1
Exhibit 2.3
=====================================================================
STOCK PURCHASE AGREEMENT
by and among
MCC ACQUISITION CORP.,
PIC RESOURCES CORP.,
THE SHAREHOLDERS OF PIC RESOURCES CORP.
and
ATN COMMUNICATIONS INC.
dated as of
August 22, 1997
=====================================================================
2
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
ARTICLE I. PURCHASE AND SALE OF SHARES.............................
1.1 Purchase and Sale of Shares.............................
1.2 Closing of Purchase and Sale of Shares..................
ARTICLE II. CONDITIONS TO OBLIGATIONS...............................
2.1 Conditions to Obligations of MCCAC, PICR/ATN............
and the PICR Shareholders...............................
2.2 Conditions to Obligations of MCCAC......................
2.3 Conditions to the Obligations of the
PICR Shareholders.......................................
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PICR/ATN AND THE PICR
SHAREHOLDERS............................................
3.1 Corporate Organization..................................
3.2 Subsidiaries and Other Entities.........................
3.3 Corporate Authorization.................................
3.4 Capital Stock...........................................
3.5 Options.................................................
3.6 Compliance with Laws....................................
3.7 No Conflict.............................................
3.8 Litigation..............................................
3.9 Insurance...............................................
3.10 Intellectual Property...................................
3.11 Assets..................................................
3.12 Financial Statements....................................
3.13 Liabilities.............................................
3.14 Transactions Not in the Ordinary Course.................
3.15 Capital Projects........................................
3.16 Taxes...................................................
3.17 Bank Accounts; Powers of Attorney.......................
3.18 Real Estate.............................................
3.19 Title to Properties.....................................
3.20 Contracts...............................................
3.21 Brokers.................................................
3.22 Special Liabilities; Warranties.........................
3
3.23 Employee Benefit Matters................................
3.24 Materially Correct......................................
3.25 Information.............................................
3.26 Relationships with Related Persons......................
ARTICLE IV. ADDITIONAL REPRESENTATIONS AND
WARRANTIES OF THE PICR SHAREHOLDERS.....................
4.1 Authority...............................................
4.2 Ownership of Shares.....................................
4.3 No Conflict.............................................
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF MCCAC.................
5.1 Corporate Organization; Authorization...................
5.2 No Conflict.............................................
5.3 Brokers.................................................
ARTICLE VI. COVENANTS OF PICR/ATN AND THE PICR SHAREHOLDERS.........
6.1 Conduct of Business.....................................
6.2 Reasonable Efforts......................................
6.3 Inspection..............................................
6.4 Best Efforts............................................
6.5 Update Information......................................
6.6 Trading Prohibitions....................................
ARTICLE VII. JOINT COVENANTS.........................................
7.1 Support of Transactions.................................
ARTICLE VIII. INDEMNIFICATION.........................................
8.1 Survival; Right to Indemnification Not
Affected by Knowledge...................................
8.2 Indemnification and Payment of Damages by
PICR Shareholders.......................................
8.3 Indemnification and Payment of Damages by
MCCAC...................................................
8.4 Procedure for Indemnification...........................
8.5 The Shareholder Representative..........................
8.6 Limitations on Indemnification Obligations of the
PICR Shareholders.......................................
8.7 Additional Indemnification Obligations of the
PICR Shareholders.......................................
ii
4
ARTICLE IX. TERMINATION.............................................
9.1 Termination.............................................
9.2 Effect..................................................
ARTICLE X. DEFINITIONS.............................................
10.1 Defined Terms...........................................
10.2 Other Definitional Provisions...........................
ARTICLE XI. MISCELLANEOUS...........................................
11.1 Waiver..................................................
11.2 Notices.................................................
11.3 Assignment..............................................
11.4 Rights of Third Parties
11.5 Reliance................................................
11.6 Expenses................................................
11.7 Construction............................................
11.8 Captions; Counterparts..................................
11.9 Entire Agreement........................................
11.10 Amendments..............................................
11.11 Publicity...............................................
iii
5
EXHIBITS
Exhibit A - PICR Shareholders
Exhibit B - Form of Opinion of Ford & Xxxxxxx
Exhibit C - Form of Shareholder Release
Exhibit D - Form of Non-Competition Agreement
Exhibit E - None
Exhibit F - PICR/ATN Disclosure Statement
iv
6
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into as of August ___, 1997 by
and among MCC Acquisition Corp. ("MCCAC"), an Iowa corporation and a wholly
owned subsidiary of Xxxxxxx Communications Corporation ("Xxxxxxx"), PIC
Resources Corp., a Texas corporation ("PICR"), Xxxxx Xxxxxx and Xxxxxx
Xxxxxxxxx as the only shareholders of PICR (the "PICR Shareholders"), and ATN
Communications Inc., a Delaware corporation that prior to Closing (as defined
below) will be wholly owned by PICR ("ATN").
Unless the context otherwise requires, terms that are capitalized and not
otherwise defined in context have the meanings set forth or cross-referenced in
Article X of this Agreement. "PICR/ATN" shall refer collectively to both PICR
and ATN and each of them.
RECITALS
A. MCCAC desires to purchase from the PICR Shareholders all of the issued
and outstanding shares of capital stock of PICR, and the PICR Shareholders
desire to sell to MCCAC the shares of PICR Common Stock listed on Exhibit A-1
hereto which together constitute all of the issued and outstanding capital
stock of PICR.
B. Simultaneously with the transactions contemplated hereby, MCCAC will
purchase all of the issued and outstanding capital stock of Priority
International Communications, Inc. ("Priority").
AGREEMENT
In order to consummate the transactions contemplated hereby, and in
consideration of the mutual agreements hereinafter contained, each party to
this Agreement agrees as follows:
7
ARTICLE I. PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Shares. Subject to the terms and conditions set
forth in this Agreement, on the Closing Date, each of the PICR Shareholders
shall sell to MCCAC, and MCCAC shall purchase from each of the PICR
Shareholders, the shares of PICR Common Stock set forth opposite each such PICR
Shareholder's name on Exhibit A hereto, as applicable, in each case free and
clear of all Encumbrances, except as stated herein, for such PICR Shareholder's
Proportional Share of the aggregate purchase consideration payable to the PICR
Shareholders at Closing (the "Purchase Price").
The Purchase Price will be payable as follows: (a) an aggregate of
$30,000 shall be payable in cash to the PICR Shareholders, in their respective
Proportional Shares; (b) 300,000 shares of Xxxxxxx common stock will be issued
to the PICR Shareholders, in their respective Proportional Shares, at Closing;
and (c) additional shares of Xxxxxxx common stock may be earned by the PICR
Shareholders pursuant to section 1.3.
1.2 Closing of Purchase and Sale of Shares. The closing of the purchase
and sale of shares of PICR Common Stock contemplated herein (the "Closing")
will occur after all of the conditions set forth in Article II have either been
fulfilled or waived. Subject to the prior fulfillment or waiver of the
conditions in Article II, the parties will make the following deliveries at the
Closing:
(a) MCCAC will deliver to each PICR Shareholder certificates for
Xxxxxxx common stock representing such shareholder's Proportional Share of the
Purchase Price, payable in the manner described in section 1.1(a); and
(b) each PICR Shareholder will deliver to MCCAC certificates
representing the shares of PICR Common Stock (as applicable), duly endorsed (or
accompanied by duly executed stock powers), for transfer to MCCAC.
1.3 Earn-Out Right. At the end of each of the two periods of 12
consecutive full calendar months during the 24 month period after the Closing
Date, Purchaser and Sellers shall measure the amount of EBITDA (earnings before
interest, taxes, depreciation and amortization) generated by the entity
comprising PICR/ATN and Priority (the "Subsidiary") and if the Subsidiary has
EBITDA of at least $1,000,000 for either such period, Xxxxxxx Common Stock with
an aggregate Quarterly Average Market Value of $1.25 for each dollar of EBITDA
earned in the relevant period in excess of $1,000,000 will be delivered to the
PICR Shareholders, according to their respective Proportional Shares, within
120 days after the end of the applicable period.
2
8
ARTICLE II. CONDITIONS TO OBLIGATIONS
2.1 Conditions to Obligations of MCCAC, PICR/ATN and the PICR
Shareholders. The obligations of MCCAC, PICR/ATN and the PICR Shareholders to
consummate, or cause to be consummated, the Acquisition are subject to the
satisfaction of the following conditions, any one or more of which may be
waived in writing by such parties:
(a) All necessary approvals, clearances and consents of governmental
and regulatory authorities required to be procured by MCCAC or PICR in
connection with the transactions contemplated by this Agreement, and all
material approvals and consents of third parties that are required to be
obtained in connection with the transactions contemplated by this Agreement,
shall have been procured.
(b) There shall not be in force any order or decree, statute, rule or
regulation nor shall there be on file any complaint by a governmental agency
seeking an order or decree, restraining, enjoining or prohibiting the
consummation of the transactions contemplated by this Agreement, and none of
MCCAC, PICR/ATN or the PICR Shareholders shall have received notice from any
governmental agency that it has determined to institute any suit or proceeding
to restrain or enjoin the consummation of the transactions contemplated by this
Agreement or to nullify or render ineffective this Agreement if consummated, or
to take any other action which would result in the prohibition or material
change in the transactions contemplated by this Agreement.
2.2 Conditions to Obligations of MCCAC. The obligation of MCCAC to
consummate, or cause to be consummated, the transactions contemplated by this
Agreement is subject to the satisfaction of the following additional
conditions, any one or more of which may be waived in writing by MCCAC:
(a) Each of the representations and warranties of PICR/ATN and the PICR
Shareholders contained in this Agreement shall be true and correct in all
material respects both on the date hereof and as of the Closing, as if made
anew at and as of that time, and each of the covenants and agreements of
PICR/ATN and the PICR Shareholders to be performed as of or prior to the
Closing shall have been duly performed, except in each case for changes after
the date hereof which are contemplated or expressly permitted by this
Agreement.
(b) PICR and ATN shall each have delivered to MCCAC a certificate
signed by its President, dated the Closing Date, certifying, in form reasonably
satisfactory to MCCAC and to its counsel that, to the best of the
3
9
knowledge and belief of such officer, the conditions specified in Section 2.1
and Section 2.2(a) as they relate to PICR or ATN, as applicable, and in Section
2.2(e) and (i) have been fulfilled.
(c) Each PICR Shareholder shall have delivered to MCCAC a certificate,
dated the Closing Date, certifying, in form reasonably satisfactory to MCCAC
and to its counsel that, to the best of the knowledge and belief of such PICR
Shareholder, the conditions specified in Section 2.1 as they relate to PICR/ATN
and such PICR Shareholder and in Sections 2.2(a), (e) and (i) have been
fulfilled.
(d) MCCAC shall have received opinions, dated the Closing Date, from
Ford & Xxxxxxx in the form of Exhibit B.
(e) PICR/ATN shall have no liabilities or obligations except Permitted
Liabilities. The terms of any such Permitted Liabilities outstanding as of the
Closing Date shall permit payment in full at the borrower's election, without
prepayment penalties, similar charges or any lender's or third party consents.
(f) MCCAC shall have received an executed release in the form of
Exhibit C to this Agreement from each of the PICR Shareholders.
(g) Each of the PICR Options shall have been exercised in full or
otherwise terminated, and any person who receives shares of PICR Common Stock
upon exercise of any such option is or becomes a party to this Agreement as
PICR Shareholder.
(h) Each PICR Shareholder shall have entered into a Non-Disturbance and
Non-Solicitation Agreement with MCCAC in substantially the form attached as
Exhibit D to this Agreement (the "Non-Competition Agreement").
(i) The assets to be held by PICR/ATN after the Closing Date shall be
free and clear of any Encumbrances except for Permitted Liens.
(j) Xxxxxxx shall have obtained new equity financing, on terms and
conditions reasonably satisfactory to Xxxxxxx, in an aggregate issue amount not
less than $3,000,000.
(k) This Agreement shall have been approved by Xxxxxxx'x Board of
Directors.
4
10
(l) Acknowledging that the parties have signed this Agreement without
attaching the PICR/ATN Disclosure Statement, the matters described on the
PICR/ATN Disclosure Statement must be acceptable to MCCAC in its sole
discretion. PICR/ATN agree to deliver the PICR/ATN Disclosure Statement to
MCCAC as soon as reasonably possible after the date of this Agreement.
2.3 Conditions to the Obligations of the PICR Shareholders. The
obligation of the PICR Shareholders to consummate the Acquisition is subject to
the satisfaction of the following additional conditions, any one or more of
which may be waived in writing by all of the PICR Shareholders:
(a) Each of the representations and warranties of MCCAC contained in
this Agreement shall be true and correct in all material respects both on the
date hereof and as of the Closing, as if made anew at and as of that time, and
each of the covenants and agreements of MCCAC to be performed as of or prior to
the Closing shall have been duly performed, except in each case for changes
after the date hereof which are contemplated or expressly permitted by this
Agreement.
(b) MCCAC shall have delivered to the PICR Shareholders a certificate
signed by an officer of MCCAC, dated the Closing Date, certifying, in form
reasonably satisfactory to the PICR Shareholders and their counsel, to the
effect that to the best of the knowledge and belief of such officer, the
conditions specified in Section 2.1 as they relate to MCCAC and in Section
2.3(a) have been fulfilled.
(c) PICR shall have obtained ownership of 100% of the outstanding
capital stock of ATN.
(d) The PICR Shareholders and Xxxxxxx shall have entered into a
registration rights agreement providing the PICR Shareholders with piggyback
registration rights for the shares of Xxxxxxx Common Stock issued to the PICR
Shareholders hereunder with respect to all secondary registrations of Xxxxxxx
Common Stock (other than registrations pursuant to registration rights granted
by Xxxxxxx prior to the Closing Date).
ARTICLE III. REPRESENTATIONS AND WARRANTIES
OF PICR/ATN AND THE PICR
SHAREHOLDERS
For purposes of this Article III, references to the knowledge of PICR/ATN
or the PICR Shareholders shall mean matters within the actual knowledge of
either PICR Shareholder and matters which either PICR Shareholder
5
11
should have known after due investigation concerning the subjects discussed in
this Article III. PICR/ATN and the PICR Shareholders jointly and severally
represent and warrant to MCCAC, except as set forth on the PICR/ATN Disclosure
Statement to be attached as Exhibit E to this Agreement, that:
3.1 Corporate Organization.
(a) PICR has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Texas and has the
corporate power and authority to own or lease its properties and to conduct its
business as it has been and is now being conducted. The copies of the Articles
of Incorporation of PICR certified by the Secretary of State of the State of
Texas, and the By-Laws of PICR , certified by the Secretary of PICR ,
previously delivered to MCCAC, are true, correct and complete.
(b) ATN has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and has
the corporate power and authority to own or lease its properties and to conduct
its business as it has been and is now being conducted. The copies of the
Articles of Incorporation of ATN, certified by the Secretary of State of
Delaware, and the By-Laws of ATN, certified by the Secretary of ATN, previously
delivered to MCCAC, are true, correct and complete.
(c) PICR and ATN are both duly licensed or qualified and in good
standing as a foreign corporation in all jurisdictions identified on Section
3.1(b) of the PICR/ATN Disclosure Statement and such jurisdictions are the only
ones in which their ownership of property or the character of their activities
requires them to be so licensed or qualified.
3.2 Subsidiaries and Other Entities. Except for ATN, PICR has no
Subsidiaries; ATN has no Subsidiaries. All the outstanding capital stock of
ATN is duly authorized, validly issued, fully paid and nonassessable. PICR
currently owns 80% and as of the Closing Date will hold 100%, of the issued and
outstanding capital stock of ATN free and clear of any Encumbrance, except the
shares pledged to United Network, Inc. as described in section 3.2 of the
PICR/ATN Disclosure Statement There are no warrants, options, subscriptions,
other convertible instruments, and no commitments, obligations, or agreement
(whether firm or conditional) pursuant to which ATN is or may be obligated to
issue, transfer, deliver or sell shares of capital stock or other securities of
ATN. Except for PICR's ownership of ATN, neither PICR nor ATN owns, directly
or indirectly, any partnership, equity, profit, participation or similar
ownership interest in any corporations, partnerships, joint ventures, trusts,
unincorporated organizations, associations or similar entities.
6
12
3.3 Corporate Authorization. The Board of Directors of PICR and of ATN,
respectively, has approved the transactions contemplated by this Agreement.
PICR/ATN has all necessary corporate power and authority to enter into this
Agreement and to perform all of the obligations to be performed by it
hereunder. Upon the execution and delivery hereof by MCCAC, this Agreement
will constitute the valid and legally binding obligation of PICR/ATN,
enforceable against PICR/ATN in accordance with its terms, except as
enforceability thereof may be limited by applicable bankruptcy, reorganization,
insolvency or other similar laws affecting creditors' rights generally, by
equitable principles of general applicability with respect to the availability
of equitable remedies, or by public policies applicable to securities laws.
3.4 Capital Stock. The entire authorized capital stock of PICR consists
solely of 1,000,000 shares of PICR Common Stock, of which 1,000 shares are
issued and outstanding. The entire authorized capital stock of ATN consists
solely of 10,000 shares of ATN Common Stock, of which 1,000 shares are issued
and outstanding. All of the issued and outstanding shares of PICR Common Stock
are owned by the PICR Shareholders as set forth on Exhibit A respectively. At
Closing, all of the issued and outstanding shares of ATN stock will be owned by
PICR. Some of the PICR stock owned by the PICR Shareholders is pledged to
secure an obligation of PICR to United Network, Inc. as disclosed in section
3.4 of the PICR/ATN Disclosure Statement. All of the outstanding shares of
PICR Common Stock and ATN Common Stock (and any shares issuable pursuant to
presently outstanding options, if exercised and purchased at the applicable
exercise price) were duly authorized and will be, when issued and the option
price paid (if applicable), validly issued, fully paid and nonassessable. None
of the capital stock or other securities of PICR or ATN is entitled or subject
to preemptive rights or registration rights. The authorization or consent of
no person is required in order to consummate the transactions contemplated
herein by virtue of any such person having an equitable or beneficial interest
in the PICR Common Stock or the ATN Common Stock. There are not now, and at
the Closing Date there will not be, any voting trusts or other agreements or
understandings to which PICR/ATN or any PICR Shareholder is a party or is bound
with respect to the voting of PICR Common Stock or the ATN Common Stock. All
outstanding shares of PICR Common Stock and ATN Common Stock were offered, sold
and issued in compliance with all applicable laws and regulations, including,
without limitation, federal and state securities laws.
3.5 Options. There are no PICR Options or ATN Options or other
commitments or obligations of PICR/ATN, either firm or conditional, to issue,
deliver or sell, whether under offers, stock option agreements, stock bonus
agreements, stock purchase plans, incentive compensation plans, warrants,
7
13
conversion rights or otherwise, any authorized but unissued shares, or treasury
shares, of PICR Common Stock or ATN Common Stock or other securities of PICR or
ATN.
3.6 Compliance with Laws. To the best knowledge of the PICR Shareholders,
except as set forth in Section 3.6 of the PICR/ATN Disclosure Statement, (i)
PICR/ATN is not currently in violation (nor is it currently liable or otherwise
currently responsible with respect to prior violations) of any statute, law or
regulation applicable to any of their presently or formerly owned properties or
to the conduct of their current or past businesses; (ii) PICR/ATN has timely
obtained all licenses and permits and timely filed all reports required to be
filed under any applicable laws or regulations; (iii) neither PICR/ATN nor any
other person has stored, dumped or otherwise disposed of any chemical
substances, including any "Hazardous Substances," "Pollutants" or
"Contaminants" (as such terms are defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA")) on,
beneath or about any of the properties of PICR/ATN; (iv) PICR/ATN has not
received written notice that it is a "potentially responsible party" under any
environmental law or of any violation of any environmental, zoning or other
land use ordinance, law or regulation relating to the operation of its or their
businesses, or to any of the processes followed, results obtained, services
provided or products made, modified or installed (in the ordinary course of its
or their businesses or otherwise), including, but not limited to, the Toxic
Substances Control Act of 1976, as amended, the Resource Conservation Recovery
Act of 1976, as amended, the Clean Air Act, as amended, the Federal Water
Pollution Control Act, as amended, CERCLA or the Occupational Safety and Health
Act of 1970, as amended, nor is PICR/ATN aware of any such violation. PICR/ATN
has listed in Section 3.6 of the PICR/ATN Disclosure Statement all
environmental reports known to PICR/ATN relating to any owned or leased real
property of PICR/ATN and has previously delivered to MCCAC a true, correct and
complete copy of each report so listed.
3.7 No Conflict. To the best knowledge of the PICR Shareholders, except
as set forth in Section 3.7 of the PICR/ATN Disclosure Statement, the execution
and delivery of this Agreement by PICR/ATN and the PICR Shareholders and the
consummation of the transactions contemplated hereby do not, and will not
constitute an event which, after notice or lapse of time or both would (a)
violate any provision of, or result in the breach of, or accelerate or permit
the acceleration of the performance required by the terms of: (i) any
applicable law, rule or regulation of any governmental body, (ii) the Articles
of Incorporation or By-Laws of PICR or ATN; (iii) any indenture, material
agreement, or other material instrument to which PICR/ATM is a party or by
which PICR/ATN may be bound; or (iv) any order, judgment or decree applicable
8
14
to PICR/ATN, or (b) terminate or result in the termination of any indenture,
material agreement or other material instrument, or result in the creation of
any Encumbrance upon any of the properties or assets of PICR/ATN under any
agreement to which any of them is a party.
3.8 Litigation. Except as set forth on Schedule 3.8 of the PICR/ATN
Disclosure Statement, there are no actions, suits, proceedings, claims or
investigations formally instituted and pending or, to the knowledge of PICR/ATN
or any of the PICR Shareholders, threatened against or specifically affecting
PICR/ATN or any PICR Shareholder or involving any of their properties or
assets, at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or any arbitration panel or alternative
dispute resolution body. Neither PICR/ATN nor any PICR Shareholder is subject
to or is in default under, any order, writ, injunction or decree of any court
or Federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, or any arbitration panel or
alternative dispute resolution body.
3.9 Insurance. Set forth in Section 3.9 of the PICR/ATN Disclosure
Statement is a list of (a) all insurance policies held by PICR/ATN (indicating
the insurer, type, amount and term of coverage, deductible, description of
vehicles, latest property insurable values by location, workers' compensation
payroll (separately for clerical, sales and technical employees), and
additional named insureds with respect to each such policy); and (b) all claims
pending under any of such insurance policies. All of these policies are in
full force and effect and all premiums due thereon have been paid or accrued.
PICR/ATN has previously delivered to MCCAC complete copies of each such
insurance policy.
3.10 Intellectual Property. Except as set forth in Section 3.10 of the
PICR/ATN Disclosure Statement, there are no patents or patent applications;
trademarks, service marks, trade dress, trade names, corporate names or any
applications to register any of the foregoing marks or names; copyrights or
copyright registrations; or any licenses, other than software licenses acquired
solely through the purchase of the underlying software, to or from third
parties with respect to any of the foregoing (including, without limiting the
generality of the foregoing, all computer software, data and documentation)
relating to PICR/ATN's business as now conducted or as presently proposed to be
conducted. PICR/ATN has not infringed, misappropriated or otherwise conflicted
with any proprietary rights of any third parties. PICR/ATN is not aware of any
infringement, misappropriation or conflict which will occur as a result of the
continued operation of PICR/ATN's business as now conducted or as presently
proposed to be conducted. PICR/ATN has not received any notices of any
infringement or misappropriation from any third party.
9
15
3.11 Assets. Section 3.11 of the PICR/ATN Disclosure Statement lists all
fixed capital assets owned by PICR/ATN (the "Asset List"). The assets on the
Asset List include (i) substantially all of the tangible assets presently used
by PICR/ATN in the conduct of its business and (ii) all assets reflected under
"Property, Plant & Equipment" on the Interim Balance Sheet.
3.12 Financial Statements. PICR/ATN will, prior to Closing, deliver to
MCCAC the following financial statements (including any notes thereto), all of
which have been prepared in accordance with GAAP consistently applied
throughout the periods involved and present fairly in all material respects the
consolidated financial position of PICR/ATN, at the dates stated in such
financial statements and the results of their operations for the periods stated
therein (subject to the absence of notes and to normal year-end adjustments) a
Consolidated Balance Sheet at June 30, 1997 (the "Interim Balance Sheet"), and
a Consolidated Statement of Income and a Consolidated Statement of Cash Flows
for the six months ended June 30, 1997.
3.13 Liabilities. Except as set forth in section 3.13 of the PICR/ATN
Disclosure Statement, PICR/ATN does not have any liability or obligation,
secured or unsecured (whether accrued, absolute, contingent or otherwise),
except:
(i) trade payables and accrued expenses incurred in the ordinary
course of business and consistent with past practices for which the
stated due date has not passed ("Current Payables");
(ii) those liabilities or obligations (for which the stated due date
has not passed) relating to operating contracts or leases entered into in
the ordinary course of business consistent with past practice;
(iii) liabilities and obligations of the type shown on the Interim
Balance Sheet; and
(iv) the Transaction Costs.
3.14 Transactions Not in the Ordinary Course. Except as set forth in
Section 3.14 of the PICR/ATN Disclosure Statement or as otherwise contemplated
by this Agreement, during the period commencing June 1, 1997 and ending on the
date of this Agreement, PICR/ATN has not (a) incurred any liability or
obligation not in the ordinary course of business or entered into any
transaction other than in the ordinary course of business; (b) declared or made
any payment or distribution to shareholders or other holders of equity or
other similar ownership or participation interests, including stock splits,
stock dividends and profit
10
16
distributions, or purchased or redeemed any shares or other equity or other
similar ownership or participation interests except as provided for in this
Agreement; (c) placed any Encumbrance on any of its assets, tangible or
intangible; (d) sold or transferred any of its other assets, tangible or
intangible, except in the ordinary course of business; (e) canceled any debts
or claims except in each case in the ordinary course of business; (f) increased
the rate of compensation of any officer or of any employee receiving (giving
effect to such increase) more than $50,000 per annum or paid or declared any
bonus (excluding fixed-formula compensation incentive payments such as may be
paid to certain sales employees from time to time); or (g) agreed to or amended
or instituted any employment contract, bonus plan, stock option plan, profit
sharing plan, pension plan, retirement plan or other similar arrangement or
plan.
3.15 Capital Projects. Set forth in Section 3.15 of the PICR/ATN
Disclosure Statement is a description of all Capital Expenditures currently
committed for or authorized by PICR/ATN.
3.16 Taxes. Except as set forth in Section 3.16 of the PICR/ATN
Disclosure Statement, ATN has (since its acquisition by PICR) been included in
a consolidated federal income tax return filed by PICR. Except as set forth in
Section 3.16 of the PICR/ATN Disclosure Statement, (i) PICR/ATN has accurately
prepared and has duly and timely filed with all appropriate Federal, foreign,
state and local governmental agencies, all tax returns and reports required to
be filed by it; (ii) such returns accurately reflect all payments and
distributions made between PICR or ATN or any of their Affiliates and required
to be reflected on such returns; (iii) all taxes owed or withheld, or which may
be claimed to be owed or required to be withheld, to or for the benefit of any
governmental agency for or with respect to the periods covered by such returns
and reports or with respect to any period (or portions thereof) ending at or
before the Closing, and all interest, penalties, assessments and deficiencies
connected therewith, have been or will be timely paid in full or provided for
in full; (iv) PICR/ATN has not executed or filed with any taxing authority any
agreement extending the period for assessment or collection of any taxes; (v)
PICR/ATN is not a party to any pending audit, inquiry, action or proceeding,
nor has PICR/ATN been notified of the inception of any such audit, inquiry,
action or proceeding by any Federal, foreign, state or local governmental
entity or municipality or subdivision thereof or any authority, department,
commission, board, bureau, agency, court or instrumentality for the assessment
or collection of taxes; (vi) no deficiency or assessment notices or reports or
statements of tax due have been received by PICR/ATN in respect of any of its
tax returns; and (vii) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will have no material
effect upon the tax treatment of any previously consummated transaction in
which PICR/ATN acquired all or any part of the assets or capital stock of
another entity.
11
17
3.17 Bank Accounts; Powers of Attorney. Set forth in Section 3.17 of the
PICR/ATN Disclosure Statement is a complete list of (a) all banks in which
PICR/ATN has an account or safe deposit box and the names of all persons
authorized to draw thereon or have access thereto; and (b) the names of all
persons holding powers of attorney from PICR/ATN.
3.18 Real Estate. Section 3.18 of the PICR/ATN Disclosure Statement lists
all real estate, real estate options and leaseholds owned or held by PICR/ATN.
To the best knowledge of the PICR Shareholders and except as set forth in
Section 3.18 of the PICR/ATN Disclosure Statement, there are no title defects,
issues of validity or enforceability, deficiencies in rights of possession or
use or similar matters relating to or affecting any real estate owned or
leased, or which is subject to an option to buy, sell or lease, of or by
PICR/ATN. Except for Permitted Liens, PICR/ATN has good and marketable title
in fee simple to all real estate owned by it and good leasehold interests in
all of its leaseholds, none of which interests will be materially and adversely
affected by the transactions contemplated hereby, and each lease with an
initial term of more than one year is, to the knowledge of PICR/ATN,
enforceable against the lessor thereunder and PICR/ATN, as the case may be,
enjoys quiet possession of all leaseholds.
3.19 Title to Properties. To the best knowledge of the PICR Shareholders,
PICR/ATN has good title to all of its personal properties and assets, tangible
and intangible (including, without limitation, those on the Asset List).
Except for Encumbrances set forth in Section 3.19 of the PICR/ATN Disclosure
Statement (which identifies those that will be removed prior to the Closing),
none of such properties or assets is subject to any Encumbrance other than (a)
any Encumbrances connected with operating leases entered into in the ordinary
course of business consistent with past practice, (b) such other Encumbrances
that do not secure indebtedness and do not materially detract from the value
of, or interfere with the present or future use of, the property subject
thereto and affected thereby or otherwise materially impair the business,
financial condition, results of operations or operations of PICR/ATN, taken as
a whole, or (c) as otherwise disclosed to and approved by MCCAC in writing
(collectively, "Permitted Liens").
3.20 Contracts. Except as set forth in Section 3.20 of the PICR/ATN
Disclosure Statement, PICR/ATN (nor any of their properties) is not a party to
or bound by any (a) agreement or other arrangement not made in the ordinary
course of business, involving payments or receipts in excess of $10,000
individually or more than $50,000 in the aggregate; (b) employment or
consulting contract; (c) contract with any labor union; (d) employee bonus,
pension, profit-sharing, retirement, stock purchase or other benefit or
welfare plan or agreement; (e) lease with respect to real or personal property,
whether as lessor or lessee; (f) contract or
12
18
commitment for the purchase of raw materials or supplies or the sale of
products involving more than $10,000 per annum or $50,000 in the aggregate;
(g) indenture, agreement, note, mortgage, guaranty or other writing which
evidences or relates to any loan of money to, or indebtedness for money
borrowed by, PICR/ATN; (h) license agreement or other contract or agreement
relating to patents, trademarks, trade names, techniques or copyrights or
applications for any thereof, inventions, trade secrets or other proprietary
know-how or technical assistance; or (i) any loan to officers, directors or
employees of PICR/ATN (all of which loans will be repaid in full by the
Closing). Except as set forth in Section 3.20 of the PICR/ATN Disclosure
Statement, to the knowledge of PICR/ATN, neither PICR/ATN, nor any other party
thereto, is in default under the terms of any commitments described in
Subsections (a) through (i) of this Section.
3.21 Brokers. PICR/ATN has not directly or indirectly dealt with anyone
acting in the capacity of a finder or broker and none of them has incurred nor
will they incur any obligation for any finder's or broker's fees or commissions
in connection with this Agreement.
3.22 Special Liabilities; Warranties. Except as set forth in Section 3.22
of the PICR/ATN Disclosure Statement, (i) PICR/ATN has no liability under any
contracts under which the consideration to be paid or received by PICR/ATN is
determined in whole or in part based on profits or operating results, nor are
there any contingent payments owing to any person in connection with the
acquisition of any business, entity, frequency or channel by PICR/ATN; (ii)
PICR/ATN has not extended any warranties to their respective customers; and
(iii) PICR/ATN is not now subject to any outstanding, pending or, to the
knowledge of PICR/ATN, threatened claims based on warranty coverage.
3.23 Employee Benefit Matters. Except as set forth in Section 3.23 of the
PICR/ATN Disclosure Statement:
(a) PICR/ATN does not have and never has had any obligation to
contribute to any "multiemployer plan" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or any
"multiple employer plan" described in Section 210(a) of ERISA or Section 413(C)
of the Code. PICR/ATN does not maintain, contribute to, or have any liability
under or with respect to any plan or arrangement, whether or not terminated,
which provides or provided medical, health, life insurance or other welfare-type
benefits for current or future retired or terminated employees (except for
limited continued medical benefit coverage required to be provided under
Section 4980B of the Code or as required under applicable state law). PICR/ATN
does not maintain, contribute to or have any liability under or with respect to
any employee plan which is a "defined benefit plan" (as defined in Section
3(35) of
13
19
ERISA), whether or not terminated. PICR/ATN does not maintain, contribute to
or have any liability under or with respect to any employee plan which is a
"defined contribution plan" (as defined in Section 3(34) of ERISA), whether or
not terminated.
(b) PICR/ATN does not maintain, contribute to or have any liability
under or with respect to any "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) or any other plan or arrangement providing benefits to
current or former employees or directors, including any bonus plan, plan for
deferred compensation, employee health or other welfare benefit plan or other
arrangement, whether or not terminated (any such plan or arrangement, an
"Employee Plan"). For purposes of this Section 3.23, "PICR/ATN" includes all
organizations that now are or that have been, within the past six years, under
common control with PICR/ATN pursuant to Section 414(b) or (c) of the Code.
PICR/ATN previously has delivered to MCCAC true, complete and correct copies of
each of the Employee Plans, including all amendments thereto, and any other
documents or other instruments relating thereto reasonably requested by MCCAC.
(c) All Employee Plans are being, and have been, maintained, operated
and administered in all material respects in accordance with their respective
terms and in compliance with all applicable laws.
(d) No Employee Plan is funded through a "welfare benefit fund" as
defined in Section 419(e) of the Code.
(e) There have been no prohibited transactions or breaches of any of
the duties imposed on "fiduciaries" (within the meaning of Section 3(21) of
ERISA) by ERISA with respect to any Employee Plan that could result in PICR/ATN
becoming liable directly or indirectly (by indemnification or otherwise) for
any material excise tax, penalty or other liability under ERISA or the Code.
(f) There are no actions or claims pending or, to the knowledge of
PICR/ATN, threatened, with respect to any Employee Plan (other than routine
claims for benefits), and there are no investigations or audits of any Employee
Plan by any governmental authority currently pending and there have been no
such investigations or audits that have been concluded that resulted in any
liability of PICR/ATN that has not been fully discharged.
(g) All (i) insurance premiums required to be paid with respect to, (ii)
benefits, expenses, and other amounts due and payable under, and (iii)
contributions, transfers, or payments required to be made to, any Employee Plan
have been paid. With respect to any insurance policy providing funding for
14
20
benefits under any Employee Plan, (x) there is no liability of PICR/ATN, in the
nature of a retroactive or retrospective rate adjustment, loss sharing
arrangement, or other actual or contingent liability, nor would there be any
such liability if such insurance policy was terminated on the date hereof, and
(y) no insurance company issuing any such policy is in receivership,
conservatorship, liquidation or similar proceeding and, to the knowledge of
PICR/ATN, no such proceedings with respect to any insurer are imminent.
(h) Each Employee Plan that is a group health plan subject to Section
4980B of the Code (or which was subject to Section 162(k) of the Code) has been
operated in material compliance with the continuation coverage requirements of
Section 4980B of the Code and Section 162(k) of the Code, as applicable, and
Part 6 of Subtitle B of Title I of ERISA.
(i) Each Employee Plan that is subject to Section 1862(b)(1) of the
Social Security Act has been operated in compliance with the secondary payer
requirements of Section 1862(b)(1) of such Act.
(j) The execution, delivery and performance of this Agreement will
not, solely in and of itself, (i) constitute a stated triggering event under any
Employee Plan that will result in any payment (whether of severance pay or
otherwise) becoming due from PICR/ATN to any present or former officer,
employee, director, shareholder or consultant, or former employee (or
dependents of any thereof), or (ii) accelerate the time of payment or vesting,
or increase the amount, of compensation due to any employee, officer, director,
shareholder or consultant of PICR/ATN.
(k) PICR/ATN has not agreed or committed to make any amendments to
any of the Employee Plans not already embodied in the documents comprising any
such Employee Plan, other than any amendments required by law.
(l) All contributions, transfers, and payments by PICR/ATN in respect
of any Employee Plan have been or are fully deductible under the Code.
(m) PICR/ATN's financial statements at and for the period ended
_______________, 1997 contain and, at and for the period ending on the Closing,
will contain adequate accruals for (i) bonuses, sales commissions and vacation
pay earned but not received as of such dates and (ii) incurred or continuing
but unpaid claims under Employee Plans not funded by insurance.
(n) No Employee Plan provides benefits to any individual who is not a
current or former employee of PICR/ATN, or the dependents or other
beneficiaries of any such individual.
15
21
(o) No "excess parachute payments" within the meaning of Section 280G
of the Code will be made in connection with or as a result of any transaction
contemplated by this Agreement (without regard to whether any such payment
might be reasonable compensation for personal services performed or to be
performed in the future).
(p) Each Employee Plan intended to be qualified under Section 401(a) of
the Code is so qualified and has heretofore been determined by the Internal
Revenue Service (the "IRS") to be so qualified, and each trust created
thereunder has heretofore been determined by the IRS to be exempt from tax
under the provisions of Section 501(a) of the Code, and nothing has occurred
since the date of any such determination that could reasonably be expected to
give the IRS grounds to revoke such determination.
(q) All (i) insurance premiums required to be paid with respect to,
(ii) benefits, expenses, and other amounts due and payable under, and (iii)
contributions, transfers, or payments required to be made to, any Employee Plan
prior to the Closing Date will have been paid, made or accrued on or before the
Closing Date.
(r) Each "fiduciary" and every "plan official" (as defined in Section
412 of ERISA) of each Employee Plan is bonded to the extent required by Section
412 of ERISA.
3.24 Materially Correct. To the best knowledge of the PICR Shareholders,
Article III of this Agreement together with the PICR/ATN Disclosure Statement
does not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the disclosures contained therein in
the light of the circumstances under which they are made, not misleading.
3.25 Information. PICR/ATN has delivered to MCCAC on or prior to the date
hereof all private placement, confidential offering or similar memoranda and
other offering or solicitation materials used at any time by PICR/ATN or anyone
acting on its behalf in connection with any offer or sale of securities of
PICR/ATN.
3.26 Relationships with Related Persons. Except as set forth in Section
3.26 of the PICR/ATN Disclosure Statement, no PICR Shareholder or any Related
Person of any PICR Shareholder:
16
22
(a) has, or since January 1, 1996 has had any interest in any property
(whether real, personal or mixed and whether tangible or intangible), used in
or pertaining to the business of PICR/ATN;
(b) has owned (beneficial or of record) an equity interest or any other
financial or profit interest in an entity that has had business dealings or a
material financial interest in any transaction with PICR/ATN or engaged in
competition with PICR/ATN; or
(c) is a party to any contract with, or has any claim or right against,
PICR/ATN.
ARTICLE IV. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE PICR
SHAREHOLDERS
Each of the PICR Shareholders, individually and not jointly and severally,
represents and warrants to MCCAC that:
4.1 Authority. He has all necessary power and authority to execute and
deliver this Agreement and consummate the transactions contemplated hereby.
Upon the execution and delivery hereof by, respectively, MCCAC, PICR/ATN and
the other PICR Shareholder, this Agreement will constitute his valid and
legally binding obligation enforceable against him in accordance with its
terms, except as enforceability thereof may be limited by applicable
bankruptcy, reorganization, insolvency or other similar laws affecting
creditors' rights generally, by equitable principles of general applicability
with respect to the availability of equitable remedies, or by public policies
applicable to securities laws.
4.2 Ownership of Shares. He owns the shares of PICR Common Stock set
forth opposite his name on Exhibit A free and clear of all Encumbrances, except
as disclosed in the PICR/ATN Disclosure Statement.
4.3 No Conflict. Neither his execution, delivery and performance of this
Agreement nor the consummation by him of the transactions contemplated hereby
will require the consent, waiver, approval, license or authorization of or
filing with any person or public authority and will not conflict with,
constitute a violation of or default under or result in a breach of any
contract, commitment, agreement, arrangement, judgment, order, ordinance,
regulation, decree or restriction of any kind to which he is a party or by
which he or his shares of PICR Common Stock is bound, except as disclosed i
the PICR/ATN Disclosure Statement.
17
23
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF MCCAC
MCCAC represents and warrants to PICR/ATN and the PICR Shareholders that:
5.1 Corporate Organization; Authorization.
(a) MCCAC has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Iowa and has the
corporate power and authority to own or lease its properties and to conduct its
business as it is now being conducted.
(b) MCCAC has all necessary corporate power and authority to enter into
this Agreement and to perform all of the obligations to be performed by it
hereunder. The execution, delivery and performance of this Agreement by MCCAC
have been duly authorized by MCCAC, and upon the execution and delivery hereof
by MCCAC, this Agreement will constitute the valid and legally binding
obligation of MCCAC, enforceable against it in accordance with its terms,
except as enforceability thereof may be limited by applicable bankruptcy,
reorganization, insolvency or other similar laws affecting creditors' rights
generally or by equitable principles of general applicability with respect to
the availability of equitable remedies.
5.2 No Conflict. The execution and delivery of this Agreement by MCCAC
and the consummation of the transactions contemplated hereby do not and will
not violate any provision of, or result in the breach of, or accelerate or
permit the acceleration of the performance required by the terms of, any
applicable law, rule or regulation of any governmental body, the Restated
Articles of Incorporation or the By-Laws of MCCAC or any agreement, indenture
or other instrument to which MCCAC is a party or by which MCCAC may be bound,
or of any order, judgment or decree applicable to it, or terminate or result in
the termination of any such agreement, indenture or instrument, or result in the
creation of any Encumbrance upon any of the properties or assets of MCCAC under
any agreement to which it is a party, or constitute an event which, after
notice or lapse of time or both, would result in any such violation, breach,
acceleration, termination or creation of an Encumbrance, except where any such
violation, breach, acceleration, termination or creation would not impair
MCCAC's ability to perform, in any material respect, its obligations under this
Agreement or any other document or instrument to which MCCAC is a party in
connection with the transactions contemplated herein.
18
24
ARTICLE VI. COVENANTS OF PICR/ATN AND THE PICR SHAREHOLDERS
6.1 Conduct of Business. From the date of this Agreement until the
Closing Date, PICR/ATN shall conduct its business only in the ordinary course
in substantially the same manner as heretofore conducted and, without limiting
the generality of the foregoing, PICR/ATN shall not, without the written
consent of MCCAC:
(a) dispose of or contract to dispose of any other assets, tangible or
intangible, except in the ordinary course of business, consistent with past
practice and, with respect to capital assets, in connection with the
replacement of the asset being disposed of;
(b) voluntarily incur any absolute or contingent debt obligation
except in the ordinary course of business under currently existing lines of
credit;
(c) enter into any material contract, including, without limitation,
any lease or contract for the purchase or sale of real estate or of any interest
therein;
(d) encumber any property or other assets except for Encumbrances
constituting Permitted Liens;
(e) declare or pay any dividend or purchase or redeem any of its
shares, notes or other securities or make any other distribution to
shareholders;
(f) adopt any new or amend any existing employee benefit plan or any
employment agreement or amend any PICR Option or ATN Option;
(g) form or cause to be formed any subsidiary;
(h) issue, sell, distribute or dispose of any shares, notes or other
securities of PICR or ATN or commit itself to do so;
(i) make any commitments for Capital Expenditures; or
(j) fail to keep its properties insured substantially to the same
extent as they are currently insured.
6.2 Reasonable Efforts. The PICR Shareholders and PICR/ATN shall use all
reasonable efforts to preserve intact its business organization and to
19
25
preserve its goodwill as to customers, suppliers and others having business
relations with it.
6.3 Inspection. PICR/ATN shall permit representatives of MCCAC, upon
reasonable prior notice, during normal business hours and under reasonable
circumstances, to examine PICR/ATN's properties, books, contracts, tax returns
and other records, and shall furnish such representatives with all such
information concerning such affairs as they may reasonably request.
6.4 Best Efforts. PICR/ATN and the PICR Shareholders shall use their
reasonable best efforts to obtain all approvals or consents necessary to permit
the consummation of the transactions contemplated by this Agreement.
6.5 Update Information. Not earlier than 10 days before the Closing Date,
PICR/ATN shall correct and supplement in writing any information furnished on
the PICR/ATN Disclosure Statement that, to the knowledge of PICR/ATN, is
incorrect or incomplete (or otherwise expressly contemplated by Article III of
this Agreement), and shall promptly furnish such corrected and supplemented
information to MCCAC, so that such information shall be correct and complete at
the time such updated information is so provided. Thereafter, to the Closing,
PICR/ATN shall notify MCCAC in writing of any changes or supplements to the
updated information needed, to the knowledge of PICR/ATN, to make such
information correct and complete at all times to the Closing. It is agreed
that the furnishing of such corrected and supplemental information, in and of
itself, shall not create any presumption that such information constitutes or
evidences the existence of a material change or any breach or violation by
PICR/ATN of any provision of this Agreement.
6.6 Trading Prohibitions. PICR/ATN and each PICR Shareholder hereby
acknowledges that as a result of disclosures by MCCAC contemplated under this
Agreement, PICR/ATN and its Affiliates may, from time to time, have material,
non-public information concerning Xxxxxxx. PICR/ATN and each PICR Shareholder
confirms that it and its Affiliates are aware and PICR/ATN has advised its
representatives that (a) the United States securities laws may prohibit a
person who has material, non-public information from purchasing or selling
securities of any company to which such information relates, and (b) material
non-public information shall not be communicated to any other person except as
permitted herein.
ARTICLE VII. JOINT COVENANTS
7.1 Support of Transactions. MCCAC, PICR/ATN, the PICR Shareholders and
their respective Affiliates shall each (a) use his or its reasonable
20
26
best efforts to assemble, prepare and file any information (and, as needed, to
supplement such information) as may be reasonably necessary to obtain as
promptly as practicable all governmental and regulatory consents required under
Article II, (b) exert his or its reasonable best efforts to obtain all material
consents and approvals of third parties that any of MCCAC, PICR/ATN, the PICR
Shareholders or their respective Affiliates are responsible to obtain in order
to consummate the transactions contemplated by this Agreement, (c) take such
other action as may reasonably be necessary or as another party may reasonably
request to satisfy the conditions of Article II or otherwise to comply with
this Agreement, and (d) provide the other parties, and such other party's
employees, officers, accountants, lawyers, financial advisors and other
representatives with access to its personnel, properties, business and records
under all reasonable circumstances.
ARTICLE VIII. INDEMNIFICATION
8.1 Survival; Right to Indemnification Not Affected by Knowledge. All
representations, warranties, covenants, and obligations of PICR/ATN, any of the
PICR Shareholders and MCCAC in this Agreement, the Transaction Documents, the
certificates delivered pursuant to Section 2.2, and any other certificate or
document delivered pursuant to this Agreement will survive the Closing. The
waiver of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification, payment of Damages,
or other remedy based on such representations, warranties, covenants, and
obligations.
8.2 Indemnification and Payment of Damages by PICR Shareholders. The PICR
Shareholders, jointly and severally, will indemnify and hold harmless MCCAC and
its representatives, officers, directors, employees, agents, stockholders,
controlling persons, subsidiaries and Affiliates (collectively, the "MCCAC
Indemnitees") for, and will pay to the MCCAC Indemnitees the amount of, any
Damages arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by PICR/ATN or the
PICR Shareholders in this Agreement (without giving effect to any supplement to
the PICR/ATN Disclosure Statement), the PICR/ATN Disclosure Statement, the
supplements to the PICR/ATN Disclosure Statement, any Transaction Document or
any other certificate or document delivered by PICR/ATN or the PICR
Shareholders pursuant to this Agreement (except that the indemnification with
respect to representations and warranties in Article IV of this Agreement shall
be several and not joint for each PICR Shareholder for Damages arising,
directly or indirectly, from or in connection with a breach of any of such PICR
Shareholder's representations or warranties in Article IV);
21
27
(b) any breach by PICR/ATN or any PICR Shareholder of any covenant or
obligation of PICR/ATN or any PICR Shareholder in this Agreement or any
Transaction Document;
(c) any claim by any person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such person with PICR/ATN or any PICR
Shareholder (or any person acting on their behalf) in connection with any of
the transactions contemplated by this Agreement;
(d) any liabilities or obligations not incurred in the ordinary
course of business by PICR/ATN prior to the Closing Date (whether known or
unknown) that are not reflected on the Interim Balance Sheet or disclosed in
the PICR/ATN Disclosure Statement; or
(e) any claims, liabilities or obligations relating to any of the
PICR/ATN Employees, including, without limitation, any liability under any
employee benefit plan or relating to severance or wrongful termination; or
The remedies provided in this Section 8.2 will not be exclusive of or
limit any other remedies that may be available to MCCAC or the other MCCAC
Indemnitees.
8.3 Indemnification and Payment of Damages by MCCAC. MCCAC will indemnify
and hold harmless each of the PICR Shareholders and each of their respective
representatives, officers, directors, employees, agents, stockholders,
controlling persons, subsidiaries and Affiliates (collectively, the "PICR/ATN
Indemnitees") for, and will pay to the PICR/ATN Indemnitees the amount of, any
Damages arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by MCCAC in this
Agreement, any Transaction Document or any other certificate or document
delivered by MCCAC;
(b) any breach by MCCAC of any covenant or obligation of MCCAC in this
Agreement or any Transaction Document;
(c) any claim by any person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such person with MCCAC (or any person acting
on its behalf) in connection with any of the transactions contemplated by this
Agreement; or
22
28
(d) any liabilities or obligations incurred by PICR/ATN prior to the
Closing Date in the ordinary course of business or disclosed on the PICR
disclosure statement and any liabilities or obligations incurred by PICR/ATN
after the Closing Date.
The remedies provided in this Section 8.3 will not be exclusive of or
limit any other remedies that may be available to the PICR Shareholders or the
other PICR/ATN Indemnitees.
8.4 Procedure for Indemnification.
(a) As soon as is reasonably practicable after any MCCAC Indemnitee or
PICR/ATN Indemnitee becomes aware of any claim, event or circumstance (a
"Claim") that has or might give rise to an indemnification obligation under
Section 8.2 or Section 8.3 of this Agreement, such MCCAC Indemnitee or PICR/ATN
Indemnitee, as the case may be (an "Indemnified Person"), shall give written
notice thereof (a "Claim Notice") to the party or parties from which
indemnification is sought (the "Indemnifying Persons"). The Claim Notice shall
describe the Claim in reasonable detail, and shall indicate the amount
(estimated if necessary and to the extent feasible) of the Damages that have
been or may be suffered by the Indemnified Person. The failure of any
Indemnified Person to promptly give the Indemnifying Persons a Claim Notice
shall not preclude such Indemnified Person from obtaining indemnification under
this Article VIII, except to the extent, and only to the extent, that such
Indemnified Person's failure has actually prejudiced the rights or increased
the liabilities and obligations of any of the Indemnifying Persons hereunder.
(b) With respect to any Claim Notice, the Indemnifying Persons shall
have the right by written notice to the Indemnified Person not later than 30
days after receipt of such Claim Notice, to assume the control of the defense,
compromise or settlement of such Claim, provided that (i) such assumption
shall, by its terms, be without cost to the Indemnified Person, (ii) each of
the Indemnifying Persons agree in writing that they are responsible to
indemnify (fully and completely) the Indemnified Person for such Claim, and
(iii) any settlement of such Claim shall involve only the payment of money
damages by the Indemnifying Persons.
(c) Upon the assumption of control by the Indemnifying Persons as
provided in Section 8.4(b), the Indemnifying Persons shall diligently proceed
with the defense, compromise or settlement of the Claim at the Indemnifying
Persons' sole expense, including employment of counsel reasonably satisfactory
to the Indemnified Person and, in connection therewith, the Indemnified Person
shall
23
29
cooperate fully, but at the expense of the Indemnifying Persons, to make
available to the Indemnifying Persons all pertinent information and witnesses
under the Indemnified Person's control, and to take such other steps as in the
opinion of counsel for the Indemnifying Persons are necessary to enable the
Indemnifying Persons to conduct such defense.
(d) The final, non-appealable determination of any Claim, including all
related costs and expenses, shall be binding and conclusive upon the
Indemnifying Persons and the Indemnified Person as to the amount of the
indemnification; provided, however, that in the Indemnifying Persons' defense
of such Claim, except with the written consent of the Indemnified Person, the
Indemnifying Persons shall not consent to entry of any judgment or enter into
any settlement, which does not include as an unconditional term thereof the
provision by the claimant to the Indemnified Person of a release of the
Indemnified Person from all liability in respect of such Claim.
(e) Should the Indemnifying Persons fail to give notice to the
Indemnified Person as provided in Section 8.4(b), the Indemnified Person shall
be entitled to defend, settle or compromise the Legal Claim as in its sole
discretion may appear advisable, and such final determination, settlement or
compromise of the Legal Claim shall be binding upon the Indemnifying Persons.
8.5 The Shareholder Representative. (a) Each PICR Shareholder hereby
irrevocably makes, constitutes and appoints Xxxxxx Xxxxxxxxx as his agent (the
"Shareholder Representative") and authorizes and empowers him to fulfill the
role of Shareholder Representative hereunder.
(b) In the event of the death, resignation or incapacity of Xxxxxx
Xxxxxxxxx, his successor shall be appointed by consent of the majority in
interest in the aggregate PICR Common Stock held by the PICR Shareholders as of
the Closing Date within 30 days of such event. The decisions and actions of
any successor Shareholder Representative shall be, for all purposes, those of a
Shareholder Representative as if originally named herein. The death or
incapacity of any Shareholder Representative shall not terminate the authority
and agency of the Shareholder Representatives. The Shareholder Representative
may resign at any time upon notice to MCCAC and each PICR Shareholder given at
least 30 days prior to the effective date of such resignation, provided that no
such resignation shall be effective until his successor has been appointed in
accordance with this Section 8.5(b), and has accepted such appointment.
(c) The Shareholder Representative shall take any actions as he may
deem appropriate with respect to any Claim Notice as provided in this Article
VIII. The PICR Shareholders agree that the Shareholder Representative
24
30
shall have full power and authority to receive all Claims Notices with respect
to Claims by any MCCAC Indemnitee, to control the defense, compromise or
settlement of any Claims by any MCCAC Indemnitee and otherwise to act on behalf
of the PICR Shareholders for all purposes of Section 8.4, and any action by the
Shareholder Representative within the scope of such authority shall be binding
on all of the PICR Shareholders. In performing any of his duties hereunder, the
Shareholder Representative shall not incur any liability to anyone for damages,
losses or expenses, except for willful misconduct.
8.6 Limitations on Indemnification Obligations of the PICR/ATN
Shareholders.
(a) The indemnification obligations of any PICR/ATN Shareholder
pursuant to this Article VIII will not exceed the aggregate amount of $200,000
for Xxxxxx Xxxxxxxxx or $1,800,000 for Xxxxx Xxxxxx, each of which
indemnification obligation may be satisfied by tendering to MCCAC Xxxxxxx stock
valued at the then fair market value as an offset against such indemnification
obligations. Notwithstanding anything to the contrary herein, each of the PICR
Shareholders may satisfy all indemnification obligations contained in this
agreement by tendering to MCCAC all shares of Xxxxxxx stock (or their
equivalent value), which they may have obtained in conjunction with this
Agreement, together with a waiver of all rights such parties may have to the
earn-out described in section 1.3 of this Agreement.
(b) The PICR Shareholders will have no indemnification obligations
pursuant to this Article VIII until the aggregate losses incurred by
Indemnified Persons exceed $20,000 (the "Indemnification Threshold");
thereafter, the PICR Shareholders will, subject to the other limitations set
forth in this Section 8.6, indemnify the Indemnified Persons for all Losses,
including those used in calculating the Indemnification Threshold.
8.7 Additional Indemnification Obligations of the PICR Shareholders.
Without regard to the limitations set forth in section 8.6, the PICR
Shareholders will indemnify and hold harmless MCCAC from and against all
Damages relating to any of the following matters:
(a) Any and all liability or obligation relating to the lien and
judgment filed against ATN in the amount of $184,416.14 plus expenses of $139 by
WorldCom (d/b/a Wiltel), or any Damages relating thereto.
(b) Any and all liability or obligation relating to or arising out of
the involvement of PICR/ATN or any of its current or former Affiliates relating
to
25
31
the Telecom America, Inc. bankruptcy proceedings or arising in connection with
such entity.
(c) Any and all liability or obligation relating to One-to-One
Communications, a former subsidiary of ATN.
ARTICLE IX. TERMINATION
9.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned:
(a) By mutual written consent of PICR/ATN, the PICR Shareholders and
MCCAC at any time prior to the Closing.
(b) By PICR/ATN or MCCAC, upon written notice to each of the other
parties hereto, if the Closing has not occurred on or prior to September 15,
1997.
(c) Prior to the Closing, by written notice to PICR/ATN from MCCAC, if
(i) there is a material breach of any representation, warranty, covenant or
agreement on the part of PICR/ATN or any PICR Shareholder set forth in this
Agreement, or if a representation or warranty of PICR/ATN or any PICR
Shareholder shall be untrue in any material respect, in either case such that
the condition specified in Sections 2.2(a), 2.2(b) or 2.2(c) would not be
satisfied at Closing (a "Terminating PICR/ATN Breach"), except that, if such
Terminating PICR/ATN Breach is curable by PICR/ATN through the exercise of its
reasonable best efforts, then, for up to 30 days, but only as long as PICR/ATN
continues to exercise such reasonable best efforts, MCCAC may not terminate this
Agreement under this Section 9.1(c)(i), (ii) any governmental or regulatory
consent or approval required for consummation of the transactions contemplated
hereby is denied by or in a final order or other final action issued or taken
by the appropriate governmental or regulatory authority, agency or similar body
or (iii) consummation of any of the transactions contemplated hereby is
enjoined, prohibited or otherwise restrained by the terms of a final,
non-appealable order or judgment of a court of competent jurisdiction.
(d) Prior to the Closing, by written notice to MCCAC from PICR/ATN or
from the holders of a majority of shares of PICR Common Stock, if (i) there is a
material breach of any representation, warranty, covenant or agreement on the
part of MCCAC set forth in this Agreement, or if a representation or warranty
of MCCAC shall be untrue in any material respect, in either case such that the
condition specified in Sections 2.3(a) or 2.3(b) would not be satisfied at
Closing (a "Terminating MCCAC Breach"), except that, if such
26
32
Terminating MCCAC Breach is curable by MCCAC through the exercise of its
reasonable best efforts then for up to 30 days, but only as long as MCCAC
continues to exercise such reasonable best efforts, PICR/ATN may not terminate
this Agreement under this Section 9.1(d)(i), (ii) any governmental or
regulatory consent or approval required for consummation of the transactions
contemplated hereby is denied by or in a final order or other final action
issued or taken by the appropriate governmental or regulatory authority, agency
or similar body, or (iii) consummation of any of the transactions contemplated
hereby is enjoined, prohibited or otherwise restrained by the terms of a final,
non-appealable order or judgment of a court of competent jurisdiction.
9.2 Effect. Any termination of this Agreement, however effected, shall
not release MCCAC, PICR/ATN or any of the PICR Shareholders from any liability
or other consequences arising from any breach or violation by any such party of
the terms of this Agreement prior to the effective time of such termination,
nor shall any such termination release any party from its obligations or duties
under this Agreement which, by their terms and/or expressed intent, may require
performance subsequent to any such termination, and all provisions of this
Agreement which set forth such obligations or duties and such other general or
procedural provisions which may be relevant to any attempt to enforce such
obligations or duties, shall survive any such termination of this Agreement
until such obligations or duties shall have been performed or discharged in
full.
ARTICLE X. DEFINITIONS
10.1 Defined Terms. As used in this Agreement, the following terms have
the following meanings:
"AFFILIATES" means, as to any person or entity, another person or
entity that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such person or
entity, provided, however, that MCCAC's Affiliates will not include any person
or entity that may be deemed to control Xxxxxxx.
"ATN COMMON STOCK" means the shares of ATN's Common Stock.
"ATN OPTIONS" means all warrants, options, subscriptions and other
convertible instruments or agreements pursuant to which ATN is obligated to
issue, transfer, deliver or sell shares of ATN Common Stock.
27
33
"CAPITAL EXPENDITURES" means investments in property, plant or
equipment involving the expenditure of more than $10,000 in any single case or
more than $50,000 in the aggregate.
"CLAIM" has the meaning set forth in section 8.4.
"CLOSING" has the meaning set forth in Section 1.2.
"CLOSING DATE" means the date on which the Closing occurs as provided
in Section 1.2.
"CODE" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder, as in effect from time to time.
"DAMAGES" means any loss, liability, claim, damage (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.
"ENCUMBRANCE" means any lien, claim, charge, security interest, option,
mortgage, pledge or other legal or equitable encumbrance, excluding any
encumbrance arising under or pursuant to federal or state securities laws.
"FAMILY" means, with respect to a particular individual, (i) the
individual, (ii) such individual's spouse, parents, children, siblings, mothers
and fathers-in-law, sons and daughters-in-law, and brothers and sisters-in-law
(i) the individual, and (iii) any other natural person who resides with such
individual.
"GAAP" means generally accepted accounting principles consistently
applied throughout the periods involved.
"MARKET VALUE" means the average closing price of the Xxxxxxx common
stock for the five trading days preceding the date of determination.
"NON-COMPETITION AGREEMENTS" have the meaning set forth in Section 2.2
(h).
"PERMITTED LIABILITIES" means the liabilities and obligations
described in clauses (i), (ii) and (iv) of Section 3.13.
"PERMITTED LIENS" has the meaning set forth in Section 3.19.
28
34
"PICR COMMON STOCK" means the shares of PICR's Common Stock.
"PICR OPTIONS" means all warrants, options, subscriptions and other
convertible instruments or agreements pursuant to which PICR is obligated to
issue, transfer, deliver or sell shares of PICR Common Stock.
"SUBSIDIARY" means any entity of which at least 50% of the equity
interests are owned, directly or indirectly, by PICR and/or ATN.
"PROPORTIONAL SHARE" means, with respect to any PICR Shareholder, (i)
the number of shares of PICR Common Stock held by that PICR Shareholder on the
Closing Date, divided by (ii) the total number of shares of PICR Common Stock
held by all of the PICR Shareholders on the Closing Date.
"PURCHASE PRICE" has the meaning set forth in Section 1.3.
"QUARTERLY AVERAGE MARKET VALUE" means the sum of the Market Value on
the last day of each calendar quarter, divided by four.
"RELATED PERSON" means, with respect to a particular individual, (i)
each other member of such individual's Family, (ii) any entity that is directly
or indirectly controlled by such individual or one or more members of such
individual's Family, (iii) any entity in which such individual or members of
such individual's Family directly or indirectly beneficially own (individually
or in the aggregate) at least 10% of the outstanding equity securities or
equity interests, and (iv) any entity with respect to which such individual or
one or more members of such individual's Family serves as a director, officer,
partner, executor, or trustee (or in a similar capacity).
"SHAREHOLDER REPRESENTATIVE" has the meaning set forth in section 8.5.
"TRANSACTION COSTS" means reasonable accounting, legal, printing and
financial advisory fees and expenses incurred by PICR/ATN and the PICR
Shareholders in connection with the Agreement and the transactions contemplated
hereby.
"TRANSACTION DOCUMENTS" means this Agreement and the Non-Competition
Agreement.
29
35
10.2 Other Definitional Provisions.
(a) All terms defined in this Agreement have the defined meanings when
used in any certificate, report or other documents made or delivered pursuant
hereto, unless the context otherwise requires.
(b) Terms defined in the singular have a comparable meaning when used
in the plural, and vice versa.
(c) As used herein, the neuter gender also denotes the masculine and
feminine, and the masculine gender also denotes the neuter and feminine, where
the context so permits.
(d) The words "hereof," "herein" and "hereunder" and words of similar
import refer to this Agreement as a whole and not to any particular provision
of this Agreement.
(e) The words "include," "including" and "or" mean without limitation
by reason of enumeration.
30
36
ARTICLE XI. MISCELLANEOUS
11.1 Waiver. Any party to this Agreement may, at any time prior to the
Closing, waive any of the terms or conditions of this Agreement or agree to an
amendment or modification to this Agreement by an agreement in writing executed
in the same manner (but not necessarily by the same persons) as this Agreement.
11.2 Notices. All notices and other communications among the parties
shall be in writing and shall be deemed to have been duly given when (i)
delivered in person, (ii) one day after delivery to a reputable overnight
courier service, (iii) five days after posting in the United States mail having
been sent registered or certified mail return receipt requested, or (iv)
delivered by telecopy, and promptly confirmed by delivery in person or post as
aforesaid in each case, with postage prepaid, addressed as follows:
(a) If to MCCAC, to:
MCC Acquisition Corporation
Attn: Xxxxxx X. Xxxxxxx
0000 00xx Xxxxxx, X.X.
Xxxxx Xxxxxx, XX 00000
Telephone No.: 000-000-0000
Telecopier No.: 000-000-0000
with a copy (which shall not
constitute notice) to:
Xxxxxx X. Xxx, Esq.
Reinhart, Boerner, Van Deuren,
Xxxxxx & Xxxxxxxxxx, s.c.
0000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
Telephone No.: 000-000-0000
Telecopier No.: 414-298-8097
(b) If to PICR/ATN or any PICR Shareholder, to:
Xx. Xxxxxx Xxxxxxxxx
0000 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone No.: 000-000-0000
31
37
Telecopier No.: 000-000-0000
with a copy (which shall not
constitute notice) to:
Xxxxxx X. Xxxxx, Esq.
Xxxxxx X. Xxxx, Esq.
Ford & Xxxxxxx
0000 Xxxxxxx Xxxxxx
00 Xxx Xxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Telephone No.: 000-000-0000
Telecopier No.: 512-477-5267
or to such other address or addresses as the parties may from time to time
designate in writing.
11.3 Assignment. Except as provided in Section 7.1, and except that MCCAC
may assign this Agreement, or any right or benefit hereunder, to Xxxxxxx, no
party hereto shall assign this Agreement or any part hereof without the prior
written consent of the other parties. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
11.4 Rights of Third Parties. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto, any subsidiary of MCCAC or
Xxxxxxx joining this Agreement under the circumstances described in Section 7.1
or any Indemnified Person described in Section 8.4, any right or remedies under
or by reason of this Agreement.
11.5 Reliance. Each of the parties to this Agreement shall be deemed to
have relied upon the accuracy of the written representations and warranties
made to it in or pursuant to this Agreement, notwithstanding any investigations
conducted by or on its behalf or notice, knowledge or belief to the contrary.
11.6 Expenses. MCCAC shall bear its own expenses incurred in connection
with this Agreement and the transactions herein contemplated whether or not
such transactions shall be consummated, including, without limitation, all fees
of its legal counsel and accountants. The PICR Shareholders shall bear the
legal, financial advisory and accounting fees and expenses of PICR/ATN, the
PICR/ATN Subsidiaries and the PICR/ATN Shareholders incurred in connection
with this Agreement and the transactions herein contemplated in excess of
$10,000.
32
38
11.7 Construction. This Agreement shall be construed and enforced in
accordance with the laws of the State of Iowa without regard to conflicts of
law principles. Unless otherwise stated, references to Sections, Articles or
Exhibits refer to the Sections, Articles and Exhibits to this Agreement. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.
11.8 Captions; Counterparts. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
11.9 Entire Agreement. This Agreement (together with the other
Transaction Documents, the Exhibits and other writings referred to herein or
delivered pursuant hereto), constitutes the entire agreement among the parties
and supersedes any other agreements, whether written or oral, that may have
been made or entered into by or among Xxxxxxx or its subsidiaries, PICR/ATN,
the PICR Shareholders or by any director or directors or officer or officers of
such parties relating to the transactions contemplated hereby, or incident
hereto. No representations, warranties, covenants, understandings or
agreements, oral or otherwise, relating to the transactions contemplated by
this Agreement, exist between the parties except as expressly set forth in this
Agreement.
11.10 Amendments. This Agreement may be amended or modified in whole or
in part, only by a duly authorized agreement in writing executed in the same
manner as this Agreement and which makes reference to this Agreement.
11.11 Publicity. All press releases or other public communications of any
nature whatsoever relating to the transactions contemplated by this Agreement,
and the method of the release for publication thereof, shall be subject to the
prior mutual approval of MCCAC and PICR/ATN, which approval shall not be
unreasonably withheld by any party; provided, however, that nothing herein
shall prevent any party from publishing such press releases or other public
communications as such party may consider necessary in order to satisfy such
party's legal or contractual obligations.
33
39
IN WITNESS WHEREOF the parties have hereunto caused this Agreement to be
duly executed as of the date first above written.
MCC ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Title: Chief Executive Officer
--------------------------------
PIC RESOURCES CORP.
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Title: Vice President
--------------------------------
ATN COMMUNICATIONS INC.
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Title: Vice President
--------------------------------
PICR SHAREHOLDERS
/s/ Xxxxxx Xxxxxxxxx, Attorney-in-Fact
-------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxxx Xxxxxxxxx
-------------------------------------
Xxxxxx Xxxxxxxxx
34
