EXHIBIT 2.2
CONTRIBUTION AGREEMENT
by and among
Xxxxxx Holdings, Inc., a Delaware corporation,
and Xxxxxxx X. Xxxxx, Xx., Xxxxxx X. Xxxxx,
X.X. Xxxxxxxx, Xxxxx X. Xxxxxx
and certain other stockholders, and
AmeriTel Pay Phones, Inc.,
a Missouri corporation
Dated December 20, 1996
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT ("Agreement") is made as of December 20, 1996, by
Xxxxxx Holdings, Inc., a Delaware corporation ("THI"), Xxxxxxx X. Xxxxx, Xx.
("X.X. Xxxxx"), Xxxxxx X. Xxxxx ("X.X. Xxxxx"), X.X. Xxxxxxxx ("X.X. Xxxxxxxx"),
Xxxxx X. Xxxxxx ("X.X. Xxxxxx") and certain other stockholders listed on Exhibit
A attached hereto (collectively, the "Stockholders"), and AmeriTel Pay Phones,
Inc., a Missouri corporation (the "Company"). X.X. Xxxxx, X.X. Xxxxx, X.X.
Xxxxxxxx, X.X. Xxxxxx and the Stockholders are sometimes referred to herein
individually as a "Shareholder" and collectively as "Shareholders."
RECITALS
WHEREAS, X.X. Xxxxx, X.X. Xxxxx, X.X. Xxxxxxxx, X.X. Xxxxxx and the
Stockholders own shares of the common stock of the Company (the "Shares"); and
WHEREAS, the Shareholders, together with certain other investors desire to
form and fund THI at the Closing (as defined herein), and will be in control of
THI as of the Closing; and
WHEREAS, each of these investors contributing assets to THI at the Closing is
concurrently entering into an agreement reflecting the terms upon which the
assets are to be contributed to THI; and
WHEREAS, the Shareholders desire to contribute to THI the Shares set forth on
Schedule 1 attached hereto and hereby made a part hereof (the "Contributed
Shares") in exchange for shares of THI's Class A common stock, $.01 par value
("THI Common") and THI's preferred stock, $.01 par value ("THI Preferred"), all
on the terms set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the mutual promises contained
herein, and for other good and valuable consideration, the receipt, sufficiency
and adequacy of which are hereby acknowledged, the parties intending to be
legally bound, do hereby agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ADJUSTMENT AMOUNT": (i) the Company's Net Liability Amount as reflected on
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the Closing Date Balance Sheet minus (ii) the Company's Net Liability Amount as
reflected on the Interim Balance Sheet (as defined in Section 3.4), but only to
the extent the Adjustment Amount causes or would cause the Funding Requirement
at Closing to exceed $40,250,000 (any lesser amount to be reflected by a cash
adjustment to the Purchase Price under
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the Stock Acquisition Agreement). An example of the calculation of the
Adjustment Amount is attached as Exhibit 1(a) and the Funding Requirement at
Closing.
"BILLING AND COLLECTION AGREEMENT": any billing and collecting agreement,
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local exchange company billing agreement or other Contract relating to the
provision of billing and collection services to the Company.
"BREACH": a "Breach" of a representation, warranty, covenant, obligation, or
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other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been any material
inaccuracy in or breach of, or any material failure to perform or comply with,
such representation, warranty, covenant, obligation, or other provision.
"CONSENT": any approval, consent, ratification, waiver, or other
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authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS": all of the transactions contemplated by this
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Agreement, including: (a) the contributions by the Shareholders to THI and the
acquisition by THI from the Shareholders of the Contributed Shares and the
contemporaneous issuance by THI to Shareholders of certain THI Common and THI
Preferred; (b) the execution, delivery and performance of the Shareholder
Documents; and (c) the performance by THI, the Company and Shareholders of their
respective covenants and obligations under this Agreement, including without
limitation their obligations under Section 2 hereof.
"CONTRACT": any agreement, contract, license obligation, promise or
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undertaking presently in effect, (a) under which the Company has or may acquire
any rights, (b) under which the Company has or may become subject to any
obligation or liability, or (c) by which the Company or any of the assets owned
or used by it is or may become bound.
"ENCUMBRANCE": any charge, claim, community property interest, condition,
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equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"ERISA": the Employee Retirement Income Security Act of 1974 or any successor
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law, and regulations and rules issued pursuant to that Act or any successor law.
"FUNDING REQUIREMENT AT CLOSING": the sum of (i) the Aggregate Price (as
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adjusted at Closing) as determined in the Stock Acquisition Agreement, (ii) the
Company's outstanding long term debt as shown on the Closing Date Balance Sheet,
and (iii) the aggregate $100,000 Non-Competition Payments or Separate Payments
required to be made under the Non-Competition
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Agreements, the Consulting Agreements and Employment Agreements at Closing (as
provided in the Stock Acquisition Agreement) less (iv) the OAN Receivable.
"GAAP": generally accepted United States accounting principles, applied on a
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consistent basis.
"GOVERNMENTAL AUTHORIZATION": any approval, consent, license, permit, waiver,
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tariff, or other written authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY": any: (a) nation, state, county, city, town, village,
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district, or other properly constituted local government; (b) federal, state,
local, municipal, foreign, or other government; (c) governmental authority of
any nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal); (d) any properly constituted and
authorized body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature in the United States.
"HSR ACT": the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 or any
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successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"INSTALLED TELEPHONE": a Telephone that is in good working order and
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operable, is subject to a Telephone Operating and License Agreement, is
installed at the location provided for in its related Telephone Operating and
License Agreement and is not co-located with any pay telephone not owned by the
Company.
"INSTALLED TELEPHONE LINE": any telephone lines and related facilities
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providing telephone service to Installed Telephones, including those Telephone
lines identified by installation, location and telephone number in EXHIBIT
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3.6(a)(ii).
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"INTELLECTUAL PROPERTY ASSETS": any patents, patent applications, inventions,
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trademarks, tradenames, business names, service marks, copyrights, trade
secrets,know-how, customer lists, software, technical information, plans,
drawings, blue prints or other intellectual property used in the operation of
the Company's business.
"IRC": the Internal Revenue Code of 1986 or any successor law, and
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regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS": the United States Internal Revenue Service or any successor agency,
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and, to the extent relevant, the United States Department of the Treasury.
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"KNOWLEDGE": in the case of Shareholders, information known to the
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Shareholders without independent investigation beyond the Company's officers and
directors; in the case of the Company, information known by the Company's
officers and directors.
"LEGAL REQUIREMENT": any federal, state, local, municipal, foreign,
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international, multinational, or other administrative order, constitution, law,
ordinance, ruling, regulation, or statute (as to representations and warranties
set forth in this Agreement, such orders, constitutions, laws, ordinances,
rulings, regulations, or statutes in effect as of the date such representation
or warranty is made).
"LONG DISTANCE SERVICE AGREEMENTS": any long distance service provider
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agreement, telecommunications agreement or other Contract relating to provision
of long distance service or other similar services to the Company.
"NET LIABILITY AMOUNT": the Company's current assets less (i) the OAN
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Receivable, (ii) the Company's current liabilities, and (iii) the Company's long
term debt, all as shown on the Interim Balance Sheet or the Closing Date Balance
Sheet, as applicable.
"OAN RECEIVABLE": the receivable (net of reserves) shown as the OAN
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Receivable on the Interim Balance Sheet and Closing Date Balance Sheet, as
applicable.
"OPERATOR SERVICE AGREEMENT": any agreement or other Contract relating to the
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provision of operator or other telephone services to the Company.
"ORDER": any award, decision, injunction, judgment, order, ruling, subpoena,
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or verdict entered, issued, made, or rendered by any court, administrative
agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS": an action taken by a Person will be deemed to
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have been taken in the "Ordinary Course of Business" only if: (a) such action
is consistent with the past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person; and (b) such
action is not required to be authorized by the board of directors of such Person
(or by any Person or group of Persons exercising similar authority).
"ORGANIZATIONAL DOCUMENTS": (a) the articles or certificate of incorporation
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and the bylaws of a corporation; (b) the partnership agreement and any statement
of partnership of a general partnership; (c) the limited partnership agreement
and the certificate of limited partnership of a limited partnership; (d) any
charter, articles of organization, shareholders agreement, operating agreement
or similar document adopted or
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filed in connection with the creation, formation, or organization of a Person;
and (e) any amendment to any of the foregoing.
"PARTS AND SUPPLIES AGREEMENT": any Contract relating to the provision of
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Telephones, Telephone parts, inventory or equipment, or other parts, equipment
or services to the Company.
"PERSON": any individual, corporation (including any non-profit corporation),
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general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"PRELIMINARY ADJUSTMENT AMOUNT": (i) the Company's Net Liability Amount as
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reflected on the Pro Forma Balance Sheet, minus (ii) the Company's Net Liability
Amount as reflected on the Interim Balance Sheet but only to the extent that the
Preliminary Adjustment Amount causes or would cause the Funding Requirement at
Closing to exceed $40,250,000 (any lesser amount to be reflected by a cash
adjustment to the Purchase Price under the Stock Acquisition Agreement).
"PROCEEDING": any action, arbitration, audit, hearing, investigation,
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litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"REPRESENTATIVE": with respect to a particular Person, any director, officer,
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employee, agent, consultant, advisor, partner or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT": the Securities Act of 1933 or any successor law, and
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regulations and rules issued pursuant to that Act or any successor law.
"SERVICE AGREEMENTS": any Long Distance Service Agreement, Billing and
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Collection Agreement, Parts and Supplies Agreement, Operator Service Agreement
or similar agreement or Contract relating to the provision of parts, equipment
or services to the Company.
"STOCK ACQUISITION AGREEMENT": that certain Stock Acquisition Agreement of
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even date herewith by and among THI, the Company and the shareholders of the
Company pursuant to which THI will acquire certain common and preferred shares
of the Company.
"TAXES": any tax, charge, fee, duty, levy or other assessment, including,
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without limitation, income, gross receipts, net proceeds, ad valorem, turnover,
real and personal property (tangible and intangible), sales, use, franchise,
excise, value added, license, payroll, unemployment, environmental, customs
duties, capital stock, disability, stamp, leasing, lease, user, transfer, fuel,
excess profits,
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occupational and interest equalization, windfall profits, severance and
employees' income withholding and Social Security taxes imposed by the United
States or any foreign country or by any state, municipality, subdivision or
instrumentality of the United States or of any foreign country or by any other
tax authority, including all applicable penalties and interest, and such term
shall include any interest, penalties or additions to tax attributable to such
taxes.
"TAX RETURN": any return (including any information return), report,
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statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"TELEPHONE OPERATING AND LICENSE AGREEMENTS": all written lease agreements,
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telephone location agreements, telephone service agreements, license agreements,
royalty agreements or other contracts relating to the Installed Telephones,
which agreements grant the exclusive right to the Company to install and operate
the Installed Telephones upon the premises set forth within any such document.
"TELEPHONES": any of the coin, credit card operated or collect call only
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telephones, owned or operated by the Company, including any hardware, enclosure,
pedestal or any other personal property installed with any Telephone.
"THREATENED": a claim, Proceeding, dispute, action, or other matter will be
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deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist that would lead
a prudent Person to conclude that such a claim, Proceeding, dispute, action, or
other matter is likely to be asserted, commenced, taken, or otherwise pursued in
the future.
2. TRANSFER OF SHARES, CLOSING AND OTHER AGREEMENTS
2.1 THI COMMON Subject to the terms and conditions of this Agreement, at the
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Closing, Shareholders will contribute the Contributed Shares to THI, and THI
will issue 1,000 shares (based on a $1,000 issue price) (or such other number of
shares equal to $1,000,000 divided by the issue price per share applicable to
the cash investors in THI) of THI Common in exchange therefor. The THI Common
will be issued to the Shareholders as set forth in instructions to be provided
by the Shareholders' Representative prior to Closing.
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2.2 THI PREFERRED
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(a) At Closing, for each $1000.00 of the Preliminary Adjustment Amount (if
any) THI will issue one share of THI Preferred to the Shareholders in proportion
to the Shareholders relative ownership in the Company immediately prior to the
Closing up to a maximum number of shares which when multiplied by the issue
price per share equals $1,000,000. Any adjustments because of differences in
the Preliminary Adjustment Amount and the Adjustment Amount shall be handled
through cash payments to or from the Post-Closing Escrow Fund established
pursuant to the Stock Acquisition Agreement.
(b) PRELIMINARY ADJUSTMENT AMOUNT Prior to the Closing Date, Shareholders
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shall prepare and deliver to THI (i) a pro forma balance sheet (together with
related notes and appropriate supporting schedules and work papers) of the
Company estimated as of the Closing Date prepared in accordance with generally
accepted accounting principles applied on a basis consistent with that used in
preparation of the Company's balance sheet (the "Pro Forma Balance Sheet"), and
(ii) a statement of the Preliminary Adjustment Amount, accompanied by a
certificate of the Company to the effect that such statement has been prepared
in accordance with generally accepted accounting principles applied on a basis
consistent with that used in the preparation of the Company's balance sheet and
the terms of this Agreement (the "Pre-Closing Certificate").
(c) ADJUSTMENT AMOUNT As soon as possible after the Closing and in any event
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within 60 days following the Closing Date, THI shall prepare and deliver to the
Shareholders' Representative (as defined in Section 11.2) (i) a balance sheet of
the Company as of the Closing Date audited by Deloitte & Touche prepared in
accordance with generally accepted accounting principles consistent with past
practices of the THI (the "Closing Date Balance Sheet") and (ii) a statement of
the Adjustment Amount as of the Closing Date (the "Post-Closing Certificate").
(d) DISPUTES REGARDING THE ADJUSTMENT AMOUNT Shareholders (through the
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Shareholders' Representative) shall notify THI in writing ("Shareholders'
Dispute Notice") within ten days after receiving the Post-Closing Certificate if
Shareholders disagree with THI's calculation of the Adjustment Amount as set
forth in the Post-Closing Certificate, which notice shall set forth in
reasonable detail the basis for such disagreement, the dollar amounts involved
and the Shareholders' calculation of the Adjustment Amount. THI will give
Shareholders access during the normal business hours of the Company to the
personnel, books and records of the Company to assist Shareholders in the
analysis of any such disagreement. In the event of such a disagreement, THI and
Shareholders shall negotiate in good faith to resolve any dispute with respect
to the Post-Closing Certificate. If no
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Shareholders' Dispute Notice is received by THI within such ten day period,
THI's calculation of the Adjustment Amount as set forth in the Post-Closing
Certificate shall be final and binding upon the parties hereto.
2.3 CLOSING
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The closing of the transactions contemplated by this Agreement (the "Closing")
will take place at the offices of THI's counsel in Dallas, Texas (or such other
location within or outside of Dallas, Texas as THI shall designate) at 10:00
a.m. (local time) on a date not more than ten (10) business days after the
satisfaction or waiver of all conditions to Closing (but in no event earlier
than December 20, 1996 unless approval of the transaction contemplated in that
certain Stock Acquisition Agreement and that certain Contribution Agreement both
relating to the acquisition of shares of Xxxxxx Telecommunications Corporation
by Buyer has been obtained from regulatory authorities of the States of
Mississippi and North Carolina, and in no event later than January 31, 1997).
Notwithstanding any of the foregoing, if Closing occurs, the Closing shall be
effective as of November 30, 1996.
2.4 CLOSING OBLIGATIONS
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At the Closing:
(a) Shareholders or the Company, as applicable, will deliver or cause to be
delivered to THI:
(i) certificates representing the Contributed Shares, duly endorsed
(or accompanied by duly executed stock powers), with signatures of
Shareholders in attendance at Closing notarized at Closing, and signatures of
Shareholders not in attendance guaranteed by a commercial bank or by a member
firm of the New York Stock Exchange, for transfer to THI;
(ii) the Investor Representation Letter and Questionnaire, the
Subscription Documents, the Shareholders Agreement, the Registration Rights
Agreement each in the form of Exhibits 2.4(a)(i) - (iv), the Investor Pledge
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Agreement and any other documents required to be executed by the Shareholders
in connection with the issuance of the THI Common and/or the THI Preferred
(collectively, the "Shareholder Documents");
(iii) a certificate executed by Shareholders and the Company
representing and warranting to THI that (A) there have been no material
changes, amendments or modifications of or to the then current Organizational
Documents of the Company since the date of each of the Organizational
Documents; and (B) each of Shareholders'
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representations and warranties in this Agreement was accurate in all material
respects as of the date of this Agreement and is accurate in all material
respects as of the Closing Date as if made on the Closing Date (the
"Shareholders' Closing Certificate");
(iv) opinion(s) of counsel, dated the Closing Date, in the form of
EXHIBIT 2.4(a)(v) and an additional opinion of counsel that all Government
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Authorizations necessary for Closing, including without limitation those of
the State of Missouri or its subdivisions or instrumentalities have been
satisfied, in the form and substance reasonably acceptable to THI; and
(v) such other documents as THI may reasonably request for the purpose
of (1) enabling its counsel to provide the opinion referred to in Section
2.4(b), (2) evidencing the accuracy of any of Shareholders' representations
and warranties, (3) evidencing the performance by Shareholders of, or the
compliance by Shareholders with, any covenant or obligation required to be
performed or complied with by the Shareholders, or (4) otherwise facilitating
the consummation or performance of any of the Contemplated Transactions.
(b) THI will deliver to each Shareholder (or to such other Persons designated
below):
(i) shares of the THI Common and THI Preferred (if any) as provided in
Sections 2.1 and 2.2 above;
(ii) the Shareholder Documents requiring THI's execution;
(iii) a certificate executed by THI to the effect that, except as
otherwise stated in such certificate, each of THI's representations and
warranties in this Agreement was accurate in all material respects as of the
date of this Agreement and is accurate in all material respects as of the
Closing Date as if made on the Closing Date (the "THI's Closing Certificate").
(iv) opinion(s) of counsel, dated the Closing Date, in the form of
EXHIBIT 2.4(b)(v); and
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(v) such other documents as Shareholders may reasonably request for
the purpose of (1) enabling its counsel to provide the opinion referred to in
Section 2.4(a), (2) evidencing the accuracy of any representation or warranty
of THI, (3) evidencing the performance by THI of, or the compliance by THI
with, any covenant or obligation required to be performed or
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complied with by THI, or (4) otherwise facilitating the consummation of the
Contemplated Transactions.
3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Shareholders and the Company represent and warrant to THI as follows:
3.1 ORGANIZATION AND GOOD STANDING
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(a) The Company is a corporation duly organized, validly existing, and in
good standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under the Contracts. The Company is
duly qualified to do business as a foreign corporation and is in good standing
under the laws of the states listed in EXHIBIT 3.1(a)-1 hereof, which are all of
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the states which the nature of the activities conducted by it requires such
qualification. The Company does not have and never has had any subsidiaries.
The Company has not been a party to any merger other than those listed on
EXHIBIT 3.1(a)-2.
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(b) Shareholders have delivered to THI copies of the Organizational Documents
of the Company. The Company's principal place of business is, and has been for
the last five (5) years or if it has not done business for five (5) years, for
the entire period that it has done business, in Xxx'x Summit, Missouri and the
Company has not had any other offices, other corporate names or done business in
any other names during said five (5) year period other than as disclosed on
EXHIBIT 3.1(b).
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3.2 AUTHORITY; NO CONFLICT
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(a) This Agreement constitutes the legal, valid, and binding obligation of
the Shareholders and the Company, enforceable against each of the Shareholders
and the Company in accordance with its terms except as such enforcement may be
limited by applicable bankruptcy laws. Upon the execution and delivery of the
Post-Closing Escrow Agreement and Shareholder's Closing Certificate
(collectively, the "Shareholders' Closing Documents"), the Shareholders' Closing
Documents will constitute the legal, valid, and binding obligations of the
parties (other than THI) enforceable against each of them in accordance with
their respective terms except as such enforcement may be limited by applicable
bankruptcy laws. Each of the Shareholders and the Company has the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and the Shareholders' Closing Documents to which each is a party and
to perform their obligations under this Agreement and the Shareholders' Closing
Documents to which each is a party.
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(b) Except as set forth in EXHIBIT 3.2.(b), neither the execution, delivery
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or performance of this Agreement nor any other consummation or performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any
provision of the Organizational Documents of the Company, (B) any resolution
adopted by the board of directors or the stockholders of the Company, (C) any
duty owed by any of the Shareholders or the Company to any Person, or (D) any
Legal Requirement, any Governmental Authorization or any Order to which the
Company or the Shareholders, or any of the assets owned or used by the Company
or the Shareholders, may be subject; or
(ii) contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Contract, or any contract or other
agreement to which any Shareholder is a party.
(c) Except for notices or Consents described on EXHIBIT 3.2.(b) hereof, none
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of Shareholders nor the Company is or will be required to give any notice to or
obtain any Consent from any Person, in connection with the execution, delivery
or performance of this Agreement or the consummation or other performance of any
of the Contemplated Transactions, the absence of which notice or Consent would
cause to occur or result in the occurrence of any of the events described in
Section 3.2(b)(i) and (ii).
3.3 CAPITALIZATION
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(a) The authorized equity securities of the Company consist of: (i)
10,000,000 Common Shares, par value $.01 per share, of which 3,259,345 Common
Shares are issued and outstanding, and (ii) 500,000 Preferred Shares, par value
$.01 per share, of which 244,800 Preferred Shares are issued and outstanding.
Shareholders are and will be on the Closing Date the record and beneficial
owners and holders of the Contributed Shares, free and clear of all
Encumbrances. On the date hereof and on the Closing Date, the Contributed
Shares are and will be owned as set forth on Exhibit 3.3(a).
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(b) Except as listed in Exhibit 3.3(b)-1, no legend or other reference to any
purported Encumbrance appears upon any certificate representing equity
securities of the Company. All of the outstanding equity securities of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. Except as listed on Exhibit 3.3(b)-2, there are no contracts or
other agreements relating to the issuance, sale, or transfer of any equity
securities or other securities of the Company. None of the outstanding equity
securities or other
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securities of the Company was issued in violation of the Securities Act or any
other Legal Requirement. The Company does not own and does not have any
Contract to acquire, any equity securities or other securities of any Person or
any direct or indirect equity or ownership interest in any other business
(c) Except as listed on Exhibit 3.3(c), there are no options, warrants or
other rights to acquire an interest in the Company or in its shares.
3.4 FINANCIAL STATEMENTS
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Shareholders have delivered to THI: (a) audited balance sheets of the Company
as at December 31, in each of the years 1994 and 1995, and the related audited
consolidated statements of income, changes in stockholders' equity, and cash
flow for each of the fiscal years then ended, and (b) an unaudited balance sheet
of the Company as at September 30, 1996, a copy of which is attached as Exhibit
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3.4, (the "Interim Balance Sheet") and the related unaudited consolidated
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statements of income, and cash flow for the eight months then ended, including
in each case the notes thereto. Shareholders shall deliver to THI such other
balance sheets, statements of income, cash flow and other financial statements
of the Company as THI may reasonably request. All such financial statements and
notes fairly present the financial condition and the results of operations, and
cash flow of the Company as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP, subject,
in the case of interim financial statements, to normal recurring year-end
adjustments (the effect of which will not, individually or in the aggregate, be
materially adverse) and the absence of notes (that, if presented, would not
differ materially from those included in the December 31, 1995 balance sheet).
The financial statements referred to in this Section 3.4 reflect the consistent
application of such accounting principles throughout the periods involved,
except as disclosed in the notes to such financial statements. No financial
statements of any Person other than the Company are required by GAAP to be
included in the consolidated financial statements of the Company.
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3.5 BOOKS AND RECORDS
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The books of account, minute books, stock record books, and other records of
the Company, all of which have been made available to THI, are complete and
correct in all material respects. The minute books of the Company contain
accurate and complete records of all meetings held of, and corporate action
taken by, the stockholders, the boards of directors, and committees of the
boards of directors of the Company, and no meeting of any such stockholders,
board of directors, or committee has been held for which minutes have not been
prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the Company.
3.6 BALANCE SHEETS ON THE CLOSING DATE
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(a) COMPANY ASSETS. Except as shown on Exhibit 3.6(a), on the Closing Date
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assuming satisfaction of that certain Revolving Credit Agreement dated September
22, 1995 by and among the Company, UMB Bank N.A., NBD Bank and UMB Bank, N.A.,
as agent for the lenders and the payment of other long term debt included in the
calculation of Net Liability Amount, the Company shall own and have good title,
without Encumbrance, to all of the assets currently owned and used in
conjunction with the operation of the Company's business (which assets are
reflected in the Company's Interim Balance Sheet) (the "Company Assets"),
including, without limitation:
(i) all rights and interest of the Company in and under the Telephone
Operating and License Agreements listed on Exhibit 3.15(a);
---------------
(ii) all Installed Telephone Lines listed on EXHIBIT 3.6(a)(ii);
------------------
(iii) all rights and interests of the Company in and under the Service
Agreements listed on Exhibit 3.15(a);
---------------
(iv) all uninstalled Telephones, parts, hardware and equipment listed
on EXHIBIT 3.6(a)(iv) (subject to turn over of inventory in the Ordinary
------------------
Course of Business);
(v) all vehicles listed on EXHIBIT 3.6(a)(v); and
-----------------
(vi) all other furniture, fixtures, equipment, personalty or
intellectual property of any kind used by the Company in the operation of its
business, including without limitation, each of those items having a value in
excess of $1,000 listed on EXHIBIT 3.6(a)(vi).
------------------
(b) LIABILITIES. Other than the liabilities and obligations listed on
-----------
EXHIBIT 3.6(b), (the "Continuing
--------------
-13-
Liabilities"), the Company shall have no other obligations or liabilities as of
the Closing Date.
3.7 ACCOUNTS RECEIVABLE
-------------------
(a) All accounts receivable of the Company that are reflected on the Interim
Balance Sheet or on the accounting records of the Company as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. The reserves reflected in the Interim Balance
Sheet have been calculated consistent with past practices and, to Shareholder's
best knowledge, are adequate. Except as set forth in EXHIBIT 3.7, there is no
-----------
contest, claim, or right of set-off, other than returns in the Ordinary Course
of Business, under any Contract with any obligor of an Accounts Receivable
relating to the amount or validity of such Accounts Receivable. EXHIBIT 3.7
-----------
hereof contains a complete and accurate list of all Accounts Receivable as of
the date of the Interim Balance Sheet, which list sets forth the aging of such
Accounts Receivable.
(b) Shareholders represent and warrant that from and after the date of the
Interim Balance Sheet (as defined in Section 3.4) through the Closing Date: (i)
the Company has collected all sums and amounts due the Company, whether
evidenced in writing, on account, designated as a receivable or otherwise
(collectively, "Pre-Closing Receivables"), only in its usual, regular and
ordinary manner, on a basis consistent with past practices (and otherwise in the
Ordinary Course of Business); and (ii) the Company has not and will not
accelerate collection of the Pre-Closing Receivables.
3.8 NO UNDISCLOSED LIABILITIES
--------------------------
Except as set forth in EXHIBIT 3.8 hereof, the Company has no liabilities or
-----------
obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent, or otherwise) except for liabilities or obligations
reflected or reserved against in the Interim Balance Sheet and current
liabilities incurred in the Ordinary Course of Business since the date thereof.
3.9 TAXES
-----
(a) The Company has filed or caused to be filed all Tax Returns that are or
were required to be filed by or with respect to any of them, either separately
or as a member of a group of corporations, pursuant to applicable Legal
Requirements. Shareholders have delivered to THI copies of, and EXHIBIT 3.9
-----------
hereof contains a complete and accurate list of, all federal income Tax Returns,
filed since 1990 (including the Tax Returns for 1990). The Company has paid, or
made provision for the payment of, all Taxes that have or may have become due
pursuant
-14-
to those Tax Returns or otherwise, or pursuant to any assessment received by
Shareholders or the Company, except such Taxes, if any, as are listed in EXHIBIT
-------
3.9 hereof and are being contested in good faith and as to which adequate
---
reserves (determined in accordance with GAAP) have been provided in the Interim
Balance Sheet.
(b) The United States federal income Tax Returns of the Company subject to
such Taxes have been audited by the IRS or relevant state tax authorities for
1994. EXHIBIT 3.9 contains a complete and accurate list of all audits of all
-----------
such Tax Returns, including a reasonably detailed description of the nature and
outcome of each audit. All deficiencies proposed as a result of such audits
have been paid, reserved against, settled, or, as described in EXHIBIT 3.9
-----------
hereof, are being contested in good faith by appropriate proceedings. EXHIBIT
-------
3.9 hereof describes all adjustments to the United States federal income Tax
---
Returns filed by the Company or any group of corporations including the Company
for all taxable years since 1991, and the resulting deficiencies proposed by the
IRS. Except as described in EXHIBIT 3.9, no Shareholder nor the Company has
-----------
given or been requested to give waivers or extensions (or is or would be subject
to a waiver or extension given by any other Person) of any statute of
limitations relating to the payment of Taxes of the Company or for which the
Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes on the
respective books of the Company are adequate (determined in accordance with
GAAP) and the Company's liability for Taxes through the Closing Date shall not
be not greater than $10,000 more than such charges, accruals and reserves.
There exists no proposed tax assessment against the Company except as disclosed
in the Interim Balance Sheet or in EXHIBIT 3.9 hereof. All Taxes that the
-----------
Company is or was required by Legal Requirements to withhold or collect have
been duly withheld or collected and, to the extent required, have been paid to
the proper Governmental Body or other Person.
(d) All Tax Returns filed by (or that include on a consolidated basis) the
Company are true, correct, and complete. There is no tax sharing agreement that
will require any payment by the Company after the date of this Agreement.
3.10 NO MATERIAL ADVERSE CHANGE
--------------------------
Except as set forth on EXHIBIT 3.10, since the date of the Interim Balance
------------
Sheet, there has not been any material adverse change in the business, client
relations, operations, or assets of the Company, and no event has occurred or
circumstance exists that may result in such a material adverse change. Without
in any way limiting the generality of the foregoing, there exists no actual or
threatened terminations, cancellations or limitations of, or any modification or
change in (i) the current business relationship of the Company with any material
customer or group
-15-
of customers whose business is material to the operation of the Company's
business; or (ii) the current business relationship of the Company with any
supplier, and the Company has no reason to believe that any such customers or
suppliers shall not continue a business relationship with THI subsequent to the
Closing on a basis no less favorable to THI than that heretofore conducted
(except where such change would not have a material adverse effect on the
Company); and (iii) there exists no other condition or state of facts or
circumstances which would materially adversely affect the Company's business or
prevent THI from conducting such business after the Closing on a basis not
materially adversely less favorable to THI than that of which it has heretofore
been conducted by the Company.
3.11 EMPLOYEE BENEFITS
-----------------
(a) As used in this Agreement, the term "Employees of the Company" means, (i)
all active or former employees or directors of the Company, (ii) all employees
of the Company who, as of the Closing Date, are on workers' compensation,
military leave, other approved leaves of absences, long-term or short-term
disability, non-occupational disability and employees on layoff with recall
rights, (iii) all individuals who are covered under any "Employee Benefit Plan"
(as such terms is hereinafter defined) as a result of previously being described
in (i) or (ii) above, and (iv) beneficiaries or dependents under any Employee
Benefit Plan of anyone described in (i) through (iii) above.
(b) EXHIBIT 3.11 sets forth a list of each "employee benefit plan" (as
------------
defined by Section 3(3) of ERISA, and any other bonus, profit sharing pension,
compensation, deferred compensation, stock option, stock purchase, fringe
benefit, severance, post-retirement, scholarship, disability, sick leave,
vacation, individual employment, commission, bonus, payroll practice, retention,
or other plan, agreement, policy, trust fund or arrangement, whether written or
oral (each such plan, agreement, policy, trust fund or arrangement is referred
to herein as an "Employee Benefit Plan", and collectively, the "Employee Benefit
Plans") that is currently in effect, or which has been approved before the date
hereof but is not yet effective, for the benefit of any Employee of the Company
or with respect to which the Company has or has had any obligation, and any
Employee Benefit Plan that was maintained since the organization of the Company
with respect to which the Company has any obligation. Except as disclosed on
EXHIBIT 3.11, there are no other benefits to which any Employee of the Company
------------
is entitled or for which the Company has any obligation.
(c) The Company has delivered to THI with respect to each Employee Benefit
Plan, true and complete copies of (i) the documents embodying and relating to
the plan, including, without limitation, the current plan documents and
documents creating any trust maintained pursuant thereto, all amendments,
investment management agreements, administrative service contracts, group
-16-
annuity contracts, insurance contracts, collective bargaining agreements, the
most recent summary plan description with each summary of material modification,
if any, and employee handbooks, (ii) annual reports including but not limited to
Forms 5500, 990 and 1041 for the last three (3) years for the plan and any
related trust, (iii) actuarial valuation reports and financial statements for
the last three years, and (iv) each communication involving the plan or any
related trust to or from the IRS, Department of Labor ("DOL"), Pension Benefit
Guaranty Corporation ("PBGC") or any other governmental authority including,
without limitation, the most recent determination letter received from the IRS
pertaining to any Employee Benefit Plan intended to qualify under Sections
401(a) or 501(c)(9) of the Code.
(d) Except as set forth on EXHIBIT 3.11, the Company has no obligation to
------------
contribute to or provide benefits pursuant to, nor has it ever maintained or
contributed to, and it has no other liability of any kind with respect to, (i) a
"multiple employer welfare arrangement" (within the meaning of Section 3(40) of
ERISA), (ii) a "plan maintained by more than one employer" (within the meaning
of Section 413(c) of the Code), (iii) a plan intended to be, or represented to
be, described in Section 401(a) of the Code, (iv) a "multiemployer plan" (within
the meaning of Section 4001(a)(3) of ERISA or Section 414(f) of the Code), or
(v) a plan subject to Parts 2, 3 or 4 of Subtitle B of Title I of ERISA. No
"ERISA Affiliate" (as that term is hereinafter defined) has any obligation to
contribute to or provide benefits pursuant to, or has any other liability of any
kind with respect to, a multiemployer plan or a plan subject to Section 412 of
the Code, Part 3 of Subtitle B of Title I of ERISA or Title IV of ERISA. As
used in this Agreement the term "ERISA Affiliate" means any trade or business
(other than the Company) whether or not incorporated, which has employees who
are or have been at any date of determination occurring within the preceding six
(6) years, treated pursuant to Section 4001(a)(14) of ERISA and/or Section 414
of the Code as employees of a single employer which includes the Company.
(e) The Company is not liable for, and after the Closing Date, THI shall not
be liable for, any contribution, tax, lien, penalty, costs, interest, claim,
loss, action, suit, damage, cost assessment or other similar type of liability
or expense of any ERISA Affiliate (including predecessors thereof) with regard
to any Employee Benefit Plan maintained, sponsored or contributed to by an ERISA
Affiliate (if a like definition of Employee Benefit Plan were applicable to the
ERISA Affiliate in the same manner as it applies to the Company).
(f) EXHIBIT 3.11 lists the name of each Employee of the Company who has
------------
experienced a "Qualifying Event" (as defined in Section 4980B of the Code and
Section 601, et seq. of ERISA) (such statutory provisions and predecessors
thereof are referred to herein collectively as "COBRA") with respect to an
Employee Benefit Plan who is eligible for "Continuation Coverage" (as
-17-
defined in COBRA) and whose maximum period for Continuation Coverage required by
COBRA has not expired. Included in such list are the current address for each
such individual, the date and type of each Qualifying Event, whether the
individual who has not yet elected Continuation Coverage, the date on which such
individual was notified of his or her rights to elect Continuation Coverage.
(g) With respect to each Employee Benefit Plan and except as otherwise set
forth on EXHIBIT 3.11:
------------
(i) no claim, lawsuit, arbitration or other action (other than routine
claims for benefits made in accordance with the terms of the Employee Benefit
Plan) has been asserted or instituted or threatened in writing against the
Employee Benefit Plan, any trustee or fiduciaries thereof, the Company, any
Employee of the Company or any of the assets of the Employee Benefit Plan or
any related trust;
(ii) the Employee Benefit Plan complies with and has been maintained
and operated in all material respects in accordance with its respective terms
and the terms and the provisions of applicable law, including, without
limitation, ERISA and the IRC;
(iii) the Employee Benefit Plan is not under audit or investigation by
the IRS or the DOL or any other governmental authority, and no such completed
audit, if any, has resulted in the imposition of any tax, interest or penalty;
and
(iv) each Employee Benefit Plan may be unilaterally terminated by the
Company on not more than ninety (90) days written notice with no further
liability to the Company.
(h) Except as set forth on the EXHIBIT 3.11, the consummation of the
------------
Contemplated Transactions will not give rise to any liability for any employee
benefits, including, without limitation, liability for severance pay,
unemployment compensation, termination pay or withdrawal liability, or
accelerate the time of payment or vesting or increase the amount of compensation
or benefits due to any Employee of the Company. No amounts payable under any
Employee Benefit Plan will fail to be deductible for federal income tax purposes
by virtue of Section 280G of the Code.
(i) Except as set forth on EXHIBIT 3.11, no Employee Benefit Plan in any way
------------
provides for any benefits of any kind whatsoever (other than under COBRA, the
Federal Social Security Act or any Employee Benefit Plan qualified under Section
401(a) of the Code) to any Employee of the Company who, at the time the benefit
is to be provided, is a former director or employee of, or other provider of
services to, the Company or an ERISA Affiliate (or a beneficiary of any such
person), or any other
-18-
Employee of the Company, nor have any representations, agreements, covenants or
commitments been made to provide such benefits.
3.12 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS AND
-------------------------------------------------------------------
ORDERS
------
(a) Except as set forth in EXHIBIT 3.12 hereof, to the best knowledge of the
------------
Shareholders and the Company:
(i) The Company is, and at all times has been, in material compliance
with each Legal Requirement, Governmental Authorization and Order that is or
was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) No event has occurred or circumstance exists that (with or without
notice or lapse of time) (A) may constitute or result in a violation by the
Company of, or a failure on the part of the Company to comply with, any Legal
Requirement, Governmental Authorization or Order, or (B) may give rise to any
obligation on the part of the Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature; and
(iii) Neither the Shareholders nor the Company has received, at any time
since 1991, any notice or other communication (whether oral or written) from
any Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of the Company, or failure by the Company to
comply with, any Legal Requirement, Governmental Authorization or Order, which
violation or failure has not been corrected or complied with, or (B) any
actual, alleged, possible, or potential obligation on the part of the Company
to undertake, or to bear all or any portion of the cost of, any remedial
action of any nature.
(b) EXHIBIT 3.12 hereof, to the best knowledge of the Shareholders and the
------------
Company, contains a complete and accurate list of each Governmental
Authorization that relates to the business of, or to any of the assets used in
the operation of the Company. Each Governmental Authorization of the Company is
valid and in full force and effect. The Governmental Authorizations listed in
EXHIBIT 3.12 hereof collectively constitute all of the Governmental
------------
Authorizations necessary to permit the Company to lawfully conduct and operate
the business of the Company in the manner they currently conduct and operate
such business and to permit the Company to own and use the assets used in the
operation of the Company in the manner in which they currently own and use such
assets. A true and complete copy of each Governmental Authorization listed in
EXHIBIT 3.12 has been delivered to THI.
------------
-19-
3.13 LEGAL PROCEEDINGS
-----------------
(a) Except as set forth in EXHIBIT 3.13(a) hereof, there is no pending
---------------
Proceeding:
(i) that has been commenced by or against the Company or that
otherwise relates to or may affect the business of, or any of the assets owned
or used by, the Company; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions or any Contract.
To the best knowledge of the Shareholders and the Company, no such Proceeding
has been Threatened, and no event has occurred or circumstance exists that may
reasonably be expected to give rise to or serve as a basis for the commencement
of any such Proceeding. The Proceedings listed in EXHIBIT 3.13(a) hereof will
---------------
not have a material adverse effect on the business, operations, assets,
condition, or prospects of the Company.
(b) All Proceedings in which the Company has been named or otherwise involved
since 1991, and all Proceedings relating to the Company in which any Shareholder
has been named or otherwise involved since 1991, are listed on EXHIBIT 3.13(b).
---------------
Shareholders have delivered to THI true and complete copies of all material
pleadings and other documentation relating to each Proceeding listed on EXHIBIT
3.13(b).
3.14 ABSENCE OF CERTAIN CHANGES AND EVENTS
-------------------------------------
Except as set forth in EXHIBIT 3.14 hereof, since the date of the Interim
------------
Balance Sheet, the Company has conducted its business only in the Ordinary
Course of Business and there has not been any:
(a) change in the Company's authorized or issued capital stock; grant
of any stock option or right to purchase shares of capital stock; issuance of
any security convertible into such capital stock; grant of any registration
rights; purchase, redemption, retirement, or other acquisition by the Company
of any shares of any such capital stock; or declaration or payment of any
dividend or other distribution or payment in respect of shares of capital
stock;
(b) payment or increase of any bonuses, salaries, or other
compensation to any stockholder, director, officer, or (except in the Ordinary
Course of Business) employee or entry into any employment, severance, or
similar Contract with any director, officer, or Employee of the Company;
-20-
(c) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any Employees of the
Company;
(d) damage to or destruction or loss of any asset or property of the
Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects
of the Company;
(e) other than the entry into new Telephone Operating and Licensing
Agreements in the ordinary course of business, entry into, termination of, or
receipt of notice of termination of (i) any license, distributorship, dealer,
sales representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by or to the
Company of at least $50,000;
(f) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of the Company
or mortgage, pledge, or imposition of any lien or other encumbrance on any
material asset or property of the Company;
(g) cancellation or waiver of any claims or rights with a value to the
Company in excess of $10,000;
(h) material change in the accounting methods used by the Company;
(i) material change in the financial condition, assets, liabilities or
business of the Company;
(j) adverse Order affecting the Company or the Company's business;
(k) change in the method of collecting accounts receivable or
acceleration in the collection of accounts receivable;
(l) failure to pay expenses incurred in connection with the operation
of the Company on a timely basis; or
(m) agreement, whether oral or written, by the Company to do any of
the foregoing.
3.15 CONTRACTS; NO DEFAULTS
----------------------
(a) Shareholders have delivered to THI true and complete copies of and
Exhibits 3.15(a)(i) - (vii) hereof contain a complete and accurate list, of the
---------------------------
following:
-21-
(i) each Telephone Operating and License Agreement is described on
EXHIBIT 3.15(a)(i);
------------------
(ii) each Service Agreement is described on EXHIBIT 3.15(a)(ii);
-------------------
(iii) each lease, rental or occupancy agreement, license, installment
and conditional sale agreement, and other Contract affecting the ownership of,
leasing of, title to, use of, or any leasehold or other interest in, any real
or personal property is described on EXHIBIT 3.15(a)(iii); provided however,
--------------------
that Exhibit 3.15(a)(iii) does not include personal property leases and
installment and conditional sales agreements having a value per item or
aggregate payments of less than $5,000 and with terms of less than one year if
the aggregate value or payments of or under such leases and agreements does
not exceed $10,000;
(iv) each licensing agreement or other Contract with respect to the
Intellectual Property Assets is described in EXHIBIT 3.15(a)(iv);
-------------------
(v) each joint venture, partnership, and other Contract (however
named) involving a sharing of profits, losses, costs, or liabilities by the
Company with any other Person is described on EXHIBIT 3.15(a)(v);
------------------
(vi) each Contract not otherwise listed in Exhibits 3.15(a)(i)-(v)
above that (1) provides for payments to or by any Person based on sales,
purchases, or profits, other than direct payments for goods, in excess of
$5,000, or (2) involves performance of services or delivery of goods or
materials by the Company of an amount or value in excess of $5,000 or (3)
involves expenditures or receipts by the Company in excess of $5,000, is
described on EXHIBIT 3.15(a)(vi); and
-------------------
(vii) each power of attorney that is currently effective and outstanding
is described on EXHIBIT 3.15(a)(vii).
--------------------
Exhibits 3.15(a)(i) - (vii) hereof set forth reasonably complete details
---------------------------
concerning such Contracts, including the date of the Contracts and the parties
to the Contracts. Additionally, EXHIBIT 3.15(a)(i) separately classifies the
------------------
Telephone Operating and License Agreement under the subcategories inmate phones
[and other pay phones,] and EXHIBIT 3.15(a)(ii) separately classifies the
-------------------
Service Agreements under the subcategories Long Distance Service Agreements,
Billing and Collection Agreements, Parts and Supplies Agreements and Operator
Service Agreements.
(b) Except as set forth in EXHIBIT 3.15(b) hereof:
---------------
-22-
(i) neither the Shareholders (nor any Person related or affiliated
with the Shareholders) has or may acquire any rights under, and neither the
Shareholders (nor any Person related or affiliated with them) has or may
become subject to any obligation or liability under, any Contract that relates
to the business of, or any of the assets used in the operation of the Company;
and
(ii) neither the Company nor any officer, director, agent, employee,
consultant, or contractor of the Company is bound by any contract or agreement
that purports to limit the ability of the Company or such officer, director,
agent, employee, consultant, or contractor to engage in or continue any
conduct, activity, or practice relating to the business of the Company.
(c) Except as set forth in EXHIBIT 3.15(c) hereof, with respect to each
---------------
Contract identified or required to be identified in EXHIBIT 3.15(a) hereof
---------------
(and/or any other material Contract by which the Company is bound even if not so
identified):
(i) such Contract is in full force and effect and is valid and
enforceable in accordance with its terms [provided, however, with respect to
Telephone Operating License Agreements, Shareholders and Company have assumed
with THI's approval in making this representation and warranty that the person
executing such agreement on behalf of the customer was the appropriate person
under applicable law to execute the agreement];
(ii) the Company is, and at all times since the later of 1991 or the
Contract's date of inception, has been, in substantial compliance with all
applicable terms and requirements of such Contract;
(iii) each other Person that has or had any obligation or liability
under such Contract is, and at all times since the later of 1991 or the
Contract's date of inception, has been, in substantial compliance with all
applicable terms and requirements of such Contract;
(iv) to the best knowledge of Shareholders and the Company, no event
has occurred or circumstance exists that (with or without notice or lapse of
time) may contravene, conflict with, or result in a violation or breach of, or
give the Company or other Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to
cancel, terminate, or modify, any such Contract; and
(v) neither the Company nor Shareholders has given to or received from
any other Person, at any time since the later of 1991 or the Contract's date
of inception, any notice or other communication (whether oral or written)
-23-
regarding any actual, alleged, possible, or potential material violation or
breach by the Company of, or default by the Company under, such Contract.
(vi) to the best knowledge of Shareholders and the Company, there are
no renegotiations of, attempts to renegotiate, or outstanding rights to
renegotiate any material amounts paid or payable to the Company under such
Contracts with any Person (and, no such Person has made written demand for
such renegotiation) where the effect of such renegotiation would have a
material adverse effect on the Company or its operations.
(vii) such Contracts have been entered into in the Ordinary Course of
Business and have been entered into without the commission of any act alone or
in concert with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any Legal Requirement.
(viii) such Contracts constitute the sole and entire agreement among the
parties thereto with respect to the subject matter thereof, and there are no
other agreements or understandings among the parties which in any way pertain
to or otherwise affect such Contracts.
3.16 INSURANCE
---------
(a) Shareholders have delivered to THI true and complete copies of and
EXHIBIT 3.16(a) contains a complete and accurate list of all policies of
---------------
insurance to which the Company is a party or under which the Company, or any
director of the Company in his capacity as director of the Company, is or has
been covered at any time since 1991;
(b) EXHIBIT 3.16(b) hereof sets forth, by year, for the current policy year
---------------
and each of the two preceding policy years (i) a summary of the loss experience
under each policy; (ii) a statement describing each claim under an insurance
policy for an amount in excess of $25,000; and (iii) a statement describing the
loss experience for all claims that were self-insured, including the number and
aggregate cost of such claims.
(c) Except as set forth on EXHIBIT 3.16(c) hereof:
---------------
(i) All policies to which the Company is a party or that provide
coverage to Shareholders, the Company, or any director or officer of the
Company:
(A) are valid, outstanding, and enforceable;
(B) taken together, provide in the judgment of the Company and
Shareholders adequate insurance
-24-
coverage for the assets and the operations of the Company;
(C) are sufficient for compliance with all Legal Requirements and
Contracts to which the Company is a party or by which any of them is
bound;
(D) will continue in full force and effect following the
consummation of the Contemplated Transactions with respect to losses or
claims accruing or arising prior to the Closing Date; and
(E) do not provide for any retrospective premium adjustment or
other experienced-based liability on the part of the Company.
(ii) No Shareholder nor the Company has received with respect to the
Company (A) any refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (B) any notice of cancellation or any
other indication that any insurance policy is no longer in full force or
effect or will not be renewed or that the issuer of any policy is not willing
or able to perform its obligations thereunder.
(iii) The Company has paid all premiums due, and have otherwise
performed all of their respective obligations, under each policy to which the
Company is a party or that provides coverage to the Company or a director
thereof.
(iv) The Company has given notice to the insurer of all material claims
that may be insured thereby.
3.17 ENVIRONMENTAL MATTERS
---------------------
Except as set forth in EXHIBIT 3.17:
------------
(a) The Company and the Company Assets are, and at all times have been, in
material compliance with, and have not been and are not in violation of or
liable under, any Environmental Laws.
(b) The Company has not generated, handled, manufactured, processed, treated,
stored, used, transferred, released, disposed of or otherwise conducted any
hazardous process or activity with respect to (collectively, "Hazardous
Activities") any hazardous substances, hazardous wastes, hazardous wastes
constituents and reaction by-products, hazardous materials, pesticides, oil and
other petroleum products, pollutants, and/or toxic substances, including
asbestos and polychlorinated biphenyls as those terms are defined pursuant to
Environmental Laws (collectively, "Hazardous Substances"), except in full
compliance with Environmental Laws, or where any alleged noncompliance is not
material.
-25-
(c) To the best of Shareholders' knowledge, neither Shareholders nor the
Company has any basis to expect, nor has any of them or any other Person for
whose conduct they are or may be held to be responsible received, any actual or
Threatened Order, notice, or other communication from any Person that relates to
Hazardous Activities, Hazardous Substances, or any alleged actual or potential
violation or failure to comply with any Environmental Law with respect to any
properties or assets (whether real, personal, or mixed) in which the Company has
or had an interest.
(d) Neither Shareholders, the Company nor any other Person for whose conduct
they are or may be held to be responsible, has any existing liability,
obligations or other responsibility that would have a material adverse effect on
the Company arising from or under Environmental Laws, and neither Shareholders
nor the Company have any basis to expect such liability, obligations or
responsibilities to arise or occur.
(e) For purposes hereof, Environmental Laws shall mean all Legal Requirements
that relate or pertain to environmental matters, pollution and/or public health,
safety or welfare, including without limitation, the Resource Conservation and
Recovery Act (42 U.S.C. 6901 et seq.), as amended, the Comprehensive
------
Environmental Response, Compensation and Liability Act (42 U.S.C. 9601 et seq.),
------
as amended, the Federal Clean Water Act (33 U.S.C. 1251 et seq.), as amended,
------
and state and federal environmental clean up programs.
3.18 EMPLOYEES
---------
(a) EXHIBIT 3.18(a) hereof contains a complete and accurate list of the
---------------
following information for each employee or director of the Company, including
each employee on leave of absence or layoff status: name; job title; current
compensation paid or payable and any change in compensation since January 1,
1996; vacation accrued; and service credited for purposes of vesting and
eligibility to participate under the Company's pension, retirement, profit-
sharing, thrift-savings, deferred compensation, stock bonus, stock option, cash
bonus, employee stock ownership (including investment credit or payroll stock
ownership), severance pay, insurance, medical, welfare, or vacation plan, other
Employee Pension Benefit Plan or Employee Welfare Benefit Plan, or any other
employee benefit plan or any Director Plan.
(b) Except as set forth on EXHIBIT 3.18(b), to the best knowledge of the
---------------
Shareholders and the Company, no employee, officer or director of the Company is
a party to, or is otherwise bound by, any agreement or arrangement, including
any confidentiality, noncompetition, or proprietary rights agreement, between
such officer or director and any other Person ("Proprietary Rights Agreement")
that in any way adversely
-26-
affects or will affect (i) the performance of his duties as an employee, officer
or director of the Company, or (ii) the ability of the Company to conduct its
business, including any Proprietary Rights Agreement with Shareholders or the
Company by any such employee, officer or director. Except as set forth on
EXHIBIT 3.18(b), to the best knowledge of the Shareholders and the Company, no
---------------
director or officer involved in the business or operations of the Company
intends to terminate his/her employment with the Company prior to December 31,
1997.
(c) EXHIBIT 3.18(c)-1 hereof contains a complete and accurate list of all
-----------------
employment agreements, employment contracts, compensation arrangements and/or
any other Contract pertaining to employment related matters between the Company
and any of its employees (the "Employment Agreements"). The Shareholders have
delivered to THI true and complete copies of all Employment Agreements. Except
those employees with Employment Agreements, that provide to the contrary, all
employees of the Company are employees at will and their employment may be
terminated at any time by the Company without fee, penalty, severance
compensation or benefits.
(d) EXHIBIT 3.18(d) hereof contains a complete and accurate list of the
---------------
following information for each retired employee or director of the Company, or
their dependents, receiving benefits or scheduled to receive benefits in the
future: name, pension benefit, pension option election, retiree medical
insurance coverage, retiree life insurance coverage, and other benefits.
3.19 LABOR RELATIONS; COMPLIANCE
---------------------------
Since 1991, the Company has not been nor is a party to any collective
bargaining or other labor Contract. Since 1991, there has not been, there is
not presently pending or existing, and to the best knowledge of Shareholders and
the Company, there is not Threatened, (a) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (b) any Proceeding against or affecting
the Company relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor Relations Board,
the Equal Employment Opportunity Commission, or any comparable Governmental
Body, organizational activity, or other labor or employment dispute against or
affecting any of the Company or their premises, or (c) any application for
certification of a collective bargaining agent. There is no lockout of any
employees by the Company, and no such action is contemplated by the Company.
The Company has complied in all respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant closing. The Company
is not liable for the payment of any compensation, damages, taxes, fines,
penalties, or other amounts,
-27-
however designated, for failure to comply with any of the foregoing Legal
Requirements.
3.20 INTELLECTUAL PROPERTY
---------------------
(a) Shareholders have delivered to THI true and complete copies of, and
EXHIBIT 3.20 hereof contains a complete and accurate list of, all Contracts
------------
relating to the Intellectual Property Assets.
(b) The Intellectual Property Assets are all those necessary for the
operation of the Company's business as it is currently conducted. The Company
is the owner of all right, title, and interest in and to each of the
Intellectual Property Assets, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims, and has the right to
use, without payment to a third party, all of the Intellectual Property Assets.
(c) The Intellectual Property Assets and the use thereof by the Company does
not nor does the subject matter of any of the Intellectual Property Assets
infringe or is alleged to infringe any rights of any third party or is a
derivative work based on the work of a third party.
3.21 BANK ACCOUNTS
-------------
EXHIBIT 3.21 contains a complete and accurate list of each bank or financial
------------
institution in which the Company has an account or safe deposit box, including
address, account number and the names of persons authorized to draw thereon or
to have access thereto.
3.22 CERTAIN PAYMENTS
----------------
Since 1991, neither the Company nor any director, officer, agent, or employee
of the Company, nor any Representative, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of the Company, or (iv) in violation of any Legal Requirement, and/or
(b) established or maintained any fund or asset that has not been recorded in
the books and records of the Company.
3.23 COMPANY REVENUES
----------------
The Company revenues, as measured by GAAP on a consolidated basis, from
Telephone and Operating License Agreements during the fiscal year ended 1995 was
not less than $20,000,000. The Company revenues, as measured by GAAP on a
consolidated basis,
-28-
from Telephone and Operating License Agreements during the two fiscal quarters
ending June 30, 1996, was not less than $14,500,000.
3.24 DISCLOSURE
----------
No representation or warranty of Shareholders in this Agreement omits to state
a material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
3.25 RELATIONSHIPS WITH RELATED PERSONS
----------------------------------
Except as set forth in EXHIBIT 3.25 hereof, neither any of the Shareholders
------------
nor any Person related or affiliated with any Shareholder or the Company is a
party to any Contract with, or has any claim or right against, the Company.
Neither any of the Shareholders nor any Person related or affiliated with any of
the Shareholders owns, directly or indirectly, any material interest in any
person or entity that is a competitor, customer or supplier of the Company, that
otherwise has any business dealings with the Company or that is engaged in the
same or similar business as the Company.
3.26 BROKERS OR FINDERS
------------------
Except as set forth in EXHIBIT 3.26, Shareholders and their agents have
------------
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
3.27 HSR ACT
-------
Company is the "acquired person" within the meaning of the HSR Act and has for
the purposes of the "size of person" test under the HSR Act less than
$100,000,000 in annual net sales or total assets.
4. REPRESENTATIONS AND WARRANTIES OF THI
THI represents and warrants to Shareholders as follows:
4.1 ORGANIZATION AND GOOD STANDING
------------------------------
THI is a corporation duly organized, validly existing, and in good standing
under the laws of the state of its incorporation.
4.2 AUTHORITY; NO CONFLICT
----------------------
(a) This Agreement constitutes the legal, valid, and binding obligation of
THI, enforceable against THI in accordance with its terms. Upon the execution
and delivery by THI of the Post-Closing Escrow Agreement and THI's Closing
Certificate
-29-
(collectively, the "THI's Closing Documents"), THI's Closing Documents will
constitute the legal, valid, and binding obligations of THI, enforceable against
THI in accordance with their respective terms. THI has the absolute and
unrestricted right, power, and authority to execute and deliver this Agreement
and the THI's Closing Documents and to perform its obligations under this
Agreement and the THI's Closing Documents.
(b) Except as set forth in EXHIBIT 4.2, neither the execution and delivery of
------------
this Agreement by THI nor the consummation or performance of any of the
Contemplated Transactions by THI will give any Person the right to prevent,
delay, or otherwise interfere with any of the Contemplated Transactions pursuant
to:
(i) any provision of THI's Organizational Documents;
(ii) any resolution adopted by the board of directors or the
stockholders of THI;
(iii) any Legal Requirement or Order to which THI may be subject; or
(iv) any contract to which THI is a party or by which THI may be bound.
Except as set forth in EXHIBIT 4.2, THI is not and will not be required to
-----------
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
4.3 INVESTMENT INTENT
-----------------
THI is acquiring the Contributed Shares for its own account and not with a
view to their distribution within the meaning of Section 2(11) of the Securities
Act.
4.4 CERTAIN PROCEEDINGS
-------------------
There is no pending or Threatened Proceeding that has been commenced against
THI and that challenges, or may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated Transactions.
4.5 BROKERS OR FINDERS
------------------
Except as set forth in EXHIBIT 4.5, THI and its officers and agents have
-----------
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement and will indemnify and hold Shareholders harmless from any such
payment alleged to be due by or through THI as a result of the action of THI or
its officers or agents.
-30-
4.6 HSR ACT
-------
THI is the "acquiring person" within the meaning of the HSR Act and has for
the purposes of the "size of person" test under the HSR Act less than
$100,000,000 in annual net sales or total assets.
5. COVENANTS OF SHAREHOLDERS AND THE COMPANY PRIOR TO/ON CLOSING DATE
5.1 REQUIRED APPROVALS
------------------
As promptly as practicable after the date of this Agreement, Shareholders
will, and will cause the Company to, make all filings required by Legal
Requirements to be made by them in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date,
Shareholders will, and will cause the Company to, (a) cooperate with THI with
respect to all filings that THI elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with THI in obtaining all Consents identified in EXHIBIT 4.2.
-----------
5.2 COMPANY APPROVAL
----------------
This Agreement and the Contemplated Transactions have been voted upon and
approved by the board of directors of the Company.
5.3 CURRENT INFORMATION
-------------------
During the period from the date of this Agreement to the Closing Date, the
Company shall cause one or more of its Representatives to confer on a regular
and frequent basis with Representatives of THI to report on the general status
of the ongoing operations of the Company. The Company shall promptly notify THI
of any material change in the normal course of its business or in the operation
of its properties and of any governmental complaints, investigations, or
hearings (or communications indicating that the same may be contemplated), or
the institution or the threat of material litigation involving such party, and
will keep THI fully informed with respect to such events.
5.4 OPERATIONS PRIOR TO CLOSING DATE
--------------------------------
(a) In addition to any other express obligation under this Agreement, between
the date of this Agreement and the Closing Date, the Company will do, and the
Shareholders shall cause the Company to do each of the following, and each of
the Company and the Shareholders also represents that from the date of the
Interim Balance Sheet to the date of this Agreement the Company has done the
following:
-31-
(i) conduct the business of the Company only in the usual, regular and
ordinary manner, on a basis consistent with past practice, maintain the
Company's books, accounts and records in the usual, regular and ordinary
manner, on a basis consistent with past practices, maintain and comply with
the terms of all licenses, permits and other Legal Requirements, and otherwise
conduct the business of the Company only in the Ordinary Course of Business;
(ii) use their best efforts to preserve intact the current organization
of the Company, keep available the services of the current officers,
employees, and agents of the current organization of the Company, and maintain
the relations and good will with all suppliers, customers, landlords,
creditors, employees, agents, and others having business relationships with
the Company;
(iii) conduct the business and affairs of the Company in a manner so
that all representations and warranties herein will be true and correct at
Closing;
(iv) maintain all of the Company Assets in good repair, order and
condition, and perform all of the Company's obligations under the Contracts;
and
(v) pay all expenses and accounts payable incurred in connection with
the operation of the Company's business in the usual, regular and ordinary
manner on a basis consistent with past practice.
(b) Except as set forth in EXHIBIT 3.14, the Company agrees that during the
------------
period from the date of this Agreement to and including the Closing Date,
without the prior written consent of THI, it will not do any of the following
and the Company and Shareholders also represent that from the date of the
Interim Balance Sheet to the date of this Agreement the Company has not done any
of the following:
(i) incur any liability or obligation of any material nature (whether
accrued, absolute, contingent or otherwise), except in the Ordinary Course of
Business;
(ii) permit any of the Company Assets to be subjected to any
Encumbrance;
(iii) sell, transfer or otherwise dispose of any Company Assets except
in the Ordinary Course of Business;
(iv) make any capital expenditure or commitment therefor, except in the
Ordinary Course of Business;
(v) redeem, purchase or otherwise acquire any shares of its capital
stock or any option, warrant or other right to purchase or acquire any such
shares;
-32-
(vi) except in the Ordinary Course of Business, borrow money or make
any loan to any Person;
(vii) write off as uncollectible any note or accounts receivable, except
write-offs in the Ordinary Course of Business charged to applicable reserves,
which individually or in the aggregate are not material to the Company;
(viii) accelerate the collection of any accounts receivable or other
amounts payable to the Company;
(ix) except as disclosed on Exhibit 5.4(b)(ix), grant any increase in
the rate of wages, salaries, bonuses or other remuneration of any executive
employees or other employees;
(x) cancel or waive any claims or rights of substantial value;
(xi) make any change in any method of accounting or auditing practice;
(xii) agree, whether or not in writing, to do any of the foregoing;
(xiii) cause the Shareholders or the Company to, without the prior
consent of THI, take any affirmative action, or fail to take any reasonable
action within their or its control, as a result of which any of the changes or
events listed in Section 3.16 is likely to occur.
5.5 ACCESS AND INVESTIGATION
------------------------
Between the date of this Agreement and the Closing Date, Shareholders and the
Company will, and will cause their Representatives during reasonable business
hours and as coordinated with the Company's management, to, (a) afford THI and
its Representatives and advisors (collectively, "THI's Advisors") full and free
access to all Company employees and personnel and to all Company Contracts,
books and records, and other documents and data, (b) furnish THI and THI's
Advisors with copies of all such Contracts, books and records, and other
existing documents nd data as THI may reasonably request, and (c) furnish THI
and THI's Advisors with such additional financial, operating, and other data and
information as THI may reasonably request.
5.6 NOTIFICATION; AMENDMENT OF EXHIBITS
-----------------------------------
(a) Between the date of this Agreement and the Closing Date, the Shareholders
and the Company will promptly notify THI in writing if a Shareholder or the
Company becomes aware of any fact or condition that causes or constitutes a
Breach of any of representations and warranties of Shareholders or the Company
as
-33-
of the date of this Agreement and before Closing, or if a Shareholder or the
Company becomes aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. During the same period, each Shareholder
will promptly notify THI of the occurrence of any Breach of any covenant of
Shareholders in this Section 5 or of the occurrence of any event that may make
the satisfaction of the conditions in Section 7 impossible or unlikely.
(b) Shareholders may in good faith, based upon circumstances not known to
Shareholders on the date of this Agreement, update the Exhibits to this
Agreement prior to Closing, in which case THI is under no obligation to close.
If the Closing occurs, Shareholders' representations will be deemed amended
based on the updated exhibits.
(c) Seller may in good faith update EXHIBIT 3.2(b) based on change of advice
--------------
of counsel up to the date shown on that Exhibit, in which case Buyer is under no
obligation to close (except to the extent that additional required consents are
covered by the Regulatory Escrow Fund established under the Stock Acquisition
Agreement.
5.7 NO NEGOTIATION
--------------
Until such time, if any, as this Agreement is terminated pursuant to Section
9, Shareholders and the Company will not, and will not permit any of their
Representatives to, directly or indirectly solicit, initiate, respond to or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than THI) relating to any
transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of the Company, or any of the capital stock of the
Company, or any merger, consolidation, business combination, or similar
transaction involving the Company.
6. COVENANTS OF THI PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
--------------------------------
As promptly as practicable after the date of this Agreement, THI will make all
filings required by Legal Requirements to be made by them to consummate the
Contemplated Transactions. The THI shall use its best efforts to satisfy all
the conditions precedent to its and all other parties' obligations under this
Agreement. Between the date of this Agreement and the Closing Date, THI will
cooperate with Shareholders with respect to all filings that Shareholders are
required by Legal Requirements to
-34-
make in connection with the Contemplated Transactions, and cooperate with
Shareholders in obtaining all consents identified in EXHIBIT 3.2(c) hereof.
--------------
6.2 NOTIFICATION
------------
Between the date of this Agreement and the Closing Date, THI will promptly
notify the Shareholders and the Company in writing if THI becomes aware of any
fact or condition that causes or constitutes a Breach of any of representations
and warranties of THI as of the date of this Agreement and before Closing, or if
THI becomes aware of the occurrence after the date of this Agreement of any fact
or condition that would (except as expressly contemplated by this Agreement)
cause or constitute a Breach of any such representation or warranty by THI had
such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. During the same period, THI will promptly
notify the Shareholders and the Company of the occurrence of any Breach of any
covenant of THI in this Section 6 or of the occurrence of any event that may
make the satisfaction of the conditions in Section 8 impossible or unlikely.
7. CONDITIONS PRECEDENT TO THI'S OBLIGATION TO CLOSE
THI's obligation to acquire the Shares and to take the other actions required
to be taken by THI at the Closing is subject to the satisfaction, at or prior to
the Closing, of each of the following conditions (any of which may be waived by
THI, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
---------------------------
All of the representations and warranties of Shareholders and the Company in
this Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been materially accurate as of
the date of this Agreement, and must be materially accurate as of the Closing
Date as if made on the Closing Date.
7.2 PERFORMANCE
-----------
(a) All of the covenants and obligations that Shareholders and the Company
are required to perform or to comply with pursuant to this Agreement at or prior
to the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
(b) Each document required to be delivered pursuant to Section 2.4 must have
been delivered.
(c) All of the agreements, other documents or certificates, or actions
required to be entered into, delivered and/or taken at or prior to the Closing
in accordance with Section 2 hereof,
-35-
including actions or deliveries of Persons not a party hereto, shall have been
entered into, delivered and or taken, as applicable.
7.3 CONSENTS
--------
Except for those regulatory and contractual consents as to which a cash
deposit is permitted to be deposited in the Regulatory Escrow Fund identified in
Section 2.3(b) of the Stock Acquisition Agreement, (i) each of the Consents
identified in Sections 3.2, and 4.2 must have been obtained and must be in full
force and effect and (ii) THI must have received an opinion of counsel in form
and substance reasonably acceptable to THI that all Government Authorizations
necessary to Closing have been obtained, including, without limitation, those of
the State of Missouri or its subdivisions or instrumentalities.
7.4 NO PROCEEDINGS
--------------
Since the date of this Agreement, there must not have been commenced or
Threatened against THI, or against any Person affiliated with THI, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise materially
interfering with any of the Contemplated Transactions.
7.5 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
---------------------------------------------------
There must not have been made or Threatened by any Person any claim asserting
that such Person (a) is the holder or the beneficial owner of, or has the right
to acquire or to obtain beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in, the Company, or (b) is entitled to all
or any portion of the Purchase Price payable for the Shares.
7.6 NO PROHIBITION
--------------
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause THI or any Person affiliated with THI to suffer any
material adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise formally proposed by or before any Governmental Body.
7.7 MATERIAL ADVERSE CHANGE
-----------------------
There shall not have occurred any change in the Company's financial condition,
business, property or prospects nor shall have there occurred any change in the
business condition of the
-36-
Company's customers or suppliers nor any change in the regulatory or competitive
environment, which in the judgment of THI materially adversely affects the
Company, the business of the Company or the condition (financial or otherwise)
of the Company.
In the event that each and every one of these conditions precedent to the
obligations of THI shall not have been satisfied prior to or at the Closing,
then THI may (but shall not be obligated to) waive such unsatisfied condition or
extend the Closing Date to allow additional time for such condition to be
satisfied. Any such waiver or extension shall be without prejudice to any other
rights and remedies THI may have hereunder or at law or in equity.
7.8 RELATED CONTRACTS Each of (i) the Stock Acquisition Agreement, (ii) that
-----------------
certain Stock Acquisition Agreement of even date herewith for the acquisition of
shares of Xxxxxx Telecommunications Corporation and (iii) that certain
Contribution Agreement of even date herewith pertaining to the contribution of
shares of Xxxxxx Telecommunications Corporation Subscription Agreements with
certain other investors must be consummated in accordance with their respective
terms contemporaneously with the Closing.
8. CONDITIONS PRECEDENT TO SHAREHOLDERS' OBLIGATION TO CLOSE
Shareholders' obligation to transfer the Shares and to take the other actions
required to be taken by Shareholders at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Shareholders, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
---------------------------
All of THI's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been materially accurate as of the date of this
Agreement and must be materially accurate as of the Closing Date as if made on
the Closing Date.
8.2 THI'S PERFORMANCE
-----------------
(a) All of the covenants and obligations that THI is required to perform or
to comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been performed and complied with in all material
respects.
(b) THI must have delivered each of the documents required to be delivered by
THI pursuant to Section 2.4 and must have made the cash payments required to be
made by THI pursuant to Sections 2.4(b)(i) and 2.4(b)(ii).
-37-
8.3 NO VIOLATION OF ORDER
---------------------
Neither the consummation nor the performance of any of the Contemplated
Transactions will result in a material violation of any Order.
8.4 RELATED CONTRACTS Each of (i) the Stock Acquisition Agreement, (ii) that
-----------------
certain Stock Acquisition Agreement of even date herewith for the acquisition of
shares of Xxxxxx Telecommunications Corporation and (iii) that certain
Contribution Agreement of even date herewith pertaining to the contribution of
shares of Xxxxxx Telecommunications Corporation Subscription Agreements with
certain other investors must be consummated in accordance with their respective
terms contemporaneously with the Closing.
9. TERMINATION
9.1 TERMINATION EVENTS
------------------
This Agreement may, by notice given prior to or at the Closing, be terminated:
(a) by either THI or Shareholders if a material Breach of any
provision of this Agreement has been committed by the other party and such
Breach has not been waived;
(b) by THI: if any of the conditions in Section 7 have not been
satisfied as of January 31, 1997; or if satisfaction of such a condition is or
becomes impossible (other than through the failure of THI to comply with its
obligations under this Agreement) and THI has not waived such condition on or
before January 31, 1997;
(c) by Shareholders: if any of the conditions in Section 8 have not
been satisfied as of January 31, 1997; or if satisfaction of such a condition
is or becomes impossible (other than through the failure of Shareholders to
comply with their obligations under this Agreement) and Shareholders have not
waived such condition on or before January 31, 1997; or
(d) by mutual consent of THI and Shareholders; or
(e) by either THI or Shareholders if the Closing has not occurred
(other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before January 31, 1997, or such later date as the parties may agree upon.
-38-
9.2 EFFECT OF TERMINATION
---------------------
Each party's right of termination under Section 9.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
a right of termination will not be an election of remedies. If this Agreement
is terminated pursuant to Section 9.1, all further obligations of the parties
under this Agreement will terminate, except that the obligations in Sections
11.1 and 11.3 will survive; provided, however, that if this Agreement is
terminated by a party because of the Breach of the Agreement by the other party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL
--------
Subject to the limitations described in this Section 10.1, all
representations, warranties, covenants, and obligations in this Agreement, the
certificates delivered pursuant to Section 2.4(a) and (b), and any other
certificate or document delivered pursuant to this Agreement will survive the
Closing as follows: (i) all representations, warranties, covenants and
obligations, other than any representation or warranty contained in Section 3.9,
3.13 or any claim based upon a fraudulent misrepresentation, shall survive the
Closing until May 31, 1998, and shall thereupon expire together with any right
to indemnification (except to the extent a written notice asserting a claim for
breach of any such representation or warranty shall have been given prior to
such date to the party which made such representation and warranty), (ii) all
representations or warranties contained in Section 3.13 shall survive the
Closing until three (3) years from the Closing Date and shall thereupon expire
together with any right to indemnification (except to the extent a written
notice asserting a claim for breach of any such representation or warranty shall
have been given prior to such date to the party which made such representation
and warranty), and (iii) all representations or warranties contained in Section
3.9 and all claims based upon a fraudulent misrepresentation shall survive the
Closing indefinitely.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SHAREHOLDERS
------------------------------------------------------
(a) Subject to the limitations described herein, Shareholders severally, and
not jointly, will indemnify and hold harmless THI, the Company and their
respective Representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons") for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage
-39-
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising or resulting from, directly or indirectly, from or in connection with:
(i) any Breach of any representation or warranty made by Shareholders
in this Agreement or the Stock Acquisition Agreement, or any other certificate
or document delivered by Shareholders pursuant to this Agreement or the Stock
Acquisition Agreement;
(ii) any Breach by Shareholders of any covenant or obligation of
Shareholders in this Agreement or the Stock Acquisition Agreement, or in any
Shareholders' Closing Documents or any other document delivered by
Shareholders pursuant to this Agreement or the Stock Acquisition Agreement;
(iii) regardless of whether it may also constitute a Breach under
Section 10.2 (a) or (b) above, any loss, liability, claim, damage (including
incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) arising from or
relating to the operation, management or ownership of the Company, arising or
related to the period on or prior to the Closing Date (whether known or
unknown on the Closing Date).
provided, however, that (i) except as provided in (ii) below, the aggregate
-------- -------
amount of Damages for which any Shareholder shall indemnify THI hereunder for
any Breach of a representation, warranty, covenant or other obligation contained
in this Agreement or the Stock Acquisition Agreement shall not exceed each
Shareholder's pro rata share (based upon his or her ownership in the Company at
Closing) of the amount in the Post-Closing Escrow Fund as established pursuant
to the Stock Acquisition Agreement (such indemnification to be provided by the
Post-Closing Escrow Fund); (ii) the aggregate amount of Damages for which the
Shareholders shall indemnify THI hereunder for any Breach of a representation or
warranty contained in Section 3.9 and 3.13 or for any claim based upon a
fraudulent misrepresentation (to the extent of Damages incurred as a result)
shall not exceed each Shareholder's pro rata share of the Purchase Price as
established pursuant to the Stock Acquisition Agreement (such indemnification to
be provided first by the Post-Closing Escrow Fund)and the shares of THI Common
and THI Preferred issued hereunder to such Shareholder and all rights of
distribution and/or dividends thereunder; and (iii) THI shall not be entitled to
assert any right to indemnification hereunder against the Shareholders until
THI's good faith estimate of all Damages for which the Shareholders indemnify
THI hereunder and/or under the Stock Acquisition Agreement exceeds $100,000 (the
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"Indemnification Threshold") at which time THI shall be entitled to
indemnification for all Damages which exceed the Indemnification Threshold
(subject to the limitations described above).
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THI
---------------------------------------------
THI will indemnify and hold harmless Shareholders and their respective
Representatives, stockholders, controlling persons, and affiliates
(collectively, the "Shareholders' Indemnified Persons"), and will pay to
Shareholders' Indemnified Persons the amount of any Damages arising, directly or
indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by THI in this
Agreement or the Stock Acquisition Agreement, or in any certificate delivered
by THI pursuant to this Agreement or the Stock Acquisition Agreement; or
(b) any Breach by THI of any covenant or obligation of THI in this
Agreement or the Stock Acquisition Agreement.
10.4 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
-------------------------------------------------
(a) Promptly after receipt by an indemnified party under Section 10.2 or
10.3, of notice of the commencement of any Proceeding against it or of notice
that such Proceeding has been Threatened against it, such indemnified party
will, if a claim is to be made against an indemnifying party under such Section,
give notice to the indemnifying party of the commencement of such claim or
threatened Proceeding, but the failure to notify the indemnifying party will not
relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action or the ability of the indemnifying party to
obtain otherwise available insurance proceeds is materially prejudiced by the
indemnified party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.4(a) is brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
-41-
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 10 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If
the indemnifying party assumes the defense of a Proceeding, (i) no compromise or
settlement of such claims may be effected by the indemnifying party without the
indemnified party's consent unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any Person and
no effect on any other claims that may be made against the indemnified party,
and (B) the sole relief provided is monetary damages that are paid in full by
the indemnifying party; and (ii) the indemnified party will have no liability
with respect to any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the commencement of any
Proceeding and the indemnifying party does not, within ten days after the
indemnified party's notice is given, give notice to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party will
be bound by any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines in good
faith that there is a reasonable probability that a Proceeding may materially
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
indemnified party may, by notice to the indemnifying party, and following a good
faith attempt to consult with the indemnifying party, assume the exclusive right
to defend, compromise, or settle such Proceeding, but the indemnifying party
will not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
10.5 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
-------------------------------------------
A claim for indemnification for any matter not involving a third-party claim
may be asserted by notice to the party from whom indemnification is sought.
10.6 SOLE REMEDY; EFFECT OF REMEDIES AVAILABLE UNDER STOCK ACQUISITION
-----------------------------------------------------------------
AGREEMENT.
---------
(a) After Closing, a claim for indemnification under this Section 10 will be
a party's sole remedy for breach of this Agreement.
(b) The parties intend for the indemnification obligations under this
Agreement and the Stock Acquisition Agreement to operate together and without
duplication so that a Shareholder's
-42-
(or Seller's) aggregate liability under both documents is limited to (i) his or
her pro rata share of the Post Closing Escrow Fund or (ii) the Purchase Price
under the Stock Acquisition Agreement plus the shares (and the rights to
distributions or dividends thereunder) and all other right or interest in Buyer
acquired by such Seller (as a contributing Shareholder) under this Agreement, as
applicable.
11. GENERAL PROVISIONS
11.1 EXPENSES
--------
Except as otherwise expressly provided in this Agreement, each party to this
Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. In the event of termination of this Agreement, the
obligation of each party to pay its own expenses will be subject to any rights
of such party arising from a breach of this Agreement by another party.
11.2 SHAREHOLDERS' OBLIGATIONS AND DECISIONS
---------------------------------------
(a) Subject to the limitations contained in Section 10.2 hereof, any and all
representations, warranties, covenants, obligations and or agreements of the
Shareholders contained herein are made and given jointly and severally by the
Shareholders, and each of the Shareholders shall be jointly and severally liable
for with all such representations, warranties, covenants, obligations and
agreements. Whenever any decision, consent, waiver, determination and/or
exercise of any right or remedy (collectively, a "Decision") is required or may
be made, taken or given by the Shareholders hereunder, such Decision may only be
----
made, taken or given by Xxxx X. Xxxxx (as provided in the Shareholder
Representative Agreement among the Shareholders) (the "Shareholders'
Representative"). The Shareholders' Representative may only be changed by a
Majority in Interest of the Shareholders. Any Decision made, taken or given by
the Shareholders' Representatives shall be binding upon all Shareholders. For
purposes hereof, Majority in Interest of the Shareholders shall mean
Shareholders holding a majority of the outstanding Common Shares.
11.3 CONFIDENTIALITY
---------------
All information and documentation furnished to THI shall be covered by that
certain agreement dated _____________, 1996 (the "Confidentiality Agreement").
Prior to Closing, no party or affiliate of a party hereto or to the
Confidentiality Agreement will issue or cause publication of any press release
or other announcement or public communications with respect to the Contemplated
Transactions, including without limitation a general
-43-
announcement to such party's employees, without the prior consent of the other
parties hereto, which consent will not be unreasonably withheld; provided,
however, that nothing herein will prohibit any party (or affiliate) from issuing
or causing publication of any such press release, announcement or public
communication to the extent that such party (or affiliate) reasonably determines
such action to be required by law, any regulatory agency or the rules of any
national stock exchange or association applicable to it, in which case the party
(or affiliate) making such determination will use reasonable efforts to allow
the other party reasonable time to comment on such release or announcement in
advance of its issuance or to make any disclosure necessary to obtain any
consents required or deemed appropriate by THI.
11.4 NOTICES
-------
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by facsimile (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and facsimile numbers set forth below (or
to such other addresses and facsimile numbers as a party may designate by notice
to the other parties):
If to THI:
c/o Xxxxxx Xxxx Xxxxxxx Capital Corporation
0000 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
With a copy to:
Xxxxxxxx & Xxxxxxxx, a Professional Corporation
0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx
-44-
If to any Shareholder and/or the Company:
c/o AmeriTel Pay Phones, Inc.
000 Xxxxxxxxx 0xx Xxxxxx
Xxx'x Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
With a copy to Shareholders' Representative:
Xxxx X. Xxxxx
000 Xxxxxx Xxxx
Xxx'x Xxxxxx, Xxxxxxxx 00000
With a copy to:
Xxxxxxxxx Xxxxxxx Xxxxxxx Weary & Xxxxxxxx X.X.
Xxxxx 0000
Xxx Xxxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
11.5 JURISDICTION; SERVICE OF PROCESS
--------------------------------
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of the State of Texas, County of Dallas, or, if it has or can
acquire jurisdiction, in the United States District Court for the Northern
District of Texas, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any
action or proceeding referred to in the preceding sentence may be served on any
party anywhere in the world.
11.6 FURTHER ASSURANCES
------------------
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
-45-
11.7 WAIVER
------
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure nor any delay by any party in exercising
any right, power, or privilege under this Agreement or the documents referred to
in this Agreement will operate as a waiver of such right, power, or privilege,
and no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
11.8 ENTIRE AGREEMENT AND MODIFICATION
---------------------------------
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and together with the Stock Acquisition Agreement
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
11.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
--------------------------------------------------
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties, except that THI may assign this Agreement
and/or any of its rights under this Agreement to (i) any affiliate of THI,
Xxxxxx Xxxx Capital Corporation and/or their respective principals, or (ii) any
bank, financial institution and/or other party providing any loans or financing
to THI. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
-46-
11.10 SEVERABILITY
------------
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
11.11 SECTION HEADINGS, CONSTRUCTION
------------------------------
The headings of Sections in this Agreement are provided for convenience only
and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms. The
parties, in acknowledgment that all of them have been represented by counsel and
that this Agreement has been carefully negotiated, agree that the construction
and interpretation of this Agreement and other documents entered into in
connection herewith shall not be affected by the identity of the party or
parties under whose direction or at whose expense this Agreement and such
documents were prepared or drafted.
11.12 TIME OF ESSENCE
---------------
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
11.13 GOVERNING LAW
-------------
This Agreement will be governed by the laws of the State of Texas without
regard to conflicts of laws principles.
11.14 COUNTERPARTS
------------
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
-47-
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
Xxxxxx Holdings, Inc.
a Delaware corporation
By: /s/ XXXX X. XXXXXXX
--------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
/s/ XXXXXXX X. XXXXX, XX.
--------------------------------------
XXXXXXX X. XXXXX, XX.
/s/ XXXXXX X. XXXXX
--------------------------------------
XXXXXX X. XXXXX
/s/ T. XXXXXXX XXXXXXXX
--------------------------------------
X.X. XXXXXXXX
/s/ XXXXX X. XXXXXX
--------------------------------------
XXXXX X. XXXXXX
AMERITEL PAY PHONES, INC.
a Missouri corporation
By: /s/ XXXXX XXXXXXX
-----------------------------------
Name: Xxxxx Xxxxxxx
Title: President
/s/ XXXXX XXXXXXX
--------------------------------------
XXXXX X. XXXXXXX
/s/ XXXXX X. XXXXXX
--------------------------------------
XXXXX X. XXXXXX
/s/ XXXX X. XXXX
--------------------------------------
XXXX XXXX
-48-
/s/ XXXX X. XXXXXXX
--------------------------------------
XXXX XXXXXXX
/s/ XXXX X. XXXXX
--------------------------------------
XXXX X. XXXXX
-49-
LIST OF EXHIBITS*
TO
AMERITEL CONTRIBUTION AGREEMENT
Schedule 1 AmeriTel Shareholder Allocations
Exhibit A List of AmeriTel Stockholders
Exhibit 1(a) Example Calculation of Adjustment Amount,
Purchase Price and Funding Requirement
Exhibit 1-b Agreements
Exhibit 2.3(a) Escrow Agreement
Exhibit 2.3(b) Regulatory Escrow Agreement
Exhibit 2.4(a) Xxxxxx Consulting Agreement
Exhibit 2.4(a)(iii)-1 Xxxxxxx Employment Agreement
Exhibit 2.4(a)(iii)-2 Xxxxxxx Employment Agreement
Exhibit 2.4(a)(v) Form of Sellers' Counsel Legal Opinion
Exhibit 2.4(a)(vi)-1 Green, Jr. Non-Competition Agreement
Exhibit 2.4(a)(vi)-2 Green Non-Competition Agreement
Exhibit 2.4(a)(vi)-3 Xxxxxxxx Non-Competition Agreement
Exhibit 2.4(b)(v) Form of Buyers Counsel Legal Opinion
Exhibit 2.5(d) Pre-Closing Escrow Agreement-NOT APPLICABLE
Exhibit 3.1(a)-1 States of Operation
Exhibit 3.1(a)-2 Mergers
Exhibit 3.1(b) Corporate Names and Addresses
Exhibit 3.2(b) Consents
Exhibit 3.3(a) Ownership of Shares
Exhibit 3.3(b)-1 Legends and other Encumbrances on Stock
Exhibit 3.3(b)-2 Contracts or Other Agreements relating to
Issuance, Sale or Transfer of any Stock
Exhibit 3.3(c) Options
Exhibit 3.4 Interim Financial Statements
Exhibit 3.6(a) Encumbrances
Exhibit 3.6(a)[sic] Exceptions to Full Title
Exhibit 3.6(a)(ii) Installed Telephone Lines
Exhibit 3.6(a)(iv) Uninstalled Telephones, Parts, Hardware and
Equipment
Exhibit 3.6(a)(v) Vehicles
Exhibit 3.6(a)(vi) Furniture, Fixtures, Equipment, Personalty or
Intellectual Property Valued in excess of $1000
Exhibit 3.6(b) Continuing Liabilities
Exhibit 3.7 Accounts Receivable
Exhibit 3.8 Undisclosed Liabilities
Exhibit 3.9 List of Tax Returns and other Tax Matters
Exhibit 3.10 Material Adverse Changes
Exhibit 3.11 Employee Benefit Plans
Exhibit 3.12 Governmental Authorizations
Exhibit 3.13(a) and
Exhibit 3.13(b) Litigation
Page 1 of 2
Exhibit 3.14 Changes and Events
Exhibit 3.15(a)(i) Telephone Operating and License Agreement
Description
Exhibit 3.15(a)(ii) Service Agreement Description
Exhibit 3.15(a)(iii) Leases, Rental and Occupancy Agreements over
$5000 and 12 months
Exhibit 3.15(a)(iv) Licensing Agreements and/or Contracts with
respect to Intellectual Property Assets
Exhibit 3.15(a)(v) Joint Venture, Partnership or Contracts
involving Sharing of Profits, Losses, Costs or
Liabilities
Exhibit 3.15(a)(vi) Other Contracts ($5000 or more)
Exhibit 3.15(a)(vii) Power of Attorney List
Exhibit 3.15(b) Rights, Obligations and/or Liabilities of Seller
Exhibit 3.15(c) Contract Compliance
Exhibit 3.16(a) Insurance Policies
Exhibit 3.16(b) Insurance Summary
Exhibit 3.16(c) Insurance Statement
Exhibit 3.17 Environmental Statement
Exhibit 3.18(a) Employee Information
Exhibit 3.18(b) Officers/Directors Terminating Employment prior
to December 31, 1997
Exhibit 3.18(c)-1 Employee, Consultant and Contract Labor
Agreements
Exhibit 3.18(d) Retired Employee, Director, Director's
Dependents List of Benefits
Exhibit 3.20 Intellectual Property Asset Contracts
Exhibit 3.21 List of Bank Accounts
Exhibit 3.25 Relationships with Related Persons
Exhibit 3.26 Brokers or Finders (Sellers)
Exhibit 4.2 List of Consents-Buyer
Exhibit 4.5 Brokers or Finders (Buyer)
Exhibit 5.4(b)(ix) Disclosure of remuneration increases
___________________
* These items have been omitted. A copy will be provided to the Commission upon
request.
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