AGREEMENT AND PLAN OF MERGER
among
TELEPHONE AND DATA SYSTEMS, INC.,
API MERGER CORP.
and
AMERICAN PAGING, INC.
Dated as of February 11, 1998
TABLE OF CONTENTS
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ARTICLE I THE TENDER OFFER. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.2 API Action . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 Effective Time of the Merger . . . . . . . . . . . . . . . . 5
Section 2.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.3 Effects of the Merger. . . . . . . . . . . . . . . . . . . . 6
Section 2.4 Certificate of Incorporation and By-Laws . . . . . . . . . . 6
Section 2.5 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.6 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III CONVERSION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . 7
Section 3.1 Conversion of Capital Stock. . . . . . . . . . . . . . . . . 7
Section 3.2 Surrender and Payment. . . . . . . . . . . . . . . . . . . . 8
Section 3.3 No Further Ownership Rights in API Common Shares . . . . . . 9
Section 3.4 Closing of API Transfer Books. . . . . . . . . . . . . . . . 9
Section 3.5 Withholding. . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.6 Lost, Stolen or Destroyed Certificates . . . . . . . . . . .10
Section 3.7 Further Assurances . . . . . . . . . . . . . . . . . . . . .10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF API. . . . . . . . . . . . . . .11
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . .11
Section 4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . .11
Section 4.3 Authority. . . . . . . . . . . . . . . . . . . . . . . . . .12
Section 4.4 Absence of Certain Changes or Events . . . . . . . . . . . .13
Section 4.5 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Section 4.6 API Real Property. . . . . . . . . . . . . . . . . . . . . .14
Section 4.7 Contracts and Commitments. . . . . . . . . . . . . . . . . .15
Section 4.8 Customers, Distributors and Suppliers. . . . . . . . . . . .17
Section 4.9 Operation of the API Business. . . . . . . . . . . . . . . .17
Section 4.10 Inventory . . . . . . . . . . . . . . . . . . . . . . . . .17
Section 4.11 Absence of Certain Business Practices . . . . . . . . . . .17
Section 4.12 No Conflict or Violation. . . . . . . . . . . . . . . . . .18
Section 4.13 Regulatory Matters. . . . . . . . . . . . . . . . . . . . .18
Section 4.14 Financial Statements; Receivables; Public Filings . . . . .21
Section 4.15 Books and Records . . . . . . . . . . . . . . . . . . . . .21
Section 4.16 Litigation. . . . . . . . . . . . . . . . . . . . . . . . .22
Section 4.17 Compliance with Law . . . . . . . . . . . . . . . . . . . .22
Section 4.18 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . .22
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Section 4.19. No Other Agreements to Sell the API Assets . . . . . . . .22
Section 4.20 Proprietary Rights. . . . . . . . . . . . . . . . . . . . .22
Section 4.21 Environmental Matters . . . . . . . . . . . . . . . . . . .23
Section 4.22 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . .24
Section 4.23 Information in Disclosure Documents . . . . . . . . . . . .25
Section 4.24 Benefit Plans; Labor Matters. . . . . . . . . . . . . . . .25
Section 4.25 Opinion of Financial Advisor. . . . . . . . . . . . . . . .27
Section 4.26 Certain Agreements . . . . . . . . . . . . . . . . . . . .27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF TDS AND
PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 5.1 Organization; Ownership. . . . . . . . . . . . . . . . . . .28
Section 5.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 5.3 Consents and Approvals; No Violations. . . . . . . . . . . .28
Section 5.4 Information in Disclosure Documents. . . . . . . . . . . . .29
Section 5.5 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE VI COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Section 6.1 Conduct of API Business. . . . . . . . . . . . . . . . . . .29
Section 6.2 Reasonable Best Efforts. . . . . . . . . . . . . . . . . . .31
Section 6.3 Access to Information. . . . . . . . . . . . . . . . . . . .32
Section 6.4 Shareholder Approval . . . . . . . . . . . . . . . . . . . .33
Section 6.5 API Option Plans . . . . . . . . . . . . . . . . . . . . . .34
Section 6.6 No Solicitation. . . . . . . . . . . . . . . . . . . . . . .35
Section 6.7 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . .36
Section 6.8 Notification of Certain Matters. . . . . . . . . . . . . . .36
Section 6.9 Public Announcements . . . . . . . . . . . . . . . . . . . .37
Section 6.10 State Takeover Laws . . . . . . . . . . . . . . . . . . . .37
Section 6.11 Indemnification of Officers and Directors . . . . . . . . .37
Section 6.12 Shareholder Litigation. . . . . . . . . . . . . . . . . . .37
ARTICLE VII CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 7.1 Conditions to Each Party's Obligation To Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 7.2 Conditions to TDS's Obligation to Effect the Merger. . . . .38
ARTICLE VIII TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . .38
Section 8.2 Effect of Termination. . . . . . . . . . . . . . . . . . . .40
ARTICLE IX MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . .40
Section 9.1 Nonsurvival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . .40
Section 9.2 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 9.3 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . .41
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Section 9.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 9.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . .42
Section 9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . .43
Section 9.7 Entire Agreement; No Third Party Beneficiaries . . . . . . .43
Section 9.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . .43
Section 9.9 Specific Performance . . . . . . . . . . . . . . . . . . . .43
Section 9.10 Assignment. . . . . . . . . . . . . . . . . . . . . . . . .43
Section 9.11 Validity. . . . . . . . . . . . . . . . . . . . . . . . . .43
Annex I Definitions
Annex II Conditions to the Offer
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 11, 1998 (this
"AGREEMENT"), among Telephone and Data Systems, Inc., an Iowa corporation
("TDS"), API Merger Corp., a Delaware corporation and a direct, wholly-owned
subsidiary of TDS ("PURCHASER"), and American Paging, Inc., a Delaware
corporation ("API"; together with Purchaser, the "CONSTITUENT CORPORATIONS").
W I T N E S S E T H:
WHEREAS, the capitalized terms used herein shall have the respective
meanings specified or referred to herein or in ANNEX I;
WHEREAS the Purchaser owns an aggregate of 12,500,000 Series A Common
Shares, par value $1.00 per share (the "SERIES A COMMON SHARES"), of API
constituting 100% of the outstanding Series A Common Shares and 4,000,000 Common
Shares, par value $1.00 per share (the "COMMON SHARES"), of API constituting
approximately 81.9% of the outstanding Common Shares;
WHEREAS, TDS has entered into an Asset Contribution Agreement, dated
as of December 22, 1997 (the "ASSET CONTRIBUTION AGREEMENT"), with TSR Paging
Inc., a Delaware corporation ("TSR"), and TSR Wireless LLC, a Delaware limited
liability company ("TSR WIRELESS");
WHEREAS, in accordance with the terms and conditions of the Asset
Contribution Agreement, (i) TDS is to propose to negotiate and enter into a
merger agreement with API pursuant to which a wholly owned subsidiary of TDS
would acquire all of the issued and outstanding stock of API not owned by TDS
and (ii) upon consummation of such proposed merger, TDS and TSR would combine
their respective paging businesses and TDS would contribute substantially all of
the assets and certain, limited liabilities of API to TSR Wireless for a 30%
interest (subject to adjustment) in TSR Wireless and TSR would contribute all of
its assets and liabilities to TSR Wireless for a 70% interest (subject to
adjustment) in TSR Wireless;
WHEREAS, in accordance with the terms and conditions of the Asset
Contribution Agreement, TDS and Purchaser have proposed to API that Purchaser
acquire all of the remaining issued and outstanding Common Shares not owned by
Purchaser;
WHEREAS, in furtherance thereof, it is proposed that Purchaser will
make, in compliance with Section 14(d)(1) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") and in compliance with the rules and
regulations
promulgated thereunder, a cash tender offer (as it may be amended from time to
time as permitted hereunder, the "OFFER") to acquire all of the issued and
outstanding Common Shares for $2.50 per Common Share (such amount, or any other
greater amount per Common Share offered pursuant to the Offer, being hereinafter
referred to as the "PER SHARE AMOUNT"), net to the seller in cash, in accordance
with the terms and subject to the conditions provided herein and in the Offer
Documents (as defined in SECTION 1.1(b));
WHEREAS, based in part on the opinion of PaineWebber, Inc. that the
consideration to be received by the holders for the Common Shares (other than
TDS and Purchaser) pursuant to each of the Offer and the Merger is fair to such
holders from a financial point of view, a special committee of the Board of
Directors of API, consisting of the independent directors of the Board of
Directors that are not directors, officers or employees of TDS or otherwise
affiliated with TDS and are not officers or employees of API (the "API SPECIAL
COMMITTEE"), has recommended, with the assistance of its independent financial
and legal advisors, to the Board of Directors of API that the Offer and the
Merger be approved by the Board of Directors of API;
WHEREAS, the respective Boards of TDS, Purchaser and API have
determined that it is in the best interests of their respective stockholders for
the Purchaser to acquire all of the remaining issued and outstanding Common
Shares;
WHEREAS, the Board of Directors of API has, by unanimous vote of all
directors present and voting, approved the making of the Offer and resolved and
agreed to recommend that the holders of the Common Shares tender their Common
Shares pursuant to the Offer; and
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of each of TDS, Purchaser and API have each approved the merger (the
"Merger") of Purchaser with and into API in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") following the consummation
of the Offer and upon the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
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ARTICLE I
THE TENDER OFFER
Section 1.1 THE OFFER.
(a) Provided that this Agreement has not been terminated in
accordance with SECTION 8.1 and none of the events or facts set forth in ANNEX
II hereto shall have occurred or be existing, Purchaser will commence the Offer
as promptly as reasonably practicable after the date hereof, but in no event
later than five business days after the initial public announcement of
Purchaser's intention to commence the Offer. The obligation of Purchaser to
commence the Offer and accept for payment, and pay for, any Common Shares
tendered pursuant to the Offer will be subject to (i) the condition (the
"MINIMUM CONDITION") that at least the number of Common Shares that when added
to the Common Shares already owned by TDS and Purchaser shall constitute not
less than 90% (or such other amount which would allow the Merger to be effected
without a meeting of the Company's shareholders in accordance with Section 253
of the Delaware Law) of the issued and outstanding Common Shares shall have been
validly tendered and not withdrawn prior to the expiration of the Offer, (ii)
the condition that the Asset Contribution Agreement be in full force and effect
and not terminated in accordance with the terms thereof and all the conditions
set forth in Articles XI and XII thereof shall have been satisfied or waived
(the "ASSET CONTRIBUTION AGREEMENT CONDITION") and (iii) the satisfaction of the
conditions set forth in ANNEX II hereto (any of which may be waived by Purchaser
in its sole discretion) and to the terms and conditions of this Agreement.
Purchaser expressly reserves the right to modify the terms of the Offer, except
that, without the consent of API (unless API takes any action permitted to be
taken pursuant to the second sentence of SECTION 6.6(b)), Purchaser shall not
(i) reduce the number of Common Shares subject to the Offer, (ii) reduce the Per
Share Amount, (iii) modify or add to the conditions set forth in ANNEX II (other
than to waive any conditions to the extent permitted by this Agreement), (iv)
except as specifically provided in this SECTION 1.1(a), extend the Offer or (v)
change the form of consideration payable in the Offer. Notwithstanding the
foregoing, Purchaser may, without the consent of API, (i) extend the Offer if at
the scheduled expiration date of the Offer any of the conditions to Purchaser's
obligation to purchase the Common Shares shall not be satisfied until such time
as such conditions are satisfied or waived, (ii) extend the Offer for any period
required by any order, decree or ruling of, or any rule, regulation,
interpretation or position of, any Governmental Authority applicable to the
Offer and/or (iii) extend the Offer for any reason for a period of not more than
10 business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence; PROVIDED, HOWEVER, in the
event that all conditions set forth in ANNEX II shall have been satisfied other
than the Minimum Condition, the Purchaser may extend the term of the Offer for a
period or periods aggregating not more than 20 business days after the later of
(x) the initial expiration date of the Offer and (y) the date on which all the
other conditions set forth in ANNEX
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II shall be satisfied after which time the Purchaser shall waive the Minimum
Condition. The Offer will be made by means of an offer to purchase (the "OFFER
TO PURCHASE") and related letter of transmittal containing the terms set forth
in this Agreement and the conditions set forth in ANNEX II hereto. Subject to
the terms of the Offer and this Agreement and the satisfaction or waiver of all
the conditions of the Offer set forth in ANNEX II hereto as of the final
expiration date of the Offer, Purchaser will accept for payment and pay for all
Common Shares validly tendered and not withdrawn pursuant to the Offer as soon
as practicable after such expiration date. The Per Share Amount shall, subject
to applicable withholding of taxes, be net to the seller in cash, upon the terms
and subject to the conditions of the Offer.
(b) On the date of commencement of the Offer, Purchaser will file
with the SEC (i) a Tender Offer Statement on Schedule 14D-1 (together with all
amendments and supplements thereto, the "SCHEDULE 14D-1") with respect to the
Offer and (ii) a Rule 13e-3 Transaction Statement on Schedule 13E-3 (together
with all amendments and supplements thereto, the "SCHEDULE 13E-3") with respect
to the Offer and other transactions contemplated hereby. The Schedule 14D-1 and
the Schedule 13E-3 will contain or will incorporate by reference the Offer to
Purchase and forms of the related letter of transmittal and summary
advertisement (which Schedule 14D-1, Schedule 13E-3, the Offer to Purchase and
such other documents pursuant to which the Offer will be made, together with any
supplements or amendments thereto, are referred to herein collectively as the
"OFFER DOCUMENTS"). TDS and Purchaser will disseminate the Offer to Purchase,
the related letter of transmittal and other Offer Documents to holders of Common
Shares. Each of TDS, Purchaser and API will promptly correct any information
provided by it for use in the Offer Documents that becomes false or misleading
in any material respect, and each of TDS and Purchaser will take all steps
necessary to cause the Schedule 14D-1 and Schedule 13E-3 as so corrected to be
filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Common Shares, in each case as and to the extent
required by applicable law. Purchaser will provide API and its counsel in
writing with any comments Purchaser or its counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt of such
comments.
Section 1.2 API ACTION.
(a) API hereby approves of and consents to the Offer and represents
and warrants that the Board of Directors of API, at a meeting duly called and
held, acting on the unanimous recommendation of the API Special Committee, has
(i) unanimously determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, are fair to and in the best interest
of the Company's shareholders, (ii) unanimously approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, and (iii)
unanimously resolved to recommend acceptance of the Offer and approval and
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adoption of this Agreement and the Merger by its shareholders. API further
represents and warrants that PaineWebber, Inc. has delivered to the API Special
Committee its written opinion that the consideration to be received by API's
shareholders pursuant to the Offer and the Merger is fair to such shareholders
from a financial point of view, and a complete and correct copy of such opinion
has been delivered by API to TDS and Purchaser.
(b) On the date of the commencement of the Offer, API will file with
the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect
to the Offer (such Schedule 14D-9, together with all amendments and supplements
thereto, the "SCHEDULE 14D-9") containing the recommendations described in
SECTION 1.2(a) above and will disseminate the Schedule 14D-9 as required by Rule
14d-9 promulgated under the Exchange Act. Each of API, TDS and Purchaser will
promptly correct any information provided by it for use in the Schedule 14D-9
that becomes false or misleading in any material respect, and API will further
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to API's shareholders, in each case as and to the
extent required by applicable law. API will provide TDS and Purchaser and their
counsel in writing with any comments API or its counsel may receive from the SEC
or its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments. API and its counsel will provide TDS and Purchaser and their
counsel with a reasonable opportunity to participate in all communications with
the SEC and its staff, including any meetings and telephone conferences relating
to the Schedule 14D-9, the Offer, the Merger or this Agreement.
(c) API will (i) promptly furnish TDS and Purchaser with mailing
labels containing the names and addresses of all record holders of Common Shares
as of a recent date and of those persons becoming record holders after such
date, together with copies of all security position listings and computer files
and all other information in API's control regarding the beneficial owners of
Common Shares that TDS or Purchaser may reasonably request and (ii) furnish to
TDS or Purchaser such other information and assistance as TDS or Purchaser or
their agents may reasonably request in expeditiously communicating the Offer to
holders of Common Shares.
ARTICLE II
THE MERGER
Section 2.1 EFFECTIVE TIME OF THE MERGER.
(a) Upon the terms and subject to the conditions hereof, and in
accordance with the DGCL, at the Effective Time Purchaser shall be merged with
and into API whereupon the separate existence of Purchaser shall cease and API
shall
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continue as the surviving corporation (the "SURVIVING CORPORATION") and
succeeding to and assuming all the rights and obligations of Purchaser in
accordance with the DGCL.
(b) Upon the terms and subject to the conditions hereof, a
certificate of merger or other appropriate documents (the "CERTIFICATE OF
MERGER") will be duly prepared and executed by API and Purchaser and thereafter
delivered to the Secretary of State of the State of Delaware (the "Delaware
Secretary") for filing as provided in the DGCL as soon as practicable on the
Closing Date. The Merger will become effective upon the filing of the
Certificate of Merger with the Delaware Secretary or at such other later date or
time as Purchaser and API shall agree and as specified in the Certificate of
Merger (the time the Merger becomes effective being the "EFFECTIVE TIME").
Section 2.2 CLOSING. Unless this Agreement is terminated and the
transactions contemplated herein abandoned pursuant to SECTION 8.1, the closing
of the Merger (the "CLOSING") will take place on a date and time to be specified
by the parties, which date will be no later than the second business day
following the satisfaction or, if permissible, waiver of each of the conditions
set forth in Article VII (the "CLOSING DATE"), at the offices of Sidley &
Austin, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another date or place
is agreed to by the parties hereto.
Section 2.3 EFFECTS OF THE MERGER. The Merger will have the effects
set forth in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of API and the Purchaser
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of API and the Purchaser shall become the debts, liabilities and duties of the
Surviving Corporation.
Section 2.4 CERTIFICATE OF INCORPORATION AND BY-LAWS.
(a) At the Effective Time the Certificate of Incorporation of
Purchaser previously delivered to API shall be the Certificate of Incorporation
of the Surviving Corporation until thereafter amended as provided by law and
such Certificate of Incorporation.
(b) The By-Laws of Purchaser, as in effect immediately prior to the
Effective Time, will be the By-Laws of the Surviving Corporation until amended
in accordance therewith and with applicable law.
Section 2.5 DIRECTORS. The directors of Purchaser at the Effective
Time will be the directors of the Surviving Corporation, each to hold office
from the Effective Time in accordance with the Certificate of Incorporation and
By-Laws of the Surviving Corporation and until his or her successor is duly
elected and qualified.
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Section 2.6 OFFICERS. The officers of API at the Effective Time will
be the officers of the Surviving Corporation, each to hold office from the
Effective Time in accordance with the Certificate of Incorporation and By-Laws
of the Surviving Corporation and until his or her successor is duly appointed
and qualified.
ARTICLE III
CONVERSION OF SECURITIES
Section 3.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of TDS, Purchaser, API
or the holder of any of the following securities:
(a) Each Common Share issued and outstanding immediately prior to the
Effective Time (other than any Common Shares to be cancelled pursuant to SECTION
3.1(b) and any Dissenting Shares shall be cancelled and shall be converted
automatically into the right to receive an amount equal to the Per Share Amount
in cash (the "Merger Consideration") payable, without interest, to the holder of
such Common Share, less any applicable withholding taxes, upon surrender, in the
manner provided in SECTION 3.2, of the certificate that formerly evidenced such
Common Share;
(b) Each Common Share held in the treasury of API and each Common
Share owned by Purchaser, TDS or any direct or indirect wholly owned subsidiary
of TDS or API immediately prior to the Effective Time shall be cancelled without
any conversion thereof and will cease to exist and no shares of capital stock of
the Surviving Corporation or other consideration will be delivered in exchange
therefor;
(c) Each Series A Common Share of API shall be cancelled without any
conversion thereof and will cease to exist and no shares of capital stock of the
Surviving Corporation or other consideration will be delivered in exchange
therefor; and
(d) Each share of common stock of the Purchaser, par value $1.00 per
share, issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, par value $1.00 per share, of the Surviving
Corporation.
(e) Notwithstanding any provision of this Agreement to the contrary,
Common Shares that are outstanding immediately prior to the Effective Time and
which are held by shareholders who shall have not voted in favor of the Merger
or consented thereto in writing and who shall have demanded properly in writing
appraisal for such Common Shares in accordance with Section 262 of the DGCL
(collectively, the "Dissenting Shares") shall not be converted into or represent
the right to receive the Merger Consideration, unless such shareholder fails to
perfect or withdraws or loses its
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right to appraisal. Such shareholders shall be entitled to receive payment of
the appraised value of such Common Shares held by them in accordance with the
provisions of such Section 262, except that all Dissenting Shares held by
shareholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Common Shares under such
Section 262 shall thereupon be deemed to have been converted into and to have
become exchangeable for, as of the Effective Time, the right to receive the
Merger Consideration, without any interest thereon, upon surrender, in the
manner provided in SECTION 3.2 of the certificate or certificates that formerly
evidenced such Common Shares. API shall give TDS (i) prompt notice of any
demands for appraisal received by API, withdrawals of such demands, and any
other instruments served pursuant to the DGCL and received by API and (ii) the
opportunity to direct all negotiations and proceedings with respect to demand
for appraisal under the DGCL. API shall not, except with the prior written
consent of TDS, make any payment with respect to any demands for appraisal or
offer to settle or settle any such demands.
Section 3.2 SURRENDER AND PAYMENT. (a) PAYING AGENT. Prior to the
Effective Time, Purchaser shall authorize a commercial bank (or such other
person or persons as shall be reasonably acceptable to TDS and API) to act as
paying agent (the "PAYING AGENT") for API and agent for the holders of Common
Shares in connection with the Merger to receive and pay the funds necessary to
make the payments contemplated by SECTION 3.1(a).
(b) SURVIVING CORPORATION TO PROVIDE FUNDS. At the Effective Time,
TDS shall take all steps necessary to enable and cause the Surviving Corporation
to provide to the Paying Agent funds necessary to pay for the Common Shares
pursuant to SECTION 3.1(a). The funds held by the Paying Agent pursuant to this
SECTION 3.2 shall not be used for any purpose other than payment of the Merger
Consideration.
(c) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time, the Paying Agent shall mail to each holder of record of a certificate of
Common Shares, other than TDS, API, any Subsidiary of TDS or API and any holder
of Dissenting Shares (a certificate or certificates held by such holders are
sometimes referred to herein as "CERTIFICATE" or "CERTIFICATES"), (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon actual delivery of the
Certificates to the Paying Agent, and shall be in a form and have such other
provisions as TDS may reasonably specify) and (ii) instructions for use in
effecting the surrender of such Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by the Surviving
Corporation, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Paying Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor the amount of
cash into
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which the Common Shares theretofore represented by such Certificate shall have
been converted pursuant to SECTION 3.1, and the Certificates so surrendered
shall forthwith be cancelled. No interest will be paid or will accrue on the
cash payable upon the surrender of any Certificate. If payment is to be made to
a person other than the person in whose name the Certificate so surrendered is
registered, it shall be a condition of payment that such Certificate shall be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of such Certificate
or establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
SECTION 3.2, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the Common Shares theretofore represented by
such Certificate shall have been converted pursuant to SECTION 3.1.
(d) RETURN OF FUNDS. At any time following the sixth month after the
Effective Time, the Surviving Corporation shall be entitled to require the
Paying Agent to deliver to it any funds which had been made available to the
Paying Agent and not disbursed to holders of Common Shares (including, without
limitation, all interest and other income received by the Paying Agent in
respect of all funds made available to it), and thereafter such holders shall be
entitled to look to the Surviving Corporation (subject to abandoned property,
escheat and other similar laws) only as general creditors thereof with respect
to any Merger Consideration that may be payable upon due surrender of the
Certificates held by them. Notwithstanding the foregoing, neither the Surviving
Corporation nor the Paying Agent shall be liable to any holder of a Common Share
for any Merger Consideration delivered in respect of such Common Share to a
public official pursuant to any abandoned property, escheat or other similar
law.
Section 3.3 NO FURTHER OWNERSHIP RIGHTS IN API COMMON SHARES. All
cash paid upon the surrender of Certificates in accordance with the terms hereof
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the Common Shares theretofore represented by such Certificates.
Section 3.4 CLOSING OF API TRANSFER BOOKS. At the Effective Time,
the stock transfer books of API shall be closed and no registration of transfers
of Common Shares or Series A Common Shares shall thereafter be made on the stock
transfer books of the Surviving Corporation. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged as provided in this ARTICLE III.
Section 3.5 WITHHOLDING. The Surviving Corporation or the Paying
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable
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pursuant to this Agreement to any holder of Common Shares such amounts as the
Surviving Corporation or the Paying Agent is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "CODE"), or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by the Surviving Corporation or
the Paying Agent, such withheld amounts will be treated for all purposes of this
Agreement as having been paid to the holder of the Common Shares in respect of
which such deduction and withholding was made by the Surviving Corporation or
the Paying Agent.
Section 3.6 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and subject to such other conditions as the Board of
Directors of the Surviving Corporation may impose, the Surviving Corporation
shall issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof as determined in accordance
herewith. When authorizing such issue of the Merger Consideration in exchange
therefor, the Board of Directors of the Surviving Corporation (or any authorized
officer thereof) may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificate to give the Surviving Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Surviving
Corporation with respect to the Certificate alleged to have been lost, stolen or
destroyed.
Section 3.7 FURTHER ASSURANCES. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations in the Merger,
all such deeds, bills of sale, assignments and assurances and do, in the name
and on behalf of such Constituent Corporations, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF API
API represents and warrants to TDS and Purchaser as follows:
Section 4.1 ORGANIZATION.
(a) API is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware. Except as set forth on API
Disclosure Letter Schedule 4.1, API is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of its properties owned or leased or the nature of its activities make
such qualification necessary, except where the failure to be so qualified or in
good standing would not have a Material Adverse Effect. Copies of the
Certificate of Incorporation and Bylaws of API, and all amendments thereto,
heretofore delivered to TDS and TSR Wireless are accurate and complete as of the
date hereof. API Disclosure Letter Schedule 4.1 lists all jurisdictions in
which API is qualified to do business as a foreign corporation.
(b) API has all requisite corporate power and authority to own, lease
and operate the API Assets and to conduct the API Business as it is presently
being conducted.
(c) API Disclosure Letter Schedule 4.1 is a correct and complete list
of API's Subsidiaries, each of which is a corporation or limited liability
company duly organized or formed, validly existing and in good standing under
the laws of its jurisdiction of incorporation or formation (as applicable) (as
identified on API Disclosure Letter Schedule 4.1), and has the requisite
corporate or limited liability company power and authority to conduct its
business as it is presently being conducted and to own and lease its properties
and assets. API Disclosure Letter Schedule 4.1 contains a true, correct and
complete list of all jurisdictions in which each Subsidiary is qualified to do
business as a foreign corporation or limited liability company. Except as set
forth in API Disclosure Letter Schedule 4.1, each of the Subsidiaries is duly
qualified to do business as a foreign corporation or limited liability company
(as applicable) and is in good standing in each jurisdiction where the character
of its properties owned or leased or the nature of its activities make such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect. Copies of the Certificate or
Articles of Incorporation and Bylaws or other organizational documents of each
Subsidiary of API have been made available to TDS and TSR Paging and are
accurate and complete. API owns of record and beneficially all of the issued
and outstanding capital stock of each free and clear of any Encumbrances, except
as set forth on API Disclosure Letter Schedule 4.1.
Section 4.2 CAPITALIZATION.
(a) As of the date of this Agreement, the total number of shares of
all classes of stock which API is authorized to issue is 160,000,000 shares,
consisting of
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50,000,000 Common Shares, 50,000,000 Series A Common Shares, 50,000,000
Series B Common Shares, par value $1.00 per share (the "SERIES B COMMON
SHARES") and 10,000,000 shares of Preferred Stock, par value $1.00 per share
(the "PREFERRED SHARES"). As of the date hereof, (i) 12,500,000 Series A
Common Shares are issued and outstanding, (ii) no Series B Common Shares are
issued and outstanding, (iii) no Preferred Shares are issued and outstanding,
(iv) 7,645,446 Common Shares are issued and outstanding, (v) no Common Shares
are held in the treasury of API, (vi) 150,000 Common Shares are reserved for
future issuance pursuant to the TDS Tax-Deferred Savings Plan, (vii) 100,000
Common Shares are reserved for future issuance for sale to employees of API
and its subsidiaries under the 1997 Employee Stock Purchase Plan, (viii)
700,000 shares are reserved for future issuance under the 1994 Long Term
Incentive Plan, as amended and restated as of April 1, 1996 (with respect to
which options to acquire 287,072 Common Shares are issued and outstanding)
and (ix) 12,500,000 Common Shares are reserved for issuance upon conversion
of the Series A Common Shares. All the outstanding shares of API's capital
stock are duly authorized, validly issued, fully paid and nonassessable and
not subject to any preemptive rights of third parties in respect thereto.
(b) As of the date of this Agreement, (i) no bonds, debentures, notes
or other indebtedness having the right to vote under ordinary circumstances (or
convertible into securities having such right to vote) ("VOTING DEBT") of API
are issued or outstanding, (ii) except as set forth above, and except as
provided in the Exchange Agreement, dated January 1, 1994, between API and TDS,
and the Registration Rights Agreement, dated January 1, 1994, between API and
TDS, there are no existing options, warrants, calls, subscriptions or other
rights or other agreements or commitments of any character (collectively,
"WARRANTS") relating to the issued or unissued capital stock or Voting Debt of
API or obligating API to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or Voting Debt of, or other
equity interests in, API or securities convertible into or exchangeable for such
shares, Voting Debt or equity interests or obligating API to grant, extend or
enter into any such Warrant and (iii) there are no outstanding contractual
obligations of API to repurchase, redeem or otherwise acquire any shares of
capital stock of API or any Warrants.
Section 4.3 AUTHORITY. API has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder to consummate the transactions contemplated hereby, subject to, with
respect to the Merger, the approval and adoption of this Agreement and the
Merger by the affirmative vote of the holders of Common Shares and Series A
Common Shares entitled to cast at least a majority of the total number of votes
entitled to be cast by holders of Common Shares and Series A Common Shares. The
execution and delivery of this Agreement and the consummation of the Merger and
of the other transactions contemplated hereby have been duly approved by the
Board of Directors of API. No other corporate proceedings on the part of API
are necessary to authorize the entering into and the performance of this
Agreement and the transactions contemplated hereby, other than, with respect to
the Merger, the approval and adoption of this Agreement
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and the Merger by API's shareholders as described in the preceding sentence and
the filing and recordation of appropriate merger documents as required by the
DGCL. This Agreement has been duly executed and delivered by API and
constitutes a legal, valid and binding obligation of API. The restrictions on
business combinations contained in Section 203 of the DGCL are not applicable to
the transactions contemplated hereby.
Section 4.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Interim
Balance Sheet Date, except as contemplated by this Agreement, there has not been
any:
4.4.1 Material Adverse Change in respect of API, or any of
its Subsidiaries, the FCC Licenses and/or the FCC License Applications.
4.4.2 change in accounting methods, principles or practices
by API or any of its Subsidiaries, except as required by law or by generally
applicable changes instituted in the accounting profession;
4.4.3 material damage, destruction or loss (whether or not
covered by insurance) adversely affecting the API Assets or the API Business;
4.4.4 cancellation, individually or the aggregate of any
material indebtedness or waiver or release of any material right or claim of API
or its Subsidiaries;
4.4.5 cancellation or termination of any material Contract of
API or its Subsidiaries or entry into any material Contract by API or its
Subsidiaries, other than in respect of the API Excluded Assets;
4.4.6 sale, assignment or transfer of (i) any transmitters
and paging terminals of API or its Subsidiaries included in the Interim Balance
Sheet of API, whether in use or in storage or (ii) any material portion of the
API Assets other than sales of Inventory in the ordinary course of business;
4.4.7 failure to replenish API's inventories and supplies in
a normal and customary manner consistent with prior practice and prudent
business practices prevailing in the industry, except for reductions in API's
and its Subsidiaries' Inventory not exceeding ten percent of such Inventory on
the Interim Balance Sheet Date consistent with prudent business practice, or any
purchase commitment made by API or its Subsidiaries in excess of the normal,
ordinary and usual requirements of its business or at any price in excess of the
then current market price or upon terms and conditions more onerous than those
usual and customary in the industry, or any change in the selling, pricing,
advertising or personnel practices of API and its Subsidiaries inconsistent with
their prior practice and prudent business practices prevailing in the industry;
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4.4.8 institution of settlement of or agreement to settle any
Action relating to the API Business (other than the API Excluded Assets) or the
API Assets other than in the ordinary course of business consistent with past
practices but not in any case involving amounts in excess of $200,000 in the
aggregate;
4.4.9 agreement by API or its Subsidiaries to do, or any
action or omission by API or its Subsidiaries which is likely to result in, any
of the representations and warranties set forth in the preceding clauses 4.4.1
through 4.4.8 becoming untrue other than as expressly provided for herein.
Section 4.5 ASSETS. API and its Subsidiaries have good and
marketable title to the API Assets and, upon the consummation of the
transactions contemplated by the Asset Contribution Agreement, TSR Wireless will
acquire good title to all the API Assets, free and clear of any Encumbrances
other than Permitted Encumbrances. The API Assets include all assets necessary
for the conduct of the API Business as presently conducted.
Section 4.6 API REAL PROPERTY. API and its Subsidiaries do not own
any Real Property. API Disclosure Letter Schedule 4.6 also contains a complete
and accurate list of all Real Property Leases distinguishing between the stores,
transmission sites, office premises and other Real Property Leases.
4.6.1 ACTIONS. There are no pending or, to the knowledge of
API, threatened condemnation proceedings or other Actions with respect to any
Real Property Leases.
4.6.2 REAL PROPERTY LEASES OR OTHER AGREEMENTS. Except for
the Real Property Leases listed on API Disclosure Letter Schedule 4.6, there are
no material leases, subleases, licenses, occupancy agreements, options, rights,
concessions or other agreements or arrangements, written or oral, granting to
any Person the right to purchase, use or occupy any Real Property Leases.
Except as set forth in API Disclosure Letter Schedule 4.6, with respect to each
Real Property Lease, API or its Subsidiaries have and will transfer to TSR
Wireless at the Closing (as defined in the Asset Contribution Agreement) a valid
leasehold interest in the leasehold estate, free and clear of all Encumbrances
other than Permitted Encumbrances. Except as set forth on API Disclosure Letter
Schedule 4.6, all Real Property Leases are valid, binding and enforceable in all
material respects in accordance with their terms and are in full force and
effect. Except as set forth on API Disclosure Letter Schedule 4.6, API and its
Subsidiaries enjoy peaceful and undisturbed possession of all real property
subject to such Real Property Leases, and API and its Subsidiaries have in all
material respects performed all the material obligations required to be
performed by them through the date hereof with respect to such Real Property
Leases, and each Real Property Lease is assignable (upon receipt of necessary
landlord Consents) in connection with the transactions contemplated by the Asset
Contribution Agreement.
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4.6.3 CERTIFICATE OF OCCUPANCY. API and its Subsidiaries
have received all required material approvals of Governmental Authorities
(including, without limitation, Permits and material certificates of occupancy
or other similar certificates permitting lawful occupancy of the Real Property
Leases) required in connection with the present use of the Real Property Leases
and all improvements thereon.
4.6.4 UTILITIES. All Real Property Leases and the
improvements thereon are supplied with utilities and other services necessary
for the operation of such facilities as currently operated.
4.6.5 IMPROVEMENTS, FIXTURES AND EQUIPMENT. All Leasehold
Improvements, and all Fixtures and Equipment and other tangible assets owned,
leased or used by API or its Subsidiaries on the Real Property Leases are
sufficient in all material respects for the operation of the API Business as
presently conducted.
4.6.6 NO SPECIAL ASSESSMENT. Other than to the extent such
Contracts relate to the API Excluded Assets, API and its Subsidiaries have not
received notice of any special assessment relating to any Real Property Leases
or any portion thereof, and API has no knowledge of any pending or threatened
special assessment, other than any special assessments disclosed in API
Disclosure Letter Schedule 4.6.
Section 4.7 CONTRACTS AND COMMITMENTS.
4.7.1 CONTRACTS. Other than to the extent such Contracts relate
to the API Excluded Assets, API Disclosure Letter Schedule 4.7 sets forth a
complete and accurate list of all Contracts of API and its Subsidiaries of the
following categories:
(i) Reseller Contracts (provided, that, with respect to
reseller agreements with customers only reseller agreements with customers for
at least 2,000 or more pagers and with respect to reseller agreements with third
party vendors only material national reseller agreements along with totals by
region of reseller agreements with third party vendors), distribution,
franchise, lease and license (other than with respect to software that is
available in consumer retail stores and subject to "shrink wrap" license
agreements) Contracts;
(ii) Sales, commission, consulting, agency or advertising
Contracts which are not cancelable on thirty (30) calendar days notice;
(iii) Options to buy any property, real or personal, or
options to sell or sublet any Real Property Leases or personal property included
in the API Assets;
(iv) Contracts involving expenditures or Liabilities in
excess of $250,000 over the life of the Contract or otherwise material to API
and its Subsidiaries;
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(v) Contracts containing covenants limiting the freedom
of API or its Subsidiaries to engage in any line of business or compete with any
Person;
(vi) Intentionally omitted;
(vii) All Contracts with LECs for provision of
Interconnection to API ("API INTERCONNECTION CONTRACTS"), including: (a) all
such API Interconnection Contracts regardless of whether such agreements have
yet been submitted to or approved by the relevant PUCs; (b) a listing of any
requests for interconnection filed by API with PUC(s) pursuant to Section 252(a)
of the Communications Act and a brief description of the status of the PUC
proceeding with respect to each such request; (c) a brief description of
outstanding negotiations between API and LECs regarding provision of
Interconnection by LECs regardless of whether such negotiations are pursuant to
a request for interconnection submitted by API pursuant to Section 252(a) of the
Communications Act; and (d) any related agreements between API and LECs
regarding Interconnection.
(viii) All Personal Property Leases excluding Contracts with
customers for lease of pagers; and
(ix) All Contracts not listed pursuant to SECTIONS 4.7.1
(i) through 4.7.1 (viii) but which are (a) material to the API Business; or (b)
not made in the ordinary course of the API Business.
Except as set forth in API Disclosure Letter Schedule 4.7, API has delivered or
made available to TDS and TSR Paging true, correct and complete copies of each
of the Contracts listed on API Disclosure Letter Schedule 4.7 and API Disclosure
Letter Schedule 4.8, including all amendments and supplements thereto other than
Personal Property Leases with individual customers on standard forms (the
standard forms having been supplied).
4.7.2 ABSENCE OF BREACHES OR DEFAULTS. Except as set forth in
API Disclosure Letter Schedule 4.7, all of the Contracts are valid and in full
force and effect. API or its Subsidiaries have duly performed all of their
material obligations under such Contracts to the extent those obligations to
perform have accrued, and no material violation of, or material default or
breach under, such Contracts by API or its Subsidiaries, or, to API's knowledge,
any other party has occurred and neither API nor its Subsidiaries, nor, to API's
knowledge, any other party has repudiated any material provisions thereof.
4.7.3 PRODUCT WARRANTY. API and its Subsidiaries have
committed no act, and there has been no omission, which would result in, and
there has been no occurrence which would give rise to, any material product
liability or material liability for breach of warranty (whether covered by
insurance or not) on the part of API or its Subsidiaries, with respect to
products sold, or services rendered prior to the Closing.
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Section 4.8 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS. API Disclosure
Letter Schedule 4.8 sets forth a complete and accurate list of the names and
addresses of API and its Subsidiaries' (i) ten (10) largest direct customers and
the ten (10) largest reseller customers for November 1997 for each sales region,
showing the approximate recurring revenue in dollars by API and its Subsidiaries
to each such customer during such month; and (ii) five (5) largest suppliers for
January through November 1997 showing the approximate total purchases in dollars
by API and its Subsidiaries from each such supplier during such period. As of
the date hereof, neither API nor any of its Subsidiaries has received any
communication from any customer or supplier named on API Disclosure Letter
Schedule 4.8 of any intention to terminate or reduce purchases from or supplies
to API and its Subsidiaries.
Section 4.9 OPERATION OF THE API BUSINESS. Except as set forth in
API Disclosure Letter Schedule 4.9, (i) API has conducted the API Business only
through API and its Subsidiaries and not through any other divisions or any
direct or indirect Subsidiary or Affiliate of TDS and (ii) no part of the API
Business is operated by TDS or API through any entity other than API and its
Subsidiaries.
Section 4.10 INVENTORY. All Inventory is of good, usable and
merchantable quality and, except as set forth on API Disclosure Letter Schedule
4.10, does not include obsolete or discontinued items not otherwise saleable for
ten dollars ($10) or more in the ordinary course of business. Except as set
forth on API Disclosure Letter Schedule 4.10 or in amounts which are not
material;
4.10.1 all Inventory is of such quality as to meet the quality
control standards of API and any applicable governmental quality control
standards;
4.10.2 all Inventory is saleable as current Inventory at the
current prices thereof in the ordinary course of business;
4.10.3 all Inventory is recorded on the books of the API
Business and in the API Interim Balance Sheet at the net book value determined
in accordance with GAAP;
4.10.4 except for a write-down made in September 1996, and
September 1997 no write-down in inventory has been made or should have been made
pursuant to GAAP during the past two years. Except for items undergoing repair
off premises, in the possession of employees or customers all Inventory is
located at the Real Property Leases.
Section 4.11 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither API or
any Subsidiaries of API, nor any officer, employee or agent of API or its
Subsidiaries, nor any other Person acting on their behalf, has, directly or
indirectly, within the past five years given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other Person
who is or may be in a position to help or hinder the API Business (or assist in
connection with any actual or proposed
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transaction relating to the API Business) (i) which subjected or might have
subjected API or any of its Subsidiaries to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) which if not given in
the past, might have had a Material Adverse Effect, (iii) which if not continued
in the future, might have a Material Adverse Effect or subject TDS or TSR
Wireless to suit or penalty in any private or governmental litigation or
proceeding, (iv) for any of the purposes described in Section 162(c) of the Code
or (v) for the purpose of establishing or maintaining any concealed fund or
concealed bank account.
Section 4.12 NO CONFLICT OR VIOLATION. Except for (i) the filing
with the SEC of the SCHEDULE 14D-9 and, if required by applicable law, the API
Proxy Statement in connection with this Agreement and the transactions
contemplated hereby and (ii) the filing of the Certificate of Merger with the
Delaware Secretary and appropriate documents with the relevant states in which
API is qualified to do business and except as set forth on API Disclosure Letter
Schedule 4.12 and as required pursuant to the API/TDS Agreements, neither the
execution, delivery or performance of this Agreement by API nor the consummation
by API of the transactions contemplated hereby, including the Merger, will (a)
violate or conflict with any provision of the Restated Certificate of
Incorporation or Bylaws of API or any of API's Subsidiaries, (b) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any Encumbrance (other than a Permitted
Encumbrance) (any such violations, conflicts, breaches, defaults, terminations,
accelerations, or creation of Encumbrances are herein referred to collectively,
as "VIOLATIONS") upon any of the API Assets under, or require any Consent under
any of the terms, conditions or provisions of any Contract, any Financing
Obligation of API, any Authorization, any Real Property Lease, Personal Property
Lease, franchise, Permit, agreement, or other instrument or obligation (i) to
which API or any of its Subsidiaries is a party or (ii) by which the API Assets
are bound, (c) violate any statute, rule, regulation, ordinance, code, order,
judgment, ruling, writ, injunction, decree or award to which API or any of its
Subsidiaries or the API Assets is subject, (d) impose any Encumbrance (other
than a Permitted Encumbrance) on the API Assets. Except as specified in API
Disclosure Letter Schedule 4.12, or in connection with necessary corporate
approvals by API of the Merger and transactions contemplated hereby, no Consent
is required to be obtained or made by API or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby.
Section 4.13 REGULATORY MATTERS.
4.13.1 FCC LICENSES.
(i) API Disclosure Letter Schedule 4.13.1 lists (a) each
FCC License and, in each case, the name of the licensee, the call sign, the
operating frequency or frequencies, the location and the expiration date of the
FCC License; and
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(b) each FCC License Application as of the date hereof and, in each case, the
name of the applicant, the proposed frequency or frequencies, the proposed
location and the FCC file number of the FCC License Application. API has made
available to TDS and TSR Paging for inspection copies of each FCC License and
FCC License Application.
(ii) Except as set forth on API Disclosure Letter Schedule
4.13.1, (A) none of the FCC Licenses or FCC License Applications is subject to
any purchase, sale, option or right of first refusal agreements; (B) API has
good and marketable title, to the extent allowed by law, to the FCC Licenses;
and (C) subject to the regulatory jurisdiction of the FCC , API holds all FCC
Licenses free and clear of all Encumbrances.
(iii) API Disclosure Letter Schedule 4.13.1 lists each 000
XXx one-way paging frequency for which API or any of its Subsidiaries currently
has nationwide exclusivity ("API 929 MHz EXCLUSIVE FREQUENCY"). Except as set
forth in API Disclosure Letter Schedule 4.13.1, for each API 929 MHz Exclusive
Frequency: (i) API and its Subsidiaries timely constructed and placed into
operation in accordance with FCC Rules sufficient transmitters to comply with
929 MHz frequency exclusivity requirements imposed by the FCC (collectively,
"FCC 929 MHz EXCLUSIVITY REQUIREMENTS") as specified, INTER ALIA, in FCC Rules
and FCC decisions in AMENDMENT OF THE COMMISSION'S RULES TO PROVIDE CHANNEL
EXCLUSIVITY TO QUALIFIED PRIVATE PAGING SYSTEMS AT 929-930 MHz, REPORT AND
ORDER, PR Docket No. 93-35, 8 FCC Rcd 8318 (1993), RECON. 11 FCC Rcd 3091
(1996), and WIRELESS TELECOMMUNICATIONS BUREAU ANNOUNCES 929-930 MHz PAGING
LICENSEES THAT HAVE MET CONSTRUCTION REQUIREMENTS FOR NATIONWIDE XXXXXXXXXXX,
XXXXXX XXXXXX, XX 00-000 (released May 10, 1996); REVISION OF PART 22 AND PART
90 OF THE COMMISSION'S RULES TO FACILITATE FUTURE DEVELOPMENT OF PAGING SYSTEMS,
WT Docket No. 96-18, FCC 97-59 (released February 24, 1997); (ii) API and its
Subsidiaries have continued to operate sufficient transmitters to comply with
the terms and conditions of such FCC Licenses and Authorizations, the
Communications Act, the FCC Rules and all applicable state laws and regulations.
4.13.2 FILINGS, ETC.
(i) The FCC Licenses and FCC License Applications and are
the only FCC and PUC Permits and Authorizations necessary to conduct the API
Business. Except as set forth on API Disclosure Letter Schedule 4.13.2, API and
its Subsidiaries have duly and in a timely fashion secured or filed under
applicable law all necessary Permits and Authorizations from, and have filed all
required registrations, applications, reports and any other documents with, the
FCC, and, if applicable, any PUC and any other Governmental Authority exercising
jurisdiction or having jurisdiction over API and its Subsidiaries, in each case,
with respect to the API Business. Except as set forth on API Disclosure Letter
Schedule 4.13.2, (a) the FCC Licenses (b) all other Authorizations are in full
force and effect, are valid for the balances of the current license term, are
not impaired by acts or failures to make required filings on the part of API or
any of its Subsidiaries, and are free and clear of restrictions that may
reasonably
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be expected to limit the full operation of the FCC Licenses or Authorizations,
in each case without adverse conditions, restrictions or impairments, except for
such conditions as are generally applicable to holders of such FCC Licenses and
Authorizations. No renewal of any FCC License would constitute a major
environmental action under the rules of the FCC.
(ii) Except as set forth on API Disclosure Letter Schedule
4.13.2, neither API nor its Subsidiaries is subject to any Order or any pending
or, to the knowledge of API, threatened, Action (excluding rule making that has
general industry applicability) which affects or would be expected to affect, in
any material respect, the validity of any FCC License, or result in the
revocation, termination, or adverse modification thereof, or impair the renewal
thereof. Except as set forth on API Disclosure Letter Schedule 4.13.2, no event
has occurred and is continuing (excluding rule making that has general industry
applicability) that could reasonably be expected to (a) result in the
revocation, termination, non-renewal or adverse modification of any FCC License
or (b) materially and adversely affect any rights of API or its Subsidiaries
thereunder.
4.13.3 FEES. API and its Subsidiaries have paid all franchise,
license, regulatory or other fees and charges which have become due and payable
pursuant to any applications, filings, recordings and registrations with, and
all Authorizations and Permits from, the FCC, any PUC or any other Governmental
Authority, in respect of the API Business.
4.13.4 SHARING AGREEMENTS. Except as set forth on API
Disclosure Letter Schedule 4.13.4, neither API nor any of its Subsidiaries is a
party to any agreement for the shared use of facilities or equipment used in
connection with the API Business.
4.13.5 OPERATIONS. The equipment operating pursuant to the FCC
Licenses or PUC Authorizations of API and its Subsidiaries is operating in all
material respects in accordance with the terms and conditions of such FCC
License or Authorizations, the Communications Act, the FCC Rules and all
applicable state laws and regulations.
4.13.6 CONSTRUCTION. Except as set forth on API Disclosure
Letter Schedule 4.13.6 all construction for facilities that API intends to place
in service proposed in any FCC License is proceeding in a manner that may
reasonably be expected to allow compliance with applicable FCC construction
benchmarks, the completion of such construction and commencement of operations
within the time specified in the relevant FCC License.
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Section 4.14 FINANCIAL STATEMENTS; RECEIVABLES; PUBLIC FILINGS.
4.14.1 FINANCIAL STATEMENTS. The API Financial Statements are
attached as API Disclosure Letter Schedule 4.14.1. The API Financial Statements
(a) were prepared in accordance with the Books and Records of API and its
Subsidiaries, (b) were prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods covered thereby subject,
in the case of the API Unaudited Financial Statements, to the absence of
footnotes and to normal year-end adjustments and (c) fairly present (i) the
consolidated assets, liabilities (including all reserves) and financial position
of API and its Subsidiaries (other than AMS) and (ii) the assets, Liabilities
(including all reserves) and financial position of AMS in each case as of the
respective dates thereof and the results of operations and changes in cash
flows for the periods then ended, consolidated as appropriate. The API Audited
Financial Statements have been audited by Xxxxxx Xxxxxxxx LLP, independent
certified public accountants, whose reports thereon are included with such API
Audited Financial Statements.
4.14.2 RECEIVABLES. All of the receivables of API and its
Subsidiaries (including accounts receivable, loans receivable and advances)
which have arisen in connection with the API Business and which are reflected in
the Interim Financial Statements, and all such receivables which will have
arisen since the Interim Balance Sheet Date, have arisen only from BONA FIDE
transactions in the ordinary course of business. All receivables of API and its
Subsidiaries on the date of this Agreement are, and on the Closing Date will be,
good and collectible in the ordinary course of business of API within 120 days
of their incurrence, subject to any applicable reserves set forth in the Interim
Balance Sheet of API. API has no knowledge of any facts or circumstances
generally which would result in any material increase in the uncollectability of
such receivables as a class in excess of the reserves therefor set forth on the
Interim Financial Statements. API Disclosure Letter Schedule 4.14.2 accurately
lists as of November 28, 1997 all receivables arising out of or relating to the
API Business in excess of $1,000, the amount owing and the aging of such
receivable and the name and last known address of the party from whom such
receivable is owing.
4.14.3 FILINGS. API Disclosure Letter Schedule 4.14.3 sets
forth a list of all reports filed by API with the SEC under the Exchange Act
during the period from January 1, 1995 to the date hereof (collectively, the
"SEC REPORTS"), true and correct copies of which have been made available to TDS
and TSR Paging. None of the SEC Reports, as of their respective dates (as
amended through the date hereof) contained any untrue statement of material fact
or omitted to state a material fact with respect to the API Business required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 4.15 BOOKS AND RECORDS. API and its Subsidiaries have made
and kept (and given TDS and TSR Paging access to) the Books and Records of API,
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which, in all material respects accurately and fairly reflect the activities of
API and its Subsidiaries that would be so recorded.
Section 4.16 LITIGATION. Except as set forth on API Disclosure
Letter Schedules 4.13.2 and 4.16 there is no Action or Order, pending or to the
knowledge of API threatened (a) against, related to or affecting (i) API or any
of its Subsidiaries or the API Assets, or (ii) any shareholders (including TDS)
officers or directors of API or any of its Subsidiaries (in each case, in such
capacity) and which either (A) may be reasonably expected to result in damages
in excess of $100,000 in respect of any individual Order for the payment of
money damages (or $200,000 in the aggregate), or (B) seeks as of the date hereof
to delay, limit or enjoin the transactions contemplated by this Agreement or (b)
in which API or any of its Subsidiaries is a plaintiff, including any derivative
suits brought by or on behalf of API or any of its Subsidiaries. None of API or
any of its Subsidiaries is in default with respect to or subject to any Order,
and to the knowledge of API, there are no unsatisfied Orders against API or any
of its Subsidiaries or the API Assets.
Section 4.17 COMPLIANCE WITH LAW. API and its Subsidiaries are and
have been in compliance in all material respects with all Authorizations,
Regulations, and Permits in respect of the API Assets and the API Business; IT
BEING UNDERSTOOD that nothing in this representation is intended to address any
compliance issues that are the subject of any other representation or warranty
set forth herein.
Section 4.18 BROKERS. Except for the fees payable to PaineWebber,
Inc., in connection with the transactions contemplated hereby, which shall be
paid by API, no broker, investment banker or other person is entitled to any
broker's, finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of API. A true, correct and complete copy of the engagement letter or
other agreement between API and PaineWebber, Inc. has been delivered to
Purchaser.
Section 4.19. NO OTHER AGREEMENTS TO SELL THE API ASSETS. Except as
contemplated by TDS in the Asset Contribution Agreement, neither API nor any of
its officers, directors or affiliates have any commitment or legal obligation,
absolute or contingent, to any other Person other than TSR Wireless and TSR
Paging to sell, assign, transfer or effect a sale of the API Assets (other than
sales of Inventory in the ordinary course of business), to sell or effect a sale
of the capital stock of API or any of its Subsidiaries (other than in connection
with existing employee stock option and stock purchase plans) to effect any
merger, consolidation, exclusive license, liquidation, dissolution or other
reorganization of API or any of its Subsidiaries, or to enter into any agreement
or cause the entering into of an agreement with respect to any of the foregoing
business combination transactions.
Section 4.20 PROPRIETARY RIGHTS.
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4.20.1 PROPRIETARY RIGHTS. API Disclosure Letter Schedule 4.20
lists all of API and its Subsidiaries' domestic and foreign registrations of
trademarks and of other marks, trade names or other trade rights, and all
pending applications for any such registrations, all of API's and its
Subsidiaries' registered copyrights and all of API's and its Subsidiaries'
patents and pending patent applications, and all agreements under which API or
its Subsidiaries are licensed to use Proprietary Rights.
4.20.2 OWNERSHIP AND PROTECTION OF PROPRIETARY RIGHTS. API or
one of its Subsidiaries owns and/or has the right to use each of the Proprietary
Rights listed on API Disclosure Letter Schedule 4.20. The Proprietary Rights
listed on API Disclosure Letter Schedule 4.20 constitute all of the Proprietary
Rights necessary to conduct the API Business in the manner presently conducted.
None of the Proprietary Rights is involved in any pending or, to the knowledge
of API, threatened litigation. No other Person (i) has the right to use any of
the Proprietary Rights, except pursuant to the Contracts; or (ii) to API's
knowledge, except as set forth in API Disclosure Letter Schedule 4.20, is
infringing upon any Proprietary Rights. To API's knowledge, the use by API and
its Subsidiaries of the Proprietary Rights is not infringing upon or otherwise
violating the rights of any third party. No proceedings have been instituted
against or notices received by API or any of its Subsidiaries that are presently
outstanding alleging that the use by API or any of its Subsidiaries of the
Proprietary Rights infringes upon or otherwise violates any rights of a third
party in or to such Proprietary Rights. All Proprietary Rights are assignable
by API and its Subsidiaries to TSR Wireless in the manner contemplated by the
Asset Contribution Agreement.
Section 4.21 ENVIRONMENTAL MATTERS.
4.21.1 COMPLIANCE WITH ENVIRONMENTAL LAW. Each of API and its
Subsidiaries has complied and is in compliance in all material respects with all
applicable Environmental Laws pertaining to any of the properties and assets of
the API Business (including the Facilities) and the use and ownership thereof,
and to the operation of the API Business. No violation by API or any of its
Subsidiaries is being alleged of any applicable Environmental Law relating to
any of the properties and assets of the API Business including the Facilities or
the use, occupation or ownership thereof, or to the operation of the API
Business.
4.21.2 OTHER ENVIRONMENTAL MATTERS. Neither API nor to the
knowledge of API any other Person (including any tenant or subtenant) has caused
or taken any action that will result in, and neither API nor any of its
Subsidiaries is subject to, any material Liability relating (i) environmental
conditions on, under, or about the Facilities, including without limitation, the
air, soil and groundwater conditions at such Facilities or (ii) the past or
present use, management, handling, transport, treatment, generation, storage,
disposal or Release of any Hazardous Materials. API has disclosed and made
available to TDS and TSR Paging all information, including, without limitation,
all studies, analyses and test results, in the possession, custody or control of
or otherwise known to API relating to (x) the environmental conditions on, under
or about the Facilities, and (y) any Hazardous Materials used, managed,
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handled, transported, treated, generated, stored or Released by API or any other
Person on, under, about or from any of the Facilities, or otherwise in
connection with the use or operation of the API Business.
Section 4.22 TAX MATTERS.
4.22.1 API has (or by the Closing will have) duly and timely
filed all Tax returns relating to the API Business with respect to Taxes through
the Closing Date for which TDS or TSR Wireless could have post-closing liability
("API PCD TAXES") required to be filed on or before the Closing Date ("API PCD
TAX RETURNS"). Except for API PCD Taxes set forth on API Disclosure Letter
Schedule 4.22, which are being contested in good faith and by appropriate
proceedings, the following API PCD Taxes have (or by the Closing Date will have)
been duly and timely paid: (i) all API PCD Taxes shown to be due on the API PCD
Tax Returns, (ii) all deficiencies and assessments of API PCD Taxes of which API
has or by the Closing Date will have received written notice. All Taxes
required to be withheld by or on behalf of API in connection with amounts paid
or owing to any employee, independent contractor, creditor or other party with
respect to API ("API WITHHOLDING TAXES") have been withheld, and such withheld
taxes have either been duly and timely paid to the proper Governmental
Authorities or set aside in accounts for such purpose.
4.22.2 Except as set forth on API Disclosure Letter Schedule
4.22, (i) all API PCD Tax Returns have been examined by the relevant taxing
authority or the period for assessment of the Taxes in respect of which such Tax
returns were required to be filed has expired, and (ii) no agreement or other
document extending, or having the effect of extending, the period of assessment
or collection of any API PCD Taxes or API Withholding Taxes, and no power of
attorney with respect to any such Taxes, has been filed with the Internal
Revenue Service ("IRS") or any other Governmental Authority.
4.22.3 Except as set forth on API Disclosure Letter Schedule
4.22, (i) there are no API PCD Taxes or API Withholding Taxes for which a
deficiency has been asserted in writing by any Governmental Authority to be due
and (ii) no issue has been raised in writing by any Governmental Authority in
the course of any audit with respect to API PCD Taxes or API Withholding Taxes.
Except as set forth on API Disclosure Letter Schedule 4.22, no API PCD Taxes and
no API Withholding Taxes are currently under audit by any Governmental Authority
of which API has, or will have by the Closing, received written notice.
4.22.4 Except as set forth on API Disclosure Letter Schedule
4.22, there is no assessment or Action or administrative appeal pending, or
threatened of which API has received assessment or written notice against or
relating to API in connection with API PCD Taxes.
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Section 4.23 INFORMATION IN DISCLOSURE DOCUMENTS.
(a) Neither the Schedule 14D-9 nor the information statement to be
filed by API in connection with the Offer pursuant to Rule 14f-1 under the
Exchange Act (the "INFORMATION STATEMENT") nor any of the information supplied
by API specifically for inclusion in the Offer Documents or the Schedule 13E-3
will, at the respective times the Schedule 14D-9, the Information Statement, the
Offer Documents or the Schedule 13E-3 are filed with the SEC or are first
published, sent or given to shareholders, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Schedule
14D-9 and the Information Statement will comply as to form in all material
respects with the applicable requirements of the Exchange Act and the applicable
rules and regulations thereunder.
(b) The proxy or information statement relating to any meeting of
API's shareholders that may be required to be held in connection with the Merger
(as it may be amended from time to time, the "API PROXY STATEMENT") will not, at
the date mailed to API's shareholders and at the time of the meeting of
shareholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies or otherwise. The API Proxy Statement will, when filed
with the SEC by API, comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
Section 4.24 BENEFIT PLANS; LABOR MATTERS. (a) API Disclosure Letter
Schedule 4.24 contains a complete and accurate list of all Benefit Plans
sponsored, maintained, participated in or contributed to by API or any of its
Subsidiaries ("API BENEFIT PLANS"). Neither API nor any of its Subsidiaries is
now sponsoring, maintaining, participating in or contributing to or has ever
sponsored, maintained, participated in or been obligated to contribute to any
Benefit Plan subject to either Title IV of ERISA or the minimum funding
standards of Section 302 of ERISA, including without limitation any defined
benefit plan (as such term is defined in Section 3(35) of ERISA) or
multiemployer plan (as such term is defined in Section 3(37) of ERISA).
(b) API Disclosure Letter Schedule 4.24 contains a complete and
accurate list of all API Benefit Plans which are sponsored or maintained by API
or one of its Subsidiaries and not by TDS ("API SPONSORED BENEFIT PLANS"). With
respect to each API Sponsored Benefit Plan, API has delivered to Purchaser a
true and correct copy, if applicable, of (i) all plan documents and amendments
thereto, trust agreements and amendments thereto and insurance and annuity
contracts and policies, (ii) the current summary plan description or related
materials given to employees of API and the Subsidiaries to describe such Plan,
(iii) the most recent annual report (Form 5500 series) and accompanying
schedules, (iv) the most recent financial statement, (v) the
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most recent actuarial report, (vi) the most recent determination letter issued
by the IRS and application submitted with respect to such letter, and (vii) all
correspondence with the IRS and Department of Labor concerning any controversy.
(c) With respect to all employees of API and its Subsidiaries, to the
best knowledge of API, each API Benefit Plan has been administered in all
material respects in accordance with its terms and complies in all material
respects with all the requirements prescribed by any and all statutes, orders
and governmental rules and regulations applicable to such API Benefit Plan,
including, but not limited to, ERISA and the Code.
(d) Each API Sponsored Benefit Plan intended to qualify under Section
401(a) and 401(k) of the Code has heretofore been determined by the Internal
Revenue Service to so qualify or a timely application for such determination has
been made, and the trusts created thereunder have heretofore been determined to
be exempt from tax under the provisions of Section 501(a) of the Code or an
application for such determination has been made, and to the knowledge of API no
circumstance has occurred or exists which may reasonably be expected to cause
the loss of such qualifications or exemption.
(e) With respect to all employees of API and its Subsidiaries, there
is no pending or, to the best knowledge of API, threatened claim in respect of
any of the API Benefit Plans other than claims for benefits in the ordinary
course of business.
(f) API and its Subsidiaries have complied in all material respects
with the health care continuation requirements of Part 6 of Title I of ERISA.
(g) Neither API nor any of its Subsidiaries has engaged in a
nonexempt prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code which could result in a material liability.
(h) Except as described in API Disclosure Letter Schedule 4.24,
neither API nor any of its Subsidiaries maintains or contributes to any employee
welfare benefit plan within the meaning of Section 3(i) of ERISA which provides
benefits to employees or their beneficiaries after termination of employment
other than as required by Part 6 of Title I of ERISA.
(i) Except as described in API Disclosure Letter Schedule 4.24 or in
API SEC Documents filed prior to the date of this Agreement, API is not a party
to or bound by any oral or written:
(i) employee collective bargaining agreement, employment agreement
(other than employment agreements terminable by API without premium or
penalty on notice of 30 days or less under which the only monetary
obligation of API is to make current wage or salary payments and provide
current fringe
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benefits), consulting, advisory or service agreement, deferred compensation
agreement, confidentiality agreement or covenant not to compete;
(ii) contract or agreement with any officer, director or employee
(other than employment agreements disclosed in response to clause (i) or
excluded from the scope of clause (i)), agent, or attorney-in-fact of API;
or
(iii) stock option, stock purchase, bonus or other incentive plan or
agreement.
(j) Except as set forth in API Disclosure Letter Schedule 4.24, API
has complied in all material respects with all applicable laws, rules and
regulations which relate to prices, wages, hours, discrimination in employment
and collective bargaining and to its operations and none of them is liable in
any material respect for any arrears of wages or any taxes or penalties for
failure to comply with any of the foregoing. API believes that its and its
Subsidiaries' relations with their employees are satisfactory. API is not a
party to, and is not affected by or threatened with, any dispute or controversy
with a union or with respect to unionization or collective bargaining or other
labor matters involving its employees. API is not materially affected by any
dispute or controversy with a union or with respect to unionization or
collective bargaining involving any supplier or customer. API Disclosure Letter
Schedule 4.24 sets forth a description of any union organizing or election
activities involving any non-union employees of API which have occurred since
December 31, 1995 or, to the knowledge of API, are threatened as of the date
hereof.
Section 4.25 OPINION OF FINANCIAL ADVISOR. API has received the
opinion of PaineWebber, Inc., its financial advisor, to the effect that, as of
February 10, 1998, the consideration to be received in the Offer and the Merger,
taken as a whole, by API's shareholders is fair to API's shareholders (other
than TDS) from a financial point of view, a copy of which opinion has been
delivered to TDS.
Section 4.26 CERTAIN AGREEMENTS. Except as set forth in API
Disclosure Letter Schedule 4.26, neither API nor any of its Subsidiaries is a
party to any oral or written agreement or plan, including without limitation any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, under which any compensation or benefits will be increased,
or the vesting of compensation or benefits will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any compensation or benefits will be calculated on the basis of any of
the transactions contemplated by this Agreement.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TDS AND PURCHASER
TDS and Purchaser represent and warrant to API as follows:
Section 5.1 ORGANIZATION; OWNERSHIP. (a) Each of TDS and Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as it is presently being conducted.
(b) As of the date hereof and immediately prior to the consummation
of the Offer, (i) TDS beneficially owns and will own 12,500,000 Series A Common
Shares and 4,000,000 Common Shares and (ii) TDS owns and will own all of the
outstanding shares of Purchaser.
Section 5.2 AUTHORITY. Each of TDS and Purchaser has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by each of TDS (as a party
hereto and as the sole shareholder of Purchaser) and Purchaser and the
consummation of the Merger and of the other transactions contemplated hereby
have been duly approved by the Board of Directors of each of TDS and Purchaser
and by TDS in its capacity as the sole shareholder of TDS. No other corporate
proceedings on the part of TDS or Purchaser are necessary to authorize the
entering into and the performance of this Agreement and the transactions
contemplated hereby, other than with respect to the Merger, the filing and
recordation of appropriate merger documents as required by the DGCL. This
Agreement has been duly executed and delivered by each of TDS and Purchaser and
constitutes a valid and binding obligation of each of TDS and Purchaser.
Section 5.3 CONSENTS AND APPROVALS; NO VIOLATIONS. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Authority is required by or with respect to TDS or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by TDS and Purchaser or the consummation by TDS and Purchaser of the Merger or
the other transactions contemplated hereby, except for (i) the filing with the
SEC by TDS and Purchaser of the Offer Documents and of such reports as may be
required by Sections 13 and 16(a) of the Exchange Act in connection with this
Agreement and the transactions contemplated hereby, (ii) the filing of the
Certificate of Merger with the Delaware Secretary and appropriate documents with
the relevant authorities of states in which API is qualified to do business and
(iii) such filings, approvals, orders, notices, registrations, declarations and
consents as may be required under any applicable state takeover or similar laws,
and any applicable state environmental laws or laws with respect to the
ownership by a foreign entity of real property. Neither the execution, delivery
or performance of this Agreement nor the consummation of the transactions
contemplated hereby will result in
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any Violation of any of the terms, conditions or provisions of (i) the
respective certificates or articles of incorporation or by-laws or comparable
organizational documents of TDS or Purchaser, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, license, lease, contract, agreement or other
instrument, permit concession, franchise or obligation to which TDS or any of
its Subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or affected or (iii) any judgment, order,
writ, injunction, decree, law, statute, rule or regulation applicable to TDS or
any of its Subsidiaries or their respective properties or assets except, in the
case of clause (ii), for Violations that would not prevent or impair the
consummation of the Offer or the Merger in any respect and would not,
individually or in the aggregate, have a material adverse effect on TDS and its
Subsidiaries or on the ability of TDS and Purchaser to perform their obligations
under this Agreement.
Section 5.4 INFORMATION IN DISCLOSURE DOCUMENTS.
(a) None of the Offer Documents or the information supplied by TDS or
Purchaser specifically for inclusion in the Schedule 14D-9 will, at the
respective times the Offer Documents (including any amendments or supplements
thereto) or the Schedule 14D-9 are filed with the SEC or are first published,
sent or given to shareholders, as the case may be, contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) None of the information supplied by TDS or Purchaser specifically
for inclusion or incorporation by reference in API Proxy Statement will, at the
date mailed to API's shareholders and at the time of the meeting of
shareholders, if required by applicable law to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
Section 5.5 BROKERS. Except for the fees payable to Credit Suisse
First Boston and BancBoston Securities, Inc. in connection with the transactions
contemplated hereby, which shall be paid by TDS, no broker, investment banker or
other person is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of TDS and Purchaser.
ARTICLE VI
COVENANTS
Section 6.1 CONDUCT OF API BUSINESS. From the date hereof through
the Closing API, except as contemplated by this Agreement, or as consented to by
TDS in writing, shall operate its business in the ordinary course and
substantially in accordance with past practice (except with respect to certain
FCC Licenses and FCC
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License Applications and certain reductions in planned License build-outs as
described in API Disclosure Letter Schedule 4.12.6) and will use its best
efforts not to take any action inconsistent with this Agreement. Without
limiting the generality of the foregoing, API and each of its Subsidiaries shall
not, except as specifically contemplated by this Agreement:
6.1.1 change or amend the Certificate of Incorporation or Bylaws
of API or any of API's Subsidiaries, except as otherwise required by law;
6.1.2 issue, reissue, sell or pledge or authorize or propose the
issuance, reissuance, sale or pledge of any of its capital stock of any class,
or securities convertible or exchangeable into capital stock of any class, or
any rights, warrants or options to acquire any convertible or exchangeable
securities or capital stock, other than the issuance of Common Shares upon the
exercise of stock options outstanding on the date of this Agreement under API
Option Plans in accordance with their present terms;
6.1.3 declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) on or in respect of any class or series of its capital stock or
otherwise make any payments to its shareholders in their capacity as such;
6.1.4 (i) adjust, split, combine, subdivide or reclassify any of
its capital stock or (ii) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any shares of capital stock of API or of
any of its Subsidiaries or any other securities thereof or any rights, options
or warrants to acquire such shares or other securities;
6.1.5 enter into, extend, modify, terminate or renew any
Contract disclosed, or which would have been required to be disclosed on API
Disclosure Letter Schedule 4.7 if entered into, extended or modified prior to
the date of this Agreement, or any Real Property Lease;
6.1.6 sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any FCC License, FCC License Application except
those previously identified in API Disclosure Letter Schedule 6.1.6 or any other
API Assets, or any interests therein other than sales and leases of Inventory in
the ordinary course of business;
6.1.7 acquire by merger or consolidation with, or merge or
consolidate with, or purchase substantially all of the assets of, or otherwise
acquire any material assets or business of any Person;
6.1.8 fail to expend funds for budgeted capital expenditures or
commitments as set forth in the budget of API attached as Exhibit I to the Asset
Contribution Agreement including, without limitation, maintaining levels of
spare parts
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sufficient to maintain and upgrade the network infrastructure as reasonably
necessary and maintain the present level of Pagers in Service;
6.1.9 fail to maintain the API Assets in substantially their
current state of repair, excepting normal wear and tear, or fail to replace
consistent with API's past practice inoperable, worn-out or obsolete or
destroyed API Assets or fail to maintain the Inventory levels of API and its
Subsidiaries at the levels on the Interim Balance Sheet Date (subject to
reductions in Inventory not exceeding ten (10) percent of such Inventory on the
Interim Balance Sheet Date in accordance with prudent business practice);
6.1.10 make any loans or advances to any Person, except for
normal advances in respect of expenses incurred by employees in the ordinary
course of business.
6.1.11 take or omit to take any action which will result in the
further default under (not otherwise waived) or any acceleration of any API
Intercompany Liabilities or any other Financing Obligations;
6.1.12 fail to take all commercially reasonable actions
reasonably necessary to retain employees of API and its Subsidiaries in the
employment of API or the applicable Subsidiary through the Closing;
6.1.13 do any other act which would cause any representation or
warranty of API in this Agreement to be or become untrue in any material
respect;
6.1.14 except as may be required by applicable law, enter into
or amend any employment, severance or similar agreements or arrangements with
any of their respective directors or executive officers;
6.1.15 except as may be required by applicable law, amend in any
material respect the terms of their respective employee benefit plans, programs
or arrangements or any severance or similar agreements or arrangements in
existence on the date hereof, enter into or amend any employment or consulting
agreement, adopt or enter into any new employee benefit programs or arrangements
or any severance or similar agreements or arrangements; or
6.1.16 enter into any agreement, or otherwise become obligated,
to do any action prohibited hereunder.
Section 6.2 REASONABLE BEST EFFORTS. Upon the terms and subject to
the conditions of this Agreement, each of the parties hereto will use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement, including
(i) the obtaining of all
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necessary actions or non-actions, waivers, consents and approvals from
Governmental Authorities and the making of all necessary registrations and
filings (including filings with Governmental Authorities) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by any Governmental Authority, (ii) the obtaining
of all necessary consents, approvals or waivers from third parties, (iii) the
defending of any claims, investigations, actions, lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Authority vacated or reversed and (iv) the execution and delivery
of any additional instruments necessary to consummate the transactions
contemplated by this Agreement. Each party will promptly consult with the other
with respect to, provide any necessary information with respect to and provide
the other (or its counsel) copies of, all filings made by such party with any
Governmental Authority in connection with this Agreement and the transactions
contemplated hereby. In addition, if at any time prior to the Effective Time
any event or circumstance relating to any of API, TDS or Purchaser or any of
their respective Subsidiaries, or any of their respective officers or directors,
should be discovered by API, TDS or Purchaser, as the case may be, and which
should be set forth in an amendment or supplement to the Offer Documents, the
discovering party will promptly inform the other party of such event or
circumstance.
Section 6.3 ACCESS TO INFORMATION.
6.3.1 From the date hereof through the Closing, API shall, and
shall cause its officers, directors and employees to, afford TDS and TSR Paging
and their respective Representatives, during normal business hours and upon
reasonable notice to API and in a manner which will not interfere with the
operation of the API Business, complete access at all reasonable times to the
API Assets and the API Business for the purpose of inspecting the same, and to
the officers and employees of API, and shall furnish TDS and TSR Paging and its
authorized representatives all financial, operating and other data and
information as TDS or TSR Paging, as the case may be, may reasonably request,
except to the extent that such access would violate any governmental regulation,
law or order to which API, its employees or the API Assets are subject; PROVIDED
that API shall have the right to have Representatives present at all such times;
and PROVIDED FURTHER that such access shall be at the expense of TDS or TSR
Paging, as the case may be.
6.3.2 TSR Paging shall have the right, at its sole cost and
expense to (i) after consultation with and with the consent of API (not to be
unreasonably withheld or delayed) conduct tests of the soil surface or
subsurface waters and air quality at, in, on, beneath or about the Real Property
Leases, and such other procedures as may be recommended by an independent
environmental consultant selected by TSR Paging (the "CONSULTANT") based on its
reasonable professional judgment, in a manner consistent with good engineering
practice, (ii) inspect records, reports, permits, applications, monitoring
results, studies, correspondence, data and any other information or documents
relevant to
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environmental conditions or environmental noncompliance, and (iii) inspect all
buildings and equipment at the Facilities, including without limitation the
visual inspection of the Facilities for asbestos-containing construction
materials; PROVIDED, in each case, such tests and inspections shall be conducted
only (a) during regular business hours; and (b) in a manner which will not
interfere with the operation of the API Business and/or the use of, access to or
egress from the Facilities.
6.3.3 TSR Paging's right to conduct tests, inspect records
and other documents, and visually inspect all buildings and equipment at the
Facilities shall also be subject to the following terms and conditions:
(i) All testing performed on TSR Paging's behalf shall be
conducted by the Consultant;
(ii) A Representative of TDS shall have the right to
accompany the Consultant as it performs testing;
(iii) Except as otherwise required by law, any information
concerning the Real Property Leases gathered by TSR Paging or the Consultant as
the result of, or in connection with, the testing shall be kept confidential in
accordance with subsection (iv) below and shall not be revealed to, or discussed
with, anyone other than Representatives of TSR Paging or Representatives of TDS
who agree to comply with the provisions of subsection (iv) below; and
(iv) In the event that any party to this Agreement or any
party set forth in subsection 6.3.3(iii) is requested or required to disclose
information described in subsection 6.3.2, TSR Paging shall provide API and TDS
or TDS or API shall provide TSR Paging, as the case may be, with prompt notice
of such request so that TDS, API or TSR Paging, as the case may be, may seek an
appropriate protective order or waiver by the other party's compliance with this
Agreement. If, in the absence of a protective order or the receipt of a waiver
hereunder, such party is nonetheless, in the opinion of its counsel, compelled
to disclose such information to any tribunal or else stand liable for contempt
or suffer other censure or penalty, such party will furnish only that portion of
the information which is legally required and will exercise its reasonable
efforts to obtain reliable assurance that confidential treatment will be
afforded to the disclosed information. The requirements of this subsection
6.3.3(iv) shall not apply to information in the public domain or lawfully
acquired on a nonconfidential basis from others.
Section 6.4 SHAREHOLDER APPROVAL. (a) If approval of this Agreement
and the Merger by the shareholders of API is required by law, API will, at TDS's
request, duly call a special meeting of its shareholders for the purpose of
voting upon this Agreement (insofar as it relates to the Merger), the Merger and
related matters and use its reasonable best efforts duly to give notice of,
convene and hold such meeting as soon as practicable following consummation of
the Offer. API will, through its Board of Directors, recommend to its
shareholders approval and adoption of this Agreement and
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approval of the Merger, except to the extent that the Board of Directors of API
shall have withdrawn its approval or recommendation of this Agreement or the
Merger as permitted by SECTION 6.6(b). At the shareholders' meeting, TDS and
Purchaser shall cause all Series A Common Shares and Common Shares then owned by
them and their subsidiaries to be voted in favor of the approval of this
Agreement and the Merger. Notwithstanding the foregoing, if Purchaser or any
other Subsidiary of TDS shall acquire at least 90% of the outstanding Common
Shares, the parties shall, subject to Article VII, at the request of TDS, take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the consummation of the Offer without a meeting of
shareholders in accordance with Section 253 of the DGCL.
(b) If approval of this Agreement and the Merger by the shareholders
of API is required by law, API will, at TDS's request, as soon as practicable
following the consummation of the Offer, prepare and file a preliminary API
Proxy Statement with the SEC and will use its reasonable best efforts to respond
to any comments of the SEC or its staff and to cause the API Proxy Statement to
be mailed to API's shareholders. API will notify TDS promptly of the receipt of
any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the API Proxy Statement or for additional
information and will supply TDS with copies of all correspondence between API or
any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the API Proxy Statement or the Merger. If at any
time prior to the approval of this Agreement by API's shareholders there shall
occur any event that should be set forth in an amendment or supplement to the
API Proxy Statement, API will promptly notify TDS thereof and prepare and mail
to its shareholders such an amendment or supplement. API will not mail any API
Proxy Statement, or any amendment or supplement thereto, to which TDS reasonably
objects.
Section 6.5 API OPTION PLANS. (a) Subject to the next sentence, API
shall use its reasonable best efforts to cause each holder of an outstanding
option with an exercise price less than the Merger Consideration (collectively,
the "EMPLOYEE OPTIONS") to purchase Common Shares granted under API Option Plans
to agree in writing prior to the Effective Time that (i) such holder shall be
entitled to receive from API on the Closing Date, in lieu of such Employee
Option, an amount in cash in respect of each Common Share subject to such
Employee Option equal to the excess, if any, of the Merger Consideration over
the per share exercise price of such Employee Option (it being understood that
if there is no such excess with respect to any such Employee Option, such holder
will not be entitled to receive any cash, securities or other consideration with
respect thereto) and (ii) such Employee Option shall be canceled immediately
prior to the Effective Time. Notwithstanding the foregoing, API shall use its
reasonable best efforts to cause each person, if any, subject to Section 16(b)
of the Exchange Act to whom an Employee Option was granted six months or less
before the Effective Time, whether or not then exercisable, to agree in writing
prior to the Effective Time (but effective as of and upon the Effective Time)
that (i) each such Employee Option shall be canceled as of the date of such
agreement; (ii) no Common Shares shall be issued in respect thereof; and (iii)
such person shall be entitled to receive from API on the date (the "OPTION
PAYMENT DATE") that is six months and one day following
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the date of grant of such option (but in no event earlier than the Closing
Date), in lieu of such Employee Option, a payment equal to the aggregate amount
of cash, if any, determined under the preceding sentence; PROVIDED that such
person shall not be entitled to receive any such amount if prior to the Option
Payment Date such person (x) terminates his employment by the Surviving
Corporation or any of its Subsidiaries, otherwise than as a result of death or
disability or (y) is terminated by the Surviving Corporation or any of its
Subsidiaries for cause. All amounts payable pursuant to this SECTION 6.5(a)
shall be subject to any applicable withholding taxes and shall be paid without
interest.
(b) API shall use its reasonable best efforts to ensure that from and
after the Effective Time neither the Surviving Corporation nor any of its
Subsidiaries is or will be bound by any options, warrants, rights or agreements
which would entitle any person, other than TDS, Purchaser or their wholly owned
Subsidiaries, to beneficially own, or receive any payments (other than as
otherwise contemplated by SECTION 3.1 and this SECTION 6.5) in respect of, any
capital stock of API or the Surviving Corporation.
(c) API shall take all actions necessary to terminate API Option
Plans effective as of the Effective Time.
Section 6.6 NO SOLICITATION. (a) From the date hereof through the
Effective Time or the earlier termination of this Agreement, API shall not, and
shall use its best efforts to cause its Representatives not to, directly or
indirectly, enter into, solicit, initiate or continue any discussions or
negotiations with, or encourage or respond to any inquires or proposals by, or
participate in any negotiations with, or provide any information to, or
otherwise cooperate in any other way with, any Person, other than TDS or TSR
Paging and their respective Representatives, concerning any sale of all or any
substantial portion of the API Assets or the API Business, or of any shares of
capital stock of API or its Subsidiaries, or any merger, consolidation,
liquidation, dissolution or exclusive licensing arrangement or similar
transaction involving API or its Subsidiaries (each such transaction being
referred to herein as a "PROPOSED API ACQUISITION TRANSACTION"); PROVIDED,
HOWEVER, that prior to the acceptance for payment of Common Shares pursuant to
the Offer, to the extent required by the fiduciary obligations of the Board of
Directors of API, as determined in good faith by the Board of Directors based on
the written advice of outside counsel (a copy of which written advice shall be
promptly furnished to TDS), API may, in response to unsolicited requests
therefor, participate in discussions or negotiations with, or furnish
information pursuant to an appropriate confidentiality agreement approved by
API's Board of Directors to, any person.
(b) Neither the Board of Directors of API nor any committee thereof
(including the API Special Committee) shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to TDS or Purchaser, the approval or
recommendation by the Board of Directors of API or any such committee of the
Offer, this Agreement or the Merger or (ii) approve or recommend, or propose to
approve or
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recommend, any Proposed API Acquisition Transaction. Notwithstanding the
foregoing, the Board of Directors of API or any committee thereof, to the extent
required by the fiduciary obligations thereof, as determined in good faith by
the Board of Directors of API or such committee, as the case may be, based on
the written advice of outside counsel (a copy of which written advice shall be
promptly furnished to TDS), may approve or recommend (and, in connection
therewith, withdraw or modify its approval or recommendation of the Offer, this
Agreement or the Merger) a superior proposal and API may take such actions as
are contemplated by Rule 14e-2(a) and Rule 14d-9 promulgated under the Exchange
Act. For purposes of this Agreement, "superior proposal" means a bona fide
written proposal made by a third party to acquire API pursuant to a tender or
exchange offer, a merger, a statutory share exchange, a sale of all or
substantially all its assets or otherwise on terms which the API Special
Committee determines in its good faith reasonable judgment (based on the advice
of independent financial advisors) to be more favorable to API and its
shareholders than the Offer and the Merger and for which financing, to the
extent required, is then fully committed or which, in the reasonable good faith
judgment of the API Special Committee (based on the advice of independent
financial advisors), is reasonably capable of being financed by such third
party.
(c) API shall promptly notify TDS if any discussions or negotiations
are sought to be initiated, any inquiry or proposal is made, or any information
is requested with respect to any Proposed API Acquisition Transaction and notify
TDS of the terms of any proposal which it may receive in respect of any such
Proposed API Acquisition Transaction, including, without limitation, the
identity of the prospective purchaser or soliciting party, except to the extent
that any such notification would violate any now existing agreement of API.
Section 6.7 FEES AND EXPENSES. All fees and expenses incurred in
connection with the Offer, the Merger, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such fees or expenses,
whether or not the Offer or the Merger is consummated.
Section 6.8 NOTIFICATION OF CERTAIN MATTERS. API shall give prompt
notice to TDS and Purchaser, and TDS (or Purchaser, as the case may be) shall
give prompt notice to API, of (a) the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which would be reasonably likely to
cause (i) any representation or warranty contained in this Agreement that is
qualified as to materiality to be untrue or incorrect or any representation or
warranty that is not so qualified to be untrue or incorrect in any material
respect or (ii) any covenant, condition or agreement contained in this Agreement
not to be complied with or satisfied in any material respect, (b) any failure of
API, TDS or Purchaser, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder in any material respect and (c) any change or event which has or is
reasonably likely to have a material adverse effect on API or TDS and its
Subsidiaries, as the case may be; PROVIDED, HOWEVER, that the delivery of any
notice pursuant to this SECTION 6.8 will not
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limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 6.9 PUBLIC ANNOUNCEMENTS. API, TDS and Purchaser will
consult with each other before issuing any press releases or otherwise making
any public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press releases or make any such public
statements prior to such consultation, except as may be required by applicable
law or by obligations pursuant to any listing agreement with any securities
exchange.
Section 6.10 STATE TAKEOVER LAWS. If any "fair price", "control
share acquisition" or "business combination" statute or other takeover or tender
offer statute or regulation shall become applicable to the transactions
contemplated by this Agreement, TDS, Purchaser and API and their respective
Boards of Directors shall use their reasonable best efforts to grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to minimize the effects of such statute or
regulation on the transactions contemplated hereby.
Section 6.11 INDEMNIFICATION OF OFFICERS AND DIRECTORS. For six
years from and after the Effective Time, TDS agrees, to the extent permitted by
law, to cause the Surviving Corporation to indemnify and hold harmless all
current officers and directors of API and of its Subsidiaries to the same extent
such persons are currently indemnified by API pursuant to API's Restated
Certificate of Incorporation and By-Laws for acts or omissions occurring at or
prior to the Effective Time. TDS will cause to be maintained for a period of
not less than six years from the Effective Time the current directors' and
officers' insurance and indemnification policy of TDS to the extent that it
provides coverage for events occurring prior to the Effective Time (the "TDS D&O
Insurance") for all directors and officers of API on the date hereof. The
provisions of this SECTION 6.11 are for the benefit of and may be enforced after
the Effective Time by such officers and directors.
Section 6.12 SHAREHOLDER LITIGATION. Each of TDS and API shall use
their reasonable best efforts to settle, and API shall give TDS the opportunity
to direct the defense of, any shareholder litigation against API and its
directors relating to the transactions contemplated by this Agreement; PROVIDED,
HOWEVER, that no such settlement shall be agreed to without TDS's consent, which
shall not be unreasonably withheld; and PROVIDED FURTHER that no settlement
requiring a payment by a director shall be agreed to without such director's
consent.
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ARTICLE VII
CONDITIONS
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of the parties to effect the Merger are
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:
(a) Purchaser shall have accepted for purchase and paid for all
Common Shares validly tendered and not withdrawn pursuant to the Offer;
PROVIDED, HOWEVER, that this condition shall not be applicable to the
obligations of TDS or Purchaser if, in breach of this Agreement or the terms of
the Offer, Purchaser fails to accept for payment the Common Shares tendered
pursuant to the Offer.
(b) If required by applicable law, this Agreement (insofar as it
relates to the Merger) and the Merger shall have been approved and adopted by
the requisite affirmative vote or consent of the holders of Common Shares in
accordance with applicable law and API's Restated Certificate of Incorporation.
(c) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
court or other tribunal or governmental body or authority which prohibits the
consummation of the transactions contemplated herein substantially on the terms
contemplated hereby. In the event any order, decree or injunction shall have
been issued, each party shall use its reasonable efforts to remove any such
order, decree or injunction.
Section 7.2 CONDITIONS TO TDS'S OBLIGATION TO EFFECT THE MERGER.
TDS's obligation to effect the Merger is subject to the Asset Contribution
Agreement being in full force and effect and not terminated in accordance with
the terms thereof and all of the conditions set forth in Articles XI and XII
thereof shall have been satisfied or waived.
ARTICLE VIII
TERMINATION
Section 8.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of any
matters presented in connection with the Merger by the shareholders of API:
(a) by mutual written consent duly authorized by the Board of
Directors of TDS and API, if such termination is also approved by the API
Special Committee;
(b) by either TDS or API if:
(i) the Effective Time shall not have occurred on or before
September 30, 1998; PROVIDED, HOWEVER, that the right to terminate this
Agreement under
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this SECTION 8.1(b)(i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such
date or
(ii) there shall be any law or regulation that makes consummation
of the Merger illegal or otherwise prohibited or any court of competent
jurisdiction or other Governmental Authority shall have issued an order,
decree, ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and nonappealable; or
(c) By TDS if due to an occurrence or circumstance that would result
in a failure to satisfy any condition set forth in ANNEX II hereto, Purchaser
shall have:
(i) failed to commence the Offer within 60 days following the date
of this Agreement,
(ii) terminated the Offer without having accepted any Common Shares
for payment thereunder, or
(iii) failed to pay for Common Shares pursuant to the Offer within
90 days following the commencement of the Offer, unless such failure to pay
for Common Shares shall have been caused by or resulted from the failure of
TDS or Purchaser to perform in any material respect any material covenant
or agreement of either of them contained in this Agreement or the material
breach by TDS or Purchaser of any material representation or warranty of
either of them contained in this Agreement; or
(d) By API, upon approval of the Board of Directors and the API
Special Committee, if due to an occurrence or circumstance that would result in
a failure to satisfy any of the conditions set forth in ANNEX II hereto,
Purchaser shall have:
(i) failed to commence the Offer within 60 days following the date
of this Agreement,
(ii) terminated the Offer without having accepted any Common Shares
for payment thereunder, or
(iii) failed to pay for Common Shares pursuant to the Offer within
90 days following the commencement of the Offer, unless such failure to pay
for Shares shall have been caused by or resulted from the failure of API to
perform in any material respect any material covenant or agreement of it
contained in this Agreement or the material breach by API of any material
representation or warranty of it contained in this Agreement; or
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(e) By API, upon approval of the Board of Directors of API and the
API Special Committee, if any representation or warranty of TDS and Purchaser in
this Agreement which is qualified as to materiality shall not be true and
correct or any such representation or warranty that is not so qualified shall
not be true and correct in any material respect, in each case as if such
representation or warranty was made as of such time on or after the date of this
Agreement; or TDS or Purchaser shall have failed to perform in any material
respect any obligation or to comply in any material respect with any agreement
or covenant of TDS or Purchaser to be performed or complied with by it under
this Agreement.
(f) By TDS, upon approval of the Board of Directors of TDS, if any
representation or warranty of API in this Agreement which is qualified as to
materiality shall not be true and correct or any such representation or warranty
that is not so qualified shall not be true and correct in any material respect,
in each case as if such representation or warranty was made as of such time on
or after the date of this Agreement; or API shall have failed to perform in any
material respect any obligation or to comply in any material respect with any
agreement or covenant of API to be performed or complied with by it under this
Agreement.
(g) By TDS if the Board of Directors of API or any committee thereof
(including the Special Committee) (A) shall withdraw, modify or change in any
adverse manner (including by amendment of the Schedule 14D-9) to TDS or
Purchaser its approval of this Agreement, the Offer or the Merger, (B) shall
approve or recommend any Proposed API Acquisition Transaction in each case,
other than by TDS or an Affiliate of TDS or (C) shall resolve to take any of the
actions specified in clauses (A) or (B) above.
The party desiring to terminate this Agreement pursuant to this SECTION 8.1
(other than pursuant to SECTION 8.1(a)) shall give notice of termination to the
other party in accordance with SECTION 9.4.
Section 8.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement by either API or TDS as provided in SECTION 8.1, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of TDS, Purchaser or API, and each shall be responsible
for its own expenses except (a) the agreements contained in this SECTION 8.2 and
SECTION 6.7 and ARTICLE IX shall survive termination hereof and (b) nothing
herein will relieve any party from liability for any willful breach hereof.
ARTICLE IX
MISCELLANEOUS
Section 9.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. SECTION 6.11 and this ARTICLE IX and, without limitation by the
specific enumeration of the foregoing, each and every other agreement contained
in this
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Agreement or any instrument or other document delivered pursuant to this
Agreement and which contemplates performance after the Effective Time shall
survive the Merger. None of the representations, warranties and agreements
(other than those agreements referred to in the previous sentence of this
SECTION 9.1 in the event of the Merger and those agreements referred to in
SECTION 8.2 in the event of the termination of this Agreement in accordance with
SECTION 8.1) in this Agreement or in any instrument or other document delivered
pursuant to this Agreement shall survive the earlier of the Effective Time or
the termination of this Agreement pursuant to SECTION 8.1, as the case may be.
Section 9.2 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the shareholders of API, but, after any such approval, no
amendment will be made which by law requires further approval by such
shareholders without such further approval; PROVIDED, HOWEVER, that such
amendment shall be approved by the API Special Committee. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
Section 9.3 EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties hereto may, to the extent legally allowed, (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver will be
valid only if set forth in a written instrument signed on behalf of such party
and, in the case of any waiver or extension by which API is to be bound, only if
approved by the Special Committee.
Section 9.4 NOTICES. All notices under this Agreement shall be in
writing and shall be deemed to have been duly given when received if personally
delivered; when transmitted if transmitted by telecopy, electronic or digital
transmission method provided that such transmission is confirmed by telephone;
the day after it is sent, if sent for next day delivery to a domestic address by
overnight mail; and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case notice shall be sent to:
(a) if to TDS or Purchaser, addressed to:
00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Chief Financial Officer
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with a copy to:
Sidley & Austin
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
(c) if to API, addressed to:
0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: President
Telecopy No.: (000) 000-0000
with a copy to:
Xx. Xxxx X. Xxxxxxxx
Independent Management Consultant
0000 Xxxxxx Xxxxxx, Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
and a copy to:
Xx. Xxxxx X. Xxxxxxx
Chairman
Minnesota Power and Light Company
00 Xxxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx 00000
and a copy to:
Xx. Xxxxxxx X. Xxxxxxxx III
Vedder, Price, Xxxxxxx & Kammholz
000 X. XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
or to such other address as any party may have specified to the others using the
procedures specified in this SECTION 9.4.
Section 9.5 INTERPRETATION. When a reference is made in this
Agreement to a Section, such reference will be to a Section of this Agreement
unless otherwise
-42-
indicated. The headings contained in this Agreement are for reference purposes
only and will not affect in any way the meaning or interpretation of this
Agreement.
Section 9.6 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which will be considered one and the same agreement
and will become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 9.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement (including the documents and the instruments referred to herein) (a)
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) other than SECTION 6.11 (which is intended to be
for the benefit of the persons covered thereby and may be enforced by such
persons), are not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
Section 9.8 GOVERNING LAW. Except to the extent that Delaware Law is
mandatorily applicable to the transactions contemplated by this Agreement, this
Agreement will be governed by, and construed in accordance with, the laws of the
State of New York applicable to contracts made, executed, delivered and
performed wholly within the State of New York, without regard to any applicable
conflicts of law.
Section 9.9 SPECIFIC PERFORMANCE. The parties hereto agree that if
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage would occur,
no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties will be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
Section 9.10 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder will be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that TDS and Purchaser may assign
all or any of their rights and obligations hereunder to any Affiliate of TDS
provided that no such assignment shall relieve the assigning party of its
obligations hereunder if such assignee does not perform such obligations.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
Section 9.11 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement will not affect the validity or enforceability of
any other provisions hereof, which will remain in full force and effect.
-43-
IN WITNESS WHEREOF, TDS, Purchaser and API have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.
TELEPHONE AND DATA SYSTEMS, INC.
By: /s/ XxXxx X. Xxxxxxx, Xx.
------------------------------------
Name: XxXxx X. Xxxxxxx, Xx.
Title: President
API MERGER CORP.
By: /s/ Xxxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President
AMERICAN PAGING, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: President
-44-
ANNEX I
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"ACTION" shall mean any action, claim, suit, litigation,
administrative appeal, proceeding, labor dispute, arbitral action, governmental
audit, inquiry, criminal prosecution, investigation or unfair labor practice
charge or complaint.
"AFFILIATE" of a Person shall mean a Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the first Person. "Control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
"AMS" shall mean American Messaging Services, LLC, a Minnesota limited
liability company.
"API ASSETS" shall mean all the right, title and interest of API and
its Subsidiaries in and to properties, assets and rights of any kind, whether
tangible or intangible, real or personal, except for the API Excluded Assets.
"API BUSINESS" shall mean the business and operations of API and its
Subsidiaries relating generally to the provision of paging and wireless
messaging services, the sale and support of pagers and other
telecommunications-related products and services and the provision of technical
and repair services in connection therewith.
"API DISCLOSURE LETTER" shall mean the letter delivered by API dated
as of the date hereof which set forth certain exceptions to the representations
and warranties contained in Article IV and certain other information called for
by this Agreement.
"API EXCLUDED ASSETS" shall mean (i) all stock and other ownership
interests of API and its Subsidiaries (other than AMS) in Subsidiaries of API
(other than AMS), (ii) the API assets listed on Schedule 1.1 to the Asset
Contribution Agreement, (iii) any Liabilities of TDS (or its Subsidiaries, other
than API and its Subsidiaries) to API and its Subsidiaries; (iv) all insurance
policies of API and its Subsidiaries, (v) all refunds of any Tax that API, or
any member of an affiliated, consolidated, combined or unitary group of which
API is also a member, paid pursuant to Section 6.22, Section
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14.4.2 or Section 14.5.2 of the Asset Contribution Agreement and (vi) any
deferred Tax Liability as described in note 2 to the 1996 API Financial
Statements.
"API FINANCIAL STATEMENTS" shall mean (i) the audited consolidated
balance sheet of API and its Subsidiaries (other than AMS) as of December 31,
1997, the related consolidated statements of income and cash flow of API and its
Subsidiaries (other than AMS) for the year ended December 31, 1997, the audited
balance sheet of AMS as of December 31, 1996 and the related statement of income
and cash flow of AMS for the year ended December 31, 1996 (and, following
delivery thereof to TDS, for the year ended December 31, 1997) (collectively,
the "API AUDITED FINANCIAL STATEMENTS"), and (ii) the unaudited consolidated
balance sheet of API and its Subsidiaries (other than AMS) dated September 30,
1997, and the related unaudited consolidated statements of income of API and its
Subsidiaries (other than AMS) for the nine (9) months ended September 30, 1997,
the cash flow statement of API and its Subsidiaries (other than AMS) for the
nine (9) months ended September 30, 1997, the unaudited balance sheet of AMS
dated September 30, 1997, and the related unaudited statement of income of AMS
for the nine (9) months ended September 30, 1997 and the cash flow statement of
AMS for the nine (9) months ended September 30, 1997 (the "API UNAUDITED
FINANCIAL STATEMENTS").
"API INTERCOMPANY LIABILITIES" shall mean all Liabilities of API (or
its Subsidiaries) to TDS or its other Subsidiaries including, without
limitation, Liabilities under the API Note.
"API NOTE" shall mean that certain revolving credit agreement between
TDS and API, effective as of January 1, 1994 and that certain loan note made by
API in favor of TDS pursuant thereto.
"API/TDS AGREEMENTS" shall mean the agreements between API and TDS
listed in Item 4 of Schedule 1.1 of the Asset Contribution Agreement.
"AUTHORIZATION" of a Person shall mean any consent, approval, waiver
or authorization of, expiration or termination of any waiting period requirement
(including pursuant to the HSR Act) of, or filing, registration, qualification,
declaration or designation with or by, any Governmental Authority.
"BENEFIT PLAN" shall mean any retirement, savings, profit sharing,
deferred compensation, severance, stock ownership, stock purchase, stock option,
performance, bonus, incentive, vacation or holiday pay, hospitalization or other
medical, disability, life or other insurance, or other welfare benefit or fringe
benefit plan, policy, trust, understanding or arrangement of any kind, whether
written or oral, with or for the benefit of any present or prior officer,
director, employee, agent or consultant (including, without limitation, each
employment, compensation, deferred compensation, severance or consulting
agreement or arrangement associated with a change in ownership or control of
API, but excluding employment agreements terminable by API
I-2
without premium or penalty on notice of 30 days or less under which the only
monetary obligation of API is to make current wage or salary payments and
provide current fringe benefits), with respect to which API is or will be
required to make any payment.
"BOOKS AND RECORDS" of API shall mean (a) all records and lists of API
and its Subsidiaries pertaining to the API Assets, as applicable, (b) all
records and lists of API and its Subsidiaries pertaining to the API Business,
customers, suppliers or personnel of API and its Subsidiaries, (c) all product,
business and marketing plans of API and its Subsidiaries and (d) all books,
ledgers, files, reports, plans, drawings and operating records of every kind
maintained by API and its Subsidiaries, but excluding the originals of API's
minute books, stock books and tax returns, and books and records pertaining to
API Excluded Assets.
"COMMUNICATIONS ACT" shall mean the Communications Act of 1934, as
amended.
"CONSENT" shall mean any consent, approval or waiver of a Person, not
including the Authorization of any Governmental Authority.
"CONTRACTS" shall mean all contracts, leases, licenses (other than
Permits), commitments, understandings and agreements to which API or any of its
Subsidiaries is a party or is bound, whether oral or written, including, without
limitation, all reseller agreements, the Real Property Leases and the Personal
Property Leases.
"DEFAULT" shall mean (i) a breach of or default under any Contract,
FCC License, Real Property Lease or Personal Property Lease or other agreement
to which a Person is party or subject, (ii) the occurrence of an event that with
the passage of time or the giving of notice or both would constitute a breach of
or default under any of the foregoing, or (iii) the occurrence of an event that
with or without the passage of time or the giving of notice or both would give
rise to a right of termination, renegotiation or acceleration under any of the
foregoing.
"ENCUMBRANCE" shall mean any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
"ENVIRONMENTAL LAWS" shall mean all Regulations which regulate or
relate to the protection or clean-up of the environment, the use, treatment,
storage, transportation, generation, manufacture, processing, distribution,
handling or disposal of, or emission, discharge or other release or threatened
release of, Hazardous Substances or otherwise dangerous substances, wastes,
pollution or materials (whether, gas, liquid or solid), the preservation or
protection of waterways,
I-3
groundwater, drinking water, air, wildlife, plants or other natural resources,
or the health and safety of Persons or property, including without limitation
protection of the health and safety of employees. Environmental Laws shall
include, without limitation, the Federal Insecticide, Fungicide, Rodenticide
Act, Resource Conservation & Recovery Act, Clean Water Act, Safe Drinking Water
Act, Atomic Energy Act, Occupational Safety and Health Act, Toxic Substances
Control Act, Clean Air Act, Comprehensive Environmental Response, Compensation
and Liability Act, Emergency Planning and Community Right-to-Know Act, Hazardous
Materials Transportation Act and all analogous or related federal, state or
local law, each as amended.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" of API shall mean any entity which is (or at any
relevant time was) a member of a "controlled group of corporations" with, under
"common control" with, or a member of an "affiliated service group" with, API as
defined in Section 414(b), (c), (m) or (o) of the Code.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FACILITIES" shall mean all real property or facilities owned, leased
or used anytime by API and/or its Subsidiaries (or a predecessor or Affiliate of
API and/or its Subsidiaries).
"FCC" shall mean the Federal Communications Commission or any
successor body thereto.
"FCC LICENSE" shall mean any license, construction permit, consent,
certificate of compliance, approval or Authorization of API issued by the FCC
authorizing operations in, INTER ALIA, Public Mobile Services pursuant to Part
22 of the FCC Rules, Personal Communications Services pursuant to Part 24 of
the FCC Rules, Domestic Fixed Satellite Service pursuant to Part 25 of the FCC
Rules, Private Land Mobile Radio Services pursuant to Part 90 of the FCC Rules
(including one-way paging operations on exclusive and non-exclusive channels in
the 929-930 MHz frequency band), and Fixed Microwave Radio Services pursuant to
Part 101 of the FCC Rules, or other license, permit, consent, certificate of
compliance, franchise approval or Authorization of the FCC or construction
permit in respect of any of the foregoing.
"FCC LICENSE APPLICATION" shall mean an application by API for an FCC
License.
"FCC RULES" shall mean the Rules and Regulations of the FCC
promulgated under the Communications Act, as amended.
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"FINANCING OBLIGATIONS" shall mean (i) indebtedness for borrowed
money, (ii) obligations evidenced by bonds, notes, debentures or similar
instruments (other than surety or similar bonds), (iii) obligations under
capitalized leases, (iv) obligations under conditional sale, title retention or
similar agreements or arrangements creating an obligation with respect to the
deferred purchase price of property (other than customary trade credit), and
(v) obligations to guarantee any of the foregoing types of obligations on behalf
of others.
"FIXTURES AND EQUIPMENT" shall mean all of the furniture, fixtures,
furnishings, machinery, automobiles, trucks, spare parts, supplies, equipment
and other tangible personal property owned or used by API and its Subsidiaries.
"FULLY DILUTED SHARES" shall mean all outstanding securities entitled
generally to vote in the election of directors of API on a fully diluted basis,
after giving effect to the exercise or conversion of all options, rights and
securities exercisable or convertible into such voting securities. .
"GAAP" shall mean generally accepted accounting principles in the
United States, consistently applied in accordance with past practice, as in
effect on the date hereof.
"GOVERNMENTAL AUTHORITY" shall mean any governmental or political
subdivision or department thereof, any governmental or regulatory body,
commission, board, bureau, agency or instrumentality, or any court or arbitrator
or alternative dispute resolution body, in each case whether domestic or
foreign, federal, state or local.
"HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, chemical,
waste and any toxic, infectious, carcinogenic, reactive, corrosive, ignitible or
flammable chemical or chemical compound or hazardous substance, material or
waste, whether solid, liquid or gas, including, without limitation, any quantity
of asbestos in any form, urea formaldehyde, PCB's, radon gas, crude oil or any
fraction thereof, all forms of natural gas, petroleum products or by-products or
derivatives, radioactive substance or material, pesticide waste waters, sludges,
slag and any other substance, material or waste that is subject to regulation,
control or remediation under any Environmental Laws.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"INTERIM BALANCE SHEET" shall mean the unaudited consolidated balance
sheet of API as of the Interim Balance Sheet Date, as included in the API
Unaudited Financial Statements.
"INTERIM BALANCE SHEET DATE" shall mean September 30, 1997.
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"INVENTORY" shall mean all of API's and its Subsidiaries' inventory
held for resale, lease or repair including all pagers, phones, phone
accessories, two-way radios and their related accessories, crystals, phone
cards, spare parts, wrapping, supply and packaging items and similar items, in
each case wherever the same may be located or in transit.
"LEASEHOLD IMPROVEMENTS" shall mean all leasehold improvements
situated in or on the real property covered by the Real Property Leases.
"LIABILITIES" shall mean any direct or indirect liability,
indebtedness, obligation, responsibility, commitment, expense, claim, loss,
damage, deficiency, guaranty or endorsement of or by any Person, whether fixed
or unfixed, xxxxxx or inchoate, liquidated or unliquidated, known or unknown,
secured or unsecured, accrued or unaccrued, joint, several, joint and several,
due or to become due, vested or unvested, executory, determined, determinable,
absolute, contingent, matured, unmatured or other and whether or not required by
GAAP to be set forth in a financial statement of a Person.
"MATERIAL ADVERSE CHANGE" shall mean any significant and substantial
adverse change in the financial condition, business or operations of the API
Business or on the ability of API to consummate the transactions contemplated
hereby.
"MATERIAL ADVERSE EFFECT" shall mean any significant and substantial
adverse effect on the financial condition, business or operations of the API
Business to be acquired hereunder or on the ability of API to consummate the
transactions contemplated hereby.
"ORDER" shall mean any judgment, decision, consent decree, injunction,
ruling or order of any Governmental Authority that is binding on any Person or
its property under applicable law.
"PAGERS IN SERVICE" shall mean activated pagers in service of API and
its Subsidiaries (whether direct or indirect through resellers, dealers or other
agents) billable for the subsequent month, excluding any pagers that are not on
billing or are billed at $0.00 (including, without limitation, pagers with
employees and demo or spare pagers with customers) or in respect of which the
customer's account is more than 90 days delinquent and for which no payment has
been received for 60 days.
"PERMITS" shall mean all licenses, permits, approvals, authorizations
or consents, certificates of compliance, franchise approvals or other similar
authorizations of any Governmental Authority necessary for the conduct of the
API Business, other than FCC Licenses.
"PERMITTED ENCUMBRANCES" shall mean (i) minor liens which in aggregate
are not substantial in amount, do not materially detract from the value or
transferability
I-6
of the property or assets subject thereto and (ii) liens arising pursuant to
Personal Property Leases.
"PERSON" or "PERSON" shall mean any individual, partnership,
corporation, trust, association, unincorporated organization, government or any
department or agency thereof or any other entity.
"PERSONAL PROPERTY LEASES" shall mean all of the existing leases with
respect to the personal property of API and its Subsidiaries.
"PROPRIETARY RIGHTS" shall mean API's and its Subsidiaries' (i)
domestic and foreign registrations of trademarks and other marks, trade names
and trade rights, (ii) pending applications for such registrations, (iii)
patents and applications therefor, (iv) trademarks and other marks, trade names
and other trade rights whether or not registered, (v) copyrights and
registrations thereof, (vi) trade secrets, designs, plans, specifications,
technical information and other proprietary rights and (vii) rights under any
licenses to API or its Subsidiaries to use any copyrights, marks, trade names,
trade rights, patents or other proprietary rights.
"PUC" shall mean any state public utilities commission, public service
commission or other similar agency.
"REAL PROPERTY LEASES" shall mean all real property leases entered
into by API or any of its Subsidiaries.
"REGULATIONS" or "REGULATIONS" shall mean any laws, statutes,
ordinances, regulations, rules, notice requirements, court decisions, agency
guidelines, principles of law and orders of any foreign, federal, state or local
government and any other governmental department or agency, including without
limitation Environmental Laws, energy, motor vehicle safety, public utility,
zoning, building and health codes, occupational safety and health and laws
respecting employment practices, employee documentation, terms and conditions of
employment and wages and hours.
"REPRESENTATIVE" or "REPRESENTATIVE" of any Person shall mean any
officer, director, principal, attorney, agent, analyst, consultant or other
representative of such Person.
"RELEASE" shall mean and include any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment or the workplace of any Hazardous Substance,
and otherwise as defined in any Environmental Law.
"SEC" shall mean the Securities and Exchange Commission or any
successor body thereto.
I-7
"SUBSIDIARY" shall mean each corporation or other Person in which a
Person owns or controls, directly or indirectly, capital stock or other equity
interests representing at least 50% of the outstanding voting stock or other
equity interests. Unless otherwise specified, for the purposes of this
Agreement AMS shall be considered a Subsidiary of API.
"TAX" shall mean any federal, state, local, foreign or other tax,
levy, impost, fee, assessment or other government charge, including without
limitation income, estimated income, business, occupation, franchise, property,
payroll, personal property, sales, transfer, use, employment, commercial rent,
occupancy, franchise or withholding taxes, and any premium, including without
limitation interest, penalties and additions in connection therewith.
1.2 OTHER DEFINED TERMS. The following terms shall have the meanings
defined for such terms in the Sections set forth below:
TERM SECTION
---- -------
"API" Preamble
"API BENEFIT PLANS" Section 4.24(a)
"API 929 MHZ EXCLUSIVE FREQUENCY" Section 4.13.1(iii)
"API PCD TAX RETURNS" Section 4.22.1
"API PCD TAXES" Section 4.22.1
"API PROXY STATEMENT" Section 4.23(b)
"API SPECIAL COMMITTEE" Recitals
"API WITHHOLDING TAXES" Section 4.22.1
"ASSET CONTRIBUTION AGREEMENT" Recitals
"ASSET CONTRIBUTION AGREEMENT CONDITION" Section 1.1
"ASSETS" Section 13.1
"CERTIFICATE" Section 3.2(c)
"CLOSING" Section 4.1
"CLOSING DATE" Section 2.2
"CODE" Section 3.5
"COMMON SHARES" Recitals
"CONSTITUENT CORPORATIONS" Preamble
"CONSULTANT" Section 6.3.2
"DELAWARE SECRETARY" Section 2.1(b)
"DGCL" Recitals
"DISSENTING SHARES" Section 3.1(e)
"EFFECTIVE TIME" Section 2.1(b)
"ERISA" Section 4.24
"ERISA AFFILIATE" Section 4.24
"EXCHANGE ACT" Recitals
"FCC 929 MHZ EXCLUSIVE FREQUENCY" Section 4.13.1(iii)
"IRS" Section 4.22.2
I-8
"MERGER" Recitals
"MERGER CONSIDERATION" Section 3.1(a)
"OFFER" Recitals
"OFFER DOCUMENTS" Section 1.1(b)
"PER SHARE AMOUNT" Recitals
"PREFERRED SHARES" Section 4.2(a)
"PROPOSED API ACQUISITION TRANSACTION" Section 6.6(a)
"PURCHASER" Preamble
"SEC REPORTS" Section 4.4.13
"SCHEDULE 14D-1" Section 1.1(b)
"SCHEDULE 14D-9" Section 1.2(b)
"SCHEDULE 13E-3" Section 1.1(b)
"SERIES A COMMON SHARES" Recitals
"SERIES B COMMON SHARES" Section 4.2(a)
"SURVIVING CORPORATION" Section 2.1(a)
"TDS" Preamble
"TSR PAGING" Recitals
"TSR WIRELESS" Recitals
"VIOLATION" Section 4.12
"VOTING DEBT" Section 4.2(b)
I-9
ANNEX II
TENDER OFFER CONDITIONS
Notwithstanding any other term or provision of the Offer or this
Agreement, Purchaser will not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c) under
the Exchange Act (relating to a bidder's obligation to pay for or return
tendered securities promptly after the termination or withdrawal of such
bidder's offer), to pay for any Common Shares tendered pursuant to the Offer and
may terminate or amend the Offer if, at any time on or after the date of this
Agreement, and before the acceptance of such Common Shares for payment, (i) the
Asset Contribution Agreement Condition is not satisfied or (ii) any of the
following events or facts shall have occurred:
(a) there shall be threatened, instituted or pending any action,
proceeding or application by any Governmental Authority, or by any other
person, domestic or foreign, before any court or Governmental Authority
(which, if brought by such other person, has a reasonable likelihood of
success), (i)(A) challenging or seeking to, or which is reasonably likely
to, make illegal, delay or otherwise directly or indirectly restrain or
prohibit, or seeking to, or which is reasonably likely to, impose voting,
procedural, price or other requirements, in addition to those required by
Federal securities laws and the DGCL each as in effect on the date of the
Offer, in connection with the making of the Offer, the acceptance for
payment of, or payment for, some of or all the Common Shares by TDS,
Purchaser or any other affiliate of TDS or the consummation by TDS,
Purchaser or any other affiliate of TDS of the Merger, (B) seeking to
obtain material damages or otherwise directly or indirectly relating to the
transactions contemplated by the Offer or the Merger, (ii) seeking to
impose or confirm limitations on the ability of TDS, Purchaser or any other
affiliate of TDS effectively to exercise full rights of ownership of Common
Shares, including, without limitation, the right to vote any Common Shares
acquired or owned by TDS, Purchaser or any other affiliate of TDS on all
matters properly presented to API's shareholders, (iii) seeking any
material diminution in the benefits expected to be derived by TDS,
Purchaser or any other affiliate of TDS as a result of the transactions
contemplated by the Offer or the Merger, (iv) otherwise directly or
indirectly relating to the Offer or the Offer Documents or which otherwise,
in the sole judgment of Purchaser, might materially adversely affect API or
any of its Subsidiaries or TDS, Purchaser or any other affiliate of TDS or
the value of Common Shares or (v) in the sole judgment of Purchaser,
materially adversely affect the business, assets, liabilities,
capitalization, results of operations, shareholders' equity, condition
(financial or otherwise) or prospects of API or any of its Subsidiaries; or
II-1
(b) there shall be any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
proposed, enacted, entered, enforced, promulgated, amended or issued with
respect to, or deemed applicable to, (i) TDS, Purchaser or any other
affiliate of TDS or API or (ii) the Offer or the Merger by any government,
legislative body or court, domestic, foreign or supranational, or
Governmental Authority, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above; or
(c) there shall have occurred any material adverse change, or any
condition, event or development that is reasonably likely to result in a
material adverse change, in the business, assets, liabilities,
capitalization, results of operations, shareholders' equity, condition
(financial or otherwise) or prospects of API; or
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States, (ii) any extraordinary or material adverse change in the
financial markets or major stock exchange indices in the United States or
abroad, (iii) any change in the general political, market, economic or
financial conditions in the United States that is reasonably likely to have
a material adverse effect upon the business, properties, assets,
liabilities, capitalization, shareholders' equity, condition (financial or
otherwise), operations, licenses or franchises, results of operations or
prospects of API or of TDS or the trading in, or value of, Common Shares,
(iv) any material change in United States currency exchange rates or a
suspension of, or limitation on, the markets therefor, (v) a declaration of
a banking moratorium or any suspension of payments in respect of banks in
the United States, (vi) any limitation (whether or not mandatory) by any
government, domestic, foreign or supranational, or Governmental Authority
on, or other event that is reasonably likely to affect the extension of
credit by banks or other lending institutions in the United States, (vii) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
or (viii) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof; or
(e) any required approval, permit, authorization, favorable review or
consent of any Governmental Authority shall not have been obtained on terms
satisfactory to Purchaser; or
(f) (i) it shall have been publicly disclosed or TDS shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 15% of the outstanding Common Shares has been acquired by
another person,
II-2
entity or "group" (within the meaning of Section 13(d)(3) of the Exchange
Act) or (ii) (x) the Board of Directors of API or any committee thereof
(including the API Special Committee) shall have withdrawn or modified in a
manner adverse to TDS or Purchaser its approval or recommendation of the
Offer, the Merger or this Agreement, or approved or recommended any
Proposed API Acquisition Transaction (other than this Agreement), (y) API
shall have entered into any agreement with respect to any Proposed API
Acquisition Transaction (other than this Agreement) or (z) the Board of
Directors of API or any committee (including the API Special Committee)
thereof shall have resolved to do any of the foregoing; or
(g) any of the representations and warranties of API set forth in
this Agreement that are qualified as to materiality shall not be true and
correct or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case as if such representations and warranties were made as of such time;
or
(h) API shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of API to be performed or complied with by it under this
Agreement; or
(i) this Agreement shall have been terminated in accordance with its
terms; or
(j) Purchaser and API (with the approval of the API Special
Committee) shall have agreed that Purchaser shall terminate the Offer or
postpone the acceptance for payment or payment for Common Shares thereon.
which, in the judgment of Purchaser, in any such case, and regardless of the
circumstances (including any action or inaction by TDS, Purchaser, or any of
their affiliates) giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and TDS and
may be asserted by Purchaser regardless of the circumstances giving rise to any
such condition or may be waived by Purchaser in whole or in part at any time and
from time to time in its sole discretion. The failure by Purchaser at any time
to exercise any of the foregoing rights will not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances will not be deemed a waiver with respect to any other facts and
circumstances and each such right will be deemed an ongoing right that may be
asserted at any time and from time to time. Any determination by Purchaser
concerning the events described in this ANNEX II will be final and binding upon
all parties.
II-3
