Exhibit 2.13
STOCK PURCHASE AGREEMENT
EXHIBITS
Exhibit A.................................................List of Shareholders
Exhibit B.....................................Form of Noncompetition Agreement
Exhibit C...........................................Opinion of Buyer's Counsel
Exhibit D...........................Opinion of Shareholders' and WMW's Counsel
SCHEDULES
Schedule 4.6..........................................WMW Financial Statements
Schedule 4.7 ............................................Material Changes
Schedule 4.9 ..................................................Litigation
Schedule 4.11...........................................Employee Benefit Plans
Schedule 4.14.....................................Subsidiaries and Investments
Schedule 4.15...............................................Insurance Policies
Schedule 4.16..............................Employees and Employment Agreements
Schedule 4.17...............................................Material Contracts
Schedule 4.19........Description of Real and Personal Property Owned or Leased
Schedule 4.22............................................Environmental Matters
Schedule 4.23...........................................Affiliate Transactions
Schedule 4.25..............................................Permits and Reports
Schedule 4.26......................................................Liabilities
Schedule 5.0 .....................................Exceptions to Covenants
This Stock Purchase Agreement (the "Agreement") is made as of December 24,
1998, among MJD Services Corp., a Delaware corporation (the "Buyer"); WMW Cable
TV Co., a South Dakota corporation ("WMW"); and Xxxxxxx X. Xxxxxx, Xx. and
Xxxxxxx X. Xxxxxx, individuals and the holders of all of the outstanding stock
of WMW (jointly, the "Shareholders"); and Xxxxxxx X. Xxxxxx, Xx., Vice President
of WMW.
WHEREAS, the Shareholders own 100 percent of the issued and outstanding
shares of the common stock of WMW (the "WMW Stock"), with the number of shares
and percentages set forth on Exhibit A hereto; and
WHEREAS, Buyer desires to purchase the WMW Stock from the Shareholders,
and the Shareholders desire to sell the WMW Stock to Buyer upon terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
Article 1
AGREEMENT TO PURCHASE AND SELL
1.1 Purchase and Sale. At Closing (as defined below), Buyer shall purchase
the WMW Stock from the Shareholders, and the Shareholders shall sell the WMW
Stock to Buyer. The conveyance of the WMW Stock shall be made by the
Shareholders to Buyer free and clear of all options, liens, claims, restrictions
and encumbrances of any nature whatsoever (collectively, "Liens").
1.2 Closing. The consummation of the transactions contemplated herein (the
"Closing") shall take place at the offices of Union Telephone Company, 116 North
Main Avenue, Hartford, South Dakota, at 1 0:00 a.m. local time, on the first
business day as the closing shall occur under the Stock Purchase Agreement,
among Union Telephone Company, the Shareholders and MJD Services Corp., and
Stock Purchase Agreement among, Armour Independent Telephone Co. and MJD
Services Corp., or at such other time and place as Buyer and the Shareholders
may mutually agree (the "Closing Date").
1.3 Shareholders' Representative. Xxxxxxx X. Xxxxxx, Xx. shall be the
"Shareholders' Representative" or, in the event of his death or inability to so
act, Xxxxxxx X. Xxxxxx, Xx. shall be the Shareholders' Representative. The
Shareholders, by execution of this Agreement, authorize the Shareholders'
Representative to take such action on their behalf as the Shareholders'
Representative is herein authorized t o take or as such Shareholders'
Representative may deem necessary or advisable in order to carry out the
purposes and intents of this Agreement.
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Article 2
PURCHASE PRICE
2.1 Purchase Price. (a) Buyer shall purchase the WMW Stock from the
Shareholders for an aggregate purchase price of $700,000 (the "Base Purchase
Price"), plus the "Increase in Stockholders' Equity" as defined in accordance
with Section 2.1 (b) below, which amount shall be payable in accordance with
this Article 2.
(b) The Base Purchase Price shall be adjusted by adding to, or
subtracting from, it the "Change in Stockholders' Equity", determined as
follows:
(i) Buyer and the Shareholders acknowledge that as of December
31, 1 997, WMW's balance sheet reflected total stockholders' equity
of $46,798. The "Change in Stockholders' Equity" shall be determined
by: Subtracting the total Stockholders' Equity as of December 31, 1
997 ($46,978) from the Total Stockholders' Equity of WMW as of the
Closing Date (which, in the event of a decrease in Stockholders'
Equity, shall result in a negative number).
(ii) The sum of the Base Purchase Price and the Change in
Stockholders' Equity as determined above, shall be referred to
herein as the Adjusted Purchase Price. The Adjusted Purchase Price
shall be based on an estimated closing balance sheet of WMW prepared
in good faith by the WMW accountants/consultants, subject to Buyer's
review and approval thereof, which shall not be unreasonably
withheld.
2.2 Closing Date Payment and Receipt of Shares. On the Closing Date, (i)
the S-shareholders will assign and transfer to Buyer good and valid title in and
to the WMW Stock, free and clear of all Liens, by delivering to Buyer stock
certificates representing the WMW Stock, duly endorsed for transfer or
accompanied by duly executed stock powers endorsed in blank with requisite stock
transfer tax stamps, if any, attached; (ii) Buyer shall, by wire transfer of
same-day funds, pay to the Shareholders in accordance with the percentage
interests shown on Exhibit A attached hereto (the "Percentage Interests") the
amount of the Adjusted Purchase Price, as determined in accordance with Section
2.1 above; (the "Closing Payment"); and (iii) the parties shall deliver to each
other the documents required under this Agreement to be delivered at or prior to
the Closing.
2.3 Post-Closing Adjustments to the Purchase Price. The Closing Payment
payable by Buyer to the Shareholders on the Closing Date pursuant to Section 2.2
hereof may be adjusted as follows. Within ninety (90) days after the Closing
Date, Buyer and the Shareholders shall prepare a closing balance sheet for WMW
as of the close of business on the Closing Date (the "Closing Balance Sheet"),
which shall be mutually acceptable to the Shareholders and Buyer and their
respective independent public accountants. The Closing Balance Sheet shall be
prepared in accordance with GAAP and consistent with WMW's past practices. The
amount of the Adjusted Purchase Price shall be increased or decreased, as the
case may be, by the difference, if any, between the Adjusted Purchase Price
determined in good faith as of the Closing Date and the Adjusted Purchase Price
as such is determined based on the Closing Balance Sheet. If, as a result of the
foregoing adjustment, the Adjusted Purchase Price is increased, Buyer shall pay
the Shareholders the amount of such -increase by wire transfer of same-day funds
within ten (10) business days of the date on which the parties agree on the
Closing Balance Sheet. If, as a result of the post-closing adjustment the
Purchase Price is decreased, the Shareholders shall refund to Buyer the amount
of such decrease by wire transfer of same-day funds within ten (10) business
days of the date on which the parties agree on the Closing Balance Sheet.
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Article 3
REPRESENTATIONS AND WARRANTIES OF BUYER
For the purpose of inducing WMW and the Shareholders to enter into this
Agreement, Buyer hereby makes the following representations and warranties:
3.1 Organization of Buyer. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with full
corporate power and authority to carry on the business in which it is engaged,
to own, lease and operate its properties and to enter into and perform its
obligations under this Agreement.
3.2 Authorization of Agreement. The execution and delivery of this
Agreement has been duly authorized and approved by the board of directors of
Buyer. This Agreement is a valid and binding obligation of Buyer enforceable in
accordance with its terms, subject to limitations imposed by laws and judicial
decisions relating to or affecting the rights of creditors or secured creditors
generally or general principles of equity (regardless of whether enforcement is
considered in proceedings at law or in equity), upon enforceability of any of
the remedies, covenants, or other provisions of this Agreement and the
availability of injunctive relief or other equitable remedies. All persons who
have executed this Agreement on behalf of Buyer have been duly authorized to do
so by all necessary corporate action.
3.3 Regulatory Approvals. At Closing, Buyer shall have given all notices
to and have obtained from all state and federal regulatory authorities any
approvals, consents, permits and authorizations required in order to consummate
the transactions contemplated in accordance with this Agreement, all as more
particularly provided in Section 7.1 hereof.
3.4 Access to Books and Records. Buyer has carefully reviewed this
Agreement and in deciding to purchase the WMW Stock has reviewed, and is
continuing to review information set forth in the books and records of WMW.
Buyer acknowledges and agrees that, to the best of its knowledge, all documents,
records and books pertaining to this transaction have been made available for
inspection by Buyer and its representatives. Buyer has had, and continues to
have, a reasonable opportunity to ask questions of and receive answers from the
Shareholders and WMW concerning all aspects of the business of WMW, including,
without limitation, its assets and liabilities, and, to the best of its
knowledge, all such questions have been answered to the full satisfaction of
Buyer and its representatives. Buyer further represents that its management has
such knowledge and experience in financial and business matters that management
is capable of evaluating the merits and risks of purchasing the WMW Stock and to
make an informed investment decision with respect thereto.
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3.5 Investment Intent. Buyer is acquiring the WMW Stock for investment and
not with a view to distribution thereof, and Buyer will not make any
distribution or transfer thereof except in accordance with the Securities Act of
1933, as amended, and the rules and regulations thereunder and applicable
exemptions therefrom.
Article 4
REPRESENTATIONS AND WARRANTIES OF WMW
AND THE SHAREHOLDERS
For the purpose of inducing Buyer to enter into this Agreement, WMW,
the Shareholders and Xxxxxxx X. Xxxxxx, Xx. jointly and severally, hereby
make the following representations and warranties (for purposes of this
Article 4, all references to "Shareholders" shall be deemed to include in all
respects, Xxxxxxx X. Xxxxxx, Xx.):
4.1 Organization and Qualification of WMW. WMW is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of South Dakota with full corporate power and authority to carry on the business
in which 4-is. presently engaged and to own, lease and operate its properties
and to perform its obligations hereunder. The Shareholders are residents of the
State of South Dakota.
4.2 Organizational Documents. WMW has delivered to Buyer a true and
correct copy of the Articles of Incorporation of WMW, together with all
amendments thereto, as certified by the Secretary of State of South Dakota, and
a true and correct copy of the Bylaws of WMW, as currently in effect, as
certified by the Secretary of WMW.
4.3 Regulatory Approvals. At Closing, WMW shall have given all notices to
and have obtained from all local, state and federal regulatory authorities any
approvals, consents, permits and authorizations required in order to consummate
the transactions contemplated in accordance with this Agreement, all as more
particularly provided in Section 7.1 hereof.
4.4 Authorization of Agreement. The execution and delivery of this
Agreement has been duly authorized and approved by WMW's board of directors and
the Shareholders. This Agreement is a valid and binding obligation of WMW and
the Shareholders, enforceable in accordance with its terms, subject to
limitations imposed by laws and judicial decisions relating to or affecting the
rights of creditors or secured creditors generally or general principles of
equity (regardless of whether enforcement is considered in proceedings at law or
in equity), upon the enforceability of any of the -remedies, covenants or other
provisions of this Agreement and the availability of injunctive relief or other
equitable remedies. All persons who have executed this Agreement on behalf of
WMW and/or the Shareholders have been duly authorized to do so by all necessary
action of WMW and its Shareholders.
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4.5 Capital Stock of WMW.
(a) The authorized capital stock of WMW consists of 10,000 shares of $10
par value common stock. The Shareholders are the beneficial owners of 100
percent of WMW's common stock. All of the issued and outstanding shares of the
WMW Stock are duly and validly issued and outstanding, are fully paid and
nonassessable, were issued in compliance with all state and federal laws and are
held by the Shareholders. The delivery by the Shareholders to Buyer of a
certificate or certificates representing the WMW Stock, as provided in Section
10.5 of this Agreement, will pass good and marketable title to the WMW Stock to
Buyer free and clear of all Liens. There are no outstanding warrants, options,
rights, calls or other commitments of any nature ..relating to the WMW Stock,
and there are no outstanding securities or debt obligations of WMW convertible
into shares of capital stock of WMW. None of the issued and outstanding shares
of capital stock of WMW was issued in violation of preemptive rights.
4.6 Financial Statements of WMW. WMW has delivered to Buyer copies of the
unaudited financial statements of WMW for the years ended December 31, 1997 and
1 996 (the "WMW Financial Statements"), which are true and correct in all
material respects and set forth all known liabilities, whether contingent or
otherwise, accurately and fully as of the dates thereof. Copies of the WMW
Financial Statements are contained in Schedule 4.6. The WMW Financial Statements
were prepared in accordance with a cash basis of accounting applied on a
consistent,basis and fairly present the financial condition of WMW as of their
respective dates and the results of operations of WMW for the periods ended
December 31, 1997, and December 31, 1996, respectively. WMW will supply to Buyer
any and all interim financial statements of WMW as shall be available,
including, without limitation, those for the 12-month period ending December 31,
1998 (the "Interim Financial Statements"). The Interim Financial Statements
shall be prepared in accordance with a cash basis of accounting applied on a
consistent basis, subject to customary year-end adjustments, and shall present
fairly the financial condition of WMW for the period(s) covered thereby.
4.7 Absence of Material Changes. Since December 31, 1997, except as
disclosed on Schedule 4.7, WMW has operated its business in the ordinary
course and there has not been:
(a) Any change in the financial condition, assets, liabilities or
operations of WMW other than changes in the ordinary course of business,
none of which has individually or in the aggregate been materially adverse
to the financial condition, properties, assets, liabilities or operations
of WMW;
(b) Any damage, destruction or loss, whether or not covered by
insurance, resulting in a material adverse effect on the properties,
operations or financial condition of WMW;
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(c) Any issuance or sale or agreement to issue or sell any
stock, bonds, notes or other corporate securities or long-term debt
of WMW;
(d) Any granting of options, warrants or other rights calling for
the issuance of stock or other corporate securities of WMW;
(e) Any merger or consolidation involving WMW or any agreement to
merge or consolidate with any other corporation; or any acquisition of or
agreement to acquire any stock or substantially all of the assets of any
business of any person, firm, association, partnership, corporation or
other business entity or organization;
(f) Any dispute or any event or condition of any character that
materially and adversely affects, or could be reasonably expected to
materially and.adversely affect, the business or property of WMW;
(g) Any material transaction entered into by WMW other than in the
ordinary course of business or any transaction or series of related
transactions in the ordinary course of business (including a capital
expenditure) in excess of $25,000;
(h) Any material change in the accounting methods or practices of
WMW or any material change in depreciation or amortization or rates
theretofore adopted by WMW, except for those changes affecting the cable
television industry generally;
(i) Any payment of a dividend or payment in the form of a
distribution to the Shareholders or any member of their family; or
(j) Any agreement or commitment by WMW (or any understanding between
WMW and any third party) to do or to take any of the actions referred to
in paragraphs (a) through (j) of this Section 4.7.
4.8 Indebtedness. All of the indebtedness of WMW is accurately reflected
on the WMW Financial Statements, except for: (i) accounts payable incurred in
the ordinary course of business since December 31, 1997, and (ii) changes
reflecting payments made by WMW of its long-term indebtedness, all of which
shall be accurately reflected on the Interim Financial Statements. WMW is not in
default with respect to any material indebtedness or in the performance,
observance or fulfillment of any material covenant or condition relating
thereto, and no event has occurred and is continuing that would constitute such
a default or event of default with the giving of notice or lapse of time or
both.
4.9 Litigation and Claims. Except as disclosed on Schedule 4.9, there are
no judgments unsatisfied against WMW or against the WMW Stock or the
Shareholders or consent decrees or injunctions to which WMW or the WMW Stock or
the Shareholders are subject, and there is no litigation, claim or proceeding
pending, or to the know-ledge of the Shareholders or WMW threatened, against or
relating to WMW or against the WMW Stock or the Shareholders or the properties
or businesses of WMW, nor do WMW or the Shareholders know or have reasonable
grounds to know of any basis for any such action or of any governmental
investigation relating to WMW or the properties or operations of WMW.
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4.10 Compliance With Laws. WMW has complied in all material respects with
all laws, regulations and orders applicable to it or its businesses and has
obtained all ..governmental permits, licenses, franchises or the like required
in order to conduct its business, and the present uses of its properties and the
conduct of its businesses do not violate in any material respect any law,
regulation, ordinance or order. Neither WMW nor the Shareholders have received
any notice or warning from any governmental authority with respect to any
failure or alleged failure of WMW or its Shareholders to comply with any
applicable law, regulation or order and, to the best knowledge of WMW and the
Shareholders, no such notice or warning has been proposed or threatened.
4.11 Benefit Plans. All employee benefit plans to which WMW pays benefits
or premiums on behalf of its employees are listed on Schedule 4.11 (the
"Plans"). Except as disclosed on Schedule 4.11, WMW does not have in effect and
has not agreed to 'institute any bonus, deferred compensation, pension, profit
sharing, retirement, stock options, employee stock ownership, group insurance,
death benefit, welfare or other fringe benefit plan, trust agreement or
arrangement, nor is WMW paying or obligated to pay any bonus, deferred
compensation, pension, profit sharing, severance, retirement allowance or other
fringe benefit to any party whatsoever. All Plans comply in all material
respects with all applicable laws, regulations or orders, are fully funded and
no circumstances exist with respect to the Plans which could reasonably be
expected to have a material adverse effect on the properties or operations of
WMW.
4.12 No Breach of Agreement. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated by this
Agreement will not (i) violate or result in a breach of or default or
acceleration under the Articles of Incorporation or Bylaws of WMW or any
instrument or agreement to which WMW or the Shareholders are a party or are
bound which would have a material adverse effect on WMW's properties or
operations; (ii) violate any judgment, order, injunction, decree or award
against or binding upon WMW or upon the WMW Stock or other securities, property
or business of WMW which would have a material adverse effect on WMW's
properties or operations; (iii) result in the creation of any material lien;
charge or encumbrance upon the properties or assets of WMW or the WMW Stock; or
(v) violate any law or regulation of any jurisdiction relating to WMW or the WMW
Stock or other securities, property or business of WMW assuming all required
regulatory approvals have been obtained in connection with the transactions
contemplated hereby.
4.13 Books and Records. The books, stock record books, minute books and
other corporate records of WMW are true and correct in all material respects and
have been maintained in accordance with ordinary business practices and
applicable law. The minute books of WMW as made available to Buyer and its
representatives contain accurate and complete records of all meetings of and
corporate actions or written consents by the shareholders and the board of
directors of WMW, and all issuances, redemptions, transfers and cancellations of
capital stock. True and correct copies of the foregoing have been made available
to Buyer.
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4.14 Subsidiaries and Investments. Except as disclosed on Schedule 4.14,
WMW has no subsidiaries or any investments in any other corporation,
association, partnership or other business entity and does not own any shares of
capital stock or other securities of any other entity or any general or limited
partnership interest.
4.15 Insurance. Attached hereto as Schedule 4.15 is a complete list of all
insurance policies currently maintained by WMW, and with respect to each of such
policies, a general description of the risks covered and claims insured; copies
of all such policies have been furnished or will be made available to Buyer
prior to Closing. All such policies are in full force and effect, and
consummation of the transactions contemplated herein shall not prevent WMW from
continuing such policies on substantially similar terms in the future.
4.16 Employees.
(a) List of Employees. Schedule 4.16 sets forth a list of all of the
WMW employees, officers, directors, consultants and independent
contractors, together with a description of any contract regarding the
terms of service and the rate and basis for total compensation of such
persons.
(b) Accruals and Taxes. Schedule 4.16 sets forth the policies
followed by WMW with respect to vacation and sick-leave for employees of
WMW. WMW has paid or made provision for the payment of all salaries and
accrued wages, and any other form of accrued, but unpaid, compensation,
and has complied in all material respects with all applicable laws, rules
and regulations relating to the employment of labor, including those
relating to wages, hours, collective bargaining and the payment and
withholding of Taxes, and has withheld and paid to the appropriate
governmental authority, or is holding for payment not yet due to such
authority, all amounts required by law or agreement to be withheld from
the wages or salaries of its employees.
(c) Employment Agreement. Except as set forth on Schedule 4.16
hereto, WMW is not a party to any (i) outstanding employment agreements
nor contracts with officers or employees that are not terminable at will,
or that provide for payment of any bonus or commission, (ii) agreement,
policy or practice that requires it to pay termination or severance pay to
salaried, nonexempt or hourly employees, (iii) collective bargaining
agreement or other labor union contract applicable to persons employed by
WMW nor do Shareholders or WMW know of any activities or proceedings of
any labor union to organize any such employees. WMW has furnished to Buyer
complete and correct copies of all such agreements, if any ("Employment
and Labor Agreements"). WMW has not breached or otherwise failed to comply
with any provisions of any Employment and Labor Agreement.
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(d) Employment Claims. There are no charges with respect to or
relating to WMW pending before the Equal Employment Opportunity Commission
or any state, or local agency responsible for the prevention of unlawful
employment practices, and WMW has not received notice from any federal,
state or local agency responsible for the enforcement of labor or
employment laws of an intention to conduct an investigation of WMW and, to
the knowledge of Shareholders and WMW, no such investigation is in
progress or threatened.
4.17 Contracts.
(a) Generally. Except as listed in Schedule 4.1 7, WMW is not a
party to any written contract relating to:
(i) Bonus, pension, profit sharing, retirement, stock option,
employee stock purchase or other plans providing for deferred
compensation;
(ii) Collective bargaining agreements or any other contract
with any labor union;
(iii) Hospitalization insurance or other welfare benefit plans
or practices;
(iv) Loans to its employees, officers, directors or
Affiliates;
(v) The borrowing or loaning of money to or from any person or
the mortgaging, pledging or otherwise placing a lien on any asset of
WMW;
(vi) A guarantee of any obligation;
(vii) The lease (whether as lessee or lessor) or operation of
any leased property, real or personal requiring total annual
payments in excess of $25,000;
(viii) Intangible property (including proprietary rights),
requiring total annual payments in excess of $25,000;
(ix) Express warranties given by WMW with respect to its
services rendered or its products sold or leased;
(x) Registration or preemptive rights with respect to any
securities;
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(xi) Prohibitions (other than applicable laws or regulations)
preventing it from freely engaging in any business;
(xii) The purchase, acquisition, disposition or supply of
inventory and other property and assets, requiring total annual
payments in excess of $25,000;
(xiii) Employees, independent contractors, consultants, or
other agents;
(xiv) Sales, commissions, advertising or marketing; or
(xv) Any other written contract not of the type covered by any
-of the foregoing items of this Section 4.1 7 requiring total annual
payments by WMW in excess of $25,000.
(b) Compliance. WMW has performed all material obligations required
to be performed by it, and is not in receipt of any claim of default or
breach or notice of audit, under any contract required to be disclosed on
Schedule 4.17. Except as disclosed in Schedule 4.17, to the best of the
Shareholders and WMW's knowledge, no event has occurred which with the
passage of time or the giving of notice or both would result in a material
default, breach or event of non-compliance by Shareholders or WMW under
any contract required to be disclosed on Schedule 4.17. Except as
disclosed in Schedule 4.17, neither the Shareholders nor WMW has any
present expectation or intention of not fully performing all of its
obligations under any contract required to be disclosed on Schedule 4.17
and has no knowledge of any breach or anticipated breach by any other
party to any contract required to be disclosed on Schedule 4.17.
4.18 True and Complete Copies. The Shareholders have delivered or made
available to Buyer true and complete copies of all contracts and documents
listed in the Schedules to this Agreement.
4.19 Title and Related Matters.
(a) Owned Property. Set forth in Schedule 4.19 is a description of
all real property and a list of personal property owned and used by WMW in
the operation of its business and a list of real and personal property to
be excluded from the transactions contemplated by this Agreement. WMW has
good and merchantable title to all real and personal property used in the
operation of its business, free and clear of all liens, except Permitted
Liens. For purposes of this Agreement, "Permitted Liens" shall mean W
statutory liens for Taxes not yet due and payable, (ii) such imperfections
or irregularities of title, liens, easements, charges or encumbrances as
do not materially interfere with the present use of the properties or
assets subject thereto or affected thereby, do not otherwise impair
present business operations at such properties, or do not 'have a material
adverse effect on the value of such properties and assets and (iii) liens
specifically disclosed in the footnotes to the WMW Financial Statements.
All properties used in WMW's business operations as of December 31, 1997
are reflected in the WMW Financial Statements in accordance with and to
the extent required by GAAP. WMW has delivered, with respect to any real
property owned by WMW, true and complete copies of all deeds and other
title documents relating to such real property. Shareholders will
cooperate in furnishing materials and/or allowing such surveys and/or
inspections as may be necessary in connection with Buyer's financing.
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(b) Leases. Except as set forth on Schedule 4.19, WMW is not a
lessee under any lease for personal or real property.
(c) Liens. The real property owned by WMW and the buildings,
-structures and improvements included within such real property
(collectively, the "Improvements") comply in all material respects with
all applicable restrictions, building ordinances and zoning ordinances and
all regulations of the applicable health and fire departments. No
alteration, repair, improvement or other work which could reasonably be
expected to give rise to a lien has been performed with respect to such
Improvements within the past one hundred twenty (120) days. WMW's owned
real property and its use, occupancy and operation as currently used,
occupied and operated does not constitute a nonconforming use under any
regulation or order affecting such real property, and the continued
existence, use, occupancy and operation of such Improvements is not
currently dependent on any special permit, exception, approval or
variance. There is no pending or, to the Shareholder's or WMW's knowledge,
threatened or proposed action or proceeding by any authority to modify the
zoning classification of, to condemn or take by the power of eminent
domain (or to purchase in lieu thereof), to classify as a landmark, to
impose special assessments on or otherwise to take or restrict in any way
the right to use, develop or alter all or any part of WMW's owned real
property.
(d) Utilities. Except as set forth on Schedule 4.19, the real
property owned by WMW has access, sufficient for the conduct of its
business as presently conducted, to public roads and to all utilities,
including electricity, sanitary and storm sewer, potable water and other
utilities used in the operation of its business as presently conducted.
(e) Condition. Since December 31, 1997, WMW has not sold,
transferred, leased, distributed or disposed of any of its assets or
properties, except for (i) transactions in the ordinary and regular course
of business, (ii) transactions otherwise consented to in writing by Buyer,
or (iii) transactions disclosed on Schedule 4.19. WMW owns, leases, or has
all rights necessary to use, all properties and assets necessary for the
conduct of its business as presently conducted. The assets and properties
owned, leased or used by WMW in the conduct of its business are in good
condition (reasonable wear and tear excepted), are suitable for their
respective uses, and comply, in all material respects, with all applicable
regulations, and constitute all of the assets necessary for Buyer to
conduct the business of WMW as presently conducted.
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4.20 Tax Matters.
(a) Generally. WMW has timely filed all federal, state and local tax
reports, returns, information returns and any other documents required to
be filed by it, (collectively, "Tax Returns") and has duly paid all Taxes
shown to be due and payable on such Tax Returns and all estimated or
advance payments required by law. For purposes of this Agreement, "Tax" or
"Taxes" means any income, gross receipt, net proceeds, alternative or
add-on minimum, ad valorem, value added, estimated turnover, sales, use,
property, personal property (tangible and intangible), stamp, leasing,
lease, user, excise, duty, franchise, transfer, license, withholding,
payroll, employment, foreign, fuel, excess profits, occupational and
interest equalization, windfall profits, severance and other taxes,
charges, fees, levies or other assessments of any kind whatsoever
(including interest, penalties, fines and additions thereto) imposed by
any taxing authority, federal, state or local. All Taxes for periods
ending on or prior to the Closing Date have been fully paid or reserved
against on the WMW Financial Statements and on the Closing Balance Sheet
and on the books and records of WMW in accordance with GAAP. All Taxes
which are required to be withheld or collected by WMW have been duly
withheld or collected and, to the extent required, have been paid to the
proper federal, state or local authorities or properly segregated or
deposited as required by applicable regulations. There are no liens for
Taxes upon any property or assets of WMW, except for liens for Taxes not
yet due and payable. Except as set forth on Schedule 4.20, WMW has not
requested an extension of time within which to file any Tax Return and has
not waived the statute of limitations on the right of the IRS or any other
taxing authority to assess or collect additional Taxes or to contest the
information reported on any Tax Return. Any and all tax refunds owed to
WMW, including those set forth on the WMW Financial Statements, have been
properly received by WMW and/or credited toward the payment of future Tax
obligations.
(b) Good Faith. All Tax Returns described in Section 4.20(a) have
been prepared in good faith and to the best of the Shareholders' and WMW's
knowledge are correct and complete in all material respects, and to the
best of the Shareholders' and WMW's knowledge, there is no basis for
assessment of any addition to the Taxes shown thereon.
(c) Claims. There are no proceedings, examination or, to the best of
the Shareholders' and WMW's knowledge, claims currently pending by any
taxing authority in connection with any Tax Returns described in Section
4.20(a) nor with respect to the periods to which such Tax Returns relate,
and there are no unresolved issues or unpaid deficiencies or outstanding
or proposed assessments relating to any such proceedings, examinations,
claims or Tax Returns. None of the Tax Returns described in Section
4.20(a) currently is under audit or has been audited in the past five
years.
15
(d) True and Complete Copies. The Shareholders and WMW have
delivered to Buyer true and complete copies of all Tax Returns filed by
WMW with respect to its 1994, 1995, 1996 and 1997 fiscal years.
4.21 Intellectual Property. WMW does not own and has not applied for any
registered patents, copyrights, trademarks or service marks. If necessary, WMW
holds valid licenses to use all proprietary rights used in the operation of its
business as presently conducted.
4.22 Environmental Matters. WMW has obtained all environmental permits
required in connection with the operation of its business. WMW is and has been,
in compliance in all material respects with (i) the terms and conditions of all
such environmental permits and (ii) all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables of any applicable environmental law or regulation, order, code, plan,
decree, judgment, injunction or demand letter issued, entered, promulgated or
approved thereunder. WMW currently possesses and maintains such environmental
permits in its name, and no amendments or modifications to such environmental
permits or filings with any permitting authority are required to permit the
acquisition of the WMW Stock as contemplated hereby. In addition, except as set
forth in Schedule 4.22:
(a) Generally. No notice, notification, demand, request for
information, citation, summons or order has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or review is
pending or, to the Shareholders' and WMW's knowledge, threatened by any
authority or other entity with respect to WMW relating to any
environmental permit, license or authorization required in connection with
the conduct of business of WMW or with respect to the generation,
treatment, storage, recycling, transportation, disposal or release of any
substance regulated under environmental laws ("Hazardous Materials").
(b) Property. To best of Shareholders' and WMW's knowledge, in
connection with the real property owned or leased by WMW, except as set
forth in Schedule 4.22:
(i) WMW has not handled any Hazardous Material on any property
now or previously owned or leased by WMW.
(ii) No PCB or asbestos is or has been present at any property now
or previously owned or leased by WMW.
(iii) There are no underground storage tanks for Hazardous
Materials, active or abandoned, at any property now or previously
owned and leased by WMW.
(iv) There has been no release of Hazardous Materials at, or under
any property now or previously owned or leased by WMW.
16
(c) Transportation. WMW has not W transported or arranged for the
transportation of any Hazardous Material to any location which is listed
on the National Priorities List under the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended ("CERCLA"),
listed for possible inclusion on the National Priorities List by the
Environmental Protection Agency in the Comprehensive Environmental
Response and Liability Information System ("CERCLIS") or on any similar
state list or which is the subject of federal, state or local enforcement
actions or other investigations or (ii) stored, treated, transported or
disposed, or arranged for storage, treatment, transport or disposal of any
Hazardous Materials, other than in compliance with environmental law.
(d) Notification of Release. No oral or written notification of a
"Release" (as defined in Section 9601(22) of Title 42 of the United States
Code) of a Hazardous Material has been filed by or on behalf of WMW and no
property now or previously owned or leased by WMW is listed or proposed
for listing on the National Priorities List under CERCLA, on CERCLIS or on
any similar state list of sites requiring investigation or clean-up.
(e) Liens. There are no Liens arising under or pursuant to any
environmental- laws on any of the real property owned or leased by WMW,
and no government actions have been taken or are threatened which could
subject any of such properties to such Liens. WMW is not required to place
any notice or restriction relating to the presence of Hazardous Materials
at any property owned by it in any deed to such property.
(f) Site Assessments. Except as set forth in Schedule 4.22, there
have been no Phase I or Phase II environmental site assessments conducted
by or which are in the possession of the Shareholders or WMW in relation
to any property or facility now or previously owned or leased by WMW.
4.23 Dealings with Affiliates. Schedule 4.23 sets forth a complete and
accurate list of all written contracts between WMW and any one or more of its
Affiliates. For purposes of this Agreement, "Affiliate" shall mean, with regard
to any person or entity, any person or entity which, directly or indirectly,
controls, is controlled by, or is under common control with, such person or
entity and, with respect- to any individual, the spouse, ancestors and
descendants (lineal or by marriage) thereof. "Control" (including, with
correlative meaning, the terms "controlled by" and "under common control with"),
as used with respect to any person or entity, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person or entity, whether through the ownership of voting
securities, by contract or otherwise. Except as set forth in Schedule 4.23,
since December 31, 1997, WMW has not made any payments, loaned any funds or
property or made any credit arrangement with any Affiliate or employee except
for the payment of employee salaries in the ordinary course of business.
17
4.24 Commissions. There are and will be no claims for brokerage
commissions finder's fees, fees for fairness opinions or financial advisory
services or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Shareholders, WMW or any of their Affiliates.
4.25 Permits and Reports. Schedule 4.25 hereto sets forth a list of all
permits, licenses, registrations, certificates, orders, approvals or other
authorizations from any authority or other person ("Permits") issued to or held
by WMW in connection with its operations. Such Permits are the only Permits that
are required for WMW to conduct its business as presently conducted. Each such
Permit is in full force and effect, and neither the Shareholders nor WMW has
received notice that any suspension, cancellation or modification of the terms
of any such Permit is threatened. WMW is in full compliance in all material
respects with the terms of each such Permit, and the Shareholders and WMW are
not aware of any reason not set forth in said Permit why any such Permit would
not be renewed, upon substantially the same -terms as currently exist, upon
expiration of such Permit. Except as set forth on Schedule 4.25, to the best of
Shareholders' and WMW's knowledge, (i) all returns, reports, applications-,
statements and other documents required to be filed by WMW with any regulatory
or governmental authority or municipality (including taxing authorities) with
respect to the business on or before the date hereof have been duly filed or
properly extended as permitted by law and are true and complete in all material
respects, (ii) all reporting requirements of regulatory or governmental
authorities or municipalities (including taxing authorities) having jurisdiction
thereof have been complied with in all material respects; and (iii) no other
person or entity is currently operating or providing television service within
the boundaries served as of the date hereof by WMW, and to the best of the
Shareholders' and WMW's knowledge, no other person or entity is anticipating or
contemplating doing so.
4.26 Absence of Undisclosed Liabilities. WMW does not have any liability
of any nature whatsoever (whether known or unknown, due or to become due,
accrued, absolute, contingent or otherwise), including, without limitation, any
unfunded obligation under employee benefit plans or compensation arrangements or
liabilities for Taxes or liabilities for under-reporting, under-billing or
under-collection of revenues or underpayment of revenues to a third party,
except for (i) liabilities stated or reserved against in full in the WMW
Financial Statements, (ii) current liabilities incurred in the ordinary course
of business and consistent with past practice after the date of the WMW
Financial Statements which, individually and in the aggregate, do not have, and
cannot reasonably be expected to have, a material adverse effect,and which shall
be fully set forth in the Interim Financial Statements with respect to the
periods covered thereby, and (iii) liabilities disclosed on Schedule 4.26
hereto.
4.27 Disclosure. Neither this Agreement nor any of the attachments,
written statements, documents, certificates or other items prepared for or
supplied to Buyer pursuant hereto by or on behalf of the Shareholders or WMW
with respect to the transactions contemplated hereby contains any untrue
statement of a material fact or omits any material fact necessary to make each
statement contained herein or therein, in light of the circumstances under which
they were made, not misleading.
18
Article 5
COVENANTS AND AGREEMENTS OF WMW AND SHAREHOLDERS
WMW, the Shareholders and Xxxxxxx X. Xxxxxx, Xx., jointly and severally,
covenant and agree with Buyer as follows, that from the date of this Agreement
through the Closing Date, except as disclosed on Schedule 5.0 hereto:
5.1 Changes in Articles of Incorporation or Bylaws. There shall be no
change in the Articles of Incorporation or Bylaws of WMW or in the authorized or
issued capital stock of WMW, and WMW shall maintain its corporate existence and
powers and shall use its reasonable best efforts to maintain the goodwill and
employees of its business.
5.2 Issuance or Purchase of Securities. WMW shall not (i) issue any
additional capital stock or other security, (ii) directly or indirectly redeem,
exchange, purchase or otherwise acquire any shares of its capital stock; or
(iii) issue to any person or entity any options, warrants or other rights to
acquire any security of WMW.
5.3 Conduct of Business. Except with the prior written approval of
Buyer or as shown on Schedule 5.0 hereto:
(a) The business of WMW shall be conducted in the same manner as
presently being conducted and WMW shall refrain from entering into any
transaction or contract other than in the ordinary course of business and
shall not make any change in its methods of management, marketing,
accounting or operation, except to the extent required by federal or state
regulatory authorities (which changes shall be specifically described on
Schedule 5.0 hereto);
(b) No written employment agreement or commitment to employees
(including any commitment to pay retirement, severance or other benefits)
shall be entered into by WMW;
(c) No increase shall be made in the compensation or compensation
plans (including bonuses, commissions, severance pay and fringe benefits)
payable or to become payable to any officer, director or employee of WMW,
except for those routine salary increases granted to employees in the
ordinary course of business and consistent with the prior practices of
WMW, and provided with respect to this Section 5.3(c), the approval of
Buyer shall not be unreasonably withheld;
(d) WMW shall not (i) create or incur any indebtedness for borrowed
money or create or incur any other indebtedness except in the normal and
ordinary course of business; 00 enter into or terminate any lease of real
estate; (iii) create any subsidiary; (iv) release or create any liens or
other security interest except for purchase money security interests
granted in the normal and ordinary course of business; (v) declare or pay
a dividend, whether in cash or in-kind, except for such cash distributions
mutually agreed to by the parties hereto and made on or before the Closing
Date, or (vi) authorize or make any change in the capital structure of
WMW;
19
(e) WMW shall not make any capital expenditure or capital
expenditure commitment, or enter into any lease, as lessee, of capital
equipment, except in the normal and ordinary course of business; and
(f) WMW shall not sell any asset or make any commitment relating to
its assets other than in the normal and ordinary course of business, and
in an amount not exceeding $25,000.
5.4 Access to Properties. At all times prior to the Closing Date, WMW
shall allow Buyer's employees, attorneys, accountants, agents and other
authorized and designated representatives full access during reasonable business
hours and after reasonable notice to WMW's properties, books and records,
including, without limitation, deeds, title commitments, leases, insurance
policies, minute books, share certificate books, share registers, accounts,
financial records and all other data that are reasonably required for Buyer to
make such investigation as it may desire of the properties and financial
condition and businesses of WMW. In order to maintain confidentiality, Buyer may
have access to WMW's offices and properties only upon the prior approval of
Xxxxxxx X. Xxxxxx, Xx., Vice President of WMW.
5.5 Directors, Officers, Operations. WMW shall deliver to Buyer
prior to Closing a list showing:
(a) The names of the WMW directors and officers, registered agent
and registered office;
(b) The banks and financial institution in which WMW has an account
or safe deposit box and the names of all persons authorized to draw
thereon or to have access thereto; and
(c) The names of all persons holding powers of attorney from WMW
with copies thereof attached thereto.
5.6 Cable Television Service. Buyer agrees that after the Closing Date,
WMW shall provide cable television full package service without charge to each
of the Shareholders and Xxxxxxx X. Xxxxxx, Xx., for so long as such person
maintains a residence within WMW's existing service area and for so long as WMW
is a provider of cable television service.
20
Article 6
INDEMNIFICATION OBLIGATIONS
6.1 Matters Covered by Indemnification. The Shareholders and Xxxxxxx
X. Xxxxxx, Xx., jointly and severally, hereby covenant and agree that they
shall defend and indemnify Buyer and hold harmless Buyer at all times after
the Closing Date from and against and in respect to any and all losses,
liabilities, claims, costs (including, without limitation, court costs and
reasonable attorneys' fees), damages, expenses or deficiencies arising out of
or due to:
(a) Any breach of any representation, warranty or any agreement,
covenant or obligation on the part of WMW, the Shareholders or Xxxxxxx X.
Xxxxxx, Xx. made in this Agreement;
(b) All Taxes of the Shareholders, Xxxxxxx X. Xxxxxx, Xx. or of WMW
attributable to any period which ends prior to or on the Closing Date to
the extent such liability was not fully accrued for in the WMW Financial
Statements or Closing Balance Sheet;
(c) Any undisclosed liability of WMW;
(d) Any actions, suits, proceedings, costs, expenses and legal fees
incident to any of the foregoing items listed under this Section 6.1.
Liability shall arise pursuant to the foregoing indemnity obligations only if
the losses, liabilities, claims, costs, damages, expenses or deficiencies
arising therefrom exceed in the aggregate $25,000 (the "Minimum Amount"), and
only with respect to such amount in excess thereof. For purposes of determining
the Minimum Amount, such amount shall include the losses, liabilities, claims,
costs, damages, expenses or deficiencies arising under the agreements of
Shareholders and Xxxxxxx X. Xxxxxx, Xx. with Buyer to sell their shares of Union
Telephone Company and shares of Armour Independent Telephone Co., as well as
this transaction. If such claims exceed the Minimum Amount, the Shareholders and
Xxxxxxx X. Xxxxxx, Xx. shall indemnify Buyer for the excess amount of the claims
pursuant to this or section; provided, however, that the Shareholders' and
Xxxxxxx X. Xxxxxx'x total obligations to indemnify Buyer pursuant to this
Article 6 shall not exceed the lesser of: (i) $600,000, or (ii) $600,000 minus
any indemnification payments (including payment by set off) made by Shareholders
and Xxxxxxx X. Xxxxxx, Xx. to Buyer pursuant to Shareholders and Xxxxxxx X.
Xxxxxx'x agreements with Buyer to sell their shares of Union Telephone Company
and shares of Armour Independent Telephone Co. (the "Maximum Amount").
6.2 Procedure for Indemnification. Buyer shall assert any claim or claims
for indemnification under the provisions of Section 6.1 above by giving written
notice of such claim or claims to the Shareholders and Xxxxxxx X. Xxxxxx within
the later of (i) twelve (12) months after the Closing Date, or (ii) four (4)
months after the close of Buyer's first audit period following the Closing Date
(the "Indemnification Period"). Each such notice shall set forth in reasonable
detail the factual basis giving rise to the claim or claims and the amount of
the damages and expenses incurred by Buyer as a result of such claim or claims.
Such notice shall be given within a reasonable time after receipt of actual
notice of such claim by Buyer. The Shareholders and Xxxxxxx X. Xxxxxx, Xx. agree
that they shall promptly reimburse and pay Buyer for such damages and expenses
to which Buyer is entitled under this Article 6. If any claim for
indemnification hereunder is based upon an action or claim filed or made against
21
Buyer or WMW by a third party, then the Shareholders and Xxxxxxx X. Xxxxxx, Xx.
shall have the right to negotiate a settlement or compromise of any such action
or claim or to defend any such action or claim at the sole cost and expense of,
and with counsel selected by, the Shareholders and Xxxxxxx X. Xxxxxx, Xx.;
provided, however, that neither the Shareholders, Xxxxxxx X. Xxxxxx, Xx., nor
WMW shall, except with the prior written consent of Buyer, consent to the entry
of any judgment or enter into any settlement or compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to Buyer of a release from all liability with respect to the subject claim. With
respect to all such third party claims, Buyers shall have the right to take any
actions or steps it deems reasonable to avoid the occurrence of any prejudice to
the rights of Buyer. Buyer shall have the right to assume the defense of any
such action with counsel of Buyer's choosing, subject to Shareholders' and
Xxxxxxx X. Xxxxxx, Xx.'s consent, which shall not be unreasonably withheld, at
the Shareholders' and Xxxxxxx X. Xxxxxx, Xx.'s sole cost, in the event such
action (i) includes a demand for injunctive or equitable relief in respect of
Buyer or WMW, or (ii) is for an alleged amount of more than Fifty Thousand
Dollars ($50,000). With respect to all other claims by third parties which may
result in indemnification by the Shareholders and Xxxxxxx X. Xxxxxx, Xx.
hereunder, Buyer may participate with counsel of its choosing at its cost.
6.3 Set Off Under Noncompetition Agreements. From and after the date of
this Aqreement through the longer of (a) the Indemnification Period or (b) so
long as any claim made during the Indemnification Period is still outstanding
and unresolved as set forth in this Article 6, Buyer shall have the right to set
off against any payments due from Buyer to the Shareholders and Xxxxxxx X.
Xxxxxx, Xx. under their respective Noncompetition Agreements any amount for
which Buyer is entitled to indemnification by Shareholders and Xxxxxxx X.
Xxxxxx, Xx. under this Article 6. Any set off against such payments shall be
divided equally among payments to each of the Shareholders and Xxxxxxx X.
Xxxxxx, Xx.
Article 7
REGULATORY APPROVALS
7.1 Regulatory Approvals. Buyer shall manage, at its expense, the process
of obtaining and shall obtain, with the Shareholders' assistance, all
governmental consents and approvals required to carry out the transactions
contemplated by this Agreement, including, without limitation, any necessary
consents and approvals from the Federal Trade Commission under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act. Buyer shall use its best efforts to
prepare and file all necessary regulatory notices, applications, requests and
petitions within thirty (30) days after the date of this Agreement. WMW and the
Shareholders agree to cooperate with Buyer in obtaining such consents and
approvals.
22
Article 8
OTHER OBLIGATIONS
8.1 Tax Return Preparation and Audit. The parties acknowledge that WMW
will be required to prepare and file a tax return for a shortened year ending as
of the Closing Date. Subject to the Shareholders' obligation to indemnify Buyer
pursuant to Section 6.1 (b) hereof, Buyer shall be responsible for accurately
and timely preparing and filing such return and for the timely payment of all
taxes stated therein as due and provided, that Buyer shall, upon the written
request of the Shareholders' Representative, permit WMW's accountant to review
and participate in preparing such -tax returns. Buyer shall not make, or fail to
make, any elections in connection with the preparation or filing of such tax
returns that would have a material adverse effect on WMW's tax liability on such
return. The parties agree that the tax return shall be prepared on the same
basis as tax returns for prior years. The Shareholders agree to cooperate with
the Buyer in the preparation of such tax return.
8.2 No Shopping. WMW and the Shareholders agree that, subject to
compliance with any fiduciary duty, neither they nor any of their agents or
affiliates will, during the period beginning on the date hereof and ending on
the first to occur of (a) the Closing or (b) the termination of this Agreement,
either (i) sell or arrange for the sale of the WMW Stock; (ii) negotiate,
solicit, encourage or authorize any person to solicit from any third party any
proposals relating to the disposition of the business or assets of WMW or the
acquisition of the WMW Stock; or (iii) make any information concerning WMW or
the WMW Stock available to any person for the purpose of affecting or causing a
disposition of WMW assets or the WMW Stock.
Article 9
CONDITIONS PRECEDENT TO OBLIGATIONS
OF WMW AND THE SHAREHOLDERS
The obligations of WMW, and the Shareholders and Xxxxxxx X. Xxxxxx, Xx.
under this Agreement are subject to the fulfillment prior to or on the
Closing Date of the following conditions:
9.1 Representations and Warranties. Each of the representations and
warranties of Buyer contained in this Agreement shall be accurate in all
material respects as of the date hereof and as of the Closing Date, and Buyer
shall have performed all covenants and agreements required to be performed by it
and shall not be in default under any of the provisions of this Agreement at or
prior to the Closing Date.
9.2 Certificate. A certificate, dated the Closing Date, signed by an
officer of Buyer covering the provisions of Section 9.1 hereof shall have been
provided.
9.3 Certified Copy of Resolutions. Buyer shall have delivered a copy,
certified by the duly qualified and acting secretary or assistant secretary of
Buyer, of resolutions adopted by the board of directors of Buyer approving this
Agreement and the consummation of the transactions contemplated by this
Agreement.
23
9.4 Consents and Approvals. All consents, approvals, authorizations,
permits, certificates and orders with respect to the transactions contemplated
by this Agreement required from any person, entity, court or governmental agency
or instrumentality (federal, state or local), including without way of
limitation, all regulatory approvals contemplated by,Section 7.1 hereof, shall
have been obtained and shall be valid and in full force and effect, and no
conditions, requirements or qualifications shall have been imposed by such
consents, approvals, authorizations, permits, certificates or orders that, in
the reasonable opinion of WMW and the Shareholders, materially adversely impact
the financial condition of WMW.
9.5 Payment. Buyer shall pay the Purchase Price in accordance with Article
2.
9.6 No Litigation. No claim, suit, action, or other proceeding shall be
pending before any court or governmental body to restrain or prohibit the
consummation of the transactions hereunder.
9.7 Deliveries by Buyer. On or before the Closing Date, Buyer shall have
executed and delivered to WMW, Xxxxxxx X. Xxxxxx, Xx. and the Shareholders
Noncompetition Agreements for each Shareholder and Xxxxxxx X. Xxxxxx, Xx. in
substantially the form attached hereto as Exhibit B.
9.8 Related Transactions. WMW and the Shareholders shall have evidence
reasonably satisfactory to them that on or before the Closing Date the
transactions contemplated in the following agreements have been consummated or
are being consummated concurrently with closing under this Agreement: (i) Stock
Purchase Agreement, dated __________________, 1998, among Union Telephone
Company, the Shareholders and MJD Services Corp., as buyer; and (ii) Stock
Purchase Agreement, dated , 1998, among Armour Independent Telephone Co., the
Shareholders and MJD Services Corp., as buyer.
9.9 Opinion of Counsel. Buyer shall deliver at Closing an opinion of
counsel to Buyer in substantially the form attached hereto as Exhibit C.
Article 10
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to the
fulfillment prior to or on the Closing Date of the following conditions:
10.1 Representations and Warranties. Each of the representations and
warranties of WMW, the Shareholders and Xxxxxxx X. Xxxxxx, Xx. contained in this
Agreement shall be accurate in all material respects as of the date hereof and
as of the Closing Date (except to the extent that such representations and
warranties shall be incorrect as of the Closing Date because of events or
changes occurring after the date hereof in the ordinary course of business of
WMW as contemplated in this Agreement); WMW, the Shareholders and Xxxxxxx X.
Xxxxxx, Xx. shall advise Buyer in writing of any such resulting inaccuracies,
and WMW, the Shareholders and Xxxxxxx X. Xxxxxx, Xx. shall have performed all
covenants and agreements required to be performed by them and shall not be in
default under any of the provisions of this Agreement at or prior to the Closing
Date.
24
10.2 Certificate. Buyer shall have received a certificate, dated the
Closing Date, signed by WMW, the Shareholders and Xxxxxxx X. Xxxxxx, Xx.
covering the provisions of Section 1 0. 1 hereof.
10.3 Certified Copy of Resolutions. WMW shall have delivered to Buyer a
copy, certified by the duly qualified and acting secretary or assistant
secretary of WMW of resolutions adopted by the board of directors of WMW
approving this Agreement and the consummation of the transactions contemplated
by this Agreement.
10.4 Consents and Approvals. All consents, approvals, authorizations,
permits, certificates and orders with respect to the transactions contemplated
by this Agreement required from any person, entity, court or governmental agency
or instrumentality (federal, state or local), including without way of
limitation, all regulatory approvals contemplated by Section 7.1 hereof, shall
have been obtained and shall be valid and in full force and effect, and no
conditions, requirements or qualifications shall have been imposed by such
consents, approvals, authorizations, permits, certificates or orders that, in
the reasonable opinion of Buyer, materially adversely impact the financial
condition of WMW.
10.5 Surrender of Certificates Representing WMW Stock. The Shareholders
shall have surrendered to Buyer the certificates representing all of the issued
and outstanding shares of WMW Stock, and such certificates shall be duly
endorsed in blank or shall have duly executed blank stock powers attached
thereto.
10.6 Resignations. Buyer shall have received from each director and
officer of WMW a written resignation from all WMW offices and directorships
held, respectively, effective as of the Closing Date, and shall have received
from each of the Shareholders and Xxxxxxx X. Xxxxxx, Xx. their resignation as
an employee of WMW.
10.7 Deliveries by Shareholders. On or before the Closing Date,
Shareholders and Xxxxxxx X. Xxxxxx, Xx. shall have executed and delivered to
Buyer Noncompetition Agreements for each Shareholder and Xxxxxxx X. Xxxxxx, Xx.
in substantially the form attached hereto as Exhibit B.
10.8 No Material Adverse Change. Since December 31, 1997 and through the
Closing Date, there shall not have occurred any material adverse change in the
business, operations, assets, liabilities or condition (financial or otherwise)
of WMW.
25
10.9 Delivery of Corporate Records. At Closing the Shareholders shall
deliver to Buyer the WMW minute books and stock registers.
10.10 No Litigation. No claim, suit, action or other proceeding shall be
pending before any court or governmental body to restrain or prohibit the
consummation of the transactions contemplated hereunder.
10.11 Opinion of Counsel. The Shareholders shall deliver at Closing an
opinion of counsel to the Shareholders and WMW in substantially the form
attached hereto as Exhibit D.
10.12 Related Transactions. The Buyer shall have evidence reasonably
satisfactory to it that on or before the Closing Date the transactions
contemplated in the following agreements have been consummated or are being
consummated concurrently with Closing under this Agreement: (i) Stock Purchase
Agreement, dated ______________, 1998, among Union Telephone Company, the
Shareholders and MJD Services Corp., as buyer; and (ii) Stock Purchase
Agreement, dated ___________________. 1998, among Armour Independent Telephone
Co., the Shareholders and MJD Services Corp., as buyer.
Article 11
TERMINATION
11.1 Right of termination. This Agreement and the transactions
contemplated herein may be terminated at any time prior to Closing:
(a) By mutual written consent of Buyer and each of the Shareholders
and Xxxxxxx X. Xxxxxx, Xx.; or
(b) By the Shareholders if Buyer breaches its obligations under
Article 7 of this Agreement and the Shareholders shall have cooperated
fully with Buyer in preparation of all required applications for approval;
or
(c) By the Shareholders in the event that any of the conditions set
forth in Article 9 of this Agreement shall not have been satisfied or
waived and Closing shall not have occurred on or before August 6, 1999, or
such later date as shall be agreed upon pursuant to Section 1.2 of this
Agreement; or
(d) By Buyer in the event that any of the conditions set forth in
Article 10 of this Agreement shall not have been satisfied or waived and
Closing shall not have occurred on or before August 6, 1999, or such later
date as shall be agreed upon pursuant to Section 1.2 of this Agreement.
11.2 Notice of Termination. Notice of termination of this Agreement as
provided for in this Article 11 shall be given by the party or parties so
terminating to the other parties hereto in accordance with the provisions of
Section 12.4 of this Agreement.
26
Article 12
MISCELLANEOUS
12.1 Entire Agreement. This Agreement, together with the exhibits and
attachments hereto, constitutes the entire agreement among the parties and
supersedes all prior agreements, oral or written. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Buyer may assign its rights and obligations
hereunder to a direct or indirect wholly-owned subsidiary of Buyer or to an
Affiliate of Buyer; provided that Buyer shall remain liable for all its
obligations hereunder if Buyer's assignee fails to perform such obligations.
12.2 Severability. If any severable provision of this Agreement is held to
be invalid or unenforceable by any judgment of a court of competent
jurisdiction, the remainder of this Agreement shall not be affected by such
judgment, and the Agreement shall be carried out as nearly as possible according
to its original terms and intent.
12.3 Expenses. Whether or not the Closing occurs, each party shall pay its
own expenses incident to the preparation and performance of this Agreement and
the transactions contemplated hereby.
12.4 Notice. Any notice, demand or other communication required or
permitted by any provision of this Agreement shall be deemed to have been
sufficiently given or served for all purposes when delivered in person or sent
by facsimile transmission with telephone confirmation of receipt, overnight
courier or registered or certified mail, return receipt requested, all postage
and other charges prepaid, as follows:
If to WMW Shareholders
If to Buyer: or Xxxxxxx X. Xxxxxx, Xx.
MJD Services Corp. x/x Xxxxx Xxxxxxx, Xxx.
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000 Xxxxxxxxx Law Firm
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 X.X. Xxx 0000
Fax #: (000) 000-0000 000 Xx. Xxxx Xxxxxx
Xxxxxxxxx: Xxxxxx Xxxxxxx Xxxxx Xxxxx, Xxxxx Xxxxxx 00000
Fax #: (000) 000-0000
with a copy to: with a copy to:
Underwood, Kinsey, Xxxxxx & Xxxxxx, P.A. Xxxxxx X. Xxxxxxx Esq.
000 Xxxxx Xxxxxxx Xxxxxx Xxxxx, Xxxx Law Xxxxxx
0000 Xxxxxxxxx Xxxxx Xxxxxxxx 0000 Xxxxxxx Tower
Charlotte, North Carolina 28244 Xxxxx, Xxxxxxxx 00000
Fax #: (000) 000-0000 Fax #: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
or at such other address as may be designated by notice pursuant to this Section
1 2.4 from such party to the other party. Notice sent by overnight courier shall
be deemed delivered on the business day immediately following deposit with such
courier. Notice sent by facsimile transmission shall be deemed delivered on the
day of transmission if a business day or if not a business day the first
business day following the day of transmission. Notice sent by certified or
registered mail shall be deemed delivered on the fifth day after deposit with
the United States postal service.
27
12.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of South Dakota.
12.6 Captions. The captions appearing herein are for the convenience of
the parties only and shall not be construed to affect the meaning of the
provisions of this Agreement.
12.7 Amendment. This Agreement may be amended, modified, superseded or
cancelled, and any of the terms, provisions, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by the parties hereto or, in the case of a waiver, by the party waiving
compliance.
12.8 Waiver. The failure to enforce or to require the performance at any
time of any of the provisions of this Agreement shall in no way be construed to
be a waiver of such provisions and shall not affect either the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every provision in accordance with the terms of this Agreement.
12.9 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same Agreement. This
Agreement shall become effective when one or more counterparts shall have been
signed by each of the parties and delivered to the other parties.
12.10 Incorporation by Reference. The exhibits and schedules referred to
in this Agreement are hereby incorporated in this Agreement as a part hereof as
if set forth in full herein.
12.11 Damages; Specific Performance. No party hereto shall be liable to
the other for any indirect, consequential, special, punitive or any other
similar damages of any kind or nature arising in any manner from this Agreement
and the performance or nonperformance of obligations hereunder. In the event of
a breach of this Agreement, the parties acknowledge and agree that each of them
shall, in addition to any other remedies available at law or in equity, have the
right to seek specific performance by the other parties of their respective
obligations hereunder.
12.12 Confidential Information.
(a) The parties hereby acknowledge and agree that on and after the
date hereof, and provided that the party seeking to enforce the provisions
of this Section 12.12 is not then in default of its obligations hereunder,
each party shall hold in the strictest confidence, and shall not use or
disclose to any person, firm or corporation (other than on a need-to-know
basis), without the written authorization of the other party, any
Confidential Information in its possession pertaining to the other party,
except (i) as may be ordered by a court of competent jurisdiction of a
claim involving the subject matter of such Confidential Information, (ii)
as otherwise required by applicable law or regulation, or (iii) as
otherwise provided under Section 12.14 hereof. As used in this Agreement,
"Confidential Information" means the terms and conditions contained in
this Agreement, including the consideration payable hereunder, and a-II
information, documents and materials not generally available to the public
which have been provided by one party to the other in connection with the
transactions contemplated hereby or which otherwise relate to, this
Agreement. WMW and Buyer each acknowledge and agree that any breach of
this section would cause the other party irreparable harm. Accordingly,
the non-breaching party may seek and obtain injunctive relief against the
breach or threatened breach of this Section 12.12, in addition to any
other remedies to which such party may be entitled at law or in equity. If
the transactions contemplated by this Agreement shall not be consummated,
such confidence shall be maintained and such information shall not be used
in competition with WMW or the Buyer.
28
(b) Notwithstanding anything in this Agreement to the contrary, the
parties shall not be under any obligation to maintain in confidence any
portion of the information it has received in connection with the
transactions contemplated hereby which (i) is now, or which hereafter,
through no act or failure to act on the part of either party, becomes
generally known or available to the public, (ii) is known by the recipient
party at the time of the disclosure of such information, (iii) is
furnished to the other without restriction on disclosure, or (iv) is
hereafter furnished to a party by a third party, as a matter of right and
without restriction of disclosure.
(c) Notwithstanding the foregoing, any party hereto may disclose the
nature and terms of this Agreement to any third party without the prior
written consent of any other party or parties hereto (i) as required to
obtain the consents, waivers and authorizations referenced in Section 3.3,
4.3, 4.12, 7.1, 9.4 and 1 0.4 hereof, (ii) in connection with the Buyer's
financing of the transactions contemplated hereby, (iii) as required by
applicable law, and (iv) in connection with any securities law filing.
12.13 Further Actions. Following the Closing Date, at the request of
Buyer, the Shareholders and Xxxxxxx X. Xxxxxx, Xx. shall deliver such further
instruments of transfer and take all reasonable action as may be necessary or
appropriate to effectuate this Agreement and the transactions contemplated
hereby. Each party will promptly notify the other party of any information
delivered to or obtained by such party which would prevent the consummation of
the transactions contemplated by this Agreement, or would indicate a breach of
the representations, warranties or covenants of any of the parties to th is
Agreement.
12.14 Joint Publicity. No party to this Agreement shall issue any
press release or make a public announcement prior to or on the Closing Date
concerning this Agreement or the transactions contemplated hereby without the
prior approval of Buyer and each of the Shareholders and Xxxxxxx X. Xxxxxx,
Xx. which approval shall not be unreasonably withheld.
29
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
MJD SERVICES CORP.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Title: Vice President
WMW CABLE TV CO.,
a South Dakota corporation
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Title: President
/s/ Xxxxxxx X. Xxxxxx, Xx.
----------------------------
XXXXXXX X. XXXXXX, XX.
/s/ Xxxxxxx X. Xxxxxx
----------------------------
XXXXXXX X. XXXXXX
/s/ Xxxxxxx X. Xxxxxx, Xx.
----------------------------
XXXXXXX X. XXXXXX, XX.
30
EXHIBIT A
WMW CABLE TV CO.
===============================================================================
PERCENTAGE OF
NUMBER OF OUTSTANDING
SHAREHOLDER SHARES OWNED COMMON STOCK
-------------------------------------------------------------------------------
Xxxxxxx X. Xxxxxx, Xx. 250 50%
-------------------------------------------------------------------------------
Xxxxxxx X. Xxxxxx 250 50%
-------------------------------------------------------------------------------
TOTAL: 500 500
===============================================================================
