Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WESTOWER CORPORATION,
WESTOWER SUMMIT ACQUISITION, LLC,
SUMMIT COMMUNICATIONS, LLC
AND
THE MEMBERS OF SUMMIT COMMUNICATIONS, LLC
TABLE OF CONTENTS
Page
ARTICLE 1. THE MERGER.......................................................... 2
1.1 Merger.............................................................. 2
1.2 Certificate of Formation............................................ 2
1.3 Operating Agreement................................................. 2
ARTICLE 2. CONVERSION AND EXCHANGE OF MEMBERSHIP INTERESTS..................... 2
2.1 Merger Terms........................................................ 2
2.2 Closing............................................................. 3
ARTICLE 3. DEFAULT............................................................. 3
3.1 Default at Closing.................................................. 3
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SUMMIT AND THE
INDIVIDUAL MEMBERS.................................................. 4
4.1 Organization Standing and Qualification............................. 4
4.2 Membership Interests................................................ 4
4.3 No Subsidiaries, Partnerships or Joint Ventures..................... 4
4.4 Financial Statements................................................ 4
4.5 Title to Properties................................................. 5
4.6 Tax Matters......................................................... 5
4.7 Litigation and Labor Matters........................................ 6
4.8 Patents, Trademarks, and Copyrights................................. 7
4.9 Contracts and Commitments........................................... 7
4.10 Absence of Undisclosed Liabilities.................................. 8
4.11 Existing Condition.................................................. 8
4.12 Validity of Contemplated Transactions............................... 8
4.13 Licenses and Permits and Compliance with Laws....................... 9
4.14 Transactions with Affiliates........................................ 9
4.15 Bank Accounts....................................................... 9
4.16 Summit's Employees.................................................. 9
4.17 Environmental Liabilities........................................... 10
4.18 Accounts Receivable................................................. 11
4.19 Books and Records................................................... 11
4.20 Insurance........................................................... 11
4.21 Employee Benefit Plans.............................................. 11
4.22 Investment Representations.......................................... 12
4.23 Information Related to Westower..................................... 13
(i)
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF WESTOWER
AND SUB............................................................. 13
5.1 Organization, Good Standing and Authority........................... 13
5.2 Validity of Contemplated Transaction................................ 13
5.3 Westower SEC Filings................................................ 14
5.4 Material Changes.................................................... 14
5.5 Entity Classification............................................... 14
ARTICLE 6. COVENANTS........................................................... 14
6.1 Business in the Ordinary Course..................................... 14
6.2 Accounting and Credit Changes....................................... 14
6.3 Capitalization, Options and Dividends............................... 14
6.4 Encumbrance of Assets............................................... 14
6.5 Employment Agreements............................................... 15
6.6 Access.............................................................. 15
6.7 Good Will........................................................... 15
6.8 Exclusive Rights to Westower........................................ 15
6.9 Maintenance of Property............................................. 15
6.10 No New Material Agreements.......................................... 15
6.11 Compensation........................................................ 15
6.12 Indebtedness........................................................ 15
6.13 Cooperation......................................................... 16
ARTICLE 7. POST-CLOSING COVENANTS.............................................. 16
7.1 Personal Guarantees................................................. 16
7.2 Sale of the Westower Stock.......................................... 16
7.3 Registration Rights................................................. 17
7.4 Westower SEC Filing Obligations..................................... 17
7.5 Removal of Legend on Certificates Representing the Westower Stock... 17
7.6 Employment Agreements. At the Closing Summit,..................... 17
7.7 Covenant Not to Compete............................................. 17
7.8 Election to Close Books............................................. 19
7.9 Audit............................................................... 19
ARTICLE 8. INDEMNIFICATION..................................................... 19
8.1 Indemnification of Westower......................................... 19
8.2 Indemnification by Westower......................................... 20
8.3 Indemnification Procedure for Third-Party Claims.................... 20
ARTICLE 9. CONDITIONS PRECEDENT TO WESTOWER'S AND SUB'S
OBLIGATIONS......................................................... 20
9.1 Representations and Warranties...................................... 20
9.2 Compliance with Agreements.......................................... 21
(ii)
9.3 Opinion of Counsel.................................................. 21
9.4 Material Damage..................................................... 21
9.5 Employment Agreements............................................... 21
9.6 Other Approvals..................................................... 21
9.7 No Litigation....................................................... 22
ARTICLE 10. CONDITIONS PRECEDENT TO MEMBERS' OBLIGATIONS........................ 22
10.1 Representations and Warranties...................................... 22
10.2 Compliance with Agreements.......................................... 22
10.3 Opinion of Counsel.................................................. 22
10.4 Material Damage..................................................... 22
10.5 Agreements.......................................................... 22
10.6 Other Approvals..................................................... 23
10.7 No Litigation....................................................... 23
10.8 Waivers and Consents Obtained....................................... 23
ARTICLE 11. MISCELLANEOUS....................................................... 23
11.1 Broker Fees......................................................... 23
11.2 Survival of Representations and Warranties.......................... 23
11.3 Knowledge........................................................... 23
11.4 Expenses............................................................ 23
11.5 Announcements....................................................... 24
11.6 Further Actions and Assurances...................................... 24
11.7 Counterparts........................................................ 24
11.8 Contents of Agreement; Parties in Interest.......................... 24
11.9 Mississippi Law to Govern........................................... 24
11.10 Section Headings and Gender......................................... 24
11.11 Schedules........................................................... 24
11.12 Notices............................................................. 24
11.13 Confidential Information............................................ 25
(iii)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is entered as of the 10th day of
November, 1998 by and among WESTOWER CORPORATION, a Washington corporation
("Westower"), WESTOWER SUMMIT ACQUISITION, LLC, a Mississippi limited liability
company and wholly-owned subsidiary of Westower ("Sub"), SUMMIT COMMUNICATIONS,
LLC, a Mississippi limited liability company ("Summit"), and XXXX X. XXXXXXX
("Xxxxxxx"), XXXX X. XXXXXX ("Xxxxxx"), THE XXXX X. XXXXXXX CHILDREN'S TRUST
(the "Xxxxxxx Trust"), and THE XXXX X. XXXXXX CHILDREN'S TRUST (the "Xxxxxx
Trust"), being all the members of Summit (each a "Member" and together the
"Members"). Xxxxxxx and Xxxxxx are referred to herein as the "Individual
Members," and the Xxxxxxx Trust and the Xxxxxx Trust are referred to herein as
the "Trust Members".
RECITALS:
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A. All of the membership interests of Summit (individually, a "Summit
Interest" and, collectively, the "Summit Interests") are owned by the Members as
follows:
Name Membership Interest
---- --------------------
Xxxxxxx 45%
Xxxxxx 45%
Xxxxxxx Trust 5%
Xxxxxx Trust 5%
---
TOTAL 100%
Each Member's Summit Interest is referred to herein as such Member's "Pro
Rata Share."
B. The board of directors of Westower, the Manager and Member of Sub, and
the Members of Summit deem it advisable and in the best interest of Sub and
Summit that Sub merge with and into Summit (the "Merger") pursuant to this
Agreement and Plan of Merger and the applicable provisions of the laws of the
State of Mississippi.
AGREEMENTS
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NOW, THEREFORE, in consideration of the recitals and of the respective
covenants, representations and agreements herein contained, it is hereby
covenanted and agreed by and among the parties that they shall carry out and
consummate the following Agreement and Plan of Merger (the "Agreement"):
ARTICLE 1.
THE MERGER
1.1 MERGER. Upon the filing of the Certificate of Merger with the
Secretary of State of the State of Mississippi, in the form attached to this
Agreement as EXHIBIT 1.1, Sub shall be merged with and into Summit pursuant to
this Agreement, the separate existence of Sub shall cease, and Summit shall
survive as a limited liability company organized under and governed by the laws
of the State of Mississippi. Summit, as it exists from and after the Merger, is
sometimes referred to as the "Surviving Company."
1.2 CERTIFICATE OF FORMATION. The Certificate of Formation of Summit in
effect immediately prior to the Merger shall be amended and restated as set
forth in Attachment A to the Certificate of Merger and, as so amended and
restated, shall be the Certificate of Formation of the Surviving Company until
amended in accordance with applicable law.
1.3 OPERATING AGREEMENT. The Operating Agreement of Summit in effect
immediately prior to the Merger shall be amended and restated and, as so amended
and restated, shall be the Operating Agreement of the Surviving Company until
amended in accordance with applicable law.
ARTICLE 2.
CONVERSION AND EXCHANGE OF MEMBERSHIP INTERESTS
2.1 MERGER TERMS.
(a) The consideration to be paid to the Members in the Merger (the "Merger
Consideration") is set forth in this Section. The Merger Consideration shall
consist of (i) $4,400,000 in cash; plus (ii) 200,000 shares of common stock, par
value $.01 per share, of Westower ("Westower Stock"); plus (iii) up to an
additional 100,000 shares of Westower Stock pursuant to the terms of the formula
set forth in Section 2.1(b). In the Merger, each Member's Summit Interest shall
be converted into and become the right to receive its Pro Rata Share of the
Merger Consideration.
(b) In addition to the Merger Consideration set forth in Section 2.1(a)(i)
and 2.1(a)(ii) above, each Member shall receive such Member's Pro Rata Share of
an additional 333 shares of Westower Stock upon the completion by Summit, during
the three-year period immediately after the Closing Date, of the construction of
each "build-to-suit" wireless communications transmitting and receiving tower to
be constructed and owned by Summit and leased in whole or in part to Mercury
Communications Company or an affiliate designated by it ("Mercury"), all
pursuant to a contract or contracts between Summit and Mercury and approved in
writing by Westower (the "Earnout"). In no event shall the aggregate Earnout
either paid or payable to the Members exceed 100,000 shares of Westower Stock.
No fractional shares of Westower Stock will be issued. The number of shares to
be issued to each Member will be rounded downward to the nearest whole share and
cash will be
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paid in lieu of any fraction based upon the closing price of Westower Stock on
the American Stock Exchange on the trading day immediately preceding the date of
payment.
(c) The membership interest of Sub shall be converted into and become the
sole membership interest in the Surviving Company.
2.2 CLOSING. The closing (the "Closing") of the Merger shall take place
at the offices of Xxxxxx, Xxxxx & Xxxxxxx LLP, 0000 Xxx Xxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 at 2:00 p.m. on the date of execution and
delivery of this Agreement or on such other date as the parties hereto may
mutually agree upon (the "Closing Date"). At the Closing, the Members shall
deliver or cause to be delivered, (i) free and clear of all liens and
encumbrances, claims and other charges thereon of every kind their respective
Summit Interests; (ii) signed Employment Agreements, as described in Section 7.6
of this Agreement; (iii) a signed Registration Rights Agreement, as described in
Section 7.3 of this Agreement; (iv) the signed Certificate of Merger, as
described in Section 1.1 of this Agreement; and (v) the other deliveries
required by this Agreement. At Closing, Westower shall deliver or cause to be
delivered (i) the cash portion of the Merger Consideration, in immediately
available funds; (ii) an irrevocable authorizing letter to its transfer agent
directing that the transfer agent issue certificates for Westower Stock, free
and clear of all liens and encumbrances, claims and charges thereon of every
kind, to the Members in the respective amounts determined pursuant to Section
2.1 of this Agreement and deliver the certificates by overnight mail; (iii) a
signed Registration Rights Agreement, as described in Section 7.3 of this
Agreement; (iv) signed Employment Agreements, as described in Section 7.6 of
this Agreement; (v) the signed Certificate of Merger, as described in Section
1.1 of this Agreement; and (vi) the other deliveries required by this Agreement.
ARTICLE 3.
DEFAULT
3.1 DEFAULT AT CLOSING. If Summit or any of the Members, on one hand, or
Westower and Sub, on the other hand, fails or refuses to consummate the
transactions described in this Agreement, the other at its option, may refuse to
complete the transaction and thereby terminate all of its obligations hereunder.
Such refusal shall not limit any remedies available to the parties for breach of
this Agreement.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
OF SUMMIT AND THE INDIVIDUAL MEMBERS
To induce Westower and Sub to enter into this Agreement and consummate the
transactions contemplated hereby, (i) Summit (except as to Sections 4.22 and
4.23) and each of the Individual Members jointly and severally represent and
warrant to Westower and Sub that the statements
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contained in this Article 4 are true and complete, and (ii) each of the Trust
Members represents and warrants that the statements contained in Sections 4.22
and 4.23 are true and complete as to such Trust Member:
4.1 ORGANIZATION STANDING AND QUALIFICATION. Summit is a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Mississippi, and has all requisite power and authority to
perform its business as presently conducted and to own and lease the properties
used in connection therewith. A complete and correct copy of the Certificate of
Formation and all amendments thereto of Summit certified by the Secretary of
State of Mississippi and a complete and correct copy of its Operating Agreement
and all amendments thereto, certified by the Individual Members, have been
delivered to Westower. Summit is duly qualified to do business and is in good
standing to do business as a foreign limited liability company in those
jurisdictions listed in Schedule 4.1, which constitute all jurisdictions in
which the failure to so qualify would have a material adverse effect on Summit's
business or the ownership of its property.
4.2 MEMBERSHIP INTERESTS. The Members are the lawful owners of record and
beneficially of the Summit Interests, as set forth in the recitals to this
Agreement, free and clear of all liens and encumbrances, claims and charges of
every kind, and the Summit Interests represent all of the ownership interests in
Summit.
4.3 NO SUBSIDIARIES, PARTNERSHIPS OR JOINT VENTURES. Summit owns no
equity interest in any corporation, limited liability company, joint venture,
partnership or other entity.
4.4 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 4.4 are copies of
the following financial statements:
(a) Balance Sheets. Balance sheets of Summit as of September 30, 1998 (the
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"Balance Sheet Date") (unaudited) and December 31, 1997 (audited by Xxxxxxx,
Xxxxxx & Co., P.A.), which balance sheets together with the notes to the
financial statements present fairly the financial condition and assets and
liabilities of Summit as of their respective dates in accordance with generally
accepted accounting principles consistently applied except as may be otherwise
disclosed therein. The balance sheet as of September 30, 1998 is hereinafter
referred to as the "1998 Balance Sheet."
(b) Statements of Income, etc. A statement of income of Summit for the
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nine months ended September 30, 1998 (unaudited) and statements of income,
members' equity and cash flows of Summit for the period commencing May 24, 1997
(the date of inception) and ending on December 31, 1997 (audited by Xxxxxxx,
Xxxxxx & Co., P.A.), which statements, together with any notes to the respective
financial statements present fairly the income, changes in members' equity and
cash flows of Summit for such periods in accordance with generally accepted
accounting principles consistently applied except as may be otherwise disclosed
therein.
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4.5 TITLE TO PROPERTIES. Summit has good and marketable title to all of
its properties and assets reflected in the 1998 Balance Sheet (except properties
and assets sold or otherwise disposed of since the Balance Sheet Date in the
normal and ordinary course of business), free and clear of all mortgages, liens,
pledges, charges or other encumbrances of any nature whatsoever, except (i) any
mortgages, liens, pledges, charges or other encumbrances disclosed in the 1998
Balance Sheet; (ii) liens for current taxes not yet due and payable, or (iii)
encumbrances disclosed in SCHEDULE 4.5. Except as set forth on SCHEDULE 4.5,
Summit neither owns nor formerly owned any real estate.
4.6 TAX MATTERS. Except as set forth in the attached SCHEDULE 4.6:
(a) Summit has timely filed all Tax Returns (as hereinafter defined) that
it was required to file for all periods prior to the Closing Date. All such Tax
Returns were correct and complete, and all Taxes (as hereinafter defined) owed
by Summit (whether or not shown on any Tax Return) for periods ending on or
before August 31, 1998 have been paid or properly accrued on the 1998 Balance
Sheet. Summit is not currently the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where Summit does not file Tax Returns that it is nor may be
subject to taxation by that jurisdiction. There are no liens on any of the
assets of Summit that arose in connection with any failure (or alleged failure)
to pay any Tax.
(b) Summit has complied with all laws relating to the withholding of Taxes.
(c) Summit has made a valid election to be treated as an S corporation ("S
Corporation") within the meaning of Section 1361 of the Internal Revenue Code of
1986, as amended (the "Code"), and such election has been in effect for each of
the Company's taxable years since its inception. The Company has qualified and
will qualify as an S corporation at all times from election up to and including
the Closing Date. The Company has not been and will not be subject to any Taxes
pursuant to Section 1363(d) or Section 1374 of the Code at any time up to and
including the Closing Date.
(d) There is no outstanding unresolved Tax deficiency of Summit, and no Tax
Returns filed with respect to Summit currently are the subject of an audit.
(e) Summit has not waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency.
(f) Summit is not a party to any tax-sharing agreement and has no liability
for the tax obligations of any other taxpayer.
For purposes of this Agreement, "Tax" means any federal, state, local,
or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code section 59A), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability,
5
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
For purposes of this Agreement, "Tax Return" means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
4.7 LITIGATION AND LABOR MATTERS. Except as disclosed in SCHEDULE 4.7
attached hereto, Summit is not aware of and has not been served with any notice
or claim by any governmental agency, customer, employee or any other party
whatsoever relating to:
(a) any environmental claim associated with operations of Summit or the
ownership or operations of any property or properties by Summit;
(b) any claim of non-compliance by Summit under any occupational safety or
health law;
(c) any negligence claims or errors and omissions claims with respect to
any services performed by or goods or products sold by Summit;
(d) any violation of any law or regulation or any term or condition of any
permit or licence held by Summit;
(e) any workers' compensation statute and any other applicable equal
employment opportunity or discrimination, wage and hour, collective bargaining
agreement, wrongful discharge, personnel or other employment related statutes,
law or common law rights of any type or description; or
(f) any other litigation of any type related in any way to the business and
operations of Summit.
4.8 PATENTS, TRADEMARKS, AND COPYRIGHTS. SCHEDULE 4.8 attached hereto
sets forth all patents, patent applications, registered trademarks, registered
service marks, trademarks and service xxxx applications, unregistered trademarks
and service marks, copyrights and copyright applications, owned or filed by
Summit or in which Summit has an interest and the nature of such interest. No
other patent, trademark, service xxxx, copyright or license is necessary to
permit the business of Summit to be conducted as it is now conducted. No
person, firm or corporation has any proprietary, financial or other interest in
any such patents, patent applications, registered trademarks, registered service
marks, trademarks and service xxxx applications, unregistered trademarks and
service marks, copyrights and copyright applications. To the knowledge of
Summit, it is not infringing on, and has not been served with any notice or
claim alleging that it is infringing, any patent, trademark, or service xxxx or
copyright or otherwise violating the intellectual property rights, of any third
party.
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4.9 CONTRACTS AND COMMITMENTS. Except as listed and identified in
SCHEDULE 4.9 attached hereto or contemplated by this Agreement, Summit is not a
party to any written or oral:
(a) contract or commitment with any employee or consultant;
(b) contract or commitment with any labor union or employee group;
(c) contract or commitment for the future purchase of, or payment for, raw
materials, supplies or products that individually total $10,000 or more;
(d) contract or commitment to sell or supply products or to perform
services that individually total $10,000 or more without the ability on the part
of Summit to increase such price or to cancel the contract or commitment without
any liability on the part of Summit;
(e) contract or commitment continuing over a period of more than six months
from the date of this Agreement;
(f) lease under which it is either lessor or lessee (and other than the
assets leased pursuant to leases listed on SCHEDULE 4.9, there are no other
material assets or properties necessary or utilized in the business and
operations of Summit that are not owned by Summit);
(g) bonus, pension, profit sharing, retirement, stock purchase, stock
option hospitalization, insurance, vacation pay or any similar plan or practice,
including but not limited to any welfare benefit plan as defined in the Employee
Retirement Income Security Act of 1974 ("ERISA"), formal or informal, in effect
with respect to any of Summit's employees or former employees (collectively, the
"Plans");
(h) contract or commitment for the borrowing of money or other agreement or
arrangement for a line of credit;
(i) contract or commitment for any charitable contribution;
(j) contract or commitment for capital expenditures in excess of $10,000;
(k) contract or commitment for limiting or restraining it from engaging in
any lines of business with any person, firm, corporation or any other entity;
(l) contract not made in the ordinary course of business
(m) license agreement; or
(n) representative or sales agency agreement.
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Except as stated in SCHEDULE 4.9 hereto and for delays, minor failures to
meet specifications or other minor defaults which are normal in the conduct of
the business between Summit and other parties to the above contracts, Summit has
complied with the provisions thereof, is not in default thereunder, and to the
knowledge of the Individual Members, all other parties to the above contracts
have complied with the provisions thereof, are not in default thereunder, and no
event has occurred which but for the passage of time or the giving of notice
would constitute a default thereunder.
4.10 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed on SCHEDULE
4.9 attached hereto, Summit has no liabilities or obligations of any nature
whatsoever, whether accrued, absolute, contingent, known or unknown, or
otherwise, and Summit does not know of any basis for assertion against Summit of
any such liability or obligation except (i) to the extent reflected in the 1998
Balance Sheet and not heretofore paid or discharged and (ii) accounts payable
and accrued expenses incurred, consistently with past business practice, in or
as a result of the normal and ordinary course of business since the Balance
Sheet Date.
4.11 EXISTING CONDITION. Except as disclosed in SCHEDULE 4.11 hereto,
since December 31, 1997, there has not been (i) any material adverse change in
the financial condition or in the results of operations, business or properties
of Summit; (ii) any material damage, destruction or loss, whether or not covered
by insurance, affecting the operations, business or properties of Summit; (iii)
any declaration, setting aside or payment of any distribution in respect of the
Summit Interests, or any redemption, purchase or other acquisition of any kind
of any Summit Interests; (iv) any increase in the compensation payable by Summit
to any of its managers, members or employees; or (v) any change in the terms of
any bonus, insurance, pension or other benefit plan for or with any manager,
member or employee which increases amounts paid, payable to or to become payable
thereunder.
4.12 VALIDITY OF CONTEMPLATED TRANSACTIONS. Neither the execution and
delivery of this Agreement nor the consummation of the transactions provided for
herein will violate any material agreement to which Summit is a party or by
which it is bound or any law, order or decree or any provision of the
Certificate of Formation or Operating Agreement of Summit. Summit, and the
Members have full legal authority to execute and deliver this Agreement and to
consummate and perform the transactions contemplated hereby, and this Agreement
constitutes the valid obligation of Summit and the Members legally binding upon
them in accordance with its terms.
4.13 LICENSES AND PERMITS AND COMPLIANCE WITH LAWS. Summit has all
material licenses and permits necessary to the conduct of the business of Summit
as presently conducted and in the conduct of its business has complied in all
material respects with all applicable laws and regulations.
4.14 TRANSACTIONS WITH AFFILIATES. No member, manager or employee of
Summit owns or during the last two years has owned, directly or indirectly, or
has, or during the last two years has had, an ownership interest in any
business, corporate or otherwise, which is a party to, or in any property which
is the subject of, any business arrangement or relationship of any kind with
Summit
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except as described in SCHEDULE 4.14 attached hereto. All relationships
described in SCHEDULE 4.14 will terminate as of the Closing Date, unless
expressly stated to the contrary in such Schedule.
4.15 BANK ACCOUNTS. SCHEDULE 4.15 attached hereto contains a true and
correct list of the name and location of each bank in which Summit has an
account, each safety deposit box or custody agreement and the names of the
persons authorized to draw thereon or to withdraw therefrom.
4.16 SUMMIT'S EMPLOYEES. SCHEDULE 4.16 attached hereto sets forth a list
of Summit's employees, their positions and rates of compensation. Except as
disclosed on SCHEDULE 4.9 attached hereto, there are no outstanding claims for
wages, vacations, or other benefits or compensation of any type or description,
whether currently payable or deferred under any defined benefit pension plan,
any defined contribution pension plan, any implied or deemed employee benefit or
plan, or any welfare plan or otherwise or any other policy, program or practice,
whether formal or informal, by any of Summit's employees or any other
individuals covered by or eligible under such plans or programs, other than
wages that will become due for current pay periods and/or benefits that have
accrued through the Closing Date and will become payable in the future. Except
as disclosed on Schedule 4.16, there are no existing or, to the knowledge of the
Individual Members, threatened claims by any of Summit's employees with respect
to any applicable workers' compensation, worker health or safety, equal
employment opportunity or discrimination, wage and hour, wrongful discharge,
personnel or other employment related statutes, laws or common law rights of any
type or description. Except as disclosed on SCHEDULE 4.9 attached hereto, there
is no collective bargaining agreement in existence between Summit and a
collective bargaining representative for any of Summit's employees, and during
the one (1) year period immediately preceding the date of this Agreement, there
has not been any union organizing activities or proceedings involving, or any
petitions for election of or demands for recognition by, a labor union or labor
organization as the exclusive bargaining agent for any of Summit's employees.
Summit has not received notice of any proceeding involving Summit currently
pending before the National Labor Relations Board, including but not limited to
any wherein a labor organization is seeking representation of any of Summit's
employees.
4.17 ENVIRONMENTAL LIABILITIES. Except as disclosed on SCHEDULE 4.17
attached hereto, in the operation of the business of Summit at any time prior to
the Closing Date, including but not limited to the ownership or operation of any
real properties, Summit: (a) has not been in material violation of any common
law or any federal foreign, state or local laws, regulations, statutes or
ordinances relating to personal injury arising out of Hazardous Substances (as
such term is hereinafter defined) or protection of the environment
(collectively, the "Environmental Laws"); (b) possesses all of the material
permits, licenses, approvals and identification numbers required under any
Environmental Laws for the operation of each of Summit's offices, manufacturing
or warehouse facilities and communication sites (collectively, the "Facilities")
in the manner in which any such facility is presently operated; (c) is in
compliance in all material respects with all permits, licenses and approvals
required by any of the Environmental Laws for the operation of each of the
Facilities in the manner in which each such facility is currently being
operated, except for such non-compliance as would not be reasonably expected to
lead to imposition of penalties or similar
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sanctions by regulatory agencies; (d) is not aware of any conditions that will
affect the continued validity after the Closing Date of all such permits,
licenses and approvals required by any Environmental Laws for the operation of
any of the Facilities in the manner in which it is currently being operated; (e)
is not aware of the existence of any pending or threatened suits, proceedings,
investigations or claims with respect to sites of, or the operations conducted
at any of the Facilities relating to the enforcement of any Environmental Laws
or to determine the existence of any environmental liabilities; (f) is not aware
of the existence of any pending or threatened suits, proceedings or claims by
any third parties for damages or injunctive relief arising out of the presence
of any emissions, discharges, releases or threatened releases, storage,
transportation or the handling of pollutants, contaminants, regulated wastes or
hazardous wastes (collectively, the Hazardous Substances) on or off the sites of
any of the Facilities allegedly caused, directly or indirectly, by the
operations of Summit at any such facility; (g) is not aware of the existence of
any citizen complaint relating to the site of any of the Facilities or the
operations of Summit at any such facility; (h) other than normal wear and tear
on equipment that may alter its performance, is not aware of any existing
circumstances that may interfere with the continued compliance with any existing
permit, license or approval required by statute or regulations for the operation
of any of the Facilities in the manner in which it is presently operated, except
for such non-compliance as would not be reasonably expected to lead to
imposition of penalties or similar sanctions by regulatory agencies; (i) is not
aware of the occurrence of any spill discharge, deposit or other release of any
Hazardous Substances, in excess of reportable quantities under Federal or state
environmental laws and which has led or is likely to lead to enforcement actions
by governmental agencies, at any of the Facilities caused, directly or
indirectly, by Summit; (j) is not aware of any asbestos conditions at any of the
Facilities; (k) is not aware of any transformers, fixtures or other electrical
equipment containing PCB's installed in, affixed to or located at any of the
Facilities; (l) is not aware of any storage tanks for petroleum or hazardous
substances located at any of the Facilities, whether above ground, underground
or within a structure; (m) is not aware of any current or prior use of the
premises of the Facilities which would give rise to liability under any
Environmental Laws; and (n) is not aware of any potential liability under any
Environmental Laws arising out of any pre-Closing utilization of or operations
at any of the Facilities by Summit or other third parties and has not been
placed on notice of any claim of any governmental agency or other regulatory
body claiming violation of any Environmental Laws or requiring any remediation
or cleanup with respect to any of the Facilities or requiring any change in the
means or methods of operation of any such facility.
4.18 ACCOUNTS RECEIVABLE. Except as disclosed on SCHEDULE 4.18 attached
hereto, all accounts receivable of Summit reflected on the 1998 Balance Sheet
are bona fide and have arisen in the ordinary course of business. The 1998
Balance Sheet contains adequate provision for doubtful accounts set forth on the
1998 Balance Sheet.
4.19 BOOKS AND RECORDS. Summit has furnished to Westower's
representatives for their examination true and complete copies of (a) Summit's
Certificate of Formation and Operating Agreement as currently in effect, (b)
Summit's minute books, which books are complete in all material respects, and
(c) all records, certificates, documents and agreements of any kind relating to
the transfer of any ownership interest in Summit. Such minutes reflect all
documented meetings of
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Summit's Members and Managers, if any, and any committees thereof since Summit's
inception, and accurately reflect in all material respects the events of and
actions taken at such meetings.
4.20 INSURANCE. SCHEDULE 4.20 attached hereto is a certificate of all
policies of fire, liability, title and other forms of insurance held by Summit.
There are no material claims pending thereunder. Except as set forth on
SCHEDULE 4.20, all such policies or similar policies have been in force for
since the inception of Summit and will be in force on the Closing Date in
accordance with their respective terms, including without limitation, with
respect to any insured losses resulting from occurrences prior to the Closing
Date. Summit is not in material default with respect to any provisions of any
such policy and has not failed to give any notice or failed to present any
material claim thereunder, as to which it has knowledge, in due and timely
fashion.
4.21 EMPLOYEE BENEFIT PLANS.
(a) Each of the Plans has been administered in compliance with its terms
and all filing, reporting, disclosure and other requirements of ERISA and the
requirements of the Code have been materially satisfied with respect to each of
the Plans.
(b) No "withdrawal liability" (as that term is used in Section 4201 of
ERISA) has been or is reasonably expected to be assessed against Summit, nor is
Summit otherwise aware of any facts or circumstances that could lead to
assessment of withdrawal liability. Summit has not withdrawn, either partially
or completely, from any multi-employer plans.
(c) Neither any of the Plans nor any trust created thereunder, nor any
trustee or administrator thereof, has engaged in a "prohibited transaction" (as
such term is defined in Section 406 of ERISA) in connection with which any of
the Plans, any such trust, or any trustee or administrator thereof, or any party
dealing with the Plans or any such trust could be subject to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section
4975 of the Code.
(d) Summit is not aware and has received no notice that it has incurred any
liability to the Pension Benefit Guaranty Corporation ("PBGC") with respect to
any of the Plans or with respect to any other employee benefit plan maintained
or contributed to by Summit that has been terminated or otherwise discontinued
prior to the date of this Agreement. The PBGC has not instituted proceedings to
terminate any of the Plans. Summit has not received any notice of and has no
knowledge of a "reportable event" (within the meaning of Section 4043(b) of
ERISA).
(e) Full payment has been made of all amounts which Summit is required to
pay under the terms of each of the Plans as a contribution to the Plans as of
the last day of the most recent fiscal year of each of the Plans ended prior to
the date of this Agreement. None of the Plans nor any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of
the last day of the most recent
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fiscal year of each of the Plans ended prior to the date of this Agreement or
the most recent contribution date as required under the terms of any such Plans
if later.
(f) Each of the Plans is in compliance in all material respects with
applicable federal, state and local laws, including but not limited to ERISA.
Each of the Plans that is intended to be "qualified" has been administered in
accordance with the requirements of Section 401(a) of the Code, and a
determination letter has been received from the IRS with respect to
qualification of such Plans, and no facts or circumstances exist which would
adversely affect the qualified status of the Plans.
4.22 INVESTMENT REPRESENTATIONS. Each Member acknowledges and understands
that (i) the Westower Stock has not been registered with the Securities and
Exchange Commission (the "SEC") or with any state official or agency and is
being offered and issued pursuant to an exemption from the registration
requirements set forth in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state blue sky or securities laws, and that no
governmental agency has recommended or endorsed the Westower Stock or made any
finding or determination relating to the fairness of the transaction set forth
herein and (ii) each Member is acquiring the Westower Stock issuable to such
Member hereunder for such Member's own account for investment, with no present
intention of reselling or otherwise distributing the same, except (x) pursuant
to an offering of shares duly registered under the Securities Act or (y) under
other circumstances which do not require registration under the Securities Act
and applicable state securities laws.
4.23 INFORMATION RELATED TO WESTOWER. Each Individual Member is an
"accredited investor" as defined in Rule 501 under the Securities Act. Each
Member has received and had an opportunity to review for a reasonable time
preceding the date of execution of this Agreement certain filings made by
Westower with the SEC under the Securities Act and the Securities Exchange Act
of 1934 (excluding exhibits, unless requested by a Member) (the "Westower SEC
Filings"). Each Member acknowledges that Westower has made available to the
Members the opportunity to ask questions and receive answers concerning Westower
and the Westower Stock and to obtain any additional information which Westower
possesses or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy of such additional information and/or the
Westower SEC Filings. Each Member possesses such knowledge and experience in
financial and business matters or has been advised by such persons who do
possess such knowledge that such Member is capable of evaluating the merits and
risks of the investment in Westower Stock contemplated by this Agreement.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF WESTOWER AND SUB
Westower and Sub represent and warrant to Summit and the Members that the
statements contained in this Article 5 are true and correct:
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5.1 ORGANIZATION, GOOD STANDING AND AUTHORITY. Westower and Sub are a
corporation and a limited liability company, respectively, duly incorporated or
formed, validly existing and in good standing under the laws of the State of
Washington and the State of Mississippi, respectively, and have full power and
authority to own their properties and assets and to carry on their businesses as
they have been and are being conducted. The execution of this Agreement and the
consummation of the transactions contemplated hereby are within the corporate or
company power of Westower and Sub and have been duly authorized by all necessary
corporate and other action. This Agreement constitutes a valid obligation of
Westower and Sub legally binding upon them in accordance with its terms. When
executed and delivered, the Registration Rights Agreement contemplated by
Section 7.3 and the Employment Agreements contemplated by Section 7.5 will be
valid obligations of Westower and Summit, respectively, legally binding on them
in accordance with their terms. The Westower Stock to be delivered to the
Members as the Merger Consideration when issued and delivered will be validly
issued, fully paid and nonassessable.
5.2 VALIDITY OF CONTEMPLATED TRANSACTION. Neither the execution and
delivery of this Agreement nor the consummation of the transactions provided for
herein will violate any agreement to which Westower or Sub is a party or by
which either is bound, or any law, order or decree or any provisions of their
respective Articles of Incorporation and Bylaws or Certificate of Formation.
5.3 WESTOWER SEC FILINGS. The Westower SEC Filings were complete and
accurate in all material respects as of the date of the filings and there were
no material misstatements therein as of such dates.
5.4 MATERIAL CHANGES. There has not been, since the dates of the SEC
Filings any material adverse change in the financial condition or in the results
of operations, business or properties of Westower.
5.5 ENTITY CLASSIFICATION. Sub has made and has not revoked an election
to be classified as an association by filing Form 8832 with the applicable IRS
Service Center. Sub has complied or will comply with the requirements of
Section 7701-3 of the Treasury Regulations regarding such election, and for
Federal tax purposes, is classified as an association taxable as a corporation.
ARTICLE 6.
COVENANTS
The Individual Members hereby covenant and agree from the date hereof to
the Closing Date that, except for transactions expressly authorized by this
Agreement, including transactions consented to in writing by Westower, they will
cause Summit to comply with the following:
6.1 BUSINESS IN THE ORDINARY COURSE. Summit shall refrain from engaging
in transactions other than in the ordinary course of business consistent with
past practice. Summit shall also refrain from entering into any transaction
involving expenditures of more than $10,000.
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6.2 ACCOUNTING AND CREDIT CHANGES. Summit shall not make any changes in
its accounting procedures and practices or its credit criteria from those in
existence at January 1, 1998.
6.3 CAPITALIZATION, OPTIONS AND DIVIDENDS. Summit shall not amend its
Certificate of Formation and shall not issue or reclassify or alter any Summit
Interests; it shall not grant options, warrants, or other rights of any kind to
purchase, or agree to issue any additional Summit Interests; it shall not
purchase or redeem or otherwise acquire for consideration any Summit Interests
and shall not declare or pay any distribution or make payments in respect of the
Summit Interests except distributions set forth on Schedule 4.11.
6.4 ENCUMBRANCE OF ASSETS. Summit shall not mortgage, pledge or encumber
any of its properties or assets.
6.5 EMPLOYMENT AGREEMENTS. Summit shall not enter into any employment
agreements and shall keep in effect its present compensation program (including
pension plans and other fringe benefits).
6.6 ACCESS. Subject to the confidentiality obligations contained in this
Agreement, Westower and its officers, attorneys, accountants and representatives
shall be permitted to examine the property, books and records of Summit, and its
title to any real estate, and such officers, attorneys, accountants and
representatives shall be afforded access to such property, books, records and
titles, and the Members will upon request furnish Westower with any information
reasonably required in respect to Summit's property, assets, and business and
will provide Westower with copies of any contract, document or instrument listed
in any Schedule hereto.
6.7 GOOD WILL. Summit will use its best efforts to preserve the good will
of its customers and suppliers and others having business relations with it.
6.8 EXCLUSIVE RIGHTS TO WESTOWER. Neither Summit nor the Individual
Members, will enter into discussions or negotiations with any other party with a
view to (i) the sale of the Summit Interests, (ii) a merger between Summit and
another party or (iii) a sale of all or substantially all of the assets of
Summit.
6.9 MAINTENANCE OF PROPERTY. Summit will maintain all of its assets in
customary repair, order and condition, reasonable wear and use and damage by
unavoidable casualty excepted, and take all steps reasonably necessary to
maintain its intangible assets, including without limitation, its patents,
trademarks, tradenames, brand names, copyrights and any pending applications
therefor.
6.10 NO NEW MATERIAL AGREEMENTS. Summit will not enter into any material
leases, sale/leaseback transactions, agreements for the purchase of fixed
assets, exclusive services agreements, or other material agreements, other than
agreements relating to the purchase and sale of inventory and/or contract
equipment in the ordinary course of business.
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6.11 COMPENSATION. Summit will not (a) grant any increase in compensation
other than normal merit and cost-of-living increases in accordance with Summit's
general prevailing practices existing prior to the date of this Agreement to any
officer, employee or agent, or (b) enter into or amend any bonus, incentive
compensation, deferred compensation, profit sharing, retirement, pension, group
insurance, death benefit or other fringe benefit plan, trust agreement, or
arrangement, or any employment, compensation or consulting agreement except as
required by law.
6.12 INDEBTEDNESS. Summit will not create, incur, assume guarantee or
otherwise become liable with respect to any indebtedness for money borrowed or
voluntarily create, incur, assume or guarantee any other indebtedness or
obligation other than in the ordinary course of business.
6.13 COOPERATION. The Individual Members will cooperate and will cause
the Company to cooperate fully with Westower in promptly taking any and all
actions or executing any and all documents appropriate to consummate the
transactions contemplated by this Agreement.
ARTICLE 7.
POST-CLOSING COVENANTS
7.1 PERSONAL GUARANTEES. Within 30 days after Closing, Westower shall use
commercially reasonable efforts to cause the release of the Individual Members
from personal guarantees issued by them that are disclosed on SCHEDULE 4.9 to
secure obligations of Summit. Westower shall retain discretion over the nature
of the action to be taken, which may include the granting of replacement
security or the refinancing of the loans secured by the guarantees. Westower
shall indemnify each Individual Member against any cost expense or liability
under any such guarantee.
7.2 SALE OF THE WESTOWER STOCK. Each Member agrees that such Member will
not sell, pledge or otherwise transfer any of the Westower Stock received by
such Member until such time as permitted under Rule 144 under the Securities Act
("Rule 144") or a registration statement with respect to the Westower Stock
filed by Westower pursuant to the provisions of Paragraph 7.3 below becomes
effective. Each Member understands that stop-transfer instructions will be
given to Westower's transfer agent with respect to the certificates evidencing
the Westower Stock delivered to them hereunder. In order to evidence the
agreement described in this paragraph, each Member further agrees that the
following legend may be placed by Westower upon the certificates representing
the Westower Stock delivered to such Member hereunder:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 BUT HAVE BEEN ACQUIRED FOR INVESTMENT
BY THE REGISTERED OWNER. NO SALE, PLEDGE OR OTHER TRANSFER MAY BE
MADE UNLESS THE CORPORATION IS FURNISHED WITH AN OPINION OF COUNSEL
FOR THE SHAREHOLDER IN FORM AND SUBSTANCE SATISFACTORY TO THE
CORPORATION THAT SUCH SALE IS IN COMPLIANCE WITH THE
15
SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS. IN
ADDITION, THE TRANSFER OF THESE SHARES IS RESTRICTED UNTIL THE
CORPORATION HAS PUBLICLY RELEASED ITS FIRST REPORT INCLUDING THE
COMBINED FINANCIAL RESULTS OF THE CORPORATION AND SUMMIT
COMMUNICATIONS, LLC FOR A PERIOD OF AT LEAST 30 DAYS OF COMBINED
OPERATIONS.
7.3 REGISTRATION RIGHTS. With respect to the Westower Stock to be
delivered to the Members at Closing, Westower shall grant to the Members
piggyback and demand registration rights pursuant to a Registration Rights
Agreement in substantially the form attached to this Agreement as EXHIBIT 7.3.
7.4 WESTOWER SEC FILING OBLIGATIONS. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of any of the Westower Stock which may be restricted as defined
in Rule 144 to the public without registration pursuant to the Securities Act,
Westower agrees to use its best lawful efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 at all times during which Westower is subject
to the reporting requirements of the Exchange Act;
(b) File with the SEC in a timely manner all reports and other documents
required of Westower under the Securities Act and the Exchange Act (at all times
during which Westower is subject to such reporting requirements); and
(c) So long as any Member owns any of the Westower Stock as restricted
securities as defined in Rule 144, to furnish to the Member upon request a
written statement to Westower as to its compliance with the reporting
requirements of the Exchange Act, a copy of the most recent annual or quarterly
report of Westower, and such other reports and documents of Westower and other
information in the possession of or reasonably obtainable by Westower as the
Member may reasonably request in availing himself of any rule or regulation of
the SEC allowing the Member to sell any of the Westower Stock without
registration pursuant to the Securities Act.
7.5 REMOVAL OF LEGEND ON CERTIFICATES REPRESENTING THE WESTOWER STOCK.
Westower shall promptly remove the legend on any certificates representing the
Westower Stock once the provisions of this Agreement and the Securities Act are
satisfied. In addition, Westower shall notify its transfer agent that any stop-
transfer instructions with respect to the Westower Stock have been rescinded.
7.6 EMPLOYMENT AGREEMENTS. At the Closing Summit, Xxxxxxx and Xxxxxx
will enter into Employment Agreements in substantially the form attached hereto
as EXHIBIT 7.6.
7.7 COVENANT NOT TO COMPETE.
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(a) Each Individual Member agrees that for a period of three years
following the Closing Date or eighteen months following from the date of
termination of his employment with Surviving Company for any reason, whether
with or without cause, whichever period is longer, he will not, except as
expressly permitted hereunder, directly or indirectly (i) operate, develop or
own any interest, other than the ownership of less than 5% of the equity
securities of a publicly traded company, in the business of wireless
telecommunications site development within Canada and/or the United States of
America (a "Business"); (ii) compete with Westower, Surviving Company or their
subsidiaries and affiliates in the operation or development of any Business;
(iii) with the exception of Surviving Company, be employed by any business which
owns, manages, or operates a Business; (iv) interfere with, solicit, disrupt or
attempt to disrupt any past, present or prospective relationship, contractual or
otherwise, between Surviving Company, or its subsidiaries or affiliates, and any
customer, client, supplier or employee of Surviving Company, or its subsidiaries
or affiliates; or (v) solicit any employee of Surviving Company, or its
subsidiaries or affiliates, to leave their employment with Surviving Company or
its subsidiaries or affiliate, as the case may be, or hire any such employee to
work for a Business. The Individual Members shall not be entitled to circumvent
the provisions of this Section 7.7 by entering into a relationship with a
Business as a consultant, director, advisor, or otherwise, which has the effect
of competing with Surviving Company, its affiliates or subsidiaries.
(b) If a judicial determination is made that any of the provisions of
Section 7.7(a) constitute an unreasonable or otherwise unenforceable
restriction, such provisions shall be rendered void only to the extent that such
judicial determination finds such provisions to be unreasonable or otherwise
unenforceable. In this regard, the parties hereto hereby agree that any
judicial authority construing this Agreement shall be empowered to sever any
portion of the territory or prohibited business activity from the coverage of
Section 7.7(a) and to apply the provisions of Section 7.7(a) to the remaining
portion of the territory or the remaining business activities not so severed by
such judicial authority. The time period during which the prohibitions set
forth in Section 7.7(a) shall apply shall be tolled and suspended during all
violations of Section 7.7(a).
(c) The Individual Members specifically acknowledge and agree that the
restrictions set forth in this Section are reasonable and necessary to protect
the legitimate interests of Westower and Surviving Company and that Westower and
Sub would not have undertaken the Merger in the absence of such restrictions.
The Individual Members further acknowledge and agree that any violation of the
provisions of this Section 7.7 will result in irreparable injury to Westower and
Surviving Company, that the remedy at law for any violation or threatened
violation of such Section will be inadequate and that in the event of any such
breach, Westower or Surviving Company, in addition to any other remedies or
damages available at law or in equity, shall be entitled to temporary injunctive
relief before trial from any court of competent jurisdiction as a matter of
course and to permanent injunctive relief without the necessity of proving
actual damages. The existence of any claim or cause of action on the part of
the Individual Members against Westower or Surviving Company, whether arising
from this Agreement or otherwise, shall not constitute a defense to the granting
or enforcement of this injunctive relief. If Westower or Surviving Company is
required to enforce any of its rights under this Agreement, Westower or
Surviving Company shall be entitled
17
to recover from the Individual Members, as applicable, all reasonable attorneys'
fees, court costs and other expenses incurred by Westower or Surviving Company
in connection with the enforcement of those rights.
7.8 ELECTION TO CLOSE BOOKS. The Members agree that promptly following
the Closing they will take whatever steps are necessary to cause the Company to
sign and deliver to the Internal Revenue Service an Election to Close Books Upon
S Corporation Termination and will execute the Consent of the Shareholder to
such election.
7.9 AUDIT. The Individual Members will cooperate fully (including
delivery of representation letters in a form customarily required of management)
with independent auditors designated by Westower to allow such auditors to audit
financial statements of Summit for any periods through the Closing Date and
deliver an opinion thereon.
ARTICLE 8.
INDEMNIFICATION
8.1 INDEMNIFICATION OF WESTOWER. Subject to the consummation of the
Closing and limitations set forth in this Section 8.1, the Individual Members
shall severally, in an amount equal to 50% payable hereunder for each Individual
Member, indemnify, defend and hold harmless Westower, its subsidiaries and
affiliates and their respective officers, directors, agents and employees (the
"Indemnified Parties") against and in respect of any and all claims, suits,
demands, liabilities, damages, losses, costs and expenses ("Losses") arising out
of or otherwise in respect of:
(a) any breach of any representation, warranty or covenant of Summit or any
of the Members contained in this Agreement or in any certificate or other
instrument furnished on behalf of Summit or by any of the Members, and
(b) any and all actions, suits, proceedings, audits, judgments, costs and
legal and other expenses incident to any of the foregoing or to the enforcement
of this Section 8.1; provided, however, that the Members shall not be liable
-------- -------
under this Agreement to the Indemnified Parties for any breach of a
representation or warranty that was not set forth in a notice of claim
(including a contingent claim that sets forth the facts on which a claim may be
made in the future to the extent then known) presented in writing to the
Individual Members pursuant to Section 11.13 within (i) eighteen months after
Closing in the case of any representation or warranty except those set forth in
Sections 4.2, 4.6 and 4.17, (ii) four years in the case of the representations
and warranties set forth in 4.17, and (iii) the expiration of the applicable
statute of limitations in the case of Sections 4.2 and 4.6. Notwithstanding
anything to the contrary herein, the Individual Members shall be liable,
responsible or obligated to indemnify the Indemnified Parties under this Section
8.1 for claims for breach of a representation or warranty only to the extent
that the aggregate amount of Losses exceeds $100,000, and the total liability
and responsibility of the Individual Members under this Section 8.1 for breaches
of representations and warranties shall be limited to the aggregate Merger
Consideration
18
received by the Members under this Agreement. Payment for indemnification by the
Individual Members may be made in their discretion by cash or the return of
Westower Stock. The value of Westower Stock shall be its average closing price
per share on the American Stock Exchange or other principal market on which it
is traded for the 30 trading days preceding such payment.
8.2 INDEMNIFICATION BY WESTOWER. Subject to the consummation of the
Closing, Westower shall indemnify and hold harmless the Members against and in
respect of any and all claims, suits, demands, liabilities, damages, losses,
costs and expenses, arising out of or resulting from any of the following:
(a) any breach of any representation, warranty or covenant in this
Agreement or in any certificate or other instrument furnished on behalf of
Westower or Sub pursuant to this Agreement, and
(b) any and all actions, suits, proceedings, audits, judgments, costs
and legal and other expenses incident to any of the foregoing or to the
enforcement of this Section 8.2.
8.3 INDEMNIFICATION PROCEDURE FOR THIRD-PARTY CLAIMS. Promptly after the
receipt by any Indemnified Party of notice of any claim or the commencement of
any action or proceeding by any third party, such party will, if a claim with
respect thereto is to be made against any party obligated to provide
indemnification (the "Indemnifying Party") pursuant to Section 8.1, give such
Indemnifying Party written notice of such claim or the commencement of such
action or proceeding. Such Indemnifying Party shall have the right, at its
option and upon posting a bond or other security equal to such claims, to
compromise or defend, at its own expense and by its counsel, any matter
involving the asserted liability of the party seeking such indemnification.
Such notice, and opportunity to defend, shall be a condition precedent to any
liability of the Indemnifying Party under this Article 8. If any Indemnifying
Party shall undertake to compromise or defend any such asserted liability, it
shall promptly notify the party seeking indemnification of its intention to do
so, and the party seeking indemnification agrees to cooperate fully with the
Indemnifying Party and its counsel in the compromise of, or defense against any
such asserted liability. In any event, the Indemnified Party shall have the
right at its own expense to participate in the defense of such asserted
liability.
ARTICLE 9.
CONDITIONS PRECEDENT TO WESTOWER'S AND SUB'S OBLIGATIONS
All obligations of Westower and Sub under this Agreement are, at the option
of Westower, subject to the fulfillment, prior to or at the Closing, of each of
the following conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Summit and the Members contained in this Agreement shall be true in all material
respects at and as of the time of Closing as though made at and as of such time
(except to the extent that they are stated therein to be true as of some other
date) and Summit and the Members shall have delivered to
19
Westower and Sub a certificate dated the Closing Date and signed by them to such
effect. A representation or warranty that is expressly subject to a materiality
limitation shall not be subject to a further materiality limitation as a result
of the use of the phrase "in all material aspects" in the preceding sentence.
9.2 COMPLIANCE WITH AGREEMENTS. The Members and Summit shall have
complied with all agreements and conditions required by this Agreement to be
performed by them prior to or at the Closing, and Summit and the Members shall
have delivered to Westower and Sub a certificate dated the Closing Date and
signed by them to such effect.
9.3 OPINION OF COUNSEL. Summit and the Members shall have delivered to
Westower and Sub an opinion of Brunini, Grantham, Grower & Xxxxx, PLLC, dated as
of the Closing Date and in form and substance satisfactory to Westower and
based, as to factual matters, on certificates of the Individual Members to the
effect that:
(a) Summit is a limited liability company duly formed, validly existing and
in good standing under the laws of the State of Mississippi and has the power to
perform its business as presently conducted and to own and lease the properties
used in connection therewith.
(b) Each of the Members is the lawful owner of the Summit Interests set
forth in this Agreement free and clear of any liens and encumbrances known to
such counsel.
(c) This Agreement constitutes a legal valid and binding obligation of
Summit and the Members enforceable in accordance with its terms and, upon filing
of the Certificate and Articles of Merger as set forth in this Agreement, Sub
will be merged with and into Summit as provided in this Agreement.
(d) The consummation of the transactions contemplated by this Agreement
will not result in a breach of any term of or constitute a default under the
Certificate of Formation or Operating Agreement of Summit, or, to the knowledge
of such counsel, any indenture, agreement, instrument or understanding known to
such counsel to which Summit or the Members are a party or by which it or any of
them is bound.
9.4 MATERIAL DAMAGE. The business and properties of Summit, taken as a
whole, shall not have been and shall not be threatened to be materially
adversely affected in any way as a result of fire, explosion, earthquake,
disaster, accident, labor dispute, flood, drought, embargo, riot, civil
disturbance, uprising, activity of armed forces or act of God or public enemy.
9.5 EMPLOYMENT AGREEMENTS. The Employment Agreements referred to in
Section 7.6 shall have been executed and delivered.
9.6 OTHER APPROVALS. All authorizations, consents, orders or approvals of
any federal or state governmental agency necessary for the consummation of the
transactions contemplated
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hereby (other than such actions, approvals or filings which, pursuant to the
terms of this Agreement, are to take place on or after the Closing) shall have
been filed, occurred or been obtained.
9.7 NO LITIGATION. No administrative investigation, action, suit or
proceeding seeking to enjoin the consummation of the transactions contemplated
under this Agreement shall be pending or threatened.
ARTICLE 10.
CONDITIONS PRECEDENT TO MEMBERS'
OBLIGATIONS
All obligations of the Members under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
10.1 REPRESENTATIONS AND WARRANTIES. Westower's and Sub's representations
and warranties contained in this Agreement shall be true at and as of the time
of Closing as though made at and as of such time (except to the extent that they
are stated therein to be true as of some other date) and Westower and Sub shall
have delivered to the Members a certificate dated as of Closing and signed by
them to such effect.
10.2 COMPLIANCE WITH AGREEMENTS. Westower and Sub shall have performed
and complied with all agreements and conditions required by this Agreement to be
performed by it prior to or at the Closing, and shall have delivered to the
Members a certificate dated as of Closing and signed by them to such effect.
10.3 OPINION OF COUNSEL. Westower and Sub shall have delivered to the
Members and Summit an opinion of their counsel Xxxxxx, Xxxxx & Bockius LLP (who
will rely on Xxxxx Xxxxxx Xxxxxxxx LLP as to matters of Washington law), dated
as of the Closing Date and in form and substance satisfactory to the Members and
Summit that the Westower Stock to be delivered as part of the Merger
Consideration, when issued and delivered, will be validly issued, fully paid and
nonassessable.
10.4 MATERIAL DAMAGE. The business and properties of Westower and its
subsidiaries, taken as a whole, shall not have been and shall not be threatened
to be, affected in any way materially adverse to its subsidiaries taken as a
whole as a result of fire, explosion, earthquake, disaster, accident, labor
dispute, flood, drought, embargo, riot, civil disturbance, uprising, activity of
armed forces or act of God or public enemy.
10.5 AGREEMENTS. The Registration Rights Agreement referred to in Section
7.3 and the Employment Agreements referred to in Section 7.6 shall have been
executed and delivered.
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10.6 OTHER APPROVALS. All authorizations, consents, orders or approvals
of any federal or state governmental agency necessary for the consummation of
the transactions contemplated hereby (other than such actions, approvals or
filings which, pursuant to the terms of this Agreement, are to take place on or
after the Closing) shall have been filed, occurred or been obtained.
10.7 NO LITIGATION. No administrative investigation, action, suit or
proceeding seeking to enjoin the consummation of the transactions contemplated
under this Agreement shall be pending or threatened.
10.8 WAIVERS AND CONSENTS OBTAINED. Westower shall have obtained all such
consents, waivers, orders and approvals, as may be necessary so as to cure,
resolve or otherwise avoid any conflict, breach or default, lien creation or
violation that would have been caused by consummation of the transactions
contemplated hereunder had such consents, waivers, orders and approvals not been
obtained.
ARTICLE 11.
MISCELLANEOUS
11.1 BROKER FEES. Summit and the Members represent and warrant to
Westower and Sub that they have not engaged or dealt with any broker or finder
so as to obligate Westower or the Surviving Company to pay a fee, commission or
similar amount in respect to the execution of this Agreement or the consummation
of the transactions contemplated hereby. Any breach of this representation and
warranty shall not be subject to the limits set forth in Section 8.1(b).
11.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and agreements, made by Summit, the Members, Westower or Sub in this
Agreement or pursuant hereto shall survive the Closing and continue in full
force and effect for a period of two years, except that the representations and
warranties of Summit and the Members contained in Sections 4.2 and 4.6 will
survive the Closing until the expiration of the applicable statute of
limitations and the representations and warranties of Summit and the Members
contained in Section 4.17 will survive the Closing and continue in full force
and effect for four years after the Closing. Notwithstanding any investigations
or audit conducted before or after Closing, the parties shall be entitled to
rely upon the representations and warranties set forth in this Agreement.
11.3 KNOWLEDGE. References to the "knowledge" of Summit contained herein
refer to the actual knowledge of Xxxxxxx and Xxxxxx after inquiry of the
employees of Summit having knowledge of the subject matter.
11.4 EXPENSES. Each of the parties hereto shall bear their own expenses,
in connection with the transactions contemplated hereby; provided, however, that
-------- -------
the fees and expenses of Brunini, Grantham, Grower & Xxxxx, PLLC in excess of
$25,000 shall be borne by the Members.
22
11.5 ANNOUNCEMENTS. All parties shall cooperate with each other as to the
timing and content of any announcements of the transactions contemplated hereby
to the general public or to employees, customers and suppliers.
11.6 FURTHER ACTIONS AND ASSURANCES. Westower, Sub, Summit and the
Members will execute and deliver any and all documents, and will cause any and
all other action to be taken, either before or after Closing, which may be
necessary or proper to effect or evidence the provisions of this Agreement and
the transactions contemplated hereby.
11.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which is an original and the Members may become a party
hereto by executing a counterpart hereof. This Agreement and any counterpart so
executed shall be deemed to be one and the same instrument. It shall not be
necessary in making proof of this Agreement or any counterpart hereof to produce
or account for any of the other counterparts.
11.8 CONTENTS OF AGREEMENT; PARTIES IN INTEREST. This Agreement sets
forth the entire understanding of the parties. Any previous agreements or
understandings between the parties regarding the subject matter hereof are
merged into and superseded by this Agreement. All representations, warranties,
covenants, terms, conditions and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
legal representatives, successors and assigns of Summit, the Members, Westower
and Sub.
11.9 MISSISSIPPI LAW TO GOVERN. This Agreement shall be construed and
enforced in accordance with the laws of the State of Mississippi.
11.10 SECTION HEADINGS AND GENDER. The section headings herein have been
inserted for convenience of reference only and shall in no way modify or
restrict the terms or provisions hereof. The use of the masculine pronoun herein
when referring to any party has been for convenience only and shall be deemed to
refer to the particular party intended regardless of the actual gender of such
party.
11.11 SCHEDULES. All Schedules referred to in this Agreement are intended
to be and are hereby specifically made a part of this Agreement.
11.12 NOTICES. All notices, requests and other communications which are
required or permitted hereunder shall be sufficient if given in writing and
delivered personally or by registered or certified mail, postage prepaid, or by
facsimile followed by an original signed copy, as follows: (or to such other
addresses as shall be set forth in a notice given in the same manner):
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If to Westower or Sub: Westower Corporation
0000 XX 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile No. (000) 000-0000
With a copy to: Xxxxx X. Xxxxxxxxx Esq.
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
If to Summit or the Members: Summit Communications LLC
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Summit Communications LLC
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
With a copy to: Xxxxxx X. Xxxxx, Esq.
Brunini, Grantham, Grower &
Xxxxx, PLLC
1400 Trustmark Building
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
11.13 Confidential Information. Westower and sub agree to hold in
confidence any information not generally available to the public received by
them from Summit or the Members pursuant to the terms of this Agreement.
Similarly, Summit and the Members agree to hold in confidence any information
not generally available to the public received by them from Westower. If this
Agreement is terminated for any reason, each of the parties and their corporate
affiliates and representatives will continue to hold such information in
confidence and will, to the extent requested by the other party, promptly return
all written materials furnished pursuant hereto. Neither party to this
Agreement shall use information received from the other for any purpose other
than evaluating the merits and risks of the transaction contemplated by this
Agreement.
24
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first above written.
WESTOWER CORPORATION
By:/s/ Xxxxxx X. Xxxxx
-------------------
Xxxxxx X. Xxxxx, Chairman
WESTOWER SUMMIT ACQUISITION LLC
By: Westower Corporation, its sole member
By:/s/ Xxxxxx X. Xxxxx
-------------------
Xxxxxx X. Xxxxx, Chairman
SUMMIT COMMUNICATIONS LLC
By:/s/ Xxxx X. Xxxxxxx
-------------------
Xxxx X. Xxxxxxx, Member
By:/s/ Xxxx X. Xxxxxx
------------------
Xxxx X. Xxxxxx, Member
MEMBERS:
/s/ Xxxx X. Xxxxxxx
-------------------
Xxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxxx
------------------
Xxxx X. Xxxxxx
The Xxxx X. Xxxxxxx Children's Trust
/s/ Xxxxxxxxxxx X. Xxxxxxx
--------------------------
Xxxxxxxxxxx X. Xxxxxxx, Sole Trustee
The Xxxx X. Xxxxxx Children's Trust
/s/ Xxx Xxxx
------------
Xxx Xxxx, Sole Trustee
25
Attachment A
------------
PLAN OF MERGER
OF
WESTOWER SUMMIT ACQUISITION, LLC
(A MISSISSIPPI LIMITED LIABILITY COMPANY)
INTO
SUMMIT COMMUNICATIONS, LLC
(A MISSISSIPPI LIMITED LIABILITY COMPANY)
Pursuant to the provisions of Section 00-00-000 of the Mississippi
Limited Liability Company Act, the following is the Plan of Merger for the
purpose of merging Westower Summit Acquisition, LLC, a Mississippi limited
liability company, into Summit Communications, LLC, a Mississippi limited
liability company (the "Merger").
A. The Plan of Merger is as follows:
1. The Merger. The names of each corporation to be merged are Westower
----------
Summit Acquisition, LLC, a Mississippi limited liability company ("Sub"), and
Summit Communications, LLC, a Mississippi limited liability company ("Summit").
Summit shall be the surviving limited liability company (the "Surviving
Company").
2. Merger Terms.
------------
(a) The Membership Interests of Summit shall be converted into and
become the right to receive the Merger Consideration, as defined in that certain
Agreement and Plan of Merger among Westower Corporation, a Washington
corporation, Sub, Summit and the members of Summit, dated as of November 10,
1998.
(b) The membership interest of Sub shall be converted into and become
the sole membership interest in the Surviving Company.
3. Certificate of Formation. The Certificate of Formation of Summit as
------------------------
the surviving limited liability company shall be amended and restated to read in
full as set forth on Exhibit A hereto.
B. The effective time of the Merger shall be the date on which the Certificate
of Merger is filed with the Secretary of State for the State of Mississippi.
Exhibit 1
---------
AMENDED AND RESTATED
CERTIFICATE OF FORMATION
1. The name of the Limited Liability Company is Summit Communications, LLC.
2. The Federal Tax ID Number is: 00-0000000
3. The name and street address of the registered agent and registered office
is:
CT Corporation System
000 Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
4. Management of the limited liability company is vested in managers.
Form of Registration Rights Agreement
See Exhibit 2.2 of the Company's Current Report on Form 8-K
Form of Employment Agreements
See Exhibits 2.3 and 2.4 of the Company's Current Report on Form 8-K
