AGREEMENT AND PLAN
OF REORGANIZATION
dated as of
August 21, 2000
by and among
NEXTEL COMMUNICATIONS, INC.,
NEXTEL FINANCE COMPANY
and
CHADMOORE WIRELESS GROUP, INC.
AGREEMENT AND PLAN OF REORGANIZATION
TABLE OF CONTENTS
PAGE
ARTICLE 1. PURCHASE AND SALE OF THE ASSETS AND
LIABILITIES; PURCHASE PRICE..................................................................2
Section 1.01 Purchase and Sale of Assets................................................2
Section 1.02 Excluded Assets............................................................2
Section 1.03 No Liens; Assumption of Liabilities........................................3
Section 1.04 Purchase Price; Adjustments................................................3
Section 1.05 Purchase Price Adjusted for Channels Not Delivered.........................4
Section 1.06 Adjustment for Nextel Funding..............................................5
Section 1.07 Other Adjustments; No Fractional Shares....................................5
Section 1.08 Assignability and Consents.................................................6
Section 1.09 Tax Consequences...........................................................7
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF CHADMOORE.......................................7
Section 2.01 Corporate Organization.....................................................7
Section 2.02 Subsidiaries and Other Entities............................................7
Section 2.03 Corporate Authorization....................................................8
Section 2.04 Compliance with Laws.......................................................8
Section 2.05 No Conflict...............................................................10
Section 2.06 Litigation................................................................10
Section 2.07 Insurance.................................................................10
Section 2.08 Intellectual Property.....................................................10
Section 2.09 Assets....................................................................11
Section 2.10 Financial Statements......................................................11
Section 2.11 Liabilities...............................................................11
Section 2.12 Transactions Not in the Ordinary Course...................................12
Section 2.13 Capital Projects..........................................................12
Section 2.14 Taxes.....................................................................12
Section 2.15 Bank Accounts; Employees..................................................13
Section 2.16 Real Estate...............................................................13
Section 2.17 Title to Assets...........................................................13
Section 2.18 Contracts.................................................................14
Section 2.19 Brokers...................................................................15
Section 2.20 Special Liabilities; Warranties...........................................14
Section 2.21 Employee Benefit Matters..................................................15
Section 2.22 Materially Correct........................................................16
Section 2.23 Information...............................................................16
Section 2.24 Regulatory Matters........................................................16
Section 2.25 Approvals.................................................................19
Section 2.26 Information in Registration Statement.....................................19
Section 2.27 Current Funding Requirements..............................................19
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ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF
NEXTEL AND ACQUISITION SUB..................................................................20
Section 3.01 Corporate Organization; Authorization.....................................20
Section 3.02 Capital Stock.............................................................20
Section 3.03 Common Stock; Registration................................................21
Section 3.04 No Conflict...............................................................21
Section 3.05 Information...............................................................21
Section 3.06 Information in Registration Statement.....................................21
Section 3.07 Litigation................................................................21
Section 3.08 Brokers...................................................................22
ARTICLE 4. COVENANTS OF CHADMOORE...........................................................22
Section 4.01 Conduct of Business.......................................................22
Section 4.02 Reasonable Efforts With Respect to Certain Contracts......................23
Section 4.03 Inspection................................................................23
Section 4.04 SEC Registration..........................................................23
Section 4.05 Antitrust Filing..........................................................24
Section 4.06 Restraint on Solicitations................................................24
Section 4.07 Commercially Reasonable Efforts...........................................25
Section 4.08 Shareholder Approval......................................................25
Section 4.09 Affiliates................................................................25
Section 4.10 Update Information........................................................25
Section 4.11 Loan Documentation........................................................25
Section 4.12 Noncompetition............................................................25
Section 4.13 Withdrawal................................................................25
Section 4.14 Further Assurances........................................................26
ARTICLE 5. COVENANTS OF NEXTEL..............................................................26
Section 5.01 Antitrust Filing..........................................................26
Section 5.02 Registration Statement....................................................26
Section 5.03 Current Public Information................................................27
Section 5.04 Funding of Chadmoore Operations...........................................27
Section 5.05 Tax Provisions............................................................27
Section 5.06 COBRA Requirements........................................................28
Section 5.07 Standstill................................................................29
ARTICLE 6. JOINT COVENANTS..................................................................29
Section 6.01 Confidentiality...........................................................29
Section 6.02 Standstill Agreement......................................................29
Section 6.03 Trading Prohibitions......................................................29
Section 6.04 Substitute of Subsidiary..................................................30
Section 6.05 Support of Transactions...................................................30
Section 6.06 Indemnification...........................................................30
Section 6.07 Bulk Transfer Laws........................................................32
Section 6.08 Exclusive Remedies........................................................32
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ARTICLE 7. CLOSING..........................................................................32
Section 7.01 General...................................................................32
Section 7.02 Documents to be Delivered by Chadmoore....................................32
Section 7.03 Documents to be Delivered by Acquisition Sub or Nextel....................33
ARTICLE 8. CONDITIONS TO OBLIGATIONS........................................................34
Section 8.01 Conditions to Obligations of Nextel, Acquisition Sub and Chadmoore........34
Section 8.02 Conditions to Obligations of Nextel and Acquisition Sub...................35
Section 8.03 Conditions to the Obligations of Chadmoore................................36
ARTICLE 9. TERMINATION/EFFECTIVENESS........................................................36
Section 9.01 Termination...............................................................36
Section 9.02 Effect....................................................................37
ARTICLE 10. MISCELLANEOUS...................................................................37
Section 10.01 Waiver.................................................................38
Section 10.02 Notices................................................................38
Section 10.03 Assignment.............................................................39
Section 10.04 Rights of Third Parties................................................39
Section 10.05 Reliance...............................................................39
Section 10.06 Expenses...............................................................39
Section 10.07 Construction...........................................................39
Section 10.08 Captions; Counterparts.................................................39
Section 10.09 Entire Agreement.......................................................39
Section 10.10 Amendments.............................................................40
Section 10.11 Publicity..............................................................40
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DEFINITIONS
A
ACQUISITION SUB- 1
ADJUSTED ENTERPRISE VALUE- 3
ADVANCES- 27
AGREEMENT- 1
ASSET LIST- 11
ASSETS- 2
ASSUMED LIABILITIES- 3
B
BUSINESS- 1
C
CERCLA- 9
CHADMOORE- 1
CHADMOORE INFORMATION- 23
CHADMOORE MANAGEMENT AGREEMENT- 16
CHADMOORE REPORTS- 16
CHADMOORE/CHADMOORE SUBS- 12
CHANNELS- 1
CLOSING- 32
CLOSING DATE- 32
CODE- 1
COMMUNICATIONS ACT- 19
CONSENTS- 6
CONTRACTS- 14
COSTS- 30
CURRENT PAYABLES- 11
D
DELIVERED- 4
DISCLOSURE SCHEDULE- 1
E
EMPLOYEE PLAN- 15
ESMR- 18
EXCHANGE ACT- 23
EXCLUDED ASSETS- 2
EXCLUDED LIABILITIES- 3
F
FCC- 1
FCC LICENSE- 16
G
GAAP- 11
H
HSR ACT- 24
J
JUNE 30 BALANCE SHEET- 11
L
LENDER- 27
LICENSES- 1
N
NEXTEL- 1
NEXTEL CLOSING PRICE- 4
NEXTEL CURE PERIOD- 37
NEXTEL REPORTS- 21
NEXTEL SHARES- 1
NONASSIGNABLE ITEMS- 6
P
PERMITTED LIENS- 14
PERSON- 6
PRIME RATE- 27
PROPOSAL- 24
PURCHASE PRICE- 3
R
REGISTRATION STATEMENT- 23
REORGANIZATION- 1
REPAYMENT AMOUNT- 5
-iv-
S
SEC- 16
SECURITIES ACT- 21
SIGNING DATE- 1
SITE LEASES- 2
XXX- 0
XXX XXXXXXX- 00
SMR SYSTEM- 17
SMR XXXXX- 00
SPECIAL TRANSACTION- 5
STA- 17
SUBSIDIARIES- 7
SYSTEM CONTRACTS- 3
SYSTEMS- 1
T
TERMINATING CHADMOORE BREACH- 36
TERMINATING NEXTEL BREACH- 37
THIRD-PARTY CLAIM- 31
THIRD-PARTY MANAGEMENT AGREEMENT- 17
TRADING DAY- 4
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ANNEXES
Annex A Chadmoore Cash Flow Statement
Annex B Form of Letter Concerning Compliance with Rule 145
Annex C Forms or Subject Matters of Opinions from Counsel to Chadmoore
Annex D Form or Subject Matter of Opinion of Xxxxx, Day, Xxxxxx & Xxxxx
-vi-
AGREEMENT AND PLAN OF REORGANIZATION
Agreement and Plan of Reorganization ("AGREEMENT") dated as of August
21, 2000 (the "SIGNING DATE") by and among NEXTEL COMMUNICATIONS, INC., a
Delaware corporation ("NEXTEL"), NEXTEL FINANCE COMPANY, a Delaware corporation
and a direct, wholly-owned subsidiary of Nextel ("ACQUISITION SUB") and
CHADMOORE WIRELESS GROUP, INC., a Colorado corporation ("CHADMOORE").
PLAN OF REORGANIZATION
A. Nextel and Chadmoore intend to enter into a transaction that will be
recognized as a plan of reorganization under the provisions of Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the "CODE").
B. The plan of reorganization will comprise the acquisition by
Acquisition Sub of substantially all of the SMR wireless business of Chadmoore
(the "BUSINESS"), and substantially all of the assets employed in the Business,
together with certain liabilities, of Chadmoore.
C. The acquisition of the Business by Acquisition Sub will be effected
by a transaction (the "REORGANIZATION") wherein Chadmoore will exchange the
Assets for that number of shares of Nextel Class A Common Stock, par value $.001
per share ("NEXTEL SHARES"), equal to an aggregate of $160,000,000, as
determined in accordance with Article 2 of this Agreement.
E. The Assets owned by Chadmoore and to be acquired by Acquisition Sub
by virtue of the Reorganization will include, without limitation, all of
Chadmoore's rights and interests in and to the Federal Communications Commission
("FCC") licenses (the "LICENSES") listed in Sections 1.01(a)(1),(2) and (3) of
the Disclosure Schedule to this Agreement (the "DISCLOSURE SCHEDULE") for the
800 MHz and 900 MHz frequencies listed in Section 1.01(a) of the Disclosure
Schedule (the "CHANNELS") (except for any Channels or Licenses not Delivered as
described in Section 1.05), as well as the related physical assets of the
relevant systems operated in accordance with the Channels (the "SYSTEMS")
(including all repeater and ancillary equipment and leased real property) and
the related intangible assets of the Systems.
F. On or about the date of the execution and delivery of this
Agreement, Nextel is arranging or providing funding for Chadmoore (as set forth
in Section 5.04) which present and future advances will be secured by a lien on
the assets of Chadmoore.
G. Each of the directors, officers of Chadmoore and Recovery Equity
Investors II, L.P., each of which is a holder of Chadmoore's Common Stock, $.001
per share, has committed in writing that he or it will vote in favor of the
Reorganization and the transactions contemplated by this Agreement.
AGREEMENT
In order to consummate the Reorganization, and in consideration of the
mutual agreements hereinafter contained, Nextel, Acquisition Sub and Chadmoore
agree as follows:
ARTICLE 1. PURCHASE AND SALE OF THE ASSETS AND LIABILITIES; PURCHASE PRICE
SECTION 1.01 PURCHASE AND SALE OF ASSETS. Except as to the Excluded Assets
described in Section 1.02, and as otherwise provided in Section 1.03, Chadmoore
will sell, transfer and assign to Acquisition Sub or its designee, as the case
may be, and Acquisition Sub, or its designee, as the case may be, will acquire
from Chadmoore, on the terms and conditions in this Agreement, substantially all
of the assets, properties and business of Chadmoore relating to the Business as
a going concern (all of which are collectively referred to herein as the
"ASSETS") including, without limitation, the following:
(a) All of Chadmoore's rights and interests in the Licenses and
Channels, including, without limitation, those described in Sections 1.01(a)(1),
1.01(a)(2) and 1.01(a)(3) of the Disclosure Schedule;
(b) The leasehold interest of Chadmoore in each of the site leases for
real property described in Section 1.01(b) of the Disclosure Schedule (the "SITE
LEASES") (except for any Site Leases that are not assignable as described in
1.08(b));
(c) All of Chadmoore's rights and interests in the Contracts described
in Section 1.03(a)(ii) of the Disclosure Schedule;
(d) All of Chadmoore's equipment and other tangible personal property
related to or used in the Business, including, without limitation, those
described in Section 1.01(d) of the Disclosure Schedule; and
(e) All records (copies and/or originals where necessary) of Chadmoore
(other than Chadmoore's corporate records) relating to the Business, including
customer lists, property records, service records, contract records and
accounting records.
SECTION 1.02 EXCLUDED ASSETS. Notwithstanding anything in Section 1.01 to
the contrary, there shall be excluded from the Assets to be transferred to
Acquisition Sub all of the assets of Chadmoore relating to the Business listed
or described in Section 1.02 of the Disclosure Schedule (collectively, the
"EXCLUDED ASSETS").
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SECTION 1.03 NO LIENS; ASSUMPTION OF LIABILITIES.
(a) The Systems and Assets shall be sold free and clear of all liens,
encumbrances and security interests of any kind or nature, and Acquisition Sub
shall assume the following (the "ASSUMED LIABILITIES"), but no other,
obligations of Chadmoore:
(i) Executory obligations under the Site Leases disclosed in
Section 1.01(b) of the Disclosure Schedule relating to periods of operation
after the Closing Date; and
(ii) Executory obligations under all contracts of Chadmoore, as
disclosed in Section 1.03(a) of the Disclosure Schedule, in effect as of this
date and relating to periods of operation after the Closing Date (collectively
with the Site Leases, the "SYSTEM CONTRACTS").
(b) Except for the Assumed Liabilities, Acquisition Sub shall not, by
execution and delivery of this Agreement or otherwise, assume or otherwise be
responsible for any liability or obligation of any nature of Chadmoore, whether
related to the Business, the Assets or any of Chadmoore's other assets,
operations, businesses or activities, if any, or claims for any liability or
obligation, whether matured or unmatured, liquidated or unliquidated, fixed or
contingent, known or unknown, arising from occurrences prior to, at or after the
Closing Date (collectively, the "EXCLUDED LIABILITIES"). Without limiting the
generality of the foregoing, neither Acquisition Sub nor Nextel shall assume,
and Chadmoore shall be responsible for, any obligation or liability of Chadmoore
to distribute to the shareholders of Chadmoore, the option holders of Chadmoore
or the holders of any other derivative securities of Chadmoore the Nextel Shares
received by Chadmoore in accordance with this Agreement.
SECTION 1.04 PURCHASE PRICE; ADJUSTMENTS.
(a) As the purchase price for the Assets, Acquisition Sub will,
concurrent with the Closing, assume the Assumed Liabilities and cause to be
issued to Chadmoore that number of Nextel Shares equal to an aggregate of
$160,000,000 (subject to adjustment in accordance with Sections 1.05 and 1.06)
(as so adjusted, the "ADJUSTED ENTERPRISE VALUE") DIVIDED BY $57.1656, subject
to adjustment in accordance with Sections 1.04(b) through (f) (the "PURCHASE
PRICE").
(b) If the Nextel Closing Price is greater than $57.1656 but less than
or equal to $68.5988, then no adjustment to the Nextel Shares or the Adjusted
Enterprise Value shall be made.
(c) If the Nextel Closing Price is greater than $68.5988, then the
number of Nextel Shares shall equal 120% of the Adjusted Enterprise Value
DIVIDED BY the Nextel Closing Price.
(d) If the Nextel Closing Price is less than $57.1656 but greater than
$45.7325, then no adjustment to the number of Nextel Shares or the Adjusted
Enterprise Value shall be made.
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(e) If the Nextel Closing Price is less than or equal to $45.7325 but
greater than $37.1577, then the number of Nextel Shares shall equal the 80%
Adjusted Enterprise Value DIVIDED BY the Nextel Closing Price.
(f) If the Nextel Closing Price is less than or equal to $37.1577, then
the number of Nextel Shares shall equal 80% of the Adjusted Enterprise Value
DIVIDED BY $35.1577.
(g) If Chadmoore has elected (as permitted by Section 9.01(c)(iv)) to
terminate this Agreement because the Nextel Closing Price is less than $37.1577,
Nextel may elect, within ten (10) business days, to exceed the number of shares
deliverable under Section 1.04(f) and to deliver the number of Nextel Shares
that equals 80% of the Adjusted Enterprise Value DIVIDED BY the Nextel Closing
Price.
(h) If Nextel makes the election contemplated by Section 1.04(g), then:
(i) the termination election made by Chadmoore under Section 9.01(c)(iv) shall
be automatically rescinded and cancelled; and (ii) the Reorganization shall
proceed in accordance with this Agreement.
(i) For purposes of this Agreement, the "NEXTEL CLOSING PRICE" per
share of Nextel common stock shall be the daily closing price per share for the
twenty (20) consecutive Trading Days immediately prior to the Closing Date. If
the Nextel Closing Price or the Nextel Signing Price per share is determined
during a period following the announcement by Nextel of (i) a dividend or
distribution on Nextel Shares payable in Nextel Shares or securities convertible
into Nextel Shares or (ii) any subdivision, reverse stock split or comparable
reclassification of Nextel Shares, and prior to the expiration of the requisite
twenty (20) Trading Day period after the dividend date for the ex-dividend or
distribution, or the record date for the subdivision, reverse stock split or
comparable reclassification, then, in each such case, the Nextel Closing Price
or the Nextel Signing Price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each Trading Day shall be the last
sale price, or, in case no sale takes place on such day, the average of the
closing bid and ask prices, in either case, as reported by the NASDAQ National
Market. For purposes of this Agreement, the term "TRADING DAY" shall mean a day
on which the NASDAQ National Market is open for business.
SECTION 1.05 PURCHASE PRICE ADJUSTED FOR CHANNELS NOT DELIVERED.
(a) If at the time of the Closing the aggregate value of Channels not
Delivered by Chadmoore exceeds $3,200,000, then the value of each Channel that
is not Delivered will reduce the Adjusted Enterprise Value by the value of such
Channel. Channels shall be valued as set forth on Schedule 1.05. If at the time
of the Closing any Channel set forth on Schedule 1.01(a)(2) is not delivered by
Chadmoore, there shall be no adjustment to the Adjusted Enterprise Value;
PROVIDED, HOWEVER, that the value of any such Channel that is Delivered at the
Closing shall be offset against any reduction to the Adjusted Enterprise Value
pursuant to the first sentence of this Section 1.05(a).
(b) A Channel shall be "DELIVERED" by Chadmoore if at the Closing Date:
(i) the FCC license for such channel has been granted to Chadmoore or a
Chadmoore Subsidiary by a Final Order; (ii) there is a Final Order approving a
transfer of control of that license to Nextel;
- 4 -
(iii) if unconstructed or deconstructed, there are at least one hundred eighty
(180) days remaining before the construction or reconstruction deadline
applicable to that channel; (iv) there is no co-channel license located within
54.7 miles of the channel, except for co-channel licenses that are Chadmoore,
Chadmoore Subsidiaries, or licenses controlled by Nextel or which was in
compliance with the FCC's short-spacing table on the date the license was
initially granted; (v) the channel is set forth on Schedule 1.02(a)(1) and is
either a land mobile 800 MHz, 900 MHz or 450 MHz frequency, for specialized
mobile radio ("SMR") use, or a frequency allocated for public safety, industrial
land transportation or business where the radio service classification has been
converted to commercial service classification (i.e., YX or GX radio service
type); (vi) the channel is granted pursuant to a primary license; (vii) such
channel is a discrete frequency within the applicable market and not subject to
any cross border frequency sharing or channel coordination or similar
arrangement, taking into account all frequencies deemed Delivered pursuant to
this Agreement in that market; (viii) the license for or including the channel
is not subject to (A) any agreement to be sold to a third party, or (B) any
option or right of first refusal in favor of any third party; (ix) except as
approved by Nextel and set forth on Schedule 2.24, there is no contract right of
any third party or FCC order otherwise encumbering or limiting the use of the
license; (x) except as set forth in any Schedule referencing this Section, which
amounts shall be paid in full by Chadmoore within ten (10) day of the Closing,
no consideration is due to any person in connection with the channel; and (xi)
the channel is not subject to any finders' preference action or otherwise
included within any proceeding commenced or asserted by a third party (other
than Nextel) or any regulatory agency, including, without limitation, the FCC,
that could result in a take-back, termination, cancellation or nonrenewal of the
relevant licenses.
SECTION 1.06 ADJUSTMENT FOR NEXTEL FUNDING. Not less than three (3) days
prior to the Closing, Chadmoore shall provide Nextel with written notice as to
the aggregate amount of cash it will deliver to Nextel at the Closing to repay
some or all of the Advances (as defined in Section 5.04) (the "REPAYMENT
AMOUNT"). The Advances, as reduced by the Repayment Amount, shall be subtracted
from $160,000,000 (as adjusted pursuant to Section 1.05) to determine the
Adjusted Enterprise Value.
SECTION 1.07 OTHER ADJUSTMENTS; NO FRACTIONAL SHARES.
(a) If any of the following transactions (each a "SPECIAL TRANSACTION")
becomes effective: (i) a capital reorganization, combination or reclassification
of the capital stock of Nextel; (ii) a consolidation or merger of Nextel with
another entity; or (iii) a sale or conveyance of all or substantially all of
Nextel's assets, then provision shall be made whereby Chadmoore shall thereafter
have the right to receive, upon the basis and upon the terms and conditions
specified herein, and in lieu of the Nextel Shares otherwise deliverable
hereunder, such shares of stock, other voting securities, cash or other assets
as may be issued or payable in and pursuant to the terms of such Special
Transaction with respect to or in exchange for the number of shares of Common
Stock equal to the number of Nextel Shares issuable hereunder had such Special
Transaction not taken place. In connection with any Special Transaction,
appropriate provision will be made with respect to the provisions of this
Agreement (including, without limitation, provisions for any adjustment of
Section 1.04) to the end that this Agreement shall thereafter provide for
delivery of shares of stock, other voting securities, cash or other assets as
were delivered for Nextel Shares in connection with the Special Transaction.
- 5 -
(b) Notwithstanding any other provision of this Agreement, no
fractional Nextel Shares shall be issued in accordance with the transactions
contemplated herein. In lieu of issuance of any fractional Nextel Shares, cash
adjustments will be paid to Chadmoore in respect of any fractional Nextel Shares
that would otherwise be issuable. Wherever in this Agreement it is contemplated
that, in connection with the Reorganization, cash payment shall be made in lieu
of a fractional share, Nextel may deliver to Chadmoore a number of whole shares,
determined by rounding up to the nearest whole share, and thereupon shall be
relieved of any obligation hereunder to make cash payments to Chadmoore in lieu
of any fractional share interest.
SECTION 1.08 ASSIGNABILITY AND CONSENTS.
(a) REQUIRED CONSENTS. Schedule 2.25 sets forth a list of all Assets,
including, without limitation, permits, System Contracts, Channels and Licenses,
that are non-assignable or non-transferable or cannot be subleased to Nextel or
Acquisition Sub without the consent of some other individual, partnership,
corporation, association, joint stock company, trust, joint venture, limited
liability company or similar entity or any governmental entity (collectively,
"PERSON"). Promptly after the public announcement by Chadmoore of this Agreement
and the transactions contemplated herein, Chadmoore shall use all commercially
reasonable efforts to obtain all consents, novations, approvals, authorizations,
requirements (including filing and registration requirements), waivers and
agreements ("CONSENTS") from any Persons necessary to authorize, approve or
permit the full and complete sale, conveyance, assignment, sublease or transfer
of the Assets, and to consummate and make effective the transactions
contemplated by this Agreement and to continue such efforts as may be required
after the Closing Date to facilitate the full and expeditious transfer of legal
title, or the sublease, as the case may be, of the Assets.
(b) NONASSIGNABLE ITEMS. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an Agreement to sell,
convey, assign, sublease or transfer any Assets, including permits, System
Contracts, Channels and Licenses, if an attempted sale, conveyance, assignment,
sublease or transfer thereof, without the Consent of any Person would constitute
a breach of, or in any way affect the rights of Chadmoore or Nextel or
Acquisition Sub with respect to such Asset ("NONASSIGNABLE ITEMS"). Chadmoore
shall use its commercially reasonable efforts and Nextel and Acquisition Sub
shall cooperate in seeking to obtain all Consents and to resolve all
impracticalities of sale, conveyance, assignment, sublease or transfer necessary
to convey to Nextel or Acquisition Sub all Nonassignable Items without any
change to the terms of such items. If any such Consents are not obtained and
satisfied or if an attempted sale, conveyance, assignment, sublease or transfer
would be ineffective, Chadmoore and its appropriate affiliates shall at the
Closing enter into such arrangements (including related written agreements) as
Nextel may reasonably request in order to fairly compensate Nextel for the net
loss of, or to provide to Nextel the benefit of, any such Nonassignable Items
(it being acknowledged that such arrangement may include obligations imposed on
Chadmoore and such affiliates promptly to pay to Nextel when received all monies
and other items of value received by Chadmoore and such affiliates under such
Nonassignable Item; PROVIDED, HOWEVER, that Chadmoore shall have no obligation
to provide Nextel the benefit of any Nonassignable Item until Nextel has used
its commercially reasonable efforts to resolve such impracticality).
- 6 -
SECTION 1.09 TAX CONSEQUENCES. The parties intend that for United States
Federal income tax purposes, (a) the sale of Assets shall constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(C) of the Code, and (b)
this Agreement shall constitute a "plan of reorganization" for purposes of
Section 354 and Section 361 of the Code.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF CHADMOORE
Chadmoore represents and warrants to Nextel and Acquisition Sub that:
SECTION 2.01 CORPORATE ORGANIZATION.
(a) Chadmoore has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Colorado and has the
corporate power and authority to own or lease its properties and to conduct its
business as it has been and is now being conducted. The copies of the Articles
of Incorporation of Chadmoore, certified by the Secretary of the State of
Colorado, and its By-Laws, certified by the Secretary of Chadmoore, previously
made available by Chadmoore to Nextel, are true, correct and complete.
(b) The subsidiaries of Chadmoore existing on the date of this
Agreement are listed on the Schedules with reference to this Section
(collectively, the "SUBSIDIARIES"). Except for Subsidiaries of Chadmoore that
have been merged into Chadmoore since the Signing Date, each of the Subsidiaries
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the state of its incorporation or has been duly
organized and is validly existing as a limited liability company under the laws
of the state of organization, as set forth on the Schedules with reference to
this Section and has the corporate or limited liability company, as the case may
be, power and authority to own or lease its properties and to conduct its
business as it has been and is now being conducted.
(c) Chadmoore and each Subsidiary are duly licensed or qualified and in
good standing as a foreign corporation or limited liability company in all
jurisdictions identified on the Schedules with reference to this Section and
such jurisdictions are the only ones in which their ownership of property or the
character of their activities is such as to require them to be so licensed or
qualified.
SECTION 2.02 SUBSIDIARIES AND OTHER ENTITIES.
(a) All the outstanding capital stock or membership interests of each
Subsidiary is duly authorized, validly issued, fully paid and nonassessable.
Except as set forth on the schedules with reference to this Section, Chadmoore
owns all the issued and outstanding capital stock or membership interest of each
Subsidiary. Except as set forth on the Schedules with reference to this Section,
Chadmoore holds all the issued and outstanding capital stock or membership
interest of each Subsidiary free and clear of any mortgage, pledge, security
interest, encumbrance, lien, claim or charge of any kind. As of the Closing,
Chadmoore shall hold all the issued and outstanding capital stock or membership
interest of each Subsidiary free and clear of any mortgage, pledge, security
interest, encumbrance, lien, claim or charge of any kind.
- 7 -
(b) There are no warrants, options, subscriptions, other convertible
instruments, and no commitments, obligations, or agreement (whether firm or
conditional) pursuant to which Chadmoore or any Subsidiary is or may be
obligated to issue, transfer, deliver or sell shares of capital stock or
membership interest of any Subsidiary or other securities of any Subsidiary.
(c) Except for the Subsidiaries, and except as set forth in the
Schedules with reference to this Section, none of Chadmoore or the Subsidiaries
has any direct or indirect subsidiaries, nor do any of them own, directly or
indirectly, any partnership, equity, profit, participation or similar ownership
interest in any Person.
SECTION 2.03 CORPORATE AUTHORIZATION.
(a) The Board of Directors of Chadmoore, by unanimous vote of all
directors at a meeting duly called and held, has resolved to submit this
Agreement to and recommend approval of this Agreement by the shareholders of
Chadmoore.
(b) Chadmoore has all necessary corporate power and authority to enter
into this Agreement and to perform all of the obligations to be performed by it
hereunder. The execution, delivery and performance of this Agreement by
Chadmoore has been duly authorized by the Board of Directors of Chadmoore, and,
at the Closing, will have been duly authorized by the shareholders of Chadmoore.
Upon the execution and delivery hereof by, respectively, Nextel and Acquisition
Sub, this Agreement will constitute the valid and legally binding obligations of
Chadmoore, enforceable against Chadmoore in accordance with its terms, except as
enforceability thereof may be limited by applicable bankruptcy, reorganization,
insolvency or other similar laws affecting creditors' rights generally, by
equitable principles of general applicability with respect to the availability
of equitable remedies, or by public policies applicable to securities law.
(c) The Board of Directors of Chadmoore received an opinion of Berwind
Financial L.P., its financial advisor, at or before the Board meeting (prior to
the approval vote) described in Section 2.03(a) above, to the effect that the
consideration to be received by Chadmoore's shareholders in the Reorganization
is fair to the shareholders from a financial point of view. Chadmoore has
provided Nextel with a correct and complete copy of the engagement letter
between Berwind Financial L.P. and Chadmoore.
SECTION 2.04 COMPLIANCE WITH LAWS.
(a) Except as set forth in the Schedules with reference to this
Section:
(i) neither Chadmoore nor any Subsidiary is currently in
violation (nor is any of them currently liable or otherwise currently
responsible with respect to prior violations) of any statute, law or regulation
applicable to any of their presently or formerly owned properties or to the
conduct of their current or past businesses;
(ii) none of the processes followed, results obtained, services
provided or products made, modified or installed by any of them (in the ordinary
course of their businesses or otherwise), or by any managers with respect to SMR
Licenses held by any of
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Chadmoore or its Subsidiaries (pursuant to Third-Party Management Agreements or
otherwise) or by Chadmoore or its Subsidiaries in the management or operation of
SMR Licenses managed by any of them (pursuant to Chadmoore Management Agreements
or otherwise), violate any statute, law or regulation applicable thereto;
(iii) none of (A) the businesses of Chadmoore or any Subsidiary;
(B) the processes, results, services or products performed, sold or otherwise
made available by Chadmoore or any Subsidiary; (C) the processes, results,
services or products performed, sold or otherwise made available by any manager
with respect to SMR Licenses held by Chadmoore or any Subsidiary (pursuant to
Third-Party Management Agreements or otherwise); or (D) the processes, results,
services or products performed, sold or otherwise made available by Chadmoore or
any Subsidiary in the management or operation of SMR Licenses managed by any of
them (pursuant to Chadmoore Management Agreements or otherwise) violates any
applicable law or regulation relating to air, water or noise pollution or
employee health and safety or the production, storage, labeling, transportation
or disposition of solid waste or hazardous or toxic substances;
(iv) Chadmoore, its Subsidiaries, each of the managers with
respect to SMR Licenses held by Chadmoore or a Subsidiary, and Chadmoore and its
Subsidiaries in their capacities as managers under Chadmoore Management
Agreements, has each timely obtained all licenses and permits and timely filed
all reports required to be filed under any such applicable laws or regulations;
(v) neither Chadmoore, its Subsidiaries nor any other Person has
stored, dumped or otherwise disposed of any chemical substances, including any
"Hazardous Substances," "Pollutants" or "Contaminants" (as such terms are
defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA")) on, beneath or about any of the properties
of Chadmoore or its Subsidiaries; or
(vi) none of Chadmoore, its Subsidiaries or any of their
respective managers (with respect to SMR Licenses held by Chadmoore or a
Subsidiary) has received written notice that it is a "potentially responsible
party" under any environmental law or of any violation of any environmental,
zoning or other land use ordinance, law or regulation relating to the operation
of its or their businesses, or to any of the processes followed, results
obtained, services provided or products made, modified or installed (in the
ordinary course of its or their businesses or otherwise), including, but not
limited to, the Toxic Substances Control Act of 1976, as amended, the Resource
Conservation Recovery Act of 1976, as amended, the Clean Air Act, as amended,
the Federal Water Pollution Control Act, as amended, CERCLA or the Occupational
Safety and Health Act of 1970, as amended, nor are Chadmoore and any Subsidiary
aware of any such violation.
(b) Chadmoore has listed in the Schedules with reference to this
Section all environmental reports known to Chadmoore or its Subsidiaries
relating to any owned or leased real property of Chadmoore or its Subsidiaries
and has previously delivered to Nextel a true, correct and complete copy of each
report so listed.
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SECTION 2.05 NO CONFLICT. Except as set forth in the Schedules with
reference to this Section and subject to the adoption and approval of this
Agreement by the shareholders of Chadmoore, the execution and delivery of this
Agreement by Chadmoore and the consummation of the transactions contemplated
hereby do not, and will not constitute an event which, after notice or lapse of
time or both would:
(a) violate any provision of, or result in the breach of, or accelerate
or permit the acceleration of the performance required by: (i) the terms of, any
applicable law, rule or regulation of any governmental body; (ii) the Articles
of Incorporation or By-Laws or Certificate of Formation or Operating Agreement,
as the case may be, of Chadmoore or any Subsidiary; (iii) any indenture,
material agreement, or other material instrument to which Chadmoore or any
Subsidiary is a party or by which Chadmoore or any Subsidiary may be bound; or
(iv) any order, judgment or decree applicable to any of them; or
(b) terminate or result in the termination of any indenture, material
agreement or other material instrument, or result in the creation of any lien,
charge or encumbrance upon any of the properties or assets of Chadmoore or any
Subsidiary under any agreement to which any of them is a party.
SECTION 2.06 LITIGATION. Except as set forth in the Schedules with
reference to this Section, there are no actions, suits, proceedings, claims or
investigations formally instituted and pending or, to the knowledge of Chadmoore
and its Subsidiaries, threatened against or specifically affecting Chadmoore or
any Subsidiary or involving any of their properties or assets, at law or in
equity, or before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or any arbitration panel or alternative dispute resolution body. Except
as set forth in such Schedule, neither Chadmoore nor any Subsidiary is subject
to or is in default under, any order, writ, injunction or decree of any court or
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any arbitration panel
or alternative dispute resolution body.
SECTION 2.07 INSURANCE. Set forth in the Schedules with reference to this
Section is a list of (a) all insurance policies held by Chadmoore or any
Subsidiary (indicating the insurer, type, amount and term of coverage,
deductible, description of vehicles, latest property insurable values by
location (100% replacement value), workers' compensation payroll (separately for
clerical, sales and technical employees), and additional named insureds with
respect to each such policy); and (b) all claims pending under any of such
insurance policies. Except as set forth in the Schedules, all of these policies
are in full force and effect and all premiums due thereon have been paid or
accrued and there are no retroactive experience-based premium adjustment
features in any policy.
SECTION 2.08 INTELLECTUAL PROPERTY. Except for the name of Chadmoore and
except as set forth in the Schedules with reference to this Section, there are
no patents or patent applications; trademarks, service marks, trade dress, trade
names, corporate names or any applications to register any of the foregoing
marks or names; copyrights or copyright registrations; or any licenses to or
from third parties with respect to any of the foregoing (including, without
limiting the generality of the foregoing, all computer software, data and
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documentation) relating to Chadmoore's or the Subsidiaries' Business. Except as
set forth in the Schedules with reference to this Section, (i) to the knowledge
of Chadmoore, neither of Chadmoore nor any Subsidiary has infringed,
misappropriated or otherwise conflicted with any proprietary rights of any third
parties; (ii) Chadmoore is not aware of any infringement, misappropriation or
conflict which will occur as a result of the continued operation of Chadmoore's
or the Subsidiaries' Business; and (iii) neither Chadmoore nor any Subsidiary
has received any notices of any infringement or misappropriation from any third
party.
SECTION 2.09 ASSETS. Chadmoore has delivered to Nextel a Schedule (which
makes reference to this Section) that lists all of the Assets (the "ASSET
LIST").
SECTION 2.10 FINANCIAL STATEMENTS. Chadmoore has previously delivered to
Nextel the following financial statements (including any notes thereto), all of
which have been prepared in accordance with generally accepted accounting
principles consistently applied ("GAAP") throughout the periods involved and
present fairly in all material respects the consolidated financial position of
Chadmoore and its Subsidiaries, at the dates stated in such financial statements
and the results of their operations for the periods stated therein (subject in
the case of the financial statements referenced in paragraph (b) to the absence
of notes and to normal year-end adjustments):
(a) a Consolidated Balance Sheet at December 31, 1999, and a
Consolidated Statement of Operations, Statement of Stockholders' Equity and
Consolidated Statement of Cash Flows for the year ended December 31, 1999 which
have been audited by and that are accompanied by the report of Xxxxxx Xxxxxxxx
LLP; and
(b) a Consolidated Balance Sheet at June 30, 2000 and a Consolidated
Statement of Operations, and a Consolidated Statement of Cash Flows for the six
months ended June 30, 2000
SECTION 2.11 LIABILITIES. Chadmoore and its Subsidiaries do not have any
liability or obligation, secured or unsecured (whether accrued, absolute,
contingent or otherwise), except:
(a) trade payables and accrued expenses incurred in the ordinary course
of business and consistent with past practices for which the stated due date has
not passed ("CURRENT PAYABLES");
(b) those liabilities or obligations (for which the stated due date has
not passed) relating to operating contracts or leases entered into in the
ordinary course of business consistent with past practice;
(c) liabilities and obligations of the type shown on Chadmoore's
balance sheet at June 30, 2000 that was previously delivered to Nextel (the
"JUNE 30 BALANCE SHEET") and any increase in the amount of such liabilities
after June 30, 2000 was either (1) consented to in writing by Nextel, or (2)
incurred by Chadmoore or any Subsidiary in the ordinary course of business after
such date; and
(d) other liabilities or obligations that do not exceed $50,000
individually and do not exceed $200,000 in the aggregate or that are set forth
in the Schedules with reference to
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this Section specifically identified (and, to the extent reasonably
ascertainable, have been identified by type, source and dollar amount).
SECTION 2.12 TRANSACTIONS NOT IN THE ORDINARY COURSE. Except as set forth
on the Schedules with reference to this Section, during the period commencing
July 1, 2000 and ending on the date of this Agreement, neither Chadmoore nor any
Subsidiary has:
(a) incurred any liability or obligation not in the ordinary course of
business or entered into any transaction other than in the ordinary course of
business the value of which did not exceed $20,000 individually and did not
exceed $200,000 in the aggregate;
(b) mortgaged, pledged or subjected to lien, charge or any other
encumbrance, any of the Assets;
(c) sold or transferred, or agreed to sell or transfer, or acquired or
agreed to acquire any SMR Licenses; or
(d) sold or transferred any of its other assets, tangible or
intangible, the value of which did not exceed $10,000 individually and did not
exceed $100,000 in the aggregate except, in each case, in the ordinary course of
business.
SECTION 2.13 CAPITAL PROJECTS. Set forth in the Schedules with reference to
this Section is a description of all capital projects currently committed for or
authorized by Chadmoore for (a) SMR Systems and (b) all other capital projects
involving the expenditure of more than $50,000 in any single case or more than
$200,000 in the aggregate.
SECTION 2.14 TAXES. Except as set forth in the Schedules with reference to
this Section, the Subsidiaries have been included in a consolidated Federal
income tax return filed by Chadmoore. Except as set forth in the Schedules with
reference to this Section:
(a) Chadmoore, on behalf of itself and its Subsidiaries (collectively,
"CHADMOORE/CHADMOORE SUBS"), has duly and timely filed with all appropriate
Federal, foreign, state and local governmental agencies all tax returns and
reports required to be filed by it;
(b) all taxes shown to be on such returns have been or paid in full or
provided for in full;
(c) Chadmoore/Chadmoore Subs has not executed or filed with any taxing
authority any agreement extending the period for assessment or collection of any
taxes;
(d) Chadmoore/Chadmoore Subs is not a party to any pending audit,
inquiry, action or proceeding, nor has Chadmoore/Chadmoore Subs been notified in
writing of the inception of any such audit, inquiry, action or proceeding by any
Federal, foreign, state or local governmental entity or municipality or
subdivision thereof or any authority, department, commission, board, bureau,
agency, court or instrumentality for the assessment or collection of taxes; and
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(e) no deficiency or assessment notices or reports or statements of tax
due have been received by Chadmoore/Chadmoore Subs in respect of any of its tax
returns.
SECTION 2.15 BANK ACCOUNTS; EMPLOYEES. Set forth in the Schedules with
reference to this Section is a complete list of:
(a) all banks in which Chadmoore or any Subsidiary has an account or
safe deposit box and the names of all Persons authorized to draw thereon or have
access thereto;
(b) the current fixed annual rate of compensation (plus total cash
compensation broken down between fixed and bonus components for fiscal year
1999) as of the date of such list for each of the five (5) then highest paid
employees of Chadmoore and each Subsidiary for the current fiscal year and a
summary of the basis on which each such Person is compensated if such basis is
other than exclusively a fixed salary rate;
(c) the names of all Persons holding powers of attorney from Chadmoore
and each Subsidiary and a summary statement of the terms thereof; and
(d) the name of each Person who is an "affiliate" of Chadmoore for
purposes of Rule 145 under the Securities Act.
SECTION 2.16 REAL ESTATE. The Schedules with reference to this Section list
all real estate, real estate options and leaseholds owned or held by Chadmoore
or any Subsidiary. Except as set forth on the Schedules with reference to this
Section, there are no title defects, issues of validity or enforceability,
deficiencies in rights of possession or use or similar matters relating to or
affecting any real estate owned or leased, or which is subject to an option to
buy, sell or lease, of or by Chadmoore or any Subsidiary. Except for Permitted
Liens or as set forth in the Schedules with reference to this Section, Chadmoore
or a Subsidiary, as the case may be, has good and marketable title in fee simple
to all real estate owned by it and good leasehold interests in all of its
leaseholds, none of which interests will be adversely affected by the
transactions contemplated hereby, and each lease with an initial term of more
than one year is, to the knowledge of Chadmoore and its Subsidiaries,
enforceable against the lessor thereunder and Chadmoore or its Subsidiary, as
the case may be, enjoys quiet possession of all leaseholds.
SECTION 2.17 TITLE TO ASSETS. Except as set forth on the Schedules with
reference to this Section, each of Chadmoore and its Subsidiaries has good and
marketable title to all of the Assets. Except for the Excluded Assets, the
Assets are the only assets properties, rights and interests used by Chadmoore or
its Subsidiaries in connection with the Business. All of the Assets are in good
operating condition and repair, subject to normal wear and tear, and are
adequate and sufficient for the uses to which they are put in the Business.
Except for liens or encumbrances set forth in the Schedules with reference to
this Section (which identifies those that will be removed prior to the Closing),
none of the Assets is subject to any lien or encumbrance other than (a) any
liens securing Current Payables;(b) any liens or encumbrances connected with
operating leases entered into in the ordinary course of business consistent with
past practice;(c) such other encumbrances that do not secure indebtedness and do
not materially detract from the value of, or interfere with the present or
future use of, the property subject thereto and affected thereby or otherwise
materially impair the business, financial condition,
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results of operations or operations of Chadmoore and its Subsidiaries, taken as
a whole; or (d) as otherwise disclosed to and approved by Nextel in writing
(collectively, "PERMITTED LIENS").
SECTION 2.18 CONTRACTS.
(a) Except as set forth in the Schedules with reference to this
Section, neither Chadmoore nor any Subsidiary (nor any of the Assets) is a party
to or bound by any (collectively, the "CONTRACTS"):
(i) agreement or other arrangement not made in the ordinary
course of business, involving payments or receipts in excess of $25,000
individually or more than $100,000 in the aggregate;
(ii) employment or consulting contract or agreement;
(iii) contract with any labor union;
(iv) employee benefit plan (within the meaning of Section 3(3) of
ERISA) or other plan, agreement or arrangement (oral or written) providing
compensation to any Person who provides services to Chadmoore or its
Subsidiaries;
(v) lease or management agreement relating to the use or
operation of an SMR Channel;
(vi) other lease with respect to real or personal property,
whether as lessor or lessee, involving lease payments in excess of $50,000 per
annum or $200,000 in the aggregate;
(vii) contract or commitment for the purchase of raw materials or
supplies or the sale of products involving more than $50,000 per annum or
$200,000 in the aggregate;
(viii) indenture, agreement, note, mortgage, guaranty or other
writing which evidences or relates to any loan of money to, or indebtedness for
money borrowed by, Chadmoore or any Subsidiary;
(ix) license agreement or other contract or agreement relating to
patents, trademarks, trade names, techniques or copyrights or applications for
any thereof, inventions, trade secrets or other proprietary know-how or
technical assistance;
(x) any loan to officers, directors or employees of Chadmoore or
any Subsidiary (all of which loans will be repaid in full by the Closing); or
(xi) any agreement relating to any direct or indirect acquisition
of SMR Licenses in the case of any of the foregoing, whether written or oral
(and, in the case of oral commitments, with Chadmoore providing an accurate
written summary of all material terms to Nextel).
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(b) Except as set forth in such Schedule, neither Chadmoore nor any
Subsidiary, nor, to the knowledge of Chadmoore, any other party thereto, is in
default under the terms of any commitments described in Subsections 2.18(a).
SECTION 2.19 BROKERS. Except for fees paid to Berwind Financial L.P.,
neither Chadmoore nor any Subsidiary has directly or indirectly dealt with
anyone acting in the capacity of a finder or broker and none of them has
incurred nor will they incur any obligation for any finder's or broker's fee or
commission in connection with this Agreement or the transactions contemplated
hereby.
SECTION 2.20 SPECIAL LIABILITIES; WARRANTIES. Except as set forth on the
Schedules with reference to this Section, (a) neither Chadmoore nor any
Subsidiary has any liability under any contracts under which the consideration
to be paid or received by Chadmoore or a Subsidiary is determined in whole or in
part based on profits or operating results, nor are there any contingent
payments owing to any Person in connection with the acquisition of any business,
entity, frequency or channel by Chadmoore or a Subsidiary; (b) neither Chadmoore
nor any Subsidiary has extended any warranties to their respective customers,
except those that each of them is authorized to extend on behalf of product
manufacturers; (c) neither Chadmoore nor any Subsidiary is now subject to any
outstanding, pending or, to the knowledge of Chadmoore, threatened claims based
on warranty coverage; and (d) there are no pending or threatened claims by any
manufacturer or vendor of equipment to disallow or invalidate manufacturers'
warranty coverage.
SECTION 2.21 EMPLOYEE BENEFIT MATTERS. Except as set forth on the Schedules
with reference to any particular subsection of this Section:
(a) Chadmoore does not have and never has had any obligation to
contribute to any "multiemployer plan" (as defined in Section 3(37) of the
Employee Retirement Income Security Act of 1974, as amended). Chadmoore does not
maintain, contribute to, or have any liability under or with respect to any plan
or arrangement, whether or not terminated, which provides or provided medical,
health, life insurance of other welfare-type benefits for current or future
retired or terminated employees (except for limited continued medical benefit
coverage required to be provided under Section 4980B of the Code or as required
under applicable state law).
(b) Chadmoore does not maintain, contribute to or have any liability
under or with respect to any plan or arrangement providing benefits to current
or former employees, directors, consultants or independent contractors including
any bonus plan, plan for deferred compensation, employee health or other welfare
benefit plan or other arrangement, whether or not terminated (any such plan or
arrangement, an "EMPLOYEE PLAN"). For purposes of this Section 2.21, "Chadmoore"
includes all organizations that now are or that have been, within the past six
years, considered with Chadmoore to be a single employer pursuant to Section 414
of the Code. Chadmoore previously has made available to Nextel true, complete
and correct copies of each of the Employee Plans, including all amendments
thereto, and any other documents or other instruments relating thereto.
- 15 -
(c) All Employee Plans are being, and have been, maintained, operated
and administered in all material respects in accordance with their respective
terms and in compliance with all applicable laws.
(d) The execution, delivery and performance of this Agreement will not,
either alone or in conjunction with any other event or events, (i) constitute a
stated triggering event under any Employee Plan that will result in any payment
(whether of severance pay or otherwise) becoming due from Chadmoore or any
Subsidiary to any present or former officer, employee, director, shareholder or
consultant, or former employee (or dependents of any thereof), or (ii)
accelerate the time of payment or vesting, or increase the amount, of
compensation due to any employee, officer, director, shareholder or consultant
of Chadmoore or any Subsidiary.
(e) Chadmoore's financial statements at and for the six months ended
June 30, 2000 contain and, at and for the period ending on the Closing, will
contain adequate accruals for (i) bonuses, sales commissions and vacation pay
earned but not received as of such dates, and (ii) incurred or continuing but
unpaid claims under Employee Plans not funded by insurance.
SECTION 2.22 MATERIALLY CORRECT. Article 2 of this Agreement together with
the Schedules referenced herein does not contain any untrue statement of a
material fact.
SECTION 2.23 INFORMATION. Chadmoore has filed all reports required to be
filed with the Securities and Exchange Commission (the "SEC") during the period
from January 1, 1999 to the Signing Date (excluding any such reports dealing
with the execution and delivery of this Agreement or any related agreements)
(collectively, the "CHADMOORE REPORTS"). None of the Chadmoore Reports, as of
their respective dates (as amended through the Signing Date), contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading. The representations
made in this Section shall also be deemed to be made by Chadmoore to Nextel
immediately prior to the Closing, but with reference to all information filed
with the SEC prior to the Closing.
SECTION 2.24 REGULATORY MATTERS.
(a) DEFINITIONS. For purposes of this Agreement, the following terms
shall have the indicated meanings:
"FCC LICENSE" shall mean any paging, mobile telephone, SMR or other
license, permit, consent, certificate of compliance, franchise, approval or
authorization of any type granted or issued by the FCC, including, without
limitation, any of the foregoing authorizing the acquisition, construction or
operation of an SMR System, radio paging system or other radio communications
system.
"CHADMOORE MANAGEMENT AGREEMENT" shall mean any management or other
agreement (other than a loading agreement) pursuant to which Chadmoore or a
Subsidiary agrees to manage or to perform other services (other than loading)
with respect to SMR Licenses held by another Person in exchange for either the
right to receive a portion of the revenues
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derived from such SMR Licenses or the right to purchase such SMR Licenses or any
loading agreement pursuant to which such Subsidiary is loading SMR Licenses held
by another Person in exchange for either the right to receive a portion of the
revenues derived from such SMR Licenses in excess of 25% of the aggregate
revenues derived from such SMR Licenses or the right to purchase such SMR
Licenses.
"SMR LICENSE" shall mean an FCC License authorizing the
construction, ownership and operation of an SMR system in the 800 or 900 MHz
band issued pursuant to 47 CFR Part 90 of the Rules and Regulations of the FCC.
"SMR SYSTEM" shall mean an SMR system licensed under 47 CFR Part 90
of the Rules and Regulations of the FCC.
"SMR UNITS" shall mean the number of mobile and control stations
(within the meaning of 47 CFR Part 90 of the Rules and Regulations of the FCC)
subscribing to SMR Systems licensed to or managed by Chadmoore or a Subsidiary
excluding, however, any such units which are subject to a Third-Party Management
Agreement if the respective third party has a right to purchase the SMR Licenses
which are subject to such Third-Party Management Agreement.
"THIRD-PARTY MANAGEMENT AGREEMENT" shall mean any management or
other agreement (other than a loading agreement) pursuant to which a Person
(other than Chadmoore or a Subsidiary) is managing SMR Licenses held by
Chadmoore or a Subsidiary or any loading agreement pursuant to which a Person
(other than Chadmoore or a Subsidiary) is loading SMR Licenses held by Chadmoore
or a Subsidiary in exchange for the right to receive a portion of the revenues
derived from such SMR Licenses in excess of 25% of the aggregate revenues
derived from such SMR Licenses.
(b) LICENSE INFORMATION. Schedule 2.24 sets forth a true and complete
list of the following information for each FCC License issued to or operated by
Chadmoore or its Subsidiaries (including all FCC Licenses subject to a Chadmoore
Management Agreement):
(i) for all FCC Licenses (including all SMR Licenses), the name
of the licensee, the name of the seller(s), the call sign, the transmitter
location (by site coordinates and city), the category or type of service (e.g.,
paging, SMR, etc.), the frequency or frequencies authorized, and operating
entity;
(ii) in the case of SMR Licenses, the number of channels
authorized, the number of channels constructed, whether the license is for a
conventional or trunked SMR System, the applicable loading date, whether the SMR
License is subject to a Finders Preference, whether the SMR License is operating
under Special Temporary Operating Authority ("STA") and the applicable STA
expiration date, and whether the SMR License is managed by Chadmoore pursuant to
a Chadmoore Management Agreement or by any other Persons pursuant to a
Third-Party Management Agreement;
(iii) each holder of any such FCC License that is neither
wholly-owned by Chadmoore nor owned entirely by unaffiliated Persons and managed
by Chadmoore; and
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(iv) for all FCC Licenses (including SMR Licenses), whether such
FCC Licenses are subject to rights of first refusal, options and other such
rights or obligations in existence on the Signing Date, including, without
limitation, entitlements to acquire additional ownership interests, which may
affect the ownership interests of Chadmoore.
(c) CONDITION OF SYSTEMS. All of the properties, equipment and systems
owned and/or operated by Chadmoore and related to the FCC licenses set forth on
a Schedule with reference to this Section are, and any such properties,
equipment and systems added in connection with any contemplated system expansion
or construction prior to the Closing will be, in compliance with all standards
or rules imposed by any governmental agency or authority (including, without
limitation, the FCC, the Federal Aviation Administration and (if applicable),
any public utilities commission or other state or local governments or
instrumentalities) applicable to Chadmoore or its operation of the properties,
equipment and systems or as imposed under any agreements with customers. All of
the equipment and systems owned and/or operated by Chadmoore are in good repair
and working order, ordinary wear and tear excepted.
(d) FEES; LICENSE COMPLIANCE. Chadmoore has paid or will pay at Closing
all franchise, license or other fees and charges which have become due in
respect of the Business and has made appropriate provision as is required by
GAAP, consistently applied, for any such fees and charges which have accrued.
Except as set forth in a Schedule with reference to this Section, Chadmoore has
duly secured all necessary permits, licenses, consents and authorizations from,
and has filed all required registrations, applications, reports and other
documents with, the FCC and, if applicable, any public utilities commission and
other entity exercising jurisdiction over the SMR businesses, radio paging
businesses and other radio communications businesses of Chadmoore or the
construction of delivery systems therefor, as such businesses are currently
conducted. Chadmoore or a Subsidiary holds or has the contractual right to
obtain the FCC Licenses specified on a Schedule with reference to this Section
and, except as indicated in such Schedule, all such FCC Licenses are valid and
in full force and effect without conditions except for such conditions as are
stated on the FCC License or as are generally applicable to holders of similarly
situated FCC Licenses. Chadmoore has filed with the FCC prior to any applicable
deadline a complete and accurate application for rejustification of any
unconstructed or deconstructed FCC License related to previously granted or
requested wide area Enhanced Specialized Mobile Radio ("ESMR") licenses. Except
as set forth on a Schedule with reference to this Section, with regard to FCC
Licenses related to wide area ESMR frequencies, neither Chadmoore nor any of its
Subsidiaries is subject to a short space agreement or any other agreement, FCC
waiver or otherwise applicable regulations encumbering or limiting the use of
such FCC License. Except as set forth on a Schedule with reference to this
Section, to the knowledge of Chadmoore all applicable loading requirements with
respect to any SMR Licenses listed on such Schedule have been met and Chadmoore
has taken every reasonable action to cause the same to be loaded in compliance
with FCC regulations. Except as set forth on a Schedule with reference to this
Section, no event has occurred and is continuing which could (i) result in the
revocation, termination or adverse modification of any FCC License listed on
such Schedule, or (ii) adversely affect any rights of Chadmoore thereunder.
Except as indicated on a Schedule with reference to this Section, Chadmoore has
no reason to believe and no knowledge that all of the FCC Licenses specified on
a Schedule with reference to this Section will not be renewed in the ordinary
course. Except with regard to any planned enhanced SMR Systems of Chadmoore and
except as shown on a Schedule with reference to this Section, Chadmoore has
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sufficient time, materials, equipment, contract rights and other required
resources to complete, in a timely fashion and in full, construction of all the
SMR Systems, radio paging and other radio communications systems associated with
the FCC Licenses listed on a Schedule with reference to this Section in
compliance with all applicable technical standards and construction requirements
and deadlines. Except as set forth on a Schedule with reference to this Section,
the current ownership and operation by Chadmoore of such SMR Systems, radio
paging and other radio communications systems comply with the Communications Act
of 1934, as amended (the "COMMUNICATIONS ACT"), and all applicable rules,
regulations and policies of the FCC.
(e) MANAGEMENT AGREEMENTS. Set forth on a Schedule with reference to
this Section is a complete and correct list of all Chadmoore Management
Agreements (and associated option agreements, if any) and Third-Party Management
Agreements to which Chadmoore or any Subsidiary is a party that correctly
identifies the manager under each such agreement and the holder of the SMR
Licenses which are the subject of such agreements, the transmitter locations (by
address), and number of channels covered by such SMR Licenses, the term of such
agreements, any options or calls (and the respective option or call prices as
well as the time period in which any option or call must be exercised or made)
in favor of any party to such agreements to purchase or sell any interest in
such SMR Licenses and the respective fees or revenues payable or receivable
under any such agreements. All Management Agreements are on one of three forms
of management agreement that Chadmoore has previously provided to Nextel. Except
as set forth on a Schedule with reference to this Section, to the knowledge of
Chadmoore the terms of all such Chadmoore Management Agreements and Third-Party
Management Agreements and the operation of each SMR System pursuant thereto
comply with the Communications Act and all applicable rules, regulations and
policies of the FCC. Except as set forth on a Schedule with reference to this
Section, none of the channels licensed to Chadmoore or its Subsidiaries are
subject to a Third-Party Management Agreement. Each Chadmoore Management
Agreement includes an option allowing Chadmoore or a Subsidiary to purchase the
channels that are subject to that agreement and no such option will be adversely
affected by this Agreement.
SECTION 2.25 APPROVALS. Set forth on a Schedule with reference to this
Section are all of the Consents that must be obtained or satisfied by Chadmoore
to transfer the Assets, including, without limitation, all Consents that must be
obtained pursuant to Section 1.10(a). All Consents prescribed by any law or
regulation, or any contract, agreement, commitment or undertaking, and which
must be obtained or satisfied by Chadmoore for the consummation of the
transactions contemplated by this Agreement, or for the continued performance by
them of their rights and obligations thereunder, have been, or shall by the
Closing have been, made, obtained and satisfied.
SECTION 2.26 INFORMATION IN REGISTRATION STATEMENT. The information,
regarding Chadmoore, its subsidiaries and affiliates, included in the
Registration Statement referred to in Sections 4.4 and 5.2 of this Agreement
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 2.27 CURRENT FUNDING REQUIREMENTS. The $5,200,000 being advanced on
or as soon as reasonably practicable after the Signing Date will cause
Chadmoore's obligations to
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be current as of such date (including any deferred obligations). The cash flow
statement prepared by Chadmoore and attached hereto as ANNEX A accurately
reflects in all material respects the cash flow of Chadmoore and its
Subsidiaries on a consolidated basis for each month of January through June,
2000 and the forecast for each month from August 2000 through March 2001 is
based on Chadmoore's historical operations and is the best estimate of the
executive officers of Chadmoore of the anticipated cash requirements of
Chadmoore and its subsidiaries on a consolidated basis for each month in the
period.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF NEXTEL AND ACQUISITION SUB
Nextel and Acquisition Sub, jointly and severally, represent and warrant to
Chadmoore that:
SECTION 3.01 CORPORATE ORGANIZATION; AUTHORIZATION.
(a) Each of Nextel and Acquisition Sub has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
State of Delaware and has the corporate power and authority to own or lease its
properties and to conduct its business as it is now being conducted.
(b) Each of Nextel and Acquisition Sub has all necessary corporate
power and authority to enter into this Agreement and to perform all of the
obligations to be performed by it hereunder. The execution, delivery and
performance of this Agreement by Nextel and Acquisition Sub have been duly
authorized by Nextel and Acquisition Sub, respectively, and upon the execution
and delivery hereof by Nextel and Acquisition Sub, this Agreement will
constitute the valid and legally binding obligations of Nextel and Acquisition
Sub, enforceable against each of them in accordance with its terms, except as
enforceability thereof may be limited by applicable bankruptcy, reorganization,
insolvency or other similar laws affecting creditors' rights generally, by
equitable principles of general applicability with respect to the availability
of equitable remedies, or by public policies applicable to securities law.
SECTION 3.02 CAPITAL STOCK. As of June 30, 2000, the authorized capital
stock of Nextel consisted of shares of capital stock divided into nine classes
or series as following: (a) 2,060,000,000 shares of Nextel Class A Common Stock,
of which 725,205,970 shares were outstanding on such date (excluding treasury
shares); (b) 100,000,000 shares of Nextel Class B (Non-Voting) Common Stock, of
which 35,660,000 shares were outstanding on such date; (c) 26,941,933 shares of
Class A Convertible Redeemable Preferred Stock, of which 7,905,981 shares were
outstanding on such date; (c) 82 shares of Class B Convertible Redeemable
Preferred Stock, all of which were outstanding on such date; (e) 26, 941,933
shares of Class C Convertible Redeemable Preferred Stock, none of which were
outstanding on such date; (f) 1,600,000 shares of Series D Exchangeable
Preferred Stock of which 709,329 shares were outstanding on such date; (g)
2,200,000 shares of Series E Exchangeable Preferred Stock, of which 961,187
shares were outstanding on such date; (h) 800,000 shares of Zero Coupon
Convertible Preferred Stock, of which 245,245 shares were outstanding on such
date; and (i) 5,400,000 shares of Preferred Stock, par value $.01 per share none
of which were outstanding on such date.
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SECTION 3.03 COMMON STOCK; REGISTRATION. At the Closing Date, the
shares of Nextel Common Stock issued by reason of this Agreement will be duly
authorized, validly issued, fully paid and nonassessable, their issuance in
connection with this Agreement will be registered under the Securities Act of
1933, as amended (the "SECURITIES ACT") and registered or exempt from
registration under applicable state securities laws, such shares of Nextel
Common Stock will be listed on the Nasdaq National Market and will be "voting
stock" within the meaning of Section 368(a)(1)(B) of the Code.
SECTION 3.04 NO CONFLICT. The execution and delivery of this Agreement by
Nextel and Acquisition Sub and the consummation of the transactions contemplated
hereby do not and will not violate any provision of, or result in the breach of,
or accelerate or permit the acceleration of the performance required by the
terms of, any applicable law, rule or regulation of any governmental body, the
Amended and Restated Certificate of Incorporation or the Amended and Restated
By-Laws of Nextel or the Certificate of Incorporation or the By-Laws of
Acquisition Sub or any agreement, indenture or other instrument to which Nextel
or Acquisition Sub is a party or by which Nextel or Acquisition Sub may be
bound, or of any order, judgment or decree applicable to it, or terminate or
result in the termination of any such agreement, indenture or instrument, or
result in the creation of any lien, charge or encumbrance upon any of the
properties or assets of Nextel or Acquisition Sub under any agreement to which
either of them is a party, or constitute an event which, after notice or lapse
of time or both, would result in any such violation, breach, acceleration,
termination or creation of a lien, charge or encumbrance.
SECTION 3.05 INFORMATION. Nextel has filed all reports required to be filed
with the SEC during the period from January 1, 1997 to the Signing Date
(excluding any such reports dealing with the execution and delivery of this
Agreement or any related agreements) (collective, the "NEXTEL REPORTS"). None of
the Nextel Reports, as of their respective dates (as amended through the Signing
Date), contained any untrue statement of material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As used in this Section, "material" means material to the business,
financial condition, results of operations, liabilities or assets of Nextel and
its subsidiaries, taken as a whole. The representation made in this Section
shall also be deemed to be made by Nextel to Chadmoore immediately prior to the
Closing, but with reference to all information filed with SEC prior to the
Closing.
SECTION 3.06 INFORMATION IN REGISTRATION STATEMENT. The information, except
information regarding Chadmoore, its Subsidiaries and affiliates, included in
the Registration Statement referred to in Sections 4.04 and 5.02 of this
Agreement will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
SECTION 3.07 LITIGATION. There is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Nextel threatened, against Nextel
or any of its subsidiaries or any of their respective properties or assets
before any governmental entity that could reasonably be expected to prevent or
delay the consummation of the transactions contemplated by this Agreement. None
of Nextel or any of its subsidiaries is subject to any outstanding order, writ,
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injunction or decree that could reasonably be expected to prevent or delay the
consummation of the transactions contemplated hereby.
SECTION 3.08 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Nextel or Acquisition Sub.
ARTICLE 4. COVENANTS OF CHADMOORE
SECTION 4.01 CONDUCT OF BUSINESS. From the date of this Agreement until the
Closing Date, Chadmoore shall conduct the Business as contemplated by the
parties to consummate the Reorganization, and, without limiting the generality
of the foregoing, neither Chadmoore nor any Subsidiary shall, without the
written consent of Nextel:
(a) dispose or contract to dispose of any SMR Channels or FCC Licenses
except as may occur as a result of an FCC enforcement action or otherwise
required under law;
(b) except as set forth on a Schedule that refers to this Section,
dispose of or contract to dispose of any of the Assets of the Business, except
in the ordinary course of business, consistent with past practice and, with
respect to capital assets, in connection with the replacement of the asset being
disposed of;
(c) except as set forth on a Schedule that refers to this Section,
acquire or contract to acquire any SMR Channels or FCC Licenses or any rights to
acquire any SMR Channels or FCC Licenses or acquire or contract to acquire,
directly or indirectly, any interest in an entity that has any interest in SMR
Channels or FCC Licenses;
(d) voluntarily incur any absolute or contingent debt obligation except
in the ordinary course of business under currently existing lines of credit;
(e) enter into any lease or contract for the purchase or sale of real
estate or of any interest therein;
(f) encumber any Asset except for encumbrances constituting Permitted
Liens or encumbrances of which Nextel is promptly notified in writing and which
will be removed prior to the Closing;
(g) declare or pay any dividend or purchase or redeem any of its
shares, notes or other securities or make any other distribution to
shareholders;
(h) other than in accordance with normal compensation adjustment
policies (all of which, including year end bonuses, are included in the
Schedules), increase the rate of remuneration of any of its directors, officers,
employees or other representatives, or agree to do so or fail to pay any year
end bonuses then owed included on such Schedule prior to the Closing Date;
(i) adopt any new or amend any existing employee benefit plan or any
employment agreement;
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(j) form or cause to be formed any subsidiary;
(k) make any commitments for capital improvements;
(l) fail to keep its properties insured substantially to the same
extent as they are currently insured; or
(m) agree or commit to do any of the foregoing.
SECTION 4.02 REASONABLE EFFORTS WITH RESPECT TO CERTAIN CONTRACTS.
Chadmoore shall, and shall cause each Subsidiary to, perform all its obligations
under and use all reasonable efforts to preserve intact the System Contracts set
forth on Schedule 1.03(a)(ii).
SECTION 4.03 INSPECTION. Chadmoore shall, and shall cause each Subsidiary
to, permit representatives of Nextel, during normal business hours, to examine
Chadmoore's and each Subsidiary's properties, books, contracts, tax returns and
other records, and shall furnish such representatives with all such information
concerning such affairs as they may reasonably request.
SECTION 4.04 SEC REGISTRATION.
(a) Chadmoore shall use its commercially reasonable efforts to, and
shall use its commercially reasonable efforts to cause each Subsidiary to,
furnish to Nextel such information about Chadmoore and each Subsidiary
(including their respective affiliates) as may be necessary to enable Nextel to
prepare and file with the SEC a Registration Statement on Form S-4 under the
Securities Act and the rules and regulations promulgated thereunder, in respect
of the shares of Nextel Common Stock to be issued by reason of the consummation
of the transactions contemplated by this Agreement (such registration statement,
the prospectus included therein and the proxy statement to be furnished to the
holders of Chadmoore's common stock, in each case together with any amendments
or supplements thereto, the "REGISTRATION STATEMENT"). Chadmoore shall use its
commercially reasonable efforts so that the Chadmoore Information included in
the Registration Statement shall not, at the time the Registration Statement is
declared effective, at the time the proxy statement/prospectus contained therein
is first mailed to Chadmoore's shareholders, or at the time of the meeting of
the shareholders of Chadmoore to approve the Reorganization, contain any untrue
statement of a material fact, omit to state any material fact required to be
stated therein, or omit any material fact necessary in order to make the
statements therein not misleading. If at any time prior to the Closing Date any
event or circumstance should come to the attention of Chadmoore with respect to
the Chadmoore Information which is required to be set forth in an amendment or
supplement to the Registration Statement, Chadmoore will immediately notify
Nextel and shall assist Nextel in appropriately amending or supplementing the
Registration Statement in the manner contemplated in Section 5.02(b). An
amendment or supplement may be accomplished, to the extent permitted by law,
rule or regulation, by including such information in a filing under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") that is
incorporated by reference into the Registration Statement. The Registration
Statement insofar as it relates to information concerning Chadmoore, its
Subsidiaries, or any of their respective businesses, assets, directors,
affiliates, officers or shareholders that is supplied by Chadmoore for inclusion
in the Registration Statement, including incorporation by reference to SEC
filings (the "CHADMOORE INFORMATION"),
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will comply as to form and substance in all material respects with the
applicable requirements of the Securities Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations thereunder; except
that Chadmoore shall have no liability or obligation for any information other
than the Chadmoore Information.
(b) Chadmoore shall instruct its accountants to deliver and shall use
its commercially reasonable efforts to cause its accountants, Xxxxxx Xxxxxxxx
LLP, to deliver to Nextel letters dated at the time the Registration Statement
becomes effective and as of the Closing, addressed to Nextel, each containing
such matters as are customarily contained in auditors' letters regarding
information about Chadmoore and its Subsidiaries expressly for inclusion in the
Registration Statement, and in a form and substance reasonably satisfactory to
Nextel.
SECTION 4.05 ANTITRUST FILING. In connection with the transactions
contemplated by this Agreement, Chadmoore (and, to the extent required, its
affiliates) shall promptly file or cause to be filed any reports, documents,
filings or other data required to be filed by Chadmoore pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX XXX") and the
rules and regulations promulgated thereunder, and shall use its commercially
reasonable efforts to respond as promptly as practicable to all inquiries
received for additional information or documentation.
SECTION 4.06 RESTRAINT ON SOLICITATIONS. From the date of this Agreement
until the Closing Date, Chadmoore shall not, nor shall it permit any of its
affiliates to, directly or indirectly, encourage (including by way of furnishing
information), solicit, initiate, participate in or otherwise be a party to any
discussions or negotiations with any Person concerning any transaction that
constitutes, or may reasonably be expected to lead to, any Proposal. Neither the
Board of Directors of Chadmoore nor any committee thereof shall (a) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Nextel, the
approval or recommendation by the Board of Directors of Chadmoore of this
Agreement or (b) approve or recommend, or propose to approve or recommend, any
Proposal. Notwithstanding the foregoing, nothing contained in this Agreement
shall prevent the Board of Directors of Chadmoore from furnishing information
to, or entering into discussions or negotiations with, any unsolicited Person or
taking any action described in clauses (a) and (b) of the preceding sentence, if
and only to the extent that the Board of Directors of Chadmoore shall have
determined in good faith, after receiving advice of its outside counsel, that
such action would be required under applicable law in the exercise of its
fiduciary duties. Chadmoore will immediately notify Nextel if any such inquiries
or proposals are received by, any such information is requested from, or any
such negotiations or discussions are sought to be initiated or continued with,
Chadmoore. As used in this Agreement, "PROPOSAL" shall mean any proposal or
offer from any Person relating to any acquisition (or sublease, as the case may
be) of the Assets or the Business or a merger, share exchange or other business
combination involving Chadmoore or any proposal or offer to acquire in any
manner a substantial equity interest in Chadmoore.
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SECTION 4.07 COMMERCIALLY REASONABLE EFFORTS. Chadmoore shall, and shall
cause each Subsidiary to, use all commercially reasonable efforts (a) to obtain
prior to Closing all of the SMR Licenses or applications being sought by
Chadmoore and/or a Subsidiary that are on file with and pending approval from
the FCC prior to Closing, including all frequencies or applications pending as
of the date hereof for wide area ESMR filings and all finder's preference
applications, (b) to obtain as promptly as practicable and in any event prior to
Closing all FCC Consents necessary to permit the consummation of the
transactions contemplated by this Agreement, and (c) to obtain any other Consent
necessary to transfer the assets to Acquisition Sub (or its designee).
SECTION 4.08 SHAREHOLDER APPROVAL. After the Registration Statement has
become effective, Chadmoore shall use its commercially reasonable efforts to
promptly furnish a copy of the proxy statement/prospectus included therein to
each shareholder of Chadmoore and to call and convene a special meeting to
obtain promptly any approvals of the Chadmoore shareholders required in
connection with the transactions contemplated by this Agreement.
SECTION 4.09 AFFILIATES. Chadmoore shall use all reasonable efforts to
cause each Person who is an "affiliate" of Chadmoore for purposes of Rule 145
under the Securities Act to deliver to Nextel prior to the date of Chadmoore's
shareholders' meeting a written agreement substantially in the form attached
hereto as ANNEX B.
SECTION 4.10 UPDATE INFORMATION. Not earlier than ten (10) and not less
than five (5) days before the date scheduled for Closing, Chadmoore shall
correct and supplement in writing any information furnished on Schedules that is
incorrect or incomplete (or otherwise expressly contemplated by Article 2 of
this Agreement), and shall promptly furnish such corrected and supplemented
information to Nextel, so that such information shall be correct and complete at
the time such updated information is so provided. Thereafter, to the Closing,
Chadmoore shall notify Nextel in writing of any changes or supplements to the
updated information needed to make such information correct and complete at all
times to the Closing. It is agreed that the furnishing of such corrected and
supplemental information, in and of itself, shall not create any presumption
that such information constitutes or evidences the existence of a material
change or any breach or violation by Chadmoore of any provision of this
Agreement.
SECTION 4.11 LOAN DOCUMENTATION. Subject to the consent of Chadmoore's
lenders (if necessary), Chadmoore will execute and deliver any documents
requested by Lender, Nextel or its affiliates (or any lender to any of them) to
create, evidence or perfect the loans, security interest and mortgage
contemplated by Section 5.04.
SECTION 4.12 NONCOMPETITION. During the period commencing on the Closing
Date, and ending on the date that Chadmoore shall liquidate and distribute to
the shareholders of Chadmoore the Nextel Shares and its other remaining
properties pursuant to a plan of reorganization within the meaning of Section
368(a)(2)(G)(1) of the Code, Chadmoore and its Subsidiaries shall not purchase
or otherwise acquire, directly or indirectly, any FCC License (other than a
Channel identified on Schedule 1.01(a)(2)).
SECTION 4.13 WITHDRAWAL. Promptly following the Closing, Chadmoore and its
Subsidiaries and any affiliates shall withdraw, or cause to be withdrawn, any of
their respective
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filings with the FCC that make any objection or opposition to positions taken by
or on behalf of Nextel or any of its subsidiaries.
SECTION 4.14 FURTHER ASSURANCES. Chadmoore and its Subsidiaries shall use
commercially reasonable efforts to implement the provisions of this Agreement,
and for such purpose Chadmoore and its Subsidiaries, at the request of Nextel,
at or after the Closing, shall, without further consideration, promptly execute
and deliver, or cause to be executed and delivered, to Nextel such deeds,
assignments, bills of sale, consents and other instruments in addition to those
required by this Agreement, in form and substance satisfactory to Nextel, and
take all such other actions appropriate to the circumstances (recognizing that
Chadmoore will cease operations and will be liquidating as contemplated by the
Reorganization), as Nextel may reasonably deem necessary or desirable to
implement any provision of this Agreement or to more effectively transfer,
convey and assign to Nextel or Acquisition Sub good and marketable title to, and
to put Nextel or Acquisition Sub in actual possession and operating control of,
all of the Acquired Assets, free and clear of all Liens, except for Permitted
Liens including, without limitation, the Channels not Delivered as set forth on
Schedule 1.01(a)(2).
ARTICLE 5. COVENANTS OF NEXTEL
SECTION 5.01 ANTITRUST FILING. In connection with the transactions
contemplated by this Agreement, Nextel shall promptly file or cause to be filed
any reports, documents, filings or other data required to be filed by Nextel
pursuant to the HSR Act and the rules and regulations promulgated thereunder,
and shall use its commercially reasonable efforts to respond as promptly as
practicable to all inquiries received for additional information or
documentation.
SECTION 5.02 REGISTRATION STATEMENT.
(a) Nextel shall file the Registration Statement and use its
commercially reasonable efforts to cause such Registration Statement to become
effective as promptly as practicable, and shall use its commercially reasonable
efforts to take any action required to be taken to comply in all material
respects with any applicable federal or state securities laws in connection with
the issuance of Nextel Common Stock; except that such covenant of Nextel is
made, as to those portions of the Registration Statement containing or required
to contain Chadmoore Information, assuming and relying on timely and full
compliance with Section 4.04.
(b) Nextel shall use its commercially reasonable efforts so that the
information included in the Registration Statement, shall not, at the time the
Registration Statement is declared effective, at the time the proxy
statement/prospectus contained therein is first mailed to Chadmoore's
shareholders, or at the time of the meeting of the shareholders of Chadmoore to
approve the transactions contemplated by this Agreement, contain any untrue
statement of a material fact, omit to state any material fact required to be
stated therein, or omit to state any material fact necessary in order to make
the statements therein not misleading; except that such covenant of Nextel is
made, as to those portions of the Registration Statement containing or required
to contain Chadmoore Information, assuming and relying on timely and full
compliance with Section 4.04. If at any time prior to the Closing Date any event
or circumstance should come to the attention of Nextel which is required to be
set forth in an amendment or supplement to the Registration Statement, Nextel
will use its commercially
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reasonable efforts to appropriately amend or supplement the Registration
Statement. An amendment or supplement may be accomplished, to the extent
permitted by law, rule or regulation, by including such information in a filing
under the Exchange Act that is incorporated by reference into the Registration
Statement. The Registration Statement and all other documents required to be
filed by Nextel with the SEC in connection with the transactions contemplated
herein will comply as to form and substance in all material respects with the
applicable requirements of the Securities Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations thereunder; except
that Nextel shall have no liability or obligation for any Chadmoore Information.
SECTION 5.03 CURRENT PUBLIC INFORMATION. Nextel shall use all reasonable
efforts to file all reports required to be filed by it under the Securities Act
or the Exchange Act and the rules and regulations adopted by the SEC thereunder
and shall use all reasonable efforts to take such further action as may be
necessary to ensure that the requirements of Rule 144(c) under the Securities
Act are satisfied such as to enable any "affiliates" of Chadmoore (for purposes
of Rule 145 under the Securities Act) to offer or sell the shares of Nextel
Common Stock received by them under this Agreement pursuant to paragraph (d) of
Rule 145 (subject to compliance with the provisions of paragraphs (e), (f) and
(g) of Rule 144).
SECTION 5.04 FUNDING OF CHADMOORE OPERATIONS. On or about the Signing Date
but not later than August 25, 2000, Nextel will cause a third-party lender to,
or if such arrangements cannot be concluded, cause a wholly owned subsidiary of
Nextel (in either case, "LENDER") to provide advances to Chadmoore of up to
$5,200,000. From the date hereof until the earlier of (a) the Closing Date, (b)
eighteen (18) months from the date hereof, (c) the termination of this Agreement
pursuant to Article 9 or (d) the filing by or against Chadmoore of a petition
under the U.S. Bankruptcy Code (or similar state law proceeding), on or before
the 5th business day of each calendar month beginning September 2000, Chadmoore
will submit its request for a cash advance in an amount not to exceed $1.3
million, and, not later than five (5) business days after receiving a request
for such advance, Lender will advance the funds to Chadmoore. Advances made as
contemplated by this Section 5.04 will be evidenced and secured on terms
reasonably satisfactory to Lender and subordinated on terms to which GATX
Capital Corporation consents. Nextel will cause Lender to exercise commercially
reasonable efforts to document such terms as soon as practicable after the
Signing Date. If this Agreement is terminated pursuant to Article 9, the
aggregate amount of advances made as contemplated by this Section 5.04 (the
"ADVANCES") shall become due and payable with interest within 180 days of such
termination. Interest will accrue on a daily basis from the date of such
termination on the unpaid principal amount outstanding pursuant to this Section
5.04, at a rate per annum equal to the Prime Rate. For purposes of this
Agreement, "PRIME RATE" means the "Prime Rate" as reported by THE WALL STREET
JOURNAL in its column entitled "Money Rates." Any fees or interest charged by a
third-party lender in the period prior to the Closing or the termination of this
Agreement shall be paid by Acquisition Sub or by another subsidiary of Nextel.
SECTION 5.05 TAX PROVISIONS. Each of Nextel and Acquisition Sub covenants
and agrees that:
(a) Both immediately before and after the Closing, Nextel shall control
Acquisition Sub within the meaning of Section 368(c) of the Code.
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(b) Except for fees and interest paid to Lender, Nextel and Acquisition
Sub shall pay their expenses incurred in connection with the Reorganization and
this Agreement, and not those of Chadmoore (or any other shareholder, officer,
director or other Person affiliated with Chadmoore).
(c) Following the transaction, Acquisition Sub (or a corporation
directly or indirectly controlled by Acquisition Sub as contemplated under
Treasury Regulations Section 1.368-2(k)) will continue to use substantially all
of the Assets to provide mobile communication services in the active conduct of
a trade or business.
(d) There is no plan or intention for Nextel, Acquisition Sub or any
Person related (as defined in Treasury Regulations Section 1.368-1(e)(3)) to
Nextel, to acquire any securities of Nextel furnished in exchange for a
proprietary interest in Chadmoore in the transaction through any transaction,
agreement or arrangement with any other Person.
(e) Neither Nextel nor Acquisition Sub has a plan or intention to sell
or otherwise dispose of any of the Assets, except the ordinary course of
business or transfers described in Section 368(a)(2)(C) of the Code.
(f) There is no intercorporate indebtedness existing between Chadmoore
and either Nextel or Acquisition Sub that was issued, acquired or will be
settled at a discount.
(g) Neither Nextel nor Acquisition Sub is an investment company as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(h) Other than the Assumed Liabilities or as required by Section
7.03(f), Acquisition Sub shall assume no liabilities, obligations or commitments
of Chadmoore in connection with the Reorganization.
(i) Following the transaction, Acquisition Sub will not issue
additional shares of its securities that would result in Nextel losing control
of Acquisition Sub within the meaning of Section 368(c) of the Code.
(j) Unless otherwise required by law, Nextel and Acquisition Sub shall
not take any position on their tax returns inconsistent with treatment of the
purchase and sale of the Assets hereunder as a reorganization within the meaning
of Section 368(a)(1)(C) of the Code.
SECTION 5.06 COBRA REQUIREMENTS. To the extent required by Proposed
Treasury Regulation Section 54.4980B-9 (as amended or finalized from time to
time), in the event that Chadmoore ceases to maintain any group health plan for
any employee in connection with the events contemplated in this Agreement,
Nextel agrees that, effective as of the later of the Closing Date of the date
that Chadmoore ceases to provide any group health plan to any employee, Nextel
will have the obligation to make COBRA continuation coverage available to those
individuals who are "M&A qualified beneficiaries" (as defined in the
Regulations) with respect to the events contemplated by this Agreement.
Notwithstanding the foregoing, Nextel shall have the right at its discretion to
assume Chadmoore's group health plan(s) in connection with satisfying any
obligations that it may have under Code Section 4980B with respect to the former
employees of Chadmoore. In the event that Nextel chooses to assume Chadmoore's
group health
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plan(s), Chadmoore agrees to take all reasonable actions requested by Nextel in
order to effectuate such assumption.
SECTION 5.07 STANDSTILL. From the Signing Date until the Closing Date,
neither Nextel nor any affiliates of Nextel, acting on its behalf or in concert
with it, will directly or indirectly (a) acquire, or offer, propose or agree to
acquire, by purchase or otherwise, any securities of Chadmoore (including any
Chadmoore notes), or (b) participate in or encourage the formation of any
partnership, syndicate or other group which owns or seeks or offers to acquire
beneficial ownership of, any securities of Chadmoore (including any Chadmoore
notes).
ARTICLE 6. JOINT COVENANTS
SECTION 6.01 CONFIDENTIALITY.
(a) Except (i) for the use of information as required in connection
with Nextel's Registration Statement; (ii) for any other governmental filing
required in order to complete the transactions contemplated herein; and (iii) as
Nextel and Chadmoore may agree or consent in writing, all information received
by Chadmoore and Nextel and their respective representatives pursuant to the
terms of this Agreement shall be kept in strictest confidence by the receiving
party and its representatives. If the transactions contemplated hereby shall
fail to be consummated, all copies of documents or extracts thereof containing
information and data as to one of the other parties, including all information
prepared by the receiving party or such receiving party's representatives, shall
be turned over to the party furnishing same, except that such information
prepared by the receiving party or such receiving party's representatives may be
destroyed at the option of the receiving party, with notice of such destruction
(or return) to be confirmed in writing to the disclosing party. Any information
not so destroyed (or returned) will remain subject to these confidentiality
provisions (notwithstanding any termination of this Agreement) until the second
anniversary of the date of this Agreement.
(b) The foregoing confidentiality provisions shall not apply to such
portions of the information received which (i) are or become generally available
to the public through no action by the receiving party or by such party's
representatives; or (ii) are or become available to the receiving party on a
nonconfidential basis from a source, other than the disclosing party or its
representatives, which the receiving party believes, after reasonable inquiry,
is not prohibited from disclosing such portions to it by a contractual, legal or
fiduciary obligation, and shall not apply to any disclosure by Nextel of any
information disclosed by Chadmoore, so long as such disclosure occurs after the
Closing.
SECTION 6.02 STANDSTILL AGREEMENT. From the Signing Date until the Closing
Date, neither Chadmoore nor any affiliates of Chadmoore, acting on its behalf or
in concert with it, will directly or indirectly (a) acquire, or offer, propose
or agree to acquire, by purchase or otherwise, any securities of Nextel, or (b)
participate in or encourage the formation of any partnership, syndicate or other
group which owns or seeks or offers to acquire beneficial ownership of, any
securities of Nextel.
SECTION 6.03 TRADING PROHIBITIONS. Chadmoore hereby acknowledges that as a
result of disclosures by Nextel contemplated under this Agreement, Chadmoore and
its affiliates may,
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from time to time, have material, non-public information concerning Nextel and
other Persons. Chadmoore confirms that it and its affiliates are aware and
Chadmoore has advised its representatives that (a) the United States securities
laws may prohibit a Person who has material, non-public information from
purchasing or selling securities of any company to which such information
relates, and (b) material non-public information shall not be communicated to
any other Person except as permitted herein.
SECTION 6.04 SUBSTITUTE OF SUBSIDIARY. Nextel has the option to substitute
any wholly-owned direct subsidiary of Nextel for Acquisition Sub or any
wholly-owned direct or indirect subsidiary of Nextel for Lender in connection
with this Agreement, provided that such substitution does not adversely affect
the interests of Chadmoore or its shareholders. If Nextel makes such an
election, each reference to Acquisition Sub or Lender, as applicable, herein
shall be deemed to refer to the new subsidiary.
SECTION 6.05 SUPPORT OF TRANSACTIONS. Nextel, Chadmoore and their
respective affiliates shall each (a) use his or its commercially reasonable
efforts to assemble, prepare and file any information (and, as needed, to
supplement such information) as may be reasonably necessary to obtain as
promptly as practicable all governmental and regulatory consents required under
Article 8; (b) exert his or its commercially reasonable efforts to obtain all
material Consents of third parties that either of Nextel, Chadmoore or their
respective affiliates are responsible to obtain in order to consummate the
transactions contemplated by this Agreement; (c) take such other action as may
reasonably be necessary or as another party may reasonably request to satisfy
the conditions of Article 8 or otherwise to comply with this Agreement; and (d)
provide the other parties, and such other party's employees, officers,
accountants, lawyers, financial advisors and other representatives with access
to its personnel, properties, business and records under all reasonable
circumstances.
SECTION 6.06 INDEMNIFICATION.
(a) Chadmoore shall indemnify and save harmless Acquisition Sub and its
affiliates (including, without limitation, Nextel) from and against any and all
claims, liabilities, costs, damages and expenses ("COSTS") incurred by any of
such entities due or relating in any manner to (i) any breach of the
representations and warranties of Chadmoore contained in this Agreement; (ii)
any failure to observe or perform any covenant or other agreement, on the part
of Chadmoore or its affiliates contained in this Agreement or in any other
instrument delivered pursuant to this Agreement; (iii) any of the Excluded
Liabilities (including, without limitation, any and all liabilities (including
successor liabilities) or obligations relating to periods prior to the Closing
Date resulting in Chadmoore's operation of the SMR Systems or ownership, use or
sale of the Assets or from Chadmoore's employment, or termination of employment,
of its employees) or the Excluded Assets; (iv) any claim or finders fee or
brokerage or other commission arising by reason of any services alleged to have
been rendered to or at the insistence of Chadmoore with respect to this
Agreement or any of the transactions contemplated hereby; (v) any and all
actions, suits, proceedings, claims, demands, assessments, judgments, costs and
expenses, including, without limitation, attorneys' fees and court costs and
expenses incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity; and (vi) any failure to comply with
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the laws of any jurisdiction relating to bulk transfers that may be applicable
in connection with the transfer of the Assets to Acquisition Sub.
(b) Each of Nextel and Acquisition Sub covenants and agrees, jointly
and severally, to indemnify and save harmless Chadmoore and its affiliates from
and against any and all Costs incurred by any such Persons due or relating in
any manner to (i) any breach of the representations and warranties of Nextel or
Acquisition Sub contained in this Agreement; (ii) any failure to observe or
perform any covenants or other agreement on the part of Nextel or Acquisition
Sub, as the case may be, contained in this Agreement or in any other instrument
delivered pursuant to this Agreement; or (iii) any failure of any designee of
Nextel or Acquisition Sub, as the case may be, hereunder to promptly terminate
any application pending before the FCC for the transfer of any SMR License, or
to seek cancellation of any such application once approved, if this Agreement is
terminated in accordance with its terms prior to Closing.
(c) The obligations of any indemnifying party under this Section 6.06
with respect to Costs resulting from the assertion of liability by third parties
(each, as the case may be, a "THIRD-PARTY CLAIM"), will be subject to the
following terms and conditions:
(i) Any party against whom any Third-Party Claim is asserted
will give the party or parties required to provide indemnity hereunder written
notice of any such Third-Party Claim promptly after learning of such Third-Party
Claim, and the indemnifying party may at their or its option undertake the
defense thereof by representatives of their or its own choosing. Failure to give
prompt notice of a Third-Party Claim hereunder shall not affect any indemnifying
party obligations under this Section 6.06, except to the extent any such
indemnifying party is materially prejudiced by such failure to give prompt
notice. If all or any indemnifying party or parties, within thirty (30) days
after notice of any such Third-Party Claim, or such shorter period as is
reasonably required, fails to assume the defense of such Third-Party Claim, the
indemnified party shall have the sole right thereafter to undertake the defense,
compromise or settlement of such Third-Party Claim on behalf of and for the
account and risk, and at the expense, of the indemnifying party or parties, as
the case may be; and
(ii) Anything in this Section 6.06 to the contrary
notwithstanding, the indemnifying party or parties shall not enter into any
settlement or compromise of any action, suit or proceeding or consent to the
entry of any judgment (A) which does not include as an unconditional term
thereof the delivery by the claimant to the indemnified party of a written
release from all liability in respect of such action, suit or proceeding, or (B)
for other than monetary damages without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld.
(d) The right to bring a claim for breach of the representations and
warranties set forth in this Agreement shall not survive the Closing. Except for
the right to make claims based on Third-Party Claims, the right to bring a claim
for breach of any covenant or agreement in this Agreement to be made or
performed before the Closing shall not survive the Closing.
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SECTION 6.07 BULK TRANSFER LAWS. Chadmoore and its Subsidiaries
will comply with the laws of all applicable jurisdictions relating to bulk
transfers that may be applicable in connection with the Reorganization.
SECTION 6.08 EXCLUSIVE REMEDIES. Except for injunctive relief for
any breach of Sections 1.01, 1.02, 1.03, 1.04, 5.07, 6.01 and 6.02, the rights
to indemnification under this Article 6 shall be the exclusive remedy under this
Agreement for each of Nextel, Acquisition Sub and Chadmoore with respect to any
claim for relief or any other remedy, including, without limitation for Costs,
and none of Nextel, Acquisition Sub or Chadmoore nor any of their respective
affiliates or any Persons claiming by or through them shall be entitled to
pursue, and each hereby expressly waives as of the Closing, any and all other
rights that may be otherwise available to them in respect of any such claim.
ARTICLE 7. CLOSING
SECTION 7.01 GENERAL. As used in this Agreement, the "CLOSING" shall mean
the time at which Chadmoore consummates the sale, assignment, transfer and
delivery of the Assets to Nextel and Acquisition Sub as provided herein by the
execution and delivery by Chadmoore of the documents and instruments referred to
in Section 7.02 against delivery by Acquisition Sub of the documents and
payments provided in Section 7.03. In the absence of a prior termination of this
Agreement by one of the parties in accordance with Article 9, the Closing shall
take place at the offices of Xxxxx, Day, Xxxxxx & Xxxxx, 00 Xxxxxxxxx Xxxxxx,
X.X., Xxxxxxxxxx X.X. 00000 at 10:00 A.M. (a) ten (10) days following the day on
which the last of the conditions to Closing set forth in Article 8 are satisfied
or (b) at such other time and place and on such other day as shall be mutually
agreed upon in writing by the parties hereto (the "CLOSING DATE"). Legal title,
equitable title and risk of loss with respect to the Assets shall not pass to
Acquisition Sub until the Assets are transferred at the Closing, which transfer,
once it has occurred, shall be deemed effective for tax, accounting and other
computational purposes as of 11:59 P.M. (Eastern Time) on the Closing Date.
SECTION 7.02 DOCUMENTS TO BE DELIVERED BY CHADMOORE. At the Closing,
Chadmoore shall deliver to Nextel or Acquisition Sub:
(a) Copies of (i) the resolutions of the Boards of Directors of
Chadmoore, authorizing and approving this Agreement and all other transactions
and agreements contemplated hereby; (ii) Chadmoore's Articles of Incorporation;
and (iii) Chadmoore's By-Laws, all certified by the corporate Secretary or
Assistant Secretary of Chadmoore to be true, correct, complete and in full force
and effect and unmodified as of the Closing Date;
(b) A xxxx of sale transferring the Assets to Acquisition Sub, free and
clear of any and all liens, equities, claims, prior assignments, mortgages,
charges, security interests, pledges, conditional sales contracts, collateral
security arrangements and other title retention arrangements, restrictions
(including, in the case of real property, rights of way, use restrictions, and
other variances, reservations or limitations of any nature) or encumbrances
whatsoever;
(c) The opinions, dated as of the Closing Date, of counsel to
Chadmoore, addressed to Nextel, covering the matters set forth on ANNEX C;
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(d) Copies of all Consents to the transfer, assignment or sublease to
Acquisition Sub of each Asset listed on Schedule 1.03(a)(ii) and subject to
Section 1.08(b);
(e) Instruments of assignment to Acquisition Sub of all trademarks,
trade names, service marks and patents (and all applications for, and extensions
and reissuances of, any of the foregoing and rights therein) identified on
Schedule 2.08 with respect to Intellectual Property;
(f) The certificate required by Section 8.02(b);
(g) Long-form good standing and tax certificates for Chadmoore from
Colorado and from the appropriate state and tax authorities in each jurisdiction
in which Chadmoore is qualified to do business as a foreign corporation, with
respect to the conduct of activities relating to the Business or the ownership,
possession, use or operation of any of the Assets, dated not more than ten (10)
days prior to the Closing;
(h) Releases, including, without limitation, termination statements
under the Uniform Commercial Code of any financing statements filed against any
Assets, evidencing discharge, removal and termination of all liens,
encumbrances, liabilities or obligations to which the Assets are subject, except
for Permitted Liens, which releases shall be effective at or prior to the
Closing, together with evidence satisfactory to Nextel that the indebtedness
shall have been satisfied and extinguished;
(i) An instrument executed by the senior secured lender(s) to Chadmoore
stating that under the subordination agreement between them and Lender, the
senior lenders waive any rights they may have to (A) the Repayment Amount (if
any), and (B) any payment made to Lender after Acquisition Sub assumes the
obligations to Lender.
(j) Such other deeds, bills of sale, endorsements, assignments,
affidavits, and other good and sufficient instruments of sale, assignment,
conveyance and transfer in form and substance satisfactory to Nextel and its
counsel, as are required to effectively vest in on Acquisition Sub good and
marketable title in and to all of the Assets, free and clear of any and all
liens, encumbrances, liabilities or obligations except Permitted Liens.
SECTION 7.03 DOCUMENTS TO BE DELIVERED BY ACQUISITION SUB OR NEXTEL. At the
Closing, Acquisition Sub or Nextel shall deliver to Chadmoore:
(a) A copy of (i) the resolutions of each of the Board of Directors of
Nextel and Acquisition Sub authorizing and approving this Agreement and all
other transactions and agreements contemplated hereby; (ii) Nextel's Amended and
Restated Certificate of Incorporation and Acquisition Sub's Certificate of
Incorporation; and (iii) Nextel's Amended and Restated By-Laws and Acquisition
Sub's By-Laws, all certified by its respective Secretary or an Assistant
Secretary to be true, correct, complete and in full force and effect and
unmodified as of the Closing Date;
(b) The certificate required by Section 8.03(b);
- 33 -
(c) The certificates representing the Nextel Shares in accordance with
Section 1.4 (as adjusted pursuant to Article 1);
(d) An opinion, dated the Closing Date, of Xxxxx, Day, Xxxxxx & Xxxxx,
counsel to Nextel and Acquisition Sub, addressed to Chadmoore, covering the
matters set forth on ANNEX D; and
(e) An Instrument of Assumption of the Assumed Liabilities.
(f) An Instrument of Assumption to Lender assuming any remaining
liabilities and obligations of Chadmoore incurred as contemplated by Section
5.04.
ARTICLE 8. CONDITIONS TO OBLIGATIONS
SECTION 8.01 CONDITIONS TO OBLIGATIONS OF NEXTEL, ACQUISITION SUB AND
CHADMOORE. The obligations of Nextel and Chadmoore to consummate, or cause to be
consummated, the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions, any one or more of which may be waived
in writing by such parties:
(a) The shareholders of Chadmoore shall have taken all necessary action
to authorize, approve and adopt this Agreement and the transactions referred to
herein.
(b) All waiting periods under the HSR Act and the regulations
promulgated thereunder applicable to the transactions contemplated by this
Agreement shall have expired or been terminated.
(c) All necessary Consents of governmental and regulatory authorities
required to be procured by Nextel and Chadmoore in connection with the
transactions contemplated by this Agreement (including all required FCC
Consents, which shall be deemed to be obtained for purposes of this Agreement
only when they have become Final Orders). Any Consent granted or an order
entered by the FCC shall be a "Final Order" when a sufficient number of days
shall have elapsed from the date of entry or grant thereof without the filing of
any adverse request, petition or appeal by any party or third party or by the
FCC (on its own motion) with respect to such Consent, or any aspect or portion
thereof, or any resubmissions of any applications or requests for any of such
Consents, or, if challenged, that such Consent (or affected aspects or portions
thereof) shall have been reaffirmed or upheld and the applicable period for
seeking further administrative or judicial review shall have expired without the
filing of any action, petition or request for further review.
(d) There shall not be in force any order or decree, statute, rule or
regulation nor shall there be on file any complaint by a governmental agency
seeking an order or decree, restraining, enjoining or prohibiting the
consummation of the transactions contemplated by this Agreement, and none of
Nextel, Acquisition Sub or Chadmoore, nor any of its Subsidiaries, shall have
received notice from any governmental agency that it has determined to institute
any suit or proceeding to restrain or enjoin the consummation of the
transactions contemplated by this Agreement or to nullify or render ineffective
this Agreement if consummated, or to take any other action which would result in
the prohibition or material change in this Agreement.
- 34 -
(e) Nextel's Registration Statement shall have become effective under
the Securities Act and no stop order suspending such effectiveness shall have
been issued or threatened with respect thereto.
SECTION 8.02 CONDITIONS TO OBLIGATIONS OF NEXTEL AND ACQUISITION SUB. The
obligations of Nextel and Acquisition Sub to consummate, or cause to be
consummated, the transactions contemplated by this Agreement is subject to the
satisfaction of the following additional conditions, any one or more of which
may be waived in writing by Nextel:
(a) Except for those matters that individually or in the aggregate will
not have a material adverse effect on the value of the Assets, each of the
representations and warranties of Chadmoore contained in this Agreement shall be
true and correct both on the Signing Date and as of the Closing, as if made anew
at and as of that time. Each of the covenants and agreements of Chadmoore and
its Subsidiaries to be performed as of or prior to the Closing shall have been
duly performed, except (i) for Sections 4.01 and 4.03 that shall have been duly
performed in all material respects and (ii) in each case for changes after the
Signing Date which are contemplated or expressly permitted by this Agreement.
(b) Chadmoore shall have delivered to Nextel a certificate signed by
its President, dated the Closing, certifying, in form reasonably satisfactory to
Nextel and to its counsel that, to the best of the knowledge and belief of such
officer, the conditions specified in Section 8.01 as they relate to Chadmoore
and in Subsections 8.02(a), (d) and (f) have been fulfilled.
(c) Lime shall have delivered to Lender, in cash or by wire transfer of
immediately available funds, the Repayment Amount.
(d) At the Closing, the Assets shall be free and clear of all liens,
encumbrances, obligations, liabilities and other adverse claims of any nature
whatsoever except for Permitted Liens.
(e) The assignment of the Systems Contracts to be assumed by
Acquisition Sub shall have been completed to Nextel's reasonable satisfaction.
(f) Nextel shall have received letters from Xxxxxx Xxxxxxxx LLP, dated
as of the date the Registration Statement becomes effective and as of the
Closing, addressed to Nextel, containing such matters as are customarily
contained in auditors' letters regarding information about Chadmoore and its
Subsidiaries expressly for inclusion in the Registration Statement, and in form
and substance reasonably satisfactory to Nextel.
(g) At the time the Registration Statement becomes effective, and also
at the Closing, Chadmoore and its Subsidiaries shall have furnished to Nextel
certificates, dated as of said times and signed by its President and Secretary,
to the effect that to the best of the knowledge and belief of the signing
persons the material contained in the Registration Statement which relates to
Chadmoore and its Subsidiaries, contains, as of the date of each of such
certificates, no material misstatement of fact and does not omit to state any
material fact necessary to make the statements made not misleading.
- 35 -
(h) Nextel shall have received from each "affiliate" of Chadmoore (as
defined in Rule 145 under the Securities Act) a Rule 145 Letter in the form of
ANNEX B.
(i) Nextel shall have received from Chadmoore all of the deliveries
provided for in Section 7.02.
(j) The aggregate value of the Channels Delivered to Nextel, as set
forth on Schedule 1.01(a)(1), shall be at least $80,000,000.
SECTION 8.03 CONDITIONS TO THE OBLIGATIONS OF CHADMOORE. The obligation of
Chadmoore to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of the following additional conditions, any one or
more of which may be waived in writing by Chadmoore:
(a) Each of the representations and warranties of Nextel contained in
this Agreement shall be true and correct in all material respects both on the
Signing Date and as of the Closing, as if made anew at and as of that time, and
each of the covenants and agreements of Nextel to be performed as of or prior to
the Closing shall have been duly performed, except in each case for changes
after the Signing Date which are contemplated or expressly permitted by this
Agreement.
(b) Nextel shall have delivered to Chadmoore a certificate signed by an
officer of Nextel, dated the Closing, certifying, in form reasonably
satisfactory to Chadmoore and its counsel, to the effect that to the best of the
knowledge and belief of such officer, the conditions specified in Section 8.01
as they relate to Nextel and in subsection 8.03(a) have been fulfilled.
(c) Chadmoore shall have received from Acquisition Sub or Nextel all of
the deliveries provided for in Section 7.03.
(d) The shares of Nextel Common Stock issuable in connection with the
transactions contemplated by this Agreement shall have been listed or approved
for listing upon notice of issuance by the NASDAQ National Market System.
ARTICLE 9. TERMINATION/EFFECTIVENESS
SECTION 9.01 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby abandoned:
(a) By mutual written consent of the parties authorized by their
respective Boards of Directors, at any time prior to the Closing.
(b) Prior to the Closing, by written notice to Chadmoore from Nextel
authorized by the Board of Directors of Nextel, if (i) there is a breach of any
representation, warranty, covenant or agreement on the part of Chadmoore or any
Subsidiary set forth in this Agreement, or if a representation or warranty of
Chadmoore shall be untrue in any respect (a "TERMINATING CHADMOORE BREACH"),
except that, if such Terminating Chadmoore Breach is curable by Chadmoore
through the exercise of its commercially reasonable efforts, then for as
- 36 -
long as Chadmoore continues to exercise such commercially reasonable efforts,
Nextel may not terminate this Agreement under this Section 9.01(b)(i) unless as
a result of such breaches a condition specified in Section 8.02(a) would not be
satisfied at Closing; (ii) any Consent required for consummation of the
transactions contemplated hereby is denied by or in a final order or other final
action issued or taken by the appropriate governmental or regulatory authority,
agency or similar body; or (iii) consummation of any of the transactions
contemplated hereby is enjoined, prohibited or otherwise restrained by the terms
of a final, non-appealable order or judgment of a court of competent
jurisdiction.
(c) Prior to the Closing, by written notice to Nextel from Chadmoore
authorized by its Board of Directors, if (i) there is a material breach of any
representation, warranty, covenant or agreement on the part of Nextel set forth
in this Agreement, or if a representation or warranty of Nextel shall be untrue
in any material respect, in either case such that the condition specified in
Sections 8.03(a) or 8.03(b) would not be satisfied at Closing (a "TERMINATING
NEXTEL BREACH"), except that, if such Terminating Nextel Breach is curable by
Nextel through the exercise of its commercially reasonable efforts then for up
to thirty 30 days, but only as long as Nextel continues to exercise such
commercially reasonable efforts, Chadmoore may not terminate this Agreement
under this Section 9.01(c)(i) (the number of days elapsed prior to any such
cure, the "NEXTEL CURE PERIOD"); (ii) any Consent required for consummation of
the transactions contemplated hereby is denied by or in a final order or other
final action issued or taken by the appropriate governmental or regulatory
authority, agency or similar body; (iii) consummation of any of the transactions
contemplated hereby is enjoined, prohibited or otherwise restrained by the terms
of a final, non-appealable order or judgment of a court of competent
jurisdiction; or (iv) except as provided in Section 1.04(h), if the conditions
to Closing have been satisfied, the Nextel Closing Price used to determine the
number of Nextel Shares issuable to Chadmoore pursuant to Section 1.04 of this
Agreement is less than $39.3473.
(d) If the Closing has not occurred on or before December 31, 2001,
unless extended by mutual consent of the parties.
SECTION 9.02 EFFECT. Any termination of this Agreement, however effected,
shall not release either Nextel or Chadmoore from any liability or other
consequences arising from any breach or violation by any such party of the terms
of this Agreement prior to the effective time of such termination, nor shall any
such termination release any party from its obligations or duties under this
Agreement which, by their terms and/or expressed intent, may require performance
subsequent to any such termination, and all provisions of this Agreement which
set forth such obligations or duties (including, without limitation, Section
6.01 and, to the extent provided therein, in Section 10.6) and such other
general or procedural provisions which may be relevant to any attempt to enforce
such obligations or duties, shall survive any such termination of this Agreement
until such obligations or duties shall have been performed or discharged in
full.
ARTICLE 10. MISCELLANEOUS
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SECTION 10.01 WAIVER. Any party to this Agreement may, at any time prior to
the Closing, by action taken by its Board of Directors, or officers thereunto
duly authorized, waive any of the terms or conditions of this Agreement or agree
to an amendment or modification to this Agreement by an agreement in writing
executed in the same manner (but not necessarily by the same persons) as this
Agreement.
SECTION 10.02 NOTICES. All notices and other communications among the
parties shall be in writing and shall be deemed to have been duly given when (i)
delivered in person; or (ii) five days after posting in the United States mail
having been sent registered or certified mail return receipt requested; or (iii)
delivered by telecopy, which must be received in its entirety during normal
business hours, meaning between the hours of 10:00 a.m. and 6:00 p.m., Reston,
Virginia time, and promptly confirmed by delivery in person or post as aforesaid
in each case, with postage prepaid, addressed as follows:
(a) If to Nextel, to:
Nextel Communications, Inc.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(b) If to Chadmoore, to:
Chadmoore Wireless Group, Inc.
0000 Xxxx Xxxxxxx Xxxx, Xxxxx X
Xxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Senior Vice President and Chief
Regulatory Officer
Telephone No.: (000) 000-0000 x000
Telecopier No.: (000) 000-0000
E-Mail: xxxxx@xxxxxxxxx.xxx
with a copy (which shall not constitute notice) to:
Xxxx Xxxx Xxxx & Freidenrich LLP
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000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
E-Mail: xxxxxx@xxxxxxxx.xxx
or to such other address or addresses as the parties may from time to time
designate in writing.
SECTION 10.03 ASSIGNMENT. Except as provided in Section 6.04, no party
hereto shall assign this Agreement or any part hereof without the prior written
consent of the other parties. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective permitted successors and assigns.
SECTION 10.04 RIGHTS OF THIRD PARTIES. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give any Person,
other than the parties hereto, or any subsidiary of Nextel joining this
Agreement under the circumstances described in Section 6.04, any right or
remedies under or by reason of this Agreement.
SECTION 10.05 RELIANCE. Each of the parties to this Agreement shall be
deemed to have relied upon the accuracy of the written representations and
warranties made to it in or pursuant to this Agreement, notwithstanding any
investigations conducted by or on its behalf or notice, knowledge or belief to
the contrary.
SECTION 10.06 EXPENSES. Nextel shall bear its own expenses incurred in
connection with this Agreement and the transactions herein contemplated whether
or not such transactions shall be consummated, including, without limitation,
all fees of its legal counsel and accountants. Chadmoore and its Subsidiaries
shall bear their own legal, financial advisory and accounting fees and expenses
incurred in connection with this Agreement and the transactions herein
contemplated if such transactions shall be consummated.
SECTION 10.07 CONSTRUCTION. This Agreement shall be construed and enforced
in accordance with the laws of the State of New York. Unless otherwise stated,
references to Sections, Articles or Annexes refer to the Sections, Articles and
Annexes to this Agreement. As used in this Agreement, the phrase "to the
knowledge of Chadmoore" or "to the knowledge of the Subsidiaries" shall
comprehend those matters that are, known to any of the executive officers of
Chadmoore.
SECTION 10.08 CAPTIONS; COUNTERPARTS. The captions in this Agreement are
for convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
SECTION 10.09 ENTIRE AGREEMENT. This Agreement (together with the Schedules
to this Agreement), constitutes the entire agreement among the parties and
supersedes any other agreements, whether written or oral, that may have been
made or entered into by or among
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Nextel or its subsidiaries and Chadmoore or its Subsidiaries or by any Director
or Directors or officer or officers of such parties relating to the transactions
contemplated hereby, or incident hereto. No representations, warranties,
covenants, understandings, agreements, oral or otherwise, relating to the
transactions contemplated by this Agreement exist between the parties except as
expressly set forth in this Agreement.
SECTION 10.10 AMENDMENTS. This Agreement may be amended or modified in
whole or in part, only by a duly authorized agreement in writing executed in the
same manner as this Agreement and which makes reference to this Agreement.
SECTION 10.11 PUBLICITY. All press releases or other public communications
of any nature whatsoever relating to the transactions contemplated by this
Agreement, and the method of the release for publication thereof, shall be
subject to the prior mutual approval of Nextel and Chadmoore which approval
shall not be unreasonably withheld by any party; PROVIDED, HOWEVER, that,
subject to compliance with Section 6.01, nothing herein shall prevent any party
from publishing such press releases or other public communications as such party
may consider necessary in order to satisfy such party's legal or contractual
obligations.
* * * * *
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IN WITNESS WHEREOF the parties have hereunto caused this
Agreement to be duly executed as of the date first above written.
NEXTEL COMMUNICATIONS, INC
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Title: President and Chief
Executive Officer
NEXTEL FINANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Title: President and Chief
Executive Officer
CHADMOORE WIRELESS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------
Title: President and Chief
Executive Officer
