<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
SCHEDULE 14D-1
(AMENDMENT NO. 1)
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
___________________
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
AMERICAN PAGING, INC.
------------------------------------------------------------
(NAME OF SUBJECT COMPANY [ISSUER])
API MERGER CORP.
AND
TELEPHONE AND DATA SYSTEMS, INC.
------------------------------------------------------------
(BIDDER)
COMMON SHARES ($1.00 PAR VALUE)
------------------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
02882K10
------------------------------------------------------------
(CUSIP NUMBER OF CLASS OF SECURITIES)
LEROY T. CARLSON, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TELEPHONE AND DATA SYSTEMS, INC.
30 N. LASALLE STREET, SUITE 4000, CHICAGO, ILLINOIS 60602
------------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
---------
COPY TO:
JAMES G. ARCHER, ESQ.
SIDLEY & AUSTIN
875 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 906-2000
<PAGE>
This Amendment No. 1 to the Tender Offer Statement on Schedule 14D-1
("Schedule 14D-1") and Amendment No. 3 to the Statement on Schedule 13D
(collectively, this "Amendment") relates to the offer by API Merger Corp., a
Delaware corporation ("Purchaser") and a direct wholly owned subsidiary of
Telephone and Data Systems, Inc., a company organized under the laws of Iowa
("TDS"), to purchase all outstanding Common Shares, par value $1.00 per share
(the "Common Shares"), of American Paging Inc., a Delaware corporation (the
"Company"), at a price of $2.50 per Common Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in Purchaser's Offer to Purchase dated February 18, 1998 (the "Offer of
Purchase") and in the related Letter of Transmittal (which together with the
Offer to Purchase constitute the "Offer").
All capitalized terms used in this Amendment without definition have
the meanings attributed to them in the Schedule 14D-1.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information set forth under "THE TENDER OFFER -- 9. Financing of
the Offer and the Merger" of the Offer to Purchase is hereby amended and
restated to read in its entirety as follows:
The total amount of funds required by Purchaser to consummate the
Offer and the Merger and to pay related fees and expenses is estimated to
be approximately $10 million. TDS will ensure that Purchaser has
sufficient funds to acquire all of the outstanding Common Shares pursuant
to the Offer and the Merger. TDS will provide such funds from its working
capital or from existing credit facilities. No decision has been made
concerning which of the existing credit facilities, if any, will be
utilized. Such decision will be made on such dates as funds are required
to consummate the Offer and the Merger and to pay related fees and
expenses.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
The information set forth under "SPECIAL FACTORS -- Beneficial Ownership of
the Securities of the Company -- Security Ownership of the Company by TDS,
Purchaser and Certain Beneficial Owners" of the Offer to Purchase is hereby
supplemented and amended by adding the following:
A Schedule 13D was filed with the Commission by Gabelli Funds, Inc.
("GFI"), Gabelli Associates Fund ("Gabelli Associates"), Gabelli Associates
Limited ("GAL") and Mario J. Gabelli with respect to 409,300 Common Shares
which represents approximately 5.4 percent of the outstanding Common
Shares. Pursuant to such Schedule 13D, GFI has sole voting and dispositive
power with respect to 271,100 Common Shares, Gabelli Associates has sole
voting and dispositive power with respect to 130,200 Common Shares and GAL
has sole voting and dispositive power with respect to 8,000 Common Shares.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth under "THE TENDER OFFER -- 8. Certain
Information Concerning Purchaser, TDS and The Voting Trust" of the Offer to
Purchase is hereby amended and supplemented by adding the following information:
2
<PAGE>
The Voting Trust holds TDS Series A Common Shares and was created
under an Agreement, dated June 30, 1989, as amended ("The Voting Trust
Agreement"), to facilitate long-standing relationships among the trust's
certificate holders. The five trustees of The Voting Trust (the
"Trustees") hold and vote the TDS Series A Common Shares in accordance with
the terms of The Voting Trust Agreement. Under the terms of The Voting
Trust Agreement, the Trustees, except as otherwise specifically provided,
possess and are entitled to exercise all of the rights and powers of owners
of the TDS Series A Common Shares deposited in The Voting Trust. Except as
otherwise provided in the Trust Agreement with respect to certain
transactions, such Series A Common Shares are to be voted as a unit in
accordance with the six-vote majority of the Trustees. A "six-vote
majority" requires the affirmative vote by the Trustees holding no fewer
than six votes. Four of the Trustees, who are currently directors of TDS,
have two votes each, and the remaining Trustee has one vote.
Pursuant to the terms of The Voting Trust Agreement, the Trustees are
instructed to use their best judgment to select suitable directors. TDS
has a twelve person Board of Directors and four of the five Trustees are
directors of TDS; however, The Voting Trust Agreement does not require the
Trustees to elect any specified persons as directors.
As a result of the TDS Series A Common Shares held in The Voting
Trust representing 51.4% of the voting power of the combined TDS Common
Shares and the TDS Series A Common Shares and four of its Trustees serving
as directors on the Board of Directors of TDS, The Voting Trust may be
deemed to control TDS and indirectly the Company.
ITEM 10. ADDITIONAL INFORMATION.
The first paragraph under "THE TENDER OFFER - - 12. Certain Conditions to
the Offer" of the Offer to Purchase is hereby amended and restated in its
entirety as follows:
12. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other term
or provision of the Offer or the Merger Agreement, Purchaser shall not be
required to accept for payment or pay for any Common Shares tendered
pursuant to the Offer, and may terminate or amend the Offer and may
postpone the acceptance for payment of, and payment for Common Shares
tendered if (i) immediately prior to the expiration of the Offer the Asset
Contribution Agreement Condition is not satisfied or (ii) at any time on or
after February 11, 1998 and prior to the expiration of the Offer and prior
to the acceptance of the Common Shares, any of the following events or
facts shall have occurred:
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby supplemented and amended by adding the following
exhibits which were previously incorporated by reference:
(c) (2) Asset Contribution Agreement, dated as of December 22, 1997, among
TDS, TSR Paging and TSR Wireless.
(c)(3) Option Agreement, dated as of December 22, 1997, between TDS and
TSR Wireless LLC.
3
<PAGE>
(c)(4) Restated Certificate of Incorporation, as amended, of the
Company.
(c)(5) The Voting Trust Agreement, dated as of June 30, 1989, with
respect to the TDS Series A Common Shares.
(c)(6) Exchange Agreement, dated as of January 1, 1994, between the
Company and TDS.
(c)(7) Revolving Credit Agreement, dated as of January 1, 1994, between
the Company and TDS.
(c)(8) Amendment to Revolving Credit Agreement, dated March 5, 1997 and
effective January 1, 1997, between the Company and TDS.
(c)(10) Intercompany Agreement, dated as of January 1, 1994, between
the Company and TDS.
(c)(11) Registration Rights Agreement, dated as of January 1, 1994,
between the Company and TDS.
(c)(12) Employee Benefit Plans Agreement, dated as of January 1, 1994,
between the Company and TDS.
(c)(13) Amendment to Revolving Credit Agreement, dated February 27,
1995, between the Company and TDS.
(c)(14) Amendment to Revolving Credit Agreement, dated August 10, 1995,
between the Company and TDS.
(c)(15) Amendment to Revolving Credit Agreement, dated December 31,
1995, between the Company and TDS.
(c)(16) Amendment to Revolving Credit Agreement, dated April 15, 1996,
between the Company and TDS.
(c)(17) Amendment to Revolving Credit Agreement, dated August 2, 1996,
between the Company and TDS.
(c)(18) Amendment to Revolving Credit Agreement, dated November 13,
1996, between the Company and TDS.
(c)(19) Amendment, dated as of November 20, 1992, to The Voting Trust
Agreement with respect to the TDS Series A Common Shares.
(c)(20) Amendment, dated as of May 9, 1991, to The Voting Trust
Agreement with respect to the TDS Series A Common Shares.
(c)(21) Joint Filing Agreement and Power of Attorney, dated February
10, 1997, with respect to The Voting Trust.
4
<PAGE>
SIGNATURES
Dated: March 17, 1998
After due inquiry and to the best of our knowledge and belief, we certify
that the information set forth in this Amendment is true, complete and correct.
API MERGER CORP. THE VOTING TRUST*
By: /s/ LeRoy T. Carlson, Jr. By: /s/ LeRoy T. Carlson,Jr.
--------------------------------- ------------------------------
Name: LeRoy T. Carlson, Jr. Name: LeRoy T. Carlson, Jr.
Title: President Title: As Trustee and
Attorney-in-Fact
for other Trustees**
* Signature only for Amendment No. 3
to the Schedule 13D relating to the
TELEPHONE AND DATA SYSTEMS, INC. direct and indirect beneficial
ownership of the Common Shares of
American Paging, Inc. by API Merger
Corp., Telephone and Data
By: /s/ LeRoy T. Carlson, Jr. Systems, Inc. and The Voting Trust,
--------------------------------- respectively.
Name: LeRoy T. Carlson, Jr.
Title: President and Chief ** Pursuant to Joint Filing Agreement
Executive Officer and Power of Attorney filed
herewith.
Signature Page to Amendment No. 1 to Schedule 14D-1 relating to the Offer
by API Merger Corp. to purchase all outstanding Common Shares of
American Paging, Inc. and Amendment No. 3 to Schedule 13D
relating to the direct and indirect beneficial ownership of the Common
Shares of American Paging, Inc. by API Merger Corp., Telephone and
Data Systems, Inc., and The Voting Trust, respectively.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Description
----------- -------------------
<S> <C>
(c)(2) Asset Contribution Agreement, dated as of December 22, 1997,
among TDS, TSR Paging and TSR Wireless.
(c)(3) Option Agreement, dated as of December 22, 1997, between TDS
and TSR Wireless LLC.
(c)(4) Restated Certificate of Incorporation, as amended, of the
Company.
(c)(5) The Voting Trust Agreement, dated as of June 30, 1989, with
respect to TDS Series A Common Shares.
(c)(6) Exchange Agreement, dated as of January 1, 1994, between
the Company and TDS.
(c)(7) Revolving Credit Agreement, dated as of January 1, 1994,
between the Company and TDS.
(c)(8) Amendment to Revolving Credit Agreement, dated March 5, 1997
and effective January 1, 1997, between the Company and TDS.
(c)(10) Intercompany Agreement, dated as of January 1, 1994, between
the Company and TDS.
(c)(11) Registration Rights Agreement, dated as of January 1, 1994,
between the Company and TDS.
(c)(12) Employee Benefit Plans Agreement, dated as of January 1,
1994, between the Company and TDS.
(c)(13) Amendment to Revolving Credit Agreement, dated February 27,
1995, between the Company and TDS.
(c)(14) Amendment to Revolving Credit Agreement, dated August 10,
1995, between the Company and TDS.
(c)(15) Amendment to Revolving Credit Agreement, dated December 31,
1995, between the Company and TDS.
(c)(16) Amendment to Revolving Credit Agreement, dated April 15,
1996, between the Company and TDS.
(c)(17) Amendment to Revolving Credit Agreement, dated August 2,
1996, between the Company and TDS.
<PAGE>
(c)(18) Amendment to Revolving Credit Agreement, dated November 13,
1996, between the Company and TDS.
(c)(19) Amendment, dated as of November 20, 1992, to The Voting
Trust Agreement with respect to the TDS Series A Common
Shares.
(c)(20) Amendment, dated as of May 9, 1991, to The Voting Trust
Agreement with respect to the TDS Series A Common Shares.
(c)(21) Joint Filing Agreement and Power of Attorney, dated
February 10, 1997, with respect to The Voting Trust.
</TABLE>
<PAGE>
- ------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ASSET CONTRIBUTION AGREEMENT
by and among
TSR PAGING INC.
TELEPHONE AND DATA SYSTEMS, INC.
and
TSR WIRELESS LLC
Dated: December 22, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . 2
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II
CONTRIBUTION OF ASSETS. . . . . . . . . . . . . 12
2.1 Contribution of TSR Paging Assets. . . . . . . . . . . . . . . . . 12
2.2 Assumption of TSR Paging Liabilities . . . . . . . . . . . . . . . 14
2.3 Contribution of API Assets . . . . . . . . . . . . . . . . . . . . 14
2.4 Assumption of API Liabilities. . . . . . . . . . . . . . . . . . . 16
2.5 API Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.6 Assets and Liabilities of AMS; Rejected Assets . . . . . . . . . . 17
ARTICLE III
ISSUANCE OF MEMBERSHIP INTERESTS . . . . . . . . . . 18
3.1 Issuance of Membership Interests . . . . . . . . . . . . . . . . . 18
3.2 Post-Closing Adjustment. . . . . . . . . . . . . . . . . . . . . . 18
3.3 Closing Costs; Transfer Fees . . . . . . . . . . . . . . . . . . . 20
3.4 Unit Allocation Following Exercise of Extension Option . . . . . . 20
ARTICLE IV
CLOSING . . . . . . . . . . . . . . . . 20
4.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Conveyances by TSR Paging at Closing . . . . . . . . . . . . . . . 20
4.3 Conveyances by TDS at Closing. . . . . . . . . . . . . . . . . . . 21
4.4 Form of Instruments. . . . . . . . . . . . . . . . . . . . . . . . 22
4.5 Certificates; Opinions . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TSR PAGING . . . . . . . 23
5.1 Organization of TSR Paging . . . . . . . . . . . . . . . . . . . . 23
5.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Absence of Certain Changes or Events . . . . . . . . . . . . . . . 23
5.5 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
i
<PAGE>
Page
----
5.6 TSR Paging Real Property . . . . . . . . . . . . . . . . . . . . . 24
5.7 Contracts and Commitments. . . . . . . . . . . . . . . . . . . . . 25
5.8 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . 27
5.9 Operation of the TSR Paging Business . . . . . . . . . . . . . . . 27
5.10 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.11 Absence of Certain Business Practices. . . . . . . . . . . . . . . 28
5.12 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . 28
5.13 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . 28
5.14 Financial Statements; Receivables. . . . . . . . . . . . . . . . . 30
5.15 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . 31
5.16 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.17 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . 31
5.18 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.19 No Other Agreements to Sell the TSR Paging Assets. . . . . . . . . 32
5.20 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . 32
5.21 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 32
5.22 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.23 Investment Intent. . . . . . . . . . . . . . . . . . . . . . . . . 34
5.24 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.25 Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . 35
5.26 Employee Benefit Plan Matters. . . . . . . . . . . . . . . . . . . 35
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF TDS. . . . . . . . . 36
6.1 Organization of TDS and API. . . . . . . . . . . . . . . . . . . . 36
6.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.4 Absence of Certain Changes or Events . . . . . . . . . . . . . . . 38
6.5 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.6 API Real Property. . . . . . . . . . . . . . . . . . . . . . . . . 39
6.7 Contracts and Commitments. . . . . . . . . . . . . . . . . . . . . 40
6.8 Customers, Distributors and Suppliers. . . . . . . . . . . . . . . 41
6.9 Operation of the API Business. . . . . . . . . . . . . . . . . . . 42
6.10 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.11 Absence of Certain Business Practices. . . . . . . . . . . . . . . 42
6.12 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . 43
6.13 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . 43
6.14 Financial Statements; Receivables; Public Filings. . . . . . . . . 45
6.15 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . 46
6.16 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ii
<PAGE>
Page
----
6.17 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . 46
6.18 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.19 No Other Agreements to Sell the API Assets . . . . . . . . . . . . 47
6.20 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . 47
6.21 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 47
6.22 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.23 Investment Intent. . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF TSR WIRELESS. . . . . . . 49
7.1 Organization of TSR Wireless . . . . . . . . . . . . . . . . . . . 49
7.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.3 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . 50
7.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . 50
7.5 Broker and Finders . . . . . . . . . . . . . . . . . . . . . . . . 50
7.6 Litigation and Proceedings . . . . . . . . . . . . . . . . . . . . 50
7.7 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VIII
COVENANTS OF THE TRANSFERORS AND TSR WIRELESS. . . . . . . 50
8.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 50
8.2 FCC Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.3 Notification of Certain Matters. . . . . . . . . . . . . . . . . . 51
ARTICLE IX
COVENANTS OF TSR PAGING . . . . . . . . . . . . 52
9.1 Access to Information. . . . . . . . . . . . . . . . . . . . . . . 52
9.2 Employee and Employee Benefit Matters. . . . . . . . . . . . . . . 52
9.3 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . 53
9.4 1997 Financial Statements. . . . . . . . . . . . . . . . . . . . . 54
ARTICLE X
COVENANTS OF TDS . . . . . . . . . . . . . . 55
10.1 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.2 Access to Information. . . . . . . . . . . . . . . . . . . . . . . 55
10.3 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . 57
10.4 1997 Financial Statements. . . . . . . . . . . . . . . . . . . . . 58
iii
<PAGE>
Page
----
10.5 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.6 Support of API . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.7 Transitional Services Agreement. . . . . . . . . . . . . . . . . . 58
10.8 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.9 Monthly Certificates . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF TSR PAGING . . . . . . . . 59
11.1 Representations, Warranties and Covenants. . . . . . . . . . . . . 59
11.2 No Injunction, etc.. . . . . . . . . . . . . . . . . . . . . . . . 59
11.3 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 59
11.4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.5 Corporate Documents. . . . . . . . . . . . . . . . . . . . . . . . 60
11.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.7 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.8 Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . 60
11.9 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.10 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . 60
11.11 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . 60
11.12 Tenant Estoppel Certificates . . . . . . . . . . . . . . . . . . . 60
11.13 Closing Current Assets . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE XII
CONDITIONS TO OBLIGATIONS OF TDS . . . . . . . . . . 61
12.1 Representations, Warranties and Covenants. . . . . . . . . . . . . 61
12.2 No Injunction, etc.. . . . . . . . . . . . . . . . . . . . . . . . 61
12.3 Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . . . . 61
12.4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
12.5 Corporate Documents. . . . . . . . . . . . . . . . . . . . . . . . 62
12.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.7 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.8 Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . 62
12.9 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.10 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . 62
12.11 Closing Current Assets . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE XIII
RISK OF LOSS; CONSENTS TO ASSIGNMENT OF CONTRACTS, REAL PROPERTY
iv
<PAGE>
Page
----
LEASES AND PERSONAL PROPERTY LEASES. . . . . . . . . . . . 63
13.1 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
13.2 Consents to Assignment of Contracts, Real Property Leases
and Personal Property Leases . . . . . . . . . . . . . . . . . . . 63
ARTICLE XIV
ACTIONS BY TSR WIRELESS AND TRANSFERORS AFTER THE CLOSING. . . . 64
14.1 Further Actions. . . . . . . . . . . . . . . . . . . . . . . . . . 64
14.2 Survival of Representations, Etc.. . . . . . . . . . . . . . . . . 64
14.3 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . 64
14.4 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.5 Bulk Sales, Transfer Taxes . . . . . . . . . . . . . . . . . . . . 68
14.6 Assistance for Filing of Tax Returns . . . . . . . . . . . . . . . 68
ARTICLE XV
MISCELLANEOUS. . . . . . . . . . . . . . . 69
15.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
15.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
15.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
15.4 Choice of Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
15.5 Entire Agreement; Amendments and Waivers . . . . . . . . . . . . . 74
15.6 Multiple Counterparts. . . . . . . . . . . . . . . . . . . . . . . 74
15.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
15.8 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
15.9 Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
15.10 Public Statements and Press Releases . . . . . . . . . . . . . . . 74
15.11 Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
15.12 Confidential Information . . . . . . . . . . . . . . . . . . . . . 75
v
<PAGE>
SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
Schedule 1.1 Excluded API Assets
Schedule 10.3.3 API Facilities - To Be Surrendered
TSR PAGING DISCLOSURE LETTER SCHEDULES
- ---------------------------------------
TSR Paging Disclosure Letter Schedule 5.1 Foreign Qualifications of TSR Paging
TSR Paging Disclosure Letter Schedule 5.6 TSR Paging Leased Real Property
TSR Paging Disclosure Letter Schedule 5.7 TSR Paging Contracts
TSR Paging Disclosure Letter Schedule 5.8 Customers and Suppliers of TSR Paging
TSR Paging Disclosure Letter Schedule 5.9 Operation of TSR Paging Business
TSR Paging Disclosure Letter Schedule 5.10 TSR Paging Inventory
TSR Paging Disclosure Letter Schedule 5.12 Consents of TSR Paging
TSR Paging Disclosure Letter Schedule 5.13.1 TSR Paging FCC Licenses, TSR Paging FCC License Applications
TSR Paging Disclosure Letter Schedule 5.13.3 Filings of TSR Paging
TSR Paging Disclosure Letter Schedule 5.13.5 Sharing Agreements
TSR Paging Disclosure Letter Schedule 5.13.7 Construction
TSR Paging Disclosure Letter Schedule 5.14.1 TSR Paging Financial Statements
TSR Paging Disclosure Letter Schedule 5.14.2 Receivables of TSR Paging
TSR Paging Disclosure Letter Schedule 5.16 Litigation of TSR Paging
TSR Paging Disclosure Letter Schedule 5.20 Proprietary Rights of TSR Paging
TSR Paging Disclosure Letter Schedule 5.22 Tax Matters
TDS DISCLOSURE LETTER SCHEDULES
- -------------------------------
TDS Disclosure Letter Schedule 6.1 Foreign Qualifications of API
TDS Disclosure Letter Schedule 6.3 Subsidiaries of API
TDS Disclosure Letter Schedule 6.6 API Leased Real Property
TDS Disclosure Letter Schedule 6.7 API Contracts
TDS Disclosure Letter Schedule 6.8 Customers and Suppliers of API
TDS Disclosure Letter Schedule 6.9 Operation of API Business
TDS Disclosure Letter Schedule 6.10 API Inventory
TDS Disclosure Letter Schedule 6.12 Consents of API
TDS Disclosure Letter Schedule 6.13.1 API FCC Licenses, API FCC License Applications
TDS Disclosure Letter Schedule 6.13.3 Filings of API
TDS Disclosure Letter Schedule 6.13.5 Sharing Agreements
TDS Disclosure Letter Schedule 6.13.7 Construction
TDS Disclosure Letter Schedule 6.14.1 API Financial Statements
TDS Disclosure Letter Schedule 6.14.2 Receivables of API
TDS Disclosure Letter Schedule 6.14.3 SEC Reports
TDS Disclosure Letter Schedule 6.16 Litigation of API
vi
<PAGE>
TDS Disclosure Letter Schedule 6.20 Proprietary Rights of API
TDS Disclosure Letter Schedule 6.22 Tax Matters
EXHIBITS
EXHIBIT A Exchange and Registration Rights Agreement
EXHIBIT B TSR Wireless LLC Agreement
EXHIBIT C Option Agreement
EXHIBIT D TDS Non-Compete and Non-Solicitation Agreement
EXHIBIT E-1 Form of legal opinion of counsel for TSR Paging
EXHIBIT E-2 Form of legal opinion of regulatory counsel for TSR Paging
EXHIBIT F-1 Form of legal opinion of counsel for TDS and API
EXHIBIT F-2 Form of legal opinion of regulatory counsel for TDS and API
EXHIBIT G Form of Transitional Services Agreement
EXHIBIT H Wire Instructions
EXHIBIT I 1998 API Capital Expenditure Budget
</TABLE>
vii
<PAGE>
ASSET CONTRIBUTION AGREEMENT
This ASSET CONTRIBUTION AGREEMENT, dated as of December 22, 1997, is by and
among TSR PAGING INC., a Delaware corporation ("TSR PAGING"), TELEPHONE AND DATA
SYSTEMS, INC., an Iowa corporation ("TDS" and, together with TSR Paging, the
"TRANSFERORS"), and TSR WIRELESS LLC, a Delaware limited liability company ("TSR
WIRELESS").
RECITALS
WHEREAS, the Transferors each conduct businesses which, among other things,
provide local and regional wireless messaging services in the United States;
WHEREAS, TDS currently owns approximately 82 percent of the issued and
outstanding capital stock of API;
WHEREAS, TDS proposes to negotiate and enter into an agreement of merger
(the "MERGER") with API pursuant to which a wholly owned subsidiary of TDS will
acquire all the outstanding stock of API not currently owned by TDS or its
Affiliates.
WHEREAS, following the Merger the Contributing Parties desire to combine
their respective businesses by contributing all of their respective assets, all
of the liabilities of TSR Paging and certain, limited, liabilities of API to TSR
Wireless in exchange for their Membership Interests (as defined in the TSR
Wireless LLC Agreement) of TSR Wireless.
WHEREAS, upon Closing, the Transferors and TSR Wireless shall effective as
of the Closing Date, enter into that certain limited liability company operating
agreement, (the "TSR WIRELESS LLC AGREEMENT"), a conformed copy of which is
attached hereto as Exhibit B.
WHEREAS, concurrently herewith, TDS and TSR Wireless have executed and
delivered that certain option agreement (the "OPTION AGREEMENT"), a conformed
copy of which is attached hereto as Exhibit C, pursuant to which TDS has granted
TSR Wireless an exclusive option to acquire the API Note (as defined below).
AGREEMENT
NOW THEREFORE, in consideration of the premises and mutual covenants and
promises contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"ACTION" shall mean any action, claim, suit, litigation,
administrative appeal, proceeding, labor dispute, arbitral action, governmental
audit, inquiry, criminal prosecution, investigation or unfair labor practice
charge or complaint.
"AFFILIATE" of a Person shall mean a Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the first Person. "Control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise, provided
however neither the Investors nor any of their respective directors, officers,
partners, members, stockholders or employees shall be an Affiliate of TSR Paging
for the purposes of this Agreement.
"AFTER-TAX BASIS" shall mean, with respect to any indemnification
payment, an amount which is sufficient to compensate the indemnified party for
any Damages after taking into account all increases in Taxes payable by the
indemnified party as a result of the receipt of such payment (by reason of such
payment being included in income, resulting in a reduction of tax basis, or
otherwise increasing such Taxes payable by the indemnified party or reducing the
amount of any refund of Taxes otherwise due to the indemnified party at any
time), net of the present value of any deductions or other tax benefits arising
from the event which gave rise to the indemnification obligation, to the extent
such deductions or other tax benefits are actually realized by the indemnified
party.
"AMS" shall mean American Messaging Services, LLC, a Minnesota limited
liability company.
"ANCILLARY AGREEMENTS" shall mean the Exchange and Registration Rights
Agreement, the TSR Wireless LLC Agreement and the TDS Non-Compete and Non-
Solicitation Agreement and the Transitional Services Agreement, each
substantially in the forms attached hereto as Exhibits A, B, D and G,
respectively.
"API" shall mean American Paging, Inc. a Delaware corporation.
"API BUSINESS" shall mean the business and operations of API and its
Subsidiaries relating generally to the provision of paging and wireless
messaging services, the
2
<PAGE>
sale and support of pagers and other telecommunications-related products and
services and the provision of technical and repair services in connection
therewith.
"API EXCLUDED ASSETS" shall mean (i) all stock and other ownership
interests of API and its Subsidiaries (other than AMS) in Subsidiaries of API
(other than AMS), (ii) the API assets listed on Schedule 1.1, (iii) any
Liabilities of TDS (or its Subsidiaries, other than API and its Subsidiaries) to
API and its Subsidiaries; (iv) all insurance policies of API and its
Subsidiaries, (v) all refunds of any Tax that API, or any member of an
affiliated, consolidated, combined or unitary group of which API is also a
member, paid pursuant to Section 6.22, Section 14.4.2 or Section 14.5.2. and
(vi) any deferred Tax Liability as described in note 2 to the 1996 API Financial
Statements.
"API FINANCIAL STATEMENTS" shall mean (i) the audited consolidated
balance sheet of API and its Subsidiaries (other than AMS) as of December 31,
1996 (and, following delivery thereof to TSR Paging, as of December 31, 1997)
the related consolidated statements of income and cash flow of API and its
Subsidiaries (other than AMS) for the year ended December 31, 1996, (and,
following delivery thereof to TSR Paging, as of December 31, 1997), the audited
balance sheet of AMS as of December 31, 1996 and the related statement of income
and cash flow of AMS for the year ended December 31, 1996 (and, following
delivery thereof to TSR Paging, for the year ended December 31, 1997)
(collectively, the "API AUDITED FINANCIAL STATEMENTS"), and (ii) the unaudited
consolidated balance sheet of API and its Subsidiaries (other than AMS) dated
September 30, 1997, and the related unaudited consolidated statements of income
of API and its Subsidiaries (other than AMS) for the nine (9) months ended
September 30, 1997, the cash flow statement of API and its Subsidiaries (other
than AMS) for the nine (9) months ended September 30, 1997, the unaudited
balance sheet of AMS dated September 30, 1997, and the related unaudited
statement of income of AMS for the nine (9) months ended September 30, 1997 and
the cash flow statement of AMS for the nine (9) months ended September 30, 1997
(the "API UNAUDITED FINANCIAL STATEMENTS").
"API INTERCOMPANY LIABILITIES" shall mean all Liabilities of API (or
its Subsidiaries) to TDS or its other Subsidiaries including, without
limitation, Liabilities under the API Note.
"API NOTE" shall mean that certain revolving credit agreement between
TDS and API, effective as of January 1, 1994 and that certain loan note made by
API in favor of TDS pursuant thereto.
"AUTHORIZATION" of a Person shall mean any consent, approval, waiver
or authorization of, expiration or termination of any waiting period requirement
(including pursuant to the HSR Act) of, or filing, registration, qualification,
declaration or designation with or by, any Governmental Authority, including the
Final FCC Orders.
3
<PAGE>
"BOOKS AND RECORDS" of any Contributing Party shall mean (a) all
records and lists of that Contributing Party and its Subsidiaries pertaining to
the TSR Paging Assets or the API Assets, as applicable, (b) all records and
lists of that Contributing Party and its Subsidiaries pertaining to the Business
of that Contributing Party, customers, suppliers or personnel of that
Contributing Party and its Subsidiaries, (c) all product, business and marketing
plans of that Contributing Party and its Subsidiaries and (d) all books,
ledgers, files, reports, plans, drawings and operating records of every kind
maintained by that Contributing Party and its Subsidiaries, but excluding the
originals of that Contributing Party's minute books, stock books and tax
returns, and books and records pertaining to API Excluded Assets.
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required to
close.
"CLOSING DATE" shall mean (i) March 31, 1998, or (ii) if all of the
conditions set forth in Articles XI and XII have not been satisfied or waived by
March 31, 1998, the fifth Business Day following the satisfaction or waiver of
such conditions which Business Day is also the last day of any monthly
accounting period of TSR Paging, or (iii) such other date as the Transferors
shall mutually agree upon.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations thereunder.
"COMMUNICATIONS ACT" shall mean the Communications Act of 1934, as
amended.
"CONSENT" shall mean any consent, approval or waiver of a Person, not
including the Authorization of any Governmental Authority.
"CONTRACTS" of any Contributing Party shall mean all contracts,
leases, licenses (other than Permits), commitments, understandings and
agreements to which that Contributing Party or any of its Subsidiaries is a
party or is bound, whether oral or written, including, without limitation, all
reseller agreements, the Real Property Leases and the Personal Property Leases
of that Contributing Party or its Subsidiaries.
"CONTRIBUTING PARTIES" shall mean, on the one hand, TSR Paging, and on
the other hand, API and its Subsidiaries and each shall be a "CONTRIBUTING
PARTY."
"DEFAULT" shall mean (i) a breach of or default under any Contract,
FCC License, Real Property Lease or Personal Property Lease or other agreement
to which a Person is party or subject, (ii) the occurrence of an event that with
the passage of time or the giving of notice or both would constitute a breach of
or default under any of the foregoing, or (iii) the occurrence of an event that
with or without the passage of time or the giving of notice or both would give
rise to a right of termination, renegotiation or acceleration under any of the
foregoing.
4
<PAGE>
"DGCL" shall mean the Delaware General Corporations Law, as amended.
"DISCLOSURE LETTER" of a Transferor shall mean the letters delivered
by such Transferor dated as of the date hereof which set forth certain
exceptions to the representations and warranties contained in Articles V and VI
and certain other information called for by this Agreement. Unless otherwise
specified, each reference in this Agreement to any numbered Disclosure Letter
Schedule of a Transferor is a reference to that numbered schedule which is
included in the Disclosure Letter of such Transferor.
"EMPLOYEE PLAN" of a Contributing Party shall mean any written plan,
program, agreement, policy or arrangement (a "plan") maintained or contributed
to by that Contributing Party or any of its Subsidiaries that is: (i) a welfare
benefit plan within the meaning of Section 3(1) of ERISA; (ii) a pension benefit
plan within the meaning of Section 3(2) of ERISA; (iii) a stock bonus, stock
purchase, stock option, restricted stock, stock appreciation right or similar
equity-based plan; or (iv) any other deferred-compensation, retirement,
severance, welfare-benefit, COBRA, bonus, incentive or fringe-benefit plan.
"ENCUMBRANCE" shall mean any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
"ENVIRONMENTAL LAWS" shall mean all Regulations which regulate or
relate to the protection or clean-up of the environment, the use, treatment,
storage, transportation, generation, manufacture, processing, distribution,
handling or disposal of, or emission, discharge or other release or threatened
release of, Hazardous Substances or otherwise dangerous substances, wastes,
pollution or materials (whether, gas, liquid or solid), the preservation or
protection of waterways, groundwater, drinking water, air, wildlife, plants or
other natural resources, or the health and safety of Persons or property,
including without limitation protection of the health and safety of employees.
Environmental Laws shall include, without limitation, the Federal Insecticide,
Fungicide, Rodenticide Act, Resource Conservation & Recovery Act, Clean Water
Act, Safe Drinking Water Act, Atomic Energy Act, Occupational Safety and Health
Act, Toxic Substances Control Act, Clean Air Act, Comprehensive Environmental
Response, Compensation and Liability Act, Emergency Planning and Community
Right-to-Know Act, Hazardous Materials Transportation Act and all analogous or
related federal, state or local law, each as amended.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" of any Contributing Party shall mean any entity
which is (or at any relevant time was) a member of a "controlled group of
corporations" with, under
5
<PAGE>
"common control" with, or a member of an "affiliated service group" with, that
Contributing Party as defined in Section 414(b), (c), (m) or (o) of the Code.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FACILITY" of any Contributing Party shall mean all real property or
facility owned, leased or used anytime by that Contributing Party and/or its
Subsidiaries (or a predecessor or Affiliate of such Contributing Party and/or
its Subsidiaries).
"FCC" shall mean the Federal Communications Commission or any
successor body thereto.
"FCC LICENSE" shall mean any license, construction permit, consent,
certificate of compliance, approval or Authorization issued by the FCC
authorizing operations in, INTER ALIA, Public Mobile Services pursuant to Part
22 of the FCC Rules, Personal Communications Services pursuant to Part 24 of
the FCC Rules, Domestic Fixed Satellite Service pursuant to Part 25 of the FCC
Rules, Private Land Mobile Radio Services pursuant to Part 90 of the FCC Rules
(including one-way paging operations on exclusive and non-exclusive channels in
the 929-930 MHz frequency band), and Fixed Microwave Radio Services pursuant to
Part 101 of the FCC Rules, or other license, permit, consent, certificate of
compliance, franchise approval or Authorization of the FCC or construction
permit in respect of any of the foregoing.
"FCC LICENSE APPLICATION" shall mean an application for an FCC
License.
"FCC RULES" shall mean the Rules and Regulations of the FCC
promulgated under the Communications Act, as amended.
"FINAL FCC ORDERS" shall mean a final, nonappealable order no longer
subject to administrative or judicial reconsideration, review or appeal.
"FINANCING OBLIGATIONS" shall mean (i) indebtedness for borrowed
money, (ii) obligations evidenced by bonds, notes, debentures or similar
instruments (other than surety or similar bonds), (iii) obligations under
capitalized leases, (iv) obligations under conditional sale, title retention or
similar agreements or arrangements creating an obligation with respect to the
deferred purchase price of property (other than customary trade credit), and
(v) obligations to guarantee any of the foregoing types of obligations on behalf
of others.
"FIXTURES AND EQUIPMENT" of any Contributing Party shall mean all of
the furniture, fixtures, furnishings, machinery, automobiles, trucks, spare
parts, supplies, equipment and other tangible personal property owned or used by
that Contributing Party and its Subsidiaries.
"GAAP" shall mean generally accepted accounting principles in the
United States, consistently applied in accordance with past practice, as in
effect on the date hereof.
6
<PAGE>
"GOVERNMENTAL AUTHORITY" shall mean any governmental or political
subdivision or department thereof, any governmental or regulatory body,
commission, board, bureau, agency or instrumentality, or any court or arbitrator
or alternative dispute resolution body, in each case whether domestic or
foreign, federal, state or local.
"HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, chemical,
waste and any toxic, infectious, carcinogenic, reactive, corrosive, ignitible or
flammable chemical or chemical compound or hazardous substance, material or
waste, whether solid, liquid or gas, including, without limitation, any quantity
of asbestos in any form, urea formaldehyde, PCB's, radon gas, crude oil or any
fraction thereof, all forms of natural gas, petroleum products or by-products or
derivatives, radioactive substance or material, pesticide waste waters, sludges,
slag and any other substance, material or waste that is subject to regulation,
control or remediation under any Environmental Laws.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"INTERIM BALANCE SHEET" of a Contributing Party shall mean the
unaudited consolidated balance sheet of that Contributing Party as of the
Interim Balance Sheet Date, as included in the API Unaudited Financial
Statements or the TSR Paging Unaudited Financial Statements, as applicable.
"INTERIM BALANCE SHEET DATE" shall mean September 30, 1997.
"INVENTORY" of a Contributing Party shall mean all of that
Contributing Party's and its Subsidiaries' inventory held for resale, lease or
repair including all pagers, phones, phone accessories, two-way radios and their
related accessories, crystals, phone cards, spare parts, wrapping, supply and
packaging items and similar items, in each case wherever the same may be located
or in transit.
"INVESTORS" shall mean TA Associates Group, Spectrum Equity Investors
L.P. and St. Paul Venture Capital, Inc.
"LEASEHOLD IMPROVEMENTS" shall mean all leasehold improvements
situated in or on the real property covered by the Real Property Leases.
"LIABILITIES" shall mean any direct or indirect liability,
indebtedness, obligation, responsibility, commitment, expense, claim, loss,
damage, deficiency, guaranty or endorsement of or by any Person, whether fixed
or unfixed, choate or inchoate, liquidated or unliquidated, known or unknown,
secured or unsecured, accrued or unaccrued, joint, several, joint and several,
due or to become due, vested or unvested, executory, determined, determinable,
absolute, contingent, matured, unmatured or other and whether or not required by
GAAP to be set forth in a financial statement of a Person including, without
limitation, all Financing Obligations of such Person.
7
<PAGE>
"MATERIAL ADVERSE CHANGE", in respect of any Contributing Party, shall
mean any significant and substantial adverse change in the financial condition,
business or operations of the Business of that Contributing Party and its
Subsidiaries to be acquired hereunder or on the ability of such Contributing
Party to consummate the transactions contemplated hereby or by the Ancillary
Agreements or the Merger.
"MATERIAL ADVERSE EFFECT", in respect of any Contributing Party, shall
mean any significant and substantial adverse effect on the financial condition,
business or operations of the Business of that Contributing Party and its
Subsidiaries to be acquired hereunder or on the ability of such Contributing
Party to consummate the transactions contemplated hereby or by the Ancillary
Agreements, the Merger Agreement or the Option Agreement.
"NET MONTHLY PAGER REVENUES" of any Contributing Party shall mean all
revenues from pagers of such Contributing Party and its Subsidiaries whose
assets are being contributed (other than AMS in the case of API) recognizable in
the relevant month in accordance with GAAP limited to recurring airtime charges,
recurring pager rental charges, recurring ancillary service charges, and
recurring debit/credit adjustments but excluding all equipment sales, one time
or non-recurring charges, accessory charges, late fees and connection fees less
the aggregate sums paid or payable to third party airtime vendors for such month
by such Contributing Party for such month.
"NET WORKING CAPITAL" shall mean the sum of all current assets of a
Contributing Party and its Subsidiaries (other than AMS in the case of API)
including cash, Inventory and accounts receivable less current liabilities of
such Contributing Party and its Subsidiaries.
"ORDER" shall mean any judgment, decision, consent decree, injunction,
ruling or order of any Governmental Authority that is binding on any Person or
its property under applicable law.
"PAGERS IN SERVICE" of a Contributing Party shall mean Closing Date
activated pagers in service of that Contributing Party and its Subsidiaries
(whether direct or indirect through resellers, dealers or other agents) billable
for the subsequent month (and collectible for the purposes of calculating the
adjustment set forth in Section 3.2), excluding any pagers that are not on
billing or are billed at $0.00 (including, without limitation, pagers with
employees and demo or spare pagers with customers) or in respect of which the
customer's account is more than 90 days delinquent and for which no payment has
been received for 60 days.
"PERMITS" shall mean in respect of any Contributing Party, all
licenses, permits, approvals, authorizations or consents, certificates of
compliance, franchise approvals or other similar authorizations of any
Governmental Authority necessary for the conduct of the Business of that
Contributing Party and its Subsidiaries, other than FCC Licenses.
8
<PAGE>
"PERMITTED ENCUMBRANCES" shall mean (i) minor liens which in aggregate
are not substantial in amount, do not materially detract from the value or
transferability of the property or assets subject thereto, (ii) liens arising
pursuant to Personal Property Leases of a Contributing Party, and (iii) in the
case of the TSR Paging Assets, liens granted pursuant to the TSR Paging Credit
Agreement and in respect of any TSR Paging Assumed Liabilities.
"PERSON" shall mean any individual, partnership, corporation, trust,
association, unincorporated organization, government or any department or agency
thereof or any other entity.
"PERSONAL PROPERTY LEASES" of any Contributing Party shall mean all of
the existing leases with respect to the personal property of that Contributing
Party and its Subsidiaries.
"PROPRIETARY RIGHTS" of any Party shall mean that Contributing Party's
and its Subsidiaries' (i) domestic and foreign registrations of trademarks and
other marks, trade names and trade rights, (ii) pending applications for such
registrations, (iii) patents and applications therefor, (iv) trademarks and
other marks, trade names and other trade rights whether or not registered, (v)
copyrights and registrations thereof, (vi) trade secrets, designs, plans,
specifications, technical information and other proprietary rights and (vii)
rights under any licenses to such Contributing Party or its Subsidiaries to use
any copyrights, marks, trade names, trade rights, patents or other proprietary
rights.
"PUC" shall mean any state public utilities commission, public service
commission or other similar agency.
"REAL PROPERTY LEASES" of any Contributing Party shall mean all real
property leases entered into by such Contributing Party or any of its
Subsidiaries.
"REGULATIONS" shall mean any laws, statutes, ordinances, regulations,
rules, notice requirements, court decisions, agency guidelines, principles of
law and orders of any foreign, federal, state or local government and any other
governmental department or agency, including without limitation Environmental
Laws, energy, motor vehicle safety, public utility, zoning, building and health
codes, occupational safety and health and laws respecting employment practices,
employee documentation, terms and conditions of employment and wages and hours.
"REPRESENTATIVE" of any Person shall mean any officer, director,
principal, attorney, agent, analyst, consultant or other representative of such
Person.
"RELEASE" shall mean and include any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment or the workplace of any Hazardous Substance,
and otherwise as defined in any Environmental Law.
9
<PAGE>
"SEC" shall mean the Securities and Exchange Commission or any
successor body thereto.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SUBSIDIARY" shall mean each corporation or other Person in which a
Person owns or controls, directly or indirectly, capital stock or other equity
interests representing at least 50% of the outstanding voting stock or other
equity interests. Unless otherwise specified, for the purposes of this
Agreement AMS shall be considered a Subsidiary of TDS and API.
"TAX" shall mean any federal, state, local, foreign or other tax,
levy, impost, fee, assessment or other government charge, including without
limitation income, estimated income, business, occupation, franchise, property,
payroll, personal property, sales, transfer, use, employment, commercial rent,
occupancy, franchise or withholding taxes, and any premium, including without
limitation interest, penalties and additions in connection therewith.
"TRANSFER" shall mean and includes the act of selling, giving,
transferring, creating a trust (voting or otherwise), assigning or otherwise
disposing of, pledging, hypothecating or otherwise transferring as security (and
correlative words shall have correlative meanings).
"TSR PAGING BUSINESS" shall mean the business and operations of TSR
Paging relating generally to the provision of paging and wireless messaging
services, the sale and support of pagers, cellphones, PCS phones, 2-way radios
and accessories and other telecommunications-related products and services and
the provision of technical and repair services in connection therewith, as well
as the provision of long distance telephone resale services.
"TSR PAGING EXCLUDED ASSETS" shall mean all refunds of any Tax that
TSR Paging, any shareholder of TSR Paging and any member of an affiliated,
consolidated, combined or unitary group of which TSR Paging is also a member,
paid pursuant to Section 5.22, Section 14.4.1 or Section 14.5.2.
"TSR PAGING FINANCIAL STATEMENTS" shall mean (i) the audited balance
sheet of TSR Paging as of December 31, 1996, (and, following delivery thereof to
TDS, as of December 31, 1997), and the related statement of income and cash flow
of TSR Paging for the year ended December 31, 1996 (and, following delivery
thereof to TDS, as of December 31, 1997), (the "TSR PAGING AUDITED FINANCIAL
STATEMENTS"), and (ii) the unaudited balance sheet of TSR Paging dated September
30, 1997, and the related unaudited statement of income of TSR Paging for the
nine (9) months ended September 30, 1997 and the cash flow statement of TSR
Paging for the nine (9) months ended September 30, 1997 (the "TSR PAGING
UNAUDITED FINANCIAL STATEMENTS").
10
<PAGE>
1.2 OTHER DEFINED TERMS. The following terms shall have the meanings
defined for such terms in the Sections set forth below:
Term Section
----- -------
"API ASSETS" Section 2.3
"API ASSUMED LIABILITIES" Section 2.4
"API ASSUMPTION DOCUMENT" Section 4.3.2
"API PCD TAX RETURNS" Section 6.22.1
"API CONTRACTS" Section 6.7
"API EXCLUDED LIABILITIES" Section 2.5
"API FACILITIES" Section 6.21.1
"API FCC LICENSE APPLICATION" Section 6.13.2
"API FCC LICENSE" Section 6.13.1
"API INVENTORY" Section 6.10
"API LEASED REAL PROPERTY" Section 6.6
"API 929 MHz EXCLUSIVE FREQUENCY" Section 6.13.1(iii)
"API PCD TAXES" Section 6.22.1
"API PERSONAL PROPERTY LEASES" Section 6.7.1
"API PAGER SHORTFALL" Section 3.2.2
"API REVENUE SHORTFALL" Section 3.2.2
"API WITHHOLDING TAXES" Section 6.22.1
"ASSETS" Section 13.1
"AUDITOR" Section 3.2.5
"AUGUST CERTIFICATE" Section 10.9
"TSR WIRELESS INDEMNITEES" Section 14.4.1
"TSR WIRELESS" Preamble
"CLAIM NOTICE" Section 14.4.5
"CLAIM" Section 14.4.5
"CLOSING" Section 4.1
"CONFIDENTIAL INFORMATION" Section 15.12.1
"CONSULTANT" Section 10.1.2
"DAMAGES" Section 14.4.1
"EXCHANGE ACT" Section 6.14.3
"EXTENSION OPTION" Section 15.1.1(v)
"FCC 929 MHz EXCLUSIVE FREQUENCY" Section 5.13.1(iii)
"FICA" Section 9.2.5
"FUTA" Section 9.2.5
"INDEMNITEES" Section 14.4.2
"INVESTMENT DOCUMENTS" Section 5.7.1
"IRS" Section 5.22.2
"JULY CERTIFICATE" Section 10.9
"JUNE CERTIFICATE" Section 10.9
"MEMBERSHIP INTERESTS" Recitals
11
<PAGE>
"MERGER" Recitals
"MIS CHARGES Section 2.4.2
"OFFER DOCUMENTS" Section 10.6.2
"OFFER" Section 10.6.1
"OPTION AGREEMENT" Recitals
"OTHER FILINGS" Section 10.9.1
"PROPOSED API ACQUISITION TRANSACTION" Section 10.1
"SCHEDULE 14D-9" Section 10.7.1
"SEC REPORTS" Section 6.14.3
"SHAREHOLDERS' MEETING" Section 10.9
"SHARES" Section 10.6.1
"TDS" Preamble
"TDS INDEMNITEES" Schedule 14.4.1
"THIRD PARTY NOTICE" Section 14.4.5
"TRANSFERORS" Preamble
"TRANSFER TAXES" Section 14.5.2
"TSR PAGING" Preamble
"TSR PAGING ASSETS" Section 2.1
"TSR PAGING ASSUMED LIABILITIES" Section 2.2
"TSR PAGING ASSUMPTION DOCUMENT" Section 4.2
"TSR PAGING PCD TAX RETURNS" Section 5.22.1
"TSR PAGING CONTRACTS" Section 5.7
"TSR PAGING CREDIT AGREEMENT" Section 5.7.1 (xii)
"TSR PAGING EMPLOYEES" Section 9.3.1
"TSR PAGING FACILITIES" Section 5.21.1
"TSR PAGING FCC LICENSE APPLICATION" Section 5.13.2
"TSR PAGING FCC LICENSE" Section 5.13.1
"TSR PAGING INDEMNITEES" Section 14.4.2
"TSR PAGING INVENTORY" Section 5.6
"TSR PAGING LEASED REAL PROPERTY" Section 5.6
"TSR PAGING 929 MHz EXCLUSIVE FREQUENCY" Section 5.13.1(iii)
"TSR PAGING PCD TAXES" Section 5.22.1
"TSR PAGING PERSONAL PROPERTY LEASES" Section 5.7.1
"TSR PAGING PAGER SHORTFALL" Section 3.2.1
"TSR PAGING REVENUE SHORTFALL" Section 3.24.1
"TSR PAGING WITHHOLDING TAXES" Section 5.22.1
"TSR WIRELESS" Recitals
"UNIT ADJUSTMENTS" Section 3.2.3
12
<PAGE>
"UNITS" Section 3.2.3
"WIRE TRANSFER" Section 15.1.1(v)
ARTICLE II
CONTRIBUTION OF ASSETS
2.1 CONTRIBUTION OF TSR PAGING ASSETS. Upon the terms and subject to the
conditions contained herein, at the Closing, TSR Paging will convey, transfer,
assign and deliver to TSR Wireless, and TSR Wireless will acquire from TSR
Paging, all of the right, title and interest of TSR Paging in and to properties,
assets and rights of any kind, whether tangible or intangible, real or personal,
other than the TSR Paging Excluded Assets (collectively, the "TSR PAGING
ASSETS"), including, without limitation, all of TSR Paging's right, title and
interest in the following:
2.1.1 All accounts and notes receivable (whether current or
noncurrent), refunds, deposits, prepayments or prepaid expenses of TSR Paging;
2.1.2 All cash and cash equivalents of TSR Paging on hand or in
banks, certificates of deposit, money market funds and securities;
2.1.3 All TSR Paging Contracts;
2.1.4 All TSR Paging Real Property Leases and all TSR Paging
Personal Property Leases;
2.1.5 Intentionally omitted.
2.1.6 All Leasehold Improvements of TSR Paging;
2.1.7 All Fixtures and Equipment of TSR Paging;
2.1.8 All TSR Paging Inventory;
2.1.9 All Books and Records of TSR Paging;
2.1.10 All Proprietary Rights of TSR Paging;
2.1.11 All Permits of TSR Paging;
2.1.12 All computer software of TSR Paging, to the extent
transferable;
2.1.13 All insurance policies of TSR Paging, to the extent
assignable;
13
<PAGE>
2.1.14 All available supplies, sales literature, promotional
literature, customer, supplier and distributor lists, art work, display units,
telephone and fax numbers and purchasing records related to the TSR Paging
Business;
2.1.15 All rights under or pursuant to all warranties,
representations and guarantees made by suppliers in connection with the TSR
Paging Assets or services furnished to TSR Paging to the extent such warranties,
representations and guarantees are assignable;
2.1.16 All claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind relating to the TSR Paging Assets,
the TSR Paging Business or the TSR Paging Assumed Liabilities, against any
Person, including, without limitation, any liens, security interests, pledges or
other rights to payment or to enforce payment in connection with products
delivered or services rendered by TSR Paging on or prior to the Closing Date;
and
2.1.17 All FCC Licenses, FCC License Applications owned or used in
the operation of the TSR Paging Business held by TSR Paging including, without
limitation, those FCC Licenses and FCC License Applications listed on TSR Paging
Disclosure Letter Schedule 5.13.
2.2 ASSUMPTION OF TSR PAGING LIABILITIES. Upon the terms and subject to
the conditions contained herein, at the Closing, TSR Wireless shall assume and
become responsible for all Liabilities of TSR Paging (the "TSR PAGING ASSUMED
LIABILITIES"), including, without limitation:
2.2.1 All Liabilities accruing, arising out of, or relating to
events or occurrences under the TSR Paging FCC Licenses, TSR Paging FCC License
Applications, TSR Paging Contracts, TSR Paging Real Property Leases and TSR
Paging Personal Property Leases;
2.2.2 All accounts payable, accrued expenses and other current
Liabilities of TSR Paging;
2.2.3 All Financing Obligations of TSR Paging;
2.2.4 All Liabilities arising out of TSR Wireless's employment of
all employees of TSR Paging, including all Liabilities under any Employee Plan
of TSR Paging or any ERISA Affiliate of TSR Paging; and
2.2.5 All Liabilities for Taxes of TSR Paging except any Tax for
which TSR Paging, any shareholder of TSR Paging, or any member of an affiliated,
consolidated, combined or unitary group of which TSR Paging is also a member, is
liable pursuant to Section 5.22, Section 14.4.1 or Section 14.5.2.
14
<PAGE>
2.3 CONTRIBUTION OF API ASSETS. Upon the terms and subject to the
conditions contained herein and subject to Section 2.6, at the Closing, TDS
shall cause API and each of its Subsidiaries to convey, transfer, assign and
deliver to TSR Wireless, and TSR Wireless will acquire from API and such
Subsidiaries, all of the right, title and interest of API and such Subsidiaries
in and to properties, assets and rights of any kind, whether tangible or
intangible, real or personal, except for the API Excluded Assets (collectively,
the "API ASSETS"), including, without limitation, all of API's and such
Subsidiaries' right, title and interest in the following:
2.3.1 All accounts and notes receivable (whether current or
noncurrent), refunds, deposits, prepayments or prepaid expenses of API and its
Subsidiaries (except in connection with insurance policies of API or its
Subsidiaries);
2.3.2 All cash and cash equivalents of API and its Subsidiaries on
hand, in the TDS cash management system, or in banks, certificates of deposit,
money market funds and securities, including such cash as is necessary to ensure
that the consolidated Net Working Capital, excluding any API Intercompany
Liabilities (but including the MIS Charges), of API and its Subsidiaries on the
Closing Date calculated in accordance with GAAP on a consistent basis with
current practice is $9,800,000 and, if necessary, TDS shall advance or
contribute to API such cash as is necessary to enable API to comply with this
Section 2.3.2;
2.3.3 All API Contracts, unless rejected by TSR Paging pursuant to
Section 2.6.2;
2.3.4 All API Real Property Leases and all API Personal Property
Leases;
2.3.5 Intentionally omitted;
2.3.6 All Leasehold Improvements of API and its Subsidiaries;
2.3.7 All Fixtures and Equipment of API and its Subsidiaries;
2.3.8 All API Inventory;
2.3.9 All Books and Records of API and its Subsidiaries;
2.3.10 All Proprietary Rights of API and its Subsidiaries;
2.3.11 All Permits of API and its Subsidiaries to the extent
transferable;
2.3.12 All computer software of API and its Subsidiaries to the
extent transferable;
2.3.13 Intentionally omitted;
15
<PAGE>
2.3.14 All available supplies, sales literature, promotional
literature, customer, supplier and distributor lists, art work, display units,
telephone and fax numbers and purchasing records related to the API Business;
2.3.15 All rights under or pursuant to all warranties,
representations and guarantees made by suppliers in connection with the API
Assets or services furnished to API or its Subsidiaries, to the extent such
warranties, representations and guarantees are assignable;
2.3.16 All claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind relating to the API Assets or the API
Assumed Liabilities, against any Person, including, without limitation, any
liens, security interests, pledges or other rights to payment or to enforce
payment in connection with products delivered or services rendered by API or its
Subsidiaries on or prior to the Closing Date;
2.3.17 All FCC Licenses and FCC License Applications owned or used
in the operation of the API Business held by API, API's Subsidiaries (including
but not limited to Advanced Wireless Messaging, Inc.), TDS or any Subsidiary of
TDS, including, without limitation, those FCC Licenses and FCC License
Applications listed on TDS Disclosure Letter Schedule 6.13; and
2.3.18 All right, title and interest of API in AMS unless rejected
by TSR Paging pursuant to Section 2.6.2.
2.4 ASSUMPTION OF API LIABILITIES. Upon the terms and subject to the
conditions contained herein and subject to Section 2.6, at the Closing, TSR
Wireless shall assume the following, and only the following, Liabilities of API
and its Subsidiaries (the "API ASSUMED LIABILITIES");
2.4.1 All Liabilities accruing, arising out of, or relating to
events or occurrences happening after the Closing Date under (i) the API FCC
Licenses and the API FCC License Applications; (ii) Contracts listed on TDS
Disclosure Letter Schedules 6.6 and 6.7 and not rejected by TSR Paging pursuant
to Section 2.6.2, or under Contracts which are not listed on TDS Disclosure
Letter Schedules 6.6 and 6.7, but which TSR Paging, in its sole discretion,
elects to accept and assume; and (iii) Real Estate Leases and Personal Property
Leases; but not including any Liability for any Default under any FCC License,
FCC License Application or Contract, Real Estate Lease or Personal Property
Lease in each case, of API or any of its Subsidiaries occurring on or prior to
the Closing Date or occurring after the Closing Date as a result of actions or
omissions prior to the Closing Date; and
2.4.2 All of API's and its Subsidiaries' current liabilities set
forth on the API Interim Balance Sheet or incurred after the Interim Balance
Sheet Date (i) in the ordinary course of business, (ii) consistent with amounts
historically incurred and (iii) in compliance with the terms of this Agreement
other than (x) the API Intercompany Liabilities, but including monthly service
charges of TDS for API's use of certain computer facilities and
16
<PAGE>
processing services of TDS ("MIS CHARGES"), (y) any Tax excluded pursuant to
Section 2.5.2 and (z) any Liabilities excluded pursuant to Section 2.5.1 to the
extent not included in current liabilities.
2.5 API LIABILITIES. Notwithstanding any other provision of this
Agreement, TSR Wireless shall not assume, or otherwise be responsible for, (i)
any Liabilities of TDS or (ii) except for the Assumed Liabilities expressly
specified in Section 2.4, any Liabilities of API or any of its Subsidiaries, in
each case whether liquidated or unliquidated, or known or unknown, whether
arising out of occurrences prior to, at or after the date hereof ("API EXCLUDED
LIABILITIES"), which API Excluded Liabilities include, without limitation:
2.5.1 Any Liabilities to or in respect of any employees or former
employees of API or any of its Subsidiaries including without limitation (i) any
employment agreement, whether or not written, between API or any of its
Subsidiaries and any Person, (ii) any Liability under any Employee Plan at any
time maintained, contributed to or required to be contributed to by or with
respect to API or any of its Subsidiaries, or any ERISA Affiliate of API or any
of its Subsidiaries or TDS or under which API or any of its Subsidiaries or TDS
may incur any Liability, or any contributions, benefits or Liabilities therefor,
or any Liability with respect to API's or any of its Subsidiaries withdrawal or
partial withdrawal from or termination of any Employee Plan and (iii) any claim
of an unfair labor practice, or any claim under any state unemployment
compensation or worker's compensation law or regulation or under any federal or
state employment discrimination law or regulation, which shall have been
asserted on or prior to the Closing Date or is based on acts or omissions which
occurred on or prior to the Closing Date.
2.5.2 Any Liability of API or any of its Subsidiaries in respect
of any Tax except any Tax Liability (other than income tax) included within
current liabilities described in Section 2.4.2.
2.5.3 Any Liability arising from any injury to or death of any
Person or damage to or destruction of any property, whether based on negligence,
breach of warranty, strict liability, enterprise liability or any other legal or
equitable theory arising from services performed by or on behalf of API or any
of its Subsidiaries or any other Person or entity on or prior to the Closing
Date;
2.5.4 Any Liability of API or any of its Subsidiaries arising out
of or related to any Action against or any Action which adversely affects the
API Assets and which shall have been asserted on or prior to the Closing Date or
to the extent the basis of which shall have arisen on or prior to the Closing
Date;
2.5.5 Any Liability of API or any of its Subsidiaries resulting
from entering into, performing its obligations pursuant to or consummating the
transactions contemplated by, this Agreement except as otherwise provided in
Sections 3.3 and 14.5.2;
17
<PAGE>
2.5.6 Any Financing Obligations of API or its Subsidiaries;
2.5.7 The API Intercompany Liabilities except for the MIS Charges;
2.5.8 Any Liability for violation of any Environmental Law;
2.5.9 Any Liability in respect of any Facility formerly owned,
leased or occupied by API or any of its Subsidiaries or any predecessor thereto;
and
2.5.10 Any Liability arising in respect of any Claim by any
shareholder of TDS or API (except for the MIS Charges).
2.6 ASSETS AND LIABILITIES OF AMS; REJECTED ASSETS
2.6.1 AMS. Notwithstanding any other provision of this Agreement,
TSR Wireless shall not assume any API Assets which are assets of AMS or any
Liabilities of AMS other than Liabilities to the BIRD Foundation which
constitute Liabilities of API assumed hereunder, which shall remain with AMS
following the Closing.
2.6.2 REJECTED API ASSETS. TSR Paging in its sole discretion may
reject (i) any API Assets not listed or described on the Disclosure Schedule,
except those not required to be so disclosed, (ii) any API Contract with a third
party airtime vendor, provided however that TSR Wireless shall enter into a
"back to back" contract with API to resell such airtime on the same financial
terms as the rejected third party airtime vendor Contracts, but otherwise on
terms similar to TSR Paging's usual terms, and (iii) the interests of API (and
any of its Subsidiaries) in AMS, and any Liabilities associated therewith by
notice to TDS at any time on or prior to the Closing Date, in which case any
such API Assets shall be excluded from the sale hereunder and the definition of
API Assets shall be modified accordingly.
ARTICLE III
ISSUANCE OF MEMBERSHIP INTERESTS
3.1 ISSUANCE OF MEMBERSHIP INTERESTS. Unless TSR Paging shall have
exercised the Extension Option, in which case the provisions of Section 3.4
shall apply and the provisions of this Section 3.1 shall not apply, on the
Closing Date, TSR Wireless shall issue to the Transferors an aggregate of
20,000,000 Units of TSR Wireless (the "UNITS"), which Units shall represent
Membership Interests of TSR Wireless in exchange for the Assets which are being
contributed to, and the Liabilities being assumed by, TSR Wireless pursuant to
this Agreement, which Units shall reflect the total value of the assets
contributed to, and the Liabilities assumed by, TSR Wireless but not any other
Contributed Property (as defined in the TSR Wireless LLC Agreement) already
contributed to TSR Wireless on or before Closing and
18
<PAGE>
which shall be apportioned, subject to adjustment as set forth in Section 3.2,
between the Transferors as follows:
3.1.1 to TSR Paging, 14,000,000 Units, and
3.1.2 to TDS, 6,000,000 Units.
3.2 POST-CLOSING ADJUSTMENT.
3.2.1 CERTIFICATION BY TSR PAGING. Within forty-five (45)
Business Days after the Closing Date, TSR Paging shall certify to TDS and TSR
Wireless (i) the number of Pagers in Service of TSR Paging as of the Closing
Date and (ii) the Net Monthly Pager Revenue of TSR Paging for the month ended
the Closing Date. If the number of Pagers in Service of TSR Paging as of the
Closing Date is less than 1,260,000, and/or the Net Monthly Pager Revenue of
TSR Paging for the month ended on the Closing Date is less than $5,500,000,
then the certificate shall state the shortfall in the number of Pagers in
Service of TSR Paging ("TSR PAGING PAGER SHORTFALL") and the shortfall in the
Net Monthly Pager Revenue of TSR Paging ("TSR PAGING REVENUE SHORTFALL"). The
provisions of this Section 3.2.1 shall not be deemed to diminish the rights
of TSR Wireless or TDS under Section 14.4.
3.2.2 CERTIFICATION BY TDS. Within forty-five (45) Business Days
after the Closing Date, TDS shall certify to TSR Paging and TSR Wireless (i) the
number of Pagers in Service of API for the month ended the Closing Date and
(ii) the Net Monthly Pager Revenue of API as of the Closing Date. If the number
of Pagers in Service of API as of the Closing Date is less than 775,000, and/or
the Net Monthly Pager Revenues of API for the month ended the Closing Date is
less than $5,800,000, then the certificate shall state the shortfall in the
number of Pagers in Service of API ("API PAGER SHORTFALL") and the shortfall in
the Net Monthly Pager Revenues of API ("API REVENUE SHORTFALL"). The provisions
of this Section 3.2.2 shall not be deemed to diminish the rights of TSR Wireless
or TSR Paging under Section 14.4.
3.2.3 UNIT ADJUSTMENT. Promptly, and in any event within five
(5) Business Days following receipt of the certificates referred to above,
TSR Wireless shall calculate and certify to the Transferors the adjustments
to be made to the Units allocated to each Transferor hereunder, as of the
Closing Date, to be made as follows (the "UNIT ADJUSTMENTS"):
(i) The number of Units allocated to TSR Paging hereunder on the
Closing shall be reduced by the greater of (a) the product of the TSR Paging
Pager Shortfall multiplied by 9.828, and (b) the product of the TSR Paging
Revenue Shortfall multiplied by 1.770, and the excess Units and the Membership
Interests represented by the Units shall be cancelled by TSR Wireless, effective
as of the Closing Date; and
19
<PAGE>
(ii) The number of Units allocated to TDS hereunder on the Closing
shall be reduced by the greater of (a) the product of the API Pager Shortfall
(if greater than 77,500) multiplied by 9.828, and (b) the product of the API
Revenue Shortfall (if greater than $580,000) multiplied by 1.770, and the excess
Units and the Membership Interests represented by the Units shall be cancelled
by TSR Wireless, effective as of the Closing Date.
3.2.4 DISPUTED UNIT ADJUSTMENT. If either Transferor shall
disagree with the Unit Adjustment, which disagreement shall be limited to the
number of Pagers in Service or the Net Monthly Pager Revenue, the Pager
Shortfall or the Revenue Shortfall certified by the other Transferor or TSR
Wireless's failure to apply the standards and correctly perform the
calculations of the Unit Adjustments set forth in Section 3.2.3, it shall
notify the other Transferor and TSR Wireless of such disagreement in writing
specifying in detail the particulars of such disagreement within twenty (20)
Business Days after receipt of the applicable certificate.
3.2.5 RESOLUTION OF DISPUTED UNIT ADJUSTMENT AMOUNT. The
Transferors shall use their reasonable efforts for a period of thirty (30)
calendar days after (i) the delivery of a notice pursuant to Section 3.2.4
above (or such longer period as the Transferors shall mutually agree upon),
or after Closing if Section 3.4 is applicable, to resolve any disagreements
raised by a Transferor with respect to the number of Pagers in Service, the
Net Monthly Pager Revenue, the Pager Shortfall or the Revenue Shortfall of
the other Transferor (as set forth in the June Certificate, if applicable) or
the calculation of the Unit Adjustments or the Unit Allocation pursuant to
Section 3.4, as the case may be. If, at the end of such period, the
Transferors and TSR Wireless are unable to resolve all such disagreements,
Arthur Andersen LLP (the "AUDITOR") shall resolve any remaining
disagreements. The Auditor shall determine whether the Pagers in Service,
the Net Monthly Pager Revenue, the Pager Shortfall and the Revenue Shortfall
were correctly certified by the relevant Transferor, only with respect to the
remaining differences submitted to the Auditor, and whether and to what
extent, if any, the Unit Adjustment requires further adjustment. The
determination of the Auditor shall be final, binding and conclusive on the
parties. The Transferors and TSR Wireless shall use their reasonable efforts
to cause the Auditor to make its determination within thirty (30) calendar
days of accepting its selection. Within ten (10) calendar days after the
date of determination of the Auditor, the Units of the Transferors allocated
hereunder shall be adjusted by the Unit Adjustment as determined by the
Auditor in the manner set forth in Section 3.2.3 and the Membership Interest
represented by the Units shall be correspondingly adjusted. The fees and
expenses of the Auditor shall be borne by the Transferors equally or as
otherwise determined by the Auditor.
3.3 CLOSING COSTS; TRANSFER FEES. The cost of any surveys, title reports
or title searches, and the recording or filing of all applicable conveyancing
instruments incurred by reason of the transfer of Assets hereunder will be paid
by the TSR Wireless upon the Closing.
20
<PAGE>
3.4 UNIT ALLOCATION FOLLOWING EXERCISE OF EXTENSION OPTION. If TSR Paging
shall have exercised the Extension Option, on the Closing Date, TSR Wireless
shall issue 14,000,000 Units to TSR Paging and shall issue to TDS the number of
Units as results from subtracting from 6,000,000 the greater of (i) the product
of the API Pager Shortfall as at June 30, 1998 multiplied by 9.828 and (ii) the
product of the API Revenue Shortfall for the month ended June 30, 1998
multiplied by 1.770, each as set forth on the June Certificate, subject to
adjustment after Closing as set forth in Section 3.2.5 upon the request of
either Transferor on the Closing Date.
ARTICLE IV
CLOSING
4.1 CLOSING. The Closing of the transactions contemplated herein (the
"CLOSING") shall be held at 10:00 a.m. local time on the Closing Date at the
offices of Latham & Watkins, 885 Third Avenue, New York, New York, unless the
parties hereto otherwise agree.
4.2 CONVEYANCES BY TSR PAGING AT CLOSING.
4.2.1 INSTRUMENTS AND POSSESSION. To effect the acquisition and
assumption referred to in Section 2.1, TSR Paging will, at the Closing, execute
and deliver to TSR Wireless:
(i) one or more instruments of conveyance conveying in the
aggregate all of TSR Paging's owned personal property included in the TSR Paging
Assets;
(ii) the Exchange and Registration Rights Agreement duly executed
by the Stockholders and the Investors (as defined therein) in substantially the
form attached as Exhibit A (the "EXCHANGE AND REGISTRATION RIGHTS AGREEMENT");
(iii) Assignments of Lease with respect to the TSR Paging
Real Property Leases and the TSR Paging Personal Property Leases;
(iv) an Assignment of the TSR Paging Contracts;
(v) Assignments of those Proprietary Rights included in the TSR
Paging Assets, in recordable form to the extent necessary to assign such rights;
(vi) such of the Ancillary Agreements to which TSR Paging is a
party;
21
<PAGE>
(vii) such other instruments as shall be reasonably requested
by TSR Wireless to vest in TSR Wireless such right, title or interest in and to
the TSR Paging Assets in accordance with this Agreement;
(viii) the certificates, opinions of counsel and other
documents to be delivered by TSR Paging described in Article XII; and
(ix) the Consents and Authorizations of TSR Paging.
4.2.2 ASSUMPTION AND OTHER DOCUMENTS. To effect the acquisition
and assumption referred to in Section 2.2, at the Closing, TSR Wireless shall
execute and deliver to TSR Paging:
(i) an instrument of assumption evidencing TSR Wireless's
assumption, pursuant to Section 2.2, of the TSR Paging Assumed Liabilities (the
"TSR PAGING ASSUMPTION DOCUMENT");
(ii) the Ancillary Agreements, duly signed by TSR Wireless; and
(iii) such other instruments as shall be reasonably requested
by TSR Paging to evidence TSR Wireless's assumption of the Assumed Liabilities
in accordance with this Agreement.
4.3 CONVEYANCES BY TDS AT CLOSING.
4.3.1 INSTRUMENTS AND POSSESSION. To effect the acquisition and
assumption referred to in Section 2.3, TDS will, or will cause API or its
Subsidiaries, as appropriate, to, at the Closing, execute and deliver to TSR
Wireless:
(i) one or more instruments of conveyance conveying in the
aggregate all of API's and its Subsidiaries' owned personal property included in
the API Assets:
(ii) Assignments of Lease with respect to the API Real Property
Leases and the API Personal Property Leases;
(iii) an Assignment of the API Contracts;
(iv) Assignments of those Proprietary Rights included in the API
Assets, in recordable form to the extent necessary to assign such rights;
(v) such of the Ancillary Agreements to which API and/or TDS is
a party;
22
<PAGE>
(vi) such other instruments as shall be reasonably requested by
TSR Wireless to vest in TSR Wireless such right, title or interest in and to the
API Assets in accordance with this Agreement;
(vii) the certificates, opinions of counsel and other
documents to be delivered by TDS described in Article XI; and
(viii) the Consents and Authorizations of API.
4.3.2 ASSUMPTION AND OTHER DOCUMENTS. To effect the acquisition
and assumption referred to in Section 2.4, at the Closing, TSR Wireless shall
execute and deliver to TDS or API and its Subsidiaries, as the case may be:
(i) an instrument of assumption evidencing TSR Wireless's
assumption, pursuant to Section 4, of the API Assumed Liabilities (the "API
ASSUMPTION DOCUMENT");
(ii) the Ancillary Agreements duly signed by TSR Wireless; and
(iii) such other instruments as shall be reasonably requested
by TDS to evidence TSR Wireless's assumption of the API Assumed Liabilities in
accordance with this Agreement.
4.4 FORM OF INSTRUMENTS. To the extent that a form of any document to be
delivered hereunder is not attached as an Exhibit hereto, such documents shall
be in form and substance, and shall be executed and delivered in a manner,
reasonably satisfactory to the party or parties in whose favor the document
runs.
4.5 CERTIFICATES; OPINIONS. The Transferors and TSR Wireless shall
deliver the certificates, opinions of counsel and other documents described in
Articles XI and XII.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TSR PAGING
TSR Paging hereby represents and warrants to TDS and TSR Wireless as
follows:
5.1 ORGANIZATION OF TSR PAGING. TSR Paging is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. TSR Paging is duly qualified under the FCC Rules and Policies to hold
a controlling interest in the TSR Wireless as contemplated herein. TSR Paging
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of its properties
23
<PAGE>
owned or leased or the nature of its activities make such qualification
necessary, except where the failure to be so qualified or in good standing would
not have a Material Adverse Effect. Copies of the Certificate of Incorporation
and Bylaws of TSR Paging, and all amendments thereto, heretofore delivered to
TSR Wireless are accurate and complete as of the date hereof. TSR Paging
Disclosure Letter Schedule 5.1 lists all jurisdictions in which TSR Paging is
qualified to do business as a foreign corporation.
5.2 AUTHORIZATION. TSR Paging has all requisite corporate power and
authority to own, lease and operate the TSR Paging Assets, to conduct the TSR
Paging Business as it is presently being conducted, to execute and deliver this
Agreement, the Ancillary Agreements and the Option Agreement and to perform its
obligations hereunder and thereunder including, without limitation, the transfer
of the TSR Paging Assets. The execution and delivery of this Agreement, the
Ancillary Agreements and the Option Agreement by TSR Paging and the consummation
by TSR Paging of the transactions contemplated hereby and thereby have been duly
approved by the board of directors of TSR Paging. No other corporate
proceedings on the part of TSR Paging is necessary to authorize the entering
into and the performance of this Agreement, the Ancillary Agreements and the
Option Agreement and the transactions contemplated hereby and thereby including,
without limitation, transfer of the TSR Paging Assets. This Agreement and the
Option Agreement have been duly executed and delivered by TSR Paging and are
legal, valid and binding obligations of TSR Paging and each of the Ancillary
Agreements to which TSR Paging is to be a party when executed at Closing will
constitute legal, valid and binding obligations of TSR Paging, enforceable
against TSR Paging in accordance with their respective terms.
5.3 SUBSIDIARIES. TSR Paging has no Subsidiaries.
5.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Interim Balance Sheet
Date, except as contemplated by this Agreement, there has not been any:
5.4.1 Material Adverse Change in respect of TSR Paging, the TSR
Paging FCC Licenses and/or the TSR Paging FCC License Applications;
5.4.2 change in accounting methods, principles or practices by TSR
Paging, except as required by law or by generally applicable changes instituted
in the accounting profession;
5.4.3 material damage, destruction or loss (whether or not covered
by insurance) adversely affecting the Assets or the TSR Paging Business;
5.4.4 sale, assignment or transfer of any material portion of the
TSR Paging Assets other than sales of Inventory in the ordinary course of
business;
5.4.5 cancellation or termination of any material Contract of TSR
Paging;
24
<PAGE>
5.4.6 institution of settlement of or agreement to settle any
Action relating to the TSR Paging Business or the TSR Paging Assets other than
in the ordinary course of business consistent with past practices but not in any
case involving amounts in excess of $200,000 in the aggregate; or
5.4.7 agreement by TSR Paging to do, or any action or omission by
TSR Paging which is likely to result in, any of the representations and
warranties set forth in the preceding clauses 5.4.1 through 5.4.6 becoming
untrue other than as expressly provided for herein.
5.5 ASSETS. TSR Paging has and will transfer good and marketable title to
the TSR Paging Assets and, upon the consummation of the transactions
contemplated hereby, TSR Wireless will acquire good title to all the TSR Paging
Assets, free and clear of any Encumbrances, other than Permitted Encumbrances.
The TSR Paging Assets include all assets necessary for the conduct of the TSR
Paging Business as presently conducted.
5.6 TSR PAGING REAL PROPERTY. TSR Paging owns no Real Property. TSR
Paging Disclosure Letter Schedule 5.6 contains a complete and accurate list of
all Real Property Leases of TSR Paging ("TSR PAGING LEASED REAL PROPERTY"
distinguishing between the stores, transmission sites, office premises and
warehouses comprising the TSR Paging Leased Real Property.
5.6.1 INTENTIONALLY OMITTED.
5.6.2 ACTIONS. There are no pending or, to the knowledge of TSR
Paging, threatened condemnation proceedings or other Actions with respect to any
TSR Paging Leased Real Property.
5.6.3 REAL PROPERTY LEASES OR OTHER AGREEMENTS. Except for the
TSR Paging Real Property Leases listed on TSR Paging Disclosure Letter Schedule
5.6, there are no material leases, subleases, licenses, occupancy agreements,
options, rights, concessions or other agreements or arrangements, written or
oral, granting to any Person the right to purchase, use or occupy any TSR Paging
Leased Real Property. With respect to each TSR Paging Real Property Lease, TSR
Paging has and will transfer to TSR Wireless at the Closing a valid leasehold
interest in the leasehold estate, free and clear of all Encumbrances other than
Permitted Encumbrances. All TSR Paging Real Property Leases are valid, binding
and enforceable in all material respects in accordance with their terms and are
in full force and effect. TSR Paging enjoys peaceful and undisturbed possession
of all real property subject to such TSR Paging Real Property Leases, and TSR
Paging has in all material respects performed all the material obligations
required to be performed by it through the date hereof with respect to such TSR
Paging Real Property Leases, and each TSR Paging Real Property Lease is
assignable (upon receipt of necessary landlord Consents) in connection with the
transactions contemplated hereby.
25
<PAGE>
5.6.4 CERTIFICATE OF OCCUPANCY. TSR Paging has received all
required material approvals of Governmental Authorities (including, without
limitation, Permits and material certificates of occupancy or other similar
certificates permitting lawful occupancy of the TSR Paging Leased Real Property)
required in connection with the present use of the TSR Paging Leased Real
Property and all improvements thereon.
5.6.5 UTILITIES. All TSR Paging Leased Real Property and the
improvements thereon are supplied with utilities and other services necessary
for the operation of such facilities as currently operated.
5.6.6 IMPROVEMENTS, FIXTURES AND EQUIPMENT. All Leasehold
Improvements, and all Fixtures and Equipment and other tangible assets owned,
leased or used by TSR Paging on the TSR Paging Leased Real Property are
sufficient in all material respects for the operation of the TSR Paging Business
as presently conducted.
5.6.7 NO SPECIAL ASSESSMENT. TSR Paging has not received notice
of any special assessment relating to any TSR Paging Leased Real Property or any
portion thereof, and TSR Paging has no knowledge of any pending or threatened
special assessment, other than any special assessments disclosed in TSR Paging
Disclosure Letter Schedule 5.6.
5.7 CONTRACTS AND COMMITMENTS.
5.7.1 CONTRACTS. TSR Paging Disclosure Letter Schedule 5.7 sets
forth a complete and accurate list of all Contracts of TSR Paging of the
following categories:
(i) Reseller Contracts for over 2,000 pagers;
(ii) Sales, commission, consulting, agency or advertising
Contracts which are not cancelable on thirty (30) calendar days notice and, in
the case of advertising Contracts, which could result in payments of over
$50,000 over the life of the Contract;
(iii) Options to buy any property, real or personal, or
options to sell or sublet any TSR Paging Leased Real Property or personal
property included in the TSR Paging Assets;
(iv) Contracts involving expenditures or Liabilities in excess of
$250,000 over the life of the Contract or otherwise material to TSR Paging;
(v) Contracts containing covenants limiting the freedom of TSR
Paging to engage in any line of business or compete with any Person;
(vi) Intentionally omitted;
26
<PAGE>
(vii) All Contracts with Local Exchange Carriers, whether
incumbent, independent, competitive or otherwise (collectively "LECs", for
provision of interconnection services and facilities (collectively,
"INTERCONNECTION") to TSR Paging ("TSR Paging INTERCONNECTION CONTRACTS"),
including: (a) all such TSR Paging Interconnection Contracts regardless of
whether such agreements have yet been submitted to or approved by the relevant
PUCs; (b) a listing of any requests for Interconnection filed by TSR Paging with
PUC(s) pursuant to Section 252(a) of the Communications Act and a brief
description of the status of the PUC proceeding with respect to each such
request; (c) a brief description of outstanding negotiations between TSR Paging
and LECs regarding provision of Interconnection by LECs regardless of whether
such negotiations are pursuant to a request for Interconnection submitted by TSR
Paging pursuant to Section 252(a) of the Communications Act; and (d) any related
agreements between TSR Paging and LECs regarding Interconnection;
(viii) All Personal Property Leases of TSR Paging ("TSR PAGING
PERSONAL PROPERTY LEASES"), excluding Contracts with customers for lease of
pagers and excluding non-material Personal Property Leases entered into in the
ordinary course of business;
(ix) All Contracts not listed pursuant to Sections 5.7.1(i)
through 5.7.1(viii) but which are (a) material to the TSR Paging Business; or
(b) not made in the ordinary course of the TSR Paging Business;
(x) the securities purchase agreement dated July 17, 1995
between, inter alia, the Investors and TSR Paging and the option agreement,
investment agreement and form of notes ancillary thereto (the "INVESTMENT
DOCUMENTS");
(xi) any TSR Paging Employee Plan, any employment agreements
between TSR Paging and Phil Sacks, Leonard P. DiSavino and Mitchell L. Sacks and
any stock option or phantom stock or other equity based plan of TSR Paging; and
(xii) the Third Amended and Restated Credit Agreement among
TSR Paging and First National Bank of Chicago dated as of October 29, 1997 (the
"TSR PAGING CREDIT AGREEMENT").
TSR Paging has delivered or made available to TDS true, correct and complete
copies of each of the Contracts listed on TSR Paging Disclosure Letter Schedule
5.7, including all amendments and supplements thereto other than TSR Paging
Personal Property Leases with individual customers on standard forms (the
standard forms having been supplied).
5.7.2 ABSENCE OF BREACHES OR DEFAULTS. All of the Contracts to
which TSR Paging is a party or bound ("TSR PAGING CONTRACTS") are valid and
in full force and effect. TSR Paging has duly performed all of its material
obligations under such Contracts to the extent those obligations to perform
have accrued, and no material violation of, or material default or breach
under, such Contracts by TSR Paging, or, to TSR Paging's knowledge, any
27
<PAGE>
other party has occurred and neither TSR Paging, nor, to TSR Paging's knowledge,
any other party has repudiated any material provisions thereof. No material
violation of, or material default or breach under, has occurred with respect to
the Investment Documents by TSR Paging, or to TSR Paging's knowledge, its
Stockholders.
5.7.3 PRODUCT WARRANTY. TSR Paging has committed no act, and
there has been no omission, which would result in, and there has been no
occurrence which would give rise to, any material product liability or
material liability for breach of warranty (whether covered by insurance or
not) on the part of TSR Paging, with respect to products sold, or services
rendered prior to the Closing.
5.8 INTENTIONALLY OMITTED.
5.9 OPERATION OF THE TSR PAGING BUSINESS. Except as set forth in TSR
Paging Disclosure Letter Schedule 5.9, (i) TSR Paging has conducted the TSR
Paging Business only through TSR Paging and not through any other divisions or
any direct or indirect Subsidiary or Affiliate of TSR Paging and (ii) no part of
the TSR Paging Business is operated by TSR Paging through any entity other than
TSR Paging.
5.10 INVENTORY. All Inventory of TSR Paging ("TSR PAGING INVENTORY") is of
good, usable and merchantable quality in all respects and, except as set forth
on TSR Paging Disclosure Letter Schedule 5.10, does not include obsolete or
discontinued items not otherwise saleable for ten dollars ($10) or more in the
ordinary course of business. Except as set forth on TSR Paging Disclosure
Letter Schedule 5.10 or in amounts that are not material;
5.10.1 all TSR Paging Inventory is of such quality as to meet the
quality control standards of TSR Paging and any applicable governmental
quality control standards;
5.10.2 all TSR Paging Inventory is saleable as current Inventory at
the current prices thereof in the ordinary course of business; and
5.10.3 all TSR Paging Inventory is recorded on the books of the TSR
Paging Business and in the TSR Paging Interim Balance Sheet at the lower of
cost or market value determined in accordance with GAAP.
5.11 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither TSR Paging, nor any
officer, employee or agent of TSR Paging, nor any other Person acting on their
behalf, has, directly or indirectly, within the past five years given or agreed
to give any gift or similar benefit to any customer, supplier, governmental
employee or other Person who is or may be in a position to help or hinder the
TSR Paging Business (or assist in connection with any actual or proposed
transaction relating to the TSR Paging Business) (i) which subjected or might
have subjected TSR Paging or any of its Subsidiaries to any damage or penalty in
any civil, criminal or governmental litigation or proceeding, (ii) which if not
given in the past, might have had a
28
<PAGE>
Material Adverse Effect, (iii) which if not continued in the future, might have
a Material Adverse Effect or subject TSR Wireless to suit or penalty in any
private or governmental litigation or proceeding, (iv) for any of the purposes
described in Section 162(c) of the Code or (v) for the purpose of establishing
or maintaining any concealed fund or concealed bank account.
5.12 NO CONFLICT OR VIOLATION. Subject to Sections 8.2, 11.6 and 12.6 and
except as set forth in TSR Paging Disclosure Letter Schedule 5.12, neither the
execution, delivery or performance of this Agreement, the Ancillary Agreements
or the Option Agreement by TSR Paging nor the consummation by TSR Paging of the
transactions contemplated hereby and thereby will (a) violate or conflict with
any provision of the Certificate of Incorporation or Bylaws of TSR Paging, (b)
violate, conflict with, or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any Encumbrance (other than a Permitted
Encumbrance) upon any of the TSR Paging Assets under, or require any Consent
under any of the terms, conditions or provisions of any TSR Paging Contract, any
Financing Obligation of TSR Paging, any Authorization, any TSR Paging Real
Property Lease, TSR Paging Personal Property Lease, franchise, Permit,
agreement, or other instrument or obligation (i) to which TSR Paging is a party
or (ii) by which the TSR Paging Assets are bound, (c) violate any statute, rule,
regulation, ordinance, code, order, judgment, ruling, writ, injunction, decree
or award to which TSR Paging or the TSR Paging Assets is subject, (d) impose any
Encumbrance (other than a Permitted Encumbrance) on the TSR Paging Assets.
Except as set forth in TSR Paging Disclosure Letter Schedule 5.12, no Consent is
required to be obtained or made by TSR Paging in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
5.13 REGULATORY MATTERS.
5.13.1 FCC LICENSES.
(i) TSR Paging Disclosure Letter Schedule 5.13.1 lists (a) each
FCC License which is issued to TSR Paging ("TSR PAGING FCC LICENSE") and, in
each case, the name of the licensee (if other than TSR Paging), the call sign,
the operating frequency or frequencies, the location and the expiration date of
the TSR Paging FCC License; and (b) each FCC License Application of TSR Paging
("TSR PAGING FCC LICENSE APPLICATION") as of the date hereof and, in each case,
the name of the applicant (if other than TSR Paging), the frequency or
frequencies, the proposed location and the file number of the TSR Paging FCC
License Application. Pursuant to the provisions of Section 9.1, TSR Paging has
made available to TDS for inspection copies of each TSR Paging FCC License and
TSR Paging FCC License Application.
29
<PAGE>
(ii) Except as set forth on TSR Paging Disclosure Letter Schedule
5.13.1, (A) none of the TSR Paging FCC Licenses or TSR Paging FCC License
Applications is subject to any purchase, sale, option or right of first refusal
agreements; (B) TSR Paging has good and marketable title to the TSR Paging FCC
Licenses to the extent allowed by law; and (C) subject to the regulatory
jurisdiction of the FCC, TSR Paging holds all TSR Paging FCC Licenses free and
clear of all Encumbrances.
(iii) TSR Paging Disclosure Letter Schedule 5.13.1 lists each
929 MHz one-way paging frequency for which TSR Paging currently has nationwide
exclusivity ("TSR PAGING 929 MHz EXCLUSIVE FREQUENCY"). Except as set forth in
TSR Paging Disclosure Letter Schedule 5.13.1, for each TSR Paging 929 MHz
Exclusive Frequency: (i) TSR Paging timely constructed and placed into
operation in accordance with FCC Rules sufficient transmitters to comply with
929 MHz frequency exclusivity requirements imposed by the FCC (collectively,
"FCC 929 MHz EXCLUSIVITY REQUIREMENTS") as specified, INTER ALIA, in FCC Rules
and FCC decisions in AMENDMENT OF THE COMMISSION'S RULES TO PROVIDE CHANNEL
EXCLUSIVITY TO QUALIFIED PRIVATE PAGING SYSTEMS AT 929-930 MHz, REPORT AND
ORDER, PR Docket No. 93-35, 8 FCC Rcd 8318 (1993), RECON. 11 FCC Rcd 3091
(1996), and WIRELESS TELECOMMUNICATIONS BUREAU ANNOUNCES 929-930 MHz PAGING
LICENSEES THAT HAVE MET CONSTRUCTION REQUIREMENTS FOR NATIONWIDE EXCLUSIVITY,
PUBLIC NOTICE, DA 96-748 (released May 10, 1996); REVISION OF PART 22 AND PART
90 OF THE COMMISSION'S RULES TO FACILITATE FUTURE DEVELOPMENT OF PAGING SYSTEMS,
WT Docket No. 96-18, FCC 97-59 (released February 24, 1997); (ii) TSR Paging has
continued to operate sufficient transmitters to comply with the terms and
conditions of such TSR Paging FCC Licenses and Authorizations, the
Communications Act, the FCC Rules and all applicable state laws and rules.
5.13.2 INTENTIONALLY OMITTED.
5.13.3 FILINGS, ETC.
(i) The TSR Paging FCC Licenses and TSR Paging FCC License
Applications are the only FCC and PUC Permits and Authorizations necessary to
conduct the TSR Paging Business. Except as set forth on TSR Paging Disclosure
Letter Schedule 5.13.3, TSR Paging has duly and in a timely fashion secured or
filed under applicable law all necessary Permits and Authorizations from, and
have filed all required registrations, applications, reports and any other
documents with, the FCC, and, if applicable, any PUC and any other Governmental
Authority exercising jurisdiction or having jurisdiction over TSR Paging, in
each case, with respect to the TSR Paging Business. Except as set forth on TSR
Paging Disclosure Letter Schedule 5.13.3, (a) the TSR Paging FCC Licenses and
(b) all other Authorizations are in full force and effect, are valid for the
balances of the current license term, are not impaired by acts or failures to
make required filings on the part of TSR Paging, and are free and clear of
restrictions that may reasonably be expected to limit the full operation of the
TSR Paging FCC Licenses or Authorizations, in each case without adverse
conditions, restrictions or impairments, except for such conditions as are
generally applicable to holders of
30
<PAGE>
such FCC Licenses and Authorizations. No renewal of any TSR Paging FCC License
would constitute a major environmental action under the rules of the FCC.
(ii) Except as set forth on TSR Paging Disclosure Letter Schedule
5.13.3, TSR Paging is not subject to any Order or any pending or, to the
knowledge of TSR Paging, threatened, Action (excluding rulemaking that has
general industry applicability) which affects or would be expected to affect, in
any material respect, the validity of any TSR Paging FCC License, or result in
the revocation, termination, or adverse modification thereof, or impair the
renewal thereof. Except as set forth on TSR Paging Disclosure Letter Schedule
5.13.3, no event has occurred and is continuing (excluding rule making that has
general industry applicability) that could reasonably be expected to (a) result
in the revocation, termination, non-renewal or adverse modification of any TSR
Paging FCC License or (b) materially and adversely affect any rights of TSR
Paging thereunder.
5.13.4 FEES. TSR Paging has paid all franchise, license,
regulatory or other fees and charges which have become due and payable pursuant
to any applications, filings, recordings and registrations with, and all
Authorizations and Permits from, the FCC, any PUC or any other Governmental
Authority, in respect of the TSR Paging Business.
5.13.5 SHARING AGREEMENTS. Except as set forth on TSR Paging
Disclosure Letter Schedule 5.13.5, TSR Paging is not a party to any agreement
for the shared use of facilities or equipment used in connection with the TSR
Paging Business.
5.13.6 OPERATIONS. The equipment operating pursuant to the TSR
Paging FCC Licenses or PUC Authorizations of TSR Paging is operating in all
material respects in accordance with the terms and conditions of such TSR Paging
FCC License or Authorizations, the Communications Act, the FCC Rules and all
applicable state laws and regulations.
5.13.7 CONSTRUCTION. Except as set forth on TSR Paging Disclosure
Letter Schedule 5.13.7 all construction for facilities that TSR Paging intends
to place in service proposed in any TSR Paging FCC License is proceeding in a
manner that may reasonably be expected to allow the completion of such
construction and commencement of operations within the time specified in the
relevant TSR Paging FCC License.
5.14 FINANCIAL STATEMENTS; RECEIVABLES.
5.14.1 FINANCIAL STATEMENTS. The TSR Paging Financial Statements
are attached hereto as TSR Paging Disclosure Letter Schedule 5.14.1. The TSR
Paging Financial Statements (a) were prepared in accordance with the Books
and Records of TSR Paging, (b) were prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
covered thereby subject, in the case of the TSR Paging Unaudited Financial
Statements, to the absence of footnotes and to normal year-end adjustments
and (c) fairly present the assets, Liabilities (including all reserves) and
financial position of TSR Paging as of the respective dates thereof and the
results of operations and changes in cash
31
<PAGE>
flows for the periods then ended, as appropriate. The TSR Paging Audited
Financial Statements have been audited by Arthur Andersen LLP, independent
certified public accountants, whose reports thereon are included with such TSR
Paging Audited Financial Statements.
5.14.2 RECEIVABLES. All of the receivables of TSR Paging
(including accounts receivable, loans receivable and advances) which have
arisen in connection with the TSR Paging Business and which are reflected in
the Interim Financial Statements, and all such receivables which will have
arisen since the Interim Balance Sheet Date, have arisen only from BONA FIDE
transactions in the ordinary course of business. All receivables of TSR
Paging on the date of this Agreement are, and on the Closing Date will be,
good and collectible in the ordinary course of business of TSR Paging within
120 days of their incurrence, subject to any applicable reserves set forth on
the Interim Balance Sheet of TSR Paging. TSR Paging has no knowledge of any
facts or circumstances generally which would result in any material increase
in the uncollectability of such receivables as a class in excess of the
reserves therefor set forth on the Interim Financial Statements. TSR Paging
Disclosure Letter Schedule 5.14.2 hereto accurately lists as of December 11,
1997, all receivables arising out of or relating to the TSR Paging Business
in excess of $1,000, the amount owing and the aging of such receivable and
the name of the party from whom such receivable is owing.
5.15 BOOKS AND RECORDS. TSR Paging has made and kept (and given TDS access
to) the Books and Records of TSR Paging, which, in all material respects
accurately and fairly reflect the activities of TSR Paging that would be so
recorded.
5.16 LITIGATION. Except as set forth on Schedules 5.13.3 and 5.16 there is
no Action or Order, pending or, to the knowledge of TSR Paging, threatened (a)
against, related to or affecting (i) TSR Paging or the TSR Paging Assets, or
(ii) any stockholders, officers or directors of TSR Paging (in each case, in
such capacity) and which either (A) may be reasonably expected to result in
Damages in excess of $100,000 in respect of any individual Order for the payment
of money damages (or $200,000 in the aggregate), or (B) seeks as of the date
hereof to delay, limit or enjoin the transactions contemplated by this
Agreement, the Ancillary Agreements or the Option Agreement or (b) in which TSR
Paging is a plaintiff, including any derivative suits brought by or on behalf of
TSR Paging. TSR Paging is not in default with respect to or subject to any
Order, and to the knowledge of TSR Paging, there are no unsatisfied Orders
against TSR Paging or the TSR Paging Assets.
5.17 COMPLIANCE WITH LAW. TSR Paging is and has been in compliance in all
material respects with all Authorizations, Regulations, and Permits in respect
of the TSR Paging Assets and the TSR Paging Business; IT BEING UNDERSTOOD that
nothing in this representation is intended to address any compliance issues that
are the subject of any other representation or warranty set forth herein.
32
<PAGE>
5.18 NO BROKERS. No broker, finder or similar agent is entitled to any
finder's fee, brokerage fees or commission or similar payment from TSR Paging in
connection with the transactions contemplated hereby.
5.19 NO OTHER AGREEMENTS TO SELL THE TSR PAGING ASSETS. Except for (i)
security granted pursuant to the TSR Paging Credit Agreement (ii) the options to
acquire stock of TSR Paging granted to the Investors and others pursuant to the
Investor Documents and (iii) stock options granted to officers, directors and
employees of TSR Paging, neither TSR Paging nor any of its officers, directors,
shareholders or Affiliates have any commitment or legal obligation, absolute or
contingent, to any other Person other than TSR Wireless and TDS to sell, assign,
transfer or effect a sale of the TSR Paging Assets (other than sales of
Inventory in the ordinary course of business), to sell or effect a sale of the
capital stock of TSR Paging, to effect any merger, consolidation, exclusive
license, liquidation, dissolution or other reorganization of TSR Paging or to
enter into any agreement or cause the entering into of an agreement with respect
to any of the foregoing business combination transactions.
5.20 PROPRIETARY RIGHTS.
5.20.1 PROPRIETARY RIGHTS. TSR Paging Disclosure Letter Schedule
5.20 lists all of TSR Paging's domestic and foreign registrations of trademarks
and of other marks, trade names or other trade rights, and all pending
applications for any such registrations, all of TSR Paging's registered
copyrights and all of TSR Paging's patents and pending patent applications, and
all agreements under which TSR Paging is licensed to use Proprietary Rights.
5.20.2 OWNERSHIP AND PROTECTION OF PROPRIETARY RIGHTS. TSR Paging
owns and/or has the right to use each of the Proprietary Rights listed on TSR
Paging Disclosure Letter Schedule 5.20. The Proprietary Rights listed on TSR
Paging Disclosure Letter Schedule 5.20 constitute all of the material
Proprietary Rights necessary to conduct the TSR Paging Business in the manner
presently conducted. None of the Proprietary Rights is involved in any pending
or, to the knowledge of TSR Paging, threatened litigation. No other Person
(i) has the right to use any of the Proprietary Rights, except pursuant to the
Contracts; or (ii) to TSR Paging's knowledge is infringing upon any Proprietary
Rights. To TSR Paging's knowledge, the use by TSR Paging of the Proprietary
Rights is not infringing upon or otherwise violating the rights of any third
party. No proceedings have been instituted against or notices received by TSR
Paging that are presently outstanding alleging that the use by TSR Paging of the
Proprietary Rights infringes upon or otherwise violates any rights of a third
party in or to such Proprietary Rights. All Proprietary Rights are assignable
by TSR Paging to TSR Wireless in the manner contemplated by this Agreement.
5.21 ENVIRONMENTAL MATTERS.
5.21.1 COMPLIANCE WITH ENVIRONMENTAL LAW. TSR Paging has complied
and is in compliance in all material respects with all applicable Environmental
Laws pertaining to any
33
<PAGE>
of the properties and assets of the TSR Paging Business (including the
Facilities of TSR Paging ("TSR PAGING FACILITIES")) and the use and ownership
thereof, and to the operation of the TSR Paging Business. No violation by TSR
Paging is being alleged of any applicable Environmental Law relating to any of
the properties and assets of the TSR Paging Business including the TSR Paging
Facilities or the use, occupation or ownership thereof, or to the operation of
the TSR Paging Business.
5.21.2 OTHER ENVIRONMENTAL MATTERS. Neither TSR Paging nor to TSR
Paging's knowledge any other Person (including any tenant or subtenant) has
caused or taken any action that will result in, and TSR Paging is not subject
to, any material Liability relating (i) environmental conditions on, under, or
about the TSR Paging Facilities, including without limitation, the air, soil and
groundwater conditions at such Facilities or (ii) the past or present use,
management, handling, transport, treatment, generation, storage, disposal or
Release of any Hazardous Materials. TSR Paging has disclosed and made available
to TDS all information, including, without limitation, all studies, analyses and
test results, in the possession, custody or control of or otherwise known to TSR
Paging relating to (x) the environmental conditions on, under or about the TSR
Paging Facilities, and (y) any Hazardous Materials used, managed, handled,
transported, treated, generated, stored or Released by TSR Paging or any other
Person on, under, about or from any of the TSR Paging Facilities, or otherwise
in connection with the use or operation of the TSR Paging Business.
5.22 TAX MATTERS.
5.22.1 TSR Paging has (or by the Closing will have), in respect of
the TSR Paging Business and the TSR Paging Assets, duly and timely filed all Tax
returns required to be filed on or before the Closing Date ("TSR PAGING PCD TAX
RETURNS"), and paid all Taxes which have become due pursuant to such Tax returns
or pursuant to any assessment which has become payable ("TSR PAGING PCD TAXES").
All Tax returns are complete in all material respects. All Taxes required to be
collected or withheld by or on behalf of TSR Paging (including amounts paid or
owing to any employee, independent contractor, creditor or other party with
respect to TSR Paging) ("TSR PAGING WITHHOLDING TAXES") have been collected or
withheld, and such taxes have either been duly and timely paid to the proper
Governmental Authorities or set aside in accounts for such purpose.
5.22.2 Except as set forth on TSR Paging Disclosure Letter Schedule
5.22, (i) all TSR Paging PCD Tax Returns have been examined by the relevant
taxing authority or the period for assessment of the Taxes in respect of which
such Tax returns were required to be filed has expired, and (ii) no agreement or
other document extending, or having the effect of extending, the period of
assessment or collection of any TSR Paging PCD Taxes or TSR Paging Withholding
Taxes, and no power of attorney with respect to any such Taxes, has been filed
with the Internal Revenue Service ("IRS") or any other Governmental Authority.
5.22.3 Except as set forth on TSR Paging Disclosure Letter Schedule
5.22, (i) there are no TSR Paging PCD Taxes or TSR Paging Withholding Taxes for
which a deficiency
34
<PAGE>
has been asserted in writing by any Governmental Authority to be due (ii) no
issue has been raised in writing by any Governmental Authority in the course of
any audit with respect to TSR Paging PCD Taxes or TSR Paging Withholding Taxes
and (iii) there are no Tax rulings, requests for rulings or closing agreements
relating to TSR Paging which could affect TSR Paging's liability for Taxes for
any period after the Closing Date. Except as set forth on TSR Paging Disclosure
Letter Schedule 5.22, no TSR Paging PCD Taxes and no TSR Paging Withholding
Taxes are currently under audit by any Governmental Authority of which TSR
Paging has or will have by the Closing, received written notice.
5.22.4 TSR Wireless will not be required to deduct and withhold any
amount pursuant to section 1445(a) of the Code upon the transfer of the TSR
Paging Business to TSR Wireless.
5.22.5 Except as set forth on TSR Paging Disclosure Letter Schedule
5.22, there is no assessment or Action pending or threatened of which TSR Paging
has received an assessment or written notice against or relating to TSR Paging
in connection with TSR Paging PCD Taxes.
5.22.6 None of the TSR Paging Assets is properly treated as owned
by persons other than TSR Paging for income tax purposes.
5.22.7 TSR Paging (i) has made a valid election under Section 1362
of the Code to be treated as an "S Corporation" and has, at all times since the
date it was organized, qualified as an "S Corporation" for purposes of
Subchapter S of the Code, and (ii) with respect to all states which for state
Tax purposes allow a corporation to be treated as an "S Corporation" or similar
entity entitled to special Tax treatment, all elections for such treatment have
been properly and validly made in such states and TSR Paging has maintained
compliance at all times with all applicable qualifications and filing procedures
for such treatment provided however that it shall not be a breach of this
Section 5.22.7 for any of the foregoing to be untrue insofar as such breach has
not had, and is not likely to have, a Material Adverse Effect on TSR Paging.
5.23 INVESTMENT INTENT. TSR Paging is acquiring its Membership Interests
for its own account for investment and with no present intention of distributing
or reselling such Membership Interests or any part thereof. TSR Paging is fully
informed as to the applicable limitations upon any distribution or resale of
Membership Interests, which have not been registered pursuant to the Securities
Act. TSR Paging agrees not to distribute or resell any of the Membership
Interests if such distribution or resale would constitute a violation of the
Securities Act by TSR Paging.
5.24 CAPITALIZATION. The authorized and issued capital stock of TSR Paging
is as set forth in TSR Paging Disclosure Letter Schedule 5.24. All of the
presently issued and outstanding shares of capital stock of TSR Paging have been
duly and validly authorized and issued and are fully paid and non-assessable and
have been issued in compliance with all
35
<PAGE>
applicable federal and state securities laws. Except as provided above or in
TSR Paging Disclosure Letter Schedule 5.24, TSR Paging has not issued any other
shares of its capital stock or any other equity interests and there are no
outstanding warrants, options or other rights to purchase or acquire any of such
shares or other equity interests, nor any outstanding securities convertible
into such shares or other equity interest or outstanding warrants, options or
other rights to acquire any such convertible securities. Except as disclosed in
TSR Paging Disclosure Letter Schedule 5.24, there are no preemptive rights with
respect to the issuance or sale of any of TSR Paging's capital stock. The
outstanding capital stock of TSR Paging is held of record and beneficially by
the Persons identified in TSR Paging Disclosure Letter Schedule 5.24 in the
amounts indicated therein.
5.25 EMPLOYMENT MATTERS.
5.25.1 There is no material unfair labor practice Action pending
against TSR Paging before any Governmental Authority.
5.25.2 There is no labor strike pending or, to the knowledge of TSR
Paging, threatened against or involving TSR Paging. TSR Paging believes that its
relations with its employees are satisfactory. No union organizing or election
activities known to TSR Paging involving any non-union employees of TSR Paging
have occurred since January 1, 1996.
5.25.3 TSR Paging has complied with the Worker Adjustment and
Retraining Notification Act and furnished any required notices of any "plant
closing" or "mass layoff" which TSR Paging has ordered to take place.
5.25.4 TSR Paging is not a party to any collective bargaining
agreement or labor contract with respect to any of its employees and is not a
party to, and, to its knowledge, has no liability or obligations under, any
individual employment agreement or contract with any of its current or former
employees that has not been performed in all material respects by TSR Paging.
5.26 EMPLOYEE BENEFIT PLAN MATTERS.
5.26.1 TSR Paging Disclosure Letter Schedule 5.26.1 contains a
complete and accurate list of all Employee Plans maintained or contributed to by
TSR Paging ("TSR PAGING EMPLOYEE PLANS"). Neither TSR Paging nor any ERISA
Affiliate of TSR Paging is now maintaining or contributing to or has ever
maintained or contributed to or been obligated to contribute to any Employee
Plan subject to either Title IV of ERISA or the minimum funding standards of
Section 302 of ERISA, including without limitation any "multiemployer plan" (as
such term is defined in Section 3(37) of ERISA).
5.26.2 Each TSR Paging Employee Plan has been administered in
accordance with its terms and complies in all material respects with all the
requirements prescribed by any
36
<PAGE>
and all statutes, orders and governmental rules and regulations applicable to
such TSR Paging Employee Plan, including, but not limited to, ERISA and the
Code.
5.26.3 Each TSR Paging Employee Plan intended to qualify under
Section 401(a) and 401(k) of the Code has heretofore been determined by the
Internal Revenue Service to so qualify or a timely application for such
determination has been made, and the trusts created thereunder have heretofore
been determined to be exempt from tax under the provisions of Section 501(a)
of the Code or an application for such determination has been made, and to the
knowledge of TSR Paging no circumstance has occurred or exists which may
reasonably be expected to cause the loss of such qualifications or exemption.
5.26.4 There is no pending or, to the knowledge of TSR Paging,
threatened Claim in respect of any of the TSR Paging Employee Plans other than
claims for benefits in the ordinary course of business or Claims which are not
material.
5.26.5 To its knowledge, TSR Paging has complied in all material
respects with the health care continuation requirements of Part 6 of Title I of
ERISA.
5.26.6 The consummation of the transactions contemplated by this
Agreement will not result in any material automatic increase in the amount of
compensation or benefits or accelerate the vesting or timing of payment of any
compensation or benefits payable to or in respect of any employee of TSR Paging
or any participant in a TSR Paging Employee Plan.
5.26.7 TSR Paging has not engaged in a nonexempt prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code which
could result in a material liability.
5.26.8 Except as described in TSR Paging Disclosure Letter Schedule
5.26.8, TSR Paging does not maintain or contribute to any employee welfare
benefit plan within the meaning of Section 3(1) of ERISA which provides benefits
to employees or their beneficiaries after termination of employment other than
as required by Part 6 of Title I of ERISA.
5.26.9 TSR Paging has delivered or made available to TDS true and
complete copies of all TSR Paging Employee Plans, including amendments, trust
agreements, and insurance contracts relating to such Plans, all summary plan
descriptions and all modifications thereto communicated to employees, the most
recent Form 5500 and determination letter issues by the Internal Revenue Service
for any applicable TSR Paging Employee Plan, and the most recent actuarial
report describing the estimated liabilities of TSR Paging to provide pension and
welfare benefits to employees and their beneficiaries after termination of
employment and any related information regarding funding by TSR Paging to pay
such liabilities.
37
<PAGE>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF TDS
TDS hereby represents and warrants to TSR Paging and TSR Wireless as
follows:
6.1 ORGANIZATION OF TDS AND API. TDS is a corporation duly organized,
validly existing and in good standing under the laws of the State of Iowa. TDS
is duly qualified under the FCC Rules and Policies to hold an interest in TSR
Wireless as contemplated herein. API is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware. Except
as set forth on TDS Disclosure Letter Schedule 6.1, API is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of its properties owned or leased or the nature of its
activities make such qualification necessary, except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect. Copies
of the Certificate of Incorporation and Bylaws of API, and all amendments
thereto, heretofore delivered to TSR Wireless are accurate and complete as of
the date hereof. TDS Disclosure Letter Schedule 6.1 lists all jurisdictions in
which API is qualified to do business as a foreign corporation.
6.2 AUTHORIZATION. TDS and API have all requisite corporate power and
authority to own, lease and operate the API Assets, to conduct the API Business
as it is presently being conducted, and TDS has and, upon receipt of necessary
approvals by its board of directors and shareholders (all of which shall have
been received by Closing), API will have, all requisite corporate power and
authority to execute and deliver such of this Agreement, the Ancillary
Agreements and the Option Agreement to which each of them is a party, and to
perform their respective obligations hereunder and thereunder including, without
limitation, the transfer of the API Assets and the Merger. The execution and
delivery of this Agreement, the Ancillary Agreements and the Option Agreement by
TDS, and the consummation by TDS of the transactions contemplated hereby and
thereby have been duly approved by the board of directors of TDS. No other
corporate proceedings on the part of TDS, are necessary to authorize the
entering into and the performance of this Agreement, the Ancillary Agreements
and the Option Agreement and the transactions contemplated hereby and thereby
including, without limitation, transfer of the API Assets. This Agreement and
the Option Agreement have been duly executed and delivered by TDS and are legal,
valid and binding obligations of TDS and each of the Ancillary Agreements when
executed at Closing will constitute legal, valid and binding obligations of TDS,
and/or API (as applicable), enforceable against TDS and/or API (as applicable)
in accordance with their respective terms.
6.3 SUBSIDIARIES. TDS Disclosure Letter Schedule 6.3 is a correct and
complete list of API's Subsidiaries, each of which is a corporation or limited
liability company duly organized or formed, validly existing and in good
standing under the laws of its jurisdiction of incorporation or formation (as
applicable) (as identified on TDS Disclosure Letter Schedule 6.3), and has the
requisite corporate or limited liability company power and authority to conduct
its business as it is presently being conducted and to own and lease its
properties and
38
<PAGE>
assets. The transactions contemplated by this Agreement to which such
Subsidiaries are or will be a party will, upon receipt of necessary approvals of
their respective boards of directors and stockholders, as necessary (all of
which shall have been received by Closing), be duly approved by all necessary
corporate or limited liability company proceedings on the part of such
Subsidiaries. TDS Disclosure Letter Schedule 6.3 contains a true, correct and
complete list of all jurisdictions in which each Subsidiary is qualified to do
business as a foreign corporation or limited liability company. Except as set
forth in TDS Disclosure Letter Schedule 6.3, each of the Subsidiaries is duly
qualified to do business as a foreign corporation or limited liability company
(as applicable) and is in good standing in each jurisdiction where the character
of its properties owned or leased or the nature of its activities make such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect. Copies of the Certificate or
Articles of Incorporation and Bylaws or other organizational documents of each
Subsidiary of API have been made available to TSR Paging and are accurate and
complete. API owns of record and beneficially all of the issued and outstanding
capital stock of each free and clear of any Encumbrances, except as set forth on
TDS Disclosure Letter Schedule 6.3.
6.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Interim Balance Sheet
Date, except as contemplated by this Agreement, there has not been any:
6.4.1 Material Adverse Change in respect of API, or any of its
Subsidiaries, the API FCC Licenses and/or the API FCC License Applications.
6.4.2 change in accounting methods, principles or practices by API
or any of its Subsidiaries, except as required by law or by generally applicable
changes instituted in the accounting profession;
6.4.3 material damage, destruction or loss (whether or not covered
by insurance) adversely affecting the API Assets or the API Business;
6.4.4 cancellation, individually or the aggregate of any material
indebtedness or waiver or release of any material right or claim of API or its
Subsidiaries;
6.4.5 cancellation or termination of any material Contract of API
or its Subsidiaries or entry into any material Contract by API or its
Subsidiaries, other than in respect of the API Excluded Assets;
6.4.6 sale, assignment or transfer of (i) any transmitters and
paging terminals of API or its Subsidiaries included in the Interim Balance
Sheet of API, whether in use or in storage or (ii) any material portion of the
API Assets other than sales of Inventory in the ordinary course of business;
6.4.7 failure to replenish API's inventories and supplies in a
normal and customary manner consistent with prior practice and prudent business
practices prevailing in
39
<PAGE>
the industry, except for reductions in API's and its Subsidiaries' Inventory not
exceeding ten percent of such Inventory on the Interim Balance Sheet Date
consistent with prudent business practice, or any purchase commitment made by
API or its Subsidiaries in excess of the normal, ordinary and usual requirements
of its business or at any price in excess of the then current market price or
upon terms and conditions more onerous than those usual and customary in the
industry, or any change in the selling, pricing, advertising or personnel
practices of API and its Subsidiaries inconsistent with their prior practice and
prudent business practices prevailing in the industry;
6.4.8 institution of settlement of or agreement to settle any
Action relating to the API Business (other than the API Excluded Assets) or the
API Assets other than in the ordinary course of business consistent with past
practices but not in any case involving amounts in excess of $200,000 in the
aggregate;
6.4.9 agreement by API or its Subsidiaries to do, or any action or
omission by API or its Subsidiaries which is likely to result in, any of the
representations and warranties set forth in the preceding clauses 6.4.1 through
6.4.8 becoming untrue other than as expressly provided for herein.
6.5 ASSETS. API and its Subsidiaries have and will transfer good and
marketable title to the API Assets and, upon the consummation of the
transactions contemplated hereby, TSR Wireless will acquire good title to all
the API Assets, free and clear of any Encumbrances other than Permitted
Encumbrances. The API Assets include all assets necessary for the conduct of
the API Business as presently conducted.
6.6 API REAL PROPERTY. API and its Subsidiaries do not own any Real
Property. TDS Disclosure Letter Schedule 6.6 also contains a complete and
accurate list of all Real Property Leases of API and its Subsidiaries ("API
LEASED REAL PROPERTY" distinguishing between the stores, transmission sites,
office premises and other Leased Real Property comprising the API Leased Real
Property.
6.6.1 INTENTIONALLY OMITTED.
6.6.2 ACTIONS. There are no pending or, to the knowledge of API,
threatened condemnation proceedings or other Actions with respect to any API
Real Property.
6.6.3 REAL PROPERTY LEASES OR OTHER AGREEMENTS. Except for the
API Real Property Leases listed on TDS Disclosure Letter Schedule 6.6, there
are no material leases, subleases, licenses, occupancy agreements, options,
rights, concessions or other agreements or arrangements, written or oral,
granting to any Person the right to purchase, use or occupy any API Leased
Real Property. Except as set forth in TDS Disclosure Letter Schedule 6.6,
with respect to each API Real Property Lease, API or its Subsidiaries have
and will transfer to TSR Wireless at the Closing a valid leasehold interest
in the leasehold estate, free and clear of all Encumbrances other than
Permitted Encumbrances. Except as set forth on TDS Disclosure
40
<PAGE>
Letter Schedule 6.6, all API Real Property Leases are valid, binding and
enforceable in all material respects in accordance with their terms and are
in full force and effect. Except as set forth on TDS Disclosure Letter
Schedule 6.6, API and its Subsidiaries enjoy peaceful and undisturbed
possession of all real property subject to such API Real Property Leases, and
API and its Subsidiaries have in all material respects performed all the
material obligations required to be performed by them through the date hereof
with respect to such API Real Property Leases, and each API Real Property
Lease is assignable (upon receipt of necessary landlord Consents) in
connection with the transactions contemplated hereby.
6.6.4 CERTIFICATE OF OCCUPANCY. API and its Subsidiaries have
received all required material approvals of Governmental Authorities (including,
without limitation, Permits and material certificates of occupancy or other
similar certificates permitting lawful occupancy of the API Leased Real
Property) required in connection with the present use of the API Leased Real
Property and all improvements thereon.
6.6.5 UTILITIES. All API Leased Real Property and the
improvements thereon are supplied with utilities and other services necessary
for the operation of such facilities as currently operated.
6.6.6 IMPROVEMENTS, FIXTURES AND EQUIPMENT. All Leasehold
Improvements, and all Fixtures and Equipment and other tangible assets owned,
leased or used by API or its Subsidiaries on the API Leased Real Property are
sufficient in all material respects for the operation of the API Business as
presently conducted.
6.6.7 NO SPECIAL ASSESSMENT. Other than to the extent such
Contracts relate to the Excluded Assets, API and its Subsidiaries have not
received notice of any special assessment relating to any API Leased Real
Property or any portion thereof, and API has no knowledge of any pending or
threatened special assessment, other than any special assessments disclosed in
TDS Disclosure Letter Schedule 6.6.
6.7 CONTRACTS AND COMMITMENTS.
6.7.1 CONTRACTS. Other than to the extent such Contracts relate
to the Excluded Assets, TDS Disclosure Letter Schedule 6.7 sets forth a complete
and accurate list of all Contracts of API and its Subsidiaries of the following
categories:
(i) Reseller Contracts (provided, that, with respect to reseller
agreements with customers only reseller agreements with customers for at least
2,000 or more pagers and with respect to reseller agreements with third party
vendors only material national reseller agreements along with totals by region
of reseller agreements with third party vendors), distribution, franchise, lease
and license (other than with respect to software that is available in consumer
retail stores and subject to "shrink wrap" license agreements) Contracts;
41
<PAGE>
(ii) Sales, commission, consulting, agency or advertising
Contracts which are not cancelable on thirty (30) calendar days notice;
(iii) Options to buy any property, real or personal, or
options to sell or sublet any API Leased Real Property or personal property
included in the API Assets;
(iv) Contracts involving expenditures or Liabilities in excess of
$250,000 over the life of the Contract or otherwise material to API and its
Subsidiaries;
(v) Contracts containing covenants limiting the freedom of
API or its Subsidiaries to engage in any line of business or compete with any
Person;
(vi) Intentionally omitted;
(vii) All Contracts with LECs for provision of Interconnection
to API ("API INTERCONNECTION CONTRACTS"), including: (a) all such API
Interconnection Contracts regardless of whether such agreements have yet been
submitted to or approved by the relevant PUCs; (b) a listing of any requests
for interconnection filed by API with PUC(s) pursuant to Section 252(a) of
the Communications Act and a brief description of the status of the PUC
proceeding with respect to each such request; (c) a brief description of
outstanding negotiations between API and LECs regarding provision of
Interconnection by LECs regardless of whether such negotiations are pursuant
to a request for interconnection submitted by API pursuant to Section 252(a)
of the Communications Act; and (d) any related agreements between API and
LECs regarding Interconnection.
(viii) All Personal Property Leases of API and its
Subsidiaries ("API PERSONAL PROPERTY LEASES") excluding Contracts with customers
for lease of pagers; and
(ix) All Contracts not listed pursuant to Sections 6.7.1 (i)
through 6.7.1 (viii) but which are (a) material to the API Business; or (b) not
made in the ordinary course of the API Business.
Except as set forth in TDS Disclosure Letter Schedule 6.7, API has delivered or
made available to TSR Paging true, correct and complete copies of each of the
Contracts listed on TDS Disclosure Letter Schedule 6.7 and TDS Disclosure Letter
Schedule 6.8, including all amendments and supplements thereto other than API
Personal Property Leases with individual customers on standard forms (the
standard forms having been supplied).
6.7.2 ABSENCE OF BREACHES OR DEFAULTS. Except as set forth in
TDS Disclosure Letter Schedule 6.6, all of the Contracts to which API or any
Subsidiary of API is a party or bound ("API CONTRACTS") are valid and in full
force and effect. API or its Subsidiaries have duly performed all of their
material obligations under such Contracts to the extent those obligations to
perform have accrued, and no material violation of, or material default or
breach under, such Contracts by API or its Subsidiaries, or, to TDS's
knowledge, any other party has
42
<PAGE>
occurred and neither API nor its Subsidiaries, nor, to TDS's knowledge, any
other party has repudiated any material provisions thereof.
6.7.3 PRODUCT WARRANTY. API and its Subsidiaries have
committed no act, and there has been no omission, which would result in, and
there has been no occurrence which would give rise to, any material product
liability or material liability for breach of warranty (whether covered by
insurance or not) on the part of API or its Subsidiaries, with respect to
products sold, or services rendered prior to the Closing.
6.8 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS. TDS Disclosure Letter Schedule
6.8 sets forth a complete and accurate list of the names and addresses of API
and its Subsidiaries' (i) ten (10) largest direct customers and the ten (10)
largest reseller customers for November 1997 for each sales region, showing the
approximate recurring revenue in dollars by API and its Subsidiaries to each
such customer during such month; and (ii) five (5) largest suppliers for January
through November 1997 showing the approximate total purchases in dollars by API
and its Subsidiaries from each such supplier during such period. As of the date
hereof, neither API nor any of its Subsidiaries has received any communication
from any customer or supplier named on TDS Disclosure Letter Schedule 6.8 of any
intention to terminate or reduce purchases from or supplies to API and its
Subsidiaries.
6.9 OPERATION OF THE API BUSINESS. Except as set forth in TDS Disclosure
Letter Schedule 6.9, (i) TDS and API have conducted the API Business only
through API and its Subsidiaries and not through any other divisions or any
direct or indirect Subsidiary or Affiliate of TDS and (ii) no part of the API
Business is operated by TDS or API through any entity other than API and its
Subsidiaries.
6.10 INVENTORY. All Inventory of API and its Subsidiaries ("API
INVENTORY") is of good, usable and merchantable quality and, except as set forth
on TDS Disclosure Letter Schedule 6.10, does not include obsolete or
discontinued items not otherwise saleable for ten dollars ($10) or more in the
ordinary course of business. Except as set forth on TDS Disclosure Letter
Schedule 6.10 or in amounts which are not material;
6.10.1 all API Inventory is of such quality as to meet the quality
control standards of API and any applicable governmental quality control
standards;
6.10.2 all API Inventory is saleable as current Inventory at the
current prices thereof in the ordinary course of business;
6.10.3 all API Inventory is recorded on the books of the API Business
and in the API Interim Balance Sheet at the net book value determined in
accordance with GAAP;
6.10.4 except for a write-down made in September 1996, and September
1997 no write-down in inventory has been made or should have been made pursuant
to GAAP
43
<PAGE>
during the past two years. Except for items undergoing repair off premises, in
the possession of employees or customers all API Inventory is located at the API
Leased Real Property.
6.11 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither API or any
Subsidiaries of API, nor any officer, employee or agent of API or its
Subsidiaries, nor any other Person acting on their behalf, has, directly or
indirectly, within the past five years given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other Person
who is or may be in a position to help or hinder the API Business (or assist in
connection with any actual or proposed transaction relating to the API Business)
(i) which subjected or might have subjected API or any of its Subsidiaries to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) which if not given in the past, might have had a Material
Adverse Effect, (iii) which if not continued in the future, might have a
Material Adverse Effect or subject TSR Wireless to suit or penalty in any
private or governmental litigation or proceeding, (iv) for any of the purposes
described in Section 162(c) of the Code or (v) for the purpose of establishing
or maintaining any concealed fund or concealed bank account.
6.12 NO CONFLICT OR VIOLATION. Subject to Sections 8.2, 11.6 and 12.6
hereof and except as set forth on TDS Disclosure Letter Schedule 6.12, neither
the execution, delivery or performance of this Agreement, the Ancillary
Agreements or the Option Agreement by TDS and/or API (as applicable) nor the
consummation by TDS and/or API (as applicable) of the transactions contemplated
hereby, including the Merger, and thereby will (a) violate or conflict with any
provision of the Certificate of Incorporation or Bylaws of TDS or API or any of
API's Subsidiaries, (b) violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any Encumbrance
(other than a Permitted Encumbrance) upon any of the API Assets under, or
require any Consent under any of the terms, conditions or provisions of any API
Contract, any Financing Obligation of API, any Authorization, any API Real
Property Lease, API Personal Property Lease, franchise, Permit, agreement, or
other instrument or obligation (i) to which API or any of its Subsidiaries is a
party or (ii) by which the API Assets are bound, (c) violate any statute, rule,
regulation, ordinance, code, order, judgment, ruling, writ, injunction, decree
or award to which API or any of its Subsidiaries or the API Assets is subject,
(d) impose any Encumbrance (other than a Permitted Encumbrance) on the API
Assets. Except as specified in TDS Disclosure Letter Schedule 6.12, or in
connection with necessary corporate approvals by API of the Merger and
transactions contemplated hereby, no Consent is required to be obtained or made
by API or any of its Subsidiaries in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
44
<PAGE>
6.13 REGULATORY MATTERS.
6.13.1 FCC LICENSES.
(i) TDS Disclosure Letter Schedule 6.13.1 lists (a) each FCC
License used in the operation of the API Business ("API FCC LICENSE") and, in
each case, the name of the licensee, the call sign, the operating frequency or
frequencies, the location and the expiration date of the API FCC License; and
(b) each FCC License Application filed as part of the operation of the API
Business ("API FCC LICENSE APPLICATION") as of the date hereof and, in each
case, the name of the applicant, the proposed frequency or frequencies, the
proposed location and the FCC file number of the API FCC License Application.
Pursuant to the provisions of Section 10.2.1, TDS has made available to TSR
Paging for inspection copies of each API FCC License and API FCC License
Application.
(ii) Except as set forth on TDS Disclosure Letter Schedule
6.13.1, (A) none of the API FCC Licenses or API FCC License Applications is
subject to any purchase, sale, option or right of first refusal agreements; (B)
API has good and marketable title, to the extent allowed by law, to the API FCC
Licenses; and (C) subject to the regulatory jurisdiction of the FCC , API holds
all API FCC Licenses free and clear of all Encumbrances.
(iii) TDS Disclosure Letter Schedule 6.13.1 lists each 929
MHz one-way paging frequency for which API or any of its Subsidiaries currently
has nationwide exclusivity ("API 929 MHz EXCLUSIVE FREQUENCY"). Except as set
forth in TDS Disclosure Letter Schedule 6.13.1, for each API 929 MHz Exclusive
Frequency: (i) API and its Subsidiaries timely constructed and placed into
operation in accordance with FCC Rules sufficient transmitters to comply with
FCC 929 MHz Exclusivity Requirements; (ii) API and its Subsidiaries have
continued to operate sufficient transmitters to comply with the terms and
conditions of such API FCC Licenses and Authorizations, the Communications Act,
the FCC Rules and all applicable state laws and regulations.
6.13.2 INTENTIONALLY OMITTED.
6.13.3 FILINGS, ETC.
(i) The API FCC Licenses and API FCC License Applications and
are the only FCC and PUC Permits and Authorizations necessary to conduct the API
Business. Except as set forth on TDS Disclosure Letter Schedule 6.13.3, API and
its Subsidiaries have duly and in a timely fashion secured or filed under
applicable law all necessary Permits and Authorizations from, and have filed all
required registrations, applications, reports and any other documents with, the
FCC, and, if applicable, any PUC and any other Governmental Authority exercising
jurisdiction or having jurisdiction over API and its Subsidiaries, in each case,
with respect to the API Business. Except as set forth on TDS Disclosure Letter
Schedule 6.13.3, (a) the API FCC Licenses (b) all other Authorizations are in
full force and effect, are
45
<PAGE>
valid for the balances of the current license term, are not impaired by acts or
failures to make required filings on the part of API or any of its Subsidiaries,
and are free and clear of restrictions that may reasonably be expected to limit
the full operation of the API FCC Licenses or Authorizations, in each case
without adverse conditions, restrictions or impairments, except for such
conditions as are generally applicable to holders of such FCC Licenses and
Authorizations. No renewal of any API FCC License would constitute a major
environmental action under the rules of the FCC.
(ii) Except as set forth on TDS Disclosure Letter Schedule
6.13.3, neither API nor its Subsidiaries is subject to any Order or any pending
or, to the knowledge of TDS, threatened, Action (excluding rule making that has
general industry applicability) which affects or would be expected to affect, in
any material respect, the validity of any API FCC License, or result in the
revocation, termination, or adverse modification thereof, or impair the renewal
thereof. Except as set forth on TDS Disclosure Letter Schedule 6.13.3, no event
has occurred and is continuing (excluding rule making that has general industry
applicability) that could reasonably be expected to (a) result in the
revocation, termination, non-renewal or adverse modification of any API FCC
License or (b) materially and adversely affect any rights of API or its
Subsidiaries thereunder.
6.13.4 FEES. API and its Subsidiaries have paid all franchise,
license, regulatory or other fees and charges which have become due and payable
pursuant to any applications, filings, recordings and registrations with, and
all Authorizations and Permits from, the FCC, any PUC or any other Governmental
Authority, in respect of the API Business.
6.13.5 SHARING AGREEMENTS. Except as set forth on TDS Disclosure
Letter Schedule 6.13.5, neither API nor any of its Subsidiaries is a party to
any agreement for the shared use of facilities or equipment used in connection
with the API Business.
6.13.6 OPERATIONS. The equipment operating pursuant to the API FCC
Licenses or PUC Authorizations of API and its Subsidiaries is operating in all
material respects in accordance with the terms and conditions of such API FCC
License or Authorizations, the Communications Act, the FCC Rules and all
applicable state laws and regulations.
6.13.7 CONSTRUCTION. Except as set forth on TDS Disclosure Letter
Schedule 6.13.7 all construction for facilities that API intends to place in
service proposed in any API FCC License is proceeding in a manner that may
reasonably be expected to allow compliance with applicable FCC construction
benchmarks, the completion of such construction and commencement of operations
within the time specified in the relevant API FCC License.
46
<PAGE>
6.14 FINANCIAL STATEMENTS; RECEIVABLES; PUBLIC FILINGS.
6.14.1 FINANCIAL STATEMENTS. The API Financial Statements are
attached hereto as TDS Disclosure Letter Schedule 6.14.1. The API Financial
Statements (a) were prepared in accordance with the Books and Records of API and
its Subsidiaries, (b) were prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods covered
thereby subject, in the case of the API Unaudited Financial Statements, to the
absence of footnotes and to normal year-end adjustments and (c) fairly present
(i) the consolidated assets, liabilities (including all reserves) and financial
position of API and its Subsidiaries (other than AMS) and (ii) the assets,
Liabilities (including all reserves) and financial position of AMS in each case
as of the respective dates thereof and the results of operations and changes in
cash flows for the periods then ended, consolidated as appropriate. The API
Audited Financial Statements have been audited by Arthur Anderson LLP,
independent certified public accountants, whose reports thereon are included
with such API Audited Financial Statements.
6.14.2 RECEIVABLES. All of the receivables of API and its
Subsidiaries (including accounts receivable, loans receivable and advances)
which have arisen in connection with the API Business and which are reflected in
the Interim Financial Statements, and all such receivables which will have
arisen since the Interim Balance Sheet Date, have arisen only from BONA FIDE
transactions in the ordinary course of business. All receivables of API and its
Subsidiaries on the date of this Agreement are, and on the Closing Date will be,
good and collectible in the ordinary course of business of API within 120 days
of their incurrence, subject to any applicable reserves set forth in the Interim
Balance Sheet of API. TDS has no knowledge of any facts or circumstances
generally which would result in any material increase in the uncollectability of
such receivables as a class in excess of the reserves therefor set forth on the
Interim Financial Statements. TDS Disclosure Letter Schedule 6.14.2 hereto
accurately lists as of November 28, 1997 all receivables arising out of or
relating to the API Business in excess of $1,000, the amount owing and the aging
of such receivable and the name and last known address of the party from whom
such receivable is owing.
6.14.3 FILINGS. TDS Disclosure Letter Schedule 6.14.3 sets forth a
list of all reports filed by API with the SEC under the Exchange Act during the
period from January 1, 1995 to the date hereof (collectively, the "SEC
REPORTS"), true and correct copies of which have been made available to TSR
Paging. None of the SEC Reports, as of their respective dates (as amended
through the date hereof) contained any untrue statement of material fact or
omitted to state a material fact with respect to the API Business required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
6.15 BOOKS AND RECORDS. API and its Subsidiaries have made and kept (and
given TSR Paging access to) the Books and Records of API, which, in all material
respects accurately and fairly reflect the activities of API and its
Subsidiaries that would be so recorded.
47
<PAGE>
6.16 LITIGATION. Except as set forth on Schedules 6.13.3 and 6.16 there is
no Action or Order, pending or to the knowledge of API threatened (a) against,
related to or affecting (i) API or any of its Subsidiaries or the API Assets, or
(ii) any stockholders (including TDS) officers or directors of API or any of its
Subsidiaries (in each case, in such capacity) and which either (A) may be
reasonably expected to result in Damages in excess of $100,000 in respect of any
individual Order for the payment of money damages (or $200,000 in the
aggregate), or (B) seeks as of the date hereof to delay, limit or enjoin the
transactions contemplated by this Agreement, the Ancillary Agreements, the
Merger Agreement or the Option Agreement or (b) in which TDS (in a matter
directly related to API or the API Business), API or any of its Subsidiaries is
a plaintiff, including any derivative suits brought by or on behalf of TDS, API
or any of its Subsidiaries. None of TDS (in a matter directly related to API or
the API Business), API or any of its Subsidiaries is in default with respect to
or subject to any Order, and to the knowledge of TDS, there are no unsatisfied
Orders against API or any of its Subsidiaries or the API Assets.
6.17 COMPLIANCE WITH LAW. API and its Subsidiaries are and have been in
compliance in all material respects with all Authorizations, Regulations, and
Permits in respect of the API Assets and the API Business; IT BEING UNDERSTOOD
that nothing in this representation is intended to address any compliance issues
that are the subject of any other representation or warranty set forth herein.
6.18 NO BROKERS. Except for the fees payable to Credit Suisse First Boston
and BancBoston Securities Inc. in connection with the transactions contemplated
hereby, which shall be paid by TDS, no broker, finder or similar agent is
entitled to any finder's fee, brokerage fees or commission or similar payment
from TDS, API or any of its Subsidiaries in connection with the transactions
contemplated hereby.
6.19 NO OTHER AGREEMENTS TO SELL THE API ASSETS. Neither TDS nor API nor
any of their respective officers, directors or affiliates have any commitment or
legal obligation, absolute or contingent, to any other Person other than TSR
Wireless and TSR Paging to sell, assign, transfer or effect a sale of the API
Assets (other than Sales of Inventory in the ordinary course of business), to
sell or effect a sale of the capital stock of API or any of its Subsidiaries
(other than in connection with existing employee stock option and stock purchase
plans to effect any merger, consolidation, exclusive license, liquidation,
dissolution or other reorganization of API or any of its Subsidiaries, or to
enter into any agreement or cause the entering into of an agreement with respect
to any of the foregoing business combination transactions.
6.20 PROPRIETARY RIGHTS.
6.20.1 PROPRIETARY RIGHTS. TDS Disclosure Letter Schedule 6.20
lists all of API and its Subsidiaries' domestic and foreign registrations of
trademarks and of other marks, trade names or other trade rights, and all
pending applications for any such registrations, all of API's and its
Subsidiaries' registered copyrights and all of API's and its Subsidiaries'
patents
48
<PAGE>
and pending patent applications, and all agreements under which API or its
Subsidiaries are licensed to use Proprietary Rights.
6.20.2 OWNERSHIP AND PROTECTION OF PROPRIETARY RIGHTS. API or
one of its Subsidiaries owns and/or has the right to use each of the
Proprietary Rights listed on TDS Disclosure Letter Schedule 6.20. The
Proprietary Rights listed on TDS Disclosure Letter Schedule 6.20 constitute
all of the Proprietary Rights necessary to conduct the API Business in the
manner presently conducted. None of the Proprietary Rights is involved in
any pending or, to the knowledge of TDS, threatened litigation. No other
Person (i) has the right to use any of the Proprietary Rights, except
pursuant to the Contracts; or (ii) to TDS' knowledge, except as set forth in
TDS Disclosure Letter Schedule 6.20, is infringing upon any Proprietary
Rights. To TDS' knowledge, the use by API and its Subsidiaries of the
Proprietary Rights is not infringing upon or otherwise violating the rights
of any third party. No proceedings have been instituted against or notices
received by API or any of its Subsidiaries that are presently outstanding
alleging that the use by API or any of its Subsidiaries of the Proprietary
Rights infringes upon or otherwise violates any rights of a third party in or
to such Proprietary Rights. All Proprietary Rights are assignable by API and
its Subsidiaries to TSR Wireless in the manner contemplated by this Agreement.
6.21 ENVIRONMENTAL MATTERS.
6.21.1 COMPLIANCE WITH ENVIRONMENTAL LAW. Each of API and its
Subsidiaries has complied and is in compliance in all material respects with all
applicable Environmental Laws pertaining to any of the properties and assets of
the API Business (including the Facilities of API and its Subsidiaries ("API
FACILITIES")) and the use and ownership thereof, and to the operation of the API
Business. No violation by API or any of its Subsidiaries is being alleged of
any applicable Environmental Law relating to any of the properties and assets of
the API Business including the API Facilities or the use, occupation or
ownership thereof, or to the operation of the API Business.
6.21.2 OTHER ENVIRONMENTAL MATTERS. Neither API nor to the
knowledge of API any other Person (including any tenant or subtenant) has caused
or taken any action that will result in, and neither API nor any of its
Subsidiaries is subject to, any material Liability relating (i) environmental
conditions on, under, or about the API Facilities, including without limitation,
the air, soil and groundwater conditions at such Facilities or (ii) the past or
present use, management, handling, transport, treatment, generation, storage,
disposal or Release of any Hazardous Materials. TDS has disclosed and made
available to TSR Paging all information, including, without limitation, all
studies, analyses and test results, in the possession, custody or control of or
otherwise known to TDS relating to (x) the environmental conditions on, under or
about the API Facilities, and (y) any Hazardous Materials used, managed,
handled, transported, treated, generated, stored or Released by API or any other
Person on, under, about or from any of the API Facilities, or otherwise in
connection with the use or operation of the API Business.
49
<PAGE>
6.22 TAX MATTERS.
6.22.1 API has (or by the Closing will have) duly and timely filed
all Tax returns relating to the API Business with respect to Taxes through the
Closing Date for which TSR Wireless could have post-closing liability ("API PCD
TAXES") required to be filed on or before the Closing Date ("API PCD TAX
RETURNS"). Except for API PCD Taxes set forth on TDS Disclosure Letter Schedule
6.22, which are being contested in good faith and by appropriate proceedings,
the following API PCD Taxes have (or by the Closing Date will have) been duly
and timely paid: (i) all API PCD Taxes shown to be due on the API PCD Tax
Returns, (ii) all deficiencies and assessments of API PCD Taxes of which API has
or by the Closing Date will have received written notice. All Taxes required to
be withheld by or on behalf of API in connection with amounts paid or owing to
any employee, independent contractor, creditor or other party with respect to
API ("API WITHHOLDING TAXES") have been withheld, and such withheld taxes have
either been duly and timely paid to the proper Governmental Authorities or set
aside in accounts for such purpose.
6.22.2 Except as set forth on TDS Disclosure Letter Schedule 6.22,
(i) all API PCD Tax Returns have been examined by the relevant taxing authority
or the period for assessment of the Taxes in respect of which such Tax returns
were required to be filed has expired, and (ii) no agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any API PCD Taxes or API Withholding Taxes, and no power of
attorney with respect to any such Taxes, has been filed with the Internal
Revenue Service ("IRS") or any other Governmental Authority.
6.22.3 Except as set forth on TDS Disclosure Letter Schedule 6.22,
(i) there are no API PCD Taxes or API Withholding Taxes for which a deficiency
has been asserted in writing by any Governmental Authority to be due and (ii) no
issue has been raised in writing by any Governmental Authority in the course of
any audit with respect to API PCD Taxes or API Withholding Taxes. Except as set
forth on TDS Disclosure Letter Schedule 6.22.3, no API PCD Taxes and no API
Withholding Taxes are currently under audit by any Governmental Authority of
which API has, or will have by the Closing, received written notice.
6.22.4 TSR Wireless will not be required to deduct and withhold any
amount pursuant to section 1445(a) of the Code upon the transfer of the API
Business to TSR Wireless.
6.22.5 Except as set forth on TDS Disclosure Letter Schedule 6.22,
there is no assessment or Action or administrative appeal pending, or threatened
of which API has received assessment or written notice against or relating to
API in connection with API PCD Taxes.
6.23 INVESTMENT INTENT. TDS is acquiring its Membership Interests for its
own account for investment and with no present intention of distributing or
reselling such
50
<PAGE>
Membership Interests or any part thereof. TDS is fully informed as to the
applicable limitations upon any distribution or resale of Membership
Interests, which have not been registered pursuant to the Securities Act.
TDS agrees not to distribute or resell any of the Membership Interests if
such distribution or resale would constitute a violation of the Securities
Act by TDS.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF TSR WIRELESS
TSR Wireless hereby represents and warrants to the Transferors as follows:
7.1 ORGANIZATION OF TSR WIRELESS. TSR Wireless is a limited liability
company duly formed validly existing and in good standing under the laws of the
State of Delaware. Copies of the Certificate of Formation and Limited Liability
Company Agreement of TSR Wireless, heretofore delivered by TSR Wireless to each
of the Transferors, are accurate and complete as of the date hereof. TSR
Wireless is duly qualified to do business and is in good standing in each
jurisdiction in which such qualification is required or will be required as a
result of the transactions contemplated by this Agreement by applicable law,
except where the failure to be so qualified will not have a material adverse
effect on the ability of TSR Wireless to consummate the transactions
contemplated hereby. TSR Wireless has not engaged in any activity other than in
connection with the transactions contemplated hereby.
7.2 AUTHORIZATION. TSR Wireless has full corporate power and authority to
execute and deliver this Agreement, the Ancillary Agreements and the Option
Agreement and to perform its obligations hereunder and thereunder. The
execution, delivery and performance by TSR Wireless of this Agreement, the
Ancillary Agreements and the Option Agreement has been duly authorized by all
requisite action on the part of TSR Wireless. This Agreement and the Option
Agreement have been duly executed and delivered by TSR Wireless and are valid
and binding obligations of TSR Wireless and each of the Ancillary Agreements
when executed at Closing will constitute a valid and binding obligation of TSR
Wireless enforceable against TSR Wireless in accordance with their respective
terms.
7.3 NO CONFLICT OR VIOLATION. Neither the execution and delivery of this
Agreement, the Ancillary Agreements or the Option Agreement by TSR Wireless, nor
the performance of its obligations hereunder and thereunder will result in (i) a
violation of or a conflict with any provision of the Certificate of Formation of
TSR Wireless or the TSR Wireless LLC Agreement, or (ii) violate or conflict with
or result in a breach of or constitute a default under any term or provision of
any contract, agreement, commitment, lease, license, franchise or permit or
other instrument or obligation to which TSR Wireless is a party or is bound, or
(iii) a violation by TSR Wireless of any Regulation or Order to which TSR
Wireless is subject.
51
<PAGE>
7.4 CONSENTS AND APPROVALS. No Authorization, Consent or Permit, is
required to be made or obtained by TSR Wireless in connection with TSR
Wireless's execution, delivery and performance of this Agreement.
7.5 BROKER AND FINDERS. Neither TSR Wireless nor any of its Affiliates
has entered into any agreement or incurred any obligation, directly or
indirectly, for the payment of any brokerage fees, commissions or finder's fee
in connection with the transactions contemplated by this Agreement.
7.6 LITIGATION AND PROCEEDINGS. There are no Actions pending or, to the
best of knowledge of TSR Wireless, threatened against the consummation by TSR
Wireless of the transactions contemplated hereby.
7.7 COMPLIANCE WITH LAW. TSR Wireless is, and since its organization has
been, in compliance in all material respects with all applicable Regulations and
Permits.
ARTICLE VIII
COVENANTS OF THE TRANSFERORS AND TSR WIRELESS
The Transferors and TSR Wireless hereby each covenant as follows:
8.1 FURTHER ASSURANCES. Each of the parties hereto agrees, both before
and after the Closing, (i) to use their respective best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, the Ancillary Agreements and the Merger, (ii) to
execute any documents, instruments or conveyances of any kind which may be
reasonably necessary or advisable to carry out any of the transactions
contemplated hereunder and under the Ancillary Agreement and the Merger, (iii)
to cooperate with each other in connection with the foregoing, including using
their respective best efforts (A) to obtain all necessary Authorizations and
Consents; (B) to obtain all necessary Permits as are required to be obtained
under any Regulations, (C) to effect all necessary registrations and filings,
including, without limitation, submissions of information requested by
Governmental Authorities, and (D) to fulfill all conditions to this Agreement
provided, in connection with the Merger, the use of best efforts (x) shall
require TDS to offer merger consideration of $2.25 per share in cash (net) to
acquire the outstanding Common Stock of API in the Merger not owned by TDS,
(y) subject to approval of the Merger by a special committee of the independent
directors of the Board of Directors of API, shall require TDS to forthwith
consummate the Merger upon acquiring ninety (90) or more percent of the
outstanding Common Stock of API and if TDS shall fail to acquire ninety (90)
percent of the outstanding Common Stock of API, to proceed forthwith and
consummate the Merger in accordance with applicable state law and (z) shall not
require TDS to complete a merger which does not have the recommendation of a
special committee of independent directors of API; PROVIDED,
52
<PAGE>
HOWEVER, that neither shall be required to make any material payments, commence
litigation or agree to any material modifications to the terms of any Contracts,
Real Property Leases or Permits in connection with the foregoing.
Notwithstanding the generality of this Section 8.1, TSR Paging's due diligence
review of the API FCC Licenses has raised certain discrepancies and errors that
TSR Paging believes should be corrected prior to Closing. API will use its
reasonable commercial efforts, with TSR Paging's cooperation, to correct such
discrepancies and errors prior to Closing and will correct such errors and
discrepancies within its control.
8.2 FCC CONSENT. Each of the parties hereto acknowledges and agrees that
the transactions contemplated by this Agreement, including but not necessarily
limited to assignment of the TSR Paging FCC Licenses to TSR Wireless and
assignment of the API FCC Licenses to TSR Wireless, can only by accomplished
upon receipt of prior FCC Consent. Without in any way limiting the generality
of Section 8.1 hereof, the parties agree to cooperate with each other, including
using their respective best efforts, to promptly prepare, file with the FCC,
prosecute and obtain FCC grant by Final FCC Order within the time frame
specified in Section 15.1.1 (ii) of this Agreement of the applications necessary
to obtain all required FCC Consent, including but not necessarily limited to
applications to obtain FCC Consent to assignment of the API FCC Licenses to TSR
Wireless (collectively, the "API-TSR WIRELESS ASSIGNMENT APPLICATION") and to
obtain FCC Consent to assignment of the TSR Paging FCC Licenses to TSR Wireless
(collectively, the "TSR PAGING-TSR WIRELESS ASSIGNMENT APPLICATION"). With
respect to the API-TSR Wireless Assignment Application and the TSR Paging-TSR
Wireless Assignment Application: (A) TDS will prepare those portions of such
applications required for TDS, API and/or their Subsidiaries; (B) TSR Paging
will prepare those portions of such applications required for TSR Paging; (C)
TSR Wireless will specify the manner in which TSR Wireless's portions of such
applications are prepared; (D) TSR Wireless will pay all FCC-imposed filing fees
with respect to the API-TSR Wireless Assignment Application; and (E) TSR
Wireless will pay all FCC-imposed filing fees with respect to the TSR Paging-TSR
Wireless Assignment Application.
8.3 NOTIFICATION OF CERTAIN MATTERS. From the date hereof through the
Closing, each Transferor shall give prompt notice to TSR Wireless and the other
Transferor and TSR Wireless shall give prompt notice to each Transferor of
(a) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any of the Transferors' or TSR Wireless's
respective representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect and (b) any failure of any
Transferor or to comply with or satisfy any of its respective covenants,
conditions or agreements to be complied with or satisfied by it under this
Agreement; PROVIDED, HOWEVER, that such disclosure shall not be deemed to cure
any breach of a representation, warranty, covenant or agreement, or to satisfy
any condition.
ARTICLE IX
53
<PAGE>
COVENANTS OF TSR PAGING
TSR Paging hereby covenants as follows:
9.1 ACCESS TO INFORMATION.
9.1.1 From the date hereof through the Closing, subject to any
confidentiality obligations of TSR Paging, TSR Paging shall, and shall cause its
officers, directors and employees to, afford TDS and its Representatives, during
normal business hours and upon reasonable notice to TSR Paging and in a manner
which will not unduly interfere with the operation of the TSR Paging Business,
complete access at all reasonable times to the TSR Paging Assets for the purpose
of inspecting the same, and to the officers and employees of TSR Paging, and
shall furnish TDS and its Representatives all financial, operating and other
data and information as TDS may reasonably request, except to the extent that
such access would violate any Regulation to which TSR Paging, its employees, the
TSR Paging Assets or the TSR Paging Business is subject; PROVIDED that TSR
Paging shall have the right to have a Representative present at all such times;
and PROVIDED FURTHER that such access shall be at the expense of the party
exercising its rights hereunder. Notwithstanding such access and the
information provided to TDS after the date hereof, TDS and TSR Wireless each
acknowledge and agrees that TSR Paging makes no representation or warranty,
express or implied, at common law, by statute or otherwise, except as
specifically set forth in this Agreement.
9.2 EMPLOYEE AND EMPLOYEE BENEFIT MATTERS.
9.2.1 TSR Paging shall use all reasonable efforts to cause all
employees of TSR Paging to make available their employment services to TSR
Wireless (the "TSR PAGING EMPLOYEES"). Effective as of the Closing Date, TSR
Wireless shall offer employment to all of the TSR Paging Employees on the same
terms and conditions and with the same benefits as enjoyed by them prior to the
Closing Date and shall assume all Liabilities of TSR Paging in respect of the
TSR Paging Employees or other beneficiaries or dependents, including all
Liabilities under the Employee Plans of TSR Paging and all Liabilities in
relation to life, disability, accidental death or dismemberment, supplemental
unemployment compensation, medical, dental, hospitalization, other health or
other welfare or fringe benefits or expense reimbursements. In connection
therewith, TSR Wireless shall assume all of TSR Paging's responsibility for,
become the successor plan sponsor of, and assume, each of TSR Paging's Employee
Plans.
9.2.2 From and after the Closing, TSR Wireless shall assume and
become solely responsible for any and all Liabilities of TSR Paging in respect
of each TSR Paging Employee, or the beneficiary or dependent of each such TSR
Paging Employee, to provide post-employment welfare benefits to such TSR Paging
Employee, beneficiary or dependent following termination of employment with TSR
Wireless.
54
<PAGE>
9.2.3 From and after the Closing Date, TSR Wireless shall assume
and be solely responsible for any and all Liabilities relating to or arising in
connection with the requirements of section 4980B of the Code to provide
continuation of health care coverage under any Employee Plan of TSR Paging in
respect of TSR Paging Employees and their covered dependents.
9.2.4 From and after the Closing Date, TSR Wireless shall assume
and be solely responsible for any and all Liabilities to or in respect of any
TSR Paging Employee relating to or arising in connection with any and all claims
for workers' compensation benefits arising in connection with any occupational
injury or disease occurring or existing on or prior to the Closing Date.
9.2.5 TSR Paging will, and TSR Wireless will, (i) treat TSR
Wireless as a "successor employer' and TSR Paging as a "predecessor," within the
meaning of sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to TSR
Paging Employees who are employed by TSR Wireless for purposes of Taxes imposed
under the United States Federal Unemployment Tax Act ("FUTA") or the United
States Federal Insurance Contributions Act ("FICA") and (ii) cooperate with each
other to avoid, to the extent possible, the filing of more year within which the
Closing Date occurs.
9.2.6 At the request of TSR Wireless with respect to any
particular applicable Tax law relating to employment, unemployment insurance,
social security, disability, workers' compensation payroll, health care or other
similar Tax other than Taxes imposed under FICA and FUTA, TSR Paging will and
TSR Wireless will, (i) treat TSR Wireless as a successor employer and TSR Paging
as a predecessor employer, within the meaning of the relevant provisions of such
Tax law, with respect to TSR Paging Employees who are employed by TSR Wireless
and (ii) cooperate with each other to avoid, to the extent possible, the filing
of more than one individual information reporting form pursuant to each such Tax
law with respect to each TSR Paging Employee for the calendar year within which
the Closing Date occurs.
9.2.7. Before and after the Closing, TSR Paging will use all
reasonable efforts to cause TSR Wireless to take, or cause to be taken, all
actions necessary, proper or advisable to carry out its obligations hereunder.
9.3 CONDUCT OF BUSINESS. From the date hereof through the Closing TSR
Paging shall, except as contemplated by this Agreement, or as consented to by
TDS in writing, operate its business in the ordinary course and substantially in
accordance with past practice and will use its best efforts not to take any
action inconsistent with this Agreement. Without limiting the generally of the
foregoing, TSR Paging shall not, except as specifically contemplated by this
Agreement:
9.3.1 engage in any transaction not permitted by Sections 5.10 and
5.11 of the Securities Purchase Agreement dated July 17, 1995 between, amongst
other Persons, TSR Paging and the Investors;
55
<PAGE>
9.3.2 do any other act which would cause any representation or
warranty of TSR Paging in this Agreement to be or become untrue in any material
respect; or
9.3.3 enter into any agreement, or otherwise become obligated, to
do any action prohibited hereunder.
9.3.4 directly or indirectly, (a) enter into any merger,
consolidation or reorganization in which TSR Paging is not the surviving
corporation or (b) transfer or agree to transfer all or substantially all TSR
Paging's Assets, unless prior to such merger, consolidation, reorganization or
asset transfer (collectively, a "TRANSACTION"), the surviving corporation or the
transferee, respectively, shall have agreed in writing (i) to assume the
obligations of TSR Paging under this Agreement, and for that purpose references
in the Exchange and Registration Rights Agreement to "Registrable Securities"
shall be deemed to include any securities which API or its shareholders would be
entitled to receive pursuant to any such Transaction, or (ii) to purchase the
API Assets and the API Assumed Liabilities or otherwise acquire the API Business
for consideration consisting of cash, a cash equivalent or freely transferable
and marketable securities (or, if not freely transferable and marketable,
subject to restrictions no more onerous than on the securities received by the
Investors in the Transaction), PROVIDED that such consideration (x) shall be the
same type of consideration as payable to TSR Paging or its shareholders in
connection with the Transaction, (y) shall be payable on the same terms as the
consideration paid to TSR Paging in the Transaction, (z) shall be in an amount
that bears the same proportion to the consideration paid to TSR Paging in the
Transaction as the initial Membership Interest of API pursuant to Section 3.1
bears to the initial Membership Interest of TSR Paging pursuant to Section 3.1
(i.e., the aggregate consideration paid in such a Transaction for TSR Paging and
for the API Assets and API Assumed Liabilities shall be allocated 70% to TSR
Paging and 30% to API), and PROVIDED FURTHER that the obligation to purchase the
API Assets and the API Assumed Liabilities or otherwise acquire the API Business
shall be contingent on and subject only to the satisfaction by API or TDS of
closing conditions comparable to those set forth in Sections 11.6 and 11.7, and
other usual and customary closing conditions in acquisitions of paging
businesses.
9.4 1997 FINANCIAL STATEMENTS. TSR Paging shall prepare its audited
financial statements for the fiscal year ending on December 31, 1997 and deliver
a copy thereof to TDS on or before May 1, 1998.
ARTICLE X
COVENANTS OF TDS
TDS hereby covenants as follows:
10.1 NO SOLICITATION.
56
<PAGE>
10.1.1 NO SOLICITATION. From the date hereof through the Closing
or the earlier termination of this Agreement, TDS shall not, and shall use its
best efforts to cause its Representatives not to, directly or indirectly, enter
into, solicit, initiate or continue any discussions or negotiations with, or
encourage or respond to any inquires or proposals by, or participate in any
negotiations with, or provide any information to, or otherwise cooperate in any
other way with, any Person, other than TSR Paging and its Representatives,
concerning any sale of all or any substantial portion of the API Assets or the
API Business, or of any shares of capital stock of API or its Subsidiaries, or
any merger, consolidation, liquidation, dissolution or exclusive licensing
arrangement or similar transaction involving API or its Subsidiaries (each such
transaction being referred to herein as a "PROPOSED API ACQUISITION
TRANSACTION").
10.1.2 NOTIFICATION. TDS shall promptly notify TSR Paging if any
discussions or negotiations are sought to be initiated, any inquiry or proposal
is made, or any information is requested with respect to any Proposed API
Acquisition Transaction and notify TSR Paging of the terms of any proposal which
it may receive in respect of any such Proposed API Acquisition Transaction,
including, without limitation, the identity of the prospective purchaser or
soliciting party, except to the extent that any such notification would violate
any now existing agreement of TDS or API.
10.2 ACCESS TO INFORMATION.
10.2.1 From the date hereof through the Closing, TDS shall, and shall
cause API and their respective officers, directors and employees to, afford TSR
Paging and its Representatives, during normal business hours and upon reasonable
notice to TDS and API and in a manner which will not interfere with the
operation of the API Business, complete access at all reasonable times to the
API Assets and the API Business for the purpose of inspecting the same, and to
the officers and employees of API, and shall furnish TSR Paging and its
authorized representatives all financial, operating and other data and
information as TSR Paging may reasonably request, except to the extent that such
access would violate any governmental regulation, law or order to which TDS,
API, their employees or the API Assets are subject; PROVIDED that API shall have
the right to have Representatives present at all such times; and PROVIDED
FURTHER that such access shall be at the expense of TSR Paging. Notwithstanding
such access and the information provided to TSR Paging after the date hereof,
TSR Paging and TSR Wireless acknowledge and agree that TDS makes no
representations or warranties, express or implied, at common law, by statute or
otherwise, except as specifically set forth in this Agreement.
10.2.2 TSR Paging shall have the right, at its sole cost and
expense to (i) after consultation with and with the consent of API (not to be
unreasonably withheld or delayed) conduct tests of the soil surface or
subsurface waters and air quality at, in, on, beneath or about the API Leased
Real Property, and such other procedures as may be recommended by an independent
environmental consultant selected by TSR Paging (the "CONSULTANT") based on its
reasonable professional judgment, in a manner consistent with good engineering
practice, (ii)
57
<PAGE>
inspect records, reports, permits, applications, monitoring results, studies,
correspondence, data and any other information or documents relevant to
environmental conditions or environmental noncompliance, and (iii) inspect all
buildings and equipment at the API Facilities, including without limitation the
visual inspection of the API Facilities for asbestos-containing construction
materials; PROVIDED, in each case, such tests and inspections shall be conducted
only (a) during regular business hours; and (b) in a manner which will not
interfere with the operation of the API Business and/or the use of, access to or
egress from the API Facilities.
10.2.3 TSR Paging's right to conduct tests, inspect records and
other documents, and visually inspect all buildings and equipment at the API
Facilities shall also be subject to the following terms and conditions:
(i) All testing performed on TSR Paging's behalf shall be conducted
by the Consultant;
(ii) A Representative of TDS shall have the right to accompany the
Consultant as it performs testing;
(iii) Except as otherwise required by law, any information
concerning the API Leased Real Property gathered by TSR Paging or the Consultant
as the result of, or in connection with, the testing shall be kept confidential
in accordance with subsection (iv) below and shall not be revealed to, or
discussed with, anyone other than Representatives of TSR Paging or
Representatives of TDS who agree to comply with the provisions of subsection
(iv) below; and
(iv) In the event that any party to this Agreement or any party set
forth in subsection 10.2.3(iii) is requested or required to disclose information
described in subsection 10.2.2, TSR Paging shall provide TDS or TDS shall
provide TSR Paging, as the case may be, with prompt notice of such request so
that TDS or TSR Paging, as the case may be, may seek an appropriate protective
order or waiver by the other party's compliance with this Agreement. If, in the
absence of a protective order or the receipt of a waiver hereunder, such party
is nonetheless, in the opinion of its counsel, compelled to disclose such
information to any tribunal or else stand liable for contempt or suffer other
censure or penalty, such party will furnish only that portion of the information
which is legally required and will exercise its reasonable efforts to obtain
reliable assurance that confidential treatment will be afforded to the disclosed
information. The requirements of this subsection 10.2.3(iv) shall not apply to
information in the public domain or lawfully acquired on a nonconfidential basis
from others.
10.3 CONDUCT OF BUSINESS. From the date hereof through the Closing TDS
shall cause API, except as contemplated by this Agreement, or as consented to by
TSR Paging in writing to operate its business in the ordinary course and
substantially in accordance with past practice (except with respect to certain
API FCC Licenses and API FCC License Applications and certain reductions in
planned License build-outs as described in TDS Disclosure Letter
58
<PAGE>
Schedule 6.13.7) and will use its best efforts not to take any action
inconsistent with this Agreement. Without limiting the generality of the
foregoing, TDS shall not, and shall cause API and each of its Subsidiaries not
to, except as specifically contemplated by this Agreement:
10.3.1 change or amend the Certificate of Incorporation or Bylaws
of API or any of API's Subsidiaries, except as otherwise required by law;
10.3.2 enter into, extend, modify, terminate or renew any API
Contract disclosed, or which would have been required to be disclosed on TDS
Disclosure Letter Schedule 6.7 if entered into, extended or modified prior to
the date of this Agreement, or any API Real Property Lease;
10.3.3 sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any API FCC License, API FCC License
Application except those previously identified in TDS Disclosure Letter Schedule
10.3.3 or any other API Assets, or any interests therein other than sales and
leases of Inventory in the ordinary course of business;
10.3.4 acquire by merger or consolidation with, or merge or
consolidate with, or purchase substantially all of the assets of, or otherwise
acquire any material assets or business of any Person;
10.3.5 fail to expend funds for budgeted capital expenditures or
commitments as set forth in the budget of API attached hereto as Exhibit I
including, without limitation, maintaining levels of spare parts sufficient to
maintain and upgrade the network infrastructure as reasonably necessary and
maintain the present level of Pagers in Service;
10.3.6 fail to maintain the API Assets in substantially their
current state of repair, excepting normal wear and tear, or fail to replace
consistent with API's past practice inoperable, worn-out or obsolete or
destroyed API Assets or fail to maintain the Inventory levels of API and its
Subsidiaries at the levels on the Interim Balance Sheet Date (subject to
reductions in Inventory not exceeding ten (10) percent of such Inventory on the
Interim Balance Sheet Date in accordance with prudent business practice);
10.3.7 make any loans or advances to any Person, except for normal
advances in respect of expenses incurred by employees in the ordinary course of
business.
10.3.8 for one year from the date of this Agreement, Transfer or
agree to Transfer all or any part of the API Note or any interest therein to any
Person otherwise than pursuant to the Option Agreement.
10.3.9 take or omit to take any action which will result in the
further default under (not otherwise waived) or any acceleration of any API
Intercompany Liabilities or any other Financing Obligations;
59
<PAGE>
10.3.10 fail to take all commercially reasonable actions reasonably
necessary to retain employees of API and its Subsidiaries in the employment of
API or the applicable Subsidiary through the Closing.
10.3.11 do any other act which would cause any representation or
warranty of TDS in this Agreement to be or become untrue in any material
respect; or
10.3.12 enter into any agreement, or otherwise become obligated, to
do any action prohibited hereunder.
10.4 1997 FINANCIAL STATEMENTS. TDS shall cause API to prepare its audited
financial statements for the fiscal year ending on December 31, 1997 and deliver
a copy thereof to TSR Paging on or before May 1, 1998.
10.5 THE MERGER. In support of and in furtherance of TDS' obligations in
Article VIII in connection with the Merger and this Article X to cause API to
take and refrain from taking certain acts and obligations, TDS shall ensure that
any merger agreement entered into with API (i) provides for the direct or
indirect acquisition by TDS of all outstanding shares of capital stock of API
not presently owned by TDS or its Affiliates in exchange for consideration other
than capital stock of API; and (ii) imposes similar covenants on API as are
imposed on TDS in this Article X in respect of API.
10.6 SUPPORT OF API. TDS shall continue to provide API with such financial
support and assistance as it requires to continue operating the API Business in
the ordinary course of business, including without limitation under the API
Intercompany Indebtedness (taking into account the waiver of certain defaults
dated March 5, 1997).
10.7 TRANSITIONAL SERVICES AGREEMENT. At the Closing, TDS and TSR Wireless
shall enter into a transitional services agreement (the "TRANSITIONAL SERVICES
AGREEMENT") in the form attached hereto as Exhibit G, pursuant to which TDS or
its Affiliates, including API, shall provide certain transitional services in
connection with information systems and lock-box services for such charges,
periods and other terms as set forth therein.
10.8 EMPLOYEES. The Transferors and TSR Wireless shall agree upon
appropriate procedures with respect to the allocation of costs of employees of
API and its Subsidiaries (the "API EMPLOYEES"). Notwithstanding the foregoing,
neither TSR Wireless or TSR Paging shall become liable for any Liabilities or
any benefits to which the API Employees are entitled in respect of their
employment prior to the employment of any API Employees by TSR Wireless to the
extent not included in current liabilities of API assumed pursuant to Section
2.4.2.
10.9 MONTHLY CERTIFICATES. If the Closing shall not have occurred by the
following applicable dates: (i) on or before July 15, 1998, TDS shall deliver a
certificate (the "JUNE CERTIFICATE") to TSR Paging setting forth the Pagers in
Service and the Net Recurring Pager Revenues of API and its Subsidiaries as at
and for the month ended June 30, 1998 and, if
60
<PAGE>
applicable, the API Pager Shortfall and the API Revenue Shortfall as at and for
the month ended June 30, 1998; (ii) on or before August 15, 1998, TDS shall
deliver a certificate (the "JULY CERTIFICATE") to TSR Paging setting forth the
Pagers in Service and the Net Revenues of API and its Subsidiaries as at and for
the month ended July 31, 1998 and, if applicable, the API Pager Shortfall and
the API Revenue Shortfall as at and for the month ended July 31, 1998 and (iii)
on or before September 15, 1998, TDS shall deliver a certificate (the "AUGUST
CERTIFICATE") to TSR Paging setting forth the Pagers in Service and the Net
Revenues of API and its Subsidiaries as at and for the month ended August 31,
1998 and, if applicable, the API Pager Shortfall and the API Revenue Shortfall
as at and for the month ended August 31, 1998.
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF TSR PAGING
The obligation of TSR Paging to effect the Closing is subject to the
satisfaction, on or prior to the Closing, of each of the following conditions,
any of which may be waived by TSR Paging in the discretion of TSR Paging:
11.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of TDS contained in this Agreement shall be true and correct in all
respects (in the case of any representation or warranty containing a materiality
qualification) or in all material respects (in the case of any representation or
warranty not containing any materiality qualification) at and as of the date of
this Agreement and at and as of the Closing, and TDS shall have performed and
satisfied all material agreements and covenants required hereby to be performed
by it, and shall have caused API to perform all material actions to be performed
by API, prior to the Closing.
11.2 NO INJUNCTION, ETC.. Consummation of the transactions contemplated
hereby and by the Ancillary Agreement, the Merger Agreement and the Option
Agreement shall not have been restrained, enjoined or otherwise prohibited by
any applicable law, including any order, injunction, decree or judgment of any
court or other Governmental Authority. No court or other Governmental Authority
shall have enacted any applicable law which would make illegal the consummation
of the transactions contemplated hereby and thereby and no proceeding with
respect to the application of any such applicable law to such effect shall be
pending.
11.3 OPINION OF COUNSEL. TDS shall have delivered to TSR Paging opinions
of Sidley and Austin and Koteen & Naftalin, L.L.P., respectively, counsel and
special regulatory counsel to TDS, dated as of the Closing Date, in
substantially the forms attached hereto as Exhibits E-1 and E-2, respectively.
11.4 CERTIFICATES. TDS shall furnish TSR Paging with such certificates of
its duly authorized officers and others to evidence compliance with the
conditions set forth in this Article XI as may be reasonably requested by TSR
Paging.
61
<PAGE>
11.5 CORPORATE DOCUMENTS. TSR Paging shall have received from TDS
resolutions adopted by the boards of directors of TDS, any corporation which is
a constituent corporation in the Merger and API as applicable, approving this
Agreement, the Ancillary Agreements, the Merger and the Option Agreement and the
transactions contemplated hereby and thereby, certified by the corporate
secretary of each Person, as applicable.
11.6 CONSENTS. All Authorizations, Consents and Permits necessary to
effect the transfer of the API Assets to TSR Wireless and the performance of the
other obligations of TDS hereunder shall have been obtained except (other than
in the case of Authorizations, Consents and Permits of the FCC) where the
failure to obtain any such Authorization, Consent or Permit would not reasonably
be expected to have a Material Adverse Effect.
11.7 MERGER. The Merger shall have been consummated.
11.8 MATERIAL ADVERSE CHANGE. No Material Adverse Change shall have
occurred in respect of the API Business. For the purposes of this Section 11.8,
Material Adverse Change shall include, without limitation, a reduction in the
number of Pagers in Service of API and its Subsidiaries or the Net Monthly Pager
Revenues of API and its Subsidiaries as at the last day of and for the month
prior to the month in which the Closing occurs below 581,250 and $4,350,000,
respectively. Not less than three (3) Business Days prior to the Closing Date,
TDS shall deliver a certificate to TSR Paging setting forth the information
described above, which shall take effect as an additional representation and
warranty of TDS hereunder. No certification pursuant to this Section 11.8 shall
affect the rights and obligations of the parties pursuant to Section 3.2, nor
shall any waiver by TSR Paging of its rights under this Section 11.8 constitute
a waiver of its rights under Section 3.2. If TSR Paging shall have exercised
the Option Extension, this Section 11.8 shall no longer apply.
11.9 OTHER AGREEMENTS. TDS and TSR Wireless shall have executed and
delivered the Ancillary Agreements to which they are each a party in the forms
attached as exhibits hereto.
11.10 INTENTIONALLY OMITTED.
11.11 INTENTIONALLY OMITTED.
11.12 TENANT ESTOPPEL CERTIFICATES. TSR Paging shall have received
tenant estoppel certificates addressed to TSR Wireless with respect to the API
Leased Real Property indicated with a (*) on TDS Disclosure Letter Schedule 6.6,
which certificates shall be reasonably satisfactory to TSR Paging or in the form
required by the applicable lease of such API Leased Real Property.
11.13 CLOSING CURRENT ASSETS. The API Inventory, the cash and cash
equivalents of API and the receivables of API as at the Closing Date to be
transferred to TSR Wireless hereunder shall have an aggregate value of at least
ninety percent (90%) of that shown on the
62
<PAGE>
Interim Balance Sheet of API, determined in a manner consistent with GAAP and
with the preparation of the Interim Balance Sheet of API. Upon the Closing, TDS
shall deliver a certificate to TSR Paging setting forth the information
described above, which shall take effect as an additional representation and
warranty of TDS hereunder.
ARTICLE XII
CONDITIONS TO OBLIGATIONS OF TDS
The obligation of TDS to effect the Closing is subject to the
satisfaction, on or prior to the Closing, of each of the following conditions,
any of which may be waived by TDS in the discretion of TDS:
12.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of TSR Paging and TSR Wireless contained in this Agreement shall be
true and correct in all respects (in the case of any representation or warranty
containing any materiality qualification) in all material respects (in the case
of any representation or warranty not containing any materiality qualification)
at and as of the date of this Agreement and at and as of the Closing (other than
any breaches of any such representations or warranties as result from any Claims
by stockholders of API), and TSR Paging and TSR Wireless shall have performed
and satisfied all material agreements and covenants required hereby to be
performed by them prior to the Closing.
12.2 NO INJUNCTION, ETC.. Consummation of the transactions contemplated
hereby and by the Ancillary Agreements, the Merger Agreement and the Option
Agreement shall not have been restrained, enjoined or otherwise prohibited by
any applicable law, including any order, injunction, decree or judgment of
any court or other Governmental Authority. No court or other Governmental
Authority shall have enacted any applicable law which would make illegal the
consummation of the transactions contemplated hereby and thereby and no
proceeding with respect to the application of any such applicable law to such
effect shall be pending.
12.3 OPINIONS OF COUNSEL. TSR Paging shall have delivered to TDS opinions
of Latham & Watkins and Richard S. Becker & Associates, respectively counsel and
special regulatory counsel to TSR Paging, dated as of the Closing Date, in
substantially the forms attached hereto as Exhibits F-1 and F-2, respectively.
12.4 CERTIFICATES. TSR Paging shall furnish TDS with such certificates of
its duly authorized officers and others to evidence compliance with the
conditions set forth in this Article XII as may be reasonably requested by TDS.
12.5 CORPORATE DOCUMENTS. TDS shall have received from TSR Paging
resolutions adopted by the board of directors of TSR Paging and resolutions of
TSR Wireless, as
63
<PAGE>
applicable, approving this Agreement, the Ancillary Agreements and the Option
Agreement and the transactions contemplated hereby and thereby, certified by the
corporate secretary or Managing Member of each Person, as applicable.
12.6 CONSENTS. All Authorizations, Consents and Permits necessary to
effect the transfer of the TSR Paging Assets to TSR Wireless and the performance
of the other obligations of TSR Paging hereunder shall have been obtained except
(other than in the case of Authorizations, Consents and Permits of the FCC)
where the failure to obtain any such Authorization, Consent or Permit would not
reasonably be expected to have a Material Adverse Effect.
12.7 MERGER. The Merger shall have been consummated.
12.8 MATERIAL ADVERSE CHANGE. No Material Adverse Change shall have
occurred in respect of the TSR Paging Business. For the purposes of this
Section 12.8, Material Adverse Change shall include, without limitation, a
reduction in the number of Pagers in Service of TSR Paging or the Net Monthly
Pager Revenues of TSR Paging as at and for the last day of the month prior to
the month in which the Closing occurs below 945,000 and $4,125,000,
respectively. Not less than three (3) Business Days prior to the Closing Date,
TSR Paging shall deliver a certificate to TDS setting forth the information
described above, which shall take effect as an additional representation and
warranty of TSR Paging hereunder. No certification pursuant to this Section
shall affect the rights and obligations of the parties pursuant to Section 3.2,
nor shall any waiver by TSR Paging of its rights under this Section constitute a
waiver of its rights under Section 3.2. If TSR Paging shall have exercised the
Extension Option, this Section 12.8 shall no longer apply.
12.9 OTHER AGREEMENTS. TSR Paging, TSR Wireless, the stockholders of TSR
Paging and the Investors shall have executed and delivered the Ancillary
Agreements to which they are party in the forms attached as exhibits hereto.
12.10 INTENTIONALLY OMITTED.
12.11 CLOSING CURRENT ASSETS. The TSR Paging Inventory, the cash and
cash equivalents of TSR Paging and the receivables of TSR Paging as at the
Closing Date to be transferred to TSR Wireless hereunder shall have an
aggregate value of not at least ninety percent (90%) of that shown on the
Interim Balance Sheet of TSR Paging, determined in a manner consistent with
GAAP and with the preparation of the Interim Balance Sheet of TSR Paging.
Upon the Closing, TSR Paging shall deliver a certificate to TDS setting forth
the information described above, which shall take effect as an additional
representation and warranty of TSR Paging hereunder.
64
<PAGE>
ARTICLE XIII
RISK OF LOSS; CONSENTS TO ASSIGNMENT OF CONTRACTS, REAL PROPERTY
LEASES AND PERSONAL PROPERTY LEASES
13.1 RISK OF LOSS. From the date hereof through the Closing Date, all risk
of loss or damage to the property included (i) in the API Assets shall be borne
by TDS; and (ii) in the TSR Paging Assets shall be borne by TSR Paging; and
thereafter in each case shall be borne by TSR Wireless. If any material portion
of the API Assets or the TSR Paging Assets (collectively, "ASSETS") is destroyed
or damaged by fire or any other cause on or prior to the Closing Date, the
applicable Transferor shall give written notice to TSR Wireless and the other
Transferor as soon as practicable after, but in any event within five (5)
calendar days of, discovery of such damage or destruction, including
specification of the amount of insurance, if any, covering such Assets and the
amount, if any, which the applicable Transferor is otherwise entitled to receive
as a consequence of such damage or destruction. Prior to the Closing, the other
Transferor shall have the option, which shall be exercised by written notice to
the applicable Transferor within ten (10) calendar days after receipt of the
applicable Transferor's notice or if there are not ten (10) calendar days prior
to the Closing Date, as soon as practicable prior to the Closing Date, of (a)
accepting such Assets in their destroyed or damaged condition in which event TSR
Wireless shall be entitled to the proceeds of any insurance or other proceeds
payable with respect to such loss, or the cash equivalent thereof and to
indemnification for any uninsured portion of such loss pursuant to Section 14.4,
and the full Units shall be issued to the applicable Transferor, (b) if agreed
by the Applicable Transferor, excluding such Assets from this Agreement, in
which event the allocation of Units shall be adjusted proportionately, as
mutually agreed between the parties or (c) after providing the Applicable
Transferor with a reasonable opportunity to cure, terminating this Agreement in
accordance with Section 15.1, if such damage or destruction is a Material
Adverse Effect.
13.2 CONSENTS TO ASSIGNMENT OF CONTRACTS, REAL PROPERTY LEASES AND PERSONAL
PROPERTY LEASES. Anything in this Agreement to the contrary notwithstanding,
this Agreement shall not constitute an agreement to assign any Contract, Real
Property Lease or Personal Property Lease, or any claim or right or any benefit
arising thereunder or resulting therefrom, if an attempted assignment thereof,
without the Consent of a third party thereto, would constitute a breach thereof
or in any way adversely affect the rights of TSR Wireless thereunder. If such
Consent is not obtained, or if an attempted assignment thereof would be
ineffective or would affect the rights thereunder so that TSR Wireless would not
receive all such rights, the Transferors and TSR Wireless will cooperate, in all
reasonable respects, to obtain such Consent as soon as practicable and, until
such Consent is obtained, to provide to TSR Wireless the benefits under any of
the foregoing to which such Consent relates (with TSR Wireless responsible for
all the liabilities and obligations thereunder). In particular, in the event
that any such Authorization or Consent is not obtained prior to Closing, then
TSR Wireless and the Transferors shall enter into such arrangements (including
subleasing or subcontracting if permitted) to provide to the parties the
economic and operational equivalent of obtaining such Consent and assigning such
Contract, Real Property Lease or Personal
65
<PAGE>
Property Lease, including enforcement for the benefit of TSR Wireless of all
claims or rights arising thereunder, and the performance by TSR Wireless of the
obligations thereunder.
ARTICLE XIV
ACTIONS BY TSR WIRELESS AND TRANSFERORS AFTER THE CLOSING
14.1 FURTHER ACTIONS. On and after the Closing Date, TSR Wireless and the
Transferors will take all appropriate actions and execute all documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to confirm or effect TSR Wireless's ownership, possession and control
(in accordance with this Agreement) of the Assets and assumption of the TSR
Paging Assumed Liabilities and the API Assumed Liabilities.
14.2 SURVIVAL OF REPRESENTATIONS, ETC.. The representations, warranties,
covenants and agreements of the Transferors and TSR Wireless contained herein
shall survive the Closing Date for the period set forth in this Section 14.2:
(i) all such representations and warranties and all claims and causes of action
with respect thereto shall terminate upon expiration of two (2) years after the
Closing Date, except that the representations and warranties in Sections 5.1,
6.1 and 7.1 (Organization), 5.2, 6.2 and 7.2 (Authorization) 5.13 and 6.13
(Regulatory Matters) and 5.18 and 6.18 (No Brokers) and all claims and causes of
action with respect thereto shall survive indefinitely and the representations
and warranties in Sections 5.21 and 6.21 (Environmental Matters) and 5.22 and
6.22 (Tax Matters), and all claims and causes of action with respect thereto
shall survive until the expiration of the applicable statute of limitations
(with extensions) (including, in the case of any Taxes, the statute of
limitations, as such may be extended, in respect of the collection of any Tax)
with respect to the matters addressed in such Sections; and (ii) each such
covenant and agreement shall survive the Closing and remain in full force and
effect unless otherwise limited by its terms. The termination of the
representations and warranties provided herein shall not affect the rights of a
party in respect of any Claim made by such party in a writing received by the
other party prior to the expiration of the applicable survival period provided
herein.
14.3 BOOKS AND RECORDS. TSR Wireless agrees that it will cooperate with
and make available to the Transferors during normal business hours, all Books
and Records, information and employees (without substantial disruption of
employment) which are necessary or useful in connection with any tax inquiry,
audit, investigation or dispute, any litigation or investigation or any other
matter requiring any such Books and Records, information or employees for any
reasonable business purpose (including any matter concerning a potential breach
of any representation or warranty or covenant of a party under this Agreement);
IT BEING UNDERSTOOD that all Books and Records shall be maintained by TSR
Wireless for seven (7) years following the Closing. Except as otherwise
required in Section 14.4, the investigating Transferor shall bear all of the
out-of-pocket costs and expenses (including, without limitation, attorneys'
fees, but excluding reimbursement for salaries and employee benefits) reasonably
incurred in
66
<PAGE>
connection with providing such Books and Records, information or employees. TSR
Wireless will give TDS notice of any breach or potential breach by TSR Paging of
any representation or warranty. All information received pursuant to this
Section 14.3 shall be subject to the confidentiality provisions of Section 14.6.
14.4 INDEMNIFICATION.
14.4.1 BY TSR PAGING. TSR Paging shall indemnify, save and hold
harmless, on an After Tax Basis, (x) TSR Wireless and its Subsidiaries, and
their respective directors, officers and employees (other than the Transferred
Employees) (the "TSR WIRELESS INDEMNITEES") and (y) TDS and its Affiliates and
Subsidiaries, and their respective directors, officers, shareholders and
employees (the "TDS INDEMNITEES") from and against any and all costs, losses,
Taxes, Liabilities, damages, lawsuits, deficiencies, claims, demands, and
expenses (whether or not arising out of third-party claims), including, without
limitation, reasonable attorneys' fees and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing herein,
(collectively, "DAMAGES"), incurred in connection with, arising out of,
resulting from (i) subject to Section 14.4.7(i), Section 14.4.7 (iv) and Section
14.4.7(vi), any breach of any representation or warranty made by TSR Paging in
this Agreement or (ii) subject to Section 14.4.7(i), Section 14.4.7(iv) and
Section 14.4.7(vi), any breach of any covenant or agreement made by TSR Paging
in this Agreement.
14.4.2 BY TDS. TDS shall indemnify, save and hold harmless, on an
After Tax Basis, (x) TSR Paging, its Affiliates and Subsidiaries, and their
respective directors, officers, shareholders and employees (the "TSR PAGING
INDEMNITEES" and together with the TDS Indemnitees, the TSR Wireless Indemnitees
and the Investor Indemnitees, the "INDEMNITEES") and (y) the TSR Wireless
Indemnitees from and against any and all Damages incurred in connection with,
arising out of, resulting from (i) subject to Section 14.4.7(ii) and Section
14.4.7(iv) and Section 14.4.7 (vii), any breach of any representation or
warranty made by TDS, API or any Subsidiary of API in this Agreement; (ii)
subject to Section 14.4.7(ii) and Section 14.4.7(iv) and Section 14.4.7 (vii),
any breach of any covenant or agreement made by TDS in this Agreement; (iii) any
API Excluded Liability and (iv) any Claim by any shareholder of TDS or API other
than MIS Charges. TDS shall indemnify, save and hold harmless the Investors and
their respective members, investors, funds, directors, officers, partners and
employees (the "INVESTOR INDEMNITEES") from and against any and all Damages
incurred in connection with, arising out of, or resulting from any Claim by any
shareholder of TDS or API.
14.4.3 BY TSR WIRELESS. TSR Wireless shall indemnify, save and
hold harmless, on an After Tax Basis, the TSR Paging Indemnitees and the TDS
Indemnitees from and against any and all Damages incurred in connection with,
arising out of, resulting from (i) subject to Section 14.4.7(iii) and Section
14.47(iv), any breach of any representation or warranty made by TSR Wireless in
this Agreement; (ii) subject to Section 14.4.7(iii) and Section 14.4.7(iv), any
breach of any covenant or agreement made by TSR Wireless in this Agreement;
(iii) any TSR Paging Assumed Liability; and (iv) any API Assumed Liability;
67
<PAGE>
14.4.4 DAMAGES. The term "Damages" as used in this Section 14.4 is
not limited to matters asserted by third parties, but includes Damages incurred
or sustained by an Indemnitee in the absence of third party claims. Payments by
an Indemnitee of amounts for which such Indemnitee is indemnified hereunder
shall not be a condition precedent to recovery.
14.4.5 DEFENSE OF CLAIMS. If a claim for Damages (a "CLAIM") is to
be made by an Indemnitee, such Indemnitee shall, subject to Section 14.2, give
written notice (a "CLAIM NOTICE") to the indemnifying party as soon as
practicable after such Indemnitee becomes aware of any fact, condition or event
which may give rise to Damages for which indemnification may be sought under
this Section 14.4. If any lawsuit or enforcement action is filed against any
Indemnitee hereunder, notice thereof (a "THIRD PARTY NOTICE") shall be given to
the indemnifying party as promptly as practicable (and in any event within
fifteen (15) calendar days after the service of the citation or summons). The
failure of any indemnified party to give timely notice hereunder shall not
affect rights to indemnification hereunder, except to the extent that the
indemnifying party demonstrates actual damage caused by such failure. After
receipt of a Third Party Notice, if the indemnifying party shall acknowledge in
writing to the indemnified party that the indemnifying party shall be obligated
under the terms of its indemnity hereunder in connection with such lawsuit or
action, then the indemnifying party shall be entitled, if it so elects, (i) to
take control of the defense and investigation of such lawsuit or action, (ii) to
employ and engage attorneys of its own choice to handle and defend the same, at
the indemnifying party's cost, risk and expense unless the named parties to such
action or proceeding include both the indemnifying party and the indemnified
party and the indemnified party has been advised in writing by counsel that
there may be one or more legal defenses available to such indemnified party that
are different from or additional to those available to the indemnifying party,
and (iii) to compromise or settle such claim, which compromise or settlement
shall be made only with the written consent of the indemnified party, such
consent not to be unreasonably withheld. The indemnified party shall cooperate
in all reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; and the indemnified party may, at its own cost, participate
in the investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. The parties shall also cooperate with each other in any
notifications to insurers. If the indemnifying party fails to assume the
defense of such claim within fifteen (15) calendar days after receipt of the
Third Party Notice, the indemnified party against which such claim has been
asserted will (upon delivering notice to such effect to the indemnifying party)
have the right to undertake the defense, compromise or settlement of such claim
and the indemnifying party shall have the right to participate therein at its
own cost; PROVIDED, HOWEVER, that such claim shall not be compromised or settled
without the written consent of the indemnifying party, which consent shall not
be unreasonably withheld. In the event the indemnified party assumes the
defense of the claim, the indemnified party will keep the indemnifying party
reasonably informed of the progress of any such defense, compromise or
settlement.
68
<PAGE>
14.4.6 BROKERS AND FINDERS. Pursuant to the provisions of this
Section 14.4, each Selling Party and TSR Wireless shall indemnify, hold harmless
and defend the other parties from the payment of any and all broker's and
finder's expenses, commissions, fees or other forms of compensation which may be
due or payable from or by the indemnifying party, or may have been earned by any
third party acting on behalf of the indemnifying party in connection with the
negotiation and execution hereof and the consummation of the transactions
contemplated hereby.
14.4.7 LIMITATIONS.
(i) TSR Paging shall not be liable to any TDS Indemnitee or
any TSR Wireless Indemnitee for any Damages with respect to the matters
contained in Section 14.4.1(i) or Section 14.4.1(ii) except to the extent the
Damages therefrom exceed, in the aggregate, $1,000,000, provided however that
once such Damages, in the aggregate, exceed such sum, TSR Paging shall be
liable for all such Damages and not just the excess.
(ii) TDS shall not be liable to any TSR Paging Indemnitee or
any TSR Wireless Indemnitee for any Damages with respect to the matters
contained in Section 14.4.2(i) or Section 14.4.2(ii) except to the extent the
Damages therefrom exceed, in the aggregate, $1,000,000, provided however that
once such Damages, in the aggregate, exceed such sum, TDS shall be liable for
all such Damages and not just the excess.
(iii) TSR Wireless shall not be liable to any TSR Paging
Indemnitee or any TDS Indemnitee for any Damages with respect to the matters
contained in Section 14.4.3(i) or Section 14.4.3(ii) except to the extent the
Damages therefrom exceed, in the aggregate, $1,000,000, provided however that
once such Damages, in the aggregate, exceed such sum, TSR Wireless shall be
liable for all such Damages and not just the excess.
(iv) The indemnification provided by this Section 14.4 shall
be in addition to any other remedy of the parties hereto including damages,
specific performance and injunctive relief, provided that the limitations set
forth in Sections 14.4.7(i) through 14.4.7(iii) shall still apply with
respect to the matters contained in Sections 14.4.1(i), 14.4.1(ii),
14.4.2(i), 14.4.2(ii), 14.4.3(i) and 14.4.3(ii).
(v) No claim based on a breach of any representation or
warranty shall be valid unless first made in writing within the survival
periods set forth in Section 14.2.
(vi) Unless TDS shall terminate this Agreement pursuant to
Section 15.1.1(iv)(a) or (c), TSR Paging's liability with respect to any
breach of any representation or warranty made by TSR Paging in this Agreement
to the extent that any Damages constitute TSR Paging Assumed Liabilities
shall be to indemnify, save and hold harmless TSR Wireless and its Affiliates
and Subsidiaries and TSR Paging shall be liable to the TDS Indemnitees with
respect to any such breach only to the extent of the costs of defending any
Claim by a third party made against such Indemnitee arising out of or related
to such breach in accordance with
69
<PAGE>
Section 14.4.5, provided, (i) any Damages in connection therewith which are also
suffered by TSR Wireless shall be satisfied by payments made to TSR Wireless and
(ii) TSR Paging shall not be responsible to indemnify, save and hold harmless
such TDS Indemnitees in respect of any Claim by any shareholder of TDS or API.
(vii) Unless TSR Paging shall terminate this Agreement
pursuant to Section 15.1.1(iii)(a) or (c), TDS' liability with respect to any
breach of any representation or warranty made by TDS in this Agreement to the
extent that any Damages constitute TDS Assumed Liabilities shall be to
indemnify, save and hold harmless TSR Wireless and its Affiliates and
Subsidiaries and TDS shall be liable to the TSR Paging's Indemnitees with
respect to any such breach only to the extent of the costs of defending any
Claim by a third party made against such Indemnitee arising out of or related
to such breach in accordance with Section 14.4.5, provided, (i) any Damages
in connection therewith which are also suffered by TSR Wireless shall be
satisfied by payments made to TSR Wireless and (ii) TDS shall not be
responsible to indemnify, save and hold harmless such TSR Paging Indemnitees
in respect of any Claim by any shareholder of TSR Paging.
14.5 BULK SALES, TRANSFER TAXES.
14.5.1 It may not be practicable to comply or attempt to comply with
the procedures of the "Bulk Sales Act" or similar law of any or all of the
states in which the Assets are situated or of any other state which may be
asserted to be applicable to the transactions contemplated hereby. Accordingly,
TSR Wireless and the Transferors waive any requirements, to the extent they are
entitled to benefits thereunder, for compliance with any or all of such laws.
Each Transferor hereby agrees that the indemnity provisions of Section 14.4
hereof shall apply to any Damages of TSR Wireless arising out of or resulting
from the failure of such Transferor to comply with any such laws.
14.5.2 Following the Closing, TSR Wireless shall be responsible for
the timely payment of, and shall severally indemnify and hold harmless each
Transferor against, all sales (including, without limitation, 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 by a
Transferor pursuant to this Agreement and the Ancillary Agreements. Subject to
the foregoing, each Transferor shall prepare and timely file all Tax returns
required to be filed in respect of Transfer Taxes, PROVIDED that TSR Wireless
shall be permitted to prepare any such Tax returns that are the primary
responsibility of TSR Wireless under applicable law.
14.6 ASSISTANCE FOR FILING OF TAX RETURNS. Each Transferor and TSR
Wireless agrees (i) to furnish or cause to be furnished to each other upon
request, as promptly as practicable, such information and assistance (including
access to books, records and correspondence received from any taxing authority)
relating to the TSR Paging Business, the TSR Paging Assets, the API Business,
and the API Assets as is reasonably necessary for the preparation and filing of
any Tax return, claim for refund or audit, and the presentation or defense of
any
70
<PAGE>
Action relating to Taxes; (ii) to provide timely notice to each interested party
in writing of any pending or threatened Tax audits or assessments relating to
Taxes in respect of the TSR Paging Business, TSR Paging Assets, API Business or
API Assets for which another party may have a liability under Section 14.4 and
Section 14.5.2.
ARTICLE XV
MISCELLANEOUS
15.1 TERMINATION.
15.1.1 TERMINATION. This Agreement may be terminated at any time
prior to Closing:
(i) By mutual written consent of the Transferors;
(ii) By TSR Paging or TDS by written notice to the other
parties if the Closing shall not have occurred on or before 5:00 p.m. New
York City time on September 30, 1998; PROVIDED HOWEVER, that this provision
shall not be available to TDS if TSR Paging has the right to terminate this
Agreement under clause (iii) of this Section 15.1.1, and this provision shall
not be available to TSR Paging if TDS has the right to terminate this
Agreement under clause (iv) of this Section 15.1.1;
(iii) By TSR Paging by written notice to TDS if (a) the
representations and warranties of TDS shall not have been true and correct in
all respects (in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) as of the
date when made, (b) if any of the conditions set forth in Article XI shall
not have been, or if it becomes apparent that any of such conditions will not
be, fulfilled by 5:00 p.m. New York City time on September 30, 1998, (c) TDS
shall fail to comply with or perform any covenant or agreement to be complied
with or performed by TDS pursuant to this Agreement unless such failure
described in (b) or (c) shall be due to the failure of TSR Paging to perform
or comply with any of the conditions, agreements or covenants hereof to be
performed or complied with by it prior to the Closing or (d) the special
committee of independent directors of API appointed to consider the
acquisition by TDS of the Common Stock of API not owned by TDS shall fail to
approve the Merger on or before February 12, 1998 or shall subsequently
withdraw its recommendation of the Merger other than as a result of a breach
of a representation or covenant of TSR Paging hereunder; or
(iv) By TDS by written notice to TSR Paging if (a) the
representations and warranties of TSR Paging shall not have been true and
correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects (in the
case of any representation or warranty without any materiality
71
<PAGE>
qualification) as of the date when made, (b) if any of the conditions set forth
in Article XII shall not have been, or if it becomes apparent that any of such
conditions will not be, fulfilled by 5:00 p.m. New York City time on September
30, 1998 or (c) TSR Paging shall fail to comply with or perform any covenant or
agreement to be complied with or performed by TSR Paging pursuant to this
Agreement unless such failure described in (b) or (c) shall be due to the
failure of TDS to perform or comply with any of the conditions, agreements or
covenants hereof to be performed or complied with by it prior to the Closing.
(v) By TDS by written notice delivered to TSR Paging within ten
(10) Business Days following delivery of the June Certificate to TSR Paging if
the number of Pagers in Service of API and its Subsidiaries or the Net Monthly
Pager Revenues of API and its Subsidiaries set forth on the June Certificate as
at and for the month ending June 30, 1998 are below 581,250 and $4,350,000,
respectively, unless TSR Paging pays $1,500,000 to TDS by wire transfer of
immediately available funds as set forth in the wire instructions attached
hereto as Exhibit H ("WIRE TRANSFER") within fifteen (15) Business Days of
receipt by TSR Paging of such written notice of termination from TDS (the
"EXTENSION OPTION"). Any notice to terminate this Agreement under this Section
15.1.1(v) may not be withdrawn, unless permitted by TSR Paging, and shall take
effect on the sixteenth (16th) Business Day following receipt by TSR Paging of
the written notice of termination from TDS, unless TSR Paging shall first have
exercised the Extension Option, PROVIDED, HOWEVER, that TDS shall not be able to
exercise its right to terminate this agreement pursuant to clause 15.1.1(v) if,
at the time it would otherwise exercise such right, TDS is in material breach of
a representation or warranty (in the case of a representation or warranty not
qualified as to materiality) or is in breach of a representation or warranty (in
the case of a representation or warranty qualified as to materiality). Solely
for purposes of Section 15.1.1(v) and Section 15.1.1(vi), TDS shall not be
deemed in breach of the Agreement if TDS has acted in good faith with respect to
its obligations under Sections 10.3.5, 10.3.10 and 10.6.
(vi) If TSR Paging has exercised the Extension Option, by TDS by
written notice delivered within ten (10) Business Days following delivery of
each of the July Certificate and the August Certificate, unless TSR Paging pays
$1,500,000 to TDS by Wire Transfer with fifteen (15) Business Days of receipt by
TSR Paging of such written notice of termination from TDS. Any notice to
terminate this Agreement under this Section 15.1.1(vi) may not be withdrawn
unless permitted by TSR Paging, and shall take effect on the sixteenth (16th)
Business Day following receipt by TSR Paging of the relevant written notice of
termination from TDS, unless TSR Paging shall first have paid $1,500,000 to TDS
as set forth above, PROVIDED, HOWEVER, that TDS shall not be able to exercise
its right to terminate this agreement pursuant to clause 15.1.1(v) if, at the
time it would otherwise exercise such right, TDS is in material breach of a
representation or warranty (in the case of a representation or warranty not
qualified as to materiality) or is in breach of a representation or warranty (in
the case of a representation or warranty qualified as to materiality). Solely
for purposes of Section 15.1.1(v) and Section 15.1.1(vi), TDS shall not be
deemed in breach of the Agreement if TDS has acted in good faith with respect to
its obligations under Sections 10.3.5, 10.3.10 and 10.6.
72
<PAGE>
(vii) By TSR Paging at any time after it has exercised the
Extension Option.
15.1.2 IN THE EVENT OF TERMINATION. In the event of termination of
this Agreement:
(i) 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;
(ii) The provisions of Sections 15.10 and 15.12 shall
continue in full force and effect;
(iii) No party hereto shall have any liability or further
obligation to any other party to this Agreement, except as stated in this
Section 15.1.2, and Section 14.4.6 and 15.7, except for any breach of this
Agreement by such party occurring prior to the proper termination of this
Agreement; and
(iv) The provision of Section 10.3.8 shall continue in full
force and effect if TSR Paging terminates the Agreement pursuant to Section
15.1.1(iii)(d).
15.2 ASSIGNMENT. Neither this Agreement, the Ancillary Agreements nor any
of the rights or obligations hereunder or thereunder may be assigned by any
party without the prior written consent of the other parties thereto; except
that TSR Wireless may, without such consent, assign all such rights to any
lender as collateral security and assign all such rights and obligations to a
wholly-owned subsidiary (or a partnership controlled by TSR Wireless) of TSR
Wireless or, after the Closing, to a successor in interest to TSR Wireless which
shall assume all obligations and liabilities of TSR Wireless under this
Agreement (PROVIDED that no assignment shall release the assigning party from
responsibility for its obligations hereunder). Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, and no other Person shall
have any right, benefit or obligation under this Agreement as a third party
beneficiary or otherwise.
15.3 NOTICES. All notices under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method provided that such transmission is confirmed by telephone; the day after
it is sent, if sent for next day delivery to a domestic address by overnight
mail; and upon receipt, if sent by certified or registered mail, return receipt
requested. In each case notice shall be sent to:
If to TDS, addressed to:
30 North LaSalle Street
73
<PAGE>
Suite 4000
Chicago, Illinois 60602
Fax: (312) 630-9299
Attention: Chief Financial Officer
With copies to:
Sidley & Austin
1 First National Plaza
Chicago, Illinois 60603
Fax: (312) 456-5352
Attention: Michael G. Hron
Sidley & Austin
875 Third Avenue
New York, New York 10022
Fax: (212) 906-2021
Attention: James G. Archer
If to TSR Paging, addressed to:
TSR Paging Inc.
400 Kelby Street, 8th Floor
Fort Lee, New Jersey 07024
Fax: (201) 947-7145
Attention: Mitchell L. Sacks
With copies to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, New York 10022
Fax: (212) 751-4864
Attention: Roger H. Kimmel, Esq.
TA Associates, Inc.
High Street Tower
Suite 2500
Boston, Massachusetts 02110
Fax:(617) 574-6728
Attention: Kenneth T. Schiciano
and to
74
<PAGE>
Spectrum Equity Investors
125 High Street, 26th Floor
Boston, Massachusetts 02110
Fax: (617) 464-4601
Attention: William P. Collatos
If to TSR Wireless, addressed to:
TSR Wireless, LLC
400 Kelby Street, 8th Floor
Fort Lee, New Jersey 07024
Fax: (201) 947-7145
Attention: Mitchell L. Sacks
With copies to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, New York 10022
Fax: (212) 751-4864
Attention: Roger H. Kimmel, Esq.
Sidley & Austin
875 Third Avenue
New York, New York 10022
Fax: (212) 906-2021
Attention: James G. Archer
TA Associates, Inc.
High Street Tower
Suite 2500
Boston, Massachusetts 02110
Fax:(617) 574-6728
Attention: Kenneth T. Schiciano
and to
Spectrum Equity Investors
125 High Street, 26th Floor
Boston, Massachusetts 02110
Fax: (617) 464-4601
Attention: William P. Collatos
75
<PAGE>
or to such other place and with such other copies as either party may
designate as to itself by written notice to the others.
15.4 CHOICE OF LAW. This Agreement shall be construed, interpreted and the
rights of the parties determined in accordance with the internal law, and not
the law of conflicts, of the State of New York.
15.5 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, the
Ancillary Agreements, together with all exhibits and schedules hereto and
thereto (including the Disclosure Schedule) and the Option Agreement and the
Confidentiality Agreement constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. This Agreement may not be amended or supplemented except by an
instrument in writing signed on behalf of each of the parties hereto. No
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
15.6 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.7 EXPENSES. Except as otherwise specified in this Agreement, each party
hereto shall pay its own legal, accounting, out-of-pocket and other expenses
incident to this Agreement and to any action taken by such party in preparation
for carrying this Agreement into effect.
15.8 INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
15.9 TITLES. The titles, captions or headings of the Articles and Sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
15.10 PUBLIC STATEMENTS AND PRESS RELEASES. The parties hereto
covenant and agree that, except as provided for below, each will not from and
after the date hereof make, issue or release any public announcement, press
release, statement or acknowledgment of the existence of, or reveal publicly the
terms, conditions and status of, the transactions provided for herein, without
the prior written consent of the other parties as to the content and time of
release of and the media in which such statement or announcement is to be made;
PROVIDED, HOWEVER,
76
<PAGE>
that in the case of announcements, statements, acknowledgements or revelations
which any party is required by law to make, issue or release, the making,
issuing or releasing of any such announcement, statement, acknowledgment or
revelation by the party so required to do so by law shall not constitute a
breach of this Agreement if such party shall have given, to the extent
reasonably possible, not less than two (2) calendar days prior notice to the
other parties, and shall have attempted, to the extent reasonably possible, to
clear such announcement, statement, acknowledgment or revelation with the other
parties. Each party hereto agrees that it will not unreasonably withhold any
such consent or clearances.
15.11 KNOWLEDGE. Whenever this Agreement refers to the "knowledge of
TSR Paging", or a similar phrase, it refers to the collective actual and
constructive knowledge of Leonard DiSavino, Philip Sacks and Mitchell L. Sacks
after reasonable inquiry. Wherever this Agreement refers to the "knowledge of
TDS" or a similar phrase, it refers to the collective actual and constructive
knowledge of the key management employees of TDS and API and its Subsidiaries
including Terrence Sullivan, Leroy T. Carlson, Jr., Scott Williamson and Murray
Swanson after reasonable inquiry.
15.12 CONFIDENTIAL INFORMATION.
15.12.1 In connection with the negotiation of this Agreement, the
preparation for the consummation of the transactions contemplated hereby, and
the performance of obligations hereunder, each party acknowledges that it has
had and will have access to confidential information relating to the other
parties, including technical or marketing information, ideas, methods,
developments, inventions, improvements, business plans, trade secrets,
statistical data, diagrams, drawings, specifications or other proprietary
information relating thereto, together with all analyses, compilations, studies,
customer lists, pricing information or other documents, records or data prepared
by each party or their respective Subsidiaries (if any) or Representatives which
contain or otherwise reflect or are generated from such information
("CONFIDENTIAL INFORMATION"). The term "Confidential Information" does not
include information received by any party or its Subsidiaries in connection with
the transactions contemplated hereby which (i) is or becomes generally available
to the public other than as a result of a disclosure by such party or its
Subsidiaries or Representatives, (ii) was within any such party's possession
prior to its being furnished to such party by or on behalf of one of the other
parties in connection with the transactions contemplated hereby, provided that
the source of such information was not known by the party now possessing the
Confidential Information to be bound by a confidentiality agreement with or
other contractual, legal or fiduciary obligation of confidentiality to any party
or any other Person with respect to such information or (iii) becomes available
to any party on a non-confidential basis from a source other than one of the
other parties and their Subsidiaries, if any, or any of their respective
Representatives, provided that such source is not bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to such other parties or any other Person with respect to such
information.
77
<PAGE>
15.12.2 TSR Paging and TDS and TSR Wireless and their respective
Subsidiaries shall treat all Confidential Information as confidential, preserve
the confidentiality thereof and not disclose any Confidential Information,
except to their respective Representatives and Affiliates who need to know such
Confidential Information in connection with the transactions contemplated hereby
and except to the board of directors of API and their Representatives. Each
party shall, and shall cause its Subsidiaries to use all reasonable efforts to
cause its Representatives to treat all Confidential Information as confidential,
preserve the confidentiality thereof and not disclose any Confidential
Information. Each party shall be responsible for any breach of this Agreement
by any of its Subsidiaries or Representatives. If, however, Confidential
Information is disclosed, such party shall immediately notify the other parties
in writing and take all reasonable steps required to prevent further disclosure.
15.12.3 Until the Closing or the termination of this Agreement, all
Confidential Information shall remain the property of the party who originally
possessed such information. In the event of the termination of this Agreement
for any reason whatsoever, each party shall, and shall cause its Subsidiaries
and Representatives to destroy or return to the other parties all Confidential
Information (including all copies, summaries and extracts thereof) furnished to
it by the other parties in connection with the transactions contemplated hereby.
15.12.4 If any of the parties or their Subsidiaries, Representatives
or Affiliates is requested or required (by oral questions, interrogatories,
requests for information or documents in legal proceedings, subpoena, civil
investigative demand or other similar process) or is required by operation of
law to disclose any Confidential Information, such party shall provide the other
parties with prompt written notice of such request or requirement, which notice
shall, if practicable, be at least 48 hours prior to making such disclosure, so
that the other parties may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Agreement. If, in the
absence of a protective order or other remedy or the receipt of such a waiver,
any party and/or any of its Subsidiaries and Representatives is nonetheless, in
the opinion of counsel, legally compelled to disclose Confidential Information,
then that party may disclose that portion of the Confidential Information which
such counsel advises is legally required to be disclosed, provided that the
party uses its reasonable efforts to preserve the confidentiality of the
Confidential Information, whereupon such disclosure shall not constitute a
breach of this Agreement.
15.12.5 This Agreement shall supersede the confidentiality agreement
dated as of May 8, 1997 between TSR Paging and TDS.
78
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers thereunto
duly authorized, all as of the day and year first above written.
TSR PAGING INC.
By /s/ Mitchell L. Sacks
--------------------------------------------
Name Mitchell L. Sacks
--------------------------------------------
Its President
--------------------------------------------
TELEPHONE AND DATA SYSTEMS, INC.
By /s/ Scott H. Williamson
--------------------------------------------
Name Scott H. Williamson
--------------------------------------------
Its Vice President - Acquisitions
--------------------------------------------
TSR WIRELESS LLC
By /s/ Mitchell L. Sacks
--------------------------------------------
Name Mitchell L. Sacks
--------------------------------------------
Its President
-------------------------------------------
79
<PAGE>
SCHEDULE 1.1
1. Contract dated 3/13/97 with Microspace Communications for Stream 3, 64 KBS
segment.
2. All contracts with Subscriber Computing.
3. All agreements between API and its employees.
4. The following Agreements between API and TDS:
a. Exchange Agreement, dated January 1, 1994, between TDS and API.
b. Registration Rights Agreement, dated January 1, 1994, between TDS and
API.
c. Revolving Credit Agreement, dated January 1, 1994, between TDS and
API.
d. Intercompany Agreement, dated January 1, 1994, between TDS and API.
e. Tax Allocation Agreement, dated January 1, 1994, between TDS and API.
f. Employee Benefit Plans Agreement, dated January 1, 1994, between TDS
and API.
g. Cash Management Agreement, dated January 1, 1994, between TDS and API.
h. Insurance Cost Sharing Agreement, dated January 1, 1994, between TDS
and API.
5. Licenses for SAP and Ceridian Software (licensed to TDS). See Schedule
6.7(i)(f).
80
<PAGE>
OPTION AGREEMENT
OPTION AGREEMENT (this "AGREEMENT") dated as of December 22, 1997, by
and among TELEPHONE AND DATA SYSTEMS, INC. ("GRANTOR"), and TSR WIRELESS LLC
("TSR WIRELESS").
RECITALS:
A. Grantor is the holder of certain indebtedness of American Paging,
Inc. (the "COMPANY").
B. On the date hereof TSR Paging Inc. ("TSR PAGING") owns 100% of
TSR Wireless.
C. Grantor desires to sell and grant to TSR Wireless, and TSR
Wireless desires to purchase and acquire from Grantor, an option (the "OPTION")
to purchase from Grantor all of Grantor's right, title and interest in and to or
arising under or in connection with the Indebtedness (as defined below).
AGREEMENT
In consideration of the mutual agreements contained herein, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
1.1 In addition to terms defined elsewhere in this Agreement, the
following terms shall have the following meanings herein.
"ASSET CONTRIBUTION AGREEMENT": Asset Contribution Agreement dated as of
December 22, 1997 by and among TSR Wireless, Grantor and TSR Paging.
"BUSINESS DAY": Any day when commercial banks are open for regular banking
business in New York City.
"CALL NOTICE": A written notice from TSR Wireless to Grantor in the form
attached hereto as EXHIBIT A.
"COMPANY": American Paging, Inc.
"DISTRIBUTIONS": Any and all cash, interest, fees, securities, dividends
and other property or consideration which may be exchanged for, distributed
or collected in respect of the Indebtedness.
"EXERCISE DATE": Any Business Day during the Exercise Period on which TSR
Wireless exercises the Option in whole or in part.
<PAGE>
"EXERCISE PERIOD": Any Business Day occurring during the period from (A)
the earlier to occur of (i) February 12, 1998, but only if the Special
Committee of the Board of Directors of the Company has failed to approve
the merger contemplated in the Asset Contribution Agreement, (ii) the date
on which the Special Committee of the Board of Directors of the Company
withdraws its approval of the Merger contemplated by the Asset Contribution
Agreement, (iii) the date the Company takes board action or the Company's
stockholders take action to liquidate the Company and (iv) the date on
which Grantor has entered into an agreement for the sale of all or
substantially all of the capital stock of the Company owned by Grantor or
the Company has entered into an agreement for the merger, consolidation or
other combination of the Company or the sale of all or substantially all of
the assets of the Company, other than to TSR Wireless, to and including (B)
the earlier of (x) 5:00 p.m. New York City time on September 30, 1998 and
(y) the date on which the Asset Contribution Agreement is terminated
pursuant to Section 15.1.1(iv)(a) or (c) and (z) the Closing occurs under
the Asset Contribution Agreement.
"FURTHER LLC INTEREST": An LLC Interest equal to 18.1% of the LLC Interest
which would have been issued to Grantor pursuant to Section 3.1.2 of the
Asset Contribution Agreement had Grantor contributed the Cracker Jack
Assets to TSR Wireless upon the Closing without regard to any Post-Closing
Adjustment provided by Article III of the Asset Contribution Agreement.
"INDEBTEDNESS": The outstanding principal amount of advances made by
Grantor to the Company under that certain Revolving Credit Agreement, dated
as of January 1, 1994, between Grantor and the Company, as amended,
supplemented or otherwise modified to date (the "CREDIT AGREEMENT"), PLUS
all interest, fees and other amounts owing thereunder.
"INITIAL LLC INTEREST": An LLC Interest equal to 81.9% of the LLC Interest
which would have been issued to Grantor pursuant to Section 3.1.2 of the
Asset Contribution Agreement had Grantor contributed the Cracker Jack
Assets to TSR Wireless upon the Closing without regard to any Post-Closing
Adjustment provided by Article III of the Asset Contribution Agreement.
"LLC INTEREST": A member interest in TSR Wireless.
"TSR ASSET CONTRIBUTION": As defined in Section 2.
"TSR WIRELESS": TSR Wireless LLC, a Delaware limited liability company in
which, as of the date hereof, TSR Paging holds all LLC Interests.
1.2 Other capitalized terms used in this Agreement, but not defined
herein, shall bear the meanings given to them in the Asset Contribution
Agreement.
2. OPTION. Grantor hereby irrevocably grants and sells to TSR
Wireless, and TSR Wireless hereby purchases and accepts from Grantor, the
Option. The Option may be exercised on any Exercise Date selected by TSR
Wireless, by delivery to Grantor of a duly
2
<PAGE>
executed Call Notice; provided that the Option may only be exercised if (i) all
of the assets and liabilities of TSR Paging have been contributed by TSR Paging
to TSR Wireless ("TSR ASSET CONTRIBUTION") in exchange for LLC Interests in TSR
Wireless, (ii) the condition set forth in Section 12.6 of the Asset Contribution
Agreement has been satisfied and the Exchange and Registration Rights Agreement
and the TSR Wireless LLC Agreement each has been duly executed by the parties
except Grantor. Within five Business Days after Grantor's receipt from TSR
Wireless of a duly executed Call Notice, Grantor shall transfer the Indebtedness
to TSR Wireless or TSR Wireless's designee, pursuant to an Assignment and
Acceptance Agreement substantially in the form of EXHIBIT B, in exchange for an
assignment of the Initial LLC Interest and shall deliver the Exchange and
Registration Rights Agreement and the TSR Wireless LLC Agreement, each duly
executed by Grantor.
3. PREMIUM. Upon delivery by Grantor and TSR Wireless to the other
of executed counterparts of this Agreement, TSR Wireless shall pay $1.00 (the
"PREMIUM") to Grantor.
4. REPRESENTATIONS AND WARRANTIES.
(a) Each party hereto represents, warrants and acknowledges to the
other parties hereto that: (i) it has full power and authority, and has taken
all action necessary, to execute and deliver this Agreement and all documents
required to be executed and delivered by it hereunder (collectively, the "OPTION
DOCUMENTS"), and to fulfill its obligations under the Option Documents, and to
consummate the transactions contemplated by the Option Documents; (ii) the
making and performance by it of the Option Documents, and the fulfillment of its
obligations under the Option Documents, does not and will not violate any law or
regulation of the jurisdiction under which it exists, any other law or
regulation applicable to it or any other agreement to which it is a party or by
which it is bound; (iii) the Option Documents have been duly executed and
delivered by it and constitute its legal, valid and binding obligation,
enforceable against it in accordance with the respective terms thereof; and (iv)
all approvals, authorizations or other actions by, or filings with, any
governmental authority necessary for the validity or enforceability of its
obligations under the Option Documents have been obtained.
(b) Grantor further represents, warrants and acknowledges to TSR
Wireless as of the date hereof and as of the Exercise Date that:
(i) it is the sole legal and beneficial owner and holder of the
Indebtedness, and will transfer the Indebtedness to TSR Wireless, and
TSR Wireless will acquire the Indebtedness, free and clear of any
liens, claims, charges, encumbrances, or other security or ownership
interests and the Indebtedness is fully and freely transferable to TSR
Wireless;
(ii) Grantor has not pledged or encumbered, nor has it granted
any security interests in or liens upon the Indebtedness;
3
<PAGE>
(iii) the Company is indebted to Grantor in respect of the
Indebtedness in principal amounts equal to not less than $170,000,000,
and the Indebtedness is not subject to any claim or right of setoff,
reduction, recoupment, avoidance, disallowance or subordination;
(iv) Grantor has not engaged in any act, conduct or omission
which could reasonably be expected to result in the Indebtedness being
subject to (and it has not received any notice that the Indebtedness
may be subject to) subordination, reduction, disallowance, setoff,
right of recoupment, avoidance, defense, counterclaims or impairment
of any kind except as set forth in that certain letter from Grantor to
the Company dated as of March 5, 1997;
(v) no litigation, arbitration or adversarial proceeding is
pending against it or the Company or, to its actual knowledge, is
threatened against it or the Company, which could reasonably be
expected to in any case have a material adverse effect on the
Indebtedness; and
(vii) without in any way implying that the Option is a "security"
within the meaning of applicable securities laws, no offer to sell or
solicitation of any offer to buy any portion of the Option or the
Indebtedness has been made by it in a manner that would violate or
require registration under such applicable securities laws.
(c) TSR Wireless further represents, warrants and acknowledges to
Grantor that:
(i) Grantor has not given any investment advice or rendered any
opinion to TSR Wireless as to whether the sale of the Option is
prudent and TSR Wireless is not relying on any representation or
warranty by Grantor except as expressly set forth in this Agreement or
the Asset Contribution Agreement;
(ii) TSR Wireless has received, reviewed and relied upon such
information concerning the legal, business and financial condition of
the Company as it considers adequate to make an informed decision
regarding the purchase of the Option; and
(iii) without implying that the Option is a "security" within the
meaning of applicable securities laws, TSR Wireless is a sophisticated
investor with respect to the Option, was not formed for the purpose of
purchasing the Option and is not purchasing the Option with a view to
any public distribution thereof which would violate applicable
securities laws.
5. FURTHER LLC INTEREST. Following the exercise of the Option, upon
the earlier to occur of (i) the transfer by the Company of all of the Company's
Assets (except for Excluded Assets) to TSR Wireless, whether by foreclosure,
conveyance or other transfer and (ii)
4
<PAGE>
the entire principal amount of the outstanding Indebtedness is repaid to TSR in
cash, TSR Wireless shall issue the Further LLC Interest to Grantor.
6. DISTRIBUTIONS. If Grantor receives any Distributions in respect
of the Indebtedness on or after an Exercise Date, it will pay the same over to
TSR Wireless or TSR Wireless's designee in the currency received by it or, in
the case of securities (to the extent permissible by law and relevant
documentation), endorse or cause to be registered in TSR Wireless's names or
such names as TSR Wireless may direct in writing (at TSR Wireless's sole
expense) and deliver to TSR Wireless or such persons as TSR Wireless may direct
such securities within three (3) business days after receipt of any such
Distribution. If any cash Distribution is not paid to TSR Wireless within such
time period Grantor will pay interest on such Distribution for the period from
the day on which such Distribution was actually received by Grantor to (but
excluding) the day such Distribution is actually paid to TSR Wireless, at a rate
per annum equal to the London Interbank Offering Rate plus two (2) percent, as
calculated and published from time to time on page 3750 of the Telerate Screen.
Until any Distributions are transferred to TSR Wireless pursuant to this Section
6, Grantor shall hold the same in trust for the benefit of TSR Wireless.
7. COVENANT; INFORMATION; ACTIONS. Grantor shall not amend,
supplement or otherwise modify the terms of the Credit Agreement without the
prior written consent of TSR Wireless, PROVIDED, HOWEVER, that this shall not
prevent an increase by Grantor of the Indebtedness so long as such increase and
a draw in an amount equal to such increase occur simultaneously. If Grantor
receives any documents, notice or correspondence under the Credit Agreement or
in respect of the Indebtedness from and after the date hereof it shall promptly
forward the same to TSR Wireless. TSR Wireless shall have sole authority to
exercise all voting and other rights and remedies under the Credit Agreement and
in respect of the Indebtedness from and after the Exercise Date. If for any
reason, Grantor is entitled to exercise any such rights after the Exercise Date
(including, without limitation, the right to vote), Grantor shall exercise such
rights only in accordance with TSR Wireless's written instructions.
8. NOTICE. Notice (including any Call Notice) will be given by fax,
if to
TSR Wireless at:
TSR Wireless LLC
400 Kelly Street
15th Floor
Fort Lee, NJ 07024
Attention: Mitchell L. Sacks
Fax: (201) 947-7145
5
<PAGE>
With copies to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, New York 10022
Attention: Roger H. Kimmel
Fax: (212) 751-4864
Grantor, at:
Telephone and Data Systems, Inc.
30 North LaSalle Street
Suite 4000
Chicago, IL 60602
Attention: Chief Financial Officer
Fax: (312) 630-9299
With copies to:
Sidley & Austin
1 First National Plaza
Chicago, Illinois 60603
Attention: Michael G. Hron
Fax: (312) 456-5352
Copies of all notices so sent will also be sent by overnight courier to the
parties' respective addresses set forth above (or such other addresses as any
party hereto may specify in writing from time to time). All notices shall be
deemed effective when received.
9. INDEMNIFICATION. (a) Grantor shall indemnify and hold each
of TSR Wireless and TSR Paging (and TSR Wireless's and TSR's fiduciaries,
officers, managers, directors, partners, employees and agents) harmless from
any actual losses, costs or expenses, including reasonable legal fees and
expenses, which are incurred as a result of breaches of any of the
representations, warranties, covenants or agreements made by Grantor in this
Agreement; (b) TSR Wireless shall indemnify and hold Grantor and TSR Paging
(and Grantor's and TSR's officers, directors, trustees, fiduciaries,
managers, employees and agents) harmless from any actual losses, costs or
expenses, including reasonable legal fees and expenses, which are incurred as
a result of breaches of any of the representations, warranties, covenants or
agreements made by TSR Wireless in this Agreement; and (c) TSR Paging shall
indemnify and hold Grantor and TSR Wireless (and Grantor's and TSR Wireless's
officers, directors, trustees, fiduciaries, managers, employees and agents)
harmless from any actual losses, costs or expenses, including
6
<PAGE>
reasonable legal fees and expenses, which are incurred as a result of
breaches of any of the representations, warranties, covenants or agreements
made by TSR Paging in this Agreement.
10. COSTS AND EXPENSES. Each party hereto shall be responsible for
its own fees and expenses (including legal fees and costs) in connection with
the preparation, review and execution of this Agreement.
11. MISCELLANEOUS. This Agreement shall be binding upon, enforceable
by and inure to the benefit of the parties hereto and their respective
successors, but shall not be assignable by any party hereto without the consent
of the other parties. The representations, warranties, covenants, agreements
and indemnities contained herein shall survive the execution, delivery and
performance of this Agreement and all other Option Documents. Any amendments
to, or waivers of, this Agreement shall be in writing and signed by Grantor, TSR
Wireless and TSR Paging. This Agreement, together with Asset Contribution
Agreement, constitutes the entire agreement of the parties hereto with respect
to the subject matter hereof. This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be an
original, but all of which together shall constitute one agreement binding on
the parties hereto. Transmission by telecopier of an executed counterpart of
this Agreement shall be deemed to constitute due and sufficient delivery of such
counterpart, PROVIDED that the party so delivering such counterpart shall,
promptly after such delivery, deliver the original of such counterpart of this
Agreement to the other parties hereto.
12. GOVERNING LAW. This Agreement shall be construed and the
obligations of the parties hereunder shall be determined in accordance with the
laws of the State of New York.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
Grantor:
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ Scott H. Williamson
----------------------------------
Name: Scott H. Williamson
Title: Vice President-Acquistions
TSR Wireless:
TSR WIRELESS LLC
By: TSR PAGING INC.,
its sole member
By: /s/ Mitchell L. Sacks
-------------------------------
Name: Mitchell L. Sacks
Title: President
8
<PAGE>
EXHIBIT A
FORM OF CALL NOTICE
Telephone and Data Systems, Inc.
30 North LaSalle Street
Suite 4000
Chicago, IL 60602
Attention:
Re: EXERCISE OF OPTION
Ladies and Gentlemen:
The undersigned hereby irrevocably elects to exercise the right, set
forth in that certain Option Agreement dated as of December 22, 1997 (the
"Option Agreement"), to purchase from Telephone and Data Systems, Inc.
("Grantor") all of Grantor's right, title and interest in and to or arising
under or in connection with the Indebtedness, as set forth in the Option
Agreement. Capitalized terms used herein without definition have the same
meanings as in the Option Agreement.
The undersigned has attached the Assignment and Acceptance, and
requests that a Note representing the Indebtedness be made in favor of the
Assignee named therein. The undersigned agrees to cause to be transferred to
Grantor, upon receipt the Note and a counterpart of the Assignment and
Acceptance, the LLC Interest.
Very truly yours,
TSR WIRELESS LLC
By:
------------------------------------
Name:
Title:
Date:
9
<PAGE>
EXHIBIT B
FORM OF
ASSIGNMENT AND ACCEPTANCE AGREEMENT
Dated _______, 19__
Reference is made to the Revolving Credit Agreement, dated as of
January 1, 1994, between Telephone and Data Systems, Inc. and American Paging,
Inc. (the "Company") (as amended, modified and supplemented to date, the "Credit
Agreement"). Unless otherwise defined herein, terms defined in the Credit
Agreement are used herein with the same meanings.
Telephone and Data Systems, Inc. (the "Assignor") and
__________________ (the "Assignee") agree as follows:
1. Subject to Section 3 below, the Assignor hereby sells and assigns
to the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, WITHOUT RECOURSE, [all] [a portion] of Assignor's rights and
obligations under the Credit Agreement on the Effective Date (as defined Section
4 below), equal to __________% of the advances owing to, and the Note held by,
the Assignor on the Effective Date.
2. The Assignor: (i) represents and warrants that, (A) as of the
date hereof, its commitment to extend credit under the Credit Agreement (without
giving effect to assignments thereof which have not yet become effective) is
$0.00; and (B) the Credit Agreement has been duly authorized and validly
executed by the Company and constitutes a valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its terms
(assuming the due execution and delivery hereof by the other parties thereto),
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought at law or in equity), and except as rights to indemnity
and contribution thereunder may be limited by public policy considerations
underlying such laws; (ii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or the
performance or observance by the Company or any subsidiary of the Company of any
of its obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto; and (iii) attaches the Note referred to in
paragraph 1 above.
3. The Assignee: (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 7(a)(l) of the Credit Agreement and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Assignor, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) agrees that it will perform in accordance with their terms all
of the obligations which by the terms of the Credit Agreement are
10
<PAGE>
required to be performed by it; and (iv) specifies as its address for notices
the office set forth beneath its name on the signature pages hereof.
4. The effective date of this Assignment and Acceptance shall be
___________, 19___ (the "Effective Date").(1) Following the execution of
this Assignment and Acceptance, a copy will be delivered to the Company.
5. As of the Effective Date, (i) the Assignee shall be a party to
the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations which Assignor had thereunder, and
(ii) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Credit Agreement [and cease to be a party thereto].(2)
6. From and after the Effective Date, the Company shall make all
payments under the Credit Agreement in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and
commitment fees with respect to the Note) to the Assignee. The Assignor and the
Assignee shall make all appropriate adjustments in payments under the Credit
Agreement for periods prior to the Effective Date directly between themselves.
7. MISCELLANEOUS.
(i) NOTICES. Notices shall be given under this Assignment and
Acceptance in the manner set forth in the Credit Agreement. The addresses
for notice shall be those set forth below the respective signatures of the
Assignor and the Assignee on this Agreement.
(ii) HEADINGS. Headings are for reference only and are to be
ignored in interpreting this Assignment and Acceptance.
(iii) GOVERNING LAW. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
(iv) FURTHER ASSURANCES. The Assignor and the Assignee hereby
agree to execute and deliver such other instruments, and take such other
action, as either party may reasonably request in furtherance of the
transactions contemplated by this Assignment and Acceptance.
- -------------------------
(1) Such date shall be at least [5] Business Days after the execution of this
Assignment and Acceptance.
(2) Insert if Assignment and Acceptance covers all or the remaining portion of
the Assignor's rights and obligations under the Credit Agreement.
11
<PAGE>
(v) COUNTERPARTS. This Assignment and Acceptance may be executed in
one or more duplicate counterparts, and when executed and delivered by all the
parties listed below shall constitute a single binding agreement.
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Acceptance Agreement by their duly authorized officers as of the date first
above written.
TELEPHONE AND DATA SYSTEMS, INC.
By:
------------------------------------
Name:
Title:
Notice Address:
[NAME OF ASSIGNEE]
By:
-------------------------------------
Name:
Title:
Notice Address:
Acknowledged this ____ day of
__________________, 19___
AMERICAN PAGING, INC.
By:
-----------------------------------
Name:
Title:
13
<PAGE>
RESTATED
CERTIFICATE OF INCORPORATION
OF
AMERICAN PAGING, INC.
AMERICAN PAGING, INC., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is AMERICAN PAGING, INC. The date
of filing of its original Certificate of Incorporation with the Secretary of
State was April 10, 1980.
2. This Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation of this
corporation by revising such document in its entirety.
3. This text of the Certificate of Incorporation as amended or
supplemented heretofore is further amended hereby to read as herein set forth
in full:
ARTICLE I
The name of the corporation is
AMERICAN PAGING, INC.
ARTICLE II
The address of its registered office in the State of Delaware is
1209 Orange Street, in the City of Wilmington, New Castle County, Delaware
19801. The name of its registered agent at such address is The Corporation
Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware; PROVIDED, HOWEVER,
that the corporation, without the written consent of TDS, shall not, directly
or indirectly (through a Subsidiary of the corporation or any other person or
otherwise) for its own account or that of another, own, invest or
<PAGE>
otherwise have an interest in, lease, operate or manage any business other
than a business engaged solely in the construction of, the ownership of
interests in and/or the management of radio paging systems.
ARTICLE IV
CAPITALIZATION
(a) AUTHORIZED SHARES. The total number of shares of all classes
of stock which the corporation shall have authority to issue is one hundred
sixty million (160,000,000) shares, consisting of fifty million (50,000,000)
Common Shares with a par value of $1.00 per share; fifty million (50,000,000)
Series A Common Shares with a par value of $1.00 per share; fifty million
(50,000,000) Series B Common Shares with a par value of $1.00 per share; and
ten million (10,000,000) shares of Preferred Stock with a par value of $1.00
per share.
(b) COMMON SHARES, SERIES A COMMON SHARES AND SERIES B COMMON
SHARES. (1) The powers, preferences and rights of the Common Shares, Series
A Common Shares and Series B Common Shares, and the qualifications,
limitations or restrictions thereof, shall be in all respects identical,
except as expressly provided in this Restated Certificate of Incorporation,
as amended, or as otherwise required by law.
(2) At each annual or special meeting of stockholders, each
holder of Common Shares shall be entitled to one (1) vote in person or by
proxy for each Common Share standing in such holder's name on the stock
transfer records of the corporation in connection with all actions submitted
to a vote of stockholders, each holder of Series A Common Shares shall be
entitled to fifteen (15) votes for each Series A Common Share standing in
such holder's name, and holders of Series B Common Shares shall not vote on
any matter, except as expressly provided in this Restated Certificate of
Incorporation, as amended, or as otherwise required by the Delaware General
Corporation Law.
(3) The number of authorized Common Shares and Series B
Common Shares may be increased or decreased (but not below the number of such
shares then outstanding in such class, respectively) by the affirmative vote
of a majority of the Series A Common Shares by the holders thereof.
(c) DIVIDENDS. Dividends may be declared and paid to the holders of
the Common Shares, Series A Common Shares and Series B Common Shares in cash,
property, or other securities of the corporation out of any net profits or net
assets of the corporation legally available therefor. If and when dividends on
the Common Shares, Series A Common Shares and Series B Common
-2-
<PAGE>
Shares are declared by the board of directors, whether payable in cash, in
property or in shares of stock of the corporation, the holders of Common
Shares, Series A Common Shares and Series B Common Shares shall be entitled
to share equally, on a per share basis, in such dividends; PROVIDED, HOWEVER,
that if at any time a dividend or other distribution is to be paid in capital
stock of the corporation on capital stock of the corporation, such dividend
or other distribution shall be paid to all holders of common stock of the
corporation and may only be paid as follows:
(1) Common Shares may be paid to holders of Common Shares and
proportionately to holders of Series A Common Shares and
Series B Common Shares;
(2) Common Shares may be paid to holders of Common Shares at the
same time that Series A Common Shares are paid
proportionately to holders of Series A Common Shares and
Series B Common Shares are paid proportionately to holders
of Series B Common Shares;
(3) Series A Common Shares may be paid to holders of Series A
Common Shares and proportionately to holders of Common
Shares and Series B Common Shares; or
(4) Series B Common Shares may be paid to holders of Series B
Common Shares and proportionately to holders of Common
Shares and Series A Common Shares;
and in the case of any such dividend or other distribution the board of
directors may permit the holders of any class of common stock to elect to
receive cash in lieu of stock.
(d) STOCK SPLITS, SUBDIVISIONS AND COMBINATIONS. If the
corporation shall in any manner split, subdivide or combine the outstanding
shares of any class of common stock, the outstanding shares of each other
class of common stock shall be proportionately split, subdivided or combined
in the same manner and on the same basis.
(e) LIQUIDATION. The holders of Common Shares, Series A Common
Shares and Series B Common Shares shall be entitled to receive the same
amount or distribution per share upon the liquidation, dissolution or winding
up of the affairs of the corporation. A consolidation, merger or
reorganization of the corporation with any other corporation or corporations,
or a sale of all or substantially all of the assets of the corporation, shall
not be considered a liquidation, dissolution or winding up of the corporation
within the meaning of these provisions.
-3-
<PAGE>
(f) DISTRIBUTIONS OF SUBSIDIARIES. Notwithstanding the provisions
of subsections (c) and (e) of Article IV, if the corporation at any time
distributes to the holders of common stock of the corporation the stock of a
Subsidiary (as hereinafter defined) having two or more classes of common
stock outstanding that have relative rights, preferences and limitations
vis-a-vis each other that, in the judgment of the board of directors, are
similar in all material respects to the relative rights, preferences and
limitations of two or more classes of common stock of the corporation
vis-a-vis each other (except for any variations in rights, preferences and
limitations that are (1) necessary to enable a class of common stock of the
Subsidiary to be traded on an exchange or through the National Association of
Securities Dealers, Inc. Automated Quotation System (the "NASDAQ System");
(2) due to differences in the laws of the states of incorporation of the
corporation and the Subsidiary; or (3) equally applicable to two or more
classes of common stock of the Subsidiary), then each class of common stock
of the Subsidiary shall be distributed to the extent practicable to the
holders of the corresponding class of common stock of the corporation,
PROVIDED that the same number of shares on a per share basis shall be
distributed with respect to shares of each applicable class of common stock
of the corporation.
(g) PRE-EMPTIVE RIGHTS. No holder of stock of the corporation
shall have any pre-emptive right to subscribe for or acquire any unissued or
treasury stock or other securities of the corporation, whether such stock or
securities be hereby or hereafter authorized, except as may be specifically
granted pursuant to a contract with the corporation approved by the board of
directors and except that holders of Series A Common Shares shall have a
pre-emptive right to acquire unissued or treasury Series A Common Shares or
securities convertible into or exchangeable for, or carrying a right to
subscribe to or acquire, Series A Common Shares; PROVIDED, HOWEVER, that no
pre-emptive right shall exist to acquire any Series A Common Shares sold
otherwise than for cash. The pre-emptive right of each holder of Series A
Common Shares may be exercised in full, or in part to the extent determined
by each holder, and in no event shall the exercise of such right be
conditioned on subscribing for or acquiring any minimum amount or proportion
of stock or other securities.
(h) CONVERSION OF SERIES A COMMON SHARES. Each outstanding Series
A Common Share shall be convertible into one Common Share. Series A Common
Shares so converted shall not be reissued. Any such conversion shall be
effected by the presentation and surrender of the certificates representing
the Series A Common Shares to be converted, at the office of the corporation
or at such other place as may from time to time be designated by the
corporation, in such form and accompanied by all transfer taxes (or proof of
payment thereof), if any, as
-4-
<PAGE>
shall be required for such transfer, and upon such surrender, the holder of
such shares shall be entitled to receive in exchange therefor certificates
for fully paid and nonassessable Common Shares of the corporation at the rate
aforesaid, and such holder shall be registered as the holder of such Common
Shares.
(i) MANDATORY REDEMPTION. Notwithstanding any other provision of
this Restated Certificate of Incorporation to the contrary, any outstanding
shares of stock of the corporation shall be subject to redemption by the
corporation, by action of the board of directors, if in the judgment of the
board of directors such action should be taken, pursuant to Section 151(b) of
Title 8 of the Delaware Code or any other applicable provision of law, to the
extent necessary to prevent the loss or secure the reinstatement of any
license or franchise from any governmental agency held by the corporation or
any of its Subsidiaries to conduct any portion of the business of the
corporation or any of its Subsidiaries, which license or franchise is
conditioned upon some or all of the holders of the corporation's stock
possessing prescribed qualifications. The terms and conditions of such
redemption shall be as follows:
(1) the redemption price of the shares to be redeemed pursuant
to this subsection (i) shall be equal to the lesser of (A)
the Fair Market Value (as hereinafter defined) of such
shares or (B) if such shares were purchased by a
Disqualified Holder (as hereinafter defined) within one year
of the Redemption Date (as hereinafter defined), such
Disqualified Holder's purchase price for such shares;
(2) the redemption price of such shares may be paid in cash,
Redemption Securities (as hereinafter defined) or any
combination thereof;
(3) if less than all the shares held by Disqualified Holders are
to be redeemed, the shares to be redeemed shall be selected
in such manner as shall be determined by the board of
directors, which may include selection first of the most
recently purchased shares thereof, selection by lot or
selection in any other manner determined by the board of
directors;
(4) at least 30 days' written notice of the Redemption Date
shall be given to the record holders of the shares selected
to be redeemed (unless waived in writing by any such
-5-
<PAGE>
holder), PROVIDED that the Redemption Date may be the date
on which written notice shall be given to record holders if
the cash or Redemption Securities necessary to effect the
redemption shall have been deposited in trust for the
benefit of such record holders and subject to immediate
withdrawal by them upon surrender of the stock certificates
for their shares to be redeemed;
(5) from and after the Redemption Date, any and all rights of
whatever nature, which may be held by the owners of shares
selected for redemption (including without limitation any
rights to vote or participate in dividends declared on stock
of the same class or series as such shares), shall cease and
terminate and they shall thenceforth be entitled only to
receive the cash or Redemption Securities payable upon
redemption; and
(6) such other terms and conditions as the board of directors
shall determine.
(j) MINORITY PROTECTION OFFERS. (1) If, after the Effective Time
(as hereinafter defined), any person or group acquires beneficial ownership
of 10% or more of the then issued and outstanding Common Shares (other than
upon original issuance by the corporation, by operation of law, by will or
the laws of descent and distribution, by gift or by foreclosure of a bona
fide loan), and such person or group (a "Related Person") does not own an
equal or greater percentage of the Series B Common Shares acquired after the
record date for the first issuance of Series B Common Shares (the
"Distribution Date"), such person or group shall, within a 90-day period
beginning the day after becoming a Related Person, make a public tender offer
in compliance with all applicable laws and regulations to acquire Series B
Common Shares as provided in this subsection (j) of Article IV (a "Minority
Protection Offer").
(2) In each Minority Protection Offer, the Related Person shall
make a public tender offer to acquire that number of Series B Common Shares
determined by (A) multiplying the percentage of outstanding Common Shares
beneficially owned on the date such person or group became a Related Person and
acquired after the Effective Time by such Related Person by the total number of
Series B Common Shares outstanding on such date, and (B) subtracting therefrom
the total number of Series B Common Shares beneficially owned on such date and
acquired after the Distribution Date by such Related Person (including shares
acquired on such date at or prior to the time such person or group became a
Related Person). The Related Person shall acquire
-6-
<PAGE>
all of such shares validly tendered; PROVIDED, HOWEVER, that if the number of
Series B Common Shares tendered to the Related Person exceeds the number of
shares required to be acquired pursuant to the formula set forth in this
clause (2), the number of Common Shares acquired from each tendering holder
shall be pro rata in proportion to the total number of Series B Common Shares
tendered by all tendering holders.
(3) The offer price for any Series B Common Shares required
to be purchased by the Related Person pursuant to this provision shall be the
greater of (A) the highest price per share paid by the Related Person for any
Common Share in the six-month period ending on the date such person or group
became a Related Person, or (B) the highest reported sales price of a Common
Share or Series B Common Share on the NASDAQ System (or such securities
exchange or other quotation system as is then the principal trading market
for such shares) on the date such person or group became a Related Person or,
in case no such sale takes place, the Closing Price (as hereinafter defined)
on the prior trading day. For purposes of clause (4) below, the applicable
date for the calculations required by the preceding sentence shall be the
date on which the Related Person becomes required to engage in a Minority
Protection Offer. In the event that the Related Person has acquired Common
Shares in the six-month period ending on the date such person or group
becomes a Related Person for consideration other than cash, the value of such
consideration per Common Share shall be as determined in good faith by the
board of directors.
(4) A Minority Protection Offer shall also be required to be
effected by any Related Person that acquires beneficial ownership of the next
higher integral multiple of 5% (e.g. 15%, 20%, 25%, etc.) of the outstanding
Common Shares after the Effective Time (other than upon issuance or sale by
the corporation, by operation of law, by will or the laws of descent and
distribution, by gift, or by foreclosure of a bona fide loan) if such Related
Person does not then own an equal or greater percentage of the Series B
Common Shares acquired after the Distribution Date. Such Related Person
shall be required to make a public tender offer to acquire that number of
Series B Common Shares prescribed by the formula set forth in clause (2)
above, and shall acquire all shares validly tendered or a pro rata portion
thereof, as specified in said clause (2), at a price determined pursuant to
clause (3) above.
(5) If any Related Person fails to make an offer required by
this subsection (j) of Article IV, or to purchase shares validly tendered and
not withdrawn (after proration, if any), such Related Person shall not be
entitled to vote any Common Shares beneficially owned by such Related Person and
acquired by such Related Person after the Effective Time unless and until such
requirements are complied with or unless and until
-7-
<PAGE>
all Common Shares causing such offer requirement to be effective are no
longer beneficially owned by such Related Person.
(6) The Minority Protection Offer requirement shall not apply
to any increase in percentage ownership of Common Shares resulting solely
from a change in the total number of Common Shares outstanding, PROVIDED that
any acquisition after such change which results in any person or group owning
10% or more of the Common Shares, excluding, in the case of the numerator but
not of the denominator of the calculation of such percentage, Common Shares
held by such Related Person immediately after the Effective Time, shall be
subject to any Minority Protection Offer requirement that would be imposed
with respect to a Related Person pursuant to this subsection (j) of Article
IV.
(7) All calculations with respect to percentage ownership of
issued and outstanding Common Shares or Series B Common Shares shall be based
upon the numbers of issued and outstanding shares reported by the corporation
on the last filed of (A) the corporation's most recent annual report on Form
10-K, (B) its most recent Quarterly Report on Form 10-Q, or (C) if any, its
most recent Current Report on Form 8-K.
(8) For purposes of this subsection (j) of Article IV, the
term "person" means a natural person, company, government, or political
subdivision, agency or instrumentality of a government, or other entity,
"beneficial ownership" shall be determined pursuant to Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or
any successor regulation and the formation or existence of a "group" shall be
determined pursuant to Rule 13d-5(b) under the 1934 Act or any successor
regulation.
(9) In the event of a merger or consolidation of the
corporation with or into another entity (whether or not the corporation is
the surviving entity), the holders of Series B Common Shares shall be
entitled to receive the same per share consideration as the per share
consideration, if any, received by any holders of the Common Shares in such
merger or consolidation.
(k) POWER TO SELL STOCK. The board of directors shall have the
power to issue and sell all or any part of any class of stock herein or
hereafter authorized to such person, firm, association or corporation, and
for such consideration as the board of directors shall from time to time, in
its discretion, determine, whether or not greater consideration could be
received upon the issue or sale of the same number of shares of another
class, and as otherwise permitted by law.
(l) POWER TO REPURCHASE STOCK. The board of directors shall have
the power to purchase shares of any class of stock
-8-
<PAGE>
herein or hereafter authorized from such person, firm, association or
corporation, and for such consideration as the board of directors shall from
time to time, in its discretion, determine, whether or not less consideration
could be paid upon the purchase of the same number of shares of another
class, and as otherwise permitted by law.
(m) PREFERRED STOCK. The board of directors is expressly
authorized to adopt, from time to time, a resolution or resolutions providing
for the issue of one or more series of Preferred Stock, with such voting
powers, full or limited, or no voting powers, and with such designations,
preferences and relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, in addition to and
not inconsistent with those specifically set forth in this Restated
Certificate of Incorporation and as shall be stated and expressed in the
resolution or resolutions adopted by the board of directors; PROVIDED,
HOWEVER, that no shares of any series of Preferred Stock shall be issued for
consideration of less than $100 per share, have more than one (1) vote per
share with respect to any matter, or have separate class-voting rights with
respect to the election of directors or any other matter. In no event shall
Preferred Stock of any series be split or divided in any manner, nor shall
any dividends or other distributions payable in stock of the corporation of
any class or series be paid or payable on Preferred Stock.
(n) EFFECTIVE TIME. Effective as of the filing of this Restated
Certificate of Incorporation with the Secretary of State of the State of
Delaware pursuant to Section 103 of Title 8 of the Delaware Code (the
"Effective Time"), the 100 shares of capital stock, par value $1.00 per
share, of the corporation, representing all the issued and outstanding
capital stock of the corporation ("Outstanding Common Stock") shall, without
any action on the part of the holder thereof, be converted into 1,500,000
Common Shares and 15,000,000 Series A Common Shares, all of which shall be
fully paid and nonassessable. Upon the surrender of certificates representing
shares of Outstanding Common Stock, the corporation or any agent of the
corporation appointed for such purpose shall issue in exchange therefor one
or more certificates representing the shares into which the shares of
Outstanding Common Stock have been converted in accordance with the foregoing.
ARTICLE V
Any and all right, title, interest and claim in or to any dividends
declared by the corporation, whether in cash, stock or otherwise, which are
unclaimed by the stockholder entitled thereto for a period of six years after
the close of business on
-9-
<PAGE>
the payment date, shall be and be deemed to be extinguished and abandoned;
and such unclaimed dividends in the possession of the corporation, its
transfer agents or other agents or depositaries shall at such time become the
absolute property of the corporation, free and clear of any and all claims of
any persons whatsoever.
ARTICLE VI
DIRECTORS
(a) NUMBER; CLASSES; CHANGES. The number of directors of the
corporation shall be fixed by or pursuant to the bylaws of the corporation,
but shall not be less than three, and, commencing with the 1994 annual
meeting of stockholders, the directors shall be divided into three classes,
which shall be as nearly equal in number as possible; the term of office of
those of the first class to expire at the annual meeting next ensuing; of the
second class one year thereafter; of the third class two years thereafter;
and at each annual election held after such classification and election,
directors shall be chosen for a full three-year term to succeed those whose
terms expire. If the number of directors fixed by or pursuant to the bylaws
of the corporation is changed at any time, any newly created directorships or
any decrease in directorships shall be so apportioned among the classes by
the board of directors so as to make all classes as nearly equal in number as
possible; PROVIDED, HOWEVER, that no decrease in the number of directors
shall shorten the term of any incumbent director.
(b) VOTING IN ELECTIONS. With respect to the election of
directors, the holders of Common Shares, voting as a class, shall be entitled
to elect at each annual meeting that number of directors which (together with
all directors whose terms do not expire at the time of such election and who
were previously elected by such holders) constitutes 25% of the number of
directors of the corporation fixed by or pursuant to the bylaws of the
corporation (rounded up to the nearest whole number). After the holders of
Common Shares have voted with respect to the election of directors, the
holders of (A) Preferred Stock entitled to vote thereon, and (B) Series A
Common Shares, both voting together as one class, shall be entitled to elect
at each annual meeting that number of directors which (together with all
directors whose terms do not expire at the time of such election and who were
previously elected by such holders) constitutes 75% of the number of
directors fixed by or pursuant to the bylaws of the corporation (rounded down
to the nearest whole number); PROVIDED, HOWEVER, that in the event the number
of issued and outstanding Series A Common Shares at the time of an annual
meeting is less than 500,000, then the holders of Common Shares shall be
entitled to vote with the holders of Series A Common
-10-
<PAGE>
Shares and Preferred Stock entitled to vote thereon for the directors such
holders are entitled to elect at such meeting, in which case the holders of
Common Shares, Series A Common Shares, and Preferred Stock entitled to vote
thereon, shall vote together without regard to class.
(c) VACANCIES. Vacancies and newly created directorships of the
Preferred Stock and Series A Common Shares shall be filled by the holders of
such classes. Vacancies and newly created directorships of the Common Shares
shall be filled by the holders of such class, if a vacancy or newly created
directorship is to be filled at an annual meeting of stockholders, or by a
majority of the directors then in office, if the vacancy or newly created
directorship is to be filled between annual meetings of stockholders.
Vacancies and newly created directorships with respect to directors elected
by the holders of Common Shares, Series A Common Shares, and Preferred Stock
entitled to vote thereon, voting together without regard to class, shall be
filled by the holders of such classes, if a vacancy or newly created
directorship is to be filled at an annual meeting of stockholders, or by a
majority of the directors then in office, if the vacancy or newly created
directorship is to be filled between annual meetings of stockholders. A
director chosen by a majority of the directors then in office to fill a
vacancy or a newly created directorship shall cease to hold office at the
next annual meeting of stockholders held thereafter, whether the term of
office of the class for which the director was chosen expires at that meeting
or not. In all other cases, directors chosen to fill vacancies and newly
created directorships shall hold office until the next election of the class
for which such directors shall have been chosen, and until their successors
shall be elected and qualified.
(d) BALLOTS. Election of directors need not be by written ballot
unless the bylaws of the corporation so provide.
ARTICLE VII
In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter, amend
or repeal the bylaws of the corporation.
ARTICLE VIII
No opportunity, transaction, agreement or other arrangement to which
TDS, or any other person in which TDS has or acquires a financial interest, is
or shall become a party, shall be the property or a corporate opportunity of the
corporation or its Subsidiaries, unless (a) not less than 500,000 Series A
-11-
<PAGE>
Common Shares are outstanding, and (b) such opportunity, transaction,
agreement or other arrangement relates solely to the construction of, the
ownership of interests in and/or the management of radio paging systems,
other than such a system that is ancillary to and integrated with another
communications system.
ARTICLE IX
A director of the corporation shall not in the absence of fraud be
disqualified by his office from dealing or contracting with the corporation
either as a vendor, purchaser or otherwise, nor in the absence of fraud shall
a director of the corporation be liable to account to the corporation for any
profit realized by him from or through any transaction or contract of the
corporation by reason of the fact that he, or any firm of which he is a
member, or any corporation of which he is an officer, director or
stockholder, was interested in such transaction or contract if such
transaction or contract has been authorized, approved or ratified in the
manner provided in the General Corporation Law of Delaware for authorization,
approval or ratification of transactions or contracts between the corporation
and one or more of its directors or officers, or between the corporation and
any other corporation, partnership, association or other organization in
which one or more of its directors or officers are directors or officers, or
have a financial interest.
ARTICLE X
For purposes of this Restated Certificate of Incorporation:
"DISQUALIFIED HOLDER" shall mean any holder of shares of stock of the
corporation whose holding of such stock, either individually or when taken
together with the holding of shares of stock of the corporation by any
other holders, may result, in the judgment of the board of directors, in
the loss of, or the failure to secure the reinstatement of, any license or
franchise from any governmental agency held by the corporation or any of
its Subsidiaries to conduct any portion of the business of the corporation
or any of its Subsidiaries.
"FAIR MARKET VALUE" of a share of the corporation's stock of any class
or series shall mean the average Closing Price for such a share for each of
the 20 most recent days on which shares of stock of such class or series
shall have been traded preceding the day on which notice of redemption
shall be given pursuant to subsection (i)(4) of Article IV; PROVIDED,
HOWEVER, that if shares of stock of such class or
-12-
<PAGE>
series are not traded on any securities exchange or on the NASDAQ
System, "Fair Market Value" shall be determined by the board of
directors in good faith. "CLOSING PRICE" on any day means the last
reported sales price or, in case no such sale takes place, the average
of the reported closing bid and asked prices on the principal United
States securities exchange registered under the 1934 Act on which such
stock is listed, or, if such stock is not listed on any such exchange,
the highest closing sales price or bid quotation for such stock on the
NASDAQ System or any system then in use, or if no such prices or
quotations are available, the fair market value on the day in question
as determined by the board of directors in good faith.
A "PERSON" shall mean an individual, a corporation, a partnership, a
joint venture, a trust or unincorporated organization, a joint stock
company or similar organization, a government or any political subdivision
thereof, or any other legal entity.
"REDEMPTION DATE" shall mean the date fixed by the board of directors
for the redemption of shares of stock of the corporation pursuant to
subsection (i) of Article IV.
"REDEMPTION SECURITIES" shall mean any debt or equity securities
(other than Series A Common Shares or securities convertible into or
exchangeable for, or carrying a right to subscribe to or acquire, Series A
Common Shares) of the corporation, any of its Subsidiaries or any other
corporation, or any combination thereof, having such terms and conditions
as shall be approved by the board of directors and which, together with any
cash to be paid as part of the redemption price, in the opinion of any
nationally recognized investment banking firm selected by the board of
directors (which may be a firm which provides other investment banking,
brokerage or other services to the corporation), has a value, at the time
notice of redemption is given pursuant to subsection (i)(4) of Article IV,
at least equal to the price required to be paid pursuant to subsection
(i)(1) of Article IV (assuming, in the case of Redemption Securities to be
publicly traded, such Redemption Securities were fully distributed and
subject only to normal trading activity).
"SUBSIDIARY", with respect to a specified person, shall mean any
person whose accounts are included in the consolidated financial statements
of the specified person and its Subsidiaries prepared in accordance with
generally accepted accounting principles at the time.
-13-
<PAGE>
"TDS" means Telephone and Data Systems, Inc., an Iowa corporation, and
any successor by merger, consolidation or otherwise to such corporation.
ARTICLE XI
(a) LIMITATION ON LIABILITY. A director or officer of the
corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
or officer, except for liability (1) for any breach of the director's or
officer's duty of loyalty to the corporation or its stockholders, (2) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (3) under Section 174 of Title 8 of the
Delaware Code, or (4) for any transaction from which the director or officer
is found by a court of law to have derived an improper personal benefit.
(b) INDEMNIFICATION. Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless by the
corporation to the fullest extent authorized by the General Corporation Law
of Delaware, as the same exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said law permitted
the corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of his or
her heirs, executors and administrators; PROVIDED, HOWEVER, that, except as
provided in subsection (c) of Article XI, the corporation shall indemnify any
such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof)
was authorized by the board of directors. The right to indemnification
conferred in this Article XI shall be a contract
-14-
<PAGE>
right and shall include the right to be paid by the corporation the expenses
incurred in defending any such proceeding in advance of its final
disposition; PROVIDED, HOWEVER, that, if the General Corporation Law of
Delaware requires, the payment of such expenses incurred by a director or
officer in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director
or officer, including, without limitation, service to an employee benefit
plan) in advance of the final disposition of a proceeding, shall be made only
upon delivery to the corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately
be determined that such director or officer is not entitled to be indemnified
under this Article XI or otherwise. The corporation may, by action of its
board of directors, provide indemnification to other employees or agents of
the corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
(c) CLAIMS FOR INDEMNIFICATION. If a claim under subsection (b)
of Article XI is not paid in full by the corporation within 30 days after a
written claim has been received by the corporation, the claimant may at any
time thereafter bring suit against the corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting such claim. It
shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance
of its final disposition where the required undertaking, if any is required,
has been tendered to the corporation) that the claimant has not met the
standards of conduct which make it permissible under the General Corporation
Law of Delaware for the corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the corporation.
Neither the failure of the corporation (including stockholders) to have made
a determination prior to the commencement of such action that indemnification
of the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the General Corporation Law of
Delaware, nor an actual determination by the corporation (including its board
of directors, independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense
to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
(d) NON-EXCLUSIVITY. The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final disposition
conferred in this Article XI shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of this
-15-
<PAGE>
Restated Certificate of Incorporation, bylaw, agreement, vote of stockholders
or disinterested directors or otherwise.
(e) INSURANCE. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of
the corporation or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against the
expense, liability or loss under the General Corporation Law of Delaware.
ARTICLE XII
The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights
conferred upon stockholders herein are granted subject to this reservation.
* * * * *
This Restated Certificate of Incorporation was duly adopted by
unanimous written consent of the stockholders in accordance with the
applicable provisions of Sections 228, 242 and 245 of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, said AMERICAN PAGING, INC. has caused this
Certificate to be signed by John R. Schaaf, its President and attested by
Michael G. Hron, its Secretary, this 4th day of February, 1994.
AMERICAN PAGING, INC.
By: /s/ John R. Schaaf
----------------------------
John R. Schaaf
President
ATTEST:
By: /s/ Michael G. Hron
-------------------------
Michael G. Hron
Secretary
-16-
<PAGE>
VOTING TRUST AGREEMENT
DATED AS OF JUNE 30, 1989
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEPOSIT OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Deposit to Trustees . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Additional Deposits . . . . . . . . . . . . . . . . . . . . . . 4
1.4 Series A Common . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
VOTING TRUST CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . 5
2.1 Issuance of Voting Trust Certificates . . . . . . . . . . . . . 5
2.2 Form of Certificates. . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
WITHDRAWAL OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Option to Acquire . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 Request for Reregistration. . . . . . . . . . . . . . . . . . . 20
3.4 Conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.5 Establishment of Price If Company Shares Not Traded . . . . . . 21
ARTICLE IV
TRANSFERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1 Permissible Transfers . . . . . . . . . . . . . . . . . . . . . 21
4.2 Permitted Transferees . . . . . . . . . . . . . . . . . . . . . 22
<PAGE>
4.3 Limitation of Voting Rights of Certain Permitted Transferees. . 30
4.4 Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.5 Transferees Bound by Agreement. . . . . . . . . . . . . . . . . 31
4.6 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE V
DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.1 Trustees to Pass Through Cash Dividends . . . . . . . . . . . . 33
5.2 Direct Payment of Dividends . . . . . . . . . . . . . . . . . . 33
5.3 Hold on Dividends at Termination. . . . . . . . . . . . . . . . 34
5.4 Stock Dividends, Stock Splits and Recapitalizations . . . . . . 34
5.5 Other Forms of Dividends. . . . . . . . . . . . . . . . . . . . 34
5.6 Receipt of Voting Securities of Separate Entity . . . . . . . . 35
5.7 Subscription Offer. . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VI
VOTING RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.1 Trustees to Vote Shares . . . . . . . . . . . . . . . . . . . . 38
6.2 Series A Common to be Voted as a Unit . . . . . . . . . . . . . 39
6.3 Failure to Achieve a Six-Vote Majority. . . . . . . . . . . . . 39
6.4 Certain Transactions to Require Joint Consent of Trustees
and Certificate Holders . . . . . . . . . . . . . . . . . . . . 39
6.5 Voting Rights of Certificate Holders . . . . . . . . . . . . . 44
<PAGE>
ARTICLE VII
THE TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.1 Meetings and Procedures . . . . . . . . . . . . . . . . . . . . 46
7.2 Voting of Trustees. . . . . . . . . . . . . . . . . . . . . . . 48
7.3 Election of Trustees. . . . . . . . . . . . . . . . . . . . . . 49
7.4 Removal of Trustees . . . . . . . . . . . . . . . . . . . . . . 51
7.5 Johnson Family Trustee. . . . . . . . . . . . . . . . . . . . . 52
7.6 Resignation of Trustees . . . . . . . . . . . . . . . . . . . . 55
7.7 Change of Control . . . . . . . . . . . . . . . . . . . . . . . 55
7.8 Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . 55
7.9 Other Relationships Between Trustees and Company. . . . . . . . 56
7.10 Trustees May be Shareholders, Certificate Holders and May
Acquire and Dispose of Shares . . . . . . . . . . . . . . . . . 56
7.11 Compensation of Trustees. . . . . . . . . . . . . . . . . . . . 57
7.12 Limitation of Liability . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VIII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.1 Adjustment for Stock Splits . . . . . . . . . . . . . . . . . . 58
8.2 Scope of Agreement. . . . . . . . . . . . . . . . . . . . . . . 58
8.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.4 Reliance by Trustee . . . . . . . . . . . . . . . . . . . . . . 60
8.5 Amendment of Agreement. . . . . . . . . . . . . . . . . . . . . 60
8.6 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.7 Renewal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
<PAGE>
8.8 De Minimis Holdings . . . . . . . . . . . . . . . . . . . . . . 62
8.9 Severability of Provisions. . . . . . . . . . . . . . . . . . . 62
8.10 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . 63
8.11 Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . 64
8.12 Construction of Agreement . . . . . . . . . . . . . . . . . . . 64
8.13 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . 64
8.14 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 64
EXHIBIT A - VOTING TRUST CERTIFICATE. . . . . . . . . . . . . . 72
EXHIBIT B - WITHDRAWAL REQUEST. . . . . . . . . . . . . . . . . 79
EXHIBIT C - SUMMARY OF REQUIREMENT
FOR CERTAIN ACTIONS BY
TRUSTEES AND CERTIFICATE
HOLDERS . . . . . . . . . . . . . . . . . . . . . . 82
<PAGE>
VOTING TRUST AGREEMENT
DATED AS OF JUNE 30, 1989
THIS VOTING TRUST AGREEMENT is made as of the thirtieth day of June,
1989, between such holders of the Series A Common Shares, par value $1.00 per
share ("Series A Common"), of TELEPHONE AND DATA SYSTEMS, INC., an Iowa
corporation (the "Company"), as may become parties to this Agreement (the
"Depositing "Certificate Holders" or the "Certificate Holders"), and WALTER
C.D. CARLSON, LETITIA G.C. CARLSON, LEROY T. CARLSON, JR., MELANIE J. HEALD
and DONALD C. NEBERGALL, or their successors (the "Trustees").
The Depositing Shareholders are owners of Series A Common and deem it to
be in their mutual best interests to confer upon the Trustees the right to
vote and to act with respect to such shares, subject to the terms and
conditions of this Agreement.
In consideration of the mutual promises and covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, it is agreed between the parties as follows:
<PAGE>
ARTICLE I
DEPOSIT OF SHARES
1.1 DEPOSIT TO TRUSTEES. Each shareholder of the Company who becomes a
party hereto by signing this Agreement agrees to deposit or cause to be
deposited with the Trustees, to be held by them pursuant to the provisions of
this Agreement, one or more stock certificates representing shares of Series
A Common now owned by him or her, duly endorsed in blank or to the Trustees,
or accompanied by proper instruments of assignment and transfer duly executed
in blank or to the Trustees, and accompanied by any revenue stamps required
for the transfer, or shares of Series A Common held in non-certificated form
pursuant to the Company's dividend reinvestment plan, represented by
appropriate transfer documents, and to accept in lieu thereof a Voting Trust
Certificate or Certificates issued hereunder in the form herein provided.
1.2 TERM. Each deposit made pursuant to Section 1.1 shall continue
from the date this Agreement becomes effective until June 30, 2009, unless
sooner terminated as herein provided. This Agreement shall be effective at
12:01 a.m. on the day following the day on which the last of the following
events occurs:
2
<PAGE>
(a) the Federal Communications Commission order giving consent to
the implementation of this Agreement becomes effective or the Trustees
determine no such order is required; or
(b) the signing of this Agreement by those Certificate Holders who
deposit or agree to deposit, in the aggregate, a majority of the Company's
then issued and outstanding Series A Common Shares, par value $1.00 per share;
provided, however, that the Trustees appointed hereunder may delay the
effective date as required to prevent the implementation of the Agreement
from interfering with any RSA or MSA applications pending before the Federal
Communications Commission.
1.3 ADDITIONAL DEPOSITS. Any owner of shares of Series A Common may at
any time apply to the Trustees for permission to deposit stock certificates
representing shares of Series A Common, accepting in lieu thereof Voting
Trust Certificates issued hereunder in the form hereinafter provided. In
consideration of the original deposit of Series A Common by the Depositing
Shareholders, the Trustees, by an "eight-vote majority" (as defined in
Subsection 7.2(b)), may accept for deposit and receive in trust hereunder any
additional stock certificates representing shares of Series A Common owned by
any shareholder whomsoever and hold any certificates so deposited in trust
under the terms and
3
<PAGE>
conditions of this Agreement. Such deposit of additional stock certificates
representing shares of Series A Common and the acceptance of Voting Trust
Certificates by the depositor thereof shall have the same force and effect as
though such depositor had in fact subscribed his or her name to this
Agreement. The Trustees, by an eight-vote majority, may also accept for
deposit any Common Shares of the Company ("Common Shares").
1.4 SERIES A COMMON.
(a) The term "Series A Common" as hereafter used in this Agreement
shall also be deemed to include:
(i) any shares of a class other than the Company's existing
class of Series A Common Shares, par value $1.00 per share, held or to be
held by the Trustees pursuant to this Agreement;
(ii) any securities convertible into shares of Series A
Common, including any shares or securities deemed to be Series A Common
pursuant to this Section 1.4;
(iii) any rights to subscribe to Series A Common, including
any shares or securities deemed to be Series A Common pursuant to this
Section 1.4;
4
<PAGE>
(b) Wherever reference is made in this Agreement to shares
of Series A Common "beneficially owned," such reference shall be to those
shares of Series A Common represented by the Voting Trust Certificates and to
those shares of Series A Common acquired in respect of an existing Voting
Trust Certificate by reason of participation in the Company's dividend
reinvestment plan.
(c) Wherever reference is made in this Agreement to votes
"beneficially held" by a Certificate Holder, such reference shall be to votes
described in Subsection 6.5(c).
ARTICLE II
VOTING TRUST CERTIFICATES
2.1 ISSUANCE OF VOTING TRUST CERTIFICATES. All stock certificates for
shares of Series A Common at any time delivered to the Trustees hereunder or
thereafter acquired by the Trustees as provided in this Agreement shall be
held and disposed of by the Trustees under and pursuant to the terms and
conditions of this Agreement. The Trustees, in exchange for the stock
certificates so deposited hereunder, shall cause to be issued and delivered
to the Certificate Holders Voting Trust Certificates
5
<PAGE>
for the appropriate number of shares of Series A Common in substantially the
form set forth in Exhibit A attached hereto or as revised to reflect the
deposit of any shares other than the Company's existing issue of Series A
Common Shares, par value $1.00 per share. The Trustees shall not issue
Voting Trust Certificates with respect to shares purchased through the
Company's dividend reinvestment plan until such shares are reduced to stock
certificate form, but such shares shall nevertheless be subject to this
Agreement if purchased with dividends earned with respect to shares which are
subject to this Agreement.
2.2 FORM OF CERTIFICATES. The Trustees may issue temporary typewritten
or printed Voting Trust Certificates conforming generally to the form set
forth on Exhibit A and may cause the same to be exchanged for definitive
Voting Trust Certificates in substantially such form when the same are
prepared. The Voting Trust Certificates shall be executed by no fewer than
three Trustees, with copies of such Certificates sent to all nonexecuting
Trustees. The Trustees, under such rules as they in their discretion may
prescribe with respect to indemnity or otherwise, shall provide for the
issuance and delivery of new Voting Trust Certificates in lieu of lost,
stolen or destroyed Certificates or in exchange for mutilated Certificates.
6
<PAGE>
ARTICLE III
WITHDRAWAL OF SHARES
3.1 WITHDRAWAL. Any Certificate Holder shall be permitted to withdraw
Common Shares, from time to time, upon the surrender Certificates, of the
corresponding Voting Trust Certificate or Certificates, subject to the
provisions of this Article. The following conditions, limitations and
procedures shall apply to any such withdrawal:
(a) AUTHORITY TO CONVERT. Any Certificate Holder electing to withdraw
Common Shares shall be deemed to have instructed, directed and authorized the
Trustees to convert a sufficient number of shares of his or her beneficially
owned Series A Common into Common Shares to the extent necessary to effect
such withdrawal.
(b) WITHDRAWALS UPON TWENTY DAYS' NOTICE. Any Certificate Holder may
make aggregate withdrawals during any calendar year of not more than 7,500
Common Shares (as adjusted by Section 8.1), provided written notice of such
intended withdrawal is given to the Trustees no less than twenty days prior
to the date of withdrawal specified in such written notice. No such
withdrawal notice shall be revoked except as provided in Subsection 3.1(i).
7
<PAGE>
(c) WITHDRAWALS UPON SIXTY DAYS' NOTICE. Any Certificate Holder may
make aggregate withdrawals during any calendar year of more than 7,500 Common
Shares (as adjusted by Section 8.1), but not more than five percent (5%) of
the number of shares of his or her beneficially owned Series A Common as of
the beginning of the calendar year in which such withdrawal occurs (as
adjusted by Section 8.1 for capital changes occurring during such calendar
year), provided written notice of such intended withdrawal is given to the
Trustees no less than sixty days prior to the date of withdrawal specified in
such written notice. No such withdrawal notice shall be revoked except as
provided in Subsection 3.1(i).
(d) WITHDRAWALS UPON NINE MONTHS' NOTICE. In addition to any
withdrawals permitted pursuant to Subsections 3.1(b) and 3.1(c), any
Certificate Holder may make additional withdrawals during any calendar year
which cause his or her aggregate withdrawals for such year to be not more
than 300,000 Common Shares (as adjusted by Section 8.1), provided written
notice of such intended withdrawal is given to the Trustees no less than nine
months prior to the date of withdrawal specified in such written notice. No
such withdrawal notice shall be revoked unless cancelled by written notice
received at least 105 or more
8
<PAGE>
days prior to the specified date of withdrawal or except as provided in
Subsection 3.1(i).
(e) WITHDRAWALS SUBSEQUENT TO TRANSFER. During any calendar year in
which a Certificate Holder makes a gratuitous intervivos transfer of a Voting
Trust Certificate, neither such transferor nor any transferee of such
Certificate may make a withdrawal to the extent that the number of Common
Shares withdrawn by such transferor during such year, when added to the
number of Common Shares represented by Voting Trust Certificates transferred
by such transferor during such year and deemed to be withdrawn by a
transferee during such year, would exceed the limitation set forth in
Subsection 3.1(d) For purposes of this Subsection 3.1(e), any such transferee
shall be deemed to withdraw Common Shares represented by Voting Trust
Certificates transferred by a transferor only after such transferee has
withdrawn shares equal in number to (i) the number of shares of Series A
Common beneficially-owned by and withdrawable by such transferee as of the
beginning of such year plus (ii) the number of shares of Series A Common
represented by Voting Trust Certificates acquired for value by such
transferee during such year prior to the date of withdrawal. If the
transferee receives a gratuitous intervivos transfer of Voting Trust
Certificates from more than one transferor during such year, he or she shall
be deemed to have withdrawn Common Shares represented by Voting
9
<PAGE>
Trust Certificates transferred by each such transferor, if at all (after
application of the preceding sentence), on the following basis:
(i) to the extent withdrawals are permitted with respect to
each such transferor, in proportion to the number of shares of Series A
Common represented by Voting Trust Certificates received during such year by
such transferee from each such transferor, and
(ii) to the extent withdrawals would not be permitted with
respect to any transferor because of the limitations imposed by this
Subsection 3.1(e), in proportion to the number of shares of Series A Common
represented by the Voting Trust Certificates received during such year by
such transferee from each transferor with respect to whom withdrawals would
be permitted.
The ability to make a withdrawal shall be determined as of the date such
withdrawal is requested, taking into account all prior withdrawal requests
whether or not such withdrawal has been completed. A transferee of a Voting
Trust Certificate from a deceased Certificate Holder may not make a withdrawal
of any Common Shares represented by such Certificate during the year in which
such decedent dies, except for that number of shares which
-10-
<PAGE>
bears the same proportion to the number of shares which such decedent was
eligible to withdraw immediately prior to his or her death as the number of
shares represented by such Certificate bears to the total number of shares
beneficially-owned by such decedent immediately prior to his or her death.
No such withdrawals shall cause such transferee's withdrawals for the year to
exceed the limitation imposed by Subsection 3.1(d).
(f) PERMITTED WITHDRAWALS IN RESPECT OF A DECEDENT. Notwithstanding
the limitations on withdrawals set forth in the preceding subsections of this
Article III, upon the death of a Certificate Holder, each transferee of such
decedent's Voting Trust Certificates may withdraw additional Common Shares so
long as the aggregate value of all withdrawals made pursuant to this Subsection
3.1(f) does not exceed the total amount of transfer and succession taxes payable
by reason of decedent's death plus the amount of administration expenses
deductible (whether or not actually deducted) pursuant to Sections 2053 and 2054
of the Internal Revenue Code of 1986, as amended, or any amended or successor
provisions, which such transferee is legally obligated to pay. Any such
withdrawals with respect to transfer and succession taxes must be made prior to
the due date or dates of such taxes, and any such withdrawals with respect to
administration expenses must be made within nine-months of the decedent's death,
provided written notice of such intended withdrawal is given to
-11-
<PAGE>
the Trustees no less than sixty days prior to the date of withdrawal as
specified in such written notice. For purposes of this Subsection 3.1(f),
the value of any withdrawn shares shall be deemed to be the value determined
with respect to such shares pursuant to Subsection 3.2(g). No such withdrawal
notice shall be revoked except as provided in Subsection 3.1(i).
(g) NOTICE OF WITHDRAWAL. The written notice of withdrawal required
pursuant to Subsections 3.1(b), (c), (d) or (f) shall be substantially in the
form prescribed in Exhibit B attached hereto.
(h) WAIVER OF NOTICE. Any notice required pursuant to Section 3.1
may be reduced to sixty days by the "six-vote majority" (as defined in
Subsection 7.2(b)) of the Trustees; provided, however, that the required six
votes shall be reduced by the number of votes held by any Trustee who is the
Certificate Holder requesting such waiver, such Trustee being excluded from
voting with respect to such matter.
(i) CANCELLATION OF OTHERWISE IRREVOCABLE NOTICE OF WITHDRAWAL.
Notwithstanding that any notice of withdrawal may be irrevocable pursuant to
the preceding provisions of this Section 3.1, the Trustees may, without
liability to any person, permit the cancellation of such withdrawal notice up
to fifteen
-12-
<PAGE>
days prior to the specified date of withdrawal, provided that the cancelling
Certificate Holder reimburses the Trustees for all expenses incurred by the
Trustees with respect to such withdrawal. Such cancellation shall be approved
by a six vote majority of the Trustees; provided, however, that the required
six votes shall be reduced by the number of votes held by the Trustee who is
the Certificate Holder wishing to cancel such withdrawal notice, such Trustee
being excluded from voting with respect to such matter. In the event any
such cancellation is permitted by the Trustees, neither the Certificate
Holder requesting such withdrawal nor the Trustees shall be liable to any
other Certificate Holder for any expenses or damages, consequential or
otherwise, that such other party or other Certificate Holder may allege to
have been incurred in reliance on or otherwise as a result of such notice of
withdrawal or cancellation. The Trustees shall not be required to permit or
deny cancellation except in their sole and uncontrolled discretion. The
Trustees shall, within five business days, provide written notice of any
cancellation to all Optionees (as defined in Subsection 3.2(a)).
3.2 OPTION TO ACQUIRE.
(a) NOTICE OF INTENT TO WITHDRAW TO OPTIONEES. Upon the Trustees'
receipt of notice from a Certificate Holder of such person's intention to
make a withdrawal pursuant to Section 3.1
-13-
<PAGE>
which would cause such person's aggregate withdrawals for the calendar year
to equal or exceed 150 (as adjusted by Section 8.1) Common Shares the
Trustees shall, within five business days after their receipt of such notice,
provide written notice of the proposed withdrawal to each remaining
Certificate Holder who beneficially owns 750 (as adjusted by Section 8.1) or
more shares of Series A Common (the "Optionee"), which notice shall include
all the information that the Trustees received. The withdrawing Certificate
Holder may require the Optionees exercising the options hereinafter described
to acquire the shares of Series A Common proposed to be converted and
withdrawn by an exchange of Common Stock in lieu of a cash purchase. Any
such requirement shall be set forth in the withdrawal request.
(b) EXERCISE OF FIRST OPTION. Each Optionee shall have the option,
exercisable until thirty days prior to the specified date of withdrawal (sixty
days in the case of a withdrawal requiring more than ninety days' notice), to
elect to acquire his or her proportionate part (as hereinafter defined) of the
shares of Series A Common proposed to be converted and withdrawn. Such
acquisition may be by cash purchase or by exchange of Common Stock. The notice
of intent to exercise such option shall be delivered to the Trustees not less
than thirty days prior to the specified date of withdrawal (sixty days in the
case of a withdrawal requiring more than ninety days' notice). The closing
-14-
<PAGE>
date of such transaction shall be the specified date of withdrawal. An
Optionee's proportionate part pursuant to this option shall be that number of
shares which bears the same proportion to the total number of shares proposed
to be withdrawn as the number of votes beneficially held by such Optionee at
the time the notice of intent to withdraw is given bears to the total number
of votes then beneficially held by all Optionees. An Optionee may elect to
acquire less than his or her proportionate part of the shares proposed to be
withdrawn.
(c) NOTICE AND EXERCISE OF SECOND OPTION. In the event all of the
shares proposed to be withdrawn are not acquired pursuant to the first
option, each Optionee shall be notified within five days after the last date
to exercise such option that he or she has a second option exercisable until
twenty days prior to the specified date of withdrawal (forty days in the case
of withdrawal requiring more than ninety days' notice). Such second option
shall entitle each Optionee to acquire his or her proportionate part of the
shares of Series A Common not being acquired pursuant to the first option.
Such proportionate part shall be that number of shares which bears the same
proportion to the total number of shares not acquired pursuant to the first
option as the number of votes beneficially held by such Optionee at the time
the notice of intent to withdraw is given bears to the total number of votes
then beneficially held by all Optionees. An
-15-
<PAGE>
Optionee may elect to acquire less than his or her proportionate part
pursuant to this second option.
(d) NOTICE AND EXERCISE OF THIRD OPTION. In the event all of the shares
of Series A Common proposed to be withdrawn are not acquired pursuant to the
first and second options, each Optionee shall be notified within five days
after the last date to exercise the second option that he or she has a third
option exercisable until ten days prior to the specified date of withdrawal
(twenty days in the case of a withdrawal requiring more than ninety days'
notice). The third option shall entitle each Optionee to acquire part of any
shares not acquired pursuant to such preceding options. Each Optionee
wishing to exercise the third option shall be required to specify the maximum
number of shares he or she is willing to acquire. An Optionee may elect to
acquire less than his or her proportionate part pursuant to this third
option. The Trustees shall allocate the unacquired shares so that each such
Optionee is entitled to acquire the lesser of (i) that number of unacquired
shares which bears the same proportion to the total number of unacquired
shares as the number of votes beneficially held by such Optionee at the time
the notice of intent to withdraw is given bears to the total number of votes
then beneficially held by all Optionees wishing to exercise the third option,
and (ii) the number of shares specified by the Optionee pursuant to his or
her exercise of this third option.
-16-
<PAGE>
The Trustees shall allocate any shares still unacquired so that each Optionee
having specified a number of shares greater than were allocated to him or her
pursuant to the preceding allocation is entitled to acquire the lesser of (i)
that number of remaining unacquired shares which bears the same proportion to
the total number of unacquired shares as the number of votes beneficially
held by such Optionee at the time the notice of intent to withdraw is given
bears to the total number of votes then beneficially held by all Optionees
who specified a number of shares greater than were allocated to him or her
pursuant to the preceding allocation, and (ii) the number of shares specified
by the Optionee pursuant to his or her exercise of this third option but not
yet allocated to him or her. The Trustees shall continue to allocate any
unacquired shares in accordance with the preceding sentence until all shares
are allocated or until no more shares are specified by the Optionees.
(e) ALTERNATE PROCEDURE AND REDUCED NOTICE PERIOD FOR SMALL
WITHDRAWALS. Notwithstanding the preceding provisions of this Section 3.2,
in the event of any notice of intended withdrawal described in Section 3.2(a)
with respect to 7,500 (as adjusted by Section 8.1) Common Shares or less,
only the option procedure described in Subsection 3.2(d) shall be used, to be
extended to all Optionees. The Trustees may, in their discretion, reduce the
period required between notice and withdrawal
-17-
<PAGE>
for purposes of Subsection 3.1(b) so long as notice is given to all Optionees
and each such Optionee is given no less than five days after receipt of such
notice to respond. Such reduction shall be approved by a six-vote majority
of the Trustees; provided, however, that the required six votes shall be
reduced by the number of votes held by any Trustee who is the Certificate
Holder desiring a reduction of such period, such Trustee being excluded from
voting with respect to such matter. If the date of withdrawal is
accelerated, the accelerated date of withdrawal shall be used to establish
the cash price to be paid determined pursuant to Subsection 3.2(f).
(f) PAYMENT OF ACQUISITION PRICE. Each Optionee electing to purchase
shares shall deliver to the Trustees on the closing date either (i) cash for
each share so purchased in an amount equal to the average closing price of
the Common Shares of the Company in their primary marketplace on the first
ten of the most recent eleven business days on which they were traded
preceding the specified date of withdrawal, (ii) a stock certificate
representing that number of Common Shares equal to the number of shares so
purchased (and such stock certificate may have been previously deposited
hereunder, in which case no delivery shall be required, but the Optionee
shall direct the Trustees to use such shares in the exercise of such option),
or (iii) a combination of (i) and (ii). To the extent the withdrawing
Certif-
-18-
<PAGE>
icate Holder requires that the acquisition be made by an exchange of Common
Shares, each Optionee must deposit that number of Common Shares which bears
the same proportion to the total number of Common Shares so required as the
number of shares to be acquired by such Optionee bears to the total number of
shares to be acquired by all Optionees, except to the extent the Optionees
may agree to otherwise apportion the requirement to tender Common Shares.
(g) WITHDRAWAL OF UNACQUIRED SHARES. To the extent any shares are
not acquired pursuant to the preceding provisions of this Section 3.2, the
Certificate Holder who intends to withdraw Common Shares may do so, free of
the terms of this Agreement, as provided in Section 3.3.
(h) ACQUIRED SHARES TO REMAIN SUBJECT TO AGREEMENT. Any
Certificate Holder acquiring shares of Series A Common pursuant to the
exercise of the option granted under this Section 3.2 shall be deemed to have
simultaneously deposited such shares with the Trustees, which shares shall
remain subject to this Agreement, and shall be issued a Voting Trust
Certificate or Certificates as provided in Section 2.1.
-19
<PAGE>
(i) OPTION RIGHTS DO NOT APPLY TO SALE BY TRUSTEES. The provisions of
this Section 3.2 do not apply to a sale by the Trustees pursuant to
Subsection 6.4(a).
3.3 REQUEST FOR REGISTRATION. With respect to any withdrawal of Common
Shares pursuant to Subsection 3.2(g) or the withdrawal of Common Shares
delivered by an Optionee pursuant to the exercise of an option, the
Certificate Holder making such withdrawal shall, not less than five business
days prior to the date on which the Common Shares are to be withdrawn,
deliver to the Trustees and to any transfer agent for the Common shares
appointed by the Company (the "Transfer Agent"), a request, in customary
form, setting forth the denominations in which stock certificates for the
Common Shares are to be delivered and the names in which such stock
certificates are to be registered. A similar request shall be made by an
Optionee with respect to the registration of any Voting Trust Certificates
issued pursuant to Subsection 3.2(h). To the extent such requests are not
made, the Trustees shall issue a single stock certificate in the name of the
withdrawing Certificate Holder for all shares to be withdrawn or a single
Voting Trust Certificate in the name of the Optionee representing all
beneficially-owned shares acquired the exercise of an option.
-20-
<PAGE>
3.4 CONVERSION. The Trustees shall not convert any shares of Series A
Common deposited hereunder except in conjunction with a withdrawal of shares
permitted by this Article III.
3.5 ESTABLISHMENT OF PRICE IF COMPANY SHARES NOT TRADED. If a value
for withdrawn shares cannot be established for purposes of Subsection 3.2(f)
because the Company's Common Shares are no longer traded in a public
marketplace or because no trading has occurred on any of the first ten of the
most recent eleven business days preceding the specified date of withdrawal,
such value shall be established pursuant to such reasonable procedures as the
Trustees may from time to time establish, including, without limitation, the
securing of one or more appraisals or the use of prices at which the
Company's Common Shares were sold prior to the said ten-day period or in
non-public transactions.
ARTICLE IV
TRANSFERS
4.1 PERMISSIBLE TRANSFERS. The Voting Trust Certificates shall not be
transferred or disposed of, whether by sale, assignment, gift, bequest,
appointment, or otherwise, except to a Permitted Transferee (as that term is
defined in Section 4.2), and
-21-
<PAGE>
the Voting Trustees shall not register any transfer except in compliance
therewith.
4.2 PERMITTED TRANSFEREES.
(a) PERMITTED TRANSFEREE OF A NATURAL PERSON. The following
persons shall be "Permitted Transferees" of each Certificate Holder who is a
natural person:
(i) the Certificate Holder's descendants and siblings, the
descendants of such siblings, the spouse of any of the foregoing persons, the
Certificate Holder's spouse, and the parents of a Certificate Holder (all
hereinafter referred to as such Certificate Holder's "Family Members");
(ii) any organization to which a Certificate Holder transfers
Voting Trust Certificates and which is an organization contributions to which
are deductible for federal income, estate or gift tax purposes or any
split-interest trust described in Section 4947 of the Internal Revenue Code
of 1986, as amended, or any successor or amended section ("Charitable
Organization");
(iii) the trustee of a trust (including, but not limited to, a
voting trust subject to the provisions of Sub-
-22
<PAGE>
section 6.5(a)(iv), but not including a trust described in Subsection
4.2(a)(ii)) to which a Certificate Holder transfers Voting Trust Certificates
and which is a trust solely for the benefit of any person who is the
transferring Certificate Holder, a Family Member of such Certificate Holder,
the Family Member of any Family Member of the Certificate Holder, or the
Family Member of any Family Member of any Family Member of the Certificate
Holder;
(iv) the court-appointed fiduciary of the estate of a
Certificate Holder who is deceased, incompetent, bankrupt or insolvent;
(v) a corporation or partnership to which a Certificate Holder
transfers Voting Trust Certificates, provided that the articles of
incorporation of such corporation or the partnership agreement of such
partnership shall irrevocably provide that voting control of such entity,
including, without limitation, control of the exercise of all duties, rights
and powers with respect to the Voting Trust Certificates so transferred, is
vested in a person who is the transferring Certificate Holder or a Permitted
Transferee of such Certificate Holder;
(vi) to the extent permitted by law and regulation, a
qualified retirement plan for the benefit of and under the sole control of
the transferring Certificate Holder during his or her
-23-
<PAGE>
lifetime (meaning a plan described in either Section 401(a) or Section 408
and exempt from tax under Section 501(a) of the Internal Revenue Code of
1986, as amended, or any successor or amended provisions);
(vii) a Permitted Transferee (determined without regard to this
Subsection 4.2(a)(vii)) of a Permitted Transferee; and
(viii) a Permitted Transferee (determined without regard to
either Subsection 4.2(a)(vii) or this Subsection 4.2(a)(viii)) of a person or
entity described in Subsection 4.2(a)(vii).
(b) PERMITTED TRANSFEREES OF ENTITIES. With respect to any Certificate
Holder which is not a natural person:
(i) In the case of any Charitable Organization that is a
Certificate Holder, "Permitted Transferee" means (1) with respect to each Voting
Trust Certificate transferred to such Charitable Organization, the Certificate
Holder who made such transfer and any Permitted Transferee of such Certificate
Holder, and (2) with respect to each Subsequent Voting Trust Certificate held by
such Charitable Organization, the Certificate
-24-
<PAGE>
Holder who transferred the Voting Trust Certificate in respect of which such
Subsequent Voting Trust Certificate was issued and any Permitted Transferee
of such Certificate Holder.
(ii) In the case of a Certificate Holder who is trustee of any
trust other than a Charitable Organization or a trust described in Subsection
4.2(b)(iii), "Permitted Transferee" means (1) with respect to each Voting Trust
Certificate transferred to such trust, the Certificate Holder who made such
transfer and any Permitted Transferee of such Certificate Holder, and (2) with
respect to each Subsequent Voting Trust Certificate held by such trust, the
Certificate Holder who transferred the Voting Trust Certificate in respect of
which such Subsequent Voting Trust Certificate was issued and any Permitted
Transferee of such Certificate Holder.
(iii) In the case of a Certificate Holder who is trustee
pursuant to a trust (other than a Charitable Organization) which was
irrevocable on the effective date of this Agreement, "Permitted Transferee"
means any person to whom or for whose benefit principal may be distributed
either during or at the end of the term of such trust whether by power of
appointment or otherwise.
-25-
<PAGE>
(iv) In the case of a Certificate Holder that is the
court-appointed fiduciary of the estate of a deceased, incompetent, bankrupt
or insolvent Certificate Holder, "Permitted Transferee" means a Permitted
Transferee of such deceased, incompetent, bankrupt or insolvent Certificate
Holder.
(v) In the case of a Certificate Holder that is a
corporation, partnership or qualified retirement plan (other than a
Charitable Organization),"Permitted Transferee" means (1) with
respect to each Voting Trust Certificate transferred to such entity, the
Certificate Holder who made such transfer and any Permitted Transferee of
such Certificate Holder, and (2) with respect to each Subsequent Voting Trust
Certificate held by such entity, the Certificate Holder who transferred the
Voting Trust Certificate in respect of which such Subsequent Voting Trust
Certificate was issued and any Permitted Transferee of such Certificate
Holder.
(vi) Notwithstanding anything to the contrary set forth
herein, any Certificate Holder may pledge his or her Voting Trust
Certificates to a pledgee pursuant to a bona fide pledge of such Certificates
as collateral security for indebtedness due to the pledgee, provided that
such Certificates shall not be transferred to or registered in the name of
the pledgee and shall remain subject to the provisions of this Section 4.2.
-26-
<PAGE>
In the event of foreclosure or other similar action with respect to such
Certificates by the pledgee, such pledged Certificates may only be
transferred to a Permitted Transferee of the pledgor or converted into Common
Shares and withdrawn subject to the terms of Section 3.1, and with respect to
any withdrawal not described in Subsections 3.1(b), 3.1(c) or 3.1(f), written
notice of such intended withdrawal must be given to the Trustees no less than
six months prior to the date of withdrawal specified in such written notice.
Any withdrawal pursuant to this Subsection 4.2(b)(vi) shall be treated as a
withdrawal to which Section 3.2 applies.
(c) DEFINITIONS AND INTERPRETATION. For purposes of Section 4.2:
(i) The term "Subsequent Voting Trust Certificate shall mean
any Voting Trust Certificate issued or acquired in respect of an existing
Voting Trust Certificate (1) by reason of Section 5.4, (2) by reason of
participation in the Company's dividend reinvestment plan, whether or not a
Voting Trust Certificate is actually issued, or (3) by reason of the exercise
of any option granted pursuant to Section 3.2, such acquired Voting Trust
Certificates to be deemed to be in respect of the Voting Trust Certificates
which enabled such person to be granted such option.
-27-
<PAGE>
(ii) A spouse shall include a widow or widower. A former spouse
by reason of a dissolution of marriage all purposes of Subsection shall remain a
Permitted Transferee for all purposes of Subsection 4.2(b) to the extent that
person was a Permitted Transferee on the date such marriage was dissolved, but,
notwithstanding the provisions of Subsections 4.2(a)(vii) and 4.2(a)(viii),
shall cease to be a Permitted Transferee for all other purposes of this
Agreement.
(iii) The relationship of any person that is derived by or
through legal adoption shall be considered a natural one, but only if the
person adopted had not attained the age of twenty-one years at the time the
adoption became effective.
(iv) A custodian under a Uniform Gifts to Minors Act, as in
effect in any state, or any similar law, shall be treated as if such custodian
were a trustee of a trust for the sole benefit of the donee of any transfer made
pursuant to such Act.
(v) Unless otherwise specified, the term "person" means both
natural persons and legal entities.
-28-
<PAGE>
(vi) The Permitted Transferees of a Certificate Holder shall
be the same irrespective of whether such Certificate Holder (or any natural
person linking such Certificate Holder to his or her Permitted Transferees by
reason of subsections 4.2(a)(vii) or (viii)) is alive or dead and shall
include Permitted Transferees born after such Certificate Holder's death.
(vii) A Certificate Holder may register or reregister his or
her Voting Trust Certificates in the names of one or more persons only if
each person in whose name the Voting Trust Certificates are to be registered
is the Certificate Holder or a Permitted Transferee of the Certificate
Holder. If Voting Trust Certificates are registered in the names of more
than one person in accordance with this Subsection 4.2(c)(vii), then such
Voting Trust Certificates may be transferred to any Permitted Transferee of
any person in whose name such shares are registered.
(viii) Notwithstanding any provision of this Agreement to the
contrary, no person shall be a Permitted Transferee or act in a fiduciary
capacity with respect to any Permitted Transferee if, because of such
person's status as an alien or because of his or her criminal record, the
Company would be denied the right to provide a material service which it
could
-29-
<PAGE>
have otherwise provided consistent with its normal business practices.
(ix) Any Certificate Holder or Permitted Transferee who
acquires any Voting Trust Certificate for value (other than pursuant to a
purchase through the Company's dividend reinvestment plan) shall represent,
as a condition to such transfer, that he or she is acquiring such Voting
Trust Certificates for his or her own personal account and not with a view to
the transfer of such certificates or of the beneficially-owned shares of
Series A Common to anyone other than a Permitted Transferee.
(x) Any purported transfer of record or beneficial ownership
of Voting Trust Certificates other than in accordance with the terms of this
Section 4.2 shall be void.
4.3 LIMITATION OF VOTING RIGHTS OF CERTAIN PERMITTED TRANSFEREES.
Notwithstanding any provision in this Agreement to the contrary, neither a
Charitable Organization, nor a trust described in Subsection 4.2(a)(iii), nor
an estate described in Subsection 4.2(a)(iv), nor a retirement plan described
in Subsection 4.2(a)(vi) shall exercise any voting rights pursuant to this
Agreement unless the majority control over the power to vote and dispose of
Voting Trust Certificates held by such entity is
-30-
<PAGE>
vested in a natural person who is either a Certificate Holder or a
Permitted Transferee of a Certificate Holder. No such person vested with
such control shall cease to be a Permitted Transferee for purposes of
exercising such control pursuant to this Section 4.3 by reason of the death
of any person.
4.4 TRANSFERS. Subject to the foregoing Sections 4.1 and 4.2, the
Voting Trust Certificates shall be transferable on the books of the Trustees
by the holders of record thereof in person or by duly authorized attorney,
subject to such regulations as may be established by the Trustees for that
purpose, upon surrender thereof at the office of the Trustees, properly
endorsed for transfer, and the Trustees may treat the holders of record
thereof, or when duly endorsed in blank the bearers thereof (so long as such
bearers are Permitted Transferees), as the owners of Voting Trust
Certificates for all purposes whatsoever. As a condition of making or
permitting any transfer or delivery of stock certificates or Voting Trust
Certificates, the Trustees may require the payment of a sum sufficient to pay
or reimburse them for any stamp tax or other governmental charge in
connection therewith or any other charge applicable to such transfer or
delivery.
4.5 TRANSFEREES BOUND BY AGREEMENT. Every Permitted Transferee of
Voting Trust Certificates shall, with respect thereto
-31-
<PAGE>
and by the acceptance thereof, become a party hereto with like force and
effect as though an original party hereto and shall be embraced within the
meaning of the terms "Depositing Shareholder" or "Certificate Holder"
wherever used herein; provided, however, that no such Permitted Transferee
shall be required to deposit any certificates representing shares of Series A
Common which he or she may otherwise own and which are not Subsequent Voting
Trust Certificates.
4.6 RECORD DATE. The Trustees, in their discretion, may fix a record
date as of which the Certificate Holders entitled to any payment or to take
any action may be determined. Any record date fixed by the Company with
respect to any payment shall be deemed to have been fixed by the Trustees as
the record date for the purpose of determining the Certificate Holders
entitled to such payment. Any other record date fixed by the Company shall
be deemed to have been fixed by the Trustees unless the Trustees, within ten
days after the fixing of such record date by the Company, fix and notify the
Certificate Holders of a different record date. The Certificate Holders at
the close of business on any such record date shall be deemed to be the
persons so determined.
-32-
<PAGE>
ARTICLE V
DIVIDENDS
5.1 TRUSTEES TO PASS THROUGH CASH DIVIDENDS. Each Certificate Holder
shall be entitled during the life of this Voting Trust, except as may be
otherwise provided herein, to receive from time to time payments equal to the
dividends payable in money, if any, received by the Trustees on a number of
shares of Series A Common equal to that represented by such Voting Trust
Certificate.
5.2 DIRECT PAYMENT OF DIVIDENDS. The Trustees, instead of themselves
receiving and disbursing dividends, may request the Company to pay the amount
of any dividends upon the shares of Series A Common held by such Trustees
hereunder to which such Trustees from time to time become entitled directly
to the Certificate Holders after deducting any charges and expenses
authorized herein and any income or other taxes required by law to be
deducted therefrom; payments in respect of each such dividend shall be made
according to their respective interests to the Certificate Holders registered
as such at the close of business on the record date determined pursuant to
Section 4.6; provided, however, that the Trustees may at any time or from
time to time thereafter request the Company to make payment in respect of
such dividends to the Trustees.
-33-
<PAGE>
5.3 HOLD ON DIVIDENDS AT TERMINATION. At the termination of this
Agreement the Trustees may continue to hold the shares of Series A Common
represented by any Voting Trust Certificate issued and outstanding under this
Agreement and any dividend received on such shares of Series A Common until
the surrender of such Voting Trust Certificate by the holder thereof.
5.4 STOCK DIVIDENDS, STOCK SPLITS AND RECAPITALIZATIONS. Except as
provided in Section 5.6, in the event the Trustees shall receive any
fully-paid shares of Series A Common as a result of a dividend, stock split,
recapitalization or other distribution in respect of the shares of Series A
Common held hereunder, the Trustees shall hold such shares subject to this
Agreement and shall issue Voting Trust Certificates, in proportion to their
respective interests, to the Certificate Holders of record at the close of
business on the date fixed by the Company as the record date for the
determination of the shareholders entitled to receive distributions in
respect of such dividend or split.
5.5 OTHER FORMS OF DIVIDENDS. Except as otherwise provided in Sections
5.4 and 5.6, if any dividend or other distribution in respect of the shares
of Series A Common held by the Trustees hereunder shall be paid otherwise
than in cash, the Trustees
-34-
<PAGE>
shall distribute the same in kind ratably among the Certificate Holders
entitled to receive such dividend or other distribution upon payment by each
Certificate Holder of a sum sufficient to reimburse the Voting Trustees for
any stamp tax, other governmental charge or other expense which the Voting
Trustees shall have incurred, or for which they shall have or will become
liable in connection therewith.
5.6 RECEIPT OF VOTING SECURITIES OF SEPARATE ENTITY. If, as the result
of a merger, reorganization, spin-off, dissolution or other transaction, the
Trustees receive any voting securities or property convertible into voting
securities of any other entity, the Trustees shall retain such securities and
property, holding and administering such securities and property pursuant to
this Agreement. If the Trustees hold voting securities of two or more
separate entities as a result of any of the transactions referred to in the
preceding sentence, and if such securities or property provide the Trustees
with more than ten percent (10%) of the voting power required to elect a
majority of the board of directors of an entity other than the Company, the
Trustees are hereby authorized and directed to create an additional trust or
trusts identical to the trust created pursuant to this Agreement, having the
same Trustees, such that the voting securities of each separate entity
(including any property convertible into such voting securities) are held
pursuant to the terms of a separate
-35-
<PAGE>
trust. Any such additional trust must be ratified by no less than sixty-five
percent (65%) in interest of the Certificate Holders who elect to exercise
their right to vote pursuant to Section 5.6 before becoming effective. If
such voting trust is not established, the Trustees shall distribute any such
securities and property in accordance with Section 5.5.
5.7 SUBSCRIPTION OFFER.
(a) MANNER OF EXERCISE OF SUBSCRIPTION RIGHTS. In the event any
securities of the Company shall be offered for subscription to the holders
of the shares of Series A Common, the Trustees, promptly upon receipt of
notice of such offer, shall mail a copy of such notice to each Certificate
Holder with a notice of the number of shares subscribable with respect to
such Certificate Holder's beneficially-owned shares of Series A Common. Upon
receipt by the Trustees, within such time as shall be fixed by the Trustees
prior to the last date fixed by the Company for subscription and payment, of
a request from any Certificate Holder to subscribe in his or her behalf and
of the amount of money required to pay for a specified amount of such
securities (not in excess of the amount of such securities subscribable in
respect of such holder's beneficially-owned shares of Series A Common), the
Trustees shall make such subscription and payment. Upon receiving from the
Company the certificate for
-36-
<PAGE>
the securities so subscribed for, the Trustees, if such securities be Series
A Common having voting rights greater than those held by Common Shares, shall
hold the same under this Agreement and shall issue to such holder a Voting
Trust Certificate in respect thereof; and if such securities be other
securities the Trustees may in their discretion hold such securities under
this Agreement and shall issue to such holder a Voting Trust Certificate in
respect thereof or may deliver the certificates for such other securities to
such holder. In the event securities of a subsidiary of the Company shall be
offered for subscription to the holders of the shares of Series A Common, the
receipt of any voting securities or other property convertible into voting
securities of such subsidiary shall be treated as a receipt to which the
provisions of Section 5.6 apply.
(b) TRANSFER OR WITHDRAWAL OF SUBSCRIPTION RIGHTS. The rights of
any Certificate Holder to subscribe to additional shares of Series A Common
as provided in Subsection 5.7(a) may be transferred only in accordance with
the provisions of Article IV and may be withdrawn only in accordance with the
provisions of Article III, except that the Trustees shall establish shorter
time periods pursuant to Section 3.2 if reasonably necessary to deal with the
terms of the subscription offer, and shall give reasonable notice of such
change.
-37-
<PAGE>
(c) SERIES A COMMON ACQUIRED PURSUANT TO SUBSCRIPTION RIGHT BY
TRANSFEREE. Any shares of Series A Common acquired pursuant to subscription
rights assigned to a transferee shall be held by the Trustees subject to all
the terms and conditions of this Agreement.
ARTICLE VI
VOTING RIGHTS
6.1 TRUSTEES TO VOTE SHARES. Until the actual delivery to the
Certificate Holder by or on behalf of the Trustees of a certificate issued by
the Company representing the shares of Series A Common deposited hereunder in
exchange for said Voting Trust Certificates, pursuant to the provisions
hereof, the Trustees shall possess and shall be entitled to exercise all the
rights and powers of owners of the shares of Series A Common of the Company
deposited hereunder, to vote for every purpose and to consent to any and all
corporate acts of the Company, it being expressly stipulated that no right to
vote or to consent or to be consulted in respect to any such shares of Series
A Common is created in or passes to any Certificate Holder by or under any
Voting Trust Certificate, or by or under this Agreement, or by or under any
other agreement, express or implied, except as provided in Sections 6.3 and
6.4.
-38-
<PAGE>
6.2 SERIES A COMMON TO BE VOTED AS A UNIT. Except as provided in
Sections 6.3 and 6.4, the Trustees shall vote the shares of Series A Common
held by them or take any other action with respect to such shares of Series A
Common as a unit in accordance with the determination of the six-vote
majority of the Trustees.
6.3 FAILURE TO ACHIEVE A SIX-VOTE MAJORITY. Except as otherwise
provided in Section 6.4, in the event of the failure of the Trustees to
achieve a six-vote majority with respect to the exercise of the right to vote
the Series A Common on any proposal, the Trustees shall promptly notify all
Certificate Holders of record and the Trustees shall vote all shares of
Series A Common deposited hereunder with respect to each such proposal as
more than fifty percent (50%) in interest of the Certificate Holders who
elect to exercise their right to vote pursuant to this Section 6.3 shall
direct in writing.
6.4 CERTAIN TRANSACTIONS TO REQUIRE JOINT CONSENT OF TRUSTEES AND
CERTIFICATE HOLDERS.
(a) (i) Upon any proposal for the sale of shares of Series A
Common by the Trustees;
-39-
<PAGE>
(ii) Upon any proposal submitted for shareholder approval for:
(1) the merger or consolidation of the Company with or into
any other corporation, or the merger or consolidation of any other corporation
with or into the Company;
(2) the sale, lease, exchange, mortgage or pledge of all,
or substantially all, the property and assets of the Company;
(3) the sale, exchange or other disposition of a
significant subsidiary of the Company or of the voting control of such
subsidiary (meaning, for purposes of this Section 6.4, a subsidiary whose
fair market value, as estimated in the reasonable judgment of the Trustees,
equals or exceeds twenty-five percent (25%) of the fair market value of the
Company and all of its subsidiaries, similarly determined);
(4) the merger or consolidation of a significant
subsidiary of the Company with or into any other corporation, or the merger
or consolidation of any other corporation with or into a significant
subsidiary of the Company in a transaction which would leave the Company with
fifty percent (50%) or less of the voting power of such significant
subsidiary;
-40-
<PAGE>
(5) the sale, lease, exchange, mortgage or pledge of
all, or substantially all, the property and assets of a significant
subsidiary of the Company;
(6) the dissolution, winding up or liquidation of the
Company or its business or of a significant subsidiary of the Company or of its
business;
(7) the amendment of the Company's Articles of
Incorporation; or
(8) the issuance of any securities having voting rights
superior to those of Common Shares;
(iii) Upon any proposal for any other transaction not
previously described in this Section 6.4 which would be deemed a change of
control under the rules and regulations of either the Securities and Exchange
Commission or the Federal Communications Commission;
the Trustees shall promptly notify all Certificate Holders and the Trustees
shall not approve or implement any such action and shall not vote any shares
of Series A Common in favor of any such proposal unless (1) the Trustees
receive the written direction in
-41-
<PAGE>
favor of the proposal from no less than seventy-five percent (75%) in
interest of the Certificate Holders of record, and (2) a six-vote majority of
the Trustees concur at a meeting of the Trustees. In the absence of both
conditions (1) and (2) being satisfied, the Trustees shall, as the case may
be, refrain from the sale of shares of Series A Common, vote against any
proposal which would have the effect of approving any transaction described
in Subsections 6.4(a)(ii)(1) through (8), or shall refrain from approving or
implementing any proposal described in Subsection 6.4(a)(iii); provided,
however, that the rights of each dissenting Certificate Holder shall be
safeguarded as provided in Subsection 6.4(b)
(b) With respect to any Certificate Holder who files a written
direction opposing a proposal referred to in Subsection 6.4(a) (a "dissenting
Certificate Holder"):
(i) No shares of Series A Common held by the Trustees for the
benefit of such dissenting Certificate Holder shall be sold without the
express written consent of such Certificate Holder. If all shares of Series
A Common except those held for the benefit of dissenting Certificate Holders
are being sold, the Trustees shall distribute the shares not being sold to
such dissenting Certificate Holders on the date the balance of the Series A
Common is sold.
-42-
<PAGE>
(ii) In the event of a transaction in which the law of the
state of incorporation of the Company grants a dissenting shareholder
appraisal rights, the Trustees shall, in accordance with and to the extent
permitted by law, take such reasonable steps as are directed in writing by
each dissenting Certificate Holder to perfect such dissenting Certificate
Holder's appraisal rights with respect to his or her beneficially owned
shares of Series A Common, the costs of which shall be borne by each such
dissenting Certificate Holder in accordance with the reasonable allocation of
such cost by the Trustees. To the extent the Trustees are not legally
permitted to fully perfect such rights, the Trustees shall distribute such
shares to their beneficial owners so that they may individually take the
necessary steps to perfect such rights.
(c) Notwithstanding any provision of this Agreement to the
contrary, with respect to the sale of shares of Series A Common held by the
Trustees pursuant to this Agreement:
(i) no such sale shall be made by the Trustees unless the
proceeds of such sale shall benefit all of the non-dissenting Certificate
Holders proportionately to their beneficial ownership of each class of
securities comprising the Series A Common hereunder;
-43-
<PAGE>
(ii) no Trustee shall negotiate or consider any offer with
respect to such sale without notice to all Trustees;
(iii) except with the consent of a six-vote majority of the
Trustees, no Trustee shall enter into any arrangement which commits the
Trustee to vote either in his or her capacity as a Trustee or as a
Certificate Holder in any specific manner; and
(iv) the Trustees shall give reasonable consideration to any
offer to purchase all or a portion of such shares which may be made by any
one or more Certificate Holders representing five percent (5%) or more in
interest hereunder, provided that the Trustees shall not be required to give
any additional notice to such Certificate Holders other than the notice
required pursuant to Subsection 6.4(a), nor shall the Trustees be required to
grant any additional time to such Certificate Holders in which to present
such offer.
6.5 VOTING RIGHTS OF CERTIFICATE HOLDERS.
(a) The voting rights available to any Certificate Holder pursuant
to Sections 6.3, 6.4 or 7.3:
-44-
<PAGE>
(i) may be exercised in person;
(ii) may be exercised by proxy, provided that the holder of such
proxy must be another Certificate Holder or the Permitted Transferee of any
Certificate Holder and provided the proxy is executed within one year before the
date on which it is exercised;
(iii) may be exercised by written ballot with respect to any
matter placed before the Certificate Holders in a proxy statement or other
written notice from the Trustees, in such form and subject to such time
limits as the Trustees may reasonably require;
(iv) may be assigned to a voting trust as provided in
Subsection 4.2(a)(iii); provided that each voting trustee thereof shall be a
Certificate Holder or the Permitted Transferee of a Certificate Holder.
(b) Whenever a percentage in interest of the Certificate Holders
is required with respect to any matter, it shall mean that percentage of the
votes of all Certificate Holders eligible to vote after giving effect to the
provisions of Section
-45-
<PAGE>
4.3, except as otherwise provided for purposes of Sections 5.6 and 6.3.
(c) A Certificate Holder may cast one vote for each vote to which
his or her beneficially-owned shares of Series A Common is entitled with
respect to the Company's affairs.
ARTICLE VII
THE TRUSTEES
7.1 MEETINGS AND PROCEDURES.
(a) ANNUAL MEETINGS. The Trustees shall meet annually on the
first Saturday in April in Chicago, Illinois, or at such other time and place
as they may otherwise determine, with such reasonable notice as their rules
may provide, including notice to all Certificate Holders who shall be invited
to attend each such annual meeting.
(b) OTHER MEETINGS OF THE TRUSTEES. In addition to the annual
meetings, the Trustees may meet at such time and place as they may determine,
with such reasonable notice as their rules may provide (and such rules shall
provide that any two trustees may call such a meeting).
-46-
<PAGE>
(c) MEETING PROCEDURES. Except for actions required of the
Trustees pursuant to Subsection 6.4(a), the Trustees may act without a
meeting by a writing embodying their action executed by that number of
Trustees holding the votes necessary to approve such action if there had been
a meeting, with notice to each Trustee not executing such writing. The
Trustees shall adopt their own rules of procedure. At any meeting of the
Trustees any Trustee may vote in person or by proxy given to any other
Trustee, and any Trustee may give powers of attorney to any other Trustee to
sign any instrument expressing the actions of the Trustees. Trustees may
participate in any meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting. The Trustees may vote by proxy
at any meeting of the Company, if they so elect, provided that such proxy be
signed by at least those Trustees holding no fewer than six votes.
(d) SPECIAL MEETINGS. Special meetings of the Certificate
Holders and the Trustees, for any purpose or purposes, may be called by any
two Trustees. Written notice of a special meeting, stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, signed by
-47-
<PAGE>
two or more Trustees, shall be given not less than ten nor more than sixty
days before the date of the meeting to each Certificate Holder entitled to
vote at such meeting, with an information copy to any Certificate Holder not
entitled to vote at the meeting by reason of the provisions of Section 4.3.
7.2 VOTING OF TRUSTEES.
(a) TRUSTEES' VOTING POWER. The "Johnson Family Trustee" (as
defined in Section 7.5) shall have one vote. All other Trustees acting
hereunder shall each have two votes.
(b) TYPES OF MAJORITIES. A "six-vote majority" shall require the
affirmative vote by Trustees holding no fewer than six votes. An "eight-vote
majority" shall require the affirmative vote by Trustees holding no fewer
than eight votes. Any action requiring the approval of the Trustees for
which no reference is made to either of the aforesaid majorities shall
require a six-vote majority. The number of votes required shall not be
reduced by reason of the temporary vacancy of any trusteeship, by the
failure of any Trustee to be present at a meeting of the Trustees either in
person or by proxy, by the cessation of the Johnson Family Trustee or for any
other reason except as specifically set forth in Subsections 3.1(h), 3.1(i)
or 3.2(e).
-48-
<PAGE>
(c) EFFECT OF FAILURE TO ACHIEVE REQUIRED MAJORITY. In the event
of the failure of the Trustees to achieve the required six-vote or eight-vote
majority as to any proposal not described in Section 6.3 (i.e., a proposal
not involving the right to vote the Series A Common), such proposal shall
fail.
(d) AUTHORITY OF ACTING AND SUCCESSOR TRUSTEES. Pending the
election of a successor Trustee to fill any vacancy, the Trustees then acting
shall possess and may exercise all the powers of the Trustees hereunder,
provided they retain a sufficient number of votes to fulfill the applicable
six-vote or eight-vote majorities.
7.3 ELECTION OF TRUSTEES.
(a) TERMS OF OFFICE. The Trustees named or elected hereunder
shall serve terms of offices, as follows:
First Term: The effective date hereof - June 30, 1994
Second Term: July 1, 1994 - June 30, 1999
Third Term: July 1, 1999 - June 30, 2004
Fourth Term: July 1, 2004 - June 30, 2009
(b) REGULAR ELECTION. No less than sixty days prior to the
expiration of a term of office, the Trustees shall hold an
-49-
<PAGE>
election among the Certificate Holders to elect a new slate of Trustees.
Each Certificate Holder shall have the right to vote, in person or by proxy,
the number of votes he or she beneficially holds for as many persons as there
are Trustees to be elected, or to accumulate such votes and give one
candidate up to that number of votes determined by multiplying the number of
Trustees to be elected by the number of shares of Series A Common he or she
beneficially owns, or to distribute such votes on the same principle among as
many candidates as such Certificate Holder shall think fit. The candidates
receiving the highest number of votes up to the total number of Trustees to
be elected shall be elected.
(c) SPECIAL ELECTION. If one or more vacancies should occur
during a term by reason of death, disability, resignation or removal, the
Trustees shall, within sixty days of any vacancy, promptly hold a separate
special election to elect each successor Trustee to complete the remainder of
a term. Only those Voting Trust Certificates with respect to which votes
were cast in favor of the Trustee who has died, become disabled, resigned or
been removed may be cast with respect to the election of the successor
Trustee. If the Trustee who has died, become disabled, resigned or been
removed is an initial Trustee, only those Voting Trust Certificates deposited
hereunder by such initial Trustee, either in his or her personal or fiduciary
capacity, may be cast with
-50-
<PAGE>
respect to the election of the successor Trustee,
including any such Voting Trust Certificates then held by a Permitted
Transferee who, even after the application of Section 4.3, is entitled to
vote hereunder. The identification of those Voting Trust Certificates shall
be made by the Trustees as they may reasonably determine.
(d) SUCCESSOR TRUSTEES. Any successor Trustee elected hereunder
shall be a natural person who is a Certificate Holder or a Permitted
Transferee of a Certificate Holder.
(e) TERMS FOLLOWING RENEWAL. Should this trust be renewed
pursuant to Section 8.6, the Trustees serving during the last term shall
serve until September 30 of the first year of the renewal term. All
subsequent terms shall be for five years beginning October 1, except any
Trustees serving at the termination of this trust because it is not renewed
pursuant to Section 8.7 shall serve four years and nine months.
7.4 REMOVAL OF TRUSTEES. Any Trustee may be removed at any time by an
instrument signed by no less than eighty-five percent (85%) in interest of
the Certificate Holders of record and delivered to the Trustees, such removal
to occur upon receipt of such instrument. Any Trustee shall be automatically
removed at such time as the Trustees shall have knowledge of any law or
-51-
<PAGE>
regulation to which the Company or this trust is subject which, because of
the Trustee's status as an alien or because of the Trustee's criminal record,
the Company would be denied the right to provide a material service which it
could have otherwise provided consistent with its normal business practices.
Upon the removal of any Trustee, the remaining Trustees shall, within sixty
days, hold an election as provided in Section 7.3.
7.5 JOHNSON FAMILY TRUSTEE. Notwithstanding the provisions of Sections
7.3 and 7.4:
(a) So long as Lester O. Johnson and his Family Members, together
with any fiduciary of a Charitable Organization, trust, estate or qualified
retirement plan who is a Permitted Transferee of any such person and who,
after giving effect to the provisions of Section 4.3, is entitled to vote
hereunder, (the "Johnson Family"), hold the percentage in interest required
by Subsection 7.5(c), the following provisions shall apply:
(i) the Trustee's position held by Melanie J. Heald or any
successor elected in her place shall be known as the "Johnson Family Trustee;"
(ii) the terms of the Johnson Family Trustee shall be
concurrent with the terms of the other Trustees, and a
-52-
<PAGE>
new Johnson Family Trustee shall be elected at the same time the other
Trustees are elected; except such election shall be made by the majority in
interest of the Johnson Family Certificate Holders of record subject to the
approval of the remaining Trustees as provided in Subsection 7.5(a)(v);
(iii) the Johnson Family Trustee may be removed only by a
majority in interest of the Johnson Family Certificate Holders of record;
(iv) if the Johnson Family Trustee should become unable to act
by reason of death, disability, resignation or removal, a successor Trustee
shall be elected by a majority in interest of the Johnson Family Certificate
Holders of record, subject to the approval of the remaining Trustees as
provided in Subsection 7.5(a)(v) and;
(v) any successor Johnson Family Trustee shall give notice of
his or her election to the remaining Trustees and shall be deemed approved
(1) upon the consent of a six-vote majority or (2) upon the expiration of ten
days from such notice unless four votes of the remaining Trustees have been
cast against the approval of such successor Trustee;
-53-
<PAGE>
(b) So long as the Johnson Family Trust is acting, the Johnson
Family Certificate Holders shall not be entitled to vote with respect to the
election or removal of any other Trustee, and all references to the election
or removal of the Trustees shall refer only to the four Trustees other than
the Johnson Family Trustee and all references to the Certificate Holders
entitled to participate in the election or removal of any other Trustees
hereunder shall be a reference only to the Certificate Holders other than the
Johnson Family Certificate Holders.
(c) Six months after the date on which the percentage in interest
of the Johnson Family falls below (i) six percent (6%) at any time either or
both of Lester O. Johnson and Frances M. Johnson are living or (ii) five
percent (5%) following the death of the survivor of Lester O. Johnson and
Frances M. Johnson, the Johnson Family Trustee shall cease to be a Voting
Trustee and thereafter there shall be only four such Trustees; provided,
however, if at any time during the one-year period following the expiration
of the aforesaid six-month period the percentage in interest of the Johnson
Family should be in excess of the applicable percentage test, the Johnson
Family Trustee shall resume office subject to all of the provisions of this
Agreement including the provisions of this Subsection 7.5(c).
-54-
<PAGE>
7.6 RESIGNATION OF TRUSTEES. Any of the Trustees may at any time
resign, and thereby be relieved of all future obligations to act hereunder,
by mailing his or her resignation to the Certificate Holders at their
respective addresses appearing on the Trustee's records. Such resignation
shall be deemed effective immediately upon its being mailed.
7.7 CHANGE OF CONTROL. Any change of trustees hereunder which
constitutes a change of control which requires prior Federal Communications
Commission approval shall not be effective until such approval is obtained.
7.8 REIMBURSEMENT OF EXPENSES. The Trustees may employ counsel or a
depositary and incur other indebtedness or expenses deemed necessary by them
for the proper discharge of their duties. In the discretion of the Trustees,
by a six-vote majority, any such expenses or discharge of indebtedness may be
invoiced among all Certificate Holders holding certificates representing
7,500 (as adjusted by Section 8.1) or more shares of Series A Common, to be
paid by such Certificate Holders in proportion to their respective beneficial
ownership of Series A Common. To the extent any such invoice is not paid
within sixty days, the Trustees shall be entitled to deduct any such amount
from the dividends received or receivable by the Trustees with respect to the
shares of Series A Common beneficially owned by
-55-
<PAGE>
the non-paying Certificate Holder before paying or causing such dividends to
be paid to such Certificate Holder.
7.9 OTHER RELATIONSHIPS BETWEEN TRUSTEES AND COMPANY. Any Trustee
shall be permitted to be, at the same time, an officer, director, consultant,
agent, or employee of the Company or of any affiliate of the Company, and
shall be permitted to be or become pecuniarily interested in his or her
personal capacity, either directly or indirectly, in any matter or
transaction to which the Company or any affiliate may be a party or in which
the Company or any affiliate may be concerned to the same extent as though he
or she were not a Trustee. Any Trustee shall be permitted to receive
compensation, of whatever character, as is provided by their existing
contracts, if any, with the Company or its affiliates, with complete
propriety and without disqualifying themselves to act as Trustees hereunder;
and upon the expiration of the existing contracts, if any, with the Trustees,
or sooner by mutual agreement, the Company or its affiliates and such
Trustees shall be permitted to enter into new contracts which may change
their compensation.
7.10 TRUSTEES MAY BE SHAREHOLDERS, CERTIFICATE HOLDERS AND MAY ACQUIRE
AND DISPOSE OF SHARES. Any Trustee shall be permitted, for his or her
personal account or otherwise, subject to all the terms and conditions of
this Agreement, to either acquire
-56-
<PAGE>
from or sell to the Company or any shareholder shares of stock or other
securities of the Company or Voting Trust Certificates to the same extent as
though he or she were not a Trustee. Any Trustee shall be entitled to
exercise all rights and options conferred upon Certificate Holders under this
Agreement to the same extent as though he or she were not a Trustee.
7.11 COMPENSATION OF TRUSTEES. The Trustees shall not be entitled to
compensation for their services as Trustees hereunder.
7.12 LIMITATION OF LIABILITY. In voting or giving directions for voting
the shares of Series A Common deposited hereunder or in exercising any
consent with respect thereto, the Trustees shall exercise their best
judgment, from time to time, to select suitable directors and in voting or
giving directions for voting and acting on other matters for shareholders'
action the Trustees shall exercise like judgment; provided, however, that the
Trustees assume no responsibility in respect of such management or in respect
of any action taken by them or taken pursuant to their consent thereto, or
pursuant to their votes, and no Trustee shall incur or be under any liability
as the holder of securities of the Company in his or her capacity as Trustee,
by reason of any error of law or any error in the construction of this
Agreement or of any matter or thing done or suggested or omitted to be done
-57-
<PAGE>
pursuant to this Agreement, except for his or her intentional misconduct.
No bond shall be required of any Trustee for the performance of his or her
services as such.
ARTICLE VIII
GENERAL PROVISIONS
8.1 ADJUSTMENT FOR STOCK SPLITS. Wherever under this Agreement a
provision sets a limitation or requirement of an amount of shares, such
number shall be adjusted from time to time as necessary to take into account
any stock splits, stock dividends, issuance of other voting stock with voting
rights superior to Common shares and other changes in the capital structure
of the Company, so that such adjusted number bears the same proportion to the
voting power of the Company held by this trust following such capital change
as the number immediately prior to adjustment bore to the voting power of the
Company held by this trust immediately prior to such capital change.
8.2 SCOPE OF AGREEMENT. This Agreement and all covenants herein
contained shall inure to the benefit of and be binding upon the parties
hereto, their heirs, executors, administrators, successors and assigns.
-58-
<PAGE>
8.3 NOTICES. Any notice required to be given under this Agreement
shall be deemed to have been given and received if actually received, such as
by telephone, telecopier, electronic mail, telegram, hand delivery, or other
means, and the giver has reasonable evidence or acknowledgment of its
receipt. Notice shall also be deemed to have been given if deposited in the
United States mail in a postpaid wrapper, in which case it shall be deemed to
have been received on the third business day after the date of such deposit,
or if deposited with a commercial or government overnight carrier, in which
case it shall be deemed to be received the first business day after the date
of such deposit. The Trustees shall request a return receipt with each
notice they mail or send by overnight carrier.
(a) In the case of a Certificate Holder, such notice shall be
addressed to such Certificate Holder at his or her last address appearing on
the records of the Trustees.
(b) In the case of a notice to the Trustees by a Certificate
Holder, such notice shall be given to each of the Trustees, addressed to
each Trustee at his or her address of record, as set forth at the end of this
Agreement or as it may be changed from time to time by written notice to all
such holders.
-59-
<PAGE>
(c) In the case of a notice to a Trustee by another Trustee,
notice shall be addressed to the Trustee at his or her address of record, as
set forth at the end of this Agreement or and as may be changed from time to
time by written notice to the remaining Trustees. The Trustees shall use
their best efforts to transmit to the Certificate Holders, or to cause the
Company to transmit, all information sent by the Company to the holders of
Series A Common.
8.4 RELIANCE BY TRUSTEE. The Trustees shall be conclusively entitled
to rely upon any notice or statement received by them from the Company or the
holders of record of Voting Trust Certificates and believed by them in good
faith to be genuine and shall act and shall be fully protected in acting in
accordance therewith.
8.5 AMENDMENT OF AGREEMENT. This Agreement and the Certificates issued
hereunder may be amended upon the consent in writing of an eight-vote
majority of the Trustees and no less than ninety percent (90%) in interest of
the Certificate Holders of record; provided, however, that no amendment which
shall have the effect of extending the time for termination of this Voting
Trust
-60-
<PAGE>
Agreement shall be made without the consent in writing of all of the
Certificate Holders.
8.6 TERMINATION. This Agreement shall be binding upon each of the
parties executing the same from the date of its execution by such party. The
trust created hereunder shall be effective as of the date hereof, and this
Agreement and the trust created hereunder shall remain in full force and
effect until January 31, 2009. This Agreement and the trust created
hereunder may be terminated at any time with the consent in writing of an
eight vote majority of the Trustees and by no less than seventy-five (75%) in
interest of the Certificate Holders of record.
8.7 RENEWAL. Not earlier than January 1, 2009, nor later than March
31, 2009, the Trustees shall notify all Certificate Holders of their right to
withdraw their shares of Series A Common upon termination of the trust on
June 30, 2009, without regard to the provisions of Article III. All
Certificate Holders shall have until May 15, 2009, to notify the Trustees of
their preliminary intent to withdraw upon termination. The Trustees shall
notify all Certificate Holders in writing before May 31, 2009, as to which
Certificate Holders have presented such notice. The Certificate Holders
shall notify the Trustees of their final election to withdraw upon
termination on or before June 30, 2009. Each Certificate Holder shall be
eligible to make
-61-
<PAGE>
a final election to withdraw irrespective of whether or not he or she
notified the Trustees of a preliminary intent to withdraw. If, as of the
close of business on June 30, 2009, fifty percent (50%) or less in interest
of the Certificate Holders have elected to withdraw, this trust shall be
automatically renewed for an additional term of the lesser of twenty years or
the maximum number of years permitted by controlling law. If more than fifty
percent (50%) in interest of the Certificate Holders have elected to
withdraw, a six-vote majority of the Trustees shall be required to renew the
trust. If the trust is renewed, it shall be renewed only with respect to
those Certificate Holders not electing to withdraw. This renewal provision
shall be equally applicable at the end of each succeeding renewal term, with
appropriate changes in dates to reflect the new termination date.
8.8 DE MINIMIS HOLDINGS. The Trustees may, in their discretion,
distribute to any Certificate Holder who beneficially owns less than 150 (as
adjusted by Section 8.1) shares of Series A Common the shares of Series A
Common then held by the Trustees for the benefit of such Certificate Holder,
which distribution shall not be subject to the provisions of Article III.
8.9 SEVERABILITY OF PROVISIONS. The invalidity or unenforceability of
any term or provision of this Agreement shall not affect the validity of the
remainder hereof.
-62-
<PAGE>
8.10 INTERPRETATION.
(a) TRUSTEE. The term "Trustee" or "Trustees" wherever used
herein means the person or persons from time to time acting in such capacity
pursuant to the provisions of this Agreement.
(b) HEREUNDER. Whenever the word "hereunder" is used in this
instrument, it shall refer to the entire instrument, not merely to the
article, section or subsection in which it appears.
(c) BUSINESS DAY. A "business day" shall be any day on which the
exchange constituting the primary marketplace for the Company's Common Shares
is open for business or, if such shares are not listed for trading on an
exchange, any day on which the New York Stock Exchange, or any successor
exchange, is open for business.
(d) GENDER AND NUMBER. As the context permits, the gender and
number of words may be interchanged.
(e) HEADINGS. The headings used herein are for convenience only,
are not part of the article, section or subsection to which they relate, and
are not to be used in construing the legal intent of this instrument.
-63-
<PAGE>
8.11 CONTROLLING LAW. All questions concerning the validity and
administration of this Agreement and the trust created hereunder shall be
determined under the law of the State of Iowa, except that the Trustees may,
in their discretion, elect to change the law to be so used to that of the
state in which the Company is incorporated as such state may change from time
to time, upon notice to the Certificate Holders. This Agreement shall be
subject to the applicable rules and regulations of the Federal Communications
Commission.
8.12 CONSTRUCTION OF AGREEMENT. All questions concerning the
interpretation or construction of this Agreement shall be determined by a
six-vote majority of the Trustees, whose decision shall be final and binding
on all parties.
8.13 MULTIPLE COUNTERPARTS. This Agreement may be executed by the
parties herein, or any of them, in any number of counterparts, with the same
force and effect as if they had all executed the same instrument.
8.14 ENTIRE AGREEMENT. This Agreement (including the exhibits attached
hereto) contains the entire understanding among the parties hereto with
respect to the subject matter hereof, and no
-64-
<PAGE>
representation, warranty, covenant or condition other than those expressly
set forth herein shall be of any force or effect.
* * * * *
-65-
<PAGE>
IN WITNESS WHEREOF, the Trustees and the Certificate Holders have
executed this Agreement as of the day and year first above written.
TRUSTEES AND ADDRESSES OF RECORD:
/s/ Walter C.D. Carlson
-----------------------
WALTER C.D. CARLSON
1041 Judson
Evanston, Illinois 60202
Home telephone: (312) 864-6869
Office telephone: (312) 853-7734
/s/ Lettitia G.C. Carlson
-------------------------
LETITIA G.C. CARLSON
2405 41st Avenue East, #303M
Seattle, Washington 98112
Home telephone: (206) 329-6897
/s/ Le Roy T. Carlson, Jr.
--------------------------
LE ROY T. CARLSON, JR.
1440 North Lake Shore Drive
Apartment 19-C
Chicago, Illinois 60610
Home telephone: (312) 266-1725
Office telephone: (312) 630-1900
/s/ Melanie J. Heald
--------------------
MELANIE J. HEALD
7410 Longmeadow Road
Madison, Wisconsin 53717
Home telephone: (608) 836-9653
/s/ Donald C. Nebergall
-----------------------
DONALD C. NEBERGALL
2919 Applewood Place, N.E.
Cedar Rapids, Iowa 52402
Home telephone: (319) 364-8386
Signature Page to TDS Voting Trust Agreement
dated as of June 30, 1989.
-66-
<PAGE>
<TABLE>
<CAPTION>
No. of
No. of Deposited
Deposited Shares of
Shares of Series A
Series A Common in
Signature of Common in Dividend
Depositing Date of Certificate Reinvestment
Shareholders Execution Form Plan
------------ --------- ------------- -------------
<S> <C> <C> <C>
/s/ Arthur Anderson 10/12/89 2,250
------------------- --------
Arthur Anderson, custodian for
Jacob Anderson
/s/ Arthur Anderson 10/12/89 1,800
------------------- --------
Arthur Anderson, custodian for
Samuel Keith
/s/ Kendrick Anderson (undated)
--------------------- --------- 2,250
Kendrick Anderson, custodian
Eve Anderson
/s/ Kendrick Anderson (undated) 2,250
------------------- ----------
Kendrick Anderson, custodian for
Jill Anderson
/s/ K.C. August 9/5/89 20,180
--------------- ----------
K.C. August
/s/ LeRoy T. Carlson 9/14/89 363,009 155.6591
-------------------- ----------
LeRoy T. Carlson
/s/ LeRoy T. Carlson, Jr. 9/7/89 1,006,331 10,310.7146
------------------------ -----------
LeRoy T. Carlson, Jr.
/s/ LeRoy T. Carlson, Jr.,
custodian for
Anthony J.M. Carlson 9/7/89 6,397 175.9203
------------------------ -----------
LeRoy T. Carlson, Jr.,
custodian for Anthony
Joseph Mouly Carlson
/s/ LeRoy T. Carlson, Jr.,
custodian for
Leo P.M. Carlson 9/7/89 475 0.7945
------------------------- ------------
LeRoy T. Carlson, Jr.,
custodian for Leo Peter
Mouly Carlson
</TABLE>
Signature Page to TDS Voting Trust Agreement
dated as of June 30, 1989.
-67-
<PAGE>
<TABLE>
<CAPTION>
No. of
No. of Deposited
Deposited Shares of
Shares of Series A
Series A Common in
Signature of Common in Dividend
Depositing Date of Certificate Reinvestment
Shareholders Execution Form Plan
------------ --------- ------------ --------------
<S> <C> <C> <C>
/s/ Letita G.C. Carlson 9/14/89 447,620 10,432.9115
----------------------- -------
Letitia G.C. Carlson
/s/ Margaret D. Carlson 9/14/89 620,725 MDC
----------------------- ------- <#>620,725</#>
Margaret D. Carlson
/s/ Prudence E. Carlson (undated) 604,718
----------------------- ---------
Prudence E. Carlson
/s/ Ross V. Carlson 9/4/89 4,500 190.4848
---------------- ---------
Ross Carlson, custodian for
Dana Dougherty
/s/ Ross V. Carlson 9/4/89 4,500 190.4848
---------------- ---------
Ross Carlson, custodian for
Adam Maldonado
/s/ Ross V. Carlson 9/4/89 4,500 190.4848
---------------- --------
Ross Carlson, custodian for
Nicole Maldonado
/s/ Walter C.D. Carlson 9/4/89 612,318 8,111.7163
----------------------- --------
Walter C.D. Carlson
/s/ Walter C.D. Carlson,
custodian for
Amanda Carlson * 9/4/89 11,612 60.0321
----------------------- --------
Walter C.D. Carlson,
custodian for Amanda
Liv de Hoyos Carlson
/s/ Walter C.D. Carlson,
custodian for
Greta Carlson * 9/4/89 1,765
--------------------- --------
custodian for Greta
Marion de Hoyos Carlson
</TABLE>
*as custodian
Signature Page to TDS Voting Trust Agreement
dated as of June 30, 1989.
-68-
<PAGE>
<TABLE>
<CAPTION>
No. of No. of Deposited
Deposited Shares of
Shares of Series A
Series A Common in
Signature of Common in Dividend
Depositing Date of Certificate Reinvestment
Shareholders Execution Form Plan
------------ --------- ------------ --------------
<S> <C> <C> <C>
/s/ Yvonne M. Carlson 9/30/89 29,002 1,331.9570
---------------------
Yvonne M. Carlson
2,347
---------------------- --------
Debora M. de Hoyos
/s/ Melanie J. Heald 9/4/89 30,000
-------------------- -------
Melanie J. Heald
/s/ Frances M. Johnson 9/4/89 81,324
---------------------- --------
Frances M. Johnson, Trustee
/s/ Graham Johnson 9/4/89 30,000
------------------ --------
Graham Johnson
/s/ Kent Johnson 9/4/89 30,000
---------------- --------
Kent Johnson
/s/ Laurel Ann Johnson 9/4/89 30,000
---------------------- --------
Laurel Ann Johnson
/s/ Lester O. Johnson 9/4/89 162,648
--------------------- --------
Lester O. Johnson, Trustee
/s/ Dagmar Maldonado,
custodian for
Dana Dougherty 10/17/89 675 31.0652
-------------------- ---------
Dagmar Maldonado, custodian
for Dana Dougherty
/s/ Dagmar Maldonado,
custodian for
Adam Maldonado 10/17/89 450 20.7109
-------------------- ----------
Dagmar Maldonado, custodian
for Adam Maldonado
/s/ Dagmar Maldonado,
custodian for
Nicole Maldonado 10/17/89 450 20.7109
-------------------- ----------
Dagmar Maldonado, custodian
for Nicole Maldonado
</TABLE>
Signature Page to TDS Voting Trust Agreement
dated as of June 30, 1989.
-69-
<PAGE>
<TABLE>
<CAPTION>
No. of
No. of Deposited
Deposited Shares of
Shares of Series A
Series A Common in
Signature of Common in Dividend
Depositing Date of Certificate Reinvestment
Shareholders Execution Form Plan
------------ --------- ------------ --------------
<S> <C> <C> <C>
/s/ Catherine Mouly 9/13/89 2,347 29.2589
------------------ ---------
Catherine Mouly
/s/ Catherine Mouly,
custodian for
Anthony J.M. Carlson 9/13/89 2,250 733.6283
------------------------ ----------
Catherine Mouly, custodian
for Anthony J.M. Carlson
/s/ Donald C. Nebergall 9/6/89 28 1.0430
----------------------- ---------
Donald C. Nebergall
/s/ Donald C. Nebergall, tr 9/6/89 395,827 476.7591
-------------------------------- ---------
Donald C. Nebergall, Trustee
U/A dated 1/1/56 for Prudence E.
Carlson
/s/ Donald C. Nebergall, tr 9/6/89 395,827 476.7591
-------------------------------- --------
Donald C. Nebergall, Trustee
U/A dated 1/1/56 for Walter C.D.
Carlson
/s/ Donald C. Nebergall, tr 9/6/89 593,741 715.1386
-------------------------------- --------
Donald C. Nebergall, Trustee
U/A dated 10/24/60 for Letitia
G.C. Carlson
/s/ Donald C. Nebergall, tr 9/6/89 315,062
-------------------------------- --------
Donald C. Nebergall, Trustee
U/A dated 12/28/72
/s/ Donald C. Nebergall, tr 9/6/89 77,346
-------------------------------- --------
Donald C. Nebergall, Trustee
U/A dated 12/31/76
</TABLE>
Signature Page to TDS Voting Trust Agreement
dated as of June 30, 1989.
-70-
<PAGE>
<TABLE>
<CAPTION>
No. of
No. of Deposited
Deposited Shares of
Shares of Series A
Series A Common in
Signature of Common in Dividend
Depositing Date of Certificate Reinvestment
Shareholders Execution Form Plan
------------ --------- ------------ --------------
<S> <C> <C> <C>
/s/ Donald C. Nebergall, tr 9/6/89 130,992
-------------------------------- -------
Donald C. Nebergall, Trustee
Lead Annuity Trust for Wellesley
College
/s/ Byron Wertz,
custodian for
Allison M. Wertz 9/6/89 4,500 190.4848
-------------------------- --------
Byron Wertz, custodian for
Allison M. Wertz
/s/ Byron Wertz,
custodian for
Joseph E. Wertz 9/6/89 4,500 190.4848
--------------------------- --------
Byron Wertz, custodian for
Joseph E. Wertz
/s/ Florence Wertz,
by John E. Wertz 9/9/89 11,925
------------------ --------
Florence Wertz
/s/ John Alan Wertz 10/-/89 2,577
------------------- --------
John Alan Wertz
/s/ Kristin Wertz 9/16/89 475
----------------- ---------
Kristin Wertz
/s/ Paul Wertz,
for Elizabeth 9/8/89 563 25.8909
-------------- --------
Paul Wertz, custodian for
Elizabeth D. Wertz
/s/ Paul Wertz,
for Jessica 9/8/89 563 25.8909
-------------- --------
Paul Wertz, custodian for
Jessica A. Wertz
</TABLE>
-71-
<PAGE>
EXHIBIT A
TO VOTING TRUST AGREEMENT
DATED AS OF JUNE 30, 1989
VOTING TRUST CERTIFICATE
No.___________ ______Shares of
Series A Common
TELEPHONE AND DATA SYSTEM, INC.
Incorporated under the Laws of the State of Iowa
THIS IS TO CERTIFY THAT, subject to the provisions hereof and of the
Voting Trust Agreement hereinafter mentioned, on the surrender hereof,
properly endorsed, _________________________ will be entitled to receive on
June 30, 2009, or on the earlier termination of the Voting Trust Agreement,
as therein provided, a stock certificate, expressed to be full-paid and
non-assessable, for shares of Series A Common, represented by this
Certificate, of Telephone and Data Systems, Inc. (the "Company"), a
corporation organized and existing under the laws of the State of Iowa, or
its successor. In the event of a withdrawal of Common Shares by the holder
of this Certificate pursuant to a Withdrawal Request as contemplated by
Article III of the Voting Trust Agreement, he or she will be entitled to
receive a stock certificate for the Common Shares so withdrawn under the
terms and conditions set forth in Article III or cash or a stock certificate
for Common Shares to the extent the shares of Series A Common are acquired
pursuant to the option available to certain participants in the Voting Trust
Agreement. In the meantime, subject to the
-72-
<PAGE>
provisions of the Voting Trust Agreement, the holder of this Certificate is
entitled to receive payments equal and of like character to the dividends if
any, received by the Trustees upon the number of shares of Series A Common
held by the Trustees for such holder, less such charges and expenses as are
authorized by the Voting Trust Agreement to be deducted therefrom and less
any income or other taxes required by law to be deducted therefrom; provided,
however, such dividends, if received by the Trustees in Series A Common shall
be payable in Voting Trust Certificates for such stock. If the Trustees
shall exercise on behalf of the holder of this Certificate any right to
subscribe to shares of Series A Common, in accordance with the provisions of
the Voting Trust Agreement, the Trustees shall issue Voting Trust
Certificates in respect thereof.
Until actual delivery of the stock certificates called for hereby
following the termination of the Voting Trust Agreement (or in the case of
Common Shares properly withdrawn pursuant to a Withdrawal Request until
actual delivery of the stock certificates for such withdrawn Common Shares),
the Trustees, upon the terms and subject to the provisions stated in the
Voting Trust Agreement, shall possess and shall be entitled to exercise all
rights and powers of the owners of such Series A Common to vote for every
purpose and to consent to any and all corporate acts of the Company, except
as such right is expressly limited by the terms of the Voting Trust
Agreement; it being expressly stipu-
-73-
<PAGE>
lated that except as expressly provided in the Voting Trust Agreement, no
right to vote such Series A Common and no right to consent or be consulted in
respect of such Series A Common is created or passes to any holder of this
Certificate by or under this Certificate or by or under any agreement express
or implied.
This Certificate is issued under and pursuant to, and the rights of each
successive holder hereof are subject to and limited by, the terms and
provisions of a certain Voting Trust Agreement, dated as of the thirtieth day
of June, 1989, between certain owners of Series A Common of the Company and
the Trustees (herein referred to, and as it may be amended from time to time,
the "Voting Trust Agreement"), one copy of which is on file with Walter C.D.
Carlson, or any other successor Trustee acting in his place. Each holder of
this Certificate by the acceptance hereof assents and agrees to be bound by
all the provisions of the Voting Trust Agreement.
This Certificate is not transferable whether by sale, assignment, gift,
bequest, appointment or otherwise by the holder of record hereof except as
provided in Article III or Article IV of the Voting Trust Agreement, subject
to such regulations as may be established by the Trustees for that purpose,
upon surrender hereof at the office of the Trustees, properly endorsed for
transfer, and the Trustees may treat the holder of record hereof as the owner
of this Certificate for all purposes. Any attempted transfer which is not
permitted pursuant to the provisions of
-74-
<PAGE>
Article IV shall be void. Every transferee of this Certificate shall by the
acceptance hereof become subject to the provisions of this Voting Trust
Agreement.
Anyone who acquires this Certificate for value (other than pursuant to
the Company's dividend reinvestment plan) represents that he or she is
acquiring this Certificate for his or her own
personal account and not with a view to the transfer of this Certificate or
of the shares of Series A Common represented by this Certificate to anyone
other than a Permitted Transferee (as defined in Article IV of the Voting
Trust Agreement).
As a condition of making or permitting any transfer or delivery of stock
certificates or Voting Trust Certificates, the Trustees may require the
payment of a sum sufficient to pay or reimburse them for any stamp tax or
other governmental charge in connection therewith, or any other charges
applicable to such transfer or delivery.
The Voting Trust Agreement and this Certificate may be amended at any
time and from time to time in the manner therein provided by the Trustees
with the consent in writing of the Trustees holding no fewer than eight votes
and by not less than ninety percent (90%) in interest of the holders of
record of Voting Trust Certificates; provided, however, that no amendment
which shall have the effect of extending the time for termination of the
Voting Trust Agreement shall be made without the consent in writing of all of
such participants. The Voting Trust Agree-
-75-
<PAGE>
ment and the trust created thereunder may be terminated at any time with the
consent in writing of the Trustees holding no fewer than eight votes and by
not less than seventy-five percent (75%) in interest of the holders of record
of Voting Trust Certificates.
This Voting Trust Agreement may be renewed for additional terms with
respect to the holder of this Certificate unless such holder notifies the
Trustees prior to June 30, 2009 (in response to
a required notice from the Trustees), of his or her election to withdraw.
-76-
<PAGE>
IN WITNESS WHEREOF, the Trustees have executed this Certificate by
affixing their hands this ____ day of _________________, 19___
___________________
WALTER C.D. CARLSON
___________________
LETITIA G.C. CARLSON
____________________
MELANIE J. HEALD
____________________
DONALD C. NEBERGALL
Signature Page to TDS Voting Trust Agreement
dated as of June 30, 1989.
-77-
<PAGE>
(FORM OF ASSIGNMENT FOR REVERSE SIDE OF
VOTING TRUST CERTIFICATE)
FOR VALUE RECEIVED, __________________ hereby sells, assigns and
transfers unto ____________________ the within Certificate and all rights and
interests thereby and does hereby irrevocably constitute and appoint attorney
to transfer such certificate on the books of the Trustees under the Voting
Trust Agreement within referred to, with full power of substitution in the
premises.
Dated: ______________________
___________________________
In the presence of:
_____________________________
-78-
<PAGE>
EXHIBIT B
TO VOTING TRUST AGREEMENT
DATED AS OF JUNE 30, 1989
A "Withdrawal Request," as referred to in Subsection 3.1(g) of the Voting
Trust Agreement, shall be in the following form:
NOTICE OF WITHDRAWAL
Dated _______________ , _______________
To Trustees
Under Voting
Trust Agreement
Dated as of June 30, 1989
("Voting Trust Agreement")
The undersigned hereby requests the withdrawal of ____________
Common Shares of Telephone and Data Systems, Inc. (the "Company"), into which
all or part of the shares of Series A Common represented by the enclosed
Voting Trust Certificate(s) No(s). ___________ registered in the
undersigned's name are convertible. The aforesaid withdrawal is permitted
pursuant to the provisions of [Subsection 3.1(b)] [Subsection 3.1(c)]
[Subsection 3.1(d)][Subsection 3.1(f)] of the Voting Trust Agreement.
You are authorized and directed by the undersigned to convert into the
above stated number of Common Shares the requisite number of shares of Series
A Common represented by the enclosed Voting Trust Certificate(s).
The undersigned hereby stipulates and agrees with you, the Trustees, and
the Transfer Agent for the Company's Common Shares that the date of
withdrawal will be ____________, 19__, and
79
<PAGE>
further information concerning the denominations and registrations of stock
certificates to be delivered at that time in accordance with Section 3.3 of
the Voting Trust Agreement, will be delivered to the Trustees and the
Transfer Agent not less than five business days prior to such closing date;
(iii) all conditions in Article III of the Voting Trust Agreement as to the
withdrawal of the Common Shares requested hereby to be satisfied by the
undersigned have been, or will prior to such closing be, satisfied, and all
procedures set forth therein to be complied with by the undersigned have
been, or prior to such closing will be, complied with; and (iv) any
additional documents, opinions of legal counsel, or other materials
reasonably required of the undersigned by you, the Company, the Depositary or
the Transfer Agent in connection with the matters that are the subject of
this Withdrawal Request will be furnished by the undersigned at or in advance
of the closing.
The undersigned acknowledges that this Withdrawal Request will cause the
Trustees to grant to certain Certificate Holders ("Optionees") an option to
acquire pursuant to Section 3.2 of the Voting Trust Agreement, and that this
Withdrawal Request shall be or become irrevocable at any time there are 105
days or less prior to the date of withdrawal previously stipulated herein.
To the extent the aforesaid option is exercised, the undersigned directs that
[all of the shares to be withdrawn] [the first shares to be withdrawn] be
acquired by the
-80-
<PAGE>
Optionees' tendering of the Company's Common Shares in exchange for the
Series A Shares represented by the enclosed Voting Trust Certificate(s) which
the undersigned has authorized you to convert into Common Shares.
_________________________________
-81-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT C
TO VOTING TRUST AGREEMENT
DATED AS OF JUNE 30, 1989
SUMMARY OF REQUIREMENTS FOR CERTAIN
ACTIONS BY TRUSTEES AND CERTIFICATE HOLDERS (1)
Required
Required # in interest
of Votes by of Certifi-
Action Section* Trustees cate Holders
------ -------- ----------- --------------
<S> <C> <C> <C>
Acceptance of
additional deposits 1.3 Eight N/A
Issuance of voting Three
trust certificates 2.2 Trustees N/A
Waiver of Notice 3.1(h) Six(2) N/A
Cancellation of
Withdrawal 3.1(1) Six(2) N/A
Reduction of
Notice Period 3.2(e) Six(2) N/A
Approval of separate
voting trust for 65% of those
spun-off entity 5.6 N/A voting
Voting of Series A 6.2, More than 50%
Common 6.3 Six of those voting
(only if
Trustees dead-
locked)
Sale of Series A
Common by Trustees
and certain major
corporate matters 6.4 Six 75%
Exercise of appraisal Any Dissenting
rights 6.4(b) N/A Certificate
Holder
Election of Trustees 7.3 N/A Cumulative
Voting
Removal of Trustee 7.4 N/A 85%
Reimbursement of
Trustees' expenses 7.7 Six N/A
Amendment of agreement 8.5 Eight 90%
Early termination 8.6 Eight 75%
Renewal 8.7 Six or More than
50%
</TABLE>
1. This summary is for convenience only and is not to be used in construing
the legal intent of the instrument to which it is attached. In the
event of any conflict between the information contained herein and the
language of the instrument, the language of the instrument shall control.
2. Any Trustee who is the person requesting the waiver or cancellation is
excluded from voting as to this matter.
-82-
<PAGE>
EXCHANGE AGREEMENT
This Exchange Agreement, dated as of January 1, 1994, is entered
into between Telephone and Data Systems, Inc., an Iowa corporation (herein
called "TDS"), and American Paging, Inc., a Delaware corporation (herein
called "API").
WHEREAS, TDS owns all of the issued and outstanding shares of the
capital stock of API;
WHEREAS, in connection with the execution and delivery of this
Agreement, API is selling in an underwritten public offering (the "Offering")
a number of its Common Shares, par value $1.00 per share, as a result of
which API will have a class of publicly held securities and API will be
subject to the reporting and other requirements of the Securities Exchange
Act of 1934, and the parties desire to provide for a recapitalization of API
to accommodate the Offering; and
WHEREAS, API and TDS desire to set forth certain agreements made
between them with respect to such recapitalization and other matters;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
As used in this Agreement, the terms set forth below shall have the
indicated meanings (such meanings apply equally to the singular and plural
forms thereof):
"ACT" shall mean the Securities Act of 1933, as amended.
"FCC" shall mean the Federal Communications Commission.
"SEC" shall mean the Securities and Exchange Commission.
ARTICLE II
RECAPITALIZATION
Promptly upon obtaining stockholder approval of the adoption of a
Restated Certificate of Incorporation for API in substantially the form
attached hereto as Exhibit A, API shall file the Restated Certificate of
Incorporation with the Secretary of State of Delaware pursuant to Section 103
of the General Corporation Law of Delaware, causing the 100 shares of capital
stock owned by TDS to be converted into 1,500,000 Common Shares and
15,000,000 Series A Common Shares of API.
<PAGE>
ARTICLE III
RIGHT TO ACQUIRE ADDITIONAL API SECURITIES
Section 3.01. PURCHASE RIGHTS. In addition to the pre-emptive
rights granted to TDS as a holder of Series A Common Shares of API pursuant
to the Restated Certificate of Incorporation of API referred to in Article
II, TDS shall have the right to subscribe to any issuance of Common Shares or
any other voting securities of API, or of any securities convertible into or
exchangeable for, or carrying a right to subscribe to or acquire, Common
Shares or any other voting securities of API, other than the Common Shares
being issued pursuant to the Offering. To the extent an issuance is to be
made for consideration other than cash, the fair market value of the non-cash
consideration shall be determined by resolution of the board of directors of
API. The proportion of each such issuance that TDS shall have the right to
subscribe to (which right may be exercised in full or in part) shall be equal
to the proportion of the Common Shares that TDS would own immediately before
the issuance if all securities of API that are convertible into Common Shares
(including securities convertible into another class that is convertible into
Common Shares and including securities that in the future will become
convertible) were converted (successively, if necessary) into Common Shares.
-3-
<PAGE>
Section 3.02. COMPLIANCE WITH SECURITIES LAWS. In connection with
any issuance to which the purchase rights granted by Section 3.01 apply, API
shall take all such action as shall be necessary to register the securities
being issued, or to qualify them for an exemption from registration, under
the Act and any applicable state securities or blue sky laws.
Section 3.03. METHOD OF EXERCISE. The purchase rights granted by
Section 3.01 are exercisable by TDS by delivering to the Secretary of API a
written election to subscribe to a specified number (in conformity with
Section 3.01) of the securities to be issued, within such reasonable period
of time as may be established by the board of directors of API after the
giving of written notice of the proposed issuance to TDS. The closing of
such purchase shall take place at such time and place as shall be determined
by the board of directors of API, upon at least 30 days' prior written notice
to TDS. At the closing, TDS shall pay for all shares issued and sold to TDS
with cash, the cancellation of indebtedness owed by API to TDS, such other
consideration as shall be reasonably acceptable to API, or a combination of
such forms of consideration.
Section 3.04. TRANSFER OF RIGHTS. (a) The rights of TDS under
this Article may be transferred to any one or more transferees from TDS of
any Common Shares, Series A Common Shares, or any securities convertible into
or exchangeable for, or carrying
-4-
<PAGE>
a right to subscribe to or acquire, shares of either such class. Any
transfer of rights pursuant to this Section 3.04 shall be effective only upon
receipt by API of written notice from TDS stating the name and address of any
transferee and identifying the securities being transferred.
(b) The rights of a transferee shall be the same rights granted to
TDS in Section 3.01 with respect to the securities transferred, subject to
the same conditions as are applicable to TDS in Section 3.03.
ARTICLE IV
CERTAIN OTHER RIGHTS
Section 4.01. AGREEMENTS REGARDING PAGING INTERESTS. (a) The
parties acknowledge and agree that certain operating telephone and cellular
companies and other entities that are subsidiaries or affiliates of TDS
(other than API and subsidiaries of API) have FCC licenses to engage in radio
paging services (collectively, "Paging Services") to certain areas as set
forth on Exhibit B (the "Non-API Paging Interests"). With respect to the
Non-API Paging Interests, the parties further acknowledge and agree that:
-5-
<PAGE>
(1) the Non-API Paging Interests have previously been offered for
sale to API and API has decided not to acquire the Non-API Paging
Interests; and
(2) consequently, TDS and such subsidiaries and affiliates will
retain all of the Non-API Paging Interests as their own property.
(b) The parties acknowledge and agree that TDS and subsidiaries of
TDS (other than API and subsidiaries of API) may, in the future, (1) obtain
FCC licenses to engage in Paging Services or (2) acquire control of entities
that have or obtain FCC licenses to engage in Paging Services or have
interests in other entities that provide Paging Services, in exchange for all
or some of the Non-API Paging Interests or otherwise (collectively, the
"Future Paging Interests"). The parties further acknowledge and agree that
all such Future Paging Interests that are ancillary to and integrated with
other communications systems shall be retained by TDS and such subsidiaries
as their own property and the balance of such Future Paging Interests (the
"Eligible Future Paging Interests") shall be subject to Section 4.02.
Section 4.02. API RIGHT OF NEGOTIATION. TDS agrees to offer API the
opportunity to negotiate regarding the purchase of the Eligible Future Paging
Interests, subject to FCC approval of
-6-
<PAGE>
any purchase, if required, PROVIDED that there are no restrictions on a sale
of the interests, including without limitation any requirement that the
interests be offered first to another person before being sold to API and
PROVIDED, FURTHER, that, in the reasonable judgment of TDS, there are no
material adverse consequences to TDS that may result therefrom. If API
desires to acquire any such interests so offered, then for a period of 90
days (the "API Negotiating Period") beginning on the date of API's receipt of
TDS's offer to negotiate, API shall have the right to negotiate with TDS
about the price and other terms and conditions of the acquisition. If,
notwithstanding the negotiations of the parties, TDS and API are not able to
agree on the price and other terms and conditions of sale during the API
Negotiating Period, then there shall be no restriction on TDS's ability to
sell at any time thereafter any interest that was a subject of those
negotiations, except that if, during the one-year period beginning on the
last day of the API Negotiating Period, TDS proposes to sell to a third party
any such interest for a price that is not more than the highest price API
offered in writing for the interest during the API Negotiating Period, TDS
shall first offer in writing to sell the interest to API upon the terms and
conditions proposed for the sale to a third party. API shall have ten days
within which to accept such offer by giving written notice of acceptance. If
API does not timely accept such offer, TDS shall then be free to sell the
interest to a third party during the remainder of the
-7-
<PAGE>
one-year period, but only if the price and other terms and conditions of sale
are in the aggregate, in the reasonable judgment of TDS, not less favorable
to TDS than those proposed for the sale of the interest to API. After the
expiration of the one-year period, there shall be no restrictions on TDS's
ability to sell the interest.
Section 4.03. FUTURE ISSUANCE OF SERIES A COMMON SHARES. The
parties acknowledge and agree that there have been extensive and in depth
discussions between the parties regarding the issuance of additional Series A
Common Shares of API subsequent to the Offering to achieve the common goal of
the parties of permitting such future issuance in any and all circumstances
in which such issuance is requested by TDS and the board of directors of API
determines, through the proper exercise of its business judgment, that such
issuance would be for a proper corporate purpose.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
As an inducement to enter into this Agreement, each party
represents to and agrees with the other that:
(a) it is a corporation duly organized, validly existing and in
good standing under the laws of its state
-8-
<PAGE>
of incorporation and has all requisite corporate power to own, lease and
operate its properties, to carry on its business as presently conducted
and to carry out the transactions contemplated by this Agreement;
(b) it has duly and validly taken all corporate action necessary
to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby;
(c) this Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms (subject, as to the enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally from time to time in effect, and subject to equitable
limitations on the availability of the remedy of specific performance);
and
(d) none of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or the compliance
with any of the provisions of this Agreement will (i) conflict with or
-9-
<PAGE>
result in a breach of any provision of its corporate charter or bylaws,
(ii) breach, violate or result in a default under any of the terms of
any agreement or other instrument or obligation to which it is a party
or by which it or any of its properties or assets may be bound, or (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to it or affecting any of its properties or assets.
ARTICLE VI
MISCELLANEOUS
Section 6.01. TERMINATION OF OBLIGATIONS. Article III of this
Agreement shall terminate and cease to be of any force and effect in respect
of TDS at such time as TDS shall cease beneficially to own any securities of
API; PROVIDED, HOWEVER, that such termination shall not affect the rights of
any transferee under Section 3.04. Article IV of this Agreement shall
terminate and cease to be of any force and effect in respect of TDS if, at
any time after TDS becomes the owner of Series A Common Shares, par value
$1.00 per share, of API, less than 500,000 Series A Common Shares are
outstanding.
Section 6.02. INJUNCTIONS. Irreparable damage would occur in the
event that any of the provisions of this Agreement
-10-
<PAGE>
were not performed in accordance with their specific terms or were otherwise
breached. Therefore, the parties hereto shall be entitled to an injunction
or injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court having
jurisdiction, such remedy being in addition to any other remedy to which they
may be entitled at law or in equity.
Section 6.03. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and
restrictions without including any of such which may be hereafter declared
invalid, void or unenforceable. In the event that any such term, provision,
covenant or restriction is so held to be invalid, void or unenforceable, the
parties hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction.
-11-
<PAGE>
Section 6.04. ASSIGNMENT. Except as provided otherwise in
Section 3.04, and except by operation of law or in connection with the sale
or transfer of all or substantially all the assets of a party hereto or of
all or substantially all of the capital stock of API beneficially owned by
TDS, this Agreement shall not be assignable, in whole or in part, directly or
indirectly, by either party hereto without the prior written consent of the
other, and any attempt to assign any rights or obligations arising under this
Agreement without such consent shall be void; PROVIDED, HOWEVER, that the
provisions of this Agreement shall be binding upon, inure to the benefit of
and be enforceable by the parties hereto and their respective permitted
successors and assigns.
Section 6.05. FURTHER ASSURANCES. Subject to the provisions
hereof, the parties hereto shall make, execute, acknowledge and deliver such
other instruments and documents, and take all such other actions as may be
reasonably required in order to effectuate the purposes of this Agreement and
to consummate the transactions contemplated hereby. Subject to the
provisions hereof, each of the parties shall, in connection with entering
into this Agreement, performing its obligations hereunder and taking any and
all actions relating hereto, comply with all applicable laws, regulations,
orders and decrees, obtain all required consents and approvals and make all
required filings with any governmental agency, other regulatory or
administrative agency, commission or
-12-
<PAGE>
similar authority and promptly provide the other with all such information as
the other may reasonably request in order to be able to comply with the
provisions of this sentence.
Section 6.06. PARTIES IN INTEREST. Nothing in this Agreement
expressed or implied is intended or shall be construed to confer any right or
benefit upon any person, firm or corporation other than the parties and their
respective permitted successors and assigns.
Section 6.07. WAIVERS, ETC. No failure or delay on the part of
the parties in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of
any other right or power. No amendment, modification or waiver of any
provision of this Agreement nor consent to any departure by the parties
therefrom shall in any event be effective unless the same shall be in writing
and signed by the chief executive officer or the chief financial officer of
each party in the case of amendments or modifications, or by the chief
executive officer or the chief financial officer of the waiving or consenting
party, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.
-13-
<PAGE>
Section 6.08. SETOFF. All payments to be made by either party
under this Agreement shall be made without setoff, counterclaim or
withholding except as specifically set forth herein with respect to
cancellation by TDS of indebtedness owed by API, all of which are expressly
waived.
Section 6.09. CONFIDENTIALITY. Subject to any contrary
requirement of law and the right of each party to enforce its rights
hereunder in any legal action, each party shall keep strictly confidential
and shall cause its employees and agents to keep strictly confidential, any
information which it or any of its agents or employees may acquire pursuant
to, or in the course of performing its obligations under, any provision of
this Agreement; PROVIDED, HOWEVER, that such obligation to maintain
confidentiality shall not apply to information which (a) at the time of
disclosure was in the public domain not as a result of acts by the receiving
party or (b) was in the possession of the receiving party at the time of
disclosure.
Section 6.10. ENTIRE AGREEMENT. This Agreement contains the
entire understanding of the parties with respect to the transactions
contemplated hereby.
-14-
<PAGE>
Section 6.11. HEADINGS. Descriptive headings are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement.
Section 6.12. COUNTERPARTS. For the convenience of the parties,
any number of counterparts of this Agreement may be executed by the parties
hereto, and each such executed counterpart shall be, and shall be deemed to
be, an original instrument.
Section 6.13. NOTICES. All notices, consents, requests,
instructions, approvals and other communications provided for herein shall be
validly given, made or served, if in writing and delivered personally, by
telegram or sent by registered mail, postage prepaid to:
TDS at: 30 North LaSalle Street
Suite 4000
Chicago, IL 60602-2507
Attention: President
with separate copies at such address to the attention of the Chief
Financial Officer and the Corporate Secretary
API at: 1300 Godward Street, N.E.
Suite 3100
Minneapolis, MN 55413-1767
Attention: President
with separate copies at such address to the attention of the Chief
Financial Officer and the Corporate Secretary
-15-
<PAGE>
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Any notice given under this Agreement
shall be deemed delivered when received at the appropriate address.
Section 6.14. GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of
Illinois applicable to contracts made and to be performed therein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers, each of whom is duly authorized,
all as of the day and year first above written.
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ LeRoy T. Carlson, Jr.
-----------------------------------------
Name: LeRoy T. Carlson, Jr.
Title: President
AMERICAN PAGING, INC.
By:/s/ John R. Schaaf
-----------------------------------------
Name: John R. Schaaf
Title: President
Signature Page of Exchange Agreement
dated as of January 1, 1994.
-16-
<PAGE>
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
<PAGE>
EXHIBIT B
NON-API PAGING INTERESTS
HELD BY CELLULAR SUBSIDIARIES AND AFFILIATES OF TDS:
<TABLE>
<CAPTION>
Licensee Callsign City State
- -------------------------------- -------- ------------- ------
<S> <C> <C> <C>
United States Cellular Operating KNKC392 Klamath Falls OR
Company of Medford Medford OR
United States Cellular Operating KNKC278 Richland WA
Company of Richland
United States Cellular Operating KNKC280 Yakima WA
Company of Yakima Benton WA
</TABLE>
HELD BY TELEPHONE COMPANY SUBSIDIARIES AND AFFILIATES OF TDS:
<TABLE>
<CAPTION>
Licensee Callsign City State
- -------------------------------- -------- ------------- ------
<S> <C> <C> <C>
Arcadia Telephone Company KNKC637 Cridersville OH
WRW272 Arcadia OH
Badger Telecom, Inc. KUS256 Chili WI
Barnardsville Telephone Company KNKC990 Asheville NC
Bonduel Telephone Company KUS279 Bonduel WI
Calhoun City Telephone Company, KUS373 Derma MS
Inc.
Camden Telephone & Telegraph KNKB475 Kingsland GA
Company, Inc.
KNKB494 Kingsland GA
Communication Corporation of KDS416 Hickory Corners MI
Michigan
Communications Corporation of KWT929 Danville IN
Indiana
Concord Telephone Exchange, Inc. KWU286 Concord TN
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LICENSEE CALLSIGN CITY STATE
- -------------------------------- -------- ------------- ------
<S> <C> <C> <C>
Delta County Tele-Comm, Inc. KNKJ597 Hotchkiss CO
KNKO605 Telluride CO
Eastcoast Telecom, Inc. KDS776 Howards Grove WI
Goshen Telephone Company, Inc. KDS431 Goshen AL
Grantland Telecom, Inc. KWT854 Pennimore WI
Happy Valley Telephone Company KNKD534 Anderson CA
Home Telephone Company-Waldron KWT872 Waldron IN
Kearsarge Telephone Company KUS308 New London NH
KMP Telephone Company WRD432 Kerkhoven MN
Ludlow Telephone Company KNKD927 Ludlow VT
Mid-State Telephone Company KUC940 Spicer MN
Midway Telephone Company KNKI323 Medford WI
Peoples Telephone Company KUS361 Leesburg AL
Scandinavia Telephone Company KUS264 Scandinavia WI
St. Stephen Telephone Company WRW295 St. Stephen SC
Tennessee Telephone Company KNKC980 Halls Crossroads TN
KNKD778 La Vergne TN
</TABLE>
1 March 13, 1998
<PAGE>
REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement, dated as of January 1, 1994, is
entered into between Telephone and Data Systems, Inc., an Iowa corporation
(herein called "TDS"), and American Paging, Inc., a Delaware corporation
(herein called the "Company").
WHEREAS, TDS owns certain of the issued and outstanding shares of
the capital stock of the Company; and
WHEREAS, in order to provide the Company with certain funds for
certain specified purposes, the Company has requested TDS to extend loans to
the Company in an aggregate amount not to exceed sixty million dollars
($60,000,000) and TDS is willing to extend such loans upon the terms and
conditions of this Revolving Credit Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
Section 1. COMMITMENT OF TDS. Subject to the terms and conditions of
this Revolving Credit Agreement, TDS, either directly or through one or more of
its subsidiaries, agrees to lend to the Company on a revolving basis, during the
period from the date hereof to the earlier to occur of (a) January 1, 1999 or
(b) the
<PAGE>
date on which ownership of stock of API by TDS would no longer meet the 80
percent requirement of Section 1504(a)(2) of the Internal Revenue Code of
1986, as amended, after replacing "80 percent" with "70 percent" (the "Early
Termination Date"), such amounts (which shall be $100,000 or an integral
multiple thereof) as the Company may from time to time request (but not more
frequently than once every five Business Days and not more than $3,000,000
per request unless otherwise agreed to by TDS) upon written notice given not
less than five Business Days before the date of the loan, but not exceeding
the principal amount of $60,000,000 at any one time outstanding. All loans
from TDS, either directly or through one or more of its subsidiaries, to the
Company or any of its Subsidiaries that were outstanding on December 31, 1993
shall be converted into and regarded for all purposes as a loan made under
this Revolving Credit Agreement on January 1, 1994. Notwithstanding any
other provision of this Revolving Credit Agreement, no other loan shall be
required to be made hereunder if any Event of Default has occurred, or if any
Default has occurred and is continuing.
Section 2. NOTE EVIDENCING BORROWINGS. The borrowings hereunder by
the Company shall be evidenced by a Note of the Company substantially in the
form set forth in Exhibit A, with appropriate insertions by TDS on Schedule I
thereto, and shall mature on the earlier of (a) December 31, 1998 or (b) the
date six months after the Early Termination Date, unless the Company in the
written notice requesting a loan specifies that an earlier date on
<PAGE>
which an interest payment is due shall be the maturity date for that loan.
With respect to each borrowing hereunder, TDS is authorized to enter the
details thereof on Schedule I to the Note, including, without limitation, the
date of the borrowing, the amount of the borrowing, the earlier maturity date
specified by the Company, if any, and principal prepayments and payments
thereof, and all such entries shall be presumed to be correct absent clear
and manifest error.
Section 3. PAYMENT OF INTEREST AND PRINCIPAL. The Company agrees
to pay interest on the unpaid principal amount of each borrowing hereunder at
a rate per annum equal to 1 1/2% above the Prime Lending Rate as in effect
from time to time, payable on the first days of January, April, July and
October until the principal amount becomes due (whether at maturity, by
acceleration or otherwise); and to pay on demand interest on any overdue
principal and (to the extent permitted by applicable law) on any overdue
installment of interest, at a rate per annum equal to 3 1/2% above the Prime
Lending Rate as in effect from time to time. Interest shall be computed on
the basis of a year of 360 days for the actual days elapsed (including the
first day but excluding the last day) occurring in the period for which
payable.
Section 4. COMPANY'S RIGHT TO PREPAY BORROWINGS. The Company may
from time to time and without premium prepay any
-3-
<PAGE>
borrowing in whole or in part. The amount of any partial prepayment shall be
$20,000 or an integral multiple thereof. Any prepayment of the full amount
of any borrowing shall include accrued interest thereon. Each prepayment
shall be applied first to outstanding interest due and then to principal
beginning with the earliest borrowing. Any prepayment made upon any
borrowing shall reinstate the Credit in the amount of such prepayment.
Section 5. TERM OF REVOLVING CREDIT AGREEMENT. Unless sooner
terminated as elsewhere provided herein, this Revolving Credit Agreement and
TDS's obligation to furnish the Credit shall terminate on the earlier of (a)
December 31, 1998 or (b) the Early Termination Date.
Section 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. To
induce TDS to grant the Credit and make loans hereunder, the Company
represents and warrants that:
(a) The Company and its Subsidiaries are corporations, each duly
organized and existing, in good standing, under the laws of the jurisdiction
of its incorporation, and each has the corporate power to own its property
and to carry on its business as now being conducted. The Company is duly
qualified to do business and is in good standing in each jurisdiction, if
any, in which the character of the properties owned or leased by it therein
or in
-4-
<PAGE>
which the transaction of its business makes such qualification necessary,
except for such failures to qualify or to be in good standing, if any, as in
the aggregate are not material to the business or financial condition of the
Company and its Subsidiaries taken as a whole.
(b) The Company has full corporate power and authority to enter
into this Revolving Credit Agreement, to make the borrowings hereunder, to
execute and deliver the Note, and to incur the obligations provided for
herein and therein, all of which have been duly authorized by all proper and
necessary corporate action.
(c) All authorizations, consents, approvals, registrations,
exemptions and licenses with or from governmental authorities which are
necessary for the borrowings hereunder, the execution and delivery of this
Revolving Credit Agreement and the Note and the performance by the Company of
its obligations hereunder and thereunder have been effected or obtained and
are in full force and effect.
(d) This Revolving Credit Agreement constitutes and the Note, when
executed and delivered pursuant hereto for value received, will constitute,
the valid and legally binding obligations of the Company enforceable in
accordance with their terms, subject, as to enforcement, to bankruptcy,
insolvency,
-5-
<PAGE>
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equitable principles.
(e) There are no proceedings or investigations pending or
threatened before any court or arbitrator or before or by any governmental
authority in which there is a reasonable possibility of an adverse decision
which would materially adversely affect the business or financial condition
of the Company and its Subsidiaries taken as a whole or materially impair the
ability of the Company to perform its obligations under this Revolving Credit
Agreement or the Note.
(f) There is no statute, regulation, rule, order or judgment, and
no provision of any mortgage, indenture, contract, license, permit, agreement
or other instrument or obligation binding on the Company or any Subsidiary or
affecting their respective properties which would prohibit, conflict (except
to the extent cured by waivers or consents or to the extent the consequences
of such conflict would not, in the aggregate, be material to the financial
condition of the Company and its Subsidiaries taken as a whole) with or in
any way prevent the execution, delivery, or carrying out of the terms of this
Revolving Credit Agreement and/or of the Note.
-6-
<PAGE>
(g) The consolidated balance sheet of the Company and its
Subsidiaries as of December 31, 1992, together with consolidated statements
of income and expense, retained earnings, paid-in capital and surplus and
changes in financial position for the fiscal year then ended, certified by
Arthur Andersen & Co., and the unaudited consolidated balance sheet of the
Company and its Subsidiaries as of September 30, 1993, together with
consolidated statements of income and expense and changes in financial
position for the nine months then ended and the accompanying footnotes,
heretofore delivered to TDS, fairly present the financial condition of the
Company and its Subsidiaries and the results of their operations and
transactions in their surplus accounts as of the dates and for the periods
referred to and have been prepared in accordance with generally accepted
accounting principles consistently maintained by the Company and its
Subsidiaries throughout the periods involved, except as otherwise indicated
in such financial statements. There has been no material adverse change in
the business, properties or financial condition of the Company and its
Subsidiaries, taken as a whole, since December 31, 1992.
(h) The Company and its Subsidiaries, taken as a whole, have good,
valid and marketable title to their respective real, personal and other
properties and assets material to the conduct of the business of the Company and
its Subsidiaries and reflected on
-7-
<PAGE>
the unaudited consolidated balance sheet of the Company and its Subsidiaries
as at September 30, 1993, free and clear of all mortgages, liens, pledges,
charges or encumbrances, except for those listed on Exhibit B.
Section 7. COVENANTS OF THE COMPANY.
(a) Until the expiration or termination of the Credit and
thereafter until the Note and other liabilities of the Company hereunder are
paid in full, the Company shall:
(1) furnish to TDS (i) within 120 days after each fiscal year of the
Company, a copy of the annual audit report of the Company and its
Subsidiaries, prepared on a consolidated basis and in conformity with
generally accepted accounting principles applied on a basis consistent with
that of the preceding fiscal year, and signed by independent certified
public accountants satisfactory to TDS, together with financial statements
consisting of consolidated balance sheets of the Company and its
Subsidiaries as of the end of such fiscal year and consolidated statements
of income and expense, retained earnings, paid-in capital and surplus and
changes in financial position of the Company and its Subsidiaries for such
fiscal year; (ii) as soon as available but in no event more than 120 days
after the close of each fiscal year of the
-8-
<PAGE>
Company, a letter or opinion of the accountants who prepared the annual
audit report relating to the Company and its Subsidiaries stating
whether anything in such accountants' examination has revealed the
occurrence of any event which constitutes a Default or an Event of
Default and, if so, stating the facts with respect thereto (PROVIDED
that the furnishing of such letter or opinion shall not require
expansion of the scope of such accountants' examination); (iii) within
60 days after each quarter (except the last quarter) of each fiscal year
of the Company, a copy of its unaudited financial statements, similarly
prepared, consisting of at least a balance sheet as at the close of such
quarter and a profit and loss statement and a statement of changes in
financial position and analysis of surplus for such quarter and for the
period from the beginning of such fiscal year to the close of such
quarter, and signed by a proper accounting officer of the Company and
accompanied by a certificate of said officer stating whether any event
has occurred which constitutes a Default or an Event of Default; and
(iv) from time to time, such other information as TDS may reasonably
request;
(2) permit, and cause each of its Subsidiaries to permit, TDS to have
one or more of its officers, employees or agents, upon at least three days'
notice, and at TDS's
-9-
<PAGE>
expense, visit and inspect any of the properties of the Company or any
Subsidiary and examine the minute books, books of account and other
records of the Company or any Subsidiary and make copies thereof or
extracts therefrom, and discuss its affairs, finances and accounts with
its officers and employees and, at the request of TDS, with the
Company's independent accountants, during normal business hours and at
such other reasonable times and as often as TDS may reasonably desire;
(3) maintain, and cause each of its Subsidiaries to maintain,
insurance to such extent and against such hazards and liabilities as is
commonly maintained by companies similarly situated;
(4) pay, and cause each of its Subsidiaries to pay, when due all
taxes, assessments, and other liabilities, except where the failure so to
pay could not have a material adverse effect on the business, credit,
financial condition or operations of the Company and its Subsidiaries taken
as a whole or except and so long as contested in good faith;
(5) preserve and maintain, and cause each of its Subsidiaries to
preserve and maintain, its corporate existence and all of its material
(considering the Company and its Subsidiaries taken as a whole) rights,
privileges and Fran-
-10-
<PAGE>
chises (including Franchises and any licenses granted by the Federal
Communications Commission) necessary in the normal conduct of its
business; PROVIDED that nothing herein contained shall prevent (i) the
termination during any consecutive 12-month period of the business or
corporate existence of any one or more Subsidiaries which comprise less
than 5% of the consolidated assets of the Company and its Subsidiaries,
or (ii) the Company or any Subsidiary from merging with another Person
if the Company or such Subsidiary is the surviving corporation or the
other Person is controlled by the Company or any Subsidiary, or any
Subsidiary from merging into, consolidating with or transferring assets
to the Company or another Subsidiary or any Person controlled by the
Company or any Subsidiary, PROVIDED that the effect of such merger will
not constitute a Default or Event of Default;
(6) comply, and cause each Subsidiary to comply, with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, a breach of which would materially and adversely
affect the business or credit of the Company and its Subsidiaries taken as
a whole, except where contested in good faith and by proper proceedings;
(7) promptly notify TDS upon the discovery by any officer of the
Company of the occurrence of any Default or
-11-
<PAGE>
Event of Default, in each case describing the nature thereof and the
action the Company proposes to take with respect thereto; and
(8) cause each Subsidiary of the Company to comply with all sections
of this Revolving Credit Agreement applicable to Subsidiaries to the same
extent as if such Subsidiary were the Company.
(b) Until the expiration or termination of the Credit and thereafter
until the Note and other liabilities of the Company hereunder are paid in full:
(1) the Company shall not purchase or redeem any shares of its stock
(other than in connection with stock option or other employee benefit
programs or where the redemption price is payable in shares of TDS
furnished by TDS to the Company to enable it to effect the redemption),
declare or pay any dividends thereon or make any other distribution to any
of its shareholders other than normal dividends payable with respect to
preferred stock, except to the extent that the cumulative sum of all such
payments (excluding any payments to redeem shares of the Company's stock
with shares of TDS furnished by TDS to the Company to enable it to effect
the redemption) shall not exceed one-half of the cumulative consolidated
net
-12-
<PAGE>
income of the Company for the period from and after January 1, 1994 to
and including the date of making any such payment;
(2) the Company shall not permit its consolidated equity (excluding
customer deposits and unearned revenues) to be less than 30% of its
consolidated liabilities (including, without limitation, the Note, accounts
payable and other liabilities);
(3) the Company shall not incur or permit to exist any indebtedness
for Borrowed Money, except (i) borrowings under this Revolving Credit
Agreement, or (ii) indebtedness of the Company or which is guaranteed by
the Company if, as to the Company's obligations thereunder, such
indebtedness is subordinate to or on a parity with borrowings under this
Revolving Credit Agreement;
(4) the Company shall not create or permit to exist or allow any of
its Subsidiaries to create or permit to exist any mortgage, pledge, title
retention lien, or other encumbrance or security interest with respect to
any assets now owned or hereafter acquired by the Company's Subsidiaries,
except (i) liens in connection with the acquisition of property and
attaching only to the property acquired and any licenses related thereto;
(ii) liens for current taxes not delinquent or as security for taxes being
contested in good faith, or in
-13-
<PAGE>
connection with workmen and materialmen for sums not due or sums being
contested in good faith; (iii) liens created in the normal course of
business to procure surety bonds; (iv) liens on property or assets of a
Subsidiary to secure obligations of such Subsidiary to the Company or
another Subsidiary; (v) liens existing on real property owned or leased
that are incidental to the conduct of business of the Company or the
ownership of its property and assets and that were not incurred in
connection with the borrowing of money or the obtaining of advances or
credit, and which do not in the aggregate materially detract from the
value of the assets of the Company and its Subsidiaries taken as a whole
or materially impair the use thereof in the operation of the business of
the Company and its Subsidiaries taken as a whole; (vi) liens existing
on the date hereof as shown on Exhibit B; (vii) liens on assets of any
corporation existing at the time such corporation is merged into or
consolidated with a Subsidiary or becomes a Subsidiary and not created
in contemplation of such event; (viii) liens existing on any asset prior
to the acquisition thereof by a Subsidiary and not created in
contemplation of such acquisition; (ix) liens arising out of the
refinancing, extension, renewal or refunding of any debt secured by any
lien permitted by any of the foregoing clauses of this Section, PROVIDED
that such debt is not increased and is not secured by any additional
assets;
-14-
<PAGE>
and (x) deposits or pledges to secure obligations under workers'
compensation, social security or similar laws, or under unemployment
insurance; and
(5) the Company shall not enter into or be a party to, or allow any
of its Subsidiaries to enter into or be a party to, any contract for the
purchase of materials, supplies, other property or services if such
contract requires that payment be made by the Company or its Subsidiaries
regardless of whether delivery is ever made of such materials, supplies,
other property or services.
Section 8. CONDITIONS OF LENDING. TDS shall not be required to make
the first loan contemplated hereunder to be made after January 1, 1994, unless
the Company shall have delivered to TDS:
(a) a certified copy of the Company's Board of Directors' resolutions
authorizing the execution and delivery of the Note and this Revolving Credit
Agreement;
(b) a certificate executed by the President or a Vice President of
the Company and dated the date of the loan certifying (i) that the warranties
and representations made in Section 6 by the Company are true and correct on
such date, (ii) that no Event
-15-
<PAGE>
of Default has occurred or would result from the Company obtaining the
requested loan, and (iii) that no Default has occurred and is continuing;
(c) the Note appropriately completed and duly executed;
(d) such other documents as TDS shall reasonably request; and
(e) an opinion from counsel to the Company that the Company is a
corporation duly existing under the laws of the State of Delaware; that the
Company has full power to execute and deliver this Revolving Credit
Agreement, to borrow money hereunder, to execute and deliver the Note, and to
perform its obligations under this Revolving Credit Agreement and the Note;
that such actions have been duly authorized by all necessary corporate action
and are not in conflict with any provision of law or of the charter or bylaws
of the Company, nor in conflict with any agreement binding upon the Company
of which such counsel has knowledge; and that this Revolving Credit Agreement
is, and the Note when executed and delivered by the Company for value
received will be, the legal and binding obligations of the Company.
Section 9. EVENTS OF DEFAULT. The occurrence of any one or more of
the following events, unless waived in writing by TDS
-16-
<PAGE>
either before or after the occurrence, shall constitute an "Event of Default"
hereunder:
(a) the Company fails to pay the principal of or interest on the
Note when and as the same shall become due and payable, whether at the due
date thereof, by acceleration or otherwise, and in the case of interest such
failure shall continue for more than five Business Days thereafter;
(b) the Company, or during any consecutive 12-month period any one or
more Subsidiaries which comprise more than 5% of the consolidated assets of the
Company and its Subsidiaries, becomes insolvent or admits in writing its
inability to pay its debts as they mature or applies for, consents to, or
acquiesces in the appointment of a trustee or receiver for the Company or any
such Subsidiary or any property thereof; in the absence of such application,
consent, or acquiescence, a trustee or receiver is appointed for the Company or
any such Subsidiary or for a substantial part of the property of any thereof and
is not discharged within 30 days; or any bankruptcy, reorganization, debt
arrangement, or other proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is instituted by or against the Company
or any such Subsidiary, and if instituted against the Company or any such
Subsidiary is consented to or
-17-
<PAGE>
acquiesced in by the Company or any such Subsidiary or remains for 30 days
undismissed;
(c) any representation or warranty made by the Company herein is
untrue in any material respect and such representation or warranty is not
made true within 30 days after an officer of the Company becomes aware of
such material untruth, or if such representation or warranty is not made true
within 90 days after an officer of the Company becomes aware of such material
untruth PROVIDED the Company is trying in good faith to make such
representation or warranty true at all times after an officer of the Company
becomes aware of such material untruth and the Company is taking whatever
action is necessary to make such representation or warranty true;
(d) any schedule, statement, report, notice, or writing furnished
by the Company is untrue in any material respect on the date as of which the
facts set forth are stated or certified if such document is not revised to be
true and furnished by the Company to TDS within ten days after an officer of
the Company becomes aware of such material untruth;
(e) the Company breaches any of the terms, covenants or agreements
herein set forth and such breach continues (i) for 30 days after notice to the
Company, (ii) for 60 days after an officer
-18-
<PAGE>
of the Company becomes aware of such breach, or (iii) for 90 days after an
officer of the Company becomes aware of such breach in the case of a breach
of any of the terms, covenants or agreements of Sections 7(a)(5), 7(a)(6),
7(b)(2), and 7(b)(4), PROVIDED that the Company is making a good faith effort
to cure the breach at all times after an officer of the Company becomes aware
of it;
(f) any event shall occur or fail to occur if the effect of such
occurrence or failure is to accelerate the maturity of any indebtedness for
Borrowed Money (other than the indebtedness under this Revolving Credit
Agreement) of the Company or any of its Subsidiaries, which indebtedness for
Borrowed Money in the aggregate exceeds 10% of the Company's consolidated
equity as reflected on the most recent consolidated balance sheet of the
Company and its Subsidiaries, or to permit the holder thereof to cause such
indebtedness to become due prior to the stated maturity thereof and such
occurrence or failure shall not have been remedied or waived within any
applicable period of grace;
(g) the Company or any of its Subsidiaries defaults in the payment of
any indebtedness for Borrowed Money other than the indebtedness under this
Revolving Credit Agreement if the aggregate of such indebtedness for Borrowed
Money, including the defaulted payment, exceeds 10% of the Company's
consolidated equity as
-19-
<PAGE>
reflected on the most recent consolidated balance sheet of the Company and
its Subsidiaries; and
(h) one of more judgments against the Company or any of its
Subsidiaries or attachments against its property, which in the aggregate
exceed $2,000,000, or the operation or result of which would be to interfere
materially and adversely with the conduct of the business of the Company and
its Subsidiaries taken as a whole, remain, unpaid, unstayed on appeal,
undischarged, unbonded, or undismissed for a period of 30 days.
The Company shall immediately advise TDS of any Event of Default or of
any Default. If any Event of Default shall occur, whether the Event of Default
shall then be continuing, TDS may declare the Credit to be terminated at any
time thereafter and the Note to be due and payable, whereupon the Credit shall
immediately terminate and the Note shall become immediately due and payable,
both as to principal and interest, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the Note to the contrary notwithstanding (PROVIDED that
TDS's commitment hereunder shall forthwith terminate, and the unpaid principal
of and accrued interest on the loans and all other amounts owing hereunder shall
automatically become and be forthwith due and payable upon the occurrence of any
event specified in clause (b) above without any
-20-
<PAGE>
such notice or other action, all of which are hereby expressly waived by the
Company). TDS shall promptly advise the Company of any such declaration, but
failure to do so shall not impair the effect of such declaration.
Section 10. DEFINITIONS.
(a) Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all determinations with respect to accounting
matters hereunder shall be made, and all financial statements and
certificates and reports as to financial matters required to be delivered
hereunder shall be prepared, in accordance with generally accepted accounting
principles.
(b) The following terms shall have the meanings ascribed to them
below:
"BORROWED MONEY" shall mean, as to any Person, any obligation of such
Person to repay money, any indebtedness of such Person evidenced by notes,
bonds, debentures or similar obligations, any obligation of such Person under a
conditional sale or other title retention agreement, any obligation of others
secured by any asset of such Person, whether or not such obligation is assumed
by such Person, any obligation of others Guaranteed by such Person, all Capital
Lease Obligations, and any reimbursement
-21-
<PAGE>
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, bankers acceptances and similar instruments, PROVIDED,
HOWEVER, that Borrowed Money indebtedness shall not include performance
bonds, franchise bonds, obligations to reimburse drawings under letters of
credit issued in lieu of performance or franchise bonds and other obligations
of like nature, trade payables, and accrued liabilities and subscriber
advance payments and deposits, arising in the ordinary course of such
Person's business.
"BUSINESS DAY" shall mean any day on which commercial banks are not
generally authorized or required to close in Chicago, Illinois.
"CAPITAL LEASE OBLIGATIONS" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement containing the right to use) real and/or personal property
which obligations are required to be classified and accounted for as a
capital lease on the balance sheet of such Person under generally accepted
accounting principles and, for the purposes of this Agreement, the amount of
such obligations shall be the capitalized amount thereof, determined in
accordance with generally accepted accounting principles.
-22-
<PAGE>
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONTROL" (including, with its correlative meanings, "controlled
by" and under "common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of a Person.
"CREDIT" shall mean TDS's commitment to loan funds to the Company
pursuant to the terms and conditions of this Revolving Credit Agreement.
"DEFAULT" shall mean any event which, with the giving of notice or
the lapse of time, or both, would constitute an Event of Default.
"DOLLARS" (including "$") shall mean lawful money of the United
States of America.
"FRANCHISE" shall mean a franchise, license, authorization or right to
construct, own, promote, extend and/or otherwise exploit any System operated or
to be operated by the Company or any of its Subsidiaries granted by the Federal
Communications Commission, by any foreign government, or by any state, county,
city, town, village or other government authority
-23-
<PAGE>
but shall not include any such franchise, license, authorization or right
which is incidentally required for the purpose of installing, constructing or
extending any System.
"GUARANTEE" by any Person shall mean any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any
indebtedness for Borrowed Money or other obligation of any other Person, or
in any manner providing for the payment of any indebtedness for Borrowed
Money or other obligation of any other Person, or otherwise protecting the
holder of such indebtedness against loss (whether by virtue of partnership
arrangements, agreements to purchase assets, goods, securities or services,
or to take-or-pay or otherwise), PROVIDED that the term "guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "guarantee" used as a verb shall have a correlative
meaning.
"NOTE" shall mean the promissory note of the Company to TDS
substantially in the form of Exhibit A hereto, evidencing borrowings made
under this Revolving Credit Agreement.
"PERSON" shall mean an individual, a corporation, a partnership, a
joint venture, a trust or unincorporated organization, a joint stock company
or similar organization, a
-24-
<PAGE>
government or any political subdivision thereof, or any other legal entity.
"PRIME LENDING RATE" shall mean the rate of interest announced by
LaSalle National Bank of Chicago ("LaSalle") from time to time as its prime
rate. If no such rate of interest is announced by LaSalle at any time, the
Prime Lending Rate shall be the rate of interest announced by THE WALL STREET
JOURNAL from time to time during such time as the prime rate.
"SUBSIDIARY" shall mean any Person other than the Company whose
accounts are included in the consolidated financial statements of the Company
and its Subsidiaries prepared in accordance with generally accepted
accounting principles in effect at the time.
"SYSTEM" shall mean the assets constituting a radio paging system
serving subscribers within a geographical area covered by one or more
Franchises.
Section 11. MISCELLANEOUS.
(a) No delay on the part of TDS or the holder of the Note in the
exercise of any power or right shall operate as a waiver thereof, nor shall any
single or partial exercise of any
-25-
<PAGE>
power or right preclude other or further exercise thereof, or the exercise of
any other power or right. No waiver by TDS shall be valid unless it is in
writing and signed by the chief executive officer or the chief financial
officer of TDS and then only to the extent specifically set forth in such
writing.
(b) All notices, consents, requests, instructions, approvals and
other communications provided for herein shall be validly given, made or
served, if in writing and delivered personally, by telegram or sent by
registered mail, postage prepaid to:
TDS at: 30 North LaSalle Street
Suite 4000
Chicago, Illinois 60602-2507
Attention: President
with separate copies at such address to the attention of the Chief
Financial Officer and the Corporate Secretary
API at: 1300 Godward Street, N.E.
Suite 3100
Minneapolis, MN 55413-1767
Attention: President
with separate copies at such address to the attention of the Chief
Financial Officer and the Corporate Secretary
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Any notice given under this Agreement
shall be deemed delivered when received at the appropriate address.
-26-
<PAGE>
(c) The Company agrees to reimburse TDS upon demand for all
reasonable out-of-pocket expenses (including reasonable attorney's fees and
legal expenses) incurred by TDS in enforcing the obligations of the Company
hereunder or under the Note and to pay, and save TDS harmless from all
liability for, any stamp or other taxes which may be payable with respect to
the execution or delivery of this Revolving Credit Agreement or the issuance
of the Note, which obligations of the Company shall survive any termination
of this Revolving Credit Agreement.
(d) This Revolving Credit Agreement and the Note shall be a
contract made under and governed by the laws of the State of Illinois.
(e) This Revolving Credit Agreement shall be binding upon the
Company and TDS and their respective successors and assigns, and shall inure
to the benefit of the Company and TDS and the successors and assigns of TDS.
(f) TDS may at any time sell, assign, transfer, grant participations
in, or otherwise dispose of all or any portion of its loans or the Note or of
its Credit or of its right, title interest therein or thereto or in or to this
Revolving Credit Agreement (collectively, "Participations") to any other Person
("Participant"). The Company agrees that any Participant may
-27-
<PAGE>
exercise any and all rights of banker's lien, set-off and counterclaim with
respect to its Participation as fully as if such Participant were the maker
of a loan in the amount of its Participation. TDS shall be released from its
obligations in connection with any assignment of its rights hereunder if such
obligations are expressly assumed by the assignee of such rights. TDS shall
promptly furnish the Company with notice of any assignment or Participation
hereunder, specifying in each case the identity of the assignee or
Participant and the amounts and terms of the assignment or Participation.
Any provision of this Revolving Credit Agreement may be amended, modified or
waived only by an instrument or instruments in writing and signed by the
chief executive officer or chief financial officer of TDS and the chief
executive officer or chief financial officer of the Company.
(g) This Revolving Credit Agreement may be executed in any number
of counterparts and by different parties in separate counterparts. Each
counterpart shall be deemed an original and all counterparts taken together
shall constitute one instrument.
(h) All representations, warranties and covenants of the parties
shall survive the delivery of the Note and the furnishing of the Credit and
shall expire upon the termination of this Revolving Credit Agreement.
-28-
<PAGE>
(i) If any provision of this Revolving Credit Agreement is held
prohibited, invalid or unenforceable under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Revolving Credit Agreement or the Note.
(j) Subject to the provisions hereof, TDS and the Company shall
each make, execute, acknowledge and deliver such other instruments and
documents, and take all such other actions as may be reasonably required in
order to effectuate the purposes of this Revolving Credit Agreement and to
consummate the transactions contemplated hereby. Subject to the provisions
hereof, TDS and the Company shall each, in connection with entering into this
Revolving Credit Agreement, performing its obligations hereunder and taking
any and all actions relating hereto, comply with all applicable laws,
regulations, orders and decrees, obtain all required consents and approvals
and make all required filings with any governmental agency, other regulatory
or administrative agency, commission or similar authority and promptly
provide the other with all such information as the other may reasonably
request in order to be able to comply with the provisions of this sentence.
(k) Nothing in this Revolving Credit Agreement expressed or implied
is intended or shall be construed to confer any right or
-29-
<PAGE>
benefit upon any Person other than TDS and the Company and their respective
permitted successors and assigns.
(l) Subject to any contrary requirement of law and the right of
each party to enforce its rights hereunder in any legal action, each party
shall keep strictly confidential and shall cause its employees and agents to
keep strictly confidential, any information which it or any of its agents or
employees may acquire pursuant to, or in the course of performing its
obligations under, any provision of this Revolving Credit Agreement;
PROVIDED, HOWEVER, that such obligation to maintain confidentiality shall not
apply to information which (i) at the time of disclosure was in the public
domain not as a result of acts by the receiving party, or (ii) was in the
possession of the receiving party at the time of disclosure.
(m) This Revolving Credit Agreement contains the entire
understanding of the parties with respect to the transactions contemplated
hereby.
(n) Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Revolving Credit Agreement.
-30-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Revolving
Credit Agreement in Chicago, Illinois, as of the day and year first above
written.
TELEPHONE DATA AND SYSTEMS, INC.
By: /s/ LeRoy T. Carlson, Jr.
---------------------------------
Name: LeRoy T. Carlson, Jr.
---------------------------------
Title: President
-------------------------------
AMERICAN PAGING, INC.
By: /s/ John R. Schaaf
---------------------------------
Name: John R. Schaaf
---------------------------------
Title: President
-------------------------------
Signature Page of Revolving Credit Agreement
dated as of January 1, 1994
-31-
<PAGE>
EXHIBIT A
REVOLVING CREDIT NOTE
$ 60,000,000.00 __________, 1994
For value received, the undersigned, American Paging, Inc., a
Delaware corporation (herein called the "Company"), hereby promises to pay to
the order of Telephone and Data Systems, Inc., an Iowa corporation (herein
called "TDS"), on or before the earlier to occur of (a) December 31, 1998 or
(b) the date six months after the Early Termination Date (as defined in the
Revolving Credit Agreement referred to herein), the sum of all amounts
borrowed under the Revolving Credit Agreement and evidenced hereby, the total
of which borrowings at any one time outstanding is not to exceed Sixty
Million Dollars pursuant to the terms of the Revolving Credit Agreement.
The Company also promises to pay interest on the unpaid principal
amount of this Note outstanding at a rate per annum equal to 1 1/2% above the
Prime Lending Rate (as defined in the Revolving Credit Agreement) and as in
effect from time to time, payable on the first days of January, April, July
and October of each year until the principal amount becomes due (whether at
maturity, by acceleration or otherwise); and to pay on demand interest on any
overdue principal and (to the extent permitted by applicable law) on any
overdue installment of interest, at a rate per annum equal to 3 1/2% above
the Prime Lending Rate as in effect from time to time.
All payments of principal and interest under this Note shall be made
in lawful money of the United States at the main office of TDS in Chicago,
Illinois, or at such other place or places as TDS may designate in writing to
the Company, for the account of TDS, as provided in the Revolving Credit
Agreement.
The Company expressly waives any presentment, demand, protest or
notice in connection with this Note, now or hereafter required by applicable
law.
This Note is the Note referred to in, and is subject to, the terms
and provisions of, the Revolving Credit Agreement dated as of January 1, 1994
(as the same may be amended, modified or supplemented from time to time,
herein called the "Revolving Credit Agreement"), executed by the Company and
accepted by TDS, to
<PAGE>
which reference is hereby made for a statement of the terms and conditions
under which this Note may be prepaid. All payments on account of the
principal amount of this Note shall, prior to transfer hereof, be recorded by
TDS on Schedule I attached hereto.
AMERICAN PAGING, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Earlier Principal
Date Amount Maturity Date Amount
of of Specified by Prepaid
Borrowing Borrowing the Company or Paid
- -------- --------- ---------- ---------
<S> <C> <C> <C>
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
- -------- --------- ---------- ---------
</TABLE>
<PAGE>
EXHIBIT B
MORTGAGES, LIENS, PLEDGES, CHARGES
AND ENCUMBRANCES OF THE COMPANY AND ITS SUBSIDIARIES
NONE.
<PAGE>
[Letterhead of TDS]
March 5, 1997
American Paging, Inc.
Suite 3100
1300 Godward Street, N.E.
Minneapolis, Minnesota 55413
Re: Revolving Credit Agreement dated January 1, 1994, as amended (the
"Revolving Credit Agreement"), between American Paging, Inc. (the
"Company") and Telephone and Data Systems, Inc. ("TDS")
Ladies and Gentlemen:
This letter will constitute TDS's agreement to amend the Revolving
Credit Agreement, effective January 1, 1997, by changing all references to
"$150,000,000" in the Revolving Credit Agreement to "$180,000,000." All other
terms and conditions of the Revolving Credit Agreement shall remain in full
force and effect.
TDS also hereby waives all defaults or events of default by the
Company under the Revolving Credit Agreement resulting from the violation of the
covenant in Section 7(b)(2) of the Revolving Credit Agreement or the insolvency
of the Company from the respective dates from any such default or event of
default through January 1, 1999.
Please acknowledge your agreement to this amendment by executing a
copy of this letter and return it to the undersigned.
Very truly yours,
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ Murray L. Swanson
------------------------------
Murray L. Swanson
Executive Vice President - Finance
<PAGE>
American Paging, Inc.
March 5, 1997
Page 2
Accepted and agreed to as of the date set forth above.
AMERICAN PAGING, INC.
By: /s/ Dennis M. Beste
------------------------------
Dennis M. Beste
Vice President - Finance, Chief Financial
Officer and Treasurer
<PAGE>
INTERCOMPANY AGREEMENT
This Intercompany Agreement, dated as of January 1, 1994, is entered
into between Telephone and Data Systems, Inc., an Iowa corporation ("herein
called TDS"), and American Paging, Inc., a Delaware corporation (herein called
"API").
WHEREAS, TDS owns all of the issued and outstanding shares of the
capital stock of API;
WHEREAS, in connection with the execution and delivery of this
Agreement, API is selling in an underwritten public offering (the "Offering") a
number of its Common Shares, par value $1.00 per share, as a result of which API
will have a class of publicly held securities and API will be subject to the
reporting and other requirements of the Securities Exchange Act of 1934 (the
"Exchange Act"); and
WHEREAS, the parties desire to provide for certain transactions and
relationships between the parties hereto after the date hereof;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
As used in this Agreement, the terms set out below shall have the
indicated meanings (such meanings applying equally to the singular and plural
forms thereof):
"AFFILIATE" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as in effect on
January 1, 1994.
"API GROUP" shall mean API and all Subsidiaries of API.
"GROUP" shall mean the API Group or the TDS Group.
A "PERSON" shall mean an individual, a corporation, a partnership, a
joint venture, a trust or unincorporated organization, a joint stock company or
similar organization, a governmental or any political subdivision thereof, or
any other legal entity.
"SUBSIDIARY", with respect to a specified person, shall mean any
person whose accounts are included in the consolidated financial statements of
the specified person and its Subsidiaries prepared in accordance with generally
accepted accounting principles in effect at the time.
<PAGE>
"TDS GROUP" shall mean TDS and all Subsidiaries of TDS except the
members of the API Group.
ARTICLE II
SERVICES AND OTHER MATTERS
Section 2.01. SERVICES TO BE MADE AVAILABLE. Subject to the other
provisions of this Article II, TDS, either directly or through other members of
the TDS Group, shall make available to members of the API Group, and API, either
directly or through other members of the API Group, shall make available to
members of the TDS Group, from time to time, services (the "Services") relating
to the following:
(a) operations, including engineering, governmental relations,
systems and procedures, information systems, data processing and other
computer services, emergency assistance, education and training, technology
assessment, research and development, construction, purchasing, safety,
maintenance and consulting;
(b) marketing, including strategy development, market analysis,
competitive analysis, market planning, product policy, sales, advertising,
pricing and customer relations;
-3-
<PAGE>
(c) human resources, including selection, hiring, labor relations,
savings, retirement and other employee benefits, compensation, and
incentive plans;
(d) accounting, including internal auditing, accounting compliance,
record keeping, consolidations, taxes, budgeting, and internal and external
reporting;
(e) customer services, including billing, credit and collections;
(f) finance, including financial planning and analysis, capital
allocation, treasury, investment management, investor relations,
acquisitions and other corporate development;
(g) general administration, including corporate planning, security
and risk management, insurance, real estate, printing, computer services,
legal, public relations and other services; and
(h) other matters.
Section 2.02. FURNISHING OF SERVICES. Unless TDS shall otherwise
determine, or unless Services are provided pursuant to a separate written
agreement between a member of the TDS Group and a
-4-
<PAGE>
member of the API Group relating to the specific services to be provided,
Services provided hereunder to members of the API Group by members of the TDS
Group shall be provided in conformity with the customary practices of the TDS
Group for furnishing services to TDS and its Subsidiaries at the time the
Services are provided. Services provided hereunder to the TDS Group by
members of the API Group shall be provided on request of any officer of TDS
desiring Services to be provided to the members of the TDS Group.
Section 2.03. LIMITATION ON OBLIGATION TO PROVIDE SERVICES.
Notwithstanding the provisions of Section 2.01, neither TDS nor API need make
available any Services to the extent that doing so would unreasonably interfere
with the performance by any employee of such employee's duties for such
employee's employer or otherwise cause unreasonable burden to such employee's
employer.
Section 2.04. PAYMENT FOR SERVICES. Unless otherwise provided in a
separate written agreement between a member of the TDS Group and a member of the
API Group relating to specific services, Services provided to members of the API
Group by members of the TDS Group shall be charged and paid for in conformity
with the customary practices of the TDS Group for charging TDS's non-telephone
company Subsidiaries (other than the members of the API Group) for Services at
the time the Services are provided. For providing Services requested pursuant
to Section 2.02, API shall be
-5-
<PAGE>
entitled to receive from TDS, upon presentation of reasonably detailed
invoices therefor, payment for the salaries of its employees and agents
assigned to render such Services (plus 40% of the cost of such salaries in
respect of overhead) for the time spent rendering such Services (excluding
unproductive travel time), determined on a per hour basis, and all travel and
out-of-pocket expenses incurred by such employees in rendering such Services,
but shall not be entitled to receive any other payment for such Services.
Section 2.05. EQUIPMENT AND MATERIALS. API shall, and shall cause
the other members of the API Group to, purchase materials and equipment from
members of the TDS Group on the same basis as materials and equipment are
purchased by members of the TDS Group from other members of the TDS Group.
Section 2.06. INDEPENDENT ACCOUNTANTS. API shall, and shall cause
the other members of the API Group to, engage the firms of independent public
accountants either selected for them by TDS, or selected by the API audit
committee and acceptable to TDS, for purposes of auditing the financial
statements of the members of the API Group and providing tax, data processing
and all other accounting services and advice. The foregoing shall not apply,
however, in the case of a member of the API Group that is a partnership if the
member of the API Group that is the partner of
-6-
<PAGE>
the partnership does not have the contractual right or power to select the
firm of independent public accountants to be engaged by the partnership for
the foregoing purposes.
Section 2.07. TRANSFEREE OF API ASSETS. Without the prior written
consent of TDS, API shall not, nor shall API permit any member of the API Group
to, sell, merge or transfer assets or property representing more than 15% of the
consolidated assets of the API Group as reflected on the most recent
consolidated balance sheet of the API Group, unless the other party to the sale,
merger or transfer agrees to be subject to the provisions of this Article II and
enters into an appropriate agreement to that effect with TDS.
ARTICLE III
ACCESS TO INFORMATION AND WITNESSES
Section 3.01. INFORMATION AND WITNESSES TO BE MADE AVAILABLE. For
purposes of this Article III, the term "Information" means any books, records,
contracts, instruments, data, facts and other information in the possession or
under the control of either the members of the TDS Group or of the API Group
necessary or desirable for use in legal, administrative or other proceedings
and, in the case of Information to be provided by the API Group to TDS, for
auditing, accounting and tax purposes. TDS shall provide to API and API shall
provide to TDS, upon the other's
-7-
<PAGE>
written request, at reasonable times, full and complete access to, and
duplication rights with respect to, any and all such Information as the other
may reasonably request and require, and TDS shall use its best efforts to
make available to API, and API shall use its best efforts to make available
to TDS, upon the other's written request, the officers, directors, employees
and agents of the members of the TDS Group and of the API Group,
respectively, as witnesses to the extent that such persons may reasonably be
required in connection with any legal, administrative or other proceedings in
which members of the API Group or members of the TDS Group, as the case may
be, may from time to time be a party.
Section 3.02. LIMITATIONS ON OBLIGATIONS TO PROVIDE ACCESS TO
INFORMATION AND WITNESSES. Notwithstanding the provisions of Section 3.01,
neither TDS nor API need provide any Information or make available witnesses to
the other (a) to the extent that doing so would (i) unreasonably interfere with
the performance by any person of such persons's duties to the party to which a
request under Section 3.01 is made or otherwise cause unreasonable burden to
such party, (ii) result in a waiver of any attorney-client or work product
privilege of such party or its legal counsel, (iii) require either TDS or API to
provide any Information which relates to the subject matter of any legal,
administrative or other proceeding in which any member of the TDS
-8-
<PAGE>
Group and any member of the API Group are adverse parties, or (iv) result in
any breach of any agreement with a third party; and (b) with respect to any
legal, administrative or other proceeding which has been finally determined
by any court or other body having jurisdiction and which shall not be subject
to judicial review (by appeal or otherwise). Each party shall use reasonable
efforts, if requested by the other, to obtain waivers of any provision of any
agreement which restricts the provision of any Information, and shall use
reasonable efforts to provide in any future agreements that Information may
be provided to Affiliates of such party.
Section 3.03. PAYMENT FOR INFORMATION AND WITNESSES.
(a) Subject to the provisions of paragraph (b) of this Section, the
party providing Information or making available witnesses pursuant to Section
3.01 shall be entitled to receive from the other party payment on the same basis
as the party is entitled to receive payment for Services rendered pursuant to
Article II hereof.
(b) API shall provide Information and make available witnesses
pursuant to Section 3.01 hereof free of charge in connection with (i) any legal,
administrative or other proceeding in respect of, or any audit or investigation
by any applicable taxing authority of, the consolidated tax returns of TDS which
-9-
<PAGE>
shall include within its scope any audit or investigation with respect to any
member of the API Group; and (ii) any legal, administrative or other proceeding
relating to or arising out of Information provided by any member of the API
Group to TDS and included in or relied on in preparing TDS's consolidated
financial statements, whether before, at or after the date hereof (audited or
unaudited).
ARTICLE IV
MAIL AND OTHER COMMUNICATIONS
TDS and API each authorize the members of the other's Group to receive
and open all mail, telegrams, packages and other communications received by any
member of its Group and not unambiguously intended for members of the other's
Group or any of the officers, directors, employees and agents of any member of
the other's Group specifically in their capacities as such, and to retain the
same to the extent that they relate to the business of the receiving party. To
the extent that any such mail, telegrams, packages and other communications so
received does not relate to the business of the receiving party but does relate
to the business of the other party's Group, or to the extent that they relate to
both, the receiving party shall, unless a prior method for the delivery of such
communications shall have been agreed upon between the parties, promptly contact
the other party by telephone for the
-10-
<PAGE>
delivery instructions and such mail, telegrams, packages or other
communications (or, in case the same is related to both businesses, copies
thereof) shall promptly be forwarded to the other party in accordance with
its delivery instructions.
ARTICLE V
LITIGATION
Section 5.01. API LIABILITIES. With respect to any litigation,
proceeding or investigation by or before any court or governmental agency or
body which may be commenced or threatened against members of the TDS Group after
the date hereof which arises out of or is based upon the past, present or future
business or operations of members of the API Group but not the TDS Group, at
TDS's option API and TDS will use their best efforts to have a member of the API
Group substituted in the place of and for members of the TDS Group and to have
members of the TDS Group removed as parties as promptly as is reasonably
practicable. Pending such substitution, and in cases where such substitution
cannot be effected, API shall promptly assume and direct the defense,
prosecution and/or settlement of the claims involved, employing for this purpose
counsel satisfactory to TDS, and shall pay all expenses related thereto. To the
extent that any such expenses are paid by members of the TDS Group, API shall
promptly reimburse each member therefor.
-11-
<PAGE>
Section 5.02. TDS LIABILITIES. With respect to any litigation,
proceeding or investigation by or before any court or governmental agency or
body which may be commenced or threatened against members of the API Group after
the date hereof which arises out of or is based upon the past, present or future
business or operations of members of the TDS Group but not the API Group, at
API's option API and TDS will use their best efforts to have a member of the TDS
Group substituted in the place of and for members of the API Group and to have
members of the API Group removed as parties as promptly as is reasonably
practicable. Pending such substitution, and in cases where such substitution
cannot be effected, TDS shall promptly assume and direct the defense,
prosecution and/or settlement of the claims involved, employing for this purpose
counsel selected by TDS, and shall pay all expenses related thereto. To the
extent that any such expenses are paid by members of the API Group, TDS shall
promptly reimburse API therefor.
Section 5.03. INDEMNIFICATION AND PARTICIPATION. The provisions of
Sections 5.01 and 5.02 shall not limit or affect the indemnification provided by
Article VI, including the right of any indemnified party to participate in the
defense of any action and the limitations on settlement rights.
-12-
<PAGE>
Section 5.04. FUTURE LITIGATION. Subject to Article VII, with
respect to any litigation, proceeding and investigation which may arise
subsequent to the date hereof and which may result in joint liability on the
part of both TDS and API, TDS shall have the right to make all decisions
regarding the defense thereof, the sharing of expenses in connection therewith
and other matters relating to such litigation, proceeding and investigation, and
API agrees to cooperate fully to implement any decision made by TDS in
connection therewith and to pay its share of any liability, expense or loss
arising out of or relating to such litigation, proceeding and investigation as
the same shall be incurred.
Section 5.05. AFFILIATES OF TDS AND API. As used in Section 5.04,
TDS shall include any Affiliates of TDS (other than any member of the API Group)
and API shall include any Affiliate of API (other than any member of the TDS
Group).
ARTICLE VI
ALLOCATION OF LIABILITIES AND INDEMNIFICATION
Section 6.01. TDS SECONDARY OBLIGATIONS.
(a) With respect to all the guarantees and other obligations and
liabilities of TDS (collectively, the "TDS Secondary Obligations") in connection
with any indebtedness, lease,
-13-
<PAGE>
contract or other obligation in respect to which any member of the API Group
is the party primarily liable and with respect to which TDS has obligations
which are monetary in nature, including but not limited to those listed on
Schedule I hereto, but excluding any such indebtedness, lease, contract or
other obligation incurred after January 1, 1994 at the specific request of
TDS, API will use its best efforts to have TDS removed as such guarantor or
obligor as promptly as practicable.
(b) In addition to and not in substitution for the indemnity from API
to TDS under Section 6.03(a) hereof, if TDS has not been removed as guarantor or
obligor with respect to all the TDS Secondary Obligations by December 31, 1994,
API shall pay TDS on December 31, 1994, and on each December 31 thereafter, an
amount equal to one percent of the then present value of the maximum amounts TDS
could be required to pay on account of all TDS Secondary Obligations. Such
present value shall be determined by discounting such maximum amounts at a rate
per annum equal to the Prime Lending Rate (as defined in that certain Revolving
Credit Agreement dated as of January 1, 1994 (the "Revolving Credit Agreement")
between API and TDS) in effect on the December 15 preceding the applicable
December 31, compounded annually.
(c) TDS agrees that it will not exercise any right that it has,
acting either alone or together with another person, to
-14-
<PAGE>
become substituted, either alone or together with another person, as the
lessee under any lease listed on Schedule I hereto, so long as API is not in
breach of its obligations under paragraphs (a) and (b) of this Section 6.01,
no event of default has occurred and is continuing under the lease, and no
event of default has occurred and is continuing under the Revolving Credit
Agreement.
Section 6.02. OBLIGATIONS REGARDING CERTAIN AGREEMENTS. API will
not, nor will it permit or cause any member of the API Group to, take or refrain
from taking any action that would cause TDS or any of its Subsidiaries or
Affiliates to breach, violate or be in default under any of the terms of any
agreement or other instrument or obligation to which TDS or any of its
Subsidiaries or Affiliates is a party or by which it or any of them or any of
its or their properties or assets may be bound and of which API is given notice
at any time. Schedule II lists those agreements of which API has been given
notice as of the date of this Agreement.
Section 6.03. INDEMNIFICATION.
(a) API shall indemnify and hold harmless each member of the TDS Group
and any person who is or was a director, officer, employee or agent of any such
member, or is or was serving at the request of any such member as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or
-15-
<PAGE>
other enterprise, from and against any and all losses, claims, damages and
liabilities, and shall promptly reimburse them, as and when incurred, for any
legal or other costs and expenses (including, without limitation, reasonable
attorneys' fees, any amount paid in settlement of any litigation commenced or
threatened, if such settlement is effected with the written consent of API,
and any and all expenses reasonably incurred in investigating, preparing or
defending any litigation, commenced or threatened, or any claim whatsoever or
in enforcing API's obligations under this indemnity) arising out of or
related in any manner to (i) the conduct by members of the API Group of their
respective businesses prior to, on or after the date hereof (other than any
such loss, claim, damage or liability resulting from TDS's gross negligence
or willful misconduct); (ii) any breach by API of its representations,
warranties and agreements made herein; or (iii) any TDS Secondary
Obligations.
(b) TDS shall indemnify and hold harmless each member of the API
Group and any person who is or was a director, officer or employee of any such
member, from and against any and all losses, claims, damages and liabilities,
and shall promptly reimburse them, as and when incurred, for any legal or other
costs and expenses (including, without limitation, reasonable attorneys' fees,
any amount paid in settlement of any litigation commenced or threatened, if such
settlement is effected with the written consent
-16-
<PAGE>
of TDS, and any and all expenses reasonably incurred in investigating,
preparing or defending any litigation, commenced or threatened, or any claim
whatsoever) arising out of or relating in any manner to (i) the conduct by
members of the TDS Group of their respective businesses prior to the date
hereof (other than any such loss, claim, damage or liability resulting from
API's gross negligence or willful misconduct); and (ii) any breach by TDS of
its representations and warranties made herein.
Section 6.04. PROCEDURE FOR INDEMNIFICATION. Each party indemnified
under paragraph (a) or (b) of Section 6.03 shall, promptly after receipt of
notice of the commencement of any action against such indemnified party in
respect of which indemnity may be sought, notify the indemnifying party in
writing of the commencement thereof. The omission of any indemnified party so
to notify an indemnifying party of any such action shall not relieve the
indemnifying party from any liability in respect of such action which it may
have to such indemnified party on account of the indemnity agreement contained
in paragraphs (a) or (b) of Section 6.03, unless the indemnifying party was
prejudiced by such omission, and in no event shall relieve the indemnifying
party from any other liability which it may have to such indemnified party. In
case any such action shall be brought against any indemnified party and it shall
notify an indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate
-17-
<PAGE>
therein and, to the extent that it may wish, to assume the defense thereof,
with counsel satisfactory in any case to TDS. If the indemnifying party so
assumes the defense thereof, it may not agree to any settlement of such
action as the result of which any remedy or relief, other than monetary
damages for which the indemnifying party shall be responsible hereunder,
shall be applied to or against the indemnified party, without the prior
written consent of the indemnified party. If the indemnifying party does not
assume the defense thereof, it shall be bound by any settlement to which the
indemnified party agrees, irrespective of whether the indemnifying party
consents thereto. If any settlement of any claim is effected by the
indemnified party prior to commencement of any action relating thereto, the
indemnifying party shall be bound thereby only if it has consented in writing
thereto. In any action hereunder, the indemnified party shall continue to be
entitled to participate in the defense thereof, with counsel satisfactory to
TDS, even if the indemnifying party has assumed the defense thereof, and the
indemnifying party shall not be relieved of the obligation hereunder to
reimburse the indemnified party for the costs thereof.
Section 6.05. SURVIVAL OF INDEMNIFICATION; PRIOR KNOWLEDGE. The
indemnification provisions of this Article VI shall survive the Offering and any
investigation made at any time by either of the parties hereto. Actual prior
knowledge by any
-18-
<PAGE>
indemnified party with respect to any matter as to which indemnification may
be sought shall not constitute a defense to any indemnified party's rights to
indemnification pursuant to the provisions hereof.
ARTICLE VII
LEGAL COUNSEL
In any case where legal counsel is to be employed to represent the
parties for any purpose under this Agreement, TDS shall have the right to select
such counsel. The parties recognize that API shall have the right to request to
discuss such selection with TDS. If in the judgment of TDS it would be
appropriate to do so, TDS may select the same counsel to represent both parties
in connection with any matter, and API hereby consents in advance to any such
joint representation; PROVIDED, HOWEVER, that if any counsel selected for such
joint representation is of the opinion at any time that, in light of the
circumstances then existing, it would not be able to discharge its professional
responsibilities properly in undertaking or in continuing such joint
representation, then TDS shall select separate counsel to represent API in the
matter. Except as otherwise specifically provided in Section 6.03(b), API shall
be solely responsible for the fees and expenses of any separate counsel so
selected, and TDS shall have no responsibility or liability whatsoever with
respect thereto. If
-19-
<PAGE>
the parties use the same counsel, each of the parties shall be responsible
for the portion of the fees and expenses of such counsel determined by such
counsel to be allocable to each of the parties.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
As an inducement to enter into this Agreement, each party represents
to and agrees with the other that:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and has all requisite
corporate power to own, lease and operate its properties, to carry on its
business as presently conducted and to carry out the transactions
contemplated by this Agreement;
(b) it has duly and validly taken all corporate action necessary to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby;
(c) this Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation
-20-
<PAGE>
enforceable in accordance with its terms (subject, as to the enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally from time to time in effect, and subject to equitable
limitations on the availability of the remedy of specific performance);
and
(d) none of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or the compliance with
any of the provisions of this Agreement will (i) conflict with or result in
a breach of any provision of its corporate charter or bylaws, (ii) breach,
violate or result in a default under any of the terms of any agreement or
other instrument or obligation to which it is a party or by which it or any
of its properties or assets may be bound, or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to it or
affecting any of its properties or assets.
ARTICLE IX
MISCELLANEOUS
Section 9.01. MATTERS RELATING TO THE OFFERING. API shall pay all
costs and expenses relating to the Offering. Each of
-21-
<PAGE>
the parties shall indemnify the other with respect to the Offering in the
same manner as set forth in the Registration Rights Agreement between the
parties dated as of the date hereof.
Section 9.02. DISPOSAL OF API SECURITIES. TDS shall not dispose of
any securities of API held by it if the disposition would directly cause any
member of the API Group to lose any authorizations or licenses the loss of which
would have a material adverse effect on the API Group taken as a whole.
Section 9.03. TERMINATION. If, at any time after TDS becomes the
owner of Series A Common Shares, par value $1.00 per share, of API, less than
500,000 Series A Common Shares are outstanding, either party may terminate the
provisions of Article II hereof upon 60 days' written notice to the other party.
All other provisions of this Agreement shall remain in effect indefinitely or
until such time as the obligations of both parties hereunder shall have been
fully discharged.
Section 9.04. INJUNCTIONS. Irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Therefore, the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically the
terms
-22-
<PAGE>
and provisions hereof in any court having jurisdiction, such remedy being in
addition to any other remedy to which they may be entitled at law or in
equity.
Section 9.05. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid, void or
unenforceable. In the event that any such term, provision, covenant, or
restriction is so held to be invalid, void or unenforceable, the parties hereto
shall use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction.
Section 9.06. ASSIGNMENT. Except, with respect to TDS, by operation
of law or in connection with the sale or transfer of all or substantially all of
the assets of a party hereto or of all or substantially all of the capital stock
of API beneficially owned by TDS, this Agreement shall not be assignable, in
whole or in
-23-
<PAGE>
part, directly or indirectly, by either party hereto without the prior
written consent of the other, and any attempt to assign any rights or
obligations arising under this Agreement without such consent shall be void;
PROVIDED, HOWEVER, that the provisions of this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties hereto and
their respective permitted successors and assigns.
Section 9.07. FURTHER ASSURANCES. Subject to the provisions hereof,
the parties hereto shall make, execute, acknowledge and deliver such other
instruments and documents, and take all such other actions as may be reasonably
required in order to effectuate the purposes of this Agreement and to consummate
the transactions contemplated hereby. Subject to the provisions hereof, each of
the parties shall, in connection with entering into this Agreement, performing
its obligations hereunder and taking any and all actions relating hereto, comply
with all applicable laws, regulations, orders and decrees, obtain all required
consents and approvals and make all required filings with any governmental
agency, other regulatory or administrative agency, commission or similar
authority and promptly provide the other with all such information as the other
may reasonably request in order to be able to comply with the provisions of this
sentence.
-24-
<PAGE>
Section 9.08. PARTIES IN INTEREST. Except for the rights of the
parties indemnified pursuant to Sections 6.03(a) and (b) hereof, nothing in this
Agreement expressed or implied is intended or shall be construed to confer any
right or benefit upon any person, firm or corporation other than the parties and
their respective Subsidiaries and permitted successors and assigns.
Section 9.09. WAIVERS, ETC. No failure or delay on the part of the
parties in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No amendment, modification or waiver of any provision of this
Agreement nor consent to any departure by the parties therefrom shall in any
event be effective unless the same shall be in writing and signed by the chief
executive officer or the chief financial officer of each party in the case of
amendments or modifications, or by the chief executive officer or the chief
financial officer of the waiving or consenting party, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.
-25-
<PAGE>
Section 9.10. SETOFF. All payments to be made by either party under
this Agreement shall be made without setoff, counterclaim or withholding, all of
which are expressly waived.
Section 9.11. CHANGES OF LAW. If, due to any change in applicable
law or regulations or the interpretation thereof by any court of law or other
governing body having jurisdiction subsequent to the date of this Agreement,
performance of any provision of this Agreement or any transaction contemplated
by this Agreement shall become impracticable or impossible, then the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
provision.
Section 9.12. CONFIDENTIALITY. Subject to any contrary requirement
of law and the right of each party to enforce its rights hereunder in any legal
action, each party shall keep strictly confidential and shall cause its
employees and agents to keep strictly confidential, any information which it or
any of its agents or employees may acquire pursuant to, or in the course of
performing its obligations under, any provision of this Agreement; PROVIDED,
HOWEVER, that such obligation to maintain confidentiality shall not apply to
information which (a) at the time of disclosure was in the public domain not as
a result of acts by the receiving
-26-
<PAGE>
party or (b) was in the possession of the receiving party at the time of
disclosure.
Section 9.13. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the transactions contemplated
hereby. With respect to Services, the parties acknowledge that certain
agreements relating to specific services to be provided and the terms of payment
therefor have been, and may in the future be, entered into between members of
the API Group and members of the TDS Group. Those agreements are not superseded
by this Agreement; PROVIDED, HOWEVER, that if any of the provisions of those
agreements shall conflict with any of the provisions of this Agreement (other
than as specifically permitted by this Agreement), the provisions of this
Agreement shall control.
Section 9.14. HEADINGS. Descriptive headings are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement.
Section 9.15. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties hereto,
and each such executed counterpart shall be, and shall be deemed to be, an
original instrument.
Section 9.16. NOTICES. All notices, consents, requests,
instructions, approvals and other communications provided for
-27-
<PAGE>
herein shall be validly given, made or served, if in writing and delivered
personally, by telegram or sent by registered mail, postage prepaid to:
TDS at: 30 North LaSalle Street
Suite 4000
Chicago, IL 60602-2507
Attention: President
with separate copies at such address to the attention of the
Chief Financial Officer and the Corporate Secretary
API at: 1300 Godward Street, N.E.
Suite 3100
Minneapolis, MN 55413-1767
Attention: President
with separate copies at such address to the attention of the
Chief Financial Officer and the Corporate Secretary
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Any notice given under this Agreement
shall be deemed delivered when received at the appropriate address.
Section 9.17. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Illinois
applicable to contracts made and to be performed therein.
-28-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers, each of whom is duly authorized, all as
of the day and year first above written.
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ LeRoy T. Carlson, Jr.
--------------------------------
Name: LeRoy T. Carlson, Jr.
------------------------------
Title: President
-----------------------------
AMERICAN PAGING, INC.
By: /s/ John R. Schaaf
--------------------------------
Name: John R. Schaaf
------------------------------
Title: President
-----------------------------
Signature Page of Intercompany Agreement
dated as of January 1, 1994
-29-
<PAGE>
SCHEDULE I
AGREEMENTS REFERRED TO IN SECTION 6.01
1. Obligations of TDS in connection with a letter of credit issued by LaSalle
National Bank to support the lease of office space in Florida by API or its
subsidiaries or affiliates.
<PAGE>
SCHEDULE II
AGREEMENTS REFERRED TO IN SECTION 6.02
1. The indenture dated as of February 1, 1991 (the "Indenture") between TDS
and Harris Trust and Savings Bank, as trustee, and the debt securities and
instruments issued and to be issued under the Indenture.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of January 1, 1994, is
entered into between Telephone and Data Systems, Inc., an Iowa corporation
(herein called "TDS"), and American Paging, Inc., a Delaware corporation
(herein called "API").
WHEREAS, TDS owns all of the issued and outstanding shares of the
capital stock of API, which have been or will be converted into Series A
Common Shares, par value $1.00 per share, and/or Common Shares, par value
$1.00 per share; and
WHEREAS, at any time and from time to time hereafter, API may
authorize, issue and sell, and TDS may acquire, other classes of debt or
equity securities (such other classes of debt or equity securities of API,
the Series A Common Shares and the Common Shares being herein collectively
called the "Securities", which term shall also have the meaning assigned
thereto in Section 8(c) hereof);
NOW, THEREFORE, in consideration of the foregoing and in order to
specify certain provisions relating to the sale by means of domestic or
foreign public offerings of Securities owned by TDS, the parties hereto agree
as follows:
<PAGE>
Section 1. REGISTRATION AND LISTING RIGHTS.
(a) REGISTRATION. If TDS shall, at any time and from time to
time, request API in writing to register under the Securities Act of 1933
(the "Act") any Securities held by it (whether for purposes of a public
offering, an exchange offer or otherwise), API shall use its best efforts to
cause the prompt registration of all Securities specified in such request,
and in connection therewith shall prepare and file on such appropriate form
as API, in its reasonable discretion, shall determine, a registration
statement under the Act to effect such registration. If TDS shall so
request, API will register such Securities for offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule or rules to
similar effect) under the Act. Notwithstanding the foregoing, API shall be
entitled to postpone for a reasonable period of time, but not in excess of 90
calendar days, the filing of any registration statement otherwise required to
be prepared and filed by it if (i) API is at such time conducting or about to
conduct an underwritten public offering of Securities for sale for its
account and determines that such offering would be materially adversely
affected by the registration so required and (ii) API so notifies TDS within
five days after TDS so requests.
-2-
<PAGE>
(b) OTHER OFFER AND SALE. If TDS shall, at any time and from time
to time, request API in writing to take such actions as shall be necessary or
appropriate to permit any Securities held by TDS to be publicly or privately
offered and sold in compliance with the securities laws or other relevant
laws or regulations of any foreign jurisdiction in which a principal
securities market outside the United States is located, API shall use its
best efforts to take such actions in any such foreign jurisdiction (including
listing such Securities on any foreign securities exchange on which such
listing is requested by TDS) and shall otherwise cooperate in a timely manner
in such offering. Any request under this paragraph (b) may be made
separately or in conjunction with any request under paragraph (a).
Notwithstanding the foregoing, API shall be entitled to postpone for a
reasonable period of time, but not in excess of 90 calendar days, the taking
of any actions otherwise required under this paragraph (b) if (i) API is at
such time conducting or about to conduct an underwritten public offering of
Securities for sale for its account and determines that such offering would
be materially adversely affected by the registration so required and (ii) API
so notifies TDS within 5 days after TDS so requests.
(c) WRITTEN NOTICE. Any request by TDS pursuant to paragraph (a)
or (b) of this Section 1, shall (i) specify the number and class of shares or
the principal amount, as the case may
-3-
<PAGE>
be, of Securities which TDS intends to offer and sell, (ii) express the
intention of TDS to offer or cause the offering of such Securities, (iii)
describe the nature or method of the proposed offer and sale thereof and
state whether such offer is intended to be made domestically or abroad, or
both, and, if abroad, the country or countries in which such offer is
intended to be made, (iv) specify any securities exchange (including any
foreign securities exchange in any principal securities market outside the
United States) or quotation system on which TDS requests that such Securities
be listed, (v) contain the undertaking of TDS to provide all such information
regarding its holdings and the proposed manner of distribution thereof as may
be required in order to permit API to comply with all applicable laws and
regulations, foreign or domestic, and all requirements of the Securities and
Exchange Commission (the "SEC"), any other applicable United States or
foreign regulatory or self-regulatory body and any other body having
jurisdiction and any securities exchange (including any foreign securities
exchange in any principal securities market outside the United States) on
which the Securities are to be listed and to obtain acceleration of the
effective date of any registration statement filed in connection therewith,
and (vi) in the case of an underwritten public offering made domestically or
abroad, or both, specify the managing underwriter or underwriters of such
Securities, which shall be selected by TDS; PROVIDED, HOWEVER, that TDS may
at any time prior to the effectiveness of any
-4-
<PAGE>
such registration statement or commencement of any such offering not pursuant
to a registration statement, in its sole discretion and without the consent
of API, abandon the proposed offering.
(d) CONDITION TO EXERCISE OF RIGHTS. The obligations of API under
paragraphs (a) and (b) of this Section 1 shall be subject to the limitation
that API shall not be obligated to register, take other specified actions
with respect to, or cooperate in the offering of, Securities upon the request
of TDS, unless, in the case of a class of equity Securities, the number of
shares specified in such request pursuant to Section 1(c)(i) shall be greater
than the lesser of (A) one million shares or (B) one percent of the total
number of shares of such class at the time issued and outstanding, or, in the
case of a class of debt Securities, the principal amount specified in such
request pursuant to Section 1(c)(i) shall be at least $5,000,000.
Notwithstanding the foregoing, the failure of TDS to own the minimum number
or percent or principal amount of Securities referred to in the preceding
sentence at any time shall not affect the ability of TDS to exercise its
rights under this Agreement at any subsequent time when TDS again owns such
minimum number or percent or principal amount.
(e) INCIDENTAL REGISTRATION. If API shall, at any time and from
time to time, propose an underwritten offering for cash of
-5-
<PAGE>
any Securities, whether pursuant to a registration statement under the Act or
otherwise, API shall give written notice as promptly as practicable of such
proposed registration or offering to TDS and shall use its best efforts to
include in such offering and, if such offering is pursuant to a registration
statement under the Act, in such registration, any of the same class of such
Securities held by TDS as TDS shall request within 20 calendar days after the
giving of such notice, upon the same terms (including the method of
distribution) as such offering; PROVIDED, HOWEVER, that (i) API shall not be
required to give such notice or include any such Securities in any offering
pursuant to a registration statement filed on Form S-8 or Form S-4 (or such
other form or forms as shall be prescribed under the Act for the same
purposes), and (ii) API may at any time prior to the effectiveness of any
such registration statement or commencement of any such offering not pursuant
to a registration statement, in its sole discretion and without the consent
of TDS, abandon the proposed offering in which TDS had requested to
participate. Notwithstanding the foregoing, API shall not be obligated to
include such Securities in such offering if API is advised in writing by its
managing underwriter or underwriters (with a copy to TDS within five days
after TDS delivers its request pursuant to this paragraph (e)) that such
offering would in its or their opinion be materially adversely affected by
such inclusion; PROVIDED, HOWEVER, that API shall in any case be obligated to
include up to, at TDS's discretion, such number or amount of
-6-
<PAGE>
Securities in such offering as such managing underwriter or underwriters
shall determine will not materially adversely affect such offering.
(f) CONVERSION OF OTHER SECURITIES. Should TDS offer any rights,
warrants or other securities issued by it or any other person that are
convertible into or exercisable or exchangeable for any Securities, API's
obligations under this Section 1 shall be applicable to such Securities to be
purchased upon such conversion, exercise or exchange.
Section 2. COVENANTS OF API. In connection with any offering of
Securities pursuant to this Agreement, API shall:
(a) furnish to TDS such number of copies of any prospectus (including
any preliminary prospectus), registration statement, offering memorandum or
other offering document (including any exhibits thereto or documents
referred to therein) as TDS may reasonably request and a copy of any and
all transmittal letters or other correspondence with the SEC or any other
governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange)
relating to such offering of Securities;
-7-
<PAGE>
(b) take such reasonable action as may be necessary to qualify such
Securities for offer and sale under such securities, "blue sky" or similar
laws of such jurisdictions (including any foreign country or political
subdivision thereof) as TDS or any underwriter shall request;
(c) enter into an underwriting agreement (or equivalent document in
any foreign jurisdiction) containing representations, warranties,
indemnities, contribution provisions and agreements then customarily
included by an issuer in underwriting agreements (or such equivalent
documents) in the form customarily used by the managing underwriter and
reasonably acceptable to API and TDS with respect to secondary
distributions;
(d) at the closing, furnish unlegended certificates representing
ownership of the Securities being sold in such denominations as shall be
requested by TDS or the managing underwriter;
(e) in the case of any offering of equity securities, instruct the
transfer agent and registrar to release any stop transfer orders with
respect to the equity securities being sold;
-8-
<PAGE>
(f) promptly inform TDS (i) in the case of any domestic offering of
Securities in respect of which a registration statement is filed under the
Act, of the date on which such registration statement or any post-effective
amendment thereto becomes effective (and, in the case of any offering
abroad of Securities, of the date when any required filing under the
securities and other laws of such foreign jurisdiction shall have been made
and when the offering may be commenced in accordance with such laws) and
(ii) of any request by the SEC, any securities exchange, government agency,
self-regulatory body or other body having jurisdiction for any amendment of
or supplement to any registration statement or preliminary prospectus or
prospectus included therein or any offering memorandum or other offering
document relating to such offering;
(g) upon any registration statement becoming effective pursuant to
any registration under the Act pursuant to this Agreement, file any
necessary amendments or supplements to such registration statement and
otherwise use its best efforts to keep such registration statement
effective for such period as TDS shall request;
(h) take such reasonable actions as may be necessary to have such
Securities listed on any securities exchange or
-9-
<PAGE>
quotation system on which TDS shall request such listing pursuant to the
notice delivered by TDS under Section 1(c) hereof;
(i) promptly notify TDS of the happening of any event as a result of
which any registration statement or any preliminary prospectus or
prospectus included therein or any offering memorandum or other offering
document includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and prepare and furnish to TDS as many copies of a supplement to
or amendment of such offering document which shall correct such untrue
statement or eliminate such omission, as TDS shall request;
(j) appoint a trustee or fiscal agent (in the case of debt
securities) and any transfer agent, registrar, depository, authentication
agent or other agent as may be necessary or desirable or as may be
requested by TDS; and
(k) take such actions and execute and deliver such other documents as
may be necessary to give full effect to the rights of TDS under this
Agreement.
-10-
<PAGE>
Section 3. EXPENSES.
(a) All expenses incurred in complying with Section 1(a) or (b)
hereof, including, without limitation, all registration and filing fees
(including all expenses incident to any filing with the National Association of
Securities Dealers, Inc., or listing on any domestic or foreign securities
exchange), fees and expenses of complying with securities and blue sky laws
(including those of counsel satisfactory to TDS retained to effect such
compliance) and printing expenses (collectively "Registration Expenses") and any
stamp, duty or transfer tax shall be paid by TDS. Notwithstanding the
foregoing, (i) TDS shall pay all underwriting discounts and commissions, (ii)
API shall pay (x) the fees and disbursements of its independent public
accountants (including any such fees and expenses incurred in performing any
special audits required in connection with any such offering and incurred in
connection with the preparation of pro forma financial statements and comfort
letters for any such offering), (y) transfer agents', trustees', fiscal agents',
depositaries', and registrars' fees and the fees of any other agent appointed in
connection with such offering, and (z) all security engraving and printing
expenses and (iii) each party shall pay the fees and expenses of its counsel.
(b) All expenses incurred in complying with Section 1(e) hereof,
including, without limitation, any Registration Expenses,
-11-
<PAGE>
shall be paid by API, except that (i) TDS shall pay all underwriting
discounts, commissions and expenses specifically attributable to the
inclusion in the offering under said Section 1(e) of the Securities being
sold by TDS and (ii) each party shall pay the fees and expenses of its
counsel.
Section 4. INDEMNIFICATION.
(a) API INDEMNITY. In the case of each offering contemplated by this
Agreement, API shall indemnify and hold harmless TDS, its officers and
directors, each underwriter of Securities so offered and each person, if any,
who controls TDS or any such underwriter within the meaning of Section 15 of the
Act, and each person affiliated with or retained by TDS and who may be subject
to liability under any applicable securities laws, against any and all losses,
claims, damages or liabilities to which they or any of them may become subject
under the Act or any other statute or common law of the United States of America
or any other country, or otherwise, including any amount paid in settlement of
any litigation commenced or threatened, and shall promptly reimburse them, as
and when incurred, for any legal or other expenses incurred by them in
connection with investigating any claims and defending any actions, insofar as
any such losses, claims, damages, liabilities or actions shall arise out of or
shall be based upon any untrue statement or alleged untrue statement of a
material fact
-12-
<PAGE>
contained in the registration statement (or in any preliminary or final
prospectus included therein) or in any offering memorandum or other offering
document relating to the offering and sale of such Securities, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or
any violation or alleged violation by API of the Act, any blue sky laws,
securities laws or other applicable laws of any state or country in which
Securities are offered and relating to action or inaction required of API in
connection with such offering; PROVIDED, HOWEVER, that the indemnification
agreement contained in this Section 4(a) shall not apply to such losses,
claims, damages, liabilities or actions if such losses, claims, damages,
liabilities or actions shall arise out of or shall be based upon any such
untrue statement or alleged untrue statement, or any such omission or alleged
omission, made in reliance upon and in conformity with information concerning
TDS supplied or approved by TDS for use in connection with the preparation of
the registration statement or any preliminary prospectus or final prospectus
contained in the registration statement, any offering memorandum or other
offering document, or any amendment thereof or supplement thereto.
(b) TDS INDEMNITY. In the case of each offering made pursuant to
this Agreement, TDS shall, in the same manner and to the same extent as set
forth in paragraph (a) of this Section 4,
-13-
<PAGE>
indemnify and hold harmless API and each person, if any, who controls API
within the meaning of Section 15 of the Act, and each person affiliated with
or retained by API and who may be subject to liability under any applicable
securities laws, its directors and those officers of API who shall have
signed any registration statement, offering memorandum or other offering
document with respect to any statement in or omission from such registration
statement, any preliminary prospectus or final prospectus contained in such
registration statement, any offering memorandum or other offering document,
or any amendment thereof or supplement thereto, if such statement or omission
shall have been made in reliance upon and in conformity with information
concerning TDS supplied or approved by TDS for use in connection with the
preparation of such registration statement, any preliminary prospectus or
final prospectus contained in such registration statement, any offering
memorandum or other offering document, or any amendment thereof or supplement
thereto.
(c) PROCEDURE FOR INDEMNIFICATION. Each party indemnified under
paragraph (a) or (b) of this Section 4, or under Section 8(f) hereof, shall,
promptly after receipt of notice of the commencement of any action against
such indemnified party in respect of which indemnity may be sought, notify
the indemnifying party in writing of the commencement thereof. The omission
of any indemnified party so to notify an indemnifying party of any such
-14-
<PAGE>
action shall not relieve the indemnifying party from any liability in respect
of such action which it may have to such indemnified party on account of the
indemnity agreement contained in paragraph (a) or (b) of this Section 4, or
under Section 8(f) hereof, unless the indemnifying party was materially
prejudiced by such omission, and in no event shall relieve the indemnifying
party from any other liability which it may have to such indemnified party.
In case any such action shall be brought against any indemnified party and
such indemnified party shall notify an indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and,
to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel satisfactory
in any case to TDS. If the indemnifying party so assumes the defense
thereof, it may not agree to any settlement of any such action as the result
of which any remedy or relief shall be applied to or against the indemnified
party, without the prior written consent of the indemnified party. If the
indemnifying party does not assume the defense thereof, it shall be bound by
any settlement to which the indemnified party agrees, irrespective of whether
the indemnifying party consents thereto. If any settlement of any claim is
effected by the indemnified party prior to commencement of any action
relating thereto, the indemnifying party shall be bound thereby only if it
has consented in writing thereto. In any action hereunder, the indemnified
party shall continue to be entitled to participate in
-15-
<PAGE>
the defense thereof, with counsel satisfactory to TDS, even if the
indemnifying party has assumed the defense thereof, and the indemnifying
party shall not be relieved of the obligation hereunder to reimburse the
indemnified party for the costs thereof.
Section 5. TRANSFER OF RIGHTS.
(a) Subject to paragraph (b) below, the rights of TDS under this
Agreement with respect to any Security may be transferred to any one or more
transferees of such Security. Any transfer of registration rights pursuant
to this Section 5 shall be effective only upon receipt by API of written
notice from TDS stating the name and address of any transferee and
identifying the Securities with respect to which the rights under this
Agreement are being transferred.
(b) The rights of a transferee under paragraph (a) above shall be
the same rights granted to TDS under this Agreement, except such transferee
shall (i) only have the right to make one request under paragraph (a) or (b)
of Section 1, which may be a simultaneous request under paragraphs (a) and
(b), and two requests under paragraph (e) of Section 1 and (ii) in the case
of a request under paragraph (a) or (b) of Section 1, be required to pay all
expenses that, under Section 3, would be required to be paid by TDS and in
the case of a request under paragraph (e) of Section 1, be
-16-
<PAGE>
required to pay all expenses that, under Section 3(b), would be required to
be paid by TDS.
Section 6. TERMINATION OF OBLIGATIONS. Section 1 of this Agreement
shall terminate and cease to be of any force and effect in respect of TDS at
such time as TDS, and in respect of any assignee of TDS under Section 9(c) at
such time as such assignee, shall cease beneficially to own any Securities;
PROVIDED, HOWEVER, that such termination shall not affect the rights of any
transferee under Section 5.
Section 7. REPRESENTATION AND WARRANTIES. As an inducement to enter
into this Agreement, each party represents to and agrees with the other that:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and has all requisite
corporate power to own, lease and operate its properties, to carry on its
business as presently conducted and to carry out the transactions
contemplated by this Agreement;
(b) it has duly and validly taken all corporate action necessary to
authorize the execution, delivery and performance
-17-
<PAGE>
of this Agreement and the consummation of the transactions contemplated
hereby;
(c) this Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable in
accordance with its terms (subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally from
time to time in effect, and subject to equitable limitations on the
availability of the remedy of specific performance); and
(d) none of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or the compliance with
any of the provisions of this Agreement will (i) conflict with or result in
a breach of any provision of its corporate charter or bylaws, (ii) breach,
violate or result in a default under any of the terms of any agreement or
other instrument or obligation to which it is a party or by which it or any
of its properties or assets may be bound, or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to it or
affecting any of its properties or assets.
-18-
<PAGE>
Section 8. CERTAIN AGREEMENTS AND DEFINITIONS.
(a) CALCULATION OF AMOUNTS. For purposes of this Agreement, the
amount of any Securities outstanding at any time (and the amount of any
Securities then beneficially owned by TDS or any other person) shall be
calculated on the basis of the information contained in API's most recent report
filed with the SEC. For purposes of calculating the amount of Securities
outstanding at any time (and the amount of Securities then beneficially owned by
TDS or any other person) all outstanding securities convertible into or
exchangeable for such Securities, including outstanding securities that in the
future will become so convertible or exchangeable, shall be deemed to have been
fully converted at such time.
(b) "PERSON"; "AFFILIATE". As used in this Agreement, the term
"person" shall mean any individual, partnership, corporation, trust or other
entity. As used in this Agreement, the term "affiliate" shall mean, with
respect to any specified person, any other person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such specified person.
(c) "SECURITIES". As used in this Agreement, the term "Securities"
shall include any security of API now owned or
-19-
<PAGE>
hereafter acquired by TDS, whether acquired in any transaction with API or
another person, in any recapitalization of API, as a dividend or other
distribution, as a result of any "split" or "reverse split", upon conversion
or exercise of another security of API or any other person, or otherwise.
(d) NO LEGEND. No Security held or to be transferred by TDS shall
bear any legend, nor shall API cause or permit any transfer agent or registrar
appointed by API with respect to such Security to refuse or fail to effect a
transfer or registration with respect to such Security, provided that TDS
provides to API a certificate of an officer to TDS in connection with such
transfer or registration to the effect that such transfer or registration is not
in violation of any applicable securities or other law.
(e) STOCK BOOKS. Except as otherwise provided by law for all holders
of securities, API will not close its stock books or other registries against
the transfer of any Security held by TDS.
(f) SECURITIES EXCHANGE ACT OF 1934. API shall at all times (whether
or not it is required to do so) timely file such information, documents and
reports as the SEC may require or prescribe under the Securities Exchange Act of
1934 (the "Exchange Act") and shall provide TDS with two copies of each thereof
or any
-20-
<PAGE>
other communication with or from the SEC. API shall, whenever requested by
TDS, notify TDS in writing whether API has, as of the date specified by TDS,
complied with the Exchange Act reporting requirements to which it is subject
for such period to such date as shall be specified by TDS. API acknowledges
and agrees that one of the purposes of the requirements contained in this
Section 8(f) is to enable TDS to comply with the current public information
requirements contained in Paragraph (c) of Rule 144 under the Act (or any
corresponding rule hereafter in effect) should TDS ever wish to dispose of
any Securities without registration under the Act in reliance upon Rule 144.
In addition, API shall take such other measures and file such other
information, documents and reports as shall hereafter be required by the SEC
as a condition to the availability of Rule 144. API covenants, represents
and warrants that all such information, documents and reports filed with the
SEC shall not contain any untrue statement of a material fact or fail to
state therein a material fact required to be stated therein or necessary to
make the statements contained therein not misleading, and API shall indemnify
and hold TDS, its officers and directors and each broker, dealer, underwriter
or other person acting for TDS (and any controlling person of any of the
foregoing) harmless from and against any and all claims, liabilities, losses,
damages, expenses and judgments and shall promptly reimburse them, as and
when incurred, for any legal or other expenses incurred by them in connection
with investigating any claims and defending any
-21-
<PAGE>
actions insofar as such claims, liabilities, losses, damages expenses and
judgments arise out of or based upon any breach of the foregoing covenants,
representations or warranties. The procedure for indemnification set forth
in Section 4(c) hereof shall apply to the indemnification provided under this
Section 8(f).
(g) LISTING. Once initially listed, API shall maintain in effect
any listing of Securities on any securities exchange (domestic or foreign) or
quotation system, shall make all filings and take all other actions required
under the rules of such exchange or quotation system and any applicable
listing agreement, shall provide TDS with two copies of each such filing or
any other communication with such exchange or quotation system at the time at
which such filing is made, and shall notify TDS of any proceeding or other
action taken by such exchange, quotation system or any other person which
might have the effect of terminating or otherwise changing the status of such
listing, forthwith upon the occurrence thereof.
(h) LIMITATION ON OTHER SECURITIES TO BE REGISTERED. In case of
any registration, offering or sale contemplated by paragraph (a) or (b) of
Section 1, API shall not include in such registration, offering or sale any
Securities other than those beneficially owned by TDS, and in case of any
registration, offering or sale contemplated by paragraph (e) of Section 1,
API
-22-
<PAGE>
shall not include in such registration, offering or sale any Securities other
than those being offered by API and TDS.
(i) FILINGS; PRESS RELEASES. As far in advance as is practicable
of (but in any event no later than two business days before) (i) the
publication of any press release containing information material to API's
stockholders or (ii) the filing of any document or report with the SEC or
with any securities exchange or quotation system, API shall send a reasonably
final draft of such press release, document or report to TDS at the address
set forth in Section 9(m) hereof. TDS shall have the right to request
amendments, modifications or supplements to any such release, document or
report and API shall not unreasonably withhold its consent thereto. The
obligations of API under this Section 8(i) shall terminate and cease to be of
any force and effect at such time as TDS shall cease to beneficially own any
Securities, or if at any time less than 500,000 Series A Common Shares, par
value $1.00 per share, of API are outstanding.
(j) COUNSEL. In any case where legal counsel is to be employed to
represent the parties for any purpose under this Agreement, TDS shall have
the right to select such counsel. If in the judgment of TDS it would be
appropriate to do so, TDS may select the same counsel to represent both
parties in connection with any matter, and API hereby consents in advance to
any such
-23-
<PAGE>
joint representation; PROVIDED, HOWEVER, that if any counsel selected for
such joint representation is of the opinion at any time that, in light of the
circumstances then existing, it would not be able to discharge its
professional responsibilities properly in undertaking or in continuing such
joint representation, then TDS shall select separate counsel to represent API
in the matter. Except as otherwise specifically provided in Section 4(b)
hereof, API shall be solely responsible for the fees and expenses of any
separate counsel so selected, and TDS shall have no responsibility or
liability whatsoever with respect thereto. If the parties use the same
counsel, each of the parties shall be responsible for the portion of the fees
and expenses of such counsel determined by such counsel to be allocable to
each of the parties.
Section 9. MISCELLANEOUS.
(a) INJUNCTIONS. Irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. Therefore, the parties
hereto shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court having jurisdiction, such remedy being in
addition to any other remedy to which they may be entitled at law or in
equity.
-24-
<PAGE>
(b) SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any
of such which may be hereafter declared invalid, void or enforceable. In the
event that any such term, provision, covenant or restriction is so held to be
invalid, void or unenforceable, the parties hereto shall use their best
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction.
(c) ASSIGNMENT. Except in the case of a transaction as a result
of which API ceases to be an affiliate of TDS or except as provided otherwise
in Section 5 hereof, and except by operation of law or in connection with the
sale of all or substantially all the assets of a party hereto, this Agreement
shall not be assignable, in whole or in part, directly or indirectly, by
either party hereto without the prior written consent of the other, and any
attempt to assign any rights or obligations arising under this Agreement
without such consent shall be void; PROVIDED, HOWEVER, that the
-25-
<PAGE>
provisions of the Agreement shall be binding upon, inure to the benefit of
and be enforceable by the parties hereto (including, solely for purposes of
Section 4 hereof, their officers and directors) and their respective
successors and permitted assigns. In the case of a transaction as a result
of which API ceases to be an affiliate of TDS, this Agreement and all of
TDS's rights and obligations hereunder shall be deemed to be automatically
assigned to any person who acquires Securities in connection with the
transaction and who API and TDS are affiliates of both before and after the
transaction.
(d) FURTHER ASSURANCES. Subject to the provisions hereof, the
parties hereto shall make, execute, acknowledge and deliver such other
instruments and documents, and take all such other actions as may be
reasonably required in order to effectuate the purposes of this Agreement and
to consummate the transactions contemplated hereby. Subject to the
provisions hereof, each of the parties shall, in connection with entering
into this Agreement, performing its obligations hereunder and taking any and
all actions relating hereto, comply with all applicable laws, regulations,
orders and decrees, obtain all required consents and approvals and make all
required filings with any governmental agency, other regulatory or
administrative agency, commission or similar authority and promptly provide
the other with all such information
-26-
<PAGE>
as the other may reasonably request in order to be able to comply with the
provisions of this sentence.
(e) PARTIES IN INTEREST. Nothing in this Agreement expressed or
implied is intended or shall be construed to confer any right or benefit upon
any person, firm or corporation other than the parties and their respective
permitted successors and assigns.
(f) WAIVERS, ETC. No failure or delay on the part of the parties
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No amendment, modification or waiver of any provision of
this Agreement nor consent to any departure by the parties therefrom shall in
any event be effective unless the same shall be in writing and signed by the
chief executive officer or the chief financial officer of each party in the
case of amendments or modifications, or by the chief executive officer or the
chief financial officer of the waiving or consenting party, and then such
waiver or consent shall be effective only in the specific instance and for
the purpose for which given.
-27-
<PAGE>
(g) SETOFF. All payments to be made by either party under this
Agreement shall be made without setoff, counterclaim or withholding, all of
which are expressly waived.
(h) CHANGES OF LAW. If, due to any change in applicable law or
regulations or the interpretation thereof by any court of law or other
governing body having jurisdiction subsequent to the date of this Agreement,
performance of any provision of this Agreement or any transaction
contemplated hereby shall become impracticable or impossible, the parties
hereto shall use their best efforts to find and employ an alternative means
to achieve the same or substantially the same result as that contemplated by
such provision.
(i) CONFIDENTIALITY. Subject to any contrary requirement of law
and the right of each party to enforce its rights hereunder in any legal
action, each party shall keep strictly confidential and shall cause its
employees and agents to keep strictly confidential, any information which it
or any of its agents or employees may acquire pursuant to, or in the course
of performing its obligations under, any provision of this Agreement;
PROVIDED, HOWEVER, that such obligation to maintain confidentiality shall not
apply to information which (x) at the time of disclosure was in the public
domain not as a result of acts by the receiving
-28-
<PAGE>
party or (y) was in the possession of the receiving party at the time of
disclosure.
(j) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the transactions contemplated
hereby.
(k) HEADINGS. Descriptive headings are for convenience only and
shall not control or affect the meaning or construction of any provision of
this Agreement.
(l) COUNTERPARTS. For the convenience of the parties, any number
of counterparts of this Agreement may be executed by the parties hereto, and
each such executed counterpart shall be, and shall be deemed to be, an
original instrument.
(m) NOTICES. All notices, consents, requests, instructions,
approvals and other communications provided for herein shall be validly
given, made or served, if in writing and delivered personally, by telegram or
sent by registered mail, postage prepaid to:
-29-
<PAGE>
TDS at: 30 North LaSalle Street
Suite 4000
Chicago, IL 60602-2507
Attention: President
with separate copies at such address to the attention of the Chief
Financial Officer and the Corporate Secretary
API at: 1300 Godward Street, N.E.
Suite 3100
Minneapolis, MN 55413-1767
Attention: President
with separate copies at such address to the attention of the Chief
Financial Officer and the Corporate Secretary
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Any notice given under this Agreement
shall be deemed delivered when received at the appropriate address.
(n) GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Illinois
applicable to contracts made and to be performed therein.
-30-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers, each of whom is duly authorized,
all as of the date and year first above written.
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ LeRoy T. Carlson, Jr.
--------------------------------
Name: LeRoy T. Carlson, Jr.
------------------------------
Title: President
-----------------------------
AMERICAN PAGING, INC.
By: /s/ John R. Schaaf
--------------------------------
Name: John R. Schaaf
------------------------------
Title: President
-----------------------------
Signature Page of Registration Rights Agreement
dated as of January 1, 1994.
-31-
<PAGE>
EMPLOYEE BENEFIT PLANS AGREEMENT
This Employee Benefit Plans Agreement, dated as of January 1, 1994, is
entered into between Telephone and Data Systems, Inc., an Iowa corporation
(herein called "TDS"), and American Paging, Inc., a Delaware corporation (herein
called "API").
WHEREAS, TDS owns all of the issued and outstanding shares of the
capital stock of API;
WHEREAS, in connection with the execution and delivery of this
Agreement, API is selling in an underwritten public offering (the "Offering") a
number of its Common Shares, par value $1.00 per share;
WHEREAS, in connection with the foregoing, certain employees of API
will continue to participate in TDS's 1993 Employees' Stock Purchase Plan;
WHEREAS, in connection with the foregoing, certain senior managers of
API will continue to participate in the American Paging, Inc. Long-Term
Incentive Program; and
WHEREAS, for purposes of this Agreement, unless the context otherwise
requires, "TDS" shall mean TDS and any of its
<PAGE>
subsidiaries, including those which become subsidiaries after the date hereof
(other than API and API's subsidiaries), and API shall mean API and any of
its subsidiaries, including those which become subsidiaries after the date
hereof;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the terms set out below shall have the
indicated meanings (such meanings applying equally to the singular and plural
forms thereof);
"API LTIP" means the American Paging, Inc. Long-Term Incentive
Program.
"API LTIP PARTICIPANT" means each individual who is or was a
participant in the API LTIP.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended.
"TDS ESPP" means the TDS 1993 Employees' Stock Purchase Plan.
<PAGE>
"TDS ESPP - API PARTICIPANT" means each individual who is or was a
participant in the TDS ESPP and an employee and/or officer of API.
Any capitalized term not otherwise defined in this Agreement shall
have the meaning set forth for such term in the employee benefit plan to which
such term relates.
ARTICLE II
TDS ESPP
In connection with the purchase of TDS Common Shares under the TDS
ESPP by a TDS ESPP - API Participant, API shall pay in cash to TDS an amount
equal to the excess of the fair market value of the TDS Common Shares on the
date of purchase over the amount paid therefor by the TDS ESPP - API Participant
and any other amounts paid or to be paid by TDS to any government or
governmental agency for taxes, if any, with respect thereto, less any amounts
paid to TDS by a API ESPP Participant for withholding taxes. Any payments by
API to TDS pursuant to this Article shall be made within 10 days after the date
of purchase under the TDS ESPP. For purposes of this Article, the fair market
value of a TDS Common Share is the closing price of a TDS Common Share on the
American Stock Exchange on the date of reference or, if the reference date is
not a trading date, the closing price of a TDS
-3-
<PAGE>
Common Share on the American Stock Exchange on the next preceding trading
date.
ARTICLE III
API LTIP
API currently maintains the API LTIP which provides for the granting
of Stock Appreciation Rights ("SAR's") utilizing shares of phantom API stock to
selected senior managers of API. Upon the exercise of vested SAR's, an API LTIP
Participant may elect to receive cash or TDS Common Shares having a value (as
determined under the API LTIP) equal to the difference between the most recently
computed value of the shares of phantom API stock for which the SAR's are being
exercised and the initial price of the related shares of phantom API stock at
the date the SAR's were granted. Although API LTIP Participants can elect to
receive payment of a vested SAR in cash or TDS Common Shares, the President of
TDS or the Board of Directors of TDS has the final determination as to whether
payment will be made in TDS Common Shares or cash. It is understood by TDS and
API that any payment under the API LTIP has been and continues to be the sole
obligation of API. If as a result of an exercise of an SAR, the President of
TDS or the Board of Directors of TDS agrees to have TDS pay a portion or all of
the value of an exercised SAR in TDS Common Shares, API shall pay in
-4-
<PAGE>
cash to TDS an amount equal to the fair market value on the date of the
exercise of the SAR of the TDS Common Shares distributed to the participants
by TDS on behalf of API. In addition, API shall pay to TDS any other amounts
paid or to be paid by TDS to any government or governmental agency for taxes,
if any, relating to the exercise of an SAR under the API LTIP less any
amounts paid to TDS by an API LTIP Participant for withholding taxes. Any
payments by API to TDS pursuant to this Article shall be made within 10 days
after the date of exercise under the API LTIP. For purposes of this Article,
the fair market value of a TDS Common Share on the date of the exercise of an
SAR is the closing price of a TDS Common Share on the American Stock Exchange
on such date or, if the date of the exercise is not a trading date, the
closing price of a TDS Common Share on the American Stock Exchange on the
next preceding trading day.
ARTICLE IV
INDEMNIFICATION
Section 4.01. INDEMNIFICATION. (a) API shall indemnify and hold
harmless TDS, and each person, if any, who controls TDS, from and against any
and all losses, claims, damages or liabilities and any costs and expenses
(including without limitation reasonable attorneys' fees and any and all
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any
-5-
<PAGE>
litigation, commenced or threatened, or any claim whatsoever) (1) arising out
of or related in any manner to API's failure to comply with any of its
obligations under this Agreement, (2) arising out of the negligence or
misconduct of API in connection with the participation of (A) the TDS ESPP -
API Participants or any present or former employees of API, in the TDS ESPP
or (B) the API LTIP Participants or any present or former employees of API,
in the API LTIP, or (3) subject to TDS's compliance with its obligations
under this Agreement, arising out of the transactions contemplated by this
Agreement and incurred by any TDS ESPP - API Participant or API LTIP
Participant.
(b) TDS shall indemnify and hold harmless API from and against any
and all losses, claims, damages or liabilities and any costs and expenses
(including without limitation reasonable attorneys' fees and any and all
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever) (1)
arising out of or related in any manner to TDS's failure to comply with any of
the terms of this Agreement, or (2) arising out of the negligence or misconduct
of TDS in connection with the participation of (A) the TDS ESPP - API
Participants or any present or former employees of API, in the TDS ESPP or (B)
the API LTIP Participants or any present or former employees of API, in the API
LTIP.
-6-
<PAGE>
Section 4.02. PROCEDURE FOR INDEMNIFICATION. Each party indemnified
under paragraph (a) or (b) of Section 4.01 shall, promptly after receipt of
notice of the commencement of any action against such indemnified party in
respect of which indemnity may be sought, notify the indemnifying party in
writing of the commencement thereof. The omission of any indemnified party so
to notify an indemnifying party of any such action shall not relieve the
indemnifying party from any liability in respect of such action which it may
have to such indemnified party on account of the indemnity agreement contained
in paragraph (a) or (b) of Section 4.01, unless the indemnifying party was
prejudiced by such omission, and in no event shall relieve the indemnifying
party from any other liability which it may have to such indemnified party. In
case any such action shall be brought against any indemnified party and it shall
notify an indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it may wish, to
assume the defense thereof, with counsel satisfactory in any case to TDS. If
the indemnifying party so assumes the defense thereof, it may not agree to any
settlement of such action as the result of which any remedy or relief, other
than monetary damages for which the indemnifying party shall be responsible
hereunder, shall be applied to or against the indemnified party, without the
prior written consent of the indemnified party. If the indemnifying party does
not assume the defense thereof, it shall be bound by any settlement to which
-7-
<PAGE>
the indemnified party agrees, irrespective of whether the indemnifying party
consents thereto. If any settlement of any claim is effected by the
indemnified party prior to commencement of any action relating thereto, the
indemnifying party shall be bound thereby only if it has consented in writing
thereto. In any action hereunder, the indemnified party shall continue to be
entitled to participate in the defense thereof, with counsel satisfactory to
TDS, even if the indemnifying party has assumed the defense thereof, and the
indemnifying party shall not be relieved of the obligation hereunder to
reimburse the indemnified party for the costs thereof.
Section 4.03. OFFICERS, DIRECTORS, ETC. For purposes of this Article
IV, losses, claims, damages, liabilities, costs and expenses of past, present or
future officers, directors, employees, agents (in each case, acting in their
capacities as such) or subsidiaries (or past, present or future officers,
directors, employees and agents of subsidiaries) of TDS or API, as the case may
be, shall be deemed to have been suffered by TDS or API, as the case may be.
Section 4.04. SURVIVAL OF INDEMNIFICATION; PRIOR KNOWLEDGE. The
indemnification provisions of this Article IV shall survive the Offering and any
investigation made at any time by either of the parties hereto. Actual prior
knowledge by any
-8-
<PAGE>
indemnified party with respect to any matter as to which indemnification may
be sought shall not constitute a defense to any indemnified party's rights to
indemnification pursuant to the provisions hereof.
ARTICLE V
LEGAL COUNSEL
In any case where legal counsel is to be employed to represent the
parties for any purpose under this Agreement, TDS shall have the right to select
such counsel. If in the judgment of TDS it would be appropriate to do so, TDS
may select the same counsel to represent both parties in connection with any
matter, and API hereby consents in advance to any such joint representation;
PROVIDED, HOWEVER, that if any counsel selected for such joint representation is
of the opinion at any time that, in light of the circumstances then existing, it
would not be able to discharge its professional responsibilities properly in
undertaking or in continuing such joint representation, then TDS shall select
separate counsel to represent API in the matter. Except as otherwise
specifically provided in Section 4.01(b), API shall be solely responsible for
the fees and expenses of any separate counsel so selected, and TDS shall have no
responsibility or liability whatsoever with respect thereto. If the parties use
the same counsel, each of the parties shall be responsible for the
-9-
<PAGE>
portion of the reasonable fees and expenses of such counsel determined by
such counsel to be allocable to each of the parties.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
As an inducement to enter into this Agreement, each party represents
to and agrees with the other that:
(a) it is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation and has all
requisite corporate power to own, lease and operate its properties, to
carry on its business as presently conducted and to carry out the
transactions contemplated by this Agreement;
(b) it has duly and validly taken all corporate action necessary
to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby;
(c) this Agreement has been duly executed and delivered by it
and constitutes its legal, valid and binding obligation enforceable in
accordance with its terms (subject, as to the enforcement of remedies,
to
-10-
<PAGE>
applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally from time to time in effect, and subject to equitable
limitations on the availability of the remedy of specific
performance); and
(d) none of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or the compliance
with any of the provisions of this Agreement will (i) conflict with or
result in a breach of any provision of its corporate charter or
by-laws, (ii) breach, violate or result in a default under any of the
terms of any agreement or other instrument or obligation to which it
is a party or by which it or any of its properties or assets may be
bound, or (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to it or affecting any of its properties
or assets.
-11-
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.01. DISPOSAL OF API SHARES. API acknowledges that TDS may
at any time and from time to time dispose of any Series A Common Shares or
Common Shares of API held by it in any manner which it deems fit without regard
to the effect of any such disposition on any provision or term of any employee
benefit plan as that term is defined in Section 3(3) of ERISA, or other
arrangements with employees of API or TDS. API hereby expressly waives any
claim which it might otherwise at any time have or have had against TDS with
respect to any such disposition of API Series A Common Shares or Common Shares.
Section 7.02. INJUNCTIONS. Irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Therefore, the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof in any court having jurisdiction, such remedy being
in addition to any other remedy to which they may be entitled at law or in
equity.
-12-
<PAGE>
Section 7.03. ASSIGNMENT. Except, with respect to TDS, by operation
of law or in connection with the sale or transfer of all or substantially all of
the assets of a party hereto or of all or substantially all of the capital stock
of API beneficially owned by TDS, this Agreement shall not be assignable, in
whole or in part, directly or indirectly, by either party hereto without the
prior written consent of the other, and any attempt to assign any rights or
obligations arising under this Agreement without such consent shall be void;
PROVIDED, HOWEVER, that the provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and their
respective permitted successors and assigns.
Section 7.04. FURTHER ASSURANCES. Subject to the provisions hereof,
the parties hereto shall make, execute, acknowledge and deliver such other
instruments and documents, and take all such other actions as may be reasonably
required in order to effectuate the purposes of this Agreement and to consummate
the transactions contemplated hereby. Subject to the provisions hereof, each of
the parties shall, in connection with entering into this Agreement, performing
its obligations hereunder and taking any and all actions relating hereto, comply
with all applicable laws, regulations, orders and decrees, obtain all required
consents and approvals and make all required filings with any governmental
agency, other regulatory or administrative agency, commission or
-13-
<PAGE>
similar authority and promptly provide the other with all such information as
the other may reasonably request in order to be able to comply with the
provisions of this sentence.
Section 7.05. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid, void or
unenforceable. In the event that any such term, provision, covenant or
restriction is so held to be invalid, void or unenforceable, the parties hereto
shall use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction.
Section 7.06. WAIVERS, ETC. No failure or delay on the part of the
parties in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any
-14-
<PAGE>
other or further exercise thereof or the exercise of any other right or
power. No amendment, modification or waiver of any provision of this
Agreement nor consent to any departure by the parties therefrom shall in any
event be effective unless the same shall be in writing and signed by the
chief executive officer or the chief financial officer of each party in the
case of amendments or modifications, or by the chief executive officer or the
chief financial officer of the waiving or consenting party, and then such
waiver or consent shall be effective only in the specific instance and for
the purpose for which given.
Section 7.07. CHANGES OF LAW. If, due to any change in applicable
law or regulations or the interpretation thereof by any court of law or other
governing body having jurisdiction subsequent to the date of this Agreement,
performance of any provision of this Agreement or any transaction contemplated
by this Agreement shall become impracticable or impossible, the parties hereto
shall use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such
provision.
Section 7.08. PARTIES IN INTEREST. Except for the rights of the
parties indemnified pursuant to Section 4.01(a) and (b) hereof, nothing in this
Agreement expressed or implied is intended or shall be construed to confer any
right or benefit upon
-15-
<PAGE>
any person, firm or corporation other than the parties and their respective
permitted successors and assigns.
Section 7.09. CONFIDENTIALITY. Subject to any contrary requirement
of law and the right of each party to enforce its rights hereunder in any legal
action, each party shall keep strictly confidential and shall cause its
employees and agents to keep strictly confidential, any information which it or
any of its agents or employees may acquire pursuant to, or in the course of
performing its obligations under, any provision of this Agreement; PROVIDED,
HOWEVER, that such obligation to maintain confidentiality shall not apply to
information which (a) at the time of disclosure was in the public domain not as
a result of acts by the receiving party or (b) was in the possession of the
receiving party at the time of disclosure.
Section 7.10. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the transactions contemplated
hereby.
Section 7.11. HEADINGS. Descriptive headings are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement.
-16-
<PAGE>
Section 7.12. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties hereto,
and each such executed counterpart shall be, and shall be deemed to be, an
original instrument.
Section 7.13. NOTICES. All notices, consents, requests,
instructions, approvals and other communications provided for herein shall be
validly given, made or served, if in writing and delivered personally, by
telegram or sent by registered mail, postage prepaid to:
TDS at: 30 North LaSalle Street
Suite 4000
Chicago, Illinois 60602-2507
Attention: President
with separate copies at such address to the attention of the Chief
Financial Officer and the Corporate Secretary
API at: 1300 Godward Street N.E.
Suite 3100
Minneapolis, MN 55413-1767
Attention: President
with separate copies at such address to the attention of the Chief
Financial officer and the Corporate Secretary
or to such other address as any party may, from to time to time, designate in a
written notice given in a like manner. Any notice given under this Agreement
shall be deemed delivered when received at the appropriate address.
-17-
<PAGE>
Section 7.14. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Illinois
applicable to contracts made and to be performed therein.
-18-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers, each of whom is duly authorized, all as
of the day and year first above written.
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ LeRoy T. Carlson, Jr.
--------------------------------------
Name: LeRoy T. Carlson, Jr.
-------------------------------------
Title: President
------------------------------------
AMERICAN PAGING, INC.
By: /s/ John R. Schaaf
--------------------------------------
Name: John R. Schaaf
-------------------------------------
Title: President
------------------------------------
Signature Page of Employee Benefit Plans Agreement
dated as of January 1, 1994.
-19-
<PAGE>
[Letterhead of TDS]
February 27, 1995
American Paging, Inc.
1300 Godward Street NE
Minneapolis, MN 55413
RE: Revolving Credit Agreement dated January 1, 1994, (the "Revolving Credit
Agreement"), between American Paging, Inc. ("API") and Telephone and Data
Systems, Inc. ("TDS")
Gentlemen:
This letter will constitute TDS's agreement to amend the Revolving Credit
Agreement by changing all of the references to "$60,00,000" in the Revolving
Credit Agreement to "$90,000,000." All of the other terms and conditions of
the Revolving Credit Agreement shall remain in full force and effect.
Please acknowledge your agreement to this amendment by executing the copy of
this letter and return it to the undersigned.
Very truly yours,
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ Murray L. Swanson
--------------------------------------
Murray L. Swanson
Executive Vice President - Finance
Accepted and agreed to as of the date set forth above.
AMERICAN PAGING, INC.
By: /s/ Terry M. Busse
--------------------------------------
Terry M. Busse
Vice President, Finance
<PAGE>
[Letterhead of TDS]
August 10, 1995
American Paging, Inc.
1300 Godward Street NE
Suite 3100
Minneapolis, MN 55413
RE: Revolving Credit Agreement dated January 1, 1994, as amended February 27,
1995, (the "Revolving Credit Agreement"), between American Paging, Inc.
("API") and Telephone and Data Systems, Inc. ("TDS")
Gentlemen:
This letter will constitute TDS's agreement to amend the Revolving Credit
Agreement by changing all of the references to "$90,00,000" in the Revolving
Credit Agreement to "$100,000,000." All of the other terms and conditions of
the Revolving Credit Agreement shall remain in full force and effect.
Please acknowledge your agreement to this amendment by executing the copy of
this letter and return it to the undersigned.
Very truly yours,
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ Murray L. Swanson
--------------------------------------
Murray L. Swanson
Executive Vice President, Finance
Accepted and agreed to as of the date set forth above.
AMERICAN PAGING, INC.
By: /s/ Terry M. Busse
--------------------------------------
Terry M. Busse
Vice President, Finance
<PAGE>
[Letterhead of TDS]
December 31, 1995
American Paging, Inc.
1300 Godward Street NE
Suite 3100
Minneapolis, MN 55413
RE: Revolving Credit Agreement dated January 1, 1994, as amended August 10,
1995, (the "Revolving Credit Agreement"), between American Paging, Inc.
("API") and Telephone and Data Systems, Inc. ("TDS")
Gentlemen:
This letter will constitute TDS's agreement to amend the Revolving Credit
Agreement by changing all of the references to $100,000,000" in the Revolving
Credit Agreement to "$125,000,000." All of the other terms and conditions of
the Revolving Credit Agreement shall remain in full force and effect.
Please acknowledge your agreement to this amendment by executing the copy of
this letter and return it to the undersigned.
Very truly yours,
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ Murray L. Swanson
--------------------------------------
Murray L. Swanson
Executive Vice President, Finance
Accepted and agreed to as of the date set forth above.
AMERICAN PAGING, INC.
By: /s/ Terrence T. Sullivan
--------------------------------------
Terrence T. Sullivan
Vice President - Finance
<PAGE>
[Letterhead of TDS]
April 15, 1996
American Paging, Inc.
Suite 3100
1300 Godward Street, N.E.
Minneapolis, Minnesota 55413
Re: Revolving Credit Agreement dated January 1, 1994, as last amended
December 31, 1995 (the "Revolving Credit Agreement"), between American
Paging, Inc. (the "Company") and Telephone and Data Systems, Inc.
("TDS")
----------------------------------------------------------------------
Gentlemen:
This letter will constitute TDS's agreement to correct the Revolving
Credit Agreement by amending and restating Section 7(b)(2) thereof in its
entirety to read as follows:
"(2) the Company shall not permit its consolidated equity to be
less than 30% of its consolidated liabilities (including, without
limitation, the Note, accounts payable and other liabilities, but
excluding customer deposits and unearned revenues);"
All other terms and conditions of the Revolving Credit Agreement shall
remain in full force and effect.
Please acknowledge your agreement to this amendment by executing a
copy of this letter and return it to the undersigned.
Very truly yours,
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ Ronald D. Webster
--------------------------------------
Ronald D. Webster
Vice President and Treasurer
<PAGE>
American Paging, Inc.
April 15, 1996
Page 2
Accepted and agreed to as of the date set forth above.
AMERICAN PAGING, INC.
By: /s/ Terrence T. Sullivan
--------------------------------------
Terrence T. Sullivan
Vice President - Finance (Chief Financial
Officer) and Treasurer
<PAGE>
[Letterhead of TDS]
August 2, 1996
American Paging, Inc.
1300 Godward Street NE #3100
Minneapolis, MN 55413
RE: Revolving Credit Agreement dated January 1, 1994, (the "Revolving Credit
Agreement"), as amended December 31, 1995, between American Paging, Inc.
("API") and Telephone and Data Systems, Inc. ("TDS")
Gentlemen:
This letter will constitute TDS's agreement to amend the Revolving Credit
Agreement by changing all of the references to "$125,000,000" in the
Revolving Credit Agreement to "$140,000,000." All of the other terms and
conditions of the Revolving Credit Agreement shall remain in full force and
effect.
Please acknowledge your agreement to this amendment by executing the copy of
this letter and return it to the undersigned.
Very truly yours,
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ Murray L. Swanson
--------------------------------------
Murray L. Swanson
Executive Vice President - Finance
Accepted and agreed to as of the date set forth above.
AMERICAN PAGING, INC.
By: /s/ Terrence T. Sullivan
--------------------------------------
Terrence T. Sullivan
Vice President - Finance
<PAGE>
[Letterhead of TDS]
November 13, 1996
American Paging, Inc.
Suite 3100
1300 Godward Street, N.E.
Minneapolis, Minnesota 55413
Re: Revolving Credit Agreement dated January 1, 1994, as amended (the
"Revolving Credit Agreement"), between American Paging, Inc. (the
"Company") and Telephone
and Data Systems, Inc. ("TDS")
-----------------------------------------------------------------
Ladies and Gentlemen:
This letter will constitute TDS's agreement to amend the Revolving
Credit Agreement by changing all references to "$140,000,000" in the Revolving
Credit Agreement to "$150,000,000." All other terms and conditions of the
Revolving Credit Agreement shall remain in full force and effect.
TDS also hereby waives all defaults or events of default by the
Company under the Revolving Credit Agreement resulting from the violation of the
covenant in Section 7(b)(2) of the Revolving Credit Agreement or the insolvency
of the Company from the respective dates from any such default or event of
default through January 2, 1998.
Please acknowledge your agreement to this amendment by executing a
copy of this letter and return it to the undersigned.
Very truly yours,
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ Murray L. Swanson
--------------------------------------
Murray L. Swanson
Executive Vice President-
Finance
<PAGE>
American Paging, Inc.
November 13, 1996
Page 2
Accepted and agreed to as of the date set forth above by Terrence T. Sullivan,
President of the Company, as acknowledged by Michelle M. Haupt, Controller of
the Company.
AMERICAN PAGING, INC.
By: /s/ Michelle M. Haupt
--------------------------------------
Michelle M. Haupt
Controller
<PAGE>
AMENDMENT DATED AS OF NOVEMBER 20, 1992,
TO THE
VOTING TRUST AGREEMENT
DATED AS OF JUNE 30, 1989
A Voting Trust Agreement ("Agreement") was entered into as of June 30,
1989, between certain holders of the Series A Common Shares, par value $1.00 per
share, of Telephone and Data Systems, Inc., an Iowa corporation ("Certificate
Holders"), and WALTER C.D. CARLSON, LETITIA G.C. CARLSON, LEROY T. CARLSON, JR.,
MELANIE J. HEALD AND DONALD C. NEBERGALL, as Trustees.
Paragraph 8.5 of the Agreement provides that the Agreement may be
amended upon the consent in writing of an eight-vote majority of the Trustees
and no less than ninety percent (90%) in interest of the Certificate Holders of
record. Pursuant to paragraph 8.5 of the Agreement, the Agreement is hereby
amended as follows:
LEROY T. CARLSON shall be permitted to withdraw up to 1,500 Series A
Common Shares from the voting trust, by written instrument delivered to the
Trustees prior to June 30, 1993, and upon his surrender of the corresponding
number of Voting Trust Certificates, without the conversion of such shares into
Common Shares and without notice of such withdrawal to the Trustees (other than
such written instrument) or to any other Certificate Holder. Furthermore,
paragraph 3.2 of the Agreement (relating to the granting of options) shall not
apply to any withdrawal pursuant to the preceding sentence.
<PAGE>
IN WITNESS WHEREOF, the following Trustees signify their approval of
the foregoing amendment as of the date set opposite the name of each such
Trustee.
Dated: NOVEMBER 20,1992 /s/ Walter C.D. Carlson
___________________________________________
Walter C.D. Carlson, Trustee (2 votes)
Dated: NOVEMBER 24, 1992 /s/ Letitia G.C. Carlson
___________________________________________
Letitia G.C. Carlson, Trustee (2 votes)
Dated: NOV. 24, 1992 /s/ LeRoy T. Carlson, Jr.
___________________________________________
LeRoy T. Carlson, Jr., Trustee (2 votes)
Dated: 11-24-92 /s/ Melanie J. Heald
__________________________________________
Melanie J. Heald, Trustee (1 vote)
Dated: 11/20/92 /s/ Donald C. Nebergall, trustee
____________________________________________
Donald C. Nebergall, Trustee (2 votes)
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF NOVEMBER 20, 1992, TO THE VOTING
TRUST AGREEMENT DATED AS OF JUNE 30, 1989.
-2-
<PAGE>
IN WITNESS WHEREOF, the following Certificate Holders signify their
approval of the foregoing amendment as of the date set opposite the name of each
such Certificate Holder.
Dated: 12/3/92 /s/ Arthur Anderson
__________ ___________________________________________
Arthur Anderson,
custodian for Jacob Anderson,
Certificate Holder
Dated: 12/3/92 /s/ Arthur Andeerson
__________ ____________________________________________
Arthur Anderson,
custodian for Samuel Keith,
Certificate Holder
Dated: __________ ____________________________________________
Eric Anderson, Certificate Holder
/s/ Kendrick Anderson, custodian for
Dated: 11/29/92 Eve Anderson
____________________________________________
Kendrick Anderson,
custodian for Eve Anderson,
Certificate Holder
/s/ Kendrick Anderson, custodian for
Dated: 11/29/92 Jill Anderson
____________________________________________
Kendrick Anderson,
custodian for Jill Anderson,
Certificate Holder
Dated: /s/ K.C. August
___________ ____________________________________________
K.C. August, Certificate Holder
Dated: /s/ LeRoy T. Carlson
____________ ____________________________________________
LeRoy T. Carlson, Certificate Holder
Dated: /s/ Margaret D. Carlson
____________ ____________________________________________
Margaret D. Carlson, Certificate Holder
Dated:Nov. 24, 1992 /s/ LeRoy T. Carlson, Jr.
____________________________________________
LeRoy T. Carlson, Jr., Certificate
Holder
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF NOVEMBER 20, 1992, TO THE VOTING
TRUST AGREEMENT DATED AS OF JUNE 30, 1989.
-3-
<PAGE>
/s/ LeRoy T. Carlson, Jr., custodian
Dated: NOV. 24, 1992 for Anthony Carlson
_______________ ____________________________________________
LeRoy T. Carlson, Jr.,
custodian for Anthony J.M. Carlson,
Certificate Holder
/s/ Catherine Mouly, custodian for
Dated: 11/25/92 Anthony J.M. Carlson, Certificate Holder
_________ ____________________________________________
Catherine Mouly,
custodian for Anthony J.M. Carlson,
Certificate Holder
Dated: 11/23/92 /s/ Byron Wertz, Trustee
_________ ____________________________________________
Byron Wertz, trustee for Anthony J.M.
Carlson, Certificate Holder
/s/ LeRoy T. Carlson, Jr., custodian for
Dated: NOV. 24, 1992 Leo Carlson
______________ ____________________________________________
LeRoy T. Carlson, Jr.,
custodian for Leo P.M. Carlson,
Certificate Holder
Dated: 11/23/92 /s/ Byron Wertz, Trustee
___________ ____________________________________________
Byron Wertz, trustee for Leo P.M.
Carlson, Certificate Holder
Dated: 11/25/92 /s/ Catherine Mouly
__________ ____________________________________________
Catherine Mouly, Certificate Holder
Dated: 11/24/92 /s/ Letitia G. C. Carlson
_________ ____________________________________________
Letitia G. C. Carlson, Certificate
Holder
Dated: 11/28/92 /s/ Edwin Himwich
__________ ____________________________________________
Edwin Himwich, Certificate Holder
Dated: /s/ Prudence E. Carlson
___________ ____________________________________________
Prudence E. Carlson, Certificate Holder
Dated: /s/ Richard Beckett
___________ ___________________________________________
Richard Beckett, Certificate Holder
Dated: 11/23/92 /s/ Walter C.D. Carlson
__________ ____________________________________________
Walter C.D. Carlson, Certificate Holder
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF NOVEMBER 20, 1992, TO THE VOTING
TRUST AGREEMENT DATED AS OF JUNE 30, 1989.
-4-
<PAGE>
Dated: 11/23/92 /s/ Walter C.D. Carlson, Custodian
_________ ____________________________________________
Walter C.D. Carlson,
custodian for Amanda Liv de Hoyos
Carlson, Certificate Holder
Dated: 11/23/92 /s/ Byron Wertz, Trustee
__________ ____________________________________________
Byron Wertz, trustee for Amanda L.
de Hoyos, Certificate Holder
Dated: 11/23/92 /s/ Walter C.D. Carlson, Custodian
__________ ____________________________________________
Walter C.D. Carlson, custodian for Greta
M. de Hoyos Carlson, Certificate
Holder
Dated: 11/23/92 /s/ Byron Wertz, Trustee
__________ ____________________________________________
Byron Wertz, trustee for Greta M. de
Hoyos Carlson, Certificate Holder
Dated: 11/23/92 /s/ Walter C.D. Carlson, Custodian
__________ ____________________________________________
Walter C.D. Carlson, custodian for
Linnea Faith de Hoyos Carlson,
Certificate Holder
Dated:___________ ____________________________________________
Debora M. de Hoyos, Certificate Holder
Dated: ___________ ____________________________________________
Yvonne M. Carlson, Certificate Holder
Dated: 11-24-92 /s/ Melanie J. Heald
__________ ____________________________________________
Melanie J. Heald, Certificate Holder
Dated: 12/16/92 /s/ Dorothea Hopkins
__________ ____________________________________________
Dorothea Hopkins, Certificate Holder
Dated: 12/1/92 /s/ Lester O. Johnson
__________ ____________________________________________
Lester O. Johnson Trust, Certificate
Holder
Dated: 12/1/92 /s/ Frances M. Johnson
__________ ____________________________________________
Frances Johnson Trust, Certificate
Holder
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF NOVEMBER 20, 1992, TO THE VOTING
TRUST AGREEMENT DATED AS OF JUNE 30, 1989.
-5-
<PAGE>
Dated: /s/ Graham Johnson & Sharon Johnson
__________ ____________________________________________
Graham Johnson & Sharon Johnson,
Certificate Holder
Dated: 12/1/92 /s/ Kent Johnson
__________ ____________________________________________
Kent Johnson, Certificate Holder
Dated: /s/ Laurel Ann Johnson
__________ ____________________________________________
Laurel Ann Johnson, Certificate Holder
Dated:
__________ ____________________________________________
Dana Dougherty, Certificate Holder
Dated:
__________ ____________________________________________
Dagmar Maldonado, custodian for Dana
Dougherty, Certificate Holder
Dated: /s/ Ross Carlson
__________ ____________________________________________
Ross Carlson, custodian for Dana
Dougherty, Certificate Holder
Dated:
__________ ____________________________________________
Dagmar Maldonado, custodian for Adam
Maldonado, Certificate Holder
Dated: /s/ Ross Carlson
__________ ____________________________________________
Ross Carlson, custodian for Adam
Maldonado, Certificate Holder
Dated:
__________ ____________________________________________
Dagmar Maldonado, custodian for Nicole
Maldonado, Certificate Holder
Dated: /s/ Ross Carlson
__________ ____________________________________________
Ross Carlson, custodian for Nicole
Maldonado, Certificate Holder
Dated: 11/20/92 /s/ Donald C. Nebergall
__________ ____________________________________________
Donald C. Nebergall, Certificate Holder
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF NOVEMBER 20, 1992, TO THE VOTING
TRUST AGREEMENT DATED AS OF JUNE 30, 1989.
-6-
<PAGE>
Dated: 11/20/92 /s/ Donald C. Nebergall
__________ ____________________________________________
Donald C. Nebergall, Trustee U/A
dated 1/1/56 for
Walter C.D. Carlson,
Certificate Holder
Dated: 11/20/92 /s/ Donald C. Nebergall
__________ ____________________________________________
Donald C. Nebergall, Trustee U/A
dated 10/24/60 for
Letitia G.C. Carlson,
Certificate Holder
Dated: 11/20/92 /s/ Donald C. Nebergall
__________ ____________________________________________
Donald C. Nebergall, Trustee U/A
12/28/72, Certificate Holder
Dated: 11/20/92 /s/ Donald C. Nebergall
__________ ____________________________________________
Donald C. Nebergall, Trustee U/A
date 12/31/76, Certificate
Holder
Dated: 11/20/92 /s/ Donald C. Nebergall
__________ ____________________________________________
Donald C. Nebergall, Trustee Lead
Annuity Trust for Wellesley
College, Certificate Holder
Dated:
__________ ____________________________________________
Byron Wertz, custodian for Allison M.
Wertz, Certificate Holder
Dated:
__________ ____________________________________________
Byron Wertz, custodian for Joseph E.
Wertz, Certificate Holder
Dated: /s/ Florence Wertz John E. Wertz
__________ ____________________________________________
Florence Wertz & John E. Wertz '81
Trust, Certificate Holder
Dated: 11/27/92 /s/ John Alan Wertz
__________ ____________________________________________
John Alan Wertz, Certificate Holder
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF NOVEMBER 20, 1992, TO THE VOTING
TRUST AGREEMENT DATED AS OF JUNE 30, 1989
-7-
<PAGE>
Dated: 11-23-92 /s/ Kristin Wertz
__________ ____________________________________________
Kristin Wertz, Certificate Holder
/s/ Paul G. Wertz cust for Elizabeth
Dated: / /92 D. Wertz
__________ ____________________________________________
Paul G. Wertz, custodian for Elizabeth
D. Wertz, Certificate Holder
/s/ Paul G. Wertz cust for Jessica
Dated: / /92 A. Wertz
__________ ____________________________________________
Paul G. Wertz, custodian for Jessica A.
Wertz, Certificate Holder
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF NOVEMBER 20, 1992, TO THE VOTING
TRUST AGREEMENT DATED AS OF JUNE 30, 1989.
-8-
<PAGE>
AMENDMENT DATED AS OF MAY 9, 1991,
TO THE
VOTING TRUST AGREEMENT
DATED AS OF JUNE 30, 1989
A Voting Trust Agreement ("Agreement") was entered into as of June 30,
1989, between certain holders of the Series A Common Shares, par value $1.00 per
share, of Telephone and Data Systems, Inc., an Iowa corporation ("Certificate
Holders"), and WALTER C.D. CARLSON, LETITIA G.C. CARLSON, LEROY T. CARLSON, JR.,
MELANIE J. HEALD AND DONALD C. NEBERGALL, as Trustees.
Paragraph 8.5 of the Agreement provides that the Agreement may be
amended upon the consent in writing of an eight-vote majority of the Trustees
and no less than ninety percent (90%) in interest of the Certificate Holders of
record. Pursuant to paragraph 8.5 of the Agreement, the Agreement is hereby
amended as follows:
LEROY T. CARLSON shall be permitted to withdraw up to 650 Series A
Common Shares from the voting trust, by written instrument delivered to the
Trustees prior to December 31, 1991, and upon his surrender of the corresponding
number of Voting Trust Certificates, without the conversion of such shares into
Common Shares and without notice of such withdrawal to the Trustees (other than
such written notice) or to any other Certificate Holder. Furthermore, paragraph
3.2 of the Agreement (relating to the granting of options) shall not apply to
any withdrawal pursuant to the preceding sentence.
<PAGE>
IN WITNESS WHEREOF, the following Trustees signify their approval of
the foregoing amendment as of the date set opposite the name of each such
Trustee.
Dated: 6/13/91 /s/ Walter C.D. Carlson
__________ ____________________________________________
Walter C.D. Carlson, Trustee (2 votes)
Dated: 6/19/91 /s/ Letitia G.C. Carlson
__________ ____________________________________________
Letitia G.C. Carlson, Trustee (2 votes)
Dated: 6/17/91 /s/ LeRoy T. Carlson, Jr.
__________ ____________________________________________
LeRoy T. Carlson, Jr., Trustee (2 votes)
Dated: 6/24/91 /s/ Melanie J. Heald
__________ ____________________________________________
Melanie J. Heald, Trustee (1 vote)
Dated: 6/17/91 /s/ Donald C. Nebergall
__________ ____________________________________________
Donald C. Nebergall, Trustee (2 votes)
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF MAY 9, 1991, TO THE VOTING TRUST
AGREEMENT DATED AS OF JUNE 30, 1989
-2-
<PAGE>
IN WITNESS WHEREOF, the following Certificate Holders signify their
approval of the foregoing amendment as of the date set opposite the name of each
such Certificate Holder.
Dated: 7/22/91 /s/ Arthur Anderson
__________ ____________________________________________
Arthur Anderson,
custodian for Jacob Anderson,
Certificate Holder
Dated: 7/22/91 /s/ Arthur Anderson
__________ ____________________________________________
Arthur Anderson,
custodian for Samuel Keith,
Certificate Holder
Dated:
__________ ____________________________________________
Eric Anderson, Certificate Holder
Dated: 7/13/91 /s/ Kendrick Anderson, Custodian
__________ ____________________________________________
Kendrick Anderson,
custodian for Eve Anderson,
Certificate Holder
Dated: 7/13/91 /s/ Kendrick Anderson, Custodian
__________ ____________________________________________
Kendrick Anderson,
custodian for Jill Anderson,
Certificate Holder
Dated: 7/10/91 /s/ K.C. August
__________ ____________________________________________
K.C. August, Certificate Holder
Dated: 6/17/91 /s/ LeRoy T. Carlson
__________ ____________________________________________
LeRoy T. Carlson, Certificate Holder
Dated: 6/30/91 /s/ Margaret D. Carlson
__________ ____________________________________________
Margaret D. Carlson, Certificate Holder
Dated: 6/17/91 /s/ LeRoy T. Carlson, Jr.
__________ ____________________________________________
LeRoy T. Carlson, Jr., Certificate
Holder
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF MAY 9, 1991, TO THE VOTING TRUST
AGREEMENT DATED AS OF JUNE 30, 1989
-3-
<PAGE>
/s/ LeRoy T. Carlson, Jr., custodian
Dated: 6/17/91 for Anthony J.M. Carlson
__________ ____________________________________________
LeRoy T. Carlson, Jr.,
custodian for Anthony J.M. Carlson,
Certificate Holder
/s/ Catherine Mouly, custodian for
Dated: 7/7/91 Anthony J.M. Carlson
__________ ____________________________________________
Catherine Mouly,
custodian for Anthony J.M. Carlson,
Certificate Holder
/s/ Byron Wertz, trustee for Anthony
Dated: J.M. Carlson
__________ ____________________________________________
Byron Wertz, trustee for Anthony J.M.
Carlson, Certificate Holder
/s/ LeRoy T. Carlson, Jr., custodian for
Dated: 7/17/91 Leo P.M. Carlson
__________ ____________________________________________
LeRoy T. Carlson, Jr.,
custodian for Leo P.M. Carlson,
Certificate Holder
/s/ Byron Wertz, trustee for Leo P.M.
Dated: Carlson
__________ ____________________________________________
Byron Wertz, trustee for Leo P.M.
Carlson, Certificate Holder
Dated: 7/7/91 /s/ Catherine Mouly
__________ ____________________________________________
Catherine Mouly, Certificate Holder
Dated: 6/19/91 /s/ Letitia G. C. Carlson
__________ ____________________________________________
Letitia G. C. Carlson, Certificate
Holder
Dated: 6/19/91 /s/ Edwin Himwich
__________ ____________________________________________
Edwin Himwich, Certificate Holder
Dated: 6/27/91 /s/ Prudence E. Carlson
__________ ____________________________________________
Prudence E. Carlson, Certificate Holder
Dated: 6/27/91 /s/ Richard Beckett
__________ ____________________________________________
Richard Beckett, Certificate Holder
Dated: 6/13/91 /s/ Walter C.D. Carlson
__________ ____________________________________________
Walter C.D. Carlson, Certificate Holder
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF MAY 9, 1991, TO THE VOTING TRUST
AGREEMENT DATED AS OF JUNE 30, 1989
-4-
<PAGE>
Dated: 6/13/91 /s/ Walter C.D. Carlson, Custodian
__________ ____________________________________________
Walter C.D. Carlson,
custodian for Amanda Liv de Hoyos
Carlson, Certificate Holder
/s/ Byron Wertz, trustee for Amanda L.
Dated: de Hoyos
__________ ____________________________________________
Byron Wertz, trustee for Amanda L.
de Hoyos, Certificate Holder
Dated: 6/13/91 /s/ Walter C.D. Carlson, Custodian
__________ ____________________________________________
Walter C.D. Carlson, custodian for Greta
M. de Hoyos Carlson, Certificate
Holder
/s/ Byron Wertz, trustee for Greta M.
Dated: de Hoyos Carlson
__________ ____________________________________________
Byron Wertz, trustee for Greta M. de
Hoyos Carlson, Certificate Holder
Dated: 6/13/91 /s/ Walter C.D. Carlson, Custodian
__________ ____________________________________________
Walter C.D. Carlson, custodian for
Linnea Faith de Hoyos Carlson,
Certificate Holder
Dated: 7/15/91 /s/ Debora M. de Hoyos
__________ ____________________________________________
Debora M. de Hoyos, Certificate Holder
Dated: 7/18/91 /s/ Yvonne M. Carlson
__________ ____________________________________________
Yvonne M. Carlson, Certificate Holder
Dated: 6/24/91 /s/ Melanie J. Heald
__________ ____________________________________________
Melanie J. Heald, Certificate Holder
Dated: 7/6/91 /s/ Dorothea Hopkins
__________ ____________________________________________
Dorothea Hopkins, Certificate Holder
Dated: 6/25/91 /s/ Lester O. Johnson
__________ ____________________________________________
Lester O. Johnson Trust, Certificate
Holder
Dated: 7/7/91 /s/ Frances Johnson
__________ ____________________________________________
Frances Johnson Trust, Certificate
Holder
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF MAY 9, 1991, TO THE VOTING TRUST
AGREEMENT DATED AS OF JUNE 30, 1989
-5-
<PAGE>
Dated: 9/05/91 /s/ Graham Johnson Sharon Johnson
__________ ____________________________________________
Graham Johnson & Sharon Johnson,
Certificate Holder
Dated: 7/7/91 /s/ Kent Johnson
__________ ____________________________________________
Kent Johnson, Certificate Holder
Dated: 7/7/91 /s/ Laurel Ann Johnson
__________ ____________________________________________
Laurel Ann Johnson, Certificate Holder
Dated: 7/18/91 /s/ Dana Dougherty
__________ ____________________________________________
Dana Dougherty, Certificate Holder
Dated:
__________ ____________________________________________
Dagmar Maldonado, custodian for Dana
Dougherty, Certificate Holder
Dated: 7/18/91 /s/ Ross Carlson
__________ ____________________________________________
Ross Carlson, custodian for Dana
Dougherty, Certificate Holder
Dated:
__________ ____________________________________________
Dagmar Maldonado, custodian for Adam
Maldonado, Certificate Holder
Dated: 7/18/91 /s/ Ross Carlson
__________ ____________________________________________
Ross Carlson, custodian for Adam
Maldonado, Certificate Holder
Dated:
__________ ____________________________________________
Dagmar Maldonado, custodian for Nicole
Maldonado, Certificate Holder
Dated: 7/18/91 /s/ Ross Carlson
__________ ____________________________________________
Ross Carlson, custodian for Nicole
Maldonado, Certificate Holder
Dated: 6/17/91 /s/ Donald C. Nebergall
__________ ____________________________________________
Donald C. Nebergall, Certificate Holder
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF MAY 9, 1991, TO THE VOTING TRUST
AGREEMENT DATED AS OF JUNE 30, 1989
-6-
<PAGE>
Dated: 6/17/91 /s/ Donald C. Nebergall
__________ ____________________________________________
Donald C. Nebergall, Trustee U/A
dated 1/1/56 for
Walter C.D. Carlson,
Certificate Holder
Dated: 6/17/91 /s/ Donald C. Nebergall
__________ ____________________________________________
Donald C. Nebergall, Trustee U/A
dated 10/24/60 for
Letitia G.C. Carlson,
Certificate Holder
Dated: 6/17/91 /s/ Donald C. Nebergall
__________ ____________________________________________
Donald C. Nebergall, Trustee U/A
12/28/72, Certificate Holder
Dated: 6/17/91 /s/ Donald C. Nebergall
__________ ____________________________________________
Donald C. Nebergall, Trustee U/A
date 12/31/76, Certificate
Holder
Dated: 6/17/91 /s/ Donald C. Nebergall
__________ ____________________________________________
Donald C. Nebergall, Trustee Lead
Annuity Trust for Wellesley
College, Certificate Holder
/s/ Byron Wertz, Custodian for Allison
Dated: M. Wertz
__________ ____________________________________________
Byron Wertz, custodian for Allison M.
Wertz, Certificate Holder
/s/ Byron Wertz, Custodian for Joseph
Dated: E. Wertz
__________ ____________________________________________
Byron Wertz, custodian for Joseph E.
Wertz, Certificate Holder
Dated: Sept. 4, 1991 /s/ Florence Wertz John E. Wertz
__________ ____________________________________________
Florence Wertz & John E. Wertz '81
Trust, Certificate Holder
Dated: 7/15/91 /s/ John Alan Wertz
__________ ____________________________________________
John Alan Wertz, Certificate Holder
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF MAY 9, 1991, TO THE VOTING TRUST
AGREEMENT DATED AS OF JUNE 30, 1989
-7-
<PAGE>
Dated: 9-9-91 /s/ Kristin Wertz
__________ ____________________________________________
Kristin Wertz, Certificate Holder
Dated: 7/21/91 /s/ Paul G. Wertz cust for Elizabeth
__________ ____________________________________________
Paul G. Wertz, custodian for Elizabeth
D. Wertz, Certificate Holder
Dated: 7/21/91 /s/ Paul G. Wertz cust for Jessica
__________ ____________________________________________
Paul G. Wertz, custodian for Jessica A.
Wertz, Certificate Holder
SIGNATURE PAGE TO THE AMENDMENT DATED AS OF MAY 9, 1991, TO THE VOTING TRUST
AGREEMENT DATED AS OF JUNE 30, 1989
-8-
<PAGE>
JOINT FILING AGREEMENT AND POWER OF ATTORNEY
By signing below, the parties hereto hereby agree and consent, pursuant
to Rule 13d-1(f)(1), to the joint filing of Schedules 13G and/or Schedules
13D (including any amendments thereto) on behalf of such parties in their
capacities as trustees of the Voting Trust Agreement dated June 30, 1989, as
amended. Each of the undersigned persons further hereby constitutes and
appoints each of LeRoy T. Carlson, Jr. and Walter C.D. Carlson, acting
singly, as their true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for the undersigned and in the
name, place and stead of the undersigned, in their capacities as trustees of
such voting trust, to execute for and on behalf of the undersigned, all
Schedules 13G and/or Schedules 13D and all amendments thereto as required by
the Securities Exchange Act of 1934, as amended, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, the issuer and relevant stock exchanges.
The powers hereby conferred upon the said attorneys-in-fact and agents shall
continue in force until notice of the revocation of this Power of Attorney
has been received by the said attorneys-in-fact.
IN WITNESS WHEREOF, the undersigned have hereunto subscribed this
Joint Filing Agreement and Power of Attorney as of the 10th day of February,
1997.
/s/ LeRoy T. Carlson, Jr.
-------------------------------
LeRoy T. Carlson, Jr.
/s/ Walter C.D. Carlson*
-------------------------------
Walter C.D. Carlson
/s/ Letitia G.C. Carlson*
-------------------------------
Letitia G.C. Carlson
/s/ Donald C. Nebergall*
-------------------------------
Donald C. Nebergall
/s/ Melanie J. Heald*
-------------------------------
Melanie J. Heald
