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Exhibit 10.23
STOCK PURCHASE AGREEMENT
BY AND AMONG
LET'S TALK CELLULAR & WIRELESS, INC.
AND THE
STOCKHOLDERS
NAMED THEREIN
RELATING TO THE ACQUISITION OF
CELLULAR USA, INC.
DATED AS OF OCTOBER 28, 1997
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 PURCHASE AND SALE OF COMPANY SHARES...............................1
1.1 Purchase and Sale of Company Shares...............................1
1.2 Purchase Price....................................................1
1.3 Closing...........................................................2
1.4 Purchase Price Adjustments........................................3
1.6 Dispute Resolution................................................3
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS................4
2.1 Due Organization..................................................4
2.2 Due Authorization.................................................4
2.3 Corporate Record Books............................................4
2.4 Title to Stock....................................................4
2.5 No Violation......................................................5
2.6 Carrier Agreement.................................................5
2.7 Pager Agreements..................................................5
2.8 Carrier Commission Reports and Paging Reports.....................6
2.9 Financial and Operating Information...............................6
2.10 Financial Statements..............................................7
2.11 Liabilities.......................................................7
2.12 Title and Related Matters.........................................7
2.13 Absence of Certain Changes or Events..............................8
2.14 Contracts.........................................................8
2.15 Patents, Trademarks, Etc..........................................9
2.16 Litigation........................................................9
2.17 Compliance with Law...............................................9
2.18 Consents and Approvals............................................9
2.19 Brokerage.........................................................9
2.20 Leases...........................................................10
2.21 Tax Matters......................................................10
2.22 Disclosure.......................................................12
2.23 Cellular Activations.............................................12
2.24 Pagers...........................................................12
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF LTC............................12
3.1 Due Organization.................................................12
3.2 Due Authorization................................................12
3.3 No Violation.....................................................13
3.4 Brokerage........................................................13
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ARTICLE 4 COVENANTS OF THE STOCKHOLDERS....................................13
4.1 Regular Course of Business.......................................13
4.2 Full Access and Disclosure.......................................13
4.3 Breach of Agreement..............................................14
4.4 Fulfillment of Conditions Precedent..............................14
4.5 Pre-Closing Actions..............................................14
ARTICLE 5 OTHER AGREEMENTS.................................................16
5.1 Employment Matters...............................................16
5.2 Non-Competition..................................................16
5.3 Confidential Documents...........................................18
5.4 Claims of Stockholders...........................................18
5.5 Agreement to Defend..............................................18
5.6 Further Assurances...............................................18
5.7 No Solicitation or Negotiation...................................18
5.8 No Termination of Stockholder's Obligations by
Subsequent Incapacity, Dissolution, Etc........................18
5.9 Deliveries After Closing.........................................19
5.10 Schedules........................................................19
ARTICLE 6 CONDITIONS TO THE OBLIGATIONS OF LTC.............................19
6.1 Representations and Warranties; Performance......................19
6.2 No Material Adverse Change.......................................19
6.3 No Proceeding or Litigation......................................19
6.4 Condition of Assets..............................................20
6.5 Physical Inventory; Due Diligence................................20
6.6 Consent; New Agreement; Estoppel Letters.........................20
6.7 Cross Receipt....................................................20
6.8 Payoff Letters...................................................20
6.9 Secretary's Certificate..........................................20
6.10 Termination of Contracts.........................................21
6.11 Resignations.....................................................21
6.12 Indebtedness and Other Obligations...............................21
6.13 Consulting Agreements............................................21
6.14 Pre-Closing Asset Transfer.......................................21
ARTICLE 7 CONDITIONS TO THE OBLIGATIONS OF THE STOCKHOLDERS................21
7.1 Representations and Warranties; Performance......................21
7.2 No Proceeding or Litigation......................................21
7.3 Performance......................................................22
7.4 New Carrier Agreement............................................22
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ARTICLE 8 TERMINATION AND ABANDONMENT......................................22
8.1 Methods of Termination...........................................22
8.2 Procedure Upon Termination.......................................22
ARTICLE 9 INDEMNIFICATION..................................................23
9.1 Indemnification by the Stockholders..............................23
9.2 Indemnification by LTC...........................................23
9.3 Set Off..........................................................24
ARTICLE 10 MISCELLANEOUS....................................................24
10.1 Binding Effect and Assignment....................................24
10.2 Survival.........................................................24
10.3 Severability.....................................................24
10.4 Entire Agreement.................................................24
10.5 Modification.....................................................25
10.6 Waiver...........................................................25
10.7 Governing Law; Jurisdiction......................................25
10.8 Headings.........................................................25
10.9 Counterparts.....................................................25
10.10 Remedies.........................................................25
10.11 Attorneys' Fees..................................................25
10.12 Further Documents................................................25
10.13 Notices..........................................................25
10.14 Expenses.........................................................26
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SCHEDULES
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Schedule 1.4 Calculation of Purchase Price Adjustment
Schedule 2.3(a) Capitalization
Schedule 2.3(b) Officers and Directors
Schedule 2.9 Real Property Leases
Schedule 2.11 Liabilities
Schedule 2.12 Title Matters
Schedule 2.14 Contracts
Schedule 2.15 Patents, Trademarks, Etc.
Schedule 2.21(e) Tax Matters
EXHIBITS
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Exhibit 1.3(b)(ii) Form of Escrow Agreement
Exhibit 6.6(c) Form of Estoppel Letter
Exhibit 6.7 Form of Cross Receipt
Exhibit 6.8 Form of Pay-Off Letter
Exhibit 6.12 Forms of Consulting Agreements
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STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of October
28, 1997, is entered into by and among Let's Talk Cellular & Wireless, Inc.,
Inc., a Florida corporation having its principal offices at 000 Xxxxxxxx Xxxxxx,
Xxxxx 000, Xxxxx, Xxxxxxx 00000 ("LTC"), each of the stockholders of Cellular
USA, Inc., a Nevada corporation (the "COMPANY"), set forth on Schedule 2.3(a)
hereto (each individually, a "STOCKHOLDER" and together, the "STOCKHOLDERS"),
and Xxxxx X. Xxxxxx, as Stockholders' Representative (the "STOCKHOLDERS'
REPRESENTATIVE").
RECITALS
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A. The Stockholders are the record and beneficial owners of all of
the issued and outstanding shares and rights to acquire shares (the "COMPANY
SHARES") of capital stock of the Company.
B. The Stockholders desire to sell their Company Shares to LTC, and LTC
desires to purchase such Company Shares, for cash on the terms and subject to
the conditions contained herein.
TERMS OF AGREEMENT
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In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF COMPANY SHARES
1.1 PURCHASE AND SALE OF COMPANY SHARES. Each Stockholder agrees to and
shall convey, transfer, assign and deliver to LTC at the Closing and LTC shall
acquire and accept from each Stockholder, on the terms and subject to the
conditions set forth in this Agreement, free and clear of all liens,
encumbrances, charges, equities and claims ("LIENS"), all of the Company Shares
held by such Stockholder.
1.2 PURCHASE PRICE. In consideration for the conveyance of the Company
Shares and in reliance on the representations and warranties, covenants and
agreement of the Stockholders contained herein, the schedules hereto and the
documents contemplated hereby, LTC shall pay to the Stockholders an aggregate
purchase price (the "PURCHASE PRICE") of $1,625,000 paid at Closing. The amount
of Purchase Price to be received by each Stockholder shall be the Stockholder's
Pro Rata Share thereof. The term "PRO RATA SHARE" means, with respect to any
Stockholder, a fraction, the numerator of which is the number of Company Shares
held by such Stockholder and the denominator of which is the total number of
Company Shares outstanding.
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1.3 CLOSING. Unless this Agreement shall have been terminated or
abandoned pursuant to the provisions of Article 8 hereof, a closing of the
transactions contemplated by this Agreement (the "CLOSING") shall be held on
November 15, 1997, or on such other date (the "CLOSING DATE") designated by LTC
upon five days notice to the Stockholders' Representative in the offices of
LTC's counsel, provided that the Closing shall not occur and this Agreement
shall automatically terminate, in any event after December 31, 1997 unless
agreed to in writing by the Parties hereto. At the Closing, and on the basis of
the representations, warranties, covenants and agreements made herein and in the
schedules hereto and in the certificates and other instruments delivered
pursuant hereto, and subject to the terms and conditions hereof:
(a) DELIVERIES AT THE CLOSING. At the Closing, (i) the Stockholders
shall deliver to LTC the various certificates and documents referred to in
Section 6 below, (ii) LTC shall deliver to the Stockholders the various
certificates and documents referred to in Section 7 below, (iii) each of the
Stockholders shall deliver to LTC stock certificates representing all of his or
her Company Shares, duly endorsed in blank or accompanied by a duly executed
assignment documents, sufficient in form and substance to convey to LTC good
title to the Company Shares, free and clear of all Liens, (iv) LTC shall deliver
to the Stockholders the initial cash consideration as set forth in paragraph
(b)(i) below, and (v) LTC shall deliver to the Escrow Agent the Escrow Funds as
set forth in paragraph (b)(ii) below.
(b) INITIAL CASH CONSIDERATION. On the Closing Date, LTC shall make
payment of the initial cash consideration of the Purchase Price as follows:
(i) To the Stockholders, by wire transfer of immediately
available funds, the sum of (A) $1,525,000 plus or minus (B) the
Purchase Price adjustments set forth in Section 1.4.
(ii) To United Title of Nevada, as escrow agent (the "ESCROW
AGENT"), pursuant to the terms of the Escrow Agreement, in the form
attached hereto as EXHIBIT 1.2(b)(ii) (the "ESCROW AGREEMENT"), the sum
of $100,000 (the "ESCROW FUNDS"). As provided in the Escrow Agreement,
the Escrow Funds shall be utilized to fund (A) all Purchase Price
adjustments described in Section 1.4 hereof and (B) any other amounts
owed by any Stockholder to LTC hereunder or under any other agreement
contemplated hereby, including, without limitation, pursuant to Article
9 hereof. In the event that the Escrow Funds are insufficient to fund
the amounts set forth in clauses (A) and (B) above, then the
Stockholders' Representative, on behalf of the Stockholders, shall
within 10 days of delivery of notice of such deficiency pay to LTC the
amount of such deficiency in immediately available funds.
1.4 PURCHASE PRICE ADJUSTMENTS.
(a) PRE-CLOSING ADJUSTMENT. AT least five days prior to the Closing
Date, the Stockholders' Representative shall prepare and deliver to LTC an
estimated calculation of the Company's Working Capital as set forth on SCHEDULE
1.4 as of October 31, 1997 (the "TARGET
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DATE"). If the estimated calculation of Working Capital shows a Working Capital
Shortfall as set forth on SCHEDULE 1.4, then the Purchase Price paid at Closing
shall be reduced by the aggregate amount of such Working Capital Shortfall.
(b) POST-CLOSING ADJUSTMENTS. As soon as practicable after the
Closing Date (but not more than 90 days thereafter), LTC, at its expense, shall
cause its accountants to prepare and deliver to the Stockholders' Representative
a calculation of the Working Capital as of the Target Date. The Stockholders and
LTC shall have the right to dispute the Working Capital calculation and make any
proposed adjustments thereto as provided in Section 1.5 hereto.
(i) If the calculation of Working Capital shows a Working
Capital Shortfall in excess of the estimated Working Capital Shortfall,
then the parties shall execute disbursement instructions to the Escrow
Agent directing it to distribute to LTC from the Escrow Funds the
amount of the excess Working Capital Shortfall.
(ii) If the calculation of Working Capital shows a Working
Capital Shortfall less than the estimated Working Capital Shortfall,
then LTC shall within 10 days of delivery of such notice pay to the
Stockholder the difference in immediately available funds.
(iii) If the calculation of Working Capital shows a Working
Capital Surplus as set forth on SCHEDULE 1.4, then LTC shall within 10
days of delivery of such notice pay to the Stockholders the amount of
the Working Capital Surplus plus the amount of any Working Capital
Shortfall deducted from the Purchase Price pursuant to Section 1.4(a).
1.5 DISPUTE RESOLUTION. If the Stockholders dispute the Working Capital
calculation or the contingent payment calculations, then LTC and the
Stockholders shall use reasonable efforts to resolve their dispute, but if a
final resolution thereof is not obtained within ten (10) days after the
Stockholders' Representative delivers to LTC a written notice of dispute, either
LTC or the Stockholders may promptly retain a nationally recognized "big six"
independent accounting firm acceptable to both the Stockholders and LTC (the
"INDEPENDENT ACCOUNTANT") to resolve any remaining disputes. If the Independent
Accountant is retained, then the Independent Accountant shall, within thirty
(30) days after receiving the positions of both the Stockholders and LTC and all
supplementary supporting documentation requested by the Independent Accountant,
render its decision, which decision shall be final and binding on, and
nonappealable by, the Stockholders and LTC. The fees and expenses of the
Independent Accountant shall be paid by the party whose estimate of the Working
Capital and/or contingent bonus is furthest from the Independent Accountant's
calculation; provided, however, that if both parties' respective estimates are
larger or smaller than the amount calculated by the Independent Accountant by
more than 75% of such amount, then each party shall pay 50% of the aggregate
fees and expenses of the Independent Accountant.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder hereby jointly and severally represents and warrants
to LTC as follows as of the date hereof and the Closing Date:
2.1 DUE ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada with
full corporate power and authority to carry on its business as it is now being
conducted, and to own, operate and lease its properties and assets. The Company
is duly qualified or licensed to transact business in good standing in Xxxxx
County, Nevada. Xxxxx County, Nevada is the only jurisdiction in which the
Company's conduct of its business or the ownership or lease of its properties
requires it to be so qualified or licensed. The Company has no subsidiaries.
2.2 DUE AUTHORIZATION. Each Stockholder has full power and authority to
enter into this Agreement and the agreements contemplated hereby and to
consummate the transactions contemplated hereby and thereby. This Agreement and
all other agreements contemplated hereby to be entered into by any Stockholder
each constitutes a legal, valid and binding obligation of such Stockholder,
enforceable in accordance with its terms.
2.3 CORPORATE RECORD BOOKS. The stock record books of the Company which
have been delivered to LTC for inspection prior to the date hereof are complete
and correct in all material respects. The authorized, issued and outstanding
capital stock of the Company and the holders thereof are as set forth in
SCHEDULE 2.3(a) hereto. There are no shares of capital stock of the Company held
in the treasury of the Company and no shares of capital stock of the Company are
currently reserved for issuance for any purpose or upon the occurrence of any
event or condition. The corporate minute books of the Company which have been
made available to the Purchasers for inspection are complete and correct in all
material respects. A true and complete list of the incumbent directors and
officers of the Company is set forth in SCHEDULE 2.3(b) hereto. The books and
records of the Company accurately reflect in all material respects the assets,
liabilities, business, financial condition and results of operations of the
Company, and have been maintained in accordance with normal business and
bookkeeping practices.
2.4 TITLE TO STOCK. All of the outstanding shares of the capital stock
of the Company are owned by the Stockholders, are duly authorized, validly
issued, fully paid and nonassessable, are free of all Liens and all agreements,
contracts, commitments, instruments, and all other binding arrangements or
understandings, whether written or oral ("CONTRACTS"), and have been issued in
compliance with all applicable securities laws, free and clear of any rescission
rights. There is no outstanding Contract with the Company or any other person to
vote, purchase, redeem or otherwise acquire any outstanding shares of the
capital stock of the Company, or securities or obligations of any kind
convertible into any shares of the capital stock of the Company. The Company has
not redeemed any securities in violation of any Contract or law or regulation
(including, without limitation, any applicable state or federal securities
laws). Upon payment of the Purchase Price to the Stockholders at the Closing,
the Company will convey good
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and marketable title to the Company Shares to LTC, free and clear of all Liens,
Contracts or other limitations whatsoever. The assignments, endorsements, stock
powers and other instruments of transfer delivered by the Stockholders to LTC at
the Closing will be sufficient to transfer the Stockholders' entire interest,
legal and beneficial, in the Company Shares to LTC. There are no existing
Contracts between any Stockholder, on the one hand, and any other person or
entity, on the other hand, regarding the Company Shares.
2.5 NO VIOLATION. The execution, delivery and performance by the
Stockholders of this Agreement, and all other agreements contemplated hereby,
and the fulfillment of and compliance with the respective terms hereof and
thereof by such Stockholders, do not and will not (a) conflict with or result in
a breach of the terms, conditions or provisions of, (b) constitute a default or
event of default under, (c) result in the creation of any lien, security
interest, encumbrance or charge upon the Company's assets pursuant to, (d) give
any third party the right to accelerate any obligations under, (e) result in a
violation of, or (f) require any authorization, consent, approval, exemption or
other action by, notice to, or filing with any third party or court or
governmental instrumentality pursuant to, the charter or bylaws of the Company,
or any applicable law, regulation, order, writ, statute, rule, injunction or
decree of any court or governmental instrumentality or any agreement or
instrument to which the Company or any of the Stockholders or any of their
properties are subject. Each Stockholder has complied with all applicable laws,
regulations and orders in connection with the execution, delivery and
performance of this Agreement and all other agreements and transactions
contemplated hereby.
2.6 CARRIER AGREEMENT. A true and complete copy of that certain Sales
Agent Agreement dated February 5 1988, by and between XxXxx Communications of
Nevada, Inc. (the "CARRIER") and the Company has been delivered to LTC and will
be attached to the Secretary's Certificate delivered at Closing pursuant to
SECTION 6.9 (the "CARRIER AGREEMENT").
2.7 PAGER AGREEMENTS. That certain agreement dated August 21, 1996, by
and between Paging Network of Las Vegas, Inc. and the Company and that certain
agreement by and between Citipage Plus (together with Paging Network of Las
Vegas, Inc., the "PAGER WHOLESALERS") and the Company, true and complete copies
of which have been delivered to LTC and will be attached to the Secretary's
Certificate delivered at Closing pursuant to SECTION 6.9. (the "PAGER
AGREEMENTS"), are valid and enforceable and are in full force and effect, and
there are no defaults by the Company or any subsidiary thereunder or, to the
knowledge of any Stockholder, by any other party thereto. No Stockholder is a
party to or bound by any other agreement, oral or written, relating to the Pager
Agreements or the subject matter thereof. The Pager Agreements contain the
entire agreement of the parties thereto with respect to the subject matter
thereof. The execution, delivery and performance by the Stockholders of this
Agreement and the agreements contemplated hereby, including the Paging
Wholesaler Consents (as defined in Section 6.6(a)(ii)), and the consummation of
the transactions contemplated hereby and thereby will not give any party a right
to terminate the Pager Agreements or give either Pager Wholesaler a right to any
increase of any amounts payable under either Pager Agreement as modified by the
respective Pager Wholesaler Consent. Following the Closing, the Company will be
entitled to all of the benefits of the Company under the Pager Agreements as
modified by the respective Pager
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Wholesaler Consents. This provision is not to be construed as a warranty by the
Stockholders of the actions of third parties after Closing.
2.8 CARRIER COMMISSION REPORTS AND PAGING REPORTS
(a) CARRIER COMMISSION REPORTS. True and complete copies of the
commission reports prepared by the Carrier for the 12 most recent monthly
periods have been delivered to LTC and will be attached to the Secretary's
Certificate delivered at Closing pursuant to SECTION 6.9 (the "CARRIER
COMMISSION REPORTS"). The Carrier Commission Reports set forth (i) the number of
activations of cellular telephone service that the Company has sold on behalf of
the Carrier pursuant to the Carrier Agreement and (ii) the amount of commission
paid to the Company for each such activation.
(b) PAGING REPORTS. True and complete copies of the paging reports
prepared by the Company for the 12 most recent monthly periods have been
delivered to LTC and will be attached to the Secretary's Certificate delivered
at Closing pursuant to SECTION 6.9 (the "PAGING REPORTS"). The Paging Reports
set forth (i) the number of the Company's paging customers at the time of
preparation of each such report, (ii) the amount of fees paid to the Company for
each such pager account during such period and (iii) the amount of fees paid to
the Paging Wholesalers for the airtime for such pager accounts during such
period.
2.90 FINANCIAL AND OPERATING INFORMATION. The Company has provided LTC
with true and complete copies of each of the following documents:
(a) LEASES. Each of the lease agreements (each individually, a
"LEASE" and collectively, the "LEASES") to which the Company is a party. Each
Lease is listed in SCHEDULE 1.1, and a true and complete copy of each has been
delivered to LTC and will be attached to the Secretary's Certificate delivered
at Closing pursuant to SECTION 6.9. The premises leased by the Company pursuant
to the Leases constitute all of the locations at which the Company conducts its
business.
(b) CUSTOMER ACTIVATION AGREEMENTS. Each customer activation
agreement (collectively, the "CUSTOMER ACTIVATION AGREEMENTS") between the
Company and each cellular customer of the Company, which Customer Activation
Agreements provide for, among other things, charge-backs to be paid to the
Company by each customer.
(c) CUSTOMER PAGER AGREEMENTS. Each customer pager agreement
(collectively, the "CUSTOMER PAGER AGREEMENTS") between the Company and each
paging customer of the Company. As of the date hereof and the Closing Date, the
Company has not less than 2,800 Customer Pager Agreements each representing a
current paging customer.
2.10 FINANCIAL STATEMENTS. The Stockholders have delivered to LTC the
financial statements of the Company for the fiscal years ended December 31, 1995
and December 31, 1996. As soon as they become available, the Company will
deliver to LTC the financial statements of the Company for the twelve months
ended July 31, 1997 and for the ten months
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ended October 31, 1997 (together with the two previous fiscal years,
collectively, the "FINANCIAL STATEMENTS"). Copies of the Financial Statements
will be attached to the Secretary's Certificate delivered at Closing pursuant to
SECTION 6.9. The individual balance sheet of the Company dated as of October 31,
1997, included in the Financial Statements is referred to herein as the "CURRENT
BALANCE SHEET." The Financial Statements fairly present the financial position
of the Company at each of the balance sheet dates and the results of operations
for the periods covered thereby, and have been prepared in accordance with
generally accepted accounting principles, as in existence at the date hereof
("GAAP") consistently applied throughout the periods indicated, except, in the
case of the Financial Statements for the ten-month period ended October 31,
1997, for normal year-end adjustments and the absence of footnotes. The books
and records of the Company fully and fairly reflect all of its transactions,
properties, assets and liabilities. Except as specified otherwise in such
Financial Statements or in the notes thereto, (i) there are no special or
non-recurring items of income or expense during the periods covered by the
Financial Statements, (ii) the balance sheets included in the Financial
Statements do not reflect any write-up or revaluation increasing the book value
of any assets, and (iii) the Financial Statements reflect all adjustments
necessary for a fair presentation of the financial information contained
therein.
2.11 LIABILITIES. Except as set forth in SCHEDULE 2.11 hereto, the
Company has no liabilities whether accrued, absolute, contingent or otherwise,
except (a) to the extent reflected on the Company's Current Balance Sheet or
disclosed in the notes thereto and not heretofore paid or discharged, and (b)
liabilities incurred in the ordinary course of business consistent with past
practice since the date of the Company's Current Balance Sheet (none of which
relates to breach of contract, breach of warranty, tort, infringement or
violation of law, or which arose out of any action, suit, claim, governmental
investigation or arbitration proceeding).
2.12 TITLE AND RELATED MATTERS.
(a) Except as set forth in SCHEDULE 2.12(a) hereto, the Company has
good and marketable title to all material real and personal property and other
assets reflected in the Financial Statements or acquired after the date of the
Current Balance Sheet, free and clear of all Liens. Except as set forth in
SCHEDULE 2.12(a) hereto, all properties used in the Company's business
operations as of the date of the Current Balance Sheet are reflected in the
Financial Statements and are reflected therein in accordance with and to the
extent required by GAAP, except as to the real property that the Company leases
as set forth on SCHEDULE 2.9. SCHEDULE 2.12(a) hereto sets forth a complete and
accurate list of all such leased assets which have annual rental payments in
excess of $5,000 (including the expiration date of such lease, the name of the
lessor, the annual rental payment and whether a consent is required from the
lessor to consummate the transactions contemplated hereby). Upon the
consummation of the transactions contemplated hereby, LTC shall have acquired
(i) all of the Company's business entities which conduct business in (or related
to) the wireless communication products and services business which own all of
the real, personal and intangible property used by the Company in the wireless
communication products and services business.
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(b) None of the assets belonging to the Company is subject to any
Contracts of sale or lease, except Contracts for the sale of inventory in the
ordinary and regular course of business.
(c) There has not been since the date of the Current Balance Sheet
and will not be prior to the Closing Date, any sale, lease, or any other
disposition or distribution by the Company of any of its assets or properties,
now or hereafter owned by it, except (i) transactions in the ordinary and
regular course of business or (ii) as otherwise consented to by LTC, including
the transfer of that certain real property designated on SCHEDULE 2.12 (the
"CONDOMINIUM"), which is owned by the Company on the date hereof and will be
transferred at or prior to Closing to Xxxxx Xxxxxx for cash consideration to the
Company in an aggregate amount not less than $70,000 (with any and all
applicable transfer taxes and fees (excluding the cost of one appraisal) paid by
Xxxxx Xxxxxx) (the "PRE CLOSING ASSET TRANSFER"). After the Closing, LTC will
own, or have the unrestricted right to use all properties and assets that are
currently used in connection with the Company's business. The properties used in
the Company's business are suitable for the purposes for which intended and in
good operating condition and repair consistent with normal industry standards,
except for ordinary wear and tear, and except for such assets which shall have
been taken out of service on a temporary basis for repairs or replacement
consistent with the Company's prior practices and normal industry standards.
2.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
Current Balance Sheet, (a) there has not been (i) any material adverse
change in the business, operations, properties, assets, condition (financial or
otherwise) or liabilities of the Company, in its employee, customer, supplier,
distributor or franchise relations or relations with the Carrier or the Paging
Wholesalers or in the prospects of the Company's business, or (ii) any
damage, destruction or loss (whether or not covered by insurance) materially and
adversely affecting the business, operations, properties, assets or condition
(financial or otherwise) of the Company, its employee, customer, supplier,
distributor or franchise relations or relations with the Carrier or the Paging
Wholesalers or the prospects of the Company's business; and (b) the Company
has not (i) sold, transferred, leased, pledged or mortgaged or agreed to sell,
transfer, lease, pledge, or mortgage any of its material assets, property or
rights (other than the Pre Closing Asset Transfer) or canceled, waived or
compromised or agreed to cancel, waive or compromise, any material debts, claims
or rights, (ii) made or permitted any material amendment or early termination
of any material contract, lease, agreement or license relating to the operation
of its business, (iii) made any significant change in any method of
accounting, or (iv) granted any general increase in the compensation of
officers or employees (including, without limitation, any such increase pursuant
to any bonus, pension, profit-sharing or other plan or commitment).
2.14 CONTRACTS. SCHEDULE 2.14 lists the material Contracts to which the
Company is a party. The Company has made available to LTC a correct and complete
copy of each Contract listed in SCHEDULE 2.14. With respect to each such
Contract: (A) the agreement is legal, valid, binding, enforceable and in full
force and effect; (B) neither the Company nor, to the knowledge of any
Stockholder, any other party is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default, or
permit termination, modification,
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or acceleration, under the agreement; and (C) neither the Company nor, to the
knowledge of any stockholder, any other party has repudiated any provision of
the Contract.
2.15 PATENTS, TRADEMARKS, ETC. SCHEDULE 2.15 hereto contains a list of
all of the material patents, trademarks, trade names, service marks and
copyrights, and applications therefor, which are owned by or licensed to the
Company, or in which the Company has any interest or which are presently being
used in connection with the business, products or processes of the Company's
business, and any pending or current registration of any of the foregoing is set
forth in SCHEDULE 2.15 hereto. Except as set forth on SCHEDULE 2.15 hereto, the
Company owns and has the sole and exclusive right to use all items set forth on
SCHEDULE 2.15 hereto, and such items are not subject to any licenses, liens,
mortgages, pledges, encumbrances, claims, restrictions, or charges of any kind,
including, without limitation, any rights retained by the Company, except as
would not reasonably be expected to have a material adverse effect in respect of
the Company's business, operations, properties, assets, conditions (financial or
otherwise), results, plans, strategies or prospects (a "MATERIAL ADVERSE
EFFECT"). The Company owns (free of any rights or claims of others), or is
licensed or otherwise has the unencumbered right to use, all material
technology, know-how, processes, methods and designs used in the conduct of the
Company's business as presently being conducted, except where the failure to own
or posses such licenses or rights would not reasonably be expected to have a
Material Adverse Effect.
2.16 LITIGATION. There are no actions, suits or proceedings pending or,
to the best of the knowledge of any Stockholder, threatened by or against the
Company or any Stockholder, at law or in equity or before or by any governmental
authority or instrumentality or before any arbitrator of any kind, (a) with
respect to this Agreement or any of the other agreements or transactions
contemplated hereby, or (b) with respect to the Company's business.
2.17 COMPLIANCE WITH LAW. The Company is and has been in compliance
with all applicable statutes, rules, regulations, ordinances, codes, orders,
licenses, franchises, permits, authorizations and concessions, as such apply to
the Company's business, including, without limitation, any applicable building,
zoning, antipollution, hazardous chemical, waste disposal, occupational safety,
health or other law, ordinance or regulation in respect of any of the, offices,
structures or operations of the Company's business, except where the failure
thereof would not reasonably be expected to have a Material Adverse Effect, and
neither the Company nor any Stockholder has received any notification alleging
any violation of any of the foregoing.
2.18 CONSENTS AND APPROVALS. Other than the Carrier Agreement, Pager
Agreements and the Leases, no notice to, consent, approval or authorization of,
or declaration, filing or registration with, any federal, state or local
governmental or regulatory authority, and no consent, approval or authorization
of or notice to any other person or entity, is required to be made or obtained
by or on behalf of any Selling Party in connection with the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby.
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2.19 BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement binding upon the Company or
any Stockholder.
2.20 LEASES. All amounts due and payable as of the date hereof under
each of the Leases by the Company, including, without limitation, all rental,
maintenance and marketing payments, have been paid, and all such amounts due and
payable as of the Closing Date will have been paid on or before the Closing
Date. Each of the Leases is valid and enforceable and is in full force and
effect, and there are no defaults, or events which constitute or would
constitute (with notice or lapse of time or both) defaults, by the Company or
any subsidiary under any of such Leases or, to the knowledge of any Stockholder,
by any other party thereto. The execution, delivery and performance by the
Stockholders of this Agreement and the agreements contemplated hereby and the
consummation of the transactions contemplated hereby and thereby will not result
in the termination of, or in any increase of any amounts payable under, any
Lease. Neither the Company nor any Stockholder has received any notice that the
landlord with respect to any Lease would refuse to renew such Lease upon
expiration of the period thereof upon substantially the same terms (except as
the Stockholders have advised LTC prior to the date hereof). Neither the Company
nor any Stockholder is party to or bound by any other agreement, oral or
written, relating to the Leases or the subject matter thereof. All Lessors under
each of the Leases have consented (where such consent is necessary) or prior to
the Closing will have consented (where such consent is necessary) to the
consummation of the transactions contemplated by this Agreement without
requiring material modification in the rights thereunder.
2.21 TAX MATTERS.
(a) The Company has filed all Tax Returns required to be filed and
has duly paid all relevant Taxes due or claimed to be due by all Taxing
Authorities. The Company has not requested any extension of time within which to
file or send any Tax Return. All Taxes applicable for all taxable years or
periods prior to the date hereof have been paid or fully reserved against on the
Financial Statements in accordance with GAAP. From the date hereof until the
Closing Date, the Company shall fully reserve on its financial statements all
amounts necessary for the payment of all Taxes that have accrued up to and
including the Closing Date. All Taxes which are required to be withheld or
collected by each of the Company have been duly withheld or collected and, to
the extent required, have been paid to the proper Taxing Authority or properly
segregated or deposited as required by applicable law. The Company has disclosed
on its Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of section
6662 of the Code. There are no Liens for Taxes upon any property or assets of
any of the Company, except for Liens for Taxes not yet due and payable. The
Company has not executed any waiver of the statute of limitations on the right
of the Internal Revenue Service or any other Taxing Authority to assess
additional Taxes or to contest the income or loss with respect to any Tax
Return. No claim has ever been made by a Taxing Authority in a jurisdiction
where the Company does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. The Company has not been a member of an
affiliated group filing consolidated or combined federal, state, local or
foreign income Tax Returns or has
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any liability for the Taxes of any other person or entity under Treasury
regulation section 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee or successor, by contract, or otherwise. The basis of any
depreciable assets, and the methods used in determining allowable depreciation
(including cost recovery), of the Company, are, to the best knowledge of the
Company and Stockholders, correct and in compliance with the Code. As used
herein, the term "TAX RETURNS", means federal, state, foreign and local tax
reports, returns, information returns and other documents, the term "TAXES"
means including without limitation income, gross receipts, net proceeds,
alternative or add-on minimum, ad valorem, value added, turnover, sales, use,
property, personal property (tangible and intangible), stamp, leasing, lease,
user, excise, duty, franchise, transfer, license, withholding, payroll,
employment, foreign, fuel, excess profits, occupational and interest
equalization, windfall profits, severance, and other charges (including interest
and penalties), and the term "TAXING AUTHORITIES" means Internal Revenue Service
and any other federal, state, or local authority which has the right to impose
Taxes on each of the Company or the Stockholders.
(b) No issues have been raised that are currently pending by any
Taxing Authority in connection with any Tax Returns. No material issues have
been raised in any examination by any Taxing Authority with respect to the
Company which, by application of similar principles, reasonably could be
expected to result in a proposed deficiency for any other period not so
examined. There are no unresolved issues or unpaid deficiencies relating to such
examinations. The items relating to the business, properties or operations of
the Company on the Tax Returns filed by the Company for all taxable years
(including the supporting schedules filed therewith), available copies of which
have been supplied (or will be promptly supplied upon request) to LTC, state
accurately, in all material respects the information requested with respect to
the Company and such information was derived from the Company's books and
records.
(c) The Company is not subject to any joint venture, partnership,
or other arrangement or Contract which is treated as a partnership for federal
income tax purposes. The Company is not party to any tax sharing agreement.
(d) The Company has not filed a consent under SECTION 341(f) of the
Code or comparable provisions of any state statutes.
(e) SCHEDULE 2.21(e) hereto lists all federal, state, local and
foreign income Tax Returns and all other Tax Returns for which the annual tax
liability is at least $5,000 for taxable periods ending on or after December 31,
1986 and indicates those Tax Returns that have been audited and those that are
the subject of audit.
(f) None of the assets of the Company constitutes tax-exempt bond
financed property or tax exempt use property within the meaning of SECTION 168
of the Code, and none of the assets of the Company are subject to a lease, safe
harbor lease, or other arrangement as a result of which the Company is not
treated as the owner for federal income tax purposes.
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(g) The Company has not made any payments, is obligated to make any
payments or is a party to any agreement that under certain circumstances could
obligate it to make any payments that will not be deductible under section 280G
of the Code.
(h) No power of attorney has been granted by the Company with
respect to any matter relating to Taxes which is currently in force.
2.22 DISCLOSURE. Neither this Agreement nor any of the exhibits,
attachments, written statements, documents, certificates or other items prepared
for or supplied to LTC by or on behalf of any Stockholder with respect to the
transactions contemplated hereby contains any untrue statement of a material
fact or omits a material fact necessary to make each statement contained herein
or therein not misleading. There is no fact which any Stockholder has not
disclosed to LTC in writing and of which any Stockholder or any of the Company's
officers, directors or executive employees is aware and which could reasonably
be anticipated to have a material adverse effect upon the execution, delivery or
performance of this Agreement or the agreements contemplated hereby or on the
consummation of the transactions contemplated hereby and thereby. This provision
is not to be construed as a warranty by the Stockholders of the actions of third
parties after Closing.
2.23 CELLULAR ACTIVATIONS. All activations (excluding deactivations
thereof in the ordinary course of business) of radiotelephone service pursuant
to the Customer Activation Agreements and all other activations of
radiotelephone service reported by the Company to the Carrier for payment
pursuant to the Carrier Agreement are good, collectible and legally binding. All
such activations are valid, genuine and subsisting, and arise out of bona fide
sales of radiotelephone service.
2.24 PAGERS. All pager fees and other amounts pursuant to the Customer
Pager Agreements (excluding deactivations thereof in the ordinary course of
business) are good, collectible and legally binding. All such pager fees other
amounts are valid, genuine and subsisting, and arise out of bona fide sales of
pager service.
ARTICLE 30
REPRESENTATIONS AND WARRANTIES OF LTC
-------------------------------------
LTC hereby represents and warrants to the Stockholder as follows as of
the Closing Date:
3.1 DUE ORGANIZATION. LTC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida with full
corporate power and authority to carry on its business as it is now being
conducted, and to own, operate and lease its properties and assets. LTC is duly
qualified or licensed to transact business in good standing in every
jurisdiction in which the conduct of its business or the ownership or lease of
its properties requires it to be so qualified or licensed.
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3.2 DUE AUTHORIZATION. LTC has full corporate power and authority to
enter into this Agreement and the agreements contemplated hereby and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and all other agreements and
transactions contemplated hereby have been duly authorized by the Board of
Directors of LTC and no other corporate proceedings on its part are necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement and all other agreements contemplated hereby to be entered into by LTC
each constitutes a legal, valid and binding obligation of LTC, enforceable
against LTC in accordance with its terms.
3.3 NO VIOLATION. The execution, delivery and performance by LTC of
this Agreement, and all other agreements contemplated hereby, and the
fulfillment of and compliance with the respective terms hereof and thereof by
LTC, do not and will not (a) conflict with or result in a breach of the terms,
conditions or provisions of, (b) constitute a default or event of default under,
(c) result in the creation of any lien, security interest, encumbrance or charge
upon LTC's capital stock or assets pursuant to, (d) give any third party the
right to accelerate any obligations under, (e) result in a violation of, or (f)
require any authorization, consent, approval, exemption or other action by,
notice to, or filing with any third party or court or governmental
instrumentality pursuant to, the charter or bylaws of LTC, or, to the best
knowledge of LTC, any applicable law, regulation, order, writ, statute, rule,
injunction or decree of any court or governmental instrumentality or any
agreement or instrument to which LTC or any of its properties are subject. LTC
has complied, in all material respects, with all applicable laws, regulations
and orders in connection with the execution, delivery and performance of this
Agreement and all other agreements and transactions contemplated hereby.
3.4 BROKERAGE. There are no brokerage commissions, finder's fees or
similar compensation arrangements in connection with the transactions
contemplated by this Agreement such as to give rise to any valid claim against
LTC.
ARTICLE 4
COVENANTS OF THE STOCKHOLDERS
-----------------------------
Until the Closing Date, except as otherwise consented to or approved by
LTC in writing, each Stockholder individually agrees that such Stockholder shall
act, or refrain from acting where required hereinafter, to comply (and shall
cause the Company to comply) with the following:
4.1 REGULAR COURSE OF BUSINESS. The Company shall operate its business
diligently and in good faith and in the ordinary course, consistent with past
management practices; shall maintain all of its material properties in customary
repair, order and condition, reasonable wear and tear excepted; shall maintain
(except for expiration due to lapse of time) all leases and contracts in effect
without change except as expressly provided herein; shall comply in all material
respects with the provisions of all governmental regulations and orders
applicable to it and the conduct of its business; shall not cancel, release,
waive or compromise any debt, claim or
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right in its favor having a value in excess of $5,000 other than in connection
with returns for credit or replacement in the ordinary course of business; shall
not alter the rate or basis of compensation of any of its officers, directors or
employees other than in the ordinary course of business; and shall maintain
insurance coverage up to the Closing Date with the coverage and in the amounts
consistent with past management practices.
4.2 FULL ACCESS AND DISCLOSURE. The Company shall afford to LTC and its
counsel, accountants, agents and other authorized representatives and to
financial institutions specified by LTC reasonable access during business hours
to each of the Company's stores and offices, properties, books and records in
order that LTC may have full opportunity to make such reasonable investigations
as it shall desire to make of the affairs of the Company; and Company shall
cause its officers, employees and auditors to furnish such additional financial
and operating data and other information as LTC shall from time to time
reasonably request including, without limitation, any internal control
recommendations made by its independent auditors in connection with any audit of
the Company.
4.3 BREACH OF AGREEMENT. Neither the Company nor any Stockholder shall
knowingly take any action which would constitute a breach of this Agreement.
4.4 FULFILLMENT OF CONDITIONS PRECEDENT. The Company and each
Stockholder shall use its, his or her reasonable commercial efforts to obtain at
its, his or her expense all such waivers, permits, consents, approvals or other
authorizations from third parties and governmental authorities as may be
required to consummate the transactions contemplated hereby, and to do all
things as may be necessary or desirable in connection with transactions
contemplated by this Agreement, including, without limitation, satisfy each of
the conditions precedent to LTC's obligation set forth in Article 6.
4.5 PRE CLOSING ACTIONS.
(a) The Company shall pay all rent and other amounts due and
payable with respect to each of its Leases which are due and payable on or prior
to the Closing Date.
(b) The Company shall not, effect any sale, lease, or any other
disposition or distribution of any of its assets or properties, now or hereafter
owned by it, except transactions in the ordinary and regular course of business
or as otherwise consented to by LTC.
(c) The Company shall pay all accounts payable, other current
liabilities, capitalized lease obligations.
(d) Prior to the Target Date, the Company shall repay all its
Indebtedness, including but not limited to, capitalized leases, accrued but
unpaid interest and notes owed to any Stockholder by the Company; provided,
however, that the mortgage loan with respect to the Condominium may be repaid at
Closing from the proceeds of the Pre Closing Asset Transfer. In addition, prior
to the Target Date, the Company shall pay all promissory notes owed to
Stockholders, all accrued but unpaid dividends, all annual or other bonuses, all
legal or other
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professional fees which are not current, all incurred but unpaid income taxes
and all trade payables which are not current. As used herein, the term
"INDEBTEDNESS" with respect to any person means any obligation of such person
for borrowed money, but in any event shall include (a) any obligation or
liabilities incurred for all or any part of the purchase price of property or
other assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included in current
liabilities and incurred in respect of property purchased in the ordinary course
of business, (whether or not such person has assumed or become liable for the
payment of such obligation) (whether accrued, absolute, contingent, unliquidated
or otherwise, known or unknown, whether due or to become due), (b) the face
amount of all letters of credit issued for the account of such person and all
drafts drawn thereunder, (c) obligations incurred for all or any part of the
purchase price of property or other assets or for the cost of property or other
assets constructed or of improvements thereto, other than accounts payable
included in current liabilities and incurred in respect of property purchase in
the ordinary course of business (whether or not such person has assumed or
become liable for the payment of such obligation) secured by Liens, (d)
capitalized lease obligations, and (e) any guarantees of such person.
(e) The Company shall not amend or otherwise change its Articles of
Incorporation, Bylaws or equivalent organizational documents.
(f) The Company shall not issue, sell, pledge, dispose of,
encumber, or, authorize the issuance, sale, pledge, disposition, grant or
encumbrance of any shares of its capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest.
(g) The Company shall not declare, set aside, make or pay any
dividend or other distribution, payable in cash, shares, property or otherwise,
to any Stockholder or any other person with respect to any of its capital stock
or pay any bonus to any Stockholder.
(h) The Company shall not reclassify, combine, split, subdivide or
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock.
(i) The Company shall not (i) acquire (including, without
limitation, for cash or shares of stock, by merger, consolidation or acquisition
of stock or assets) any interest in any corporation, partnership or other
business organization or division thereof or any assets, or make any investment
either by purchase of shares or securities, contributions of capital or property
transfer, or, except in the ordinary course of business, consistent with past
practice, purchase any property or assets of any other person, (ii) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse or otherwise as an accommodation become responsible for,
the obligations of any person, or make any loans or advances, or (iii) modify,
terminate, or enter into any Contract other than as provided herein or in the
ordinary course of business, consistent with past practice.
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(j) The Company shall not take any action with respect to
accounting policies or procedures other than in the ordinary course of business
and in a manner consistent with past practices.
(k) Except as provided herein, the Company shall not pay, discharge
or satisfy any existing claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and consistent with
past practice of due and payable liabilities reflected or reserved against in
its financial statements, as appropriate, or liabilities incurred after the date
thereof in the ordinary course of business and consistent with past practice.
(l) The Company shall not acquire or agree to acquire any capital
assets, excluding inventory.
(m) Except as provided herein, the Company shall not enter into any
transaction with any Stockholder or affiliate thereof.
(n) The Company shall not agree, in writing or otherwise, to take
or authorize any of the foregoing actions or any action which would make any
representation or warranty in ARTICLE 2 untrue or incorrect in any respect.
ARTICLE 50
OTHER AGREEMENTS
----------------
5.1 EMPLOYMENT MATTERS. Upon Closing, LTC shall have the right, but not
the duty, to offer employment to any or all of the employees currently or
formerly employed by the Company in the conduct of the Company's business. Upon
Closing, LTC shall have no obligation in respect of, and assume no
responsibility for, accrued employment benefits of any kind claimed to belong or
belonging to such employees (should there be any), including but not limited to
pension or retirement benefits, stock, profit sharing, bonus or other incentive
compensation plans, vacation pay, severance pay and benefits, payroll
withholding, medical or dental plans or insurance plans.
5.2 NON-COMPETITION
(a) GENERAL. Each Stockholder agrees that for the period commencing
on the Closing Date and ending on the second anniversary of the Closing Date, he
will not serve as or be a consultant to or employee, officer, agent, director or
owner of more than five percent (5%) of another corporation, partnership or
other entity which competes with LTC within Xxxxx County, Nevada in LTC's
Business. The term "LTC'S BUSINESS" shall mean the business of selling cellular
or wireless communications services or products, including without limitation,
paging, PCS, ESMR and any other form of personal communications services in
competition with LTC. Each Stockholder further agrees that for the period
commencing on the Closing Date
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and ending on the fifth anniversary of the Closing Date, such Stockholder (i)
will not (x) solicit for employment, (y) endeavor in any way to entice away from
employment with the Company or LTC or their affiliates or (z) employ or contract
with any employee of the Company or LTC or any of their affiliates who is an
officer, a manager of any department, salesperson or any sub-agent,
sub-contractor or other independent contractor of the Company or LTC or their
affiliates , including, without limitation, any resellers of cellular or
wireless communications services and (ii) will not solicit any person,
corporation, partnership or other entity that is a customer of the Company
immediately prior to the Closing for the purpose of selling cellular or wireless
communications services or products. The Stockholders acknowledge and agree that
the covenants provided for in this Section 5.2(a) are reasonable and necessary
in terms of time, area and line of business to protect LTC's legitimate business
interests as a buyer of the Company Shares in protecting its trade secrets. The
Stockholders further acknowledge and agree that such covenants are reasonable
and necessary in terms of time, area and line of business to protect LTC's other
legitimate business interests, which include its interests in protecting its (x)
valuable confidential business information, (y) substantial relationships with
specific customers throughout the United States of America and (z) customer
goodwill associated with its ongoing business by way of its marketing throughout
the United States of America using the trademark, "Let's Talk Cellular &
Wireless." The Stockholders hereby expressly authorize the enforcement of the
covenants provided for in this Section 5.2(a) by (w) the Company, (x) LTC, (y)
the Company's or any of LTC's permitted assigns and (z) any successors to the
business of the Company or LTC. To the extent that the covenant provided for in
this Section 5.2(a) may later be deemed by a court to be too broad to be
enforced with respect to its duration or with respect to any particular activity
or geographic area, the court making such determination shall have the power to
reduce the duration or scope of the provision, and to add or delete specific
words or phrases to or from the provision. The provision as modified shall then
be enforced.
(b) NON-DISCLOSURE. Each Stockholder hereby agrees that he or she
shall, and shall use his or her best efforts to cause his or her affiliates and
their respective agents, accountants, legal counsel and other representatives
and advisers (and shall use its best efforts to cause their and the Company's
employees), to hold in strict confidence all, and not divulge or disclose any,
information of any kind concerning the transaction contemplated by this
Agreement, the Company, LTC or their businesses; provided, however, that the
foregoing obligation of confidence shall not apply to (i) information that is or
becomes generally available to the public other than as a result of a disclosure
by any of the Stockholders or any of their respective affiliates, employees,
agents, accountants, legal counsel or other representatives or advisors
(collectively, "RELATED PERSONS"), (ii) information that is or becomes available
to the Stockholders or any of their Related Persons after the Closing on a
non-confidential basis prior to its disclosure by any of the Stockholders or any
of their Related Persons and (iii) information that is required to be disclosed
by any of the Stockholders or any of their Related Persons as a result of any
applicable law, rule or regulation of any federal, state or local governmental
authority; and provided, further, that the Stockholders shall promptly notify
LTC of any disclosure pursuant to clause (iii) above.
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(c) INJUNCTION. The parties hereto hereby acknowledge that a breach
or violation by any of the Stockholders or their Related Persons of any or all
of the covenants and agreements contained in this Section 5.2 may cause
irreparable harm and damage to LTC in a monetary amount which may be virtually
impossible to ascertain. As a result, each of the Stockholders acknowledges and
agrees that LTC shall be entitled to an injunction from any court of competent
jurisdiction without having to post a bond and restraining any breach or
violation of any or all of the covenants and agreements contained in this
Section 2.2 by the Stockholders and/or their Related Persons, either directly or
indirectly, and that such right to injunction shall be cumulative and in
addition to whatever other rights or remedies that LTC may possess hereunder, at
law or in equity. Nothing contained in this Section 5.2 shall be construed to
prevent LTC from seeking and recovering from the Stockholders damages sustained
by it as a result of any breach or violation by any of them of any of the
covenants or agreements contained in this Section 5.2.
5.3 CONFIDENTIAL DOCUMENTS. No Stockholder shall retain any originals
or copies of any of the following, whether written, printed or another form of
hard copy, or in electronic or magnetic form or contained on a computer diskette
or other similar media: (i) any of the Company's customer lists; and (ii) any
product pricing materials relating to the Company's business.
5.4 CLAIMS OF STOCKHOLDERS. Each Stockholder hereby releases, waives
and discharges any and all claims, rights and actions that he or she has against
the Company.
5.5 AGREEMENT TO DEFEND. In the event any action, suit, proceeding or
investigation of the nature specified in Section 6.3 hereof is commenced,
whether before or after the Closing Date, all the parties hereto agree to
cooperate and use commercially reasonable efforts to defend against and respond
thereto.
5.6 FURTHER ASSURANCES. Subject to the terms and conditions of this
Agreement, the parties hereto shall use their reasonable commercial efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective as promptly as possible the transactions
contemplated by this Agreement, and to cooperate with each other in connection
with the foregoing, including without limitation using all reasonable commercial
efforts (a) to obtain all necessary waivers, consents, and approvals from other
parties to loan agreements, leases, mortgages and other contracts, (b) to obtain
all necessary permits, consents, approvals and authorizations as are required to
be obtained under any federal, state or foreign governmental regulation, (c) to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby, and (d) to effect all necessary registrations and filings and
submissions of information requested by governmental authorities. The parties
hereto further covenant and agree that they shall use their respective
reasonable commercial efforts to prevent, with respect to a threatened or
pending preliminary or permanent injunction or other regulation or order the
entry, enactment or promulgation thereof, as the case may be.
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5.7 NO SOLICITATION OR NEGOTIATION. Unless and until this Agreement is
terminated, the Stockholders shall not, and the Stockholders shall use their
best efforts to cause the Company and its directors, officers, employees,
representatives, agents, advisors, accountants and attorneys not to, initiate or
solicit, directly or indirectly, any inquiries or the making of any proposal
with respect to, or engage in negotiations concerning, or provide any
confidential information or data to any person with respect to, or have any
discussions with any person relating to, any acquisition, business combination
or purchase of all or any significant asset of, or any equity interest in,
directly or indirectly, the Company, or otherwise facilitate any effort or
attempt to do or seek any of the foregoing, and shall immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing.
5.8 NO TERMINATION OF STOCKHOLDERS' OBLIGATIONS BY SUBSEQUENT
INCAPACITY, DISSOLUTION, ETC. Each Stockholder specifically agrees that its or
his obligations hereunder, including, without limitation, obligations pursuant
to Article 9 and Section 5.2 shall not be terminated by operation of law or by
the death or incapacity of any Stockholder.
5.9 DELIVERIES AFTER CLOSING. At LTC's request and without further
consideration from LTC, the Stockholders shall execute and deliver such other
instruments of conveyance and transfer and take such other action as LTC
reasonably may require to convey, transfer to and vest in LTC and to put LTC in
possession of any rights or property to be sold, conveyed, transferred and
delivered hereunder.
5.10 SCHEDULES. The parties hereto acknowledge and agree that Schedules
2.9, 2.11, 2.12, 2.14, 2.15 and 2.21(e) have not been attached to this Agreement
as of the date hereof and consequently the Stockholders' representations and
warranties shall be deemed to include such schedules when and as delivered. The
Stockholders shall cause the Company to deliver to LTC all schedules to this
Agreement not later than 21 days after the date hereof, but in no event later
than ten days prior to the Closing Date. The required delivery date of the
schedules is hereinafter referred to as the "SCHEDULE DELIVERY DATE." The
Stockholders shall each execute a certificate as of the Schedule Delivery Date
affirming that the representations and warranties as modified by the schedules
are true and correct as of such date. LTC shall have seven days to accept or
reject such schedules in writing. If LTC rejects any of these schedules, this
Agreement shall be terminated in accordance with Section 8.1 without any further
liability to the Stockholders.
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ARTICLE 6
CONDITIONS TO THE OBLIGATIONS OF LTC
Each and every obligation of LTC under this Agreement shall be subject
to the satisfaction, on or before the Closing Date, of each of the following
conditions unless waived in writing by LTC:
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations
and warranties of each of the Stockholders contained in this Agreement and all
information contained in any exhibit or schedule hereto delivered by, or on
behalf of, each of the Stockholders, to LTC, shall be true and correct when made
and on the Closing Date as though then made, except as expressly provided
herein. Each of the Stockholders shall have performed and complied with all
agreements, covenants and conditions required by this Agreement to be performed
and complied with by them prior to the Closing Date.
6.2 NO MATERIAL ADVERSE CHANGE. There shall have been no development or
change which might reasonably be expected to have a Material Adverse Effect.
6.3 NO PROCEEDING OR LITIGATION. No preliminary or permanent injunction
or other order, decree or ruling issued by a court of competent jurisdiction or
by any governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority shall be in effect, which would prevent the consummation
of the transactions contemplated hereby.
6.4 CONDITION OF ASSETS. None of the Company's assets and properties
shall have been damaged or destroyed prior to the Closing Date by fire or other
casualty, whether or not fully covered by insurance, in an aggregate amount
exceeding $5,000.
6.5 PHYSICAL INVENTORY; DUE DILIGENCE. LTC shall have conducted a
physical inventory of the Company's inventory and the results of such physical
inventory shall show no material adverse changes in the inventory from the
Current Balance Sheet (taking into account sales of inventory to the Company's
customers). LTC shall have completed its due diligence investigation, and the
results thereof shall be satisfactory to LTC, in its reasonable discretion, and
such investigation shall not have revealed that any of the representations of
the Stockholders set forth herein are untrue or incorrect in any respect or
otherwise unsatisfactory to LTC.
6.6 CONSENT; NEW CARRIER AGREEMENT; ESTOPPEL LETTERS.
(a) LTC shall have received the consent of each Paging Wholesaler
to the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, in form and substance acceptable to LTC (the
"PAGING WHOLESALER CONSENTS").
(b) LTC and/or the Company shall have entered into a new carrier
agreement with the Carrier replacing the Carrier Agreement, in form and
substance reasonably acceptable to LTC (the "NEW CARRIER AGREEMENT"). LTC shall
negotiate in good faith to enter into such New Carrier Agreement.
(c) The Company shall have delivered to LTC an estoppel letter from
each Lessor of real property pursuant to each of the Leases, substantially in
the form attached hereto as EXHIBIT 6.6(c) (each individually, an "ESTOPPEL
LETTER" and collectively, the "ESTOPPEL LETTERS").
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26
6.7 CROSS RECEIPT. The Stockholders and LTC shall have executed and
delivered a cross-receipt acknowledging receipt of the Company Shares and the
Purchase Price in the form attached hereto as EXHIBIT 6.7 (the "CROSS-RECEIPT").
6.8 PAYOFF LETTERS. The Company shall have delivered to LTC "pay-off"
letters evidencing the repayment of all Indebtedness to be repaid pursuant to
Sections 4.5(d) and 6.12 and the termination, at or prior to Closing, of any and
all liens that encumber any of the real or personal properties of the Company
(including, without limitation, a satisfaction of mortgage with respect to the
mortgage on the Condominium and a pay-off letter with respect to the mortgage
loan secured thereby), substantially in the form attached hereto as EXHIBIT 6.8
(each individually, a "PAY-OFF LETTER" and collectively, the "PAY-OFF LETTERS").
6.9 SECRETARY'S CERTIFICATE. The Company shall have executed and
delivered to LTC a Secretary's Certificate certifying copies of (i) the Seller's
Articles of Incorporation, (ii) the Seller's Bylaws, (iii) the resolutions of
the Seller's shareholders and Board of Directors, (iv) the jurisdictions in
which the Seller is qualified and licensed to do business, (v) the Carrier
Agreement, (vi) the Pager Agreements, (viii) the Carrier Commission Reports,
(viii) the Paging Reports, (ix) the Leases, (x) the Financial Statements and
(xi) the incumbency of the persons executing this Agreement and the
certificates, agreements and other documents delivered in connection herewith.
6.10 TERMINATION OF CONTRACTS. The Company shall have caused the
Contracts indicated on SCHEDULE 2.14 hereto to terminate at Closing without any
further liability to the Company.
6.11 RESIGNATIONS. The Company shall have caused the directors and
officers previously identified by LTC to have resigned from the Board of
Directors and such offices, respectively.
6.12 INDEBTEDNESS AND OTHER OBLIGATIONS. Prior to the Target Date, the
Company shall have repaid all of its Indebtedness, other liabilities, taxes and
other amounts required to be repaid prior to the Target Date pursuant to Section
4.5(d), and at or prior to Closing the mortgage loan with respect to the
Condominium shall have been repaid.
6.13 CONSULTING AGREEMENTS. The Stockholders shall have executed and
delivered the consulting agreements substantially in the forms included in
EXHIBIT 6.13 (collectively, the "CONSULTING AGREEMENTS").
6.14 PRE-CLOSING ASSET TRANSFER. The Pre-Closing Asset Transfer shall
have been consummated in accordance with the provisions of Section 2.12 pursuant
to instruments of transfer (including, without limitation, a xxxx of sale with
respect to each of the Pre Closing Asset Transfer and a warranty deed with
respect to the Pre Closing Asset Transfer) in form reasonably satisfactory to
LTC and the Stockholders' Representative shall have provided to LTC evidence of
payment of any and all transfer taxes and fees applicable to the Pre-Closing
Asset Transfer.
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ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF THE STOCKHOLDERS
-------------------------------------------------
Each and every obligation of the Stockholders under this Agreement
shall be subject to the satisfaction, on or before the Closing Date, of each of
the following conditions unless waived in writing by the Stockholders'
Representative:
7.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations
and warranties of LTC contained in this Agreement and all information contained
in any exhibit or schedule hereto delivered by, or on behalf of, LTC, to the
Selling Parties, shall be true and correct when made and on the Closing Date as
though then made, except as expressly provided herein. LTC shall have performed
and complied with all agreements, covenants and conditions required by this
Agreement to be performed and complied with by them prior to the Closing Date.
7.2 NO PROCEEDING OR LITIGATION. No preliminary or permanent injunction
or other order, decree or ruling issued by a court of competent jurisdiction or
by any governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority shall be in effect, which would prevent the consummation
of the transactions contemplated hereby.
7.3 PERFORMANCE. LTC shall have made payment of the initial cash
portion of the Purchase Price, by wire transfer in immediately available funds,
as set forth in Section 1.3(b).
7.4 NEW CARRIER AGREEMENT. LTC and/or the Company shall have entered
into the New Carrier Agreement, in form and substance acceptable to LTC.
ARTICLE 8
TERMINATION AND ABANDONMENT
---------------------------
8.1 METHODS OF TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time:
(a) by mutual consent of LTC and the Stockholders;
(b) by LTC or the Stockholders if this Agreement is not
consummated on or before December 31, 1997; provided that if any party has
breached or defaulted with respect to its respective obligations under this
Agreement on or before such date, such party may not terminate this Agreement
pursuant to this Section 8.1(b), and each other party to this Agreement shall at
its option enforce its rights against such breaching or defaulting party and
seek any remedies against such party, in either case as provided hereunder and
by applicable law;
(c) by LTC if as of the Closing Date any of the conditions
specified in Article 6 hereof have not been satisfied in any material respect or
if the Stockholders are otherwise in default in any material respect under this
Agreement;
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(d) by the Stockholders if on the Closing Date any of the
conditions specified in Article 7 hereof have not been satisfied in any material
respect or if LTC is otherwise in default in any material respect under this
Agreement; or
(e) upon the rejection by LTC of any schedule delivered by the
Stockholders pursuant to Section 5.10.
8.2 PROCEDURE UPON TERMINATION. In the event of termination and
abandonment pursuant to Section 8.1 hereof, and subject to the proviso contained
in Section 8.1(b) this Agreement shall terminate and shall be abandoned, without
further action by any of the parties hereto. If this Agreement is terminated as
provided herein:
(a) each party shall redeliver all documents and other material of
any other party relating to the transactions contemplated hereby, whether
obtained before or after the execution hereof, to the party furnishing the same;
and
(b) No non-breaching party hereto shall have any liability or
further obligation to any other party to this Agreement.
ARTICLE 9
INDEMNIFICATION
---------------
9.1 INDEMNIFICATION BY THE STOCKHOLDERS. Each Stockholder agrees,
severally and not jointly (in proportion to each Stockholder's Pro Rata Share),
to indemnify and hold harmless LTC and its affiliates at all times against and
in respect of all losses, liabilities, costs and expenses (including reasonable
attorneys' fees) which arise out of or are based on (a) any taxes (federal,
state or local) payable by the Company or arising from the transactions
contemplated hereby, and (b) any breach of the representations, warranties,
covenants or agreements of the Stockholders set forth in this Agreement. LTC
shall promptly notify each of the Stockholders in writing of all matters which
may give rise to the right to indemnification hereunder. The Stockholders shall
not, without the prior written consent of LTC, settle or compromise or consent
to the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not LTC is an actual or potential party to such claim,
action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of LTC from all liability arising out of such
claim, action, suit or proceeding, it being understood that if the Stockholders
do not receive notice of any matter known to LTC and as to which LTC is entitled
to indemnification hereunder in time to contest the determination of any such
liability which is susceptible to being successfully contested, the Stockholders
shall not be obligated to indemnify LTC with respect thereto. LTC and the
Stockholders shall keep each other informed of all settlement negotiations with
third parties and of the progress of any litigation with third parties. LTC and
the Stockholders shall permit each other reasonable access to books and records
and otherwise cooperate with all reasonable requests of each other in connection
with any matter or claim for
23
29
indemnification by a third party. With respect to the representations and
warranties set forth in Sections 2.12, 2.17, 2.18, 2.20, 2.21, 2.23 and 2.24,
the Stockholders shall not be required to indemnify LTC until the indemnifiable
damages, in the aggregate, exceed $16,000 (the "Hurdle Rate"), at which point
the Stockholders shall be responsible for all indemnifiable damages that may
arise, irrespective of the Hurdle Rate; provided. that indemnifiable damages
shall accumulate until such time as they exceed the Hurdle Rate, whereupon LTC
shall be entitled to seek indemnification for the full amount of such damages;
further provided, that the Hurdle Rate shall not apply to the transfer taxes and
fees applicable to the Pre Closing Asset Transfer, which shall be paid by Xxxxx
Xxxxxx at or prior to Closing and which obligation shall be indemnified by Xxxxx
Xxxxxx.
9.2 INDEMNIFICATION BY LTC. LTC agrees to indemnify and hold harmless
the Stockholders at all times against and in respect of all losses, liabilities,
costs and expenses (including reasonable attorneys' fees) which are caused by
any breach of the representations, warranties, covenants or agreements of LTC
set forth in this Agreement. The Stockholders shall promptly notify LTC in
writing of all matters which may give rise to the right to indemnification
hereunder, it being understood that if LTC does not receive notice of any matter
known to the Stockholders and as to which the Stockholders are entitled to
indemnification hereunder in time to contest the determination of any such
liability which is susceptible to being successfully contested, LTC shall not be
obligated to indemnify the Stockholders with respect thereto. LTC shall have the
right with the consent of the Stockholders, which shall not be unreasonably
withheld, to settle all indemnifiable matters related to claims by third parties
which are susceptible to being settled, and to defend (without the consent of
the Stockholders) through counsel of its own choosing, at its own expense, any
action which may be brought by a third party in connection therewith; provided,
however, that the Stockholders shall have the right to have their counsel
participate fully in such defense at its own expense. LTC and the Stockholders
shall keep each other informed of all settlement negotiations with third parties
and of the progress of any litigation with third parties. LTC and the
Stockholders shall permit each other reasonable access to books and records and
otherwise cooperate with all reasonable requests of each other in connection
with any matter or claim for indemnification by a third party.
9.3 SET OFF. The parties hereto hereby agree that LTC is hereby
authorized to set off all amounts at any time owed by any Stockholder to LTC
under Section 9.1 against the obligations of LTC to any Stockholder under this
Agreement or under any other agreement contemplated hereby, including, without
limitation, against any Purchase Price adjustment under Section 1.4 owed by LTC
to the Stockholders and contingent payments under the Consulting Agreements owed
by LTC or the Company to the Stockholders.
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ARTICLE 10
MISCELLANEOUS
-------------
10.1 BINDING EFFECT AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, provided, that neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned or transferred, by
operation of law or otherwise, by any Stockholder without the prior written
consent of LTC.
10.2 SURVIVAL. Any provision of this Agreement which contemplates the
performance or existence of obligations after the Closing Date, and any and all
representations and warranties set forth in this Agreement, shall not be deemed
to be merged into or waived by the execution and delivery of the instruments
executed at the Closing, but shall expressly survive Closing and shall be
binding upon the party or parties obligated thereby in accordance with the terms
of this Agreement, subject to any limitations expressly set forth in this
Agreement.
10.3 SEVERABILITY. Each of the provisions contained in this Agreement
shall be severable, and the unenforceability of one shall not affect the
enforceability of any others or of the remainder of this Agreement.
10.4 ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties hereto with respect to the transactions covered hereby, superseding
all negotiations, prior discussions and preliminary agreements made prior to the
date hereof and is not intended to confer upon any other person any rights or
remedies hereunder.
10.5 MODIFICATION. This Agreement may not be amended, supplemented or
otherwise modified except by an instrument in writing signed by all of the
parties hereto.
10.6 WAIVER The failure of any party to enforce any condition or part
of this Agreement at any time shall not be construed as a waiver of that
condition or part, nor shall such party forfeit any rights to future enforcement
thereof.
10.7 GOVERNING LAW; JURISDICTION. This Agreement shall be construed and
enforced in accordance with and governed by the internal laws of the State of
Nevada. The parties agree that any suit, action or proceeding arising out of, or
with respect to, this Agreement or any judgment entered by any court in respect
thereof may be brought in the courts of the State of Nevada or the federal
district courts located within the State of Nevada, and the parties hereto
hereby accept the nonexclusive jurisdiction of those courts for the purpose of
any suit, action or proceeding.
10.8 HEADINGS. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part hereof.
10.9 COUNTERPARTS. More than one counterpart of this Agreement may be
executed by the parties hereto, and each fully executed counterpart shall be
deemed an original.
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10.10 REMEDIES. The rights and remedies provided by this Agreement are
cumulative, and the use of any one right or remedy by any party hereto shall not
preclude or constitute a waiver of its right to use any or all other remedies.
Such rights and remedies are given in addition to any other rights and remedies
a party may have by law, statute or otherwise.
10.11 ATTORNEYS' FEES. In the event any suit or other legal proceeding
is brought for the enforcement of any of the provisions of this Agreement, the
parties hereto agree that the prevailing party or parties shall be entitled to
recover from the other party or parties upon final judgment on the merits
reasonable attorneys' fees, including attorneys' fees for any appeal, and the
costs incurred in bringing such suit or proceeding.
10.12 FURTHER DOCUMENTS. Each party hereto shall, at the request of any
other party, execute and deliver to such other party all such further
instruments, assignments, assurances and other documents as such other party may
reasonably request in connection with the carrying out of this Agreement.
10.13 NOTICES. All communications, notices and consents provided for
herein shall be in writing and be given in person or by means of telex, telecopy
or other wire transmission (with confirmation of receipt in a manner typical
with respect to communications of that type) or by mail, and shall become
effective (i) on delivery if given in person, (ii) on the date of transmission
and confirmation of receipt if sent by telex, telecopy or other wire
transmission, or (iii) four business days after being deposited in the mails,
with proper postage for first-class registered or certified air mail, prepaid.
Notices shall be addressed as follows:
If to LTC, to: Let's Talk Cellular & Wireless, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xx. Xxxx Xxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxxxxx Traurig Xxxxxxx
Xxxxxx Xxxxx & Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
26
32
with a copy to: H.I.G. Capital Management, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
If to any Stockholder, to: Cellular USA, Inc.
0000 X. Xxxxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to: Xxxx & Kelesis
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxx Xxxx, Esq.
Fax: (000) 000-0000
provided, however, that if either party shall have designated a different
address by notice to the other as provided herein, then to the last address so
designated.
10.14 EXPENSES. The Stockholders shall bear their own expenses and the
Company's expenses, including without limitation, legal fees and expenses, with
respect to this Agreement and the transactions contemplated hereby; provided
that up to $1,000 of such expenses may be paid by the Company. LTC shall bear
its own expenses, including without limitation, legal fees and expenses, with
respect to this Agreement and the transactions contemplated hereby.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/ Xxxxx Xxxxxxxxx
---------------------------------------------
Name: Xxxxx Xxxxxxxxx
---------------------------------------
Title: President
---------------------------------------
STOCKHOLDERS
/s/ Xxxxx X. Xxxxxx
------------------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxx Xxxxxxx
------------------------------------------------
Xxxx Xxxxxxx
/s/ Xxxxxx Xxxxxx
------------------------------------------------
Xxxxxx Xxxxxx
STOCKHOLDERS' REPRESENTATIVE
/s/ Xxxxx X. Xxxxxx
------------------------------------------------
Xxxxx X. Xxxxxx, as Stockholders' Representative
28
34
SCHEDULE 1.4
------------
CALCULATION OF PURCHASE PRICE ADJUSTMENT
1. Definition of Working Capital
The term "Working Capital" shall mean the (i) Company's current assets,
including cash (other than cash received in consideration for the Pre Closing
Asset Transfer) and marketable securities, LESS (ii) the Company's current
liabilities. All depreciation and amortization shall accrue at historical rates.
Reserves shall continue to accrue at historic rates. In the event that any
Indebtedness, other liabilities, taxes or other amounts required to be repaid
prior to the Target Date pursuant to Sections 4.5(d) and 6.12 shall not have
been so repaid by the Target Date, then, for purposes of calculating Working
Capital as of the Target Date, the Company's current liabilities shall be
increased by all such unpaid amounts.
2. Definitions of Working Capital Shortfall and Working Capital Surplus
The term "Working Capital Shortfall" shall mean the amount by which the
estimated calculation of Working Capital pursuant to SECTION 1.4(a) is less than
the Target Working Capital.
The term "Working Capital Surplus" shall mean the amount by which the
estimated calculation of Working Capital pursuant to SECTION 1.4(a) exceeds than
the Target Working Capital.
3. Target Working Capital Calculation Procedures
The term "Target Working Capital" means the average monthly Working Capital
of the Company for the 12 months ended July 31, 1997, calculated as of the last
day of each such month, which is $300,000.
35
SCHEDULE 2.3(a)
---------------
CAPITALIZATION
COMMON STOCK
------------
Xxxxx Xxxxxx 1,450 shares of common stock - 58%
Xxxx Xxxxxxx 950 shares of common stock - 38%
Xxxxxx Xxxxxx 100 shares of common stock - 4%
Total 2,500 shares of common stock outstanding
36
SCHEDULE 2.3(b)
---------------
OFFICERS AND DIRECTORS
OFFICERS
--------
Chief Executive Officer Xxxxx Xxxxxx
President Xxxxxx Xxxxxx
Secretary Xxxxx Xxxxxx
Treasurer Xxxxx Xxxxxx
DIRECTOR
--------
Xxxxx Xxxxxx
37
SCHEDULE 2.9
------------
REAL PROPERTY LEASES
1. To be delivered by the Company to LTC pursuant to Section 5.10.
38
SCHEDULE 2.11
-------------
LIABILITIES
1. To be delivered by the Company to LTC pursuant to Section 5.10.
39
SCHEDULE 2.12
-------------
TITLE MATTERS
1. To be delivered by the Company to LTC pursuant to Section 5.10.
40
SCHEDULE 2.14
-------------
CONTRACTS
1. To be delivered by the Company to LTC pursuant to Section 5.10.
41
SCHEDULE 2.15
-------------
PATENTS, TRADEMARKS, ETC.
1. To be delivered by the Company to LTC pursuant to Section 5.10.
42
SCHEDULE 2.21(e)
----------------
TAX MATTERS
1. To be delivered by the Company to LTC pursuant to Section 5.10.
43
EXHIBIT 1.3(b)(ii)
------------------
FORM OF ESCROW AGREEMENT
44
ESCROW AGREEMENT
This Escrow Agreement, dated as of ___________, 1997 is made and
entered into by and between Let's Talk Cellular & Wireless, Inc., a Florida
corporation ("LTC"), Xxxxx X. Xxxxxx, Xxxx Xxxxxxx and Xxxxxx Xxxxxx (the
"STOCKHOLDERS" and each individually, a "STOCKHOLDER"), Xxxxx X. Xxxxxx, as the
Stockholders' Representative (the "STOCKHOLDERS' REPRESENTATIVE"), and United
Title of Nevada (the "ESCROW AGENT").
RECITALS
LTC and the Stockholders have entered into that certain Stock Purchase
Agreement (the "PURCHASE AGREEMENT"), dated as of October __, 1997, which
relates to the acquisition of substantially all of the capital stock of Cellular
USA, Inc., a Nevada corporation (the "COMPANY"). Capitalized terms used herein
without definition shall have the meanings as set forth in the Purchase
Agreement.
The Purchase Agreement requires that certain funds be held in escrow
and the parties desire that United Title of Nevada serve as the Escrow Agent to
hold such funds upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the consummation of the
transactions contemplated by the Purchase Agreement and the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. ESTABLISHMENT OF ESCROW FUND. At the Closing of the Purchase
Agreement, LTC shall deposit with the Escrow Agent by certified check, payable
to the Escrow Agent, or by wire transfer of immediately available funds the sum
of $100,000 (the "ESCROW AMOUNT" or the "ESCROW FUNDS"), which the Escrow Agent
shall deposit in an account entitled ________________________________ (the
"ESCROW ACCOUNT").
2. PURPOSE OF THE ESCROW FUNDS. The Escrow Account has been
established to hold the Escrow Amount, which amount represents a portion of the
Purchase Price delivered in connection with the Purchase Agreement, to the
extent necessary, to serve as security for and satisfy adjustments made to the
Purchase Price in favor of LTC pursuant to ARTICLE 1 of the Purchase Agreement,
and as security for and to fund any other amounts owed by any Stockholder to LTC
thereunder or under any other agreement contemplated thereby, including, without
limitation, pursuant to ARTICLE 9 of the Purchase Agreement and the Consulting
Agreements. Notwithstanding anything contained herein or in the Purchase
Agreement, if the Escrow Funds are insufficient to satisfy the aforementioned
obligations, the Stockholders shall not be relieved of their liabilities under
the Purchase Agreement.
3. INVESTMENT OF ESCROW FUNDS. The cash portion of the Escrow Amount
shall, at the direction of the Stockholders' Representative, only be invested
and reinvested in (a) obligations issued or guaranteed by the United States
government (or agencies thereof) maturing
45
in 30 days or less and (b) certificates of deposit or repurchase agreements
maturing in 30 days or less of domestic United States banks having capital and
surplus of $250,000,000 or more and having a rating of A or better from Xxxxx'x
Investors Service, Inc. and A or better from Standard & Poor's Corporation.
Income from all investments and reinvestments of Escrow Funds shall be paid upon
termination of this Agreement to the parties receiving the distribution of the
Escrow Funds in proportion to the amount of distributions thereof including any
distributions which were made prior to such termination. For federal income tax
purposes, income from all investments and reinvestments of Escrow Funds shall be
recognized by the parties in proportion to the amount of the distribution of
such income.
4. DISBURSEMENTS. Whenever LTC shall be entitled to receive payment
pursuant to the Purchase Agreement, including, without limitation, ARTICLE 1 and
ARTICLE 9 thereof, LTC and the Stockholders' Representative shall deliver
Disbursement Instructions (as hereinafter defined) to the Escrow Agent within
five (5) business days of LTC's and the Stockholders' agreement as to the amount
of such payment. The "DISBURSEMENT INSTRUCTIONS" shall (i) be in writing and
signed by LTC and the Stockholders' Representative, (ii) state the principal
amount owed to LTC as determined in accordance with the Purchase Agreement, and
(iii) shall provide wire transfer instructions to the Escrow Agent as to where
and to whom such amount is to be sent. Upon receipt of the Disbursement
Instructions, the Escrow Agent shall within five (5) business days transfer
funds from the Escrow Funds as directed in the Disbursement Instructions.
5. APPOINTMENT OF ESCROW AGENT. LTC and the Stockholders hereby
appoint United Title of Nevada as the escrow agent (the "Escrow Agent") under
this Agreement. The Escrow Agent is hereby authorized to take any and all
actions indicated in this Agreement to be taken by the Escrow Agent and all such
further actions consistent herewith as it shall deem necessary or desirable to
implement the provisions hereof. The Escrow Agent represents and warrants to LTC
and the Stockholders that it has all legal power and authority to act in the
manner contemplated by this Agreement. The Stockholders and LTC agree that the
authorization and designation of the Escrow Agent under this SECTION 5 shall be
irrevocable and shall be binding upon their successors and assigns.
6. RESPONSIBILITIES OF ESCROW AGENT. The acceptance by the Escrow
Agent of its duties under this Agreement is subject to the following terms and
conditions, which the parties to this Agreement hereby agree shall govern and
control with respect to the rights, duties, liabilities and immunities of the
Escrow Agent:
(a) The responsibilities of the Escrow Agent hereunder shall
be to act as agent and bailee for LTC and the Stockholders, to hold the Escrow
Funds in safekeeping, to invest the funds pursuant to the instructions of the
Stockholders' Representative within the guidelines noted herein and to make
disposition of the Escrow Funds as provided herein;
(b) The Escrow Agent acts herein as agent and bailee for LTC
and the Stockholders only, and does not undertake to construe the meaning of any
contract, agreement or other instrument, or to determine any of the matters
covered by the same. It is expressly understood and agreed that the Escrow Agent
does not assume any of the obligations or duties
-2-
46
which LTC or the Stockholders may have under the Purchase Agreement, this Escrow
Agreement or any other agreement, except to hold and dispose of the Escrow Funds
as provided for herein;
(c) The Escrow Agent shall be protected in acting upon any
written notice, request, waiver, consent, receipt or other paper or document
furnished to it, not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth and accuracy of any
information contained therein, which it in good faith believes to be genuine and
which is signed or presented to it by a proper person, or upon evidence deemed
by it in good faith to be sufficient; and
(d) So long as LTC or the Stockholders have any interest in
the Escrow Funds, (i) the Escrow Agent agrees that it will not assert any right
which it may have to setoff, recoupment, reduction or other right with respect
to the Escrow Funds now or hereafter acquired, arising from any relationship,
debt, obligations, liability, credit accommodation or otherwise that may be owed
the Escrow Agent by any of the parties hereto or any party having an interest in
the Escrow Funds, (ii) the Escrow Agent shall provide the parties hereto with
such receipts, account statements, affidavits as they may from time to time
request, and (iii) the Escrow Agent shall not move the Escrow Funds from the
Escrow Account without the written consent of all the parties hereto in
accordance with the terms of this Agreement.
7. INDEMNIFICATION OF ESCROW AGENT. Unless the Escrow Agent
discharges any of its duties under this Escrow Agreement in violation of
specific terms of this Agreement, in a negligent manner or is guilty of willful
misconduct with regard to its duties under this Escrow Agreement, the Escrow
Agent shall not be liable to any person for any action taken or loss suffered by
such person, nor for any mistake of fact, error of judgment, or for any actions
or omissions of any kind. Except with respect to the foregoing liability
exceptions, LTC and the Stockholders, jointly and severally, shall indemnify the
Escrow Agent and hold it harmless from any and all claims, liabilities, losses,
actions, suits or proceedings, or other expenses, fees, or charges of any
character or nature, public or private, which it may incur or with which it may
be threatened by reason of its acting as Escrow Agent under this Escrow
Agreement, and shall indemnify the Escrow Agent against any and all expenses,
including reasonable attorneys' fees and the cost of defending any action, suit
or proceeding or resisting any claim in such capacity, both at the trial and
appellate levels. The provisions of this paragraph shall survive the termination
of this Escrow Agreement.
8. DISCRETION OF ESCROW AGENT TO FILE AN INTERPLEADER ACTION. In the
event of a dispute as to the proper disposition of Escrow Funds, the Escrow
Agent may hold Escrow Funds until receipt of evidence satisfactory to it that
the dispute has been resolved, and until receipt of notice directing the proper
disposition of the Escrow Funds in accordance with the terms of this Agreement.
If the parties, including the Escrow Agent, are in disagreement about the
interpretation of this Escrow Agreement, or about the rights and obligations or
the propriety of any action contemplated by the Escrow Agent under this Escrow
Agreement, the Escrow Agent may, but shall not be required to, file an action in
interpleader to resolve any disagreement in a court of competent jurisdiction in
the State of Nevada. The Escrow Agent shall be indemnified
-3-
47
by LTC and the Stockholders, jointly and severally, for all costs and reasonable
attorneys' fees (both trial and appellate) incurred in its capacity as Escrow
Agent in connection with any such interpleader action and shall be fully
protected in suspending all or part of its activities under this Escrow
Agreement until a judgment in the interpleader action is entered and becomes
final.
9. CONSULTATION WITH COUNSEL. The Escrow Agent may consult with
counsel of its own choice and shall have full and complete authorization and
protection to act in accordance with the opinion of such counsel as to any
matters in connection with this Escrow Agreement to the extent that any act or
failure to act undertaken on the advice of counsel is undertaken in good faith
and is not contrary to the specific provisions of this Escrow Agreement. The
Escrow Agent shall be indemnified by the parties hereto for all costs and
reasonable attorneys' fees incurred in connection with such consultation. The
Escrow Agent shall not be liable for any action taken in reliance upon the
advice of counsel and in good faith.
10. RESIGNATION. The Escrow Agent may resign as escrow agent by
giving LTC and the Stockholders' Representative sixty (60) days prior written
notice of the effective date of such resignation. In the case of the Escrow
Agent's resignation, its only duty shall be to hold and dispose of the remaining
portion of the Escrow Amount in accordance with the original provisions of this
Escrow Agreement until a successor escrow agent shall be appointed by LTC and
the Stockholders' Representative and a written notice of the name and address of
such successor escrow agent shall be given to the Escrow Agent by LTC and the
Stockholders' Representative, whereupon the Escrow Agent's only duty shall be to
turn over, in accordance with the written instructions of LTC and the
Stockholders' Representative, to the successor escrow agent the remaining
portion of the Escrow Amount. In the event that a successor escrow agent shall
not have been appointed and the Escrow Agent shall not have turned over to the
successor escrow agent the remaining portion of the Escrow Amount within a
reasonable time after the Escrow Agent's delivery of written notice of
resignation pursuant to this SECTION 10, the Escrow Agent may deposit the
remaining portion of the Escrow Amount with the Clerk of the United States
District Court for the __________ District of _________ or with the clerk or
registry of any other court of competent jurisdiction, at which time the Escrow
Agent's duties hereunder shall terminate.
[11. ESCROW AGENT FEES. The Escrow Agent shall be entitled to the fees
set forth in SCHEDULE A hereto.]
12. AMENDMENT. This Agreement may be amended at any time only by and
upon written agreement of the Escrow Agent, the Stockholders' Representative and
LTC.
13. TERMINATION AND DISBURSEMENT OF ESCROW FUNDS. This Agreement may be
terminated at any time by and upon receipt by the Escrow Agent of written notice
of termination signed by both LTC and the Stockholders' Representative. Unless
so terminated, this Agreement shall terminate at 5:00 p.m. after the later of
(i) twelve (12) months after the Closing Date, and (ii) all expenses required to
be paid to the Escrow Agent out of the Escrow Funds, if any, have been paid;
PROVIDED, that such termination date shall be extended if on such termination
date
-4-
48
there is pending any claim by LTC for payment out of the Escrow Funds until such
matter is resolved and payment, if any, is made to LTC from the Escrow Funds.
14. MISCELLANEOUS.
(a) NOTICES. All notices, objections and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered (return receipt requested) or mailed by
certified mail (return receipt requested) or by Federal Express or another
nationally recognized courier service as follows:
If to LTC, to: Let's Talk Cellular & Wireless, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xx. Xxxx Xxxxxx and Xx. Xxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxxxxx Traurig Xxxxxxx
Xxxxxx Xxxxx & Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
with a copy to: H.I.G. Capital Management, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
If to any Stockholder, to: Cellular USA, Inc.
0000 X. Xxxxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Fax:(000) 000-0000
with a copy to: Xxxx & Kelesis
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxx Xxxx, Esq.
Fax: (000) 000-0000
or at such other place as any party hereto shall furnish to each other party
hereto in writing.
-5-
49
(b) BINDING EFFECT ASSIGNMENT; THIRD PARTY BENEFICIARIES.
Neither party may assign, its rights and obligations hereunder without the
consent of the other parties. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors and assigns. This Agreement is not
intended, and shall not create, any third party beneficiaries or rights in any
third parties.
(c) GOVERNING LAW. This Escrow Agreement shall be construed in
accordance with and governed by the laws of the State of Nevada without
application to the principles of conflicts of laws and shall be binding upon the
parties hereto and their respective successors and assigns.
(d) EFFECT ON PURCHASE AGREEMENT. The provisions of this
Agreement are not intended to alter, modify, negate or replace any provisions of
the Purchase Agreement that may be in conflict with the provisions hereof. In
the event of any conflict or inconsistency between the terms hereof and the
Purchase Agreement, the Purchase Agreement shall control.
(e) COUNTERPARTS. 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. It shall not be necessary
for every party to sign each counterpart but only that each party shall sign at
least one such counterpart.
* * *
-6-
50
IN WITNESS WHEREOF, the parties hereto have made and entered into this
Escrow Agreement the day and year first above written.
UNITED TITLE OF NEVADA
By:
--------------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
LET'S TALK CELLULAR & WIRELESS, INC.
By:
--------------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
STOCKHOLDERS
-----------------------------------------------
Xxxxx X. Xxxxxx
-----------------------------------------------
Xxxx Xxxxxxx
-----------------------------------------------
Xxxxxx Xxxxxx
STOCKHOLDERS' REPRESENTATIVE
------------------------------------------------
Xxxxx X. Xxxxxx, as Stockholders' Representative
-7-
51
SCHEDULE A
ESCROW AGENCY FEE SCHEDULE
Initial Acceptance Fee...................................................................... $_____
For review of the documents and set up of the Escrow
Account, payable upon execution of the Agreement.
Annual Administration Fee................................................................... $_____
For administration of the Escrow Account, payable in advance
upon execution of the Agreement and on each anniversary date
thereafter as long as the Agreement remains in effect.
ACTIVITY FEES
(To the Extent Applicable)
For each wire transfer made................................................................. $_____
For processing checks returned as uncollectible............................................. $_____
For each investment transaction (purchase/sale/collection).................................. $_____
Incidental or Extraordinary Services:
Charges for services of this nature will be based on an
analysis of the work to be provided.
Out-of-Pocket Expense:
The above fees do not include out-of-pocket expenses that include, but
are not limited to, postage, stationery, fees and expenses of counsel,
telephone, messenger, overtime, insurance, etc.
52
EXHIBIT 6.6(c)
--------------
FORM OF ESTOPPEL LETTER
53
ESTOPPEL LETTER
This Estoppel Letter (this "AGREEMENT") dated as of _____________,
199_, by and between ___________________________, whose address is
_____________________________ ("LANDLORD"), __________________________, a
___________ corporation ("TENANT").
WHEREAS, the Tenant has by a written lease dated ____________________,
19__ (as amended from time to time hereinafter called the "LEASE") leased from
the Landlord all or part of certain real estate and improvements thereon located
on the property more particularly described in EXHIBIT A hereto (the
"PREMISES");
WHEREAS, Let's Talk Cellular & Wireless, Inc., a Florida corporation
("LTC") intends to acquire all of the capital stock of the Tenant (the
"ACQUISITION") and desires to have the Lease assigned to it prior to the
consummation of the Acquisition;
WHEREAS, LTC and the Tenant desire to obtain the consent of the
Landlord to facilitate the consummation of the Acquisition.
NOW, THEREFORE, in consideration of the premises hereof and mutual
promises and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. CONSENT TO ACQUISITION. The Landlord hereby acknowledges and agrees
that LTC may acquire all of the outstanding capital stock of the Tenant and such
Acquisition does not constitute a breach of, or default under, or modify the
terms of, the Lease and, to the extent the Lease contains any provision to the
contrary, such provisions are hereby waived with respect to the Acquisition
2. ACKNOWLEDGMENT OF SECURITY INTEREST. The Landlord acknowledges that
LTC and/or Tenant has or will execute and deliver a security agreement (the
"SECURITY AGREEMENT") in favor of their lenders on the Lease and (a) all
property, including, without limitation, trade fixtures, equipment and inventory
located on or used in connection with the Premises by the Tenant, and (b)
operating licenses and permits now or at any time hereafter relating to the use
of the Premises (all such property being collectively referred to as the
"Collateral") and the Landlord agrees that the execution, delivery and
performance of the Security Agreement by LTC and its lenders do not constitute a
breach of, or default under, or modify the terms of, the Lease.
3. NO DEFAULTS. The Landlord acknowledges and agrees that there are no
existing defaults under the Lease on the part of the Landlord or the Tenant, and
the Tenant has performed all covenants required of the Tenant under the terms of
the Lease prior to the date hereof.
4. RENT. The Landlord acknowledges and agrees that the Tenant has paid
all rent through the last day of the whole calendar month ending prior to the
date hereof.
54
5. NOTICES. Any notice(s) required or desired to be given hereunder (a)
to the Landlord shall be in writing directed to ___________________, Attention:
_____________________________, and (b) to LTC shall be directed to Let's Talk
Cellular & Wireless, Inc., 000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000,
Attention: Xxxxxxx Xxxxxxxxx. All notices hereunder shall be sent by prepaid
certified or registered mail, return receipt requested, or delivered to a
regularly scheduled overnight delivery carrier with delivery fees either prepaid
or an arrangement, satisfactory with such carrier, made for the payment of such
fees.
6. AMENDMENTS; NOTICE OF ASSIGNMENT OF INTERESTS. The agreements
contained herein may not be modified or terminated orally and shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors or assigns. The Lenders shall promptly notify the Landlord, in the
event that the Lenders shall assign their right, title and interest in or under
the Security Agreement to any third person. The Landlord shall promptly notify
the Lenders in the event that the Landlord shall assign or encumber its interest
in the Premises or under the Lease.
7. TENANT'S OBLIGATIONS. THIS AGREEMENT SHALL NOT IMPAIR OR OTHERWISE
AFFECT TENANT'S OBLIGATIONS TO PAY RENT AND ANY OTHER SUMS PAYABLE BY TENANT OR
TO OTHERWISE PERFORM ITS OBLIGATIONS TO THE LANDLORD PURSUANT TO THE TERMS OF
THE LEASE.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
[LANDLORD]
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
[TENANT]
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
2
55
STATE OF _________________ )
) SS
COUNTY OF ________________ )
On this ____ day of __________________, 199_, before me, the
undersigned, a Notary Public in and for the __________________________,
personally appeared _________________ _________________________, to me
personally known, who, being by me duly sworn, did say that he is the
_____________________________ of said corporation executing the within and
foregoing instrument; that (no seal has been procured by the said) (the seal
affixed thereto is the seal of said) corporation; that said instrument was
signed (and sealed) on behalf of said corporation by authority of its Board of
Directors; and that the said ________________ _______________________________ as
such officer acknowledged the execution of said instrument to be the voluntary
act and deed of said corporation, by it and by him voluntarily executed.
------------------------------------
Notary Public in and for the
------------------------------------
3
56
EXHIBIT 6.7
-----------
FORM OF CROSS RECEIPT
57
CROSS-RECEIPT
-------------
LET'S TALK CELLULAR & WIRELESS, INC. ("LTC") acknowledges receipt from
CELLULAR USA, INC., a Nevada corporation (the "COMPANY"), pursuant to the
provision of the Stock Purchase Agreement, dated as of October __, 1997 (the
"STOCK PURCHASE AGREEMENT"), among LTC and the Stockholders named therein, of
certificates representing an aggregate of ________ shares of common stock, $____
par value, of the Company (the "STOCK").
Dated: _________, 1997
LET'S TALK CELLULAR & WIRELESS, INC.
By:
---------------------------------
Name:
---------------------------
Title:
---------------------------
The Stockholders named below hereby acknowledges receipt from LTC,
pursuant to the provisions of the Stock Purchase Agreement, of $_____________
(the "PURCHASE PRICE"), as set forth on EXHIBIT I hereto, in consideration of
the delivery of the Stock.
Dated: __________, 1997
-----------------------------------
Xxxxx X. Xxxxxx
-----------------------------------
Xxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxx
58
EXHIBIT 6.8
-----------
FORM OF PAY-OFF LETTER
59
[Letterhead of Creditor]
______ ___, 1997
Let's Talk Cellular & Wireless, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
PAY-OFF LETTER
--------------
Ladies and Gentlemen:
The undersigned, ___________________________ ("Lender"), in connection
with that certain Credit Agreement dated as of _____________, as amended from
time to time (the "Credit Agreement"), by and between Lender and Cellular USA,
Inc. (the "Company"), and related agreements, including, without limitation,
[list any other related agreements, including security agreements or mortgages,
if any], has been advised by the Company that Let's Talk Cellular & Wireless,
Inc. ("LTC") will acquire all of the issued and outstanding capital stock of the
Company (the "Acquisition"). It is the understanding of Lender that a portion of
the proceeds of said Acquisition will be used to repay the total indebtedness of
the Company to Lender.
Lender agrees to provide to the Company, by facsimile, prior to 5:00
p.m. (Eastern Time) on the business day immediately preceding the date of the
closing of the Acquisition, the total amount due to Lender under the Credit
Agreement, including, without limitation, principal, accrued interest, fees and
expenses.
In consideration of the payment in full of the Company's indebtedness
to Lender under the Credit Agreement, Lender hereby (i) acknowledges and agrees
that payment of the above amount will constitute satisfaction in full of the
Company's indebtedness and obligations to Lender under the Credit Agreement and
the related agreements referred to above and a full release of all liens and
security interests with respect thereto, (ii) represents that it has no other
credit arrangements with, loans outstanding to, guarantee by, or interests or
liens against the Company or any of the Company's property arising, (iii)
concurrently with such payment and delivery, authorizes the filing and/or
recordation of the UCC-3 termination statements and releases attached hereto,
and (iv) agrees that it will deliver to LTC all promissory notes evidencing the
Company's indebtedness to Lender and all other UCC-3 termination statements,
releases, or such other agreements as LTC may reasonably request in connection
with the Lender's above described release of the security interests and liens.
Very truly yours,
By:
-----------------------------------------
Title:
--------------------------------------
60
NOTICE OF REPAYMENT OF EXISTING DEBT
AND RELEASE OF SECURITY INTEREST
1. _________________________ ("______") hereby acknowledges the receipt
of a wire transfer in immediately available funds in the amount of
$_____________ from Cellular USA, Inc., a Nevada corporation (the "Company"),
representing payment in full of all outstanding principal of, premium, if any
and accrued interest on, and all other obligations, now due and owing, of the
Company under the Credit Agreement dated ________________ between the Company
and ____, as amended (the "_______ Credit Agreement").
2. ______ hereby terminates and releases the liens on and security
interests in any and all collateral, consisting of certain of its assets,
granted by the Company to secure its obligations under the ______ Credit
Agreement, including all liens and security interests granted by the Company
pursuant to [list security agreements or mortgages, if any], and ______ hereby
acknowledges that it neither has, nor shall, as amended assert, any further
security interest or other interest in, or lien on, any assets of the Company
pursuant to the ______ Credit Agreement or the documents related thereto.
Dated: _______ __, 1997
-----------------------------------------
By:
--------------------------------------
Name:
--------------------------------
Title:
--------------------------------
61
EXHIBIT 6.12
------------
FORMS OF CONSULTING AGREEMENTS
62
CONSULTING AGREEMENT
CONSULTING AGREEMENT (this "Agreement") dated as of ________, 1997,
between Cellular USA, Inc., a Nevada corporation (the "CORPORATION"), and Xxxxx
X. Xxxxxx (the "CONSULTANT").
WHEREAS, the Consultant is willing to make its expertise and experience
available to the Corporation upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto do hereby agree as follows:
1. TERM. For the period commencing 10 days after the Closing Date of
the Stock Purchase Agreement and ending on the date all payments have been made
by the Corporation pursuant to Section 3 (the "TERM"), the Consultant shall
provide advisory services to the Corporation as provided in Section 2. The term
"STOCK PURCHASE AGREEMENT" means that certain stock purchase agreement dated as
of October ___, 1997 among the Consultant, LTC and the Stockholders named
therein.
2. SERVICES.
(a) Subject to the restrictions set forth in paragraph (b) below,
during the Term the Consultant shall provide to the Corporation advisory
services for the purpose of facilitating an orderly transition of the ownership
of the Corporation to Let's Talk Cellular & Wireless, Inc. ("LTC"). Until the
earlier of January 15, 1998 and the expiration of the first 60 days of the Term,
the Consultant shall provide its services hereunder on an exclusive basis
relating to budgeting, developing projections, administrative issues, financial
reporting and other projects as requested by the Corporation during the
Corporation's normal business for not less than 20 hours per week, except as
consented to by the Corporation, but in no event shall the Consultant be
required to provide his services for more than 22 hours per week. For the
remainder of the Term, the Consultant, may provide its services hereunder from
its own place of business during the Consultant's normal business hours
according to a schedule acceptable to the Consultant and by way of, among other
means, telephone consultation or written correspondence and otherwise in the
manner acceptable to the Consultant.
(b) The Consultant agrees that for the period commencing on the
Closing Date and ending on the second anniversary of the Closing Date, it will
not serve as or be a consultant to or owner of more than five percent (5%) of
another corporation, partnership or other entity which competes with the
Corporation in Xxxxx County, Nevada in the Corporation's Business. The term
"Corporation's Business" shall mean the business of selling cellular or wireless
communications services or products, including, without limitation, paging, PCS,
ESMR and any other form of personal communications services in competition with
the Corporation. The Consultant further agrees that for the period commencing on
the Closing Date and ending on the third anniversary of the Closing Date, it (i)
will not (x) solicit for employment, (y) endeavor in any way to entice away from
employment with the Corporation, LTC or its affiliates or
63
(z) employ or contract with any employee of the Corporation, LTC or any of its
affiliates who is an officer, a manager of any department, salesperson or any
sub-agent, sub-contractor or other independent contractor, including, without
limitation, any resellers of cellular or wireless communications services and
(ii) will not solicit any person, corporation, partnership or other entity that
is a customer of the Corporation for the purpose of selling cellular or wireless
communications services or products. The Consultant acknowledges and agrees that
the covenants provided for in this Section 2(b) are reasonable and necessary in
terms of time, area and line of business to protect the Corporation's legitimate
business interests as a buyer of all of the outstanding capital stock of the
Corporation in protecting its trade secrets. The Consultant further acknowledges
and agrees that such covenants are reasonable and necessary in terms of time,
area and line of business to protect the Corporation's other legitimate business
interests, which include its interests in protecting its (x) valuable
confidential business information, (y) substantial relationships with specific
customers throughout the United States of America and (z) customer goodwill
associated with its ongoing business by way of its marketing throughout the
United States of America using the trademark, "Let's Talk Cellular & Wireless."
The Consultant hereby expressly authorizes the enforcement of the covenants
provided for in this Section 2(b) by (w) the Corporation, (x) any LTC Party, (y)
any of the Corporation's or LTC Party's permitted assigns and (z) any successors
to the business of the Corporation or any LTC Party. To the extent that the
covenant provided for in this Section 2(b) may later be deemed by a court to be
too broad to be enforced with respect to its duration or with respect to any
particular activity or geographic area, the court making such determination
shall have the power to reduce the duration or scope of the provision, and to
add or delete specific words or phrases to or from the provision. The provision
as modified shall then be enforced.
(c) The parties hereto hereby acknowledge that a breach or
violation by the Consultant of any or all of the covenants and agreements
contained in paragraph (b) above may cause irreparable harm and damage to the
Corporation in a monetary amount which may be virtually impossible to ascertain.
As a result, the Consultant acknowledges and agrees that the Corporation shall
be entitled to an injunction from any court of competent jurisdiction without
having to post a bond and restraining any breach or violation of any or all of
the covenants and agreements contained in paragraph (b) above by the Consultant,
either directly or indirectly, and that such right to injunction shall be
cumulative and in addition to whatever other rights or remedies that the
Corporation may possess hereunder, at law or in equity. Nothing contained in
this Section 2 shall be construed to prevent the Corporation from seeking and
recovering from the Consultant damages sustained by it as a result of any breach
or violation by it of any of the covenants or agreements contained in this
Section 2.
3. CONTINGENT PAYMENT. In consideration of its agreement to act as a
Consultant pursuant to the terms of this Agreement, the Corporation hereby
agrees to pay the Consultant a contingent payment in the aggregate amount of 58%
of $175,000, paid in four semiannual installments beginning with the six-month
period ending July 31, 1998, if the Gross Profit of the Acquired Stores exceeds
the Target Gross Profit as set forth on SCHEDULE A hereto. Payment shall be made
to the Consultant within 45 days after the end of each six-month period. The
contingent payments provided for herein shall be subject to Section 9.3 of the
Stock Purchase Agreement. The term "ACQUIRED STORES" means the stores acquired
by LTC pursuant to the Stock Purchase Agreement.
-2-
64
4. EXPENSES; DEMO LINE. The Consultant shall be reimbursed by the
Corporation for any and all out-of-pocket expenses incurred by him in connection
with any services he provides to the Corporation hereunder, such expenses not to
exceed $1,000 in the aggregate, including telephone, gas and all other
appropriate expenses. The Consultant shall be entitled to use one demonstration
cellular telephone line provided by the Corporation free of charge during the
period commencing on the Closing Date and ending on the second anniversary of
the Closing Date; provided, however, that after January 15, 1998, the Consultant
shall pay all roaming and long-distance charges for such line.
5. CONFIDENTIALITY. All information, knowledge and data relating to or
concerned with the operations, business and affairs of either the Consultant or
the Corporation, as the case may be, which are exchanged by the parties hereto
in connection with the performance by the Consultant of its duties hereunder
(including the existence of this Agreement) shall be the property of the
Corporation and be treated as confidential information and shall be held in a
fiduciary capacity by the parties hereunder. The Consultant shall not disclose
or divulge such information to any firm, person, corporation or other entity
other than in connection with the performance of its duties hereunder.
6. INDEPENDENT CONTRACTOR. In performing the services provided for
hereunder, the Consultant is acting as an independent contractor, and the
Consultant's employees at all times during the term of this Agreement shall be
in the employment of and under the supervision and responsibility of the
Consultant, and no person employed by the Consultant either directly or
indirectly shall be deemed by virtue of this Agreement, or any other agreement
related to the Business, to be the servant, agent or employee of the Corporation
or any affiliate of the Corporation for any purpose whatsoever.
7. ASSIGNMENT. All of the terms of this Agreement shall inure to the
benefit of, be enforceable by and be binding upon the parties hereto and their
respective successors and assigns; provided, that the Consultant shall not have
the right to assign his rights or duties hereunder or any interest herein
without the prior written consent of the Corporation.
8. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
sent by registered or certified mail, return receipt requested, with first-class
postage fees prepaid, or if hand delivered against receipt or if sent via
facsimile transmission upon electronic confirmation of receipt thereof during
normal business hours, to the applicable party at the address indicated below:
If to the Consultant: Xxxxx X. Xxxxxx
Cellular USA, Inc.
0000 X. Xxxxxxxx
Xxx Xxxxx, Xxxxxx 00000
Fax: (000) 000-0000
with a copy to: Xxxx & Kelesis
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxx Xxxx, Esq.
Fax: (000) 000-0000
-3-
65
If to the Corporation c/o Let's Talk Cellular & Wireless, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xx. Xxxx Xxxxxx and
Xx. Xxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxxxxx Traurig Xxxxxxx
Xxxxxx Xxxxx & Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
with a copy to: H.I.G. Capital Management, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
or, to each party, to such other address as shall be designated by such party in
a written notice to the other party pursuant to the provisions of this Section
8. All such notices, requests, demands and other communications shall be
effective when sent.
9. SEVERABILITY. In the event any part of this Agreement, for any
reason, shall be finally adjudged by any court of competent jurisdiction to be
invalid, such judgment shall not affect, impair or invalidate the remainder of
this Agreement and this Agreement shall be reformed consistent with the original
objectives of this Agreement. The invalidity of any part or parts of this
Agreement shall not relieve the parties from their other duties and obligations
under this Agreement.
10. WAIVER. The failure of either party to enforce any provision of
this Agreement or exercise any right granted hereby shall not be construed to be
a waiver of such provision or right nor shall it affect the validity of this
Agreement or any part hereof or limit in any way the right of either party
subsequently to enforce any such provision or exercise such right in accordance
with its terms.
11. NO THIRD-PARTY BENEFICIARIES. This Agreement shall be construed to
be for the benefit of only the parties hereto and shall confer no right or
benefit upon any other person based on the theory of third party beneficiaries
or otherwise.
12. AMENDMENTS. The term of this Agreement may be amended, modified,
discharged, waived or terminated only by a written instrument executed by both
parties or, in the case of a waiver, by the party waiving compliance, unless
such waiver is conditional.
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66
13. TITLES AND HEADINGS. The titles and headings included in this
Agreement are inserted for convenience only and shall not be deemed to be a part
of or considered in construing this Agreement, nor limit or otherwise affect the
meaning hereof.
14. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, and which
together shall constitute but one and the same instrument.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof, and no
amendment or modification hereof shall be valid or binding unless made in
writing and signed by the party against whom enforcement thereof is sought.
16. APPLICABLE LAW. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of Nevada without regard to
choice-of-law principles thereof.
17. LIMITS OF LIABILITY. No party shall have any liability hereunder to
the other except for willful misconduct or violation of any applicable law. No
direct or indirect shareholder, officer, director or agent of the Consultant
shall have any obligation or liability hereunder or with respect to any
judgments obtained by any party against such corporation.
* * *
-5-
67
IN WITNESS WHEREOF, the parties hereto have caused this Consulting
Agreement to be duly executed on the date and year first above written.
CELLULAR USA, INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
CONSULTANT
-------------------------------------
Xxxxx X. Xxxxxx
-6-
68
SCHEDULE A
CALCULATION OF CONTINGENT PAYMENTS
The term "Gross Profit" means a store's total revenues, LESS cost of
goods sold.
TARGET GROSS PROFIT
------------------------
SIX-MONTH PERIOD
ENDING
JULY 31, 1998
------------------------
$900,000
SIX-MONTH PERIOD
ENDING
JANUARY 31, 1998
------------------------
$1,020,000
SIX-MONTH PERIOD
ENDING
JULY 31, 1999
------------------------
$945,000
SIX-MONTH PERIOD
ENDING
JANUARY 31, 1999
------------------------
$1,070,000
1. The Target Gross Profit for each of the foregoing periods shall be
proportionately reduced for each Acquired Store that is closed during
the Term.
2. The Acquired Stores shall not include any new stores opened by the
Corporation after the date hereof for purposes of calculating the
contingent payments provided for herein; provided, however, that the
Acquired Stores' total revenues shall include all residual income
received by the Corporation from AT&T Wireless Services ("AT&T") for
all of the Corporation's stores in Xxxxx County, Nevada pursuant to the
Corporation's dealer agreement with AT&T.
69
CONSULTING AGREEMENT
CONSULTING AGREEMENT (this "Agreement") dated as of ________, 1997,
between Cellular USA, Inc., a Nevada corporation (the "CORPORATION"), and Xxxx
Xxxxxxx (the "CONSULTANT").
WHEREAS, the Consultant is willing to make its expertise and experience
available to the Corporation upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto do hereby agree as follows:
1. TERM. For the period commencing 10 days after the Closing Date of
the Stock Purchase Agreement and ending on the date all payments have been made
by the Corporation pursuant to Section 3 (the "TERM"), the Consultant shall
provide advisory services to the Corporation as provided in Section 2. The term
"STOCK PURCHASE AGREEMENT" means that certain stock purchase agreement dated as
of October ___, 1997 among the Consultant, LTC and the Stockholders named
therein.
2. SERVICES.
(a) Subject to the restrictions set forth in paragraph (b) below,
during the Term the Consultant shall provide to the Corporation advisory
services for the purpose of facilitating an orderly transition of the ownership
of the Corporation to Let's Talk Cellular & Wireless, Inc. ("LTC"). The
Consultant, may provide its services hereunder from its own place of business
during the Consultant's normal business hours according to a schedule acceptable
to the Consultant and by way of, among other means, telephone consultation or
written correspondence and otherwise in the manner acceptable to the Consultant.
(b) The Consultant agrees that for the period commencing on the
Closing Date and ending on the second anniversary of the Closing Date, it will
not serve as or be a consultant to or owner of more than five percent (5%) of
another corporation, partnership or other entity which competes with the
Corporation in Xxxxx County, Nevada in the Corporation's Business. The term
"Corporation's Business" shall mean the business of selling cellular or wireless
communications services or products, including, without limitation, paging, PCS,
ESMR and any other form of personal communications services in competition with
the Corporation. The Consultant further agrees that for the period commencing on
the Closing Date and ending on the third anniversary of the Closing Date, it (i)
will not (x) solicit for employment, (y) endeavor in any way to entice away from
employment with the Corporation, LTC or its affiliates or (z) employ or contract
with any employee of the Corporation, LTC or any of its affiliates who is an
officer, a manager of any department, salesperson or any sub-agent,
sub-contractor or other independent contractor, including, without limitation,
any resellers of cellular or wireless communications services and (ii) will not
solicit any person, corporation, partnership or other entity that is a customer
of the Corporation for the purpose of selling cellular or wireless
communications services or products. The Consultant acknowledges and agrees that
the
70
covenants provided for in this Section 2(b) are reasonable and necessary in
terms of time, area and line of business to protect the Corporation's legitimate
business interests as a buyer of all of the outstanding capital stock of the
Corporation in protecting its trade secrets. The Consultant further acknowledges
and agrees that such covenants are reasonable and necessary in terms of time,
area and line of business to protect the Corporation's other legitimate business
interests, which include its interests in protecting its (x) valuable
confidential business information, (y) substantial relationships with specific
customers throughout the United States of America and (z) customer goodwill
associated with its ongoing business by way of its marketing throughout the
United States of America using the trademark, "Let's Talk Cellular & Wireless."
The Consultant hereby expressly authorizes the enforcement of the covenants
provided for in this Section 2(b) by (w) the Corporation, (x) any LTC Party, (y)
any of the Corporation's or LTC Party's permitted assigns and (z) any successors
to the business of the Corporation or any LTC Party. To the extent that the
covenant provided for in this Section 2(b) may later be deemed by a court to be
too broad to be enforced with respect to its duration or with respect to any
particular activity or geographic area, the court making such determination
shall have the power to reduce the duration or scope of the provision, and to
add or delete specific words or phrases to or from the provision. The provision
as modified shall then be enforced.
(c) The parties hereto hereby acknowledge that a breach or
violation by the Consultant of any or all of the covenants and agreements
contained in paragraph (b) above may cause irreparable harm and damage to the
Corporation in a monetary amount which may be virtually impossible to ascertain.
As a result, the Consultant acknowledges and agrees that the Corporation shall
be entitled to an injunction from any court of competent jurisdiction without
having to post a bond and restraining any breach or violation of any or all of
the covenants and agreements contained in paragraph (b) above by the Consultant,
either directly or indirectly, and that such right to injunction shall be
cumulative and in addition to whatever other rights or remedies that the
Corporation may possess hereunder, at law or in equity. Nothing contained in
this Section 2 shall be construed to prevent the Corporation from seeking and
recovering from the Consultant damages sustained by it as a result of any breach
or violation by it of any of the covenants or agreements contained in this
Section 2.
3. CONTINGENT PAYMENT. In consideration of its agreement to act as a
Consultant pursuant to the terms of this Agreement, the Corporation hereby
agrees to pay the Consultant a contingent payment in the aggregate amount of 38%
of $175,000, paid in four semiannual installments beginning with the six-month
period ending July 31, 1998, if the Gross Profit of the Acquired Stores exceeds
the Target Gross Profit as set forth on SCHEDULE A hereto. Payment shall be made
to the Consultant within 45 days after the end of each six-month period. The
contingent payments provided for herein shall be subject to Section 9.3 of the
Stock Purchase Agreement. The term "ACQUIRED STORES" means the stores acquired
by LTC pursuant to the Stock Purchase Agreement.
4. CONFIDENTIALITY. All information, knowledge and data relating to or
concerned with the operations, business and affairs of either the Consultant or
the Corporation, as the case may be, which are exchanged by the parties hereto
in connection with the performance by the Consultant of its duties hereunder
(including the existence of this Agreement) shall be the property of the
Corporation and be treated as confidential information and shall be held in a
-2-
71
fiduciary capacity by the parties hereunder. The Consultant shall not disclose
or divulge such information to any firm, person, corporation or other entity
other than in connection with the performance of its duties hereunder.
5. INDEPENDENT CONTRACTOR. In performing the services provided for
hereunder, the Consultant is acting as an independent contractor, and the
Consultant's employees at all times during the term of this Agreement shall be
in the employment of and under the supervision and responsibility of the
Consultant, and no person employed by the Consultant either directly or
indirectly shall be deemed by virtue of this Agreement, or any other agreement
related to the Business, to be the servant, agent or employee of the Corporation
or any affiliate of the Corporation for any purpose whatsoever.
6. ASSIGNMENT. All of the terms of this Agreement shall inure to the
benefit of, be enforceable by and be binding upon the parties hereto and their
respective successors and assigns; provided, that the Consultant shall not have
the right to assign his rights or duties hereunder or any interest herein
without the prior written consent of the Corporation.
7. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
sent by registered or certified mail, return receipt requested, with first-class
postage fees prepaid, or if hand delivered against receipt or if sent via
facsimile transmission upon electronic confirmation of receipt thereof during
normal business hours, to the applicable party at the address indicated below:
If to the Consultant: Xxxx Xxxxxxx
Valley Yellow Pages
000 Xxxxx Xxxxx, Xx. X
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Fax: (___) ______________
with a copy to: _________________________
-------------------------
Attn: __________________
Fax: (___) ______________
If to the Corporation c/o Let's Talk Cellular & Wireless, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xx. Xxxx Xxxxxx and
Xx. Xxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxxxxx Traurig Xxxxxxx
Xxxxxx Xxxxx & Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
-4-
72
with a copy to: H.I.G. Capital Management, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
or, to each party, to such other address as shall be designated by such party in
a written notice to the other party pursuant to the provisions of this Section
8. All such notices, requests, demands and other communications shall be
effective when sent.
8. SEVERABILITY. In the event any part of this Agreement, for any
reason, shall be finally adjudged by any court of competent jurisdiction to be
invalid, such judgment shall not affect, impair or invalidate the remainder of
this Agreement and this Agreement shall be reformed consistent with the original
objectives of this Agreement. The invalidity of any part or parts of this
Agreement shall not relieve the parties from their other duties and obligations
under this Agreement.
9. WAIVER. The failure of either party to enforce any provision of this
Agreement or exercise any right granted hereby shall not be construed to be a
waiver of such provision or right nor shall it affect the validity of this
Agreement or any part hereof or limit in any way the right of either party
subsequently to enforce any such provision or exercise such right in accordance
with its terms.
10. NO THIRD-PARTY BENEFICIARIES. This Agreement shall be construed to
be for the benefit of only the parties hereto and shall confer no right or
benefit upon any other person based on the theory of third party beneficiaries
or otherwise.
11. AMENDMENTS. The term of this Agreement may be amended, modified,
discharged, waived or terminated only by a written instrument executed by both
parties or, in the case of a waiver, by the party waiving compliance, unless
such waiver is conditional.
12. TITLES AND HEADINGS. The titles and headings included in this
Agreement are inserted for convenience only and shall not be deemed to be a part
of or considered in construing this Agreement, nor limit or otherwise affect the
meaning hereof.
13. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, and which
together shall constitute but one and the same instrument.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof, and no
amendment or modification hereof shall be valid or binding unless made in
writing and signed by the party against whom enforcement thereof is sought.
-4-
73
15. APPLICABLE LAW. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of Nevada without regard to
choice-of-law principles thereof.
16. LIMITS OF LIABILITY. No party shall have any liability hereunder to
the other except for willful misconduct or violation of any applicable law. No
direct or indirect shareholder, officer, director or agent of the Consultant
shall have any obligation or liability hereunder or with respect to any
judgments obtained by any party against such corporation.
* * *
-5-
74
IN WITNESS WHEREOF, the parties hereto have caused this Consulting
Agreement to be duly executed on the date and year first above written.
CELLULAR USA, INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
CONSULTANT
-------------------------------------
Xxxx Xxxxxxx
-6-
75
SCHEDULE A
CALCULATION OF CONTINGENT PAYMENTS
The term "Gross Profit" means a store's total revenues, LESS cost of
goods sold.
TARGET GROSS PROFIT
------------------------
SIX-MONTH PERIOD
ENDING
JULY 31, 1998
------------------------
$900,000
SIX-MONTH PERIOD
ENDING
JANUARY 31, 1998
------------------------
$1,020,000
SIX-MONTH PERIOD
ENDING
JULY 31, 1999
------------------------
$945,000
SIX-MONTH PERIOD
ENDING
JANUARY 31, 1999
------------------------
$1,070,000
1. The Target Gross Profit for each of the foregoing periods shall be
proportionately reduced for each Acquired Store that is closed during
the Term.
2. The Acquired Stores shall not include any new stores opened by the
Corporation after the date hereof for purposes of calculating the
contingent payments provided for herein; provided, however, that the
Acquired Stores' total revenues shall include all residual income
received by the Corporation from AT&T Wireless Services ("AT&T") for
all of the Corporation's stores in Xxxxx County, Nevada pursuant to the
Corporation's dealer agreement with AT&T.
76
CONSULTING AGREEMENT
CONSULTING AGREEMENT (this "Agreement") dated as of ________, 1997,
between Cellular USA, Inc., a Nevada corporation (the "CORPORATION"), and Xxxxxx
Xxxxxx (the "CONSULTANT").
WHEREAS, the Consultant is willing to make its expertise and experience
available to the Corporation upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto do hereby agree as follows:
1. TERM. For the period commencing 10 days after the Closing Date of
the Stock Purchase Agreement and ending on the date all payments have been made
by the Corporation pursuant to Section 3 (the "TERM"), the Consultant shall
provide advisory services to the Corporation as provided in Section 2. The term
"STOCK PURCHASE AGREEMENT" means that certain stock purchase agreement dated as
of October ___, 1997 among the Consultant, LTC and the Stockholders named
therein.
2. SERVICES.
(a) Subject to the restrictions set forth in paragraph (b) below,
during the Term the Consultant shall provide to the Corporation advisory
services for the purpose of facilitating an orderly transition of the ownership
of the Corporation to Let's Talk Cellular & Wireless, Inc. ("LTC"). The
Consultant, may provide its services hereunder from its own place of business
during the Consultant's normal business hours according to a schedule acceptable
to the Consultant and by way of, among other means, telephone consultation or
written correspondence and otherwise in the manner acceptable to the Consultant.
(b) The Consultant agrees that for the period commencing on the
Closing Date and ending on the second anniversary of the Closing Date, it will
not serve as or be a consultant to or owner of more than five percent (5%) of
another corporation, partnership or other entity which competes with the
Corporation in Xxxxx County, Nevada in the Corporation's Business. The term
"Corporation's Business" shall mean the business of selling cellular or wireless
communications services or products, including, without limitation, paging, PCS,
ESMR and any other form of personal communications services in competition with
the Corporation. The Consultant further agrees that for the period commencing on
the Closing Date and ending on the third anniversary of the Closing Date, it (i)
will not (x) solicit for employment, (y) endeavor in any way to entice away from
employment with the Corporation, LTC or its affiliates or (z) employ or contract
with any employee of the Corporation, LTC or any of its affiliates who is an
officer, a manager of any department, salesperson or any sub-agent,
sub-contractor or other independent contractor, including, without limitation,
any resellers of cellular or wireless communications services and (ii) will not
solicit any person, corporation, partnership or other entity that is a customer
of the Corporation for the purpose of selling cellular or wireless
communications services or products. The Consultant acknowledges and agrees that
the
77
covenants provided for in this Section 2(b) are reasonable and necessary in
terms of time, area and line of business to protect the Corporation's legitimate
business interests as a buyer of all of the outstanding capital stock of the
Corporation in protecting its trade secrets. The Consultant further acknowledges
and agrees that such covenants are reasonable and necessary in terms of time,
area and line of business to protect the Corporation's other legitimate business
interests, which include its interests in protecting its (x) valuable
confidential business information, (y) substantial relationships with specific
customers throughout the United States of America and (z) customer goodwill
associated with its ongoing business by way of its marketing throughout the
United States of America using the trademark, "Let's Talk Cellular & Wireless."
The Consultant hereby expressly authorizes the enforcement of the covenants
provided for in this Section 2(b) by (w) the Corporation, (x) any LTC Party, (y)
any of the Corporation's or LTC Party's permitted assigns and (z) any successors
to the business of the Corporation or any LTC Party. To the extent that the
covenant provided for in this Section 2(b) may later be deemed by a court to be
too broad to be enforced with respect to its duration or with respect to any
particular activity or geographic area, the court making such determination
shall have the power to reduce the duration or scope of the provision, and to
add or delete specific words or phrases to or from the provision. The provision
as modified shall then be enforced.
(c) The parties hereto hereby acknowledge that a breach or
violation by the Consultant of any or all of the covenants and agreements
contained in paragraph (b) above may cause irreparable harm and damage to the
Corporation in a monetary amount which may be virtually impossible to ascertain.
As a result, the Consultant acknowledges and agrees that the Corporation shall
be entitled to an injunction from any court of competent jurisdiction without
having to post a bond and restraining any breach or violation of any or all of
the covenants and agreements contained in paragraph (b) above by the Consultant,
either directly or indirectly, and that such right to injunction shall be
cumulative and in addition to whatever other rights or remedies that the
Corporation may possess hereunder, at law or in equity. Nothing contained in
this Section 2 shall be construed to prevent the Corporation from seeking and
recovering from the Consultant damages sustained by it as a result of any breach
or violation by it of any of the covenants or agreements contained in this
Section 2.
3. CONTINGENT PAYMENT. In consideration of its agreement to act as a
Consultant pursuant to the terms of this Agreement, the Corporation hereby
agrees to pay the Consultant a contingent payment in the aggregate amount of 4%
of $175,000, paid in four semiannual installments beginning with the six-month
period ending July 31, 1998, if the Gross Profit of the Acquired Stores exceeds
the Target Gross Profit as set forth on SCHEDULE A hereto. Payment shall be made
to the Consultant within 45 days after the end of each six-month period. The
contingent payments provided for herein shall be subject to Section 9.3 of the
Stock Purchase Agreement. The term "ACQUIRED STORES" means the stores acquired
by LTC pursuant to the Stock Purchase Agreement.
4. CONFIDENTIALITY. All information, knowledge and data relating to or
concerned with the operations, business and affairs of either the Consultant or
the Corporation, as the case may be, which are exchanged by the parties hereto
in connection with the performance by the Consultant of its duties hereunder
(including the existence of this Agreement) shall be the property of the
Corporation and be treated as confidential information and shall be held in a
-2-
78
fiduciary capacity by the parties hereunder. The Consultant shall not disclose
or divulge such information to any firm, person, corporation or other entity
other than in connection with the performance of its duties hereunder.
5. INDEPENDENT CONTRACTOR. In performing the services provided for
hereunder, the Consultant is acting as an independent contractor, and the
Consultant's employees at all times during the term of this Agreement shall be
in the employment of and under the supervision and responsibility of the
Consultant, and no person employed by the Consultant either directly or
indirectly shall be deemed by virtue of this Agreement, or any other agreement
related to the Business, to be the servant, agent or employee of the Corporation
or any affiliate of the Corporation for any purpose whatsoever.
6. ASSIGNMENT. All of the terms of this Agreement shall inure to the
benefit of, be enforceable by and be binding upon the parties hereto and their
respective successors and assigns; provided, that the Consultant shall not have
the right to assign his rights or duties hereunder or any interest herein
without the prior written consent of the Corporation.
7. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
sent by registered or certified mail, return receipt requested, with first-class
postage fees prepaid, or if hand delivered against receipt or if sent via
facsimile transmission upon electronic confirmation of receipt thereof during
normal business hours, to the applicableparty at the address indicated below:
If to the Consultant: Xxxxxx Xxxxxx
--------------------
--------------------
Fax: (___) _________
with a copy to: ____________________
--------------------
Attn: _____________
Fax: (___) _________
If to the Corporation c/o Let's Talk Cellular & Wireless, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xx. Xxxx Xxxxxx and
Xx. Xxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxxxxx Traurig Xxxxxxx
Xxxxxx Xxxxx & Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
-3-
79
with a copy to: H.I.G. Capital Management, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
or, to each party, to such other address as shall be designated by such party in
a written notice to the other party pursuant to the provisions of this Section
8. All such notices, requests, demands and other communications shall be
effective when sent.
8. SEVERABILITY. In the event any part of this Agreement, for any
reason, shall be finally adjudged by any court of competent jurisdiction to be
invalid, such judgment shall not affect, impair or invalidate the remainder of
this Agreement and this Agreement shall be reformed consistent with the original
objectives of this Agreement. The invalidity of any part or parts of this
Agreement shall not relieve the parties from their other duties and obligations
under this Agreement.
9. WAIVER. The failure of either party to enforce any provision of this
Agreement or exercise any right granted hereby shall not be construed to be a
waiver of such provision or right nor shall it affect the validity of this
Agreement or any part hereof or limit in any way the right of either party
subsequently to enforce any such provision or exercise such right in accordance
with its terms.
10. NO THIRD-PARTY BENEFICIARIES. This Agreement shall be construed to
be for the benefit of only the parties hereto and shall confer no right or
benefit upon any other person based on the theory of third party beneficiaries
or otherwise.
11. AMENDMENTS. The term of this Agreement may be amended, modified,
discharged, waived or terminated only by a written instrument executed by both
parties or, in the case of a waiver, by the party waiving compliance, unless
such waiver is conditional.
12. TITLES AND HEADINGS. The titles and headings included in this
Agreement are inserted for convenience only and shall not be deemed to be a part
of or considered in construing this Agreement, nor limit or otherwise affect the
meaning hereof.
13. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, and which
together shall constitute but one and the same instrument.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof, and no
amendment or modification hereof shall be valid or binding unless made in
writing and signed by the party against whom enforcement thereof is sought.
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80
15. APPLICABLE LAW. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of Nevada without regard to
choice-of-law principles thereof.
16. LIMITS OF LIABILITY. No party shall have any liability hereunder to
the other except for willful misconduct or violation of any applicable law. No
direct or indirect shareholder, officer, director or agent of the Consultant
shall have any obligation or liability hereunder or with respect to any
judgments obtained by any party against such corporation.
* * *
-5-
81
IN WITNESS WHEREOF, the parties hereto have caused this Consulting
Agreement to be duly executed on the date and year first above written.
CELLULAR USA, INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
CONSULTANT
--------------------------------------
Xxxxxx Xxxxxx
-6-
82
SCHEDULE A
CALCULATION OF CONTINGENT PAYMENTS
The term "Gross Profit" means a store's total revenues, LESS cost of
goods sold.
TARGET GROSS PROFIT
------------------------
SIX-MONTH PERIOD
ENDING
JULY 31, 1998
------------------------
$900,000
SIX-MONTH PERIOD
ENDING
JANUARY 31, 1998
------------------------
$1,020,000
SIX-MONTH PERIOD
ENDING
JULY 31, 1999
------------------------
$945,000
SIX-MONTH PERIOD
ENDING
JANUARY 31, 1999
------------------------
$1,070,000
1. The Target Gross Profit for each of the foregoing periods shall be
proportionately reduced for each Acquired Store that is closed during
the Term.
2. The Acquired Stores shall not include any new stores opened by the
Corporation after the date hereof for purposes of calculating the
contingent payments provided for herein; provided, however, that the
Acquired Stores' total revenues shall include all residual income
received by the Corporation from AT&T Wireless Services ("AT&T") for
all of the Corporation's stores in Xxxxx County, Nevada pursuant to the
Corporation's dealer agreement with AT&T.