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ASSET CONTRIBUTION AGREEMENT
by and among
TSR PAGING INC.
TELEPHONE AND DATA SYSTEMS, INC.
and
TSR WIRELESS LLC
Dated: December 22, 1997
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . 2
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II
CONTRIBUTION OF ASSETS. . . . . . . . . . . . . 12
2.1 Contribution of TSR Paging Assets. . . . . . . . . . . . . . . . . 12
2.2 Assumption of TSR Paging Liabilities . . . . . . . . . . . . . . . 14
2.3 Contribution of API Assets . . . . . . . . . . . . . . . . . . . . 14
2.4 Assumption of API Liabilities. . . . . . . . . . . . . . . . . . . 16
2.5 API Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.6 Assets and Liabilities of AMS; Rejected Assets . . . . . . . . . . 17
ARTICLE III
ISSUANCE OF MEMBERSHIP INTERESTS . . . . . . . . . . 18
3.1 Issuance of Membership Interests . . . . . . . . . . . . . . . . . 18
3.2 Post-Closing Adjustment. . . . . . . . . . . . . . . . . . . . . . 18
3.3 Closing Costs; Transfer Fees . . . . . . . . . . . . . . . . . . . 20
3.4 Unit Allocation Following Exercise of Extension Option . . . . . . 20
ARTICLE IV
CLOSING . . . . . . . . . . . . . . . . 20
4.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Conveyances by TSR Paging at Closing . . . . . . . . . . . . . . . 20
4.3 Conveyances by TDS at Closing. . . . . . . . . . . . . . . . . . . 21
4.4 Form of Instruments. . . . . . . . . . . . . . . . . . . . . . . . 22
4.5 Certificates; Opinions . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TSR PAGING . . . . . . . 23
5.1 Organization of TSR Paging . . . . . . . . . . . . . . . . . . . . 23
5.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Absence of Certain Changes or Events . . . . . . . . . . . . . . . 23
5.5 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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5.6 TSR Paging Real Property . . . . . . . . . . . . . . . . . . . . . 24
5.7 Contracts and Commitments. . . . . . . . . . . . . . . . . . . . . 25
5.8 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . 27
5.9 Operation of the TSR Paging Business . . . . . . . . . . . . . . . 27
5.10 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.11 Absence of Certain Business Practices. . . . . . . . . . . . . . . 28
5.12 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . 28
5.13 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . 28
5.14 Financial Statements; Receivables. . . . . . . . . . . . . . . . . 30
5.15 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . 31
5.16 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.17 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . 31
5.18 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.19 No Other Agreements to Sell the TSR Paging Assets. . . . . . . . . 32
5.20 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . 32
5.21 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 32
5.22 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.23 Investment Intent. . . . . . . . . . . . . . . . . . . . . . . . . 34
5.24 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.25 Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . 35
5.26 Employee Benefit Plan Matters. . . . . . . . . . . . . . . . . . . 35
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF TDS. . . . . . . . . 36
6.1 Organization of TDS and API. . . . . . . . . . . . . . . . . . . . 36
6.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.4 Absence of Certain Changes or Events . . . . . . . . . . . . . . . 38
6.5 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.6 API Real Property. . . . . . . . . . . . . . . . . . . . . . . . . 39
6.7 Contracts and Commitments. . . . . . . . . . . . . . . . . . . . . 40
6.8 Customers, Distributors and Suppliers. . . . . . . . . . . . . . . 41
6.9 Operation of the API Business. . . . . . . . . . . . . . . . . . . 42
6.10 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.11 Absence of Certain Business Practices. . . . . . . . . . . . . . . 42
6.12 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . 43
6.13 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . 43
6.14 Financial Statements; Receivables; Public Filings. . . . . . . . . 45
6.15 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . 46
6.16 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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6.17 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . 46
6.18 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.19 No Other Agreements to Sell the API Assets . . . . . . . . . . . . 47
6.20 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . 47
6.21 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 47
6.22 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.23 Investment Intent. . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF TSR WIRELESS. . . . . . . 49
7.1 Organization of TSR Wireless . . . . . . . . . . . . . . . . . . . 49
7.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.3 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . 50
7.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . 50
7.5 Broker and Finders . . . . . . . . . . . . . . . . . . . . . . . . 50
7.6 Litigation and Proceedings . . . . . . . . . . . . . . . . . . . . 50
7.7 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VIII
COVENANTS OF THE TRANSFERORS AND TSR WIRELESS. . . . . . . 50
8.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 50
8.2 FCC Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.3 Notification of Certain Matters. . . . . . . . . . . . . . . . . . 51
ARTICLE IX
COVENANTS OF TSR PAGING . . . . . . . . . . . . 52
9.1 Access to Information. . . . . . . . . . . . . . . . . . . . . . . 52
9.2 Employee and Employee Benefit Matters. . . . . . . . . . . . . . . 52
9.3 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . 53
9.4 1997 Financial Statements. . . . . . . . . . . . . . . . . . . . . 54
ARTICLE X
COVENANTS OF TDS . . . . . . . . . . . . . . 55
10.1 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.2 Access to Information. . . . . . . . . . . . . . . . . . . . . . . 55
10.3 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . 57
10.4 1997 Financial Statements. . . . . . . . . . . . . . . . . . . . . 58
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10.5 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.6 Support of API . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.7 Transitional Services Agreement. . . . . . . . . . . . . . . . . . 58
10.8 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.9 Monthly Certificates . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF TSR PAGING . . . . . . . . 59
11.1 Representations, Warranties and Covenants. . . . . . . . . . . . . 59
11.2 No Injunction, etc.. . . . . . . . . . . . . . . . . . . . . . . . 59
11.3 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 59
11.4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.5 Corporate Documents. . . . . . . . . . . . . . . . . . . . . . . . 60
11.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.7 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.8 Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . 60
11.9 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.10 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . 60
11.11 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . 60
11.12 Tenant Estoppel Certificates . . . . . . . . . . . . . . . . . . . 60
11.13 Closing Current Assets . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE XII
CONDITIONS TO OBLIGATIONS OF TDS . . . . . . . . . . 61
12.1 Representations, Warranties and Covenants. . . . . . . . . . . . . 61
12.2 No Injunction, etc.. . . . . . . . . . . . . . . . . . . . . . . . 61
12.3 Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . . . . 61
12.4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
12.5 Corporate Documents. . . . . . . . . . . . . . . . . . . . . . . . 62
12.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.7 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.8 Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . 62
12.9 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.10 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . 62
12.11 Closing Current Assets . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE XIII
RISK OF LOSS; CONSENTS TO ASSIGNMENT OF CONTRACTS, REAL PROPERTY
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LEASES AND PERSONAL PROPERTY LEASES. . . . . . . . . . . . 63
13.1 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
13.2 Consents to Assignment of Contracts, Real Property Leases
and Personal Property Leases . . . . . . . . . . . . . . . . . . . 63
ARTICLE XIV
ACTIONS BY TSR WIRELESS AND TRANSFERORS AFTER THE CLOSING. . . . 64
14.1 Further Actions. . . . . . . . . . . . . . . . . . . . . . . . . . 64
14.2 Survival of Representations, Etc.. . . . . . . . . . . . . . . . . 64
14.3 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . 64
14.4 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.5 Bulk Sales, Transfer Taxes . . . . . . . . . . . . . . . . . . . . 68
14.6 Assistance for Filing of Tax Returns . . . . . . . . . . . . . . . 68
ARTICLE XV
MISCELLANEOUS. . . . . . . . . . . . . . . 69
15.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
15.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
15.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
15.4 Choice of Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
15.5 Entire Agreement; Amendments and Waivers . . . . . . . . . . . . . 74
15.6 Multiple Counterparts. . . . . . . . . . . . . . . . . . . . . . . 74
15.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
15.8 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
15.9 Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
15.10 Public Statements and Press Releases . . . . . . . . . . . . . . . 74
15.11 Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
15.12 Confidential Information . . . . . . . . . . . . . . . . . . . . . 75
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SCHEDULES
Schedule 1.1 Excluded API Assets
Schedule 10.3.3 API Facilities - To Be Surrendered
TSR PAGING DISCLOSURE LETTER SCHEDULES
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TSR Paging Disclosure Letter Schedule 5.1 Foreign Qualifications of TSR Paging
TSR Paging Disclosure Letter Schedule 5.6 TSR Paging Leased Real Property
TSR Paging Disclosure Letter Schedule 5.7 TSR Paging Contracts
TSR Paging Disclosure Letter Schedule 5.8 Customers and Suppliers of TSR Paging
TSR Paging Disclosure Letter Schedule 5.9 Operation of TSR Paging Business
TSR Paging Disclosure Letter Schedule 5.10 TSR Paging Inventory
TSR Paging Disclosure Letter Schedule 5.12 Consents of TSR Paging
TSR Paging Disclosure Letter Schedule 5.13.1 TSR Paging FCC Licenses, TSR Paging FCC License Applications
TSR Paging Disclosure Letter Schedule 5.13.3 Filings of TSR Paging
TSR Paging Disclosure Letter Schedule 5.13.5 Sharing Agreements
TSR Paging Disclosure Letter Schedule 5.13.7 Construction
TSR Paging Disclosure Letter Schedule 5.14.1 TSR Paging Financial Statements
TSR Paging Disclosure Letter Schedule 5.14.2 Receivables of TSR Paging
TSR Paging Disclosure Letter Schedule 5.16 Litigation of TSR Paging
TSR Paging Disclosure Letter Schedule 5.20 Proprietary Rights of TSR Paging
TSR Paging Disclosure Letter Schedule 5.22 Tax Matters
TDS DISCLOSURE LETTER SCHEDULES
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TDS Disclosure Letter Schedule 6.1 Foreign Qualifications of API
TDS Disclosure Letter Schedule 6.3 Subsidiaries of API
TDS Disclosure Letter Schedule 6.6 API Leased Real Property
TDS Disclosure Letter Schedule 6.7 API Contracts
TDS Disclosure Letter Schedule 6.8 Customers and Suppliers of API
TDS Disclosure Letter Schedule 6.9 Operation of API Business
TDS Disclosure Letter Schedule 6.10 API Inventory
TDS Disclosure Letter Schedule 6.12 Consents of API
TDS Disclosure Letter Schedule 6.13.1 API FCC Licenses, API FCC License Applications
TDS Disclosure Letter Schedule 6.13.3 Filings of API
TDS Disclosure Letter Schedule 6.13.5 Sharing Agreements
TDS Disclosure Letter Schedule 6.13.7 Construction
TDS Disclosure Letter Schedule 6.14.1 API Financial Statements
TDS Disclosure Letter Schedule 6.14.2 Receivables of API
TDS Disclosure Letter Schedule 6.14.3 SEC Reports
TDS Disclosure Letter Schedule 6.16 Litigation of API
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TDS Disclosure Letter Schedule 6.20 Proprietary Rights of API
TDS Disclosure Letter Schedule 6.22 Tax Matters
EXHIBITS
EXHIBIT A Exchange and Registration Rights Agreement
EXHIBIT B TSR Wireless LLC Agreement
EXHIBIT C Option Agreement
EXHIBIT D TDS Non-Compete and Non-Solicitation Agreement
EXHIBIT E-1 Form of legal opinion of counsel for TSR Paging
EXHIBIT E-2 Form of legal opinion of regulatory counsel for TSR Paging
EXHIBIT F-1 Form of legal opinion of counsel for TDS and API
EXHIBIT F-2 Form of legal opinion of regulatory counsel for TDS and API
EXHIBIT G Form of Transitional Services Agreement
EXHIBIT H Wire Instructions
EXHIBIT I 1998 API Capital Expenditure Budget
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ASSET CONTRIBUTION AGREEMENT
This ASSET CONTRIBUTION AGREEMENT, dated as of December 22, 1997, is by and
among TSR PAGING INC., a Delaware corporation ("TSR PAGING"), TELEPHONE AND DATA
SYSTEMS, INC., an Iowa corporation ("TDS" and, together with TSR Paging, the
"TRANSFERORS"), and TSR WIRELESS LLC, a Delaware limited liability company ("TSR
WIRELESS").
RECITALS
WHEREAS, the Transferors each conduct businesses which, among other things,
provide local and regional wireless messaging services in the United States;
WHEREAS, TDS currently owns approximately 82 percent of the issued and
outstanding capital stock of API;
WHEREAS, TDS proposes to negotiate and enter into an agreement of merger
(the "MERGER") with API pursuant to which a wholly owned subsidiary of TDS will
acquire all the outstanding stock of API not currently owned by TDS or its
Affiliates.
WHEREAS, following the Merger the Contributing Parties desire to combine
their respective businesses by contributing all of their respective assets, all
of the liabilities of TSR Paging and certain, limited, liabilities of API to TSR
Wireless in exchange for their Membership Interests (as defined in the TSR
Wireless LLC Agreement) of TSR Wireless.
WHEREAS, upon Closing, the Transferors and TSR Wireless shall effective as
of the Closing Date, enter into that certain limited liability company operating
agreement, (the "TSR WIRELESS LLC AGREEMENT"), a conformed copy of which is
attached hereto as Exhibit B.
WHEREAS, concurrently herewith, TDS and TSR Wireless have executed and
delivered that certain option agreement (the "OPTION AGREEMENT"), a conformed
copy of which is attached hereto as Exhibit C, pursuant to which TDS has granted
TSR Wireless an exclusive option to acquire the API Note (as defined below).
AGREEMENT
NOW THEREFORE, in consideration of the premises and mutual covenants and
promises contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"ACTION" shall mean any action, claim, suit, litigation,
administrative appeal, proceeding, labor dispute, arbitral action, governmental
audit, inquiry, criminal prosecution, investigation or unfair labor practice
charge or complaint.
"AFFILIATE" of a Person shall mean a Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the first Person. "Control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise, provided
however neither the Investors nor any of their respective directors, officers,
partners, members, stockholders or employees shall be an Affiliate of TSR Paging
for the purposes of this Agreement.
"AFTER-TAX BASIS" shall mean, with respect to any indemnification
payment, an amount which is sufficient to compensate the indemnified party for
any Damages after taking into account all increases in Taxes payable by the
indemnified party as a result of the receipt of such payment (by reason of such
payment being included in income, resulting in a reduction of tax basis, or
otherwise increasing such Taxes payable by the indemnified party or reducing the
amount of any refund of Taxes otherwise due to the indemnified party at any
time), net of the present value of any deductions or other tax benefits arising
from the event which gave rise to the indemnification obligation, to the extent
such deductions or other tax benefits are actually realized by the indemnified
party.
"AMS" shall mean American Messaging Services, LLC, a Minnesota limited
liability company.
"ANCILLARY AGREEMENTS" shall mean the Exchange and Registration Rights
Agreement, the TSR Wireless LLC Agreement and the TDS Non-Compete and Non-
Solicitation Agreement and the Transitional Services Agreement, each
substantially in the forms attached hereto as Exhibits A, B, D and G,
respectively.
"API" shall mean American Paging, Inc. a Delaware corporation.
"API BUSINESS" shall mean the business and operations of API and its
Subsidiaries relating generally to the provision of paging and wireless
messaging services, the
2
sale and support of pagers and other telecommunications-related products and
services and the provision of technical and repair services in connection
therewith.
"API EXCLUDED ASSETS" shall mean (i) all stock and other ownership
interests of API and its Subsidiaries (other than AMS) in Subsidiaries of API
(other than AMS), (ii) the API assets listed on Schedule 1.1, (iii) any
Liabilities of TDS (or its Subsidiaries, other than API and its Subsidiaries) to
API and its Subsidiaries; (iv) all insurance policies of API and its
Subsidiaries, (v) all refunds of any Tax that API, or any member of an
affiliated, consolidated, combined or unitary group of which API is also a
member, paid pursuant to Section 6.22, Section 14.4.2 or Section 14.5.2. and
(vi) any deferred Tax Liability as described in note 2 to the 1996 API Financial
Statements.
"API FINANCIAL STATEMENTS" shall mean (i) the audited consolidated
balance sheet of API and its Subsidiaries (other than AMS) as of December 31,
1996 (and, following delivery thereof to TSR Paging, as of December 31, 1997)
the related consolidated statements of income and cash flow of API and its
Subsidiaries (other than AMS) for the year ended December 31, 1996, (and,
following delivery thereof to TSR Paging, as of December 31, 1997), the audited
balance sheet of AMS as of December 31, 1996 and the related statement of income
and cash flow of AMS for the year ended December 31, 1996 (and, following
delivery thereof to TSR Paging, for the year ended December 31, 1997)
(collectively, the "API AUDITED FINANCIAL STATEMENTS"), and (ii) the unaudited
consolidated balance sheet of API and its Subsidiaries (other than AMS) dated
September 30, 1997, and the related unaudited consolidated statements of income
of API and its Subsidiaries (other than AMS) for the nine (9) months ended
September 30, 1997, the cash flow statement of API and its Subsidiaries (other
than AMS) for the nine (9) months ended September 30, 1997, the unaudited
balance sheet of AMS dated September 30, 1997, and the related unaudited
statement of income of AMS for the nine (9) months ended September 30, 1997 and
the cash flow statement of AMS for the nine (9) months ended September 30, 1997
(the "API UNAUDITED FINANCIAL STATEMENTS").
"API INTERCOMPANY LIABILITIES" shall mean all Liabilities of API (or
its Subsidiaries) to TDS or its other Subsidiaries including, without
limitation, Liabilities under the API Note.
"API NOTE" shall mean that certain revolving credit agreement between
TDS and API, effective as of January 1, 1994 and that certain loan note made by
API in favor of TDS pursuant thereto.
"AUTHORIZATION" of a Person shall mean any consent, approval, waiver
or authorization of, expiration or termination of any waiting period requirement
(including pursuant to the HSR Act) of, or filing, registration, qualification,
declaration or designation with or by, any Governmental Authority, including the
Final FCC Orders.
3
"BOOKS AND RECORDS" of any Contributing Party shall mean (a) all
records and lists of that Contributing Party and its Subsidiaries pertaining to
the TSR Paging Assets or the API Assets, as applicable, (b) all records and
lists of that Contributing Party and its Subsidiaries pertaining to the Business
of that Contributing Party, customers, suppliers or personnel of that
Contributing Party and its Subsidiaries, (c) all product, business and marketing
plans of that Contributing Party and its Subsidiaries and (d) all books,
ledgers, files, reports, plans, drawings and operating records of every kind
maintained by that Contributing Party and its Subsidiaries, but excluding the
originals of that Contributing Party's minute books, stock books and tax
returns, and books and records pertaining to API Excluded Assets.
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required to
close.
"CLOSING DATE" shall mean (i) March 31, 1998, or (ii) if all of the
conditions set forth in Articles XI and XII have not been satisfied or waived by
March 31, 1998, the fifth Business Day following the satisfaction or waiver of
such conditions which Business Day is also the last day of any monthly
accounting period of TSR Paging, or (iii) such other date as the Transferors
shall mutually agree upon.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations thereunder.
"COMMUNICATIONS ACT" shall mean the Communications Act of 1934, as
amended.
"CONSENT" shall mean any consent, approval or waiver of a Person, not
including the Authorization of any Governmental Authority.
"CONTRACTS" of any Contributing Party shall mean all contracts,
leases, licenses (other than Permits), commitments, understandings and
agreements to which that Contributing Party or any of its Subsidiaries is a
party or is bound, whether oral or written, including, without limitation, all
reseller agreements, the Real Property Leases and the Personal Property Leases
of that Contributing Party or its Subsidiaries.
"CONTRIBUTING PARTIES" shall mean, on the one hand, TSR Paging, and on
the other hand, API and its Subsidiaries and each shall be a "CONTRIBUTING
PARTY."
"DEFAULT" shall mean (i) a breach of or default under any Contract,
FCC License, Real Property Lease or Personal Property Lease or other agreement
to which a Person is party or subject, (ii) the occurrence of an event that with
the passage of time or the giving of notice or both would constitute a breach of
or default under any of the foregoing, or (iii) the occurrence of an event that
with or without the passage of time or the giving of notice or both would give
rise to a right of termination, renegotiation or acceleration under any of the
foregoing.
4
"DGCL" shall mean the Delaware General Corporations Law, as amended.
"DISCLOSURE LETTER" of a Transferor shall mean the letters delivered
by such Transferor dated as of the date hereof which set forth certain
exceptions to the representations and warranties contained in Articles V and VI
and certain other information called for by this Agreement. Unless otherwise
specified, each reference in this Agreement to any numbered Disclosure Letter
Schedule of a Transferor is a reference to that numbered schedule which is
included in the Disclosure Letter of such Transferor.
"EMPLOYEE PLAN" of a Contributing Party shall mean any written plan,
program, agreement, policy or arrangement (a "plan") maintained or contributed
to by that Contributing Party or any of its Subsidiaries that is: (i) a welfare
benefit plan within the meaning of Section 3(1) of ERISA; (ii) a pension benefit
plan within the meaning of Section 3(2) of ERISA; (iii) a stock bonus, stock
purchase, stock option, restricted stock, stock appreciation right or similar
equity-based plan; or (iv) any other deferred-compensation, retirement,
severance, welfare-benefit, COBRA, bonus, incentive or fringe-benefit plan.
"ENCUMBRANCE" shall mean any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
"ENVIRONMENTAL LAWS" shall mean all Regulations which regulate or
relate to the protection or clean-up of the environment, the use, treatment,
storage, transportation, generation, manufacture, processing, distribution,
handling or disposal of, or emission, discharge or other release or threatened
release of, Hazardous Substances or otherwise dangerous substances, wastes,
pollution or materials (whether, gas, liquid or solid), the preservation or
protection of waterways, groundwater, drinking water, air, wildlife, plants or
other natural resources, or the health and safety of Persons or property,
including without limitation protection of the health and safety of employees.
Environmental Laws shall include, without limitation, the Federal Insecticide,
Fungicide, Rodenticide Act, Resource Conservation & Recovery Act, Clean Water
Act, Safe Drinking Water Act, Atomic Energy Act, Occupational Safety and Health
Act, Toxic Substances Control Act, Clean Air Act, Comprehensive Environmental
Response, Compensation and Liability Act, Emergency Planning and Community
Right-to-Know Act, Hazardous Materials Transportation Act and all analogous or
related federal, state or local law, each as amended.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" of any Contributing Party shall mean any entity
which is (or at any relevant time was) a member of a "controlled group of
corporations" with, under
5
"common control" with, or a member of an "affiliated service group" with, that
Contributing Party as defined in Section 414(b), (c), (m) or (o) of the Code.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FACILITY" of any Contributing Party shall mean all real property or
facility owned, leased or used anytime by that Contributing Party and/or its
Subsidiaries (or a predecessor or Affiliate of such Contributing Party and/or
its Subsidiaries).
"FCC" shall mean the Federal Communications Commission or any
successor body thereto.
"FCC LICENSE" shall mean any license, construction permit, consent,
certificate of compliance, approval or Authorization issued by the FCC
authorizing operations in, INTER ALIA, Public Mobile Services pursuant to Part
22 of the FCC Rules, Personal Communications Services pursuant to Part 24 of
the FCC Rules, Domestic Fixed Satellite Service pursuant to Part 25 of the FCC
Rules, Private Land Mobile Radio Services pursuant to Part 90 of the FCC Rules
(including one-way paging operations on exclusive and non-exclusive channels in
the 929-930 MHz frequency band), and Fixed Microwave Radio Services pursuant to
Part 101 of the FCC Rules, or other license, permit, consent, certificate of
compliance, franchise approval or Authorization of the FCC or construction
permit in respect of any of the foregoing.
"FCC LICENSE APPLICATION" shall mean an application for an FCC
License.
"FCC RULES" shall mean the Rules and Regulations of the FCC
promulgated under the Communications Act, as amended.
"FINAL FCC ORDERS" shall mean a final, nonappealable order no longer
subject to administrative or judicial reconsideration, review or appeal.
"FINANCING OBLIGATIONS" shall mean (i) indebtedness for borrowed
money, (ii) obligations evidenced by bonds, notes, debentures or similar
instruments (other than surety or similar bonds), (iii) obligations under
capitalized leases, (iv) obligations under conditional sale, title retention or
similar agreements or arrangements creating an obligation with respect to the
deferred purchase price of property (other than customary trade credit), and
(v) obligations to guarantee any of the foregoing types of obligations on behalf
of others.
"FIXTURES AND EQUIPMENT" of any Contributing Party shall mean all of
the furniture, fixtures, furnishings, machinery, automobiles, trucks, spare
parts, supplies, equipment and other tangible personal property owned or used by
that Contributing Party and its Subsidiaries.
"GAAP" shall mean generally accepted accounting principles in the
United States, consistently applied in accordance with past practice, as in
effect on the date hereof.
6
"GOVERNMENTAL AUTHORITY" shall mean any governmental or political
subdivision or department thereof, any governmental or regulatory body,
commission, board, bureau, agency or instrumentality, or any court or arbitrator
or alternative dispute resolution body, in each case whether domestic or
foreign, federal, state or local.
"HAZARDOUS SUBSTANCE" shall mean any pollutant, contaminant, chemical,
waste and any toxic, infectious, carcinogenic, reactive, corrosive, ignitible or
flammable chemical or chemical compound or hazardous substance, material or
waste, whether solid, liquid or gas, including, without limitation, any quantity
of asbestos in any form, urea formaldehyde, PCB's, radon gas, crude oil or any
fraction thereof, all forms of natural gas, petroleum products or by-products or
derivatives, radioactive substance or material, pesticide waste waters, sludges,
slag and any other substance, material or waste that is subject to regulation,
control or remediation under any Environmental Laws.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"INTERIM BALANCE SHEET" of a Contributing Party shall mean the
unaudited consolidated balance sheet of that Contributing Party as of the
Interim Balance Sheet Date, as included in the API Unaudited Financial
Statements or the TSR Paging Unaudited Financial Statements, as applicable.
"INTERIM BALANCE SHEET DATE" shall mean September 30, 1997.
"INVENTORY" of a Contributing Party shall mean all of that
Contributing Party's and its Subsidiaries' inventory held for resale, lease or
repair including all pagers, phones, phone accessories, two-way radios and their
related accessories, crystals, phone cards, spare parts, wrapping, supply and
packaging items and similar items, in each case wherever the same may be located
or in transit.
"INVESTORS" shall mean TA Associates Group, Spectrum Equity Investors
L.P. and St. Xxxx Venture Capital, Inc.
"LEASEHOLD IMPROVEMENTS" shall mean all leasehold improvements
situated in or on the real property covered by the Real Property Leases.
"LIABILITIES" shall mean any direct or indirect liability,
indebtedness, obligation, responsibility, commitment, expense, claim, loss,
damage, deficiency, guaranty or endorsement of or by any Person, whether fixed
or unfixed, xxxxxx or inchoate, liquidated or unliquidated, known or unknown,
secured or unsecured, accrued or unaccrued, joint, several, joint and several,
due or to become due, vested or unvested, executory, determined, determinable,
absolute, contingent, matured, unmatured or other and whether or not required by
GAAP to be set forth in a financial statement of a Person including, without
limitation, all Financing Obligations of such Person.
7
"MATERIAL ADVERSE CHANGE", in respect of any Contributing Party, shall
mean any significant and substantial adverse change in the financial condition,
business or operations of the Business of that Contributing Party and its
Subsidiaries to be acquired hereunder or on the ability of such Contributing
Party to consummate the transactions contemplated hereby or by the Ancillary
Agreements or the Merger.
"MATERIAL ADVERSE EFFECT", in respect of any Contributing Party, shall
mean any significant and substantial adverse effect on the financial condition,
business or operations of the Business of that Contributing Party and its
Subsidiaries to be acquired hereunder or on the ability of such Contributing
Party to consummate the transactions contemplated hereby or by the Ancillary
Agreements, the Merger Agreement or the Option Agreement.
"NET MONTHLY PAGER REVENUES" of any Contributing Party shall mean all
revenues from pagers of such Contributing Party and its Subsidiaries whose
assets are being contributed (other than AMS in the case of API) recognizable in
the relevant month in accordance with GAAP limited to recurring airtime charges,
recurring pager rental charges, recurring ancillary service charges, and
recurring debit/credit adjustments but excluding all equipment sales, one time
or non-recurring charges, accessory charges, late fees and connection fees less
the aggregate sums paid or payable to third party airtime vendors for such month
by such Contributing Party for such month.
"NET WORKING CAPITAL" shall mean the sum of all current assets of a
Contributing Party and its Subsidiaries (other than AMS in the case of API)
including cash, Inventory and accounts receivable less current liabilities of
such Contributing Party and its Subsidiaries.
"ORDER" shall mean any judgment, decision, consent decree, injunction,
ruling or order of any Governmental Authority that is binding on any Person or
its property under applicable law.
"PAGERS IN SERVICE" of a Contributing Party shall mean Closing Date
activated pagers in service of that Contributing Party and its Subsidiaries
(whether direct or indirect through resellers, dealers or other agents) billable
for the subsequent month (and collectible for the purposes of calculating the
adjustment set forth in Section 3.2), excluding any pagers that are not on
billing or are billed at $0.00 (including, without limitation, pagers with
employees and demo or spare pagers with customers) or in respect of which the
customer's account is more than 90 days delinquent and for which no payment has
been received for 60 days.
"PERMITS" shall mean in respect of any Contributing Party, all
licenses, permits, approvals, authorizations or consents, certificates of
compliance, franchise approvals or other similar authorizations of any
Governmental Authority necessary for the conduct of the Business of that
Contributing Party and its Subsidiaries, other than FCC Licenses.
8
"PERMITTED ENCUMBRANCES" shall mean (i) minor liens which in aggregate
are not substantial in amount, do not materially detract from the value or
transferability of the property or assets subject thereto, (ii) liens arising
pursuant to Personal Property Leases of a Contributing Party, and (iii) in the
case of the TSR Paging Assets, liens granted pursuant to the TSR Paging Credit
Agreement and in respect of any TSR Paging Assumed Liabilities.
"PERSON" shall mean any individual, partnership, corporation, trust,
association, unincorporated organization, government or any department or agency
thereof or any other entity.
"PERSONAL PROPERTY LEASES" of any Contributing Party shall mean all of
the existing leases with respect to the personal property of that Contributing
Party and its Subsidiaries.
"PROPRIETARY RIGHTS" of any Party shall mean that Contributing Party's
and its Subsidiaries' (i) domestic and foreign registrations of trademarks and
other marks, trade names and trade rights, (ii) pending applications for such
registrations, (iii) patents and applications therefor, (iv) trademarks and
other marks, trade names and other trade rights whether or not registered, (v)
copyrights and registrations thereof, (vi) trade secrets, designs, plans,
specifications, technical information and other proprietary rights and (vii)
rights under any licenses to such Contributing Party or its Subsidiaries to use
any copyrights, marks, trade names, trade rights, patents or other proprietary
rights.
"PUC" shall mean any state public utilities commission, public service
commission or other similar agency.
"REAL PROPERTY LEASES" of any Contributing Party shall mean all real
property leases entered into by such Contributing Party or any of its
Subsidiaries.
"REGULATIONS" shall mean any laws, statutes, ordinances, regulations,
rules, notice requirements, court decisions, agency guidelines, principles of
law and orders of any foreign, federal, state or local government and any other
governmental department or agency, including without limitation Environmental
Laws, energy, motor vehicle safety, public utility, zoning, building and health
codes, occupational safety and health and laws respecting employment practices,
employee documentation, terms and conditions of employment and wages and hours.
"REPRESENTATIVE" of any Person shall mean any officer, director,
principal, attorney, agent, analyst, consultant or other representative of such
Person.
"RELEASE" shall mean and include any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment or the workplace of any Hazardous Substance,
and otherwise as defined in any Environmental Law.
9
"SEC" shall mean the Securities and Exchange Commission or any
successor body thereto.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SUBSIDIARY" shall mean each corporation or other Person in which a
Person owns or controls, directly or indirectly, capital stock or other equity
interests representing at least 50% of the outstanding voting stock or other
equity interests. Unless otherwise specified, for the purposes of this
Agreement AMS shall be considered a Subsidiary of TDS and API.
"TAX" shall mean any federal, state, local, foreign or other tax,
levy, impost, fee, assessment or other government charge, including without
limitation income, estimated income, business, occupation, franchise, property,
payroll, personal property, sales, transfer, use, employment, commercial rent,
occupancy, franchise or withholding taxes, and any premium, including without
limitation interest, penalties and additions in connection therewith.
"TRANSFER" shall mean and includes the act of selling, giving,
transferring, creating a trust (voting or otherwise), assigning or otherwise
disposing of, pledging, hypothecating or otherwise transferring as security (and
correlative words shall have correlative meanings).
"TSR PAGING BUSINESS" shall mean the business and operations of TSR
Paging relating generally to the provision of paging and wireless messaging
services, the sale and support of pagers, cellphones, PCS phones, 2-way radios
and accessories and other telecommunications-related products and services and
the provision of technical and repair services in connection therewith, as well
as the provision of long distance telephone resale services.
"TSR PAGING EXCLUDED ASSETS" shall mean all refunds of any Tax that
TSR Paging, any shareholder of TSR Paging and any member of an affiliated,
consolidated, combined or unitary group of which TSR Paging is also a member,
paid pursuant to Section 5.22, Section 14.4.1 or Section 14.5.2.
"TSR PAGING FINANCIAL STATEMENTS" shall mean (i) the audited balance
sheet of TSR Paging as of December 31, 1996, (and, following delivery thereof to
TDS, as of December 31, 1997), and the related statement of income and cash flow
of TSR Paging for the year ended December 31, 1996 (and, following delivery
thereof to TDS, as of December 31, 1997), (the "TSR PAGING AUDITED FINANCIAL
STATEMENTS"), and (ii) the unaudited balance sheet of TSR Paging dated September
30, 1997, and the related unaudited statement of income of TSR Paging for the
nine (9) months ended September 30, 1997 and the cash flow statement of TSR
Paging for the nine (9) months ended September 30, 1997 (the "TSR PAGING
UNAUDITED FINANCIAL STATEMENTS").
10
1.2 OTHER DEFINED TERMS. The following terms shall have the meanings
defined for such terms in the Sections set forth below:
Term Section
----- -------
"API ASSETS" Section 2.3
"API ASSUMED LIABILITIES" Section 2.4
"API ASSUMPTION DOCUMENT" Section 4.3.2
"API PCD TAX RETURNS" Section 6.22.1
"API CONTRACTS" Section 6.7
"API EXCLUDED LIABILITIES" Section 2.5
"API FACILITIES" Section 6.21.1
"API FCC LICENSE APPLICATION" Section 6.13.2
"API FCC LICENSE" Section 6.13.1
"API INVENTORY" Section 6.10
"API LEASED REAL PROPERTY" Section 6.6
"API 929 MHz EXCLUSIVE FREQUENCY" Section 6.13.1(iii)
"API PCD TAXES" Section 6.22.1
"API PERSONAL PROPERTY LEASES" Section 6.7.1
"API PAGER SHORTFALL" Section 3.2.2
"API REVENUE SHORTFALL" Section 3.2.2
"API WITHHOLDING TAXES" Section 6.22.1
"ASSETS" Section 13.1
"AUDITOR" Section 3.2.5
"AUGUST CERTIFICATE" Section 10.9
"TSR WIRELESS INDEMNITEES" Section 14.4.1
"TSR WIRELESS" Preamble
"CLAIM NOTICE" Section 14.4.5
"CLAIM" Section 14.4.5
"CLOSING" Section 4.1
"CONFIDENTIAL INFORMATION" Section 15.12.1
"CONSULTANT" Section 10.1.2
"DAMAGES" Section 14.4.1
"EXCHANGE ACT" Section 6.14.3
"EXTENSION OPTION" Section 15.1.1(v)
"FCC 929 MHz EXCLUSIVE FREQUENCY" Section 5.13.1(iii)
"FICA" Section 9.2.5
"FUTA" Section 9.2.5
"INDEMNITEES" Section 14.4.2
"INVESTMENT DOCUMENTS" Section 5.7.1
"IRS" Section 5.22.2
"JULY CERTIFICATE" Section 10.9
"JUNE CERTIFICATE" Section 10.9
"MEMBERSHIP INTERESTS" Recitals
11
"MERGER" Recitals
"MIS CHARGES Section 2.4.2
"OFFER DOCUMENTS" Section 10.6.2
"OFFER" Section 10.6.1
"OPTION AGREEMENT" Recitals
"OTHER FILINGS" Section 10.9.1
"PROPOSED API ACQUISITION TRANSACTION" Section 10.1
"SCHEDULE 14D-9" Section 10.7.1
"SEC REPORTS" Section 6.14.3
"SHAREHOLDERS' MEETING" Section 10.9
"SHARES" Section 10.6.1
"TDS" Preamble
"TDS INDEMNITEES" Schedule 14.4.1
"THIRD PARTY NOTICE" Section 14.4.5
"TRANSFERORS" Preamble
"TRANSFER TAXES" Section 14.5.2
"TSR PAGING" Preamble
"TSR PAGING ASSETS" Section 2.1
"TSR PAGING ASSUMED LIABILITIES" Section 2.2
"TSR PAGING ASSUMPTION DOCUMENT" Section 4.2
"TSR PAGING PCD TAX RETURNS" Section 5.22.1
"TSR PAGING CONTRACTS" Section 5.7
"TSR PAGING CREDIT AGREEMENT" Section 5.7.1 (xii)
"TSR PAGING EMPLOYEES" Section 9.3.1
"TSR PAGING FACILITIES" Section 5.21.1
"TSR PAGING FCC LICENSE APPLICATION" Section 5.13.2
"TSR PAGING FCC LICENSE" Section 5.13.1
"TSR PAGING INDEMNITEES" Section 14.4.2
"TSR PAGING INVENTORY" Section 5.6
"TSR PAGING LEASED REAL PROPERTY" Section 5.6
"TSR PAGING 929 MHz EXCLUSIVE FREQUENCY" Section 5.13.1(iii)
"TSR PAGING PCD TAXES" Section 5.22.1
"TSR PAGING PERSONAL PROPERTY LEASES" Section 5.7.1
"TSR PAGING PAGER SHORTFALL" Section 3.2.1
"TSR PAGING REVENUE SHORTFALL" Section 3.24.1
"TSR PAGING WITHHOLDING TAXES" Section 5.22.1
"TSR WIRELESS" Recitals
"UNIT ADJUSTMENTS" Section 3.2.3
12
"UNITS" Section 3.2.3
"WIRE TRANSFER" Section 15.1.1(v)
ARTICLE II
CONTRIBUTION OF ASSETS
2.1 CONTRIBUTION OF TSR PAGING ASSETS. Upon the terms and subject to the
conditions contained herein, at the Closing, TSR Paging will convey, transfer,
assign and deliver to TSR Wireless, and TSR Wireless will acquire from TSR
Paging, all of the right, title and interest of TSR Paging in and to properties,
assets and rights of any kind, whether tangible or intangible, real or personal,
other than the TSR Paging Excluded Assets (collectively, the "TSR PAGING
ASSETS"), including, without limitation, all of TSR Paging's right, title and
interest in the following:
2.1.1 All accounts and notes receivable (whether current or
noncurrent), refunds, deposits, prepayments or prepaid expenses of TSR Paging;
2.1.2 All cash and cash equivalents of TSR Paging on hand or in
banks, certificates of deposit, money market funds and securities;
2.1.3 All TSR Paging Contracts;
2.1.4 All TSR Paging Real Property Leases and all TSR Paging
Personal Property Leases;
2.1.5 Intentionally omitted.
2.1.6 All Leasehold Improvements of TSR Paging;
2.1.7 All Fixtures and Equipment of TSR Paging;
2.1.8 All TSR Paging Inventory;
2.1.9 All Books and Records of TSR Paging;
2.1.10 All Proprietary Rights of TSR Paging;
2.1.11 All Permits of TSR Paging;
2.1.12 All computer software of TSR Paging, to the extent
transferable;
2.1.13 All insurance policies of TSR Paging, to the extent
assignable;
13
2.1.14 All available supplies, sales literature, promotional
literature, customer, supplier and distributor lists, art work, display units,
telephone and fax numbers and purchasing records related to the TSR Paging
Business;
2.1.15 All rights under or pursuant to all warranties,
representations and guarantees made by suppliers in connection with the TSR
Paging Assets or services furnished to TSR Paging to the extent such warranties,
representations and guarantees are assignable;
2.1.16 All claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind relating to the TSR Paging Assets,
the TSR Paging Business or the TSR Paging Assumed Liabilities, against any
Person, including, without limitation, any liens, security interests, pledges or
other rights to payment or to enforce payment in connection with products
delivered or services rendered by TSR Paging on or prior to the Closing Date;
and
2.1.17 All FCC Licenses, FCC License Applications owned or used in
the operation of the TSR Paging Business held by TSR Paging including, without
limitation, those FCC Licenses and FCC License Applications listed on TSR Paging
Disclosure Letter Schedule 5.13.
2.2 ASSUMPTION OF TSR PAGING LIABILITIES. Upon the terms and subject to
the conditions contained herein, at the Closing, TSR Wireless shall assume and
become responsible for all Liabilities of TSR Paging (the "TSR PAGING ASSUMED
LIABILITIES"), including, without limitation:
2.2.1 All Liabilities accruing, arising out of, or relating to
events or occurrences under the TSR Paging FCC Licenses, TSR Paging FCC License
Applications, TSR Paging Contracts, TSR Paging Real Property Leases and TSR
Paging Personal Property Leases;
2.2.2 All accounts payable, accrued expenses and other current
Liabilities of TSR Paging;
2.2.3 All Financing Obligations of TSR Paging;
2.2.4 All Liabilities arising out of TSR Wireless's employment of
all employees of TSR Paging, including all Liabilities under any Employee Plan
of TSR Paging or any ERISA Affiliate of TSR Paging; and
2.2.5 All Liabilities for Taxes of TSR Paging except any Tax for
which TSR Paging, any shareholder of TSR Paging, or any member of an affiliated,
consolidated, combined or unitary group of which TSR Paging is also a member, is
liable pursuant to Section 5.22, Section 14.4.1 or Section 14.5.2.
14
2.3 CONTRIBUTION OF API ASSETS. Upon the terms and subject to the
conditions contained herein and subject to Section 2.6, at the Closing, TDS
shall cause API and each of its Subsidiaries to convey, transfer, assign and
deliver to TSR Wireless, and TSR Wireless will acquire from API and such
Subsidiaries, all of the right, title and interest of API and such Subsidiaries
in and to properties, assets and rights of any kind, whether tangible or
intangible, real or personal, except for the API Excluded Assets (collectively,
the "API ASSETS"), including, without limitation, all of API's and such
Subsidiaries' right, title and interest in the following:
2.3.1 All accounts and notes receivable (whether current or
noncurrent), refunds, deposits, prepayments or prepaid expenses of API and its
Subsidiaries (except in connection with insurance policies of API or its
Subsidiaries);
2.3.2 All cash and cash equivalents of API and its Subsidiaries on
hand, in the TDS cash management system, or in banks, certificates of deposit,
money market funds and securities, including such cash as is necessary to ensure
that the consolidated Net Working Capital, excluding any API Intercompany
Liabilities (but including the MIS Charges), of API and its Subsidiaries on the
Closing Date calculated in accordance with GAAP on a consistent basis with
current practice is $9,800,000 and, if necessary, TDS shall advance or
contribute to API such cash as is necessary to enable API to comply with this
Section 2.3.2;
2.3.3 All API Contracts, unless rejected by TSR Paging pursuant to
Section 2.6.2;
2.3.4 All API Real Property Leases and all API Personal Property
Leases;
2.3.5 Intentionally omitted;
2.3.6 All Leasehold Improvements of API and its Subsidiaries;
2.3.7 All Fixtures and Equipment of API and its Subsidiaries;
2.3.8 All API Inventory;
2.3.9 All Books and Records of API and its Subsidiaries;
2.3.10 All Proprietary Rights of API and its Subsidiaries;
2.3.11 All Permits of API and its Subsidiaries to the extent
transferable;
2.3.12 All computer software of API and its Subsidiaries to the
extent transferable;
2.3.13 Intentionally omitted;
15
2.3.14 All available supplies, sales literature, promotional
literature, customer, supplier and distributor lists, art work, display units,
telephone and fax numbers and purchasing records related to the API Business;
2.3.15 All rights under or pursuant to all warranties,
representations and guarantees made by suppliers in connection with the API
Assets or services furnished to API or its Subsidiaries, to the extent such
warranties, representations and guarantees are assignable;
2.3.16 All claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind relating to the API Assets or the API
Assumed Liabilities, against any Person, including, without limitation, any
liens, security interests, pledges or other rights to payment or to enforce
payment in connection with products delivered or services rendered by API or its
Subsidiaries on or prior to the Closing Date;
2.3.17 All FCC Licenses and FCC License Applications owned or used
in the operation of the API Business held by API, API's Subsidiaries (including
but not limited to Advanced Wireless Messaging, Inc.), TDS or any Subsidiary of
TDS, including, without limitation, those FCC Licenses and FCC License
Applications listed on TDS Disclosure Letter Schedule 6.13; and
2.3.18 All right, title and interest of API in AMS unless rejected
by TSR Paging pursuant to Section 2.6.2.
2.4 ASSUMPTION OF API LIABILITIES. Upon the terms and subject to the
conditions contained herein and subject to Section 2.6, at the Closing, TSR
Wireless shall assume the following, and only the following, Liabilities of API
and its Subsidiaries (the "API ASSUMED LIABILITIES");
2.4.1 All Liabilities accruing, arising out of, or relating to
events or occurrences happening after the Closing Date under (i) the API FCC
Licenses and the API FCC License Applications; (ii) Contracts listed on TDS
Disclosure Letter Schedules 6.6 and 6.7 and not rejected by TSR Paging pursuant
to Section 2.6.2, or under Contracts which are not listed on TDS Disclosure
Letter Schedules 6.6 and 6.7, but which TSR Paging, in its sole discretion,
elects to accept and assume; and (iii) Real Estate Leases and Personal Property
Leases; but not including any Liability for any Default under any FCC License,
FCC License Application or Contract, Real Estate Lease or Personal Property
Lease in each case, of API or any of its Subsidiaries occurring on or prior to
the Closing Date or occurring after the Closing Date as a result of actions or
omissions prior to the Closing Date; and
2.4.2 All of API's and its Subsidiaries' current liabilities set
forth on the API Interim Balance Sheet or incurred after the Interim Balance
Sheet Date (i) in the ordinary course of business, (ii) consistent with amounts
historically incurred and (iii) in compliance with the terms of this Agreement
other than (x) the API Intercompany Liabilities, but including monthly service
charges of TDS for API's use of certain computer facilities and
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processing services of TDS ("MIS CHARGES"), (y) any Tax excluded pursuant to
Section 2.5.2 and (z) any Liabilities excluded pursuant to Section 2.5.1 to the
extent not included in current liabilities.
2.5 API LIABILITIES. Notwithstanding any other provision of this
Agreement, TSR Wireless shall not assume, or otherwise be responsible for, (i)
any Liabilities of TDS or (ii) except for the Assumed Liabilities expressly
specified in Section 2.4, any Liabilities of API or any of its Subsidiaries, in
each case whether liquidated or unliquidated, or known or unknown, whether
arising out of occurrences prior to, at or after the date hereof ("API EXCLUDED
LIABILITIES"), which API Excluded Liabilities include, without limitation:
2.5.1 Any Liabilities to or in respect of any employees or former
employees of API or any of its Subsidiaries including without limitation (i) any
employment agreement, whether or not written, between API or any of its
Subsidiaries and any Person, (ii) any Liability under any Employee Plan at any
time maintained, contributed to or required to be contributed to by or with
respect to API or any of its Subsidiaries, or any ERISA Affiliate of API or any
of its Subsidiaries or TDS or under which API or any of its Subsidiaries or TDS
may incur any Liability, or any contributions, benefits or Liabilities therefor,
or any Liability with respect to API's or any of its Subsidiaries withdrawal or
partial withdrawal from or termination of any Employee Plan and (iii) any claim
of an unfair labor practice, or any claim under any state unemployment
compensation or worker's compensation law or regulation or under any federal or
state employment discrimination law or regulation, which shall have been
asserted on or prior to the Closing Date or is based on acts or omissions which
occurred on or prior to the Closing Date.
2.5.2 Any Liability of API or any of its Subsidiaries in respect
of any Tax except any Tax Liability (other than income tax) included within
current liabilities described in Section 2.4.2.
2.5.3 Any Liability arising from any injury to or death of any
Person or damage to or destruction of any property, whether based on negligence,
breach of warranty, strict liability, enterprise liability or any other legal or
equitable theory arising from services performed by or on behalf of API or any
of its Subsidiaries or any other Person or entity on or prior to the Closing
Date;
2.5.4 Any Liability of API or any of its Subsidiaries arising out
of or related to any Action against or any Action which adversely affects the
API Assets and which shall have been asserted on or prior to the Closing Date or
to the extent the basis of which shall have arisen on or prior to the Closing
Date;
2.5.5 Any Liability of API or any of its Subsidiaries resulting
from entering into, performing its obligations pursuant to or consummating the
transactions contemplated by, this Agreement except as otherwise provided in
Sections 3.3 and 14.5.2;
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2.5.6 Any Financing Obligations of API or its Subsidiaries;
2.5.7 The API Intercompany Liabilities except for the MIS Charges;
2.5.8 Any Liability for violation of any Environmental Law;
2.5.9 Any Liability in respect of any Facility formerly owned,
leased or occupied by API or any of its Subsidiaries or any predecessor thereto;
and
2.5.10 Any Liability arising in respect of any Claim by any
shareholder of TDS or API (except for the MIS Charges).
2.6 ASSETS AND LIABILITIES OF AMS; REJECTED ASSETS
2.6.1 AMS. Notwithstanding any other provision of this Agreement,
TSR Wireless shall not assume any API Assets which are assets of AMS or any
Liabilities of AMS other than Liabilities to the BIRD Foundation which
constitute Liabilities of API assumed hereunder, which shall remain with AMS
following the Closing.
2.6.2 REJECTED API ASSETS. TSR Paging in its sole discretion may
reject (i) any API Assets not listed or described on the Disclosure Schedule,
except those not required to be so disclosed, (ii) any API Contract with a third
party airtime vendor, provided however that TSR Wireless shall enter into a
"back to back" contract with API to resell such airtime on the same financial
terms as the rejected third party airtime vendor Contracts, but otherwise on
terms similar to TSR Paging's usual terms, and (iii) the interests of API (and
any of its Subsidiaries) in AMS, and any Liabilities associated therewith by
notice to TDS at any time on or prior to the Closing Date, in which case any
such API Assets shall be excluded from the sale hereunder and the definition of
API Assets shall be modified accordingly.
ARTICLE III
ISSUANCE OF MEMBERSHIP INTERESTS
3.1 ISSUANCE OF MEMBERSHIP INTERESTS. Unless TSR Paging shall have
exercised the Extension Option, in which case the provisions of Section 3.4
shall apply and the provisions of this Section 3.1 shall not apply, on the
Closing Date, TSR Wireless shall issue to the Transferors an aggregate of
20,000,000 Units of TSR Wireless (the "UNITS"), which Units shall represent
Membership Interests of TSR Wireless in exchange for the Assets which are being
contributed to, and the Liabilities being assumed by, TSR Wireless pursuant to
this Agreement, which Units shall reflect the total value of the assets
contributed to, and the Liabilities assumed by, TSR Wireless but not any other
Contributed Property (as defined in the TSR Wireless LLC Agreement) already
contributed to TSR Wireless on or before Closing and
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which shall be apportioned, subject to adjustment as set forth in Section 3.2,
between the Transferors as follows:
3.1.1 to TSR Paging, 14,000,000 Units, and
3.1.2 to TDS, 6,000,000 Units.
3.2 POST-CLOSING ADJUSTMENT.
3.2.1 CERTIFICATION BY TSR PAGING. Within forty-five (45)
Business Days after the Closing Date, TSR Paging shall certify to TDS and TSR
Wireless (i) the number of Pagers in Service of TSR Paging as of the Closing
Date and (ii) the Net Monthly Pager Revenue of TSR Paging for the month ended
the Closing Date. If the number of Pagers in Service of TSR Paging as of the
Closing Date is less than 1,260,000, and/or the Net Monthly Pager Revenue of
TSR Paging for the month ended on the Closing Date is less than $5,500,000,
then the certificate shall state the shortfall in the number of Pagers in
Service of TSR Paging ("TSR PAGING PAGER SHORTFALL") and the shortfall in the
Net Monthly Pager Revenue of TSR Paging ("TSR PAGING REVENUE SHORTFALL"). The
provisions of this Section 3.2.1 shall not be deemed to diminish the rights
of TSR Wireless or TDS under Section 14.4.
3.2.2 CERTIFICATION BY TDS. Within forty-five (45) Business Days
after the Closing Date, TDS shall certify to TSR Paging and TSR Wireless (i) the
number of Pagers in Service of API for the month ended the Closing Date and
(ii) the Net Monthly Pager Revenue of API as of the Closing Date. If the number
of Pagers in Service of API as of the Closing Date is less than 775,000, and/or
the Net Monthly Pager Revenues of API for the month ended the Closing Date is
less than $5,800,000, then the certificate shall state the shortfall in the
number of Pagers in Service of API ("API PAGER SHORTFALL") and the shortfall in
the Net Monthly Pager Revenues of API ("API REVENUE SHORTFALL"). The provisions
of this Section 3.2.2 shall not be deemed to diminish the rights of TSR Wireless
or TSR Paging under Section 14.4.
3.2.3 UNIT ADJUSTMENT. Promptly, and in any event within five
(5) Business Days following receipt of the certificates referred to above,
TSR Wireless shall calculate and certify to the Transferors the adjustments
to be made to the Units allocated to each Transferor hereunder, as of the
Closing Date, to be made as follows (the "UNIT ADJUSTMENTS"):
(i) The number of Units allocated to TSR Paging hereunder on the
Closing shall be reduced by the greater of (a) the product of the TSR Paging
Pager Shortfall multiplied by 9.828, and (b) the product of the TSR Paging
Revenue Shortfall multiplied by 1.770, and the excess Units and the Membership
Interests represented by the Units shall be cancelled by TSR Wireless, effective
as of the Closing Date; and
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(ii) The number of Units allocated to TDS hereunder on the Closing
shall be reduced by the greater of (a) the product of the API Pager Shortfall
(if greater than 77,500) multiplied by 9.828, and (b) the product of the API
Revenue Shortfall (if greater than $580,000) multiplied by 1.770, and the excess
Units and the Membership Interests represented by the Units shall be cancelled
by TSR Wireless, effective as of the Closing Date.
3.2.4 DISPUTED UNIT ADJUSTMENT. If either Transferor shall
disagree with the Unit Adjustment, which disagreement shall be limited to the
number of Pagers in Service or the Net Monthly Pager Revenue, the Pager
Shortfall or the Revenue Shortfall certified by the other Transferor or TSR
Wireless's failure to apply the standards and correctly perform the
calculations of the Unit Adjustments set forth in Section 3.2.3, it shall
notify the other Transferor and TSR Wireless of such disagreement in writing
specifying in detail the particulars of such disagreement within twenty (20)
Business Days after receipt of the applicable certificate.
3.2.5 RESOLUTION OF DISPUTED UNIT ADJUSTMENT AMOUNT. The
Transferors shall use their reasonable efforts for a period of thirty (30)
calendar days after (i) the delivery of a notice pursuant to Section 3.2.4
above (or such longer period as the Transferors shall mutually agree upon),
or after Closing if Section 3.4 is applicable, to resolve any disagreements
raised by a Transferor with respect to the number of Pagers in Service, the
Net Monthly Pager Revenue, the Pager Shortfall or the Revenue Shortfall of
the other Transferor (as set forth in the June Certificate, if applicable) or
the calculation of the Unit Adjustments or the Unit Allocation pursuant to
Section 3.4, as the case may be. If, at the end of such period, the
Transferors and TSR Wireless are unable to resolve all such disagreements,
Xxxxxx Xxxxxxxx LLP (the "AUDITOR") shall resolve any remaining
disagreements. The Auditor shall determine whether the Pagers in Service,
the Net Monthly Pager Revenue, the Pager Shortfall and the Revenue Shortfall
were correctly certified by the relevant Transferor, only with respect to the
remaining differences submitted to the Auditor, and whether and to what
extent, if any, the Unit Adjustment requires further adjustment. The
determination of the Auditor shall be final, binding and conclusive on the
parties. The Transferors and TSR Wireless shall use their reasonable efforts
to cause the Auditor to make its determination within thirty (30) calendar
days of accepting its selection. Within ten (10) calendar days after the
date of determination of the Auditor, the Units of the Transferors allocated
hereunder shall be adjusted by the Unit Adjustment as determined by the
Auditor in the manner set forth in Section 3.2.3 and the Membership Interest
represented by the Units shall be correspondingly adjusted. The fees and
expenses of the Auditor shall be borne by the Transferors equally or as
otherwise determined by the Auditor.
3.3 CLOSING COSTS; TRANSFER FEES. The cost of any surveys, title reports
or title searches, and the recording or filing of all applicable conveyancing
instruments incurred by reason of the transfer of Assets hereunder will be paid
by the TSR Wireless upon the Closing.
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3.4 UNIT ALLOCATION FOLLOWING EXERCISE OF EXTENSION OPTION. If TSR Paging
shall have exercised the Extension Option, on the Closing Date, TSR Wireless
shall issue 14,000,000 Units to TSR Paging and shall issue to TDS the number of
Units as results from subtracting from 6,000,000 the greater of (i) the product
of the API Pager Shortfall as at June 30, 1998 multiplied by 9.828 and (ii) the
product of the API Revenue Shortfall for the month ended June 30, 1998
multiplied by 1.770, each as set forth on the June Certificate, subject to
adjustment after Closing as set forth in Section 3.2.5 upon the request of
either Transferor on the Closing Date.
ARTICLE IV
CLOSING
4.1 CLOSING. The Closing of the transactions contemplated herein (the
"CLOSING") shall be held at 10:00 a.m. local time on the Closing Date at the
offices of Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, unless the
parties hereto otherwise agree.
4.2 CONVEYANCES BY TSR PAGING AT CLOSING.
4.2.1 INSTRUMENTS AND POSSESSION. To effect the acquisition and
assumption referred to in Section 2.1, TSR Paging will, at the Closing, execute
and deliver to TSR Wireless:
(i) one or more instruments of conveyance conveying in the
aggregate all of TSR Paging's owned personal property included in the TSR Paging
Assets;
(ii) the Exchange and Registration Rights Agreement duly executed
by the Stockholders and the Investors (as defined therein) in substantially the
form attached as Exhibit A (the "EXCHANGE AND REGISTRATION RIGHTS AGREEMENT");
(iii) Assignments of Lease with respect to the TSR Paging
Real Property Leases and the TSR Paging Personal Property Leases;
(iv) an Assignment of the TSR Paging Contracts;
(v) Assignments of those Proprietary Rights included in the TSR
Paging Assets, in recordable form to the extent necessary to assign such rights;
(vi) such of the Ancillary Agreements to which TSR Paging is a
party;
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(vii) such other instruments as shall be reasonably requested
by TSR Wireless to vest in TSR Wireless such right, title or interest in and to
the TSR Paging Assets in accordance with this Agreement;
(viii) the certificates, opinions of counsel and other
documents to be delivered by TSR Paging described in Article XII; and
(ix) the Consents and Authorizations of TSR Paging.
4.2.2 ASSUMPTION AND OTHER DOCUMENTS. To effect the acquisition
and assumption referred to in Section 2.2, at the Closing, TSR Wireless shall
execute and deliver to TSR Paging:
(i) an instrument of assumption evidencing TSR Wireless's
assumption, pursuant to Section 2.2, of the TSR Paging Assumed Liabilities (the
"TSR PAGING ASSUMPTION DOCUMENT");
(ii) the Ancillary Agreements, duly signed by TSR Wireless; and
(iii) such other instruments as shall be reasonably requested
by TSR Paging to evidence TSR Wireless's assumption of the Assumed Liabilities
in accordance with this Agreement.
4.3 CONVEYANCES BY TDS AT CLOSING.
4.3.1 INSTRUMENTS AND POSSESSION. To effect the acquisition and
assumption referred to in Section 2.3, TDS will, or will cause API or its
Subsidiaries, as appropriate, to, at the Closing, execute and deliver to TSR
Wireless:
(i) one or more instruments of conveyance conveying in the
aggregate all of API's and its Subsidiaries' owned personal property included in
the API Assets:
(ii) Assignments of Lease with respect to the API Real Property
Leases and the API Personal Property Leases;
(iii) an Assignment of the API Contracts;
(iv) Assignments of those Proprietary Rights included in the API
Assets, in recordable form to the extent necessary to assign such rights;
(v) such of the Ancillary Agreements to which API and/or TDS is
a party;
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(vi) such other instruments as shall be reasonably requested by
TSR Wireless to vest in TSR Wireless such right, title or interest in and to the
API Assets in accordance with this Agreement;
(vii) the certificates, opinions of counsel and other
documents to be delivered by TDS described in Article XI; and
(viii) the Consents and Authorizations of API.
4.3.2 ASSUMPTION AND OTHER DOCUMENTS. To effect the acquisition
and assumption referred to in Section 2.4, at the Closing, TSR Wireless shall
execute and deliver to TDS or API and its Subsidiaries, as the case may be:
(i) an instrument of assumption evidencing TSR Wireless's
assumption, pursuant to Section 4, of the API Assumed Liabilities (the "API
ASSUMPTION DOCUMENT");
(ii) the Ancillary Agreements duly signed by TSR Wireless; and
(iii) such other instruments as shall be reasonably requested
by TDS to evidence TSR Wireless's assumption of the API Assumed Liabilities in
accordance with this Agreement.
4.4 FORM OF INSTRUMENTS. To the extent that a form of any document to be
delivered hereunder is not attached as an Exhibit hereto, such documents shall
be in form and substance, and shall be executed and delivered in a manner,
reasonably satisfactory to the party or parties in whose favor the document
runs.
4.5 CERTIFICATES; OPINIONS. The Transferors and TSR Wireless shall
deliver the certificates, opinions of counsel and other documents described in
Articles XI and XII.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TSR PAGING
TSR Paging hereby represents and warrants to TDS and TSR Wireless as
follows:
5.1 ORGANIZATION OF TSR PAGING. TSR Paging is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. TSR Paging is duly qualified under the FCC Rules and Policies to hold
a controlling interest in the TSR Wireless as contemplated herein. TSR Paging
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of its properties
23
owned or leased or the nature of its activities make such qualification
necessary, except where the failure to be so qualified or in good standing would
not have a Material Adverse Effect. Copies of the Certificate of Incorporation
and Bylaws of TSR Paging, and all amendments thereto, heretofore delivered to
TSR Wireless are accurate and complete as of the date hereof. TSR Paging
Disclosure Letter Schedule 5.1 lists all jurisdictions in which TSR Paging is
qualified to do business as a foreign corporation.
5.2 AUTHORIZATION. TSR Paging has all requisite corporate power and
authority to own, lease and operate the TSR Paging Assets, to conduct the TSR
Paging Business as it is presently being conducted, to execute and deliver this
Agreement, the Ancillary Agreements and the Option Agreement and to perform its
obligations hereunder and thereunder including, without limitation, the transfer
of the TSR Paging Assets. The execution and delivery of this Agreement, the
Ancillary Agreements and the Option Agreement by TSR Paging and the consummation
by TSR Paging of the transactions contemplated hereby and thereby have been duly
approved by the board of directors of TSR Paging. No other corporate
proceedings on the part of TSR Paging is necessary to authorize the entering
into and the performance of this Agreement, the Ancillary Agreements and the
Option Agreement and the transactions contemplated hereby and thereby including,
without limitation, transfer of the TSR Paging Assets. This Agreement and the
Option Agreement have been duly executed and delivered by TSR Paging and are
legal, valid and binding obligations of TSR Paging and each of the Ancillary
Agreements to which TSR Paging is to be a party when executed at Closing will
constitute legal, valid and binding obligations of TSR Paging, enforceable
against TSR Paging in accordance with their respective terms.
5.3 SUBSIDIARIES. TSR Paging has no Subsidiaries.
5.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Interim Balance Sheet
Date, except as contemplated by this Agreement, there has not been any:
5.4.1 Material Adverse Change in respect of TSR Paging, the TSR
Paging FCC Licenses and/or the TSR Paging FCC License Applications;
5.4.2 change in accounting methods, principles or practices by TSR
Paging, except as required by law or by generally applicable changes instituted
in the accounting profession;
5.4.3 material damage, destruction or loss (whether or not covered
by insurance) adversely affecting the Assets or the TSR Paging Business;
5.4.4 sale, assignment or transfer of any material portion of the
TSR Paging Assets other than sales of Inventory in the ordinary course of
business;
5.4.5 cancellation or termination of any material Contract of TSR
Paging;
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5.4.6 institution of settlement of or agreement to settle any
Action relating to the TSR Paging Business or the TSR Paging Assets other than
in the ordinary course of business consistent with past practices but not in any
case involving amounts in excess of $200,000 in the aggregate; or
5.4.7 agreement by TSR Paging to do, or any action or omission by
TSR Paging which is likely to result in, any of the representations and
warranties set forth in the preceding clauses 5.4.1 through 5.4.6 becoming
untrue other than as expressly provided for herein.
5.5 ASSETS. TSR Paging has and will transfer good and marketable title to
the TSR Paging Assets and, upon the consummation of the transactions
contemplated hereby, TSR Wireless will acquire good title to all the TSR Paging
Assets, free and clear of any Encumbrances, other than Permitted Encumbrances.
The TSR Paging Assets include all assets necessary for the conduct of the TSR
Paging Business as presently conducted.
5.6 TSR PAGING REAL PROPERTY. TSR Paging owns no Real Property. TSR
Paging Disclosure Letter Schedule 5.6 contains a complete and accurate list of
all Real Property Leases of TSR Paging ("TSR PAGING LEASED REAL PROPERTY"
distinguishing between the stores, transmission sites, office premises and
warehouses comprising the TSR Paging Leased Real Property.
5.6.1 INTENTIONALLY OMITTED.
5.6.2 ACTIONS. There are no pending or, to the knowledge of TSR
Paging, threatened condemnation proceedings or other Actions with respect to any
TSR Paging Leased Real Property.
5.6.3 REAL PROPERTY LEASES OR OTHER AGREEMENTS. Except for the
TSR Paging Real Property Leases listed on TSR Paging Disclosure Letter Schedule
5.6, there are no material leases, subleases, licenses, occupancy agreements,
options, rights, concessions or other agreements or arrangements, written or
oral, granting to any Person the right to purchase, use or occupy any TSR Paging
Leased Real Property. With respect to each TSR Paging Real Property Lease, TSR
Paging has and will transfer to TSR Wireless at the Closing a valid leasehold
interest in the leasehold estate, free and clear of all Encumbrances other than
Permitted Encumbrances. All TSR Paging Real Property Leases are valid, binding
and enforceable in all material respects in accordance with their terms and are
in full force and effect. TSR Paging enjoys peaceful and undisturbed possession
of all real property subject to such TSR Paging Real Property Leases, and TSR
Paging has in all material respects performed all the material obligations
required to be performed by it through the date hereof with respect to such TSR
Paging Real Property Leases, and each TSR Paging Real Property Lease is
assignable (upon receipt of necessary landlord Consents) in connection with the
transactions contemplated hereby.
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5.6.4 CERTIFICATE OF OCCUPANCY. TSR Paging has received all
required material approvals of Governmental Authorities (including, without
limitation, Permits and material certificates of occupancy or other similar
certificates permitting lawful occupancy of the TSR Paging Leased Real Property)
required in connection with the present use of the TSR Paging Leased Real
Property and all improvements thereon.
5.6.5 UTILITIES. All TSR Paging Leased Real Property and the
improvements thereon are supplied with utilities and other services necessary
for the operation of such facilities as currently operated.
5.6.6 IMPROVEMENTS, FIXTURES AND EQUIPMENT. All Leasehold
Improvements, and all Fixtures and Equipment and other tangible assets owned,
leased or used by TSR Paging on the TSR Paging Leased Real Property are
sufficient in all material respects for the operation of the TSR Paging Business
as presently conducted.
5.6.7 NO SPECIAL ASSESSMENT. TSR Paging has not received notice
of any special assessment relating to any TSR Paging Leased Real Property or any
portion thereof, and TSR Paging has no knowledge of any pending or threatened
special assessment, other than any special assessments disclosed in TSR Paging
Disclosure Letter Schedule 5.6.
5.7 CONTRACTS AND COMMITMENTS.
5.7.1 CONTRACTS. TSR Paging Disclosure Letter Schedule 5.7 sets
forth a complete and accurate list of all Contracts of TSR Paging of the
following categories:
(i) Reseller Contracts for over 2,000 pagers;
(ii) Sales, commission, consulting, agency or advertising
Contracts which are not cancelable on thirty (30) calendar days notice and, in
the case of advertising Contracts, which could result in payments of over
$50,000 over the life of the Contract;
(iii) Options to buy any property, real or personal, or
options to sell or sublet any TSR Paging Leased Real Property or personal
property included in the TSR Paging Assets;
(iv) Contracts involving expenditures or Liabilities in excess of
$250,000 over the life of the Contract or otherwise material to TSR Paging;
(v) Contracts containing covenants limiting the freedom of TSR
Paging to engage in any line of business or compete with any Person;
(vi) Intentionally omitted;
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(vii) All Contracts with Local Exchange Carriers, whether
incumbent, independent, competitive or otherwise (collectively "LECs", for
provision of interconnection services and facilities (collectively,
"INTERCONNECTION") to TSR Paging ("TSR Paging INTERCONNECTION CONTRACTS"),
including: (a) all such TSR Paging Interconnection Contracts regardless of
whether such agreements have yet been submitted to or approved by the relevant
PUCs; (b) a listing of any requests for Interconnection filed by TSR Paging with
PUC(s) pursuant to Section 252(a) of the Communications Act and a brief
description of the status of the PUC proceeding with respect to each such
request; (c) a brief description of outstanding negotiations between TSR Paging
and LECs regarding provision of Interconnection by LECs regardless of whether
such negotiations are pursuant to a request for Interconnection submitted by TSR
Paging pursuant to Section 252(a) of the Communications Act; and (d) any related
agreements between TSR Paging and LECs regarding Interconnection;
(viii) All Personal Property Leases of TSR Paging ("TSR PAGING
PERSONAL PROPERTY LEASES"), excluding Contracts with customers for lease of
pagers and excluding non-material Personal Property Leases entered into in the
ordinary course of business;
(ix) All Contracts not listed pursuant to Sections 5.7.1(i)
through 5.7.1(viii) but which are (a) material to the TSR Paging Business; or
(b) not made in the ordinary course of the TSR Paging Business;
(x) the securities purchase agreement dated July 17, 1995
between, inter alia, the Investors and TSR Paging and the option agreement,
investment agreement and form of notes ancillary thereto (the "INVESTMENT
DOCUMENTS");
(xi) any TSR Paging Employee Plan, any employment agreements
between TSR Paging and Xxxx Xxxxx, Xxxxxxx X. XxXxxxxx and Xxxxxxxx X. Xxxxx and
any stock option or phantom stock or other equity based plan of TSR Paging; and
(xii) the Third Amended and Restated Credit Agreement among
TSR Paging and First National Bank of Chicago dated as of October 29, 1997 (the
"TSR PAGING CREDIT AGREEMENT").
TSR Paging has delivered or made available to TDS true, correct and complete
copies of each of the Contracts listed on TSR Paging Disclosure Letter Schedule
5.7, including all amendments and supplements thereto other than TSR Paging
Personal Property Leases with individual customers on standard forms (the
standard forms having been supplied).
5.7.2 ABSENCE OF BREACHES OR DEFAULTS. All of the Contracts to
which TSR Paging is a party or bound ("TSR PAGING CONTRACTS") are valid and
in full force and effect. TSR Paging has duly performed all of its material
obligations under such Contracts to the extent those obligations to perform
have accrued, and no material violation of, or material default or breach
under, such Contracts by TSR Paging, or, to TSR Paging's knowledge, any
27
other party has occurred and neither TSR Paging, nor, to TSR Paging's knowledge,
any other party has repudiated any material provisions thereof. No material
violation of, or material default or breach under, has occurred with respect to
the Investment Documents by TSR Paging, or to TSR Paging's knowledge, its
Stockholders.
5.7.3 PRODUCT WARRANTY. TSR Paging has committed no act, and
there has been no omission, which would result in, and there has been no
occurrence which would give rise to, any material product liability or
material liability for breach of warranty (whether covered by insurance or
not) on the part of TSR Paging, with respect to products sold, or services
rendered prior to the Closing.
5.8 INTENTIONALLY OMITTED.
5.9 OPERATION OF THE TSR PAGING BUSINESS. Except as set forth in TSR
Paging Disclosure Letter Schedule 5.9, (i) TSR Paging has conducted the TSR
Paging Business only through TSR Paging and not through any other divisions or
any direct or indirect Subsidiary or Affiliate of TSR Paging and (ii) no part of
the TSR Paging Business is operated by TSR Paging through any entity other than
TSR Paging.
5.10 INVENTORY. All Inventory of TSR Paging ("TSR PAGING INVENTORY") is of
good, usable and merchantable quality in all respects and, except as set forth
on TSR Paging Disclosure Letter Schedule 5.10, does not include obsolete or
discontinued items not otherwise saleable for ten dollars ($10) or more in the
ordinary course of business. Except as set forth on TSR Paging Disclosure
Letter Schedule 5.10 or in amounts that are not material;
5.10.1 all TSR Paging Inventory is of such quality as to meet the
quality control standards of TSR Paging and any applicable governmental
quality control standards;
5.10.2 all TSR Paging Inventory is saleable as current Inventory at
the current prices thereof in the ordinary course of business; and
5.10.3 all TSR Paging Inventory is recorded on the books of the TSR
Paging Business and in the TSR Paging Interim Balance Sheet at the lower of
cost or market value determined in accordance with GAAP.
5.11 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither TSR Paging, nor any
officer, employee or agent of TSR Paging, nor any other Person acting on their
behalf, has, directly or indirectly, within the past five years given or agreed
to give any gift or similar benefit to any customer, supplier, governmental
employee or other Person who is or may be in a position to help or hinder the
TSR Paging Business (or assist in connection with any actual or proposed
transaction relating to the TSR Paging Business) (i) which subjected or might
have subjected TSR Paging or any of its Subsidiaries to any damage or penalty in
any civil, criminal or governmental litigation or proceeding, (ii) which if not
given in the past, might have had a
28
Material Adverse Effect, (iii) which if not continued in the future, might have
a Material Adverse Effect or subject TSR Wireless to suit or penalty in any
private or governmental litigation or proceeding, (iv) for any of the purposes
described in Section 162(c) of the Code or (v) for the purpose of establishing
or maintaining any concealed fund or concealed bank account.
5.12 NO CONFLICT OR VIOLATION. Subject to Sections 8.2, 11.6 and 12.6 and
except as set forth in TSR Paging Disclosure Letter Schedule 5.12, neither the
execution, delivery or performance of this Agreement, the Ancillary Agreements
or the Option Agreement by TSR Paging nor the consummation by TSR Paging of the
transactions contemplated hereby and thereby will (a) violate or conflict with
any provision of the Certificate of Incorporation or Bylaws of TSR Paging, (b)
violate, conflict with, or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any Encumbrance (other than a Permitted
Encumbrance) upon any of the TSR Paging Assets under, or require any Consent
under any of the terms, conditions or provisions of any TSR Paging Contract, any
Financing Obligation of TSR Paging, any Authorization, any TSR Paging Real
Property Lease, TSR Paging Personal Property Lease, franchise, Permit,
agreement, or other instrument or obligation (i) to which TSR Paging is a party
or (ii) by which the TSR Paging Assets are bound, (c) violate any statute, rule,
regulation, ordinance, code, order, judgment, ruling, writ, injunction, decree
or award to which TSR Paging or the TSR Paging Assets is subject, (d) impose any
Encumbrance (other than a Permitted Encumbrance) on the TSR Paging Assets.
Except as set forth in TSR Paging Disclosure Letter Schedule 5.12, no Consent is
required to be obtained or made by TSR Paging in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
5.13 REGULATORY MATTERS.
5.13.1 FCC LICENSES.
(i) TSR Paging Disclosure Letter Schedule 5.13.1 lists (a) each
FCC License which is issued to TSR Paging ("TSR PAGING FCC LICENSE") and, in
each case, the name of the licensee (if other than TSR Paging), the call sign,
the operating frequency or frequencies, the location and the expiration date of
the TSR Paging FCC License; and (b) each FCC License Application of TSR Paging
("TSR PAGING FCC LICENSE APPLICATION") as of the date hereof and, in each case,
the name of the applicant (if other than TSR Paging), the frequency or
frequencies, the proposed location and the file number of the TSR Paging FCC
License Application. Pursuant to the provisions of Section 9.1, TSR Paging has
made available to TDS for inspection copies of each TSR Paging FCC License and
TSR Paging FCC License Application.
29
(ii) Except as set forth on TSR Paging Disclosure Letter Schedule
5.13.1, (A) none of the TSR Paging FCC Licenses or TSR Paging FCC License
Applications is subject to any purchase, sale, option or right of first refusal
agreements; (B) TSR Paging has good and marketable title to the TSR Paging FCC
Licenses to the extent allowed by law; and (C) subject to the regulatory
jurisdiction of the FCC, TSR Paging holds all TSR Paging FCC Licenses free and
clear of all Encumbrances.
(iii) TSR Paging Disclosure Letter Schedule 5.13.1 lists each
000 XXx one-way paging frequency for which TSR Paging currently has nationwide
exclusivity ("TSR PAGING 929 MHz EXCLUSIVE FREQUENCY"). Except as set forth in
TSR Paging Disclosure Letter Schedule 5.13.1, for each TSR Paging 929 MHz
Exclusive Frequency: (i) TSR Paging timely constructed and placed into
operation in accordance with FCC Rules sufficient transmitters to comply with
929 MHz frequency exclusivity requirements imposed by the FCC (collectively,
"FCC 929 MHz EXCLUSIVITY REQUIREMENTS") as specified, INTER ALIA, in FCC Rules
and FCC decisions in AMENDMENT OF THE COMMISSION'S RULES TO PROVIDE CHANNEL
EXCLUSIVITY TO QUALIFIED PRIVATE PAGING SYSTEMS AT 929-930 MHz, REPORT AND
ORDER, PR Docket No. 93-35, 8 FCC Rcd 8318 (1993), RECON. 11 FCC Rcd 3091
(1996), and WIRELESS TELECOMMUNICATIONS BUREAU ANNOUNCES 929-930 MHz PAGING
LICENSEES THAT HAVE MET CONSTRUCTION REQUIREMENTS FOR NATIONWIDE XXXXXXXXXXX,
XXXXXX XXXXXX, XX 00-000 (released May 10, 1996); REVISION OF PART 22 AND PART
90 OF THE COMMISSION'S RULES TO FACILITATE FUTURE DEVELOPMENT OF PAGING SYSTEMS,
WT Docket No. 96-18, FCC 97-59 (released February 24, 1997); (ii) TSR Paging has
continued to operate sufficient transmitters to comply with the terms and
conditions of such TSR Paging FCC Licenses and Authorizations, the
Communications Act, the FCC Rules and all applicable state laws and rules.
5.13.2 INTENTIONALLY OMITTED.
5.13.3 FILINGS, ETC.
(i) The TSR Paging FCC Licenses and TSR Paging FCC License
Applications are the only FCC and PUC Permits and Authorizations necessary to
conduct the TSR Paging Business. Except as set forth on TSR Paging Disclosure
Letter Schedule 5.13.3, TSR Paging has duly and in a timely fashion secured or
filed under applicable law all necessary Permits and Authorizations from, and
have filed all required registrations, applications, reports and any other
documents with, the FCC, and, if applicable, any PUC and any other Governmental
Authority exercising jurisdiction or having jurisdiction over TSR Paging, in
each case, with respect to the TSR Paging Business. Except as set forth on TSR
Paging Disclosure Letter Schedule 5.13.3, (a) the TSR Paging FCC Licenses and
(b) all other Authorizations are in full force and effect, are valid for the
balances of the current license term, are not impaired by acts or failures to
make required filings on the part of TSR Paging, and are free and clear of
restrictions that may reasonably be expected to limit the full operation of the
TSR Paging FCC Licenses or Authorizations, in each case without adverse
conditions, restrictions or impairments, except for such conditions as are
generally applicable to holders of
30
such FCC Licenses and Authorizations. No renewal of any TSR Paging FCC License
would constitute a major environmental action under the rules of the FCC.
(ii) Except as set forth on TSR Paging Disclosure Letter Schedule
5.13.3, TSR Paging is not subject to any Order or any pending or, to the
knowledge of TSR Paging, threatened, Action (excluding rulemaking that has
general industry applicability) which affects or would be expected to affect, in
any material respect, the validity of any TSR Paging FCC License, or result in
the revocation, termination, or adverse modification thereof, or impair the
renewal thereof. Except as set forth on TSR Paging Disclosure Letter Schedule
5.13.3, no event has occurred and is continuing (excluding rule making that has
general industry applicability) that could reasonably be expected to (a) result
in the revocation, termination, non-renewal or adverse modification of any TSR
Paging FCC License or (b) materially and adversely affect any rights of TSR
Paging thereunder.
5.13.4 FEES. TSR Paging has paid all franchise, license,
regulatory or other fees and charges which have become due and payable pursuant
to any applications, filings, recordings and registrations with, and all
Authorizations and Permits from, the FCC, any PUC or any other Governmental
Authority, in respect of the TSR Paging Business.
5.13.5 SHARING AGREEMENTS. Except as set forth on TSR Paging
Disclosure Letter Schedule 5.13.5, TSR Paging is not a party to any agreement
for the shared use of facilities or equipment used in connection with the TSR
Paging Business.
5.13.6 OPERATIONS. The equipment operating pursuant to the TSR
Paging FCC Licenses or PUC Authorizations of TSR Paging is operating in all
material respects in accordance with the terms and conditions of such TSR Paging
FCC License or Authorizations, the Communications Act, the FCC Rules and all
applicable state laws and regulations.
5.13.7 CONSTRUCTION. Except as set forth on TSR Paging Disclosure
Letter Schedule 5.13.7 all construction for facilities that TSR Paging intends
to place in service proposed in any TSR Paging FCC License is proceeding in a
manner that may reasonably be expected to allow the completion of such
construction and commencement of operations within the time specified in the
relevant TSR Paging FCC License.
5.14 FINANCIAL STATEMENTS; RECEIVABLES.
5.14.1 FINANCIAL STATEMENTS. The TSR Paging Financial Statements
are attached hereto as TSR Paging Disclosure Letter Schedule 5.14.1. The TSR
Paging Financial Statements (a) were prepared in accordance with the Books
and Records of TSR Paging, (b) were prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
covered thereby subject, in the case of the TSR Paging Unaudited Financial
Statements, to the absence of footnotes and to normal year-end adjustments
and (c) fairly present the assets, Liabilities (including all reserves) and
financial position of TSR Paging as of the respective dates thereof and the
results of operations and changes in cash
31
flows for the periods then ended, as appropriate. The TSR Paging Audited
Financial Statements have been audited by Xxxxxx Xxxxxxxx LLP, independent
certified public accountants, whose reports thereon are included with such TSR
Paging Audited Financial Statements.
5.14.2 RECEIVABLES. All of the receivables of TSR Paging
(including accounts receivable, loans receivable and advances) which have
arisen in connection with the TSR Paging Business and which are reflected in
the Interim Financial Statements, and all such receivables which will have
arisen since the Interim Balance Sheet Date, have arisen only from BONA FIDE
transactions in the ordinary course of business. All receivables of TSR
Paging on the date of this Agreement are, and on the Closing Date will be,
good and collectible in the ordinary course of business of TSR Paging within
120 days of their incurrence, subject to any applicable reserves set forth on
the Interim Balance Sheet of TSR Paging. TSR Paging has no knowledge of any
facts or circumstances generally which would result in any material increase
in the uncollectability of such receivables as a class in excess of the
reserves therefor set forth on the Interim Financial Statements. TSR Paging
Disclosure Letter Schedule 5.14.2 hereto accurately lists as of December 11,
1997, all receivables arising out of or relating to the TSR Paging Business
in excess of $1,000, the amount owing and the aging of such receivable and
the name of the party from whom such receivable is owing.
5.15 BOOKS AND RECORDS. TSR Paging has made and kept (and given TDS access
to) the Books and Records of TSR Paging, which, in all material respects
accurately and fairly reflect the activities of TSR Paging that would be so
recorded.
5.16 LITIGATION. Except as set forth on Schedules 5.13.3 and 5.16 there is
no Action or Order, pending or, to the knowledge of TSR Paging, threatened (a)
against, related to or affecting (i) TSR Paging or the TSR Paging Assets, or
(ii) any stockholders, officers or directors of TSR Paging (in each case, in
such capacity) and which either (A) may be reasonably expected to result in
Damages in excess of $100,000 in respect of any individual Order for the payment
of money damages (or $200,000 in the aggregate), or (B) seeks as of the date
hereof to delay, limit or enjoin the transactions contemplated by this
Agreement, the Ancillary Agreements or the Option Agreement or (b) in which TSR
Paging is a plaintiff, including any derivative suits brought by or on behalf of
TSR Paging. TSR Paging is not in default with respect to or subject to any
Order, and to the knowledge of TSR Paging, there are no unsatisfied Orders
against TSR Paging or the TSR Paging Assets.
5.17 COMPLIANCE WITH LAW. TSR Paging is and has been in compliance in all
material respects with all Authorizations, Regulations, and Permits in respect
of the TSR Paging Assets and the TSR Paging Business; IT BEING UNDERSTOOD that
nothing in this representation is intended to address any compliance issues that
are the subject of any other representation or warranty set forth herein.
32
5.18 NO BROKERS. No broker, finder or similar agent is entitled to any
finder's fee, brokerage fees or commission or similar payment from TSR Paging in
connection with the transactions contemplated hereby.
5.19 NO OTHER AGREEMENTS TO SELL THE TSR PAGING ASSETS. Except for (i)
security granted pursuant to the TSR Paging Credit Agreement (ii) the options to
acquire stock of TSR Paging granted to the Investors and others pursuant to the
Investor Documents and (iii) stock options granted to officers, directors and
employees of TSR Paging, neither TSR Paging nor any of its officers, directors,
shareholders or Affiliates have any commitment or legal obligation, absolute or
contingent, to any other Person other than TSR Wireless and TDS to sell, assign,
transfer or effect a sale of the TSR Paging Assets (other than sales of
Inventory in the ordinary course of business), to sell or effect a sale of the
capital stock of TSR Paging, to effect any merger, consolidation, exclusive
license, liquidation, dissolution or other reorganization of TSR Paging or to
enter into any agreement or cause the entering into of an agreement with respect
to any of the foregoing business combination transactions.
5.20 PROPRIETARY RIGHTS.
5.20.1 PROPRIETARY RIGHTS. TSR Paging Disclosure Letter Schedule
5.20 lists all of TSR Paging's domestic and foreign registrations of trademarks
and of other marks, trade names or other trade rights, and all pending
applications for any such registrations, all of TSR Paging's registered
copyrights and all of TSR Paging's patents and pending patent applications, and
all agreements under which TSR Paging is licensed to use Proprietary Rights.
5.20.2 OWNERSHIP AND PROTECTION OF PROPRIETARY RIGHTS. TSR Paging
owns and/or has the right to use each of the Proprietary Rights listed on TSR
Paging Disclosure Letter Schedule 5.20. The Proprietary Rights listed on TSR
Paging Disclosure Letter Schedule 5.20 constitute all of the material
Proprietary Rights necessary to conduct the TSR Paging Business in the manner
presently conducted. None of the Proprietary Rights is involved in any pending
or, to the knowledge of TSR Paging, threatened litigation. No other Person
(i) has the right to use any of the Proprietary Rights, except pursuant to the
Contracts; or (ii) to TSR Paging's knowledge is infringing upon any Proprietary
Rights. To TSR Paging's knowledge, the use by TSR Paging of the Proprietary
Rights is not infringing upon or otherwise violating the rights of any third
party. No proceedings have been instituted against or notices received by TSR
Paging that are presently outstanding alleging that the use by TSR Paging of the
Proprietary Rights infringes upon or otherwise violates any rights of a third
party in or to such Proprietary Rights. All Proprietary Rights are assignable
by TSR Paging to TSR Wireless in the manner contemplated by this Agreement.
5.21 ENVIRONMENTAL MATTERS.
5.21.1 COMPLIANCE WITH ENVIRONMENTAL LAW. TSR Paging has complied
and is in compliance in all material respects with all applicable Environmental
Laws pertaining to any
33
of the properties and assets of the TSR Paging Business (including the
Facilities of TSR Paging ("TSR PAGING FACILITIES")) and the use and ownership
thereof, and to the operation of the TSR Paging Business. No violation by TSR
Paging is being alleged of any applicable Environmental Law relating to any of
the properties and assets of the TSR Paging Business including the TSR Paging
Facilities or the use, occupation or ownership thereof, or to the operation of
the TSR Paging Business.
5.21.2 OTHER ENVIRONMENTAL MATTERS. Neither TSR Paging nor to TSR
Paging's knowledge any other Person (including any tenant or subtenant) has
caused or taken any action that will result in, and TSR Paging is not subject
to, any material Liability relating (i) environmental conditions on, under, or
about the TSR Paging Facilities, including without limitation, the air, soil and
groundwater conditions at such Facilities or (ii) the past or present use,
management, handling, transport, treatment, generation, storage, disposal or
Release of any Hazardous Materials. TSR Paging has disclosed and made available
to TDS all information, including, without limitation, all studies, analyses and
test results, in the possession, custody or control of or otherwise known to TSR
Paging relating to (x) the environmental conditions on, under or about the TSR
Paging Facilities, and (y) any Hazardous Materials used, managed, handled,
transported, treated, generated, stored or Released by TSR Paging or any other
Person on, under, about or from any of the TSR Paging Facilities, or otherwise
in connection with the use or operation of the TSR Paging Business.
5.22 TAX MATTERS.
5.22.1 TSR Paging has (or by the Closing will have), in respect of
the TSR Paging Business and the TSR Paging Assets, duly and timely filed all Tax
returns required to be filed on or before the Closing Date ("TSR PAGING PCD TAX
RETURNS"), and paid all Taxes which have become due pursuant to such Tax returns
or pursuant to any assessment which has become payable ("TSR PAGING PCD TAXES").
All Tax returns are complete in all material respects. All Taxes required to be
collected or withheld by or on behalf of TSR Paging (including amounts paid or
owing to any employee, independent contractor, creditor or other party with
respect to TSR Paging) ("TSR PAGING WITHHOLDING TAXES") have been collected or
withheld, and such taxes have either been duly and timely paid to the proper
Governmental Authorities or set aside in accounts for such purpose.
5.22.2 Except as set forth on TSR Paging Disclosure Letter Schedule
5.22, (i) all TSR Paging PCD Tax Returns have been examined by the relevant
taxing authority or the period for assessment of the Taxes in respect of which
such Tax returns were required to be filed has expired, and (ii) no agreement or
other document extending, or having the effect of extending, the period of
assessment or collection of any TSR Paging PCD Taxes or TSR Paging Withholding
Taxes, and no power of attorney with respect to any such Taxes, has been filed
with the Internal Revenue Service ("IRS") or any other Governmental Authority.
5.22.3 Except as set forth on TSR Paging Disclosure Letter Schedule
5.22, (i) there are no TSR Paging PCD Taxes or TSR Paging Withholding Taxes for
which a deficiency
34
has been asserted in writing by any Governmental Authority to be due (ii) no
issue has been raised in writing by any Governmental Authority in the course of
any audit with respect to TSR Paging PCD Taxes or TSR Paging Withholding Taxes
and (iii) there are no Tax rulings, requests for rulings or closing agreements
relating to TSR Paging which could affect TSR Paging's liability for Taxes for
any period after the Closing Date. Except as set forth on TSR Paging Disclosure
Letter Schedule 5.22, no TSR Paging PCD Taxes and no TSR Paging Withholding
Taxes are currently under audit by any Governmental Authority of which TSR
Paging has or will have by the Closing, received written notice.
5.22.4 TSR Wireless will not be required to deduct and withhold any
amount pursuant to section 1445(a) of the Code upon the transfer of the TSR
Paging Business to TSR Wireless.
5.22.5 Except as set forth on TSR Paging Disclosure Letter Schedule
5.22, there is no assessment or Action pending or threatened of which TSR Paging
has received an assessment or written notice against or relating to TSR Paging
in connection with TSR Paging PCD Taxes.
5.22.6 None of the TSR Paging Assets is properly treated as owned
by persons other than TSR Paging for income tax purposes.
5.22.7 TSR Paging (i) has made a valid election under Section 1362
of the Code to be treated as an "S Corporation" and has, at all times since the
date it was organized, qualified as an "S Corporation" for purposes of
Subchapter S of the Code, and (ii) with respect to all states which for state
Tax purposes allow a corporation to be treated as an "S Corporation" or similar
entity entitled to special Tax treatment, all elections for such treatment have
been properly and validly made in such states and TSR Paging has maintained
compliance at all times with all applicable qualifications and filing procedures
for such treatment provided however that it shall not be a breach of this
Section 5.22.7 for any of the foregoing to be untrue insofar as such breach has
not had, and is not likely to have, a Material Adverse Effect on TSR Paging.
5.23 INVESTMENT INTENT. TSR Paging is acquiring its Membership Interests
for its own account for investment and with no present intention of distributing
or reselling such Membership Interests or any part thereof. TSR Paging is fully
informed as to the applicable limitations upon any distribution or resale of
Membership Interests, which have not been registered pursuant to the Securities
Act. TSR Paging agrees not to distribute or resell any of the Membership
Interests if such distribution or resale would constitute a violation of the
Securities Act by TSR Paging.
5.24 CAPITALIZATION. The authorized and issued capital stock of TSR Paging
is as set forth in TSR Paging Disclosure Letter Schedule 5.24. All of the
presently issued and outstanding shares of capital stock of TSR Paging have been
duly and validly authorized and issued and are fully paid and non-assessable and
have been issued in compliance with all
35
applicable federal and state securities laws. Except as provided above or in
TSR Paging Disclosure Letter Schedule 5.24, TSR Paging has not issued any other
shares of its capital stock or any other equity interests and there are no
outstanding warrants, options or other rights to purchase or acquire any of such
shares or other equity interests, nor any outstanding securities convertible
into such shares or other equity interest or outstanding warrants, options or
other rights to acquire any such convertible securities. Except as disclosed in
TSR Paging Disclosure Letter Schedule 5.24, there are no preemptive rights with
respect to the issuance or sale of any of TSR Paging's capital stock. The
outstanding capital stock of TSR Paging is held of record and beneficially by
the Persons identified in TSR Paging Disclosure Letter Schedule 5.24 in the
amounts indicated therein.
5.25 EMPLOYMENT MATTERS.
5.25.1 There is no material unfair labor practice Action pending
against TSR Paging before any Governmental Authority.
5.25.2 There is no labor strike pending or, to the knowledge of TSR
Paging, threatened against or involving TSR Paging. TSR Paging believes that its
relations with its employees are satisfactory. No union organizing or election
activities known to TSR Paging involving any non-union employees of TSR Paging
have occurred since January 1, 1996.
5.25.3 TSR Paging has complied with the Worker Adjustment and
Retraining Notification Act and furnished any required notices of any "plant
closing" or "mass layoff" which TSR Paging has ordered to take place.
5.25.4 TSR Paging is not a party to any collective bargaining
agreement or labor contract with respect to any of its employees and is not a
party to, and, to its knowledge, has no liability or obligations under, any
individual employment agreement or contract with any of its current or former
employees that has not been performed in all material respects by TSR Paging.
5.26 EMPLOYEE BENEFIT PLAN MATTERS.
5.26.1 TSR Paging Disclosure Letter Schedule 5.26.1 contains a
complete and accurate list of all Employee Plans maintained or contributed to by
TSR Paging ("TSR PAGING EMPLOYEE PLANS"). Neither TSR Paging nor any ERISA
Affiliate of TSR Paging is now maintaining or contributing to or has ever
maintained or contributed to or been obligated to contribute to any Employee
Plan subject to either Title IV of ERISA or the minimum funding standards of
Section 302 of ERISA, including without limitation any "multiemployer plan" (as
such term is defined in Section 3(37) of ERISA).
5.26.2 Each TSR Paging Employee Plan has been administered in
accordance with its terms and complies in all material respects with all the
requirements prescribed by any
36
and all statutes, orders and governmental rules and regulations applicable to
such TSR Paging Employee Plan, including, but not limited to, ERISA and the
Code.
5.26.3 Each TSR Paging Employee Plan intended to qualify under
Section 401(a) and 401(k) of the Code has heretofore been determined by the
Internal Revenue Service to so qualify or a timely application for such
determination has been made, and the trusts created thereunder have heretofore
been determined to be exempt from tax under the provisions of Section 501(a)
of the Code or an application for such determination has been made, and to the
knowledge of TSR Paging no circumstance has occurred or exists which may
reasonably be expected to cause the loss of such qualifications or exemption.
5.26.4 There is no pending or, to the knowledge of TSR Paging,
threatened Claim in respect of any of the TSR Paging Employee Plans other than
claims for benefits in the ordinary course of business or Claims which are not
material.
5.26.5 To its knowledge, TSR Paging has complied in all material
respects with the health care continuation requirements of Part 6 of Title I of
ERISA.
5.26.6 The consummation of the transactions contemplated by this
Agreement will not result in any material automatic increase in the amount of
compensation or benefits or accelerate the vesting or timing of payment of any
compensation or benefits payable to or in respect of any employee of TSR Paging
or any participant in a TSR Paging Employee Plan.
5.26.7 TSR Paging has not engaged in a nonexempt prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code which
could result in a material liability.
5.26.8 Except as described in TSR Paging Disclosure Letter Schedule
5.26.8, TSR Paging does not maintain or contribute to any employee welfare
benefit plan within the meaning of Section 3(1) of ERISA which provides benefits
to employees or their beneficiaries after termination of employment other than
as required by Part 6 of Title I of ERISA.
5.26.9 TSR Paging has delivered or made available to TDS true and
complete copies of all TSR Paging Employee Plans, including amendments, trust
agreements, and insurance contracts relating to such Plans, all summary plan
descriptions and all modifications thereto communicated to employees, the most
recent Form 5500 and determination letter issues by the Internal Revenue Service
for any applicable TSR Paging Employee Plan, and the most recent actuarial
report describing the estimated liabilities of TSR Paging to provide pension and
welfare benefits to employees and their beneficiaries after termination of
employment and any related information regarding funding by TSR Paging to pay
such liabilities.
37
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF TDS
TDS hereby represents and warrants to TSR Paging and TSR Wireless as
follows:
6.1 ORGANIZATION OF TDS AND API. TDS is a corporation duly organized,
validly existing and in good standing under the laws of the State of Iowa. TDS
is duly qualified under the FCC Rules and Policies to hold an interest in TSR
Wireless as contemplated herein. API is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware. Except
as set forth on TDS Disclosure Letter Schedule 6.1, API is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of its properties owned or leased or the nature of its
activities make such qualification necessary, except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect. Copies
of the Certificate of Incorporation and Bylaws of API, and all amendments
thereto, heretofore delivered to TSR Wireless are accurate and complete as of
the date hereof. TDS Disclosure Letter Schedule 6.1 lists all jurisdictions in
which API is qualified to do business as a foreign corporation.
6.2 AUTHORIZATION. TDS and API have all requisite corporate power and
authority to own, lease and operate the API Assets, to conduct the API Business
as it is presently being conducted, and TDS has and, upon receipt of necessary
approvals by its board of directors and shareholders (all of which shall have
been received by Closing), API will have, all requisite corporate power and
authority to execute and deliver such of this Agreement, the Ancillary
Agreements and the Option Agreement to which each of them is a party, and to
perform their respective obligations hereunder and thereunder including, without
limitation, the transfer of the API Assets and the Merger. The execution and
delivery of this Agreement, the Ancillary Agreements and the Option Agreement by
TDS, and the consummation by TDS of the transactions contemplated hereby and
thereby have been duly approved by the board of directors of TDS. No other
corporate proceedings on the part of TDS, are necessary to authorize the
entering into and the performance of this Agreement, the Ancillary Agreements
and the Option Agreement and the transactions contemplated hereby and thereby
including, without limitation, transfer of the API Assets. This Agreement and
the Option Agreement have been duly executed and delivered by TDS and are legal,
valid and binding obligations of TDS and each of the Ancillary Agreements when
executed at Closing will constitute legal, valid and binding obligations of TDS,
and/or API (as applicable), enforceable against TDS and/or API (as applicable)
in accordance with their respective terms.
6.3 SUBSIDIARIES. TDS Disclosure Letter Schedule 6.3 is a correct and
complete list of API's Subsidiaries, each of which is a corporation or limited
liability company duly organized or formed, validly existing and in good
standing under the laws of its jurisdiction of incorporation or formation (as
applicable) (as identified on TDS Disclosure Letter Schedule 6.3), and has the
requisite corporate or limited liability company power and authority to conduct
its business as it is presently being conducted and to own and lease its
properties and
38
assets. The transactions contemplated by this Agreement to which such
Subsidiaries are or will be a party will, upon receipt of necessary approvals of
their respective boards of directors and stockholders, as necessary (all of
which shall have been received by Closing), be duly approved by all necessary
corporate or limited liability company proceedings on the part of such
Subsidiaries. TDS Disclosure Letter Schedule 6.3 contains a true, correct and
complete list of all jurisdictions in which each Subsidiary is qualified to do
business as a foreign corporation or limited liability company. Except as set
forth in TDS Disclosure Letter Schedule 6.3, each of the Subsidiaries is duly
qualified to do business as a foreign corporation or limited liability company
(as applicable) and is in good standing in each jurisdiction where the character
of its properties owned or leased or the nature of its activities make such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect. Copies of the Certificate or
Articles of Incorporation and Bylaws or other organizational documents of each
Subsidiary of API have been made available to TSR Paging and are accurate and
complete. API owns of record and beneficially all of the issued and outstanding
capital stock of each free and clear of any Encumbrances, except as set forth on
TDS Disclosure Letter Schedule 6.3.
6.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Interim Balance Sheet
Date, except as contemplated by this Agreement, there has not been any:
6.4.1 Material Adverse Change in respect of API, or any of its
Subsidiaries, the API FCC Licenses and/or the API FCC License Applications.
6.4.2 change in accounting methods, principles or practices by API
or any of its Subsidiaries, except as required by law or by generally applicable
changes instituted in the accounting profession;
6.4.3 material damage, destruction or loss (whether or not covered
by insurance) adversely affecting the API Assets or the API Business;
6.4.4 cancellation, individually or the aggregate of any material
indebtedness or waiver or release of any material right or claim of API or its
Subsidiaries;
6.4.5 cancellation or termination of any material Contract of API
or its Subsidiaries or entry into any material Contract by API or its
Subsidiaries, other than in respect of the API Excluded Assets;
6.4.6 sale, assignment or transfer of (i) any transmitters and
paging terminals of API or its Subsidiaries included in the Interim Balance
Sheet of API, whether in use or in storage or (ii) any material portion of the
API Assets other than sales of Inventory in the ordinary course of business;
6.4.7 failure to replenish API's inventories and supplies in a
normal and customary manner consistent with prior practice and prudent business
practices prevailing in
39
the industry, except for reductions in API's and its Subsidiaries' Inventory not
exceeding ten percent of such Inventory on the Interim Balance Sheet Date
consistent with prudent business practice, or any purchase commitment made by
API or its Subsidiaries in excess of the normal, ordinary and usual requirements
of its business or at any price in excess of the then current market price or
upon terms and conditions more onerous than those usual and customary in the
industry, or any change in the selling, pricing, advertising or personnel
practices of API and its Subsidiaries inconsistent with their prior practice and
prudent business practices prevailing in the industry;
6.4.8 institution of settlement of or agreement to settle any
Action relating to the API Business (other than the API Excluded Assets) or the
API Assets other than in the ordinary course of business consistent with past
practices but not in any case involving amounts in excess of $200,000 in the
aggregate;
6.4.9 agreement by API or its Subsidiaries to do, or any action or
omission by API or its Subsidiaries which is likely to result in, any of the
representations and warranties set forth in the preceding clauses 6.4.1 through
6.4.8 becoming untrue other than as expressly provided for herein.
6.5 ASSETS. API and its Subsidiaries have and will transfer good and
marketable title to the API Assets and, upon the consummation of the
transactions contemplated hereby, TSR Wireless will acquire good title to all
the API Assets, free and clear of any Encumbrances other than Permitted
Encumbrances. The API Assets include all assets necessary for the conduct of
the API Business as presently conducted.
6.6 API REAL PROPERTY. API and its Subsidiaries do not own any Real
Property. TDS Disclosure Letter Schedule 6.6 also contains a complete and
accurate list of all Real Property Leases of API and its Subsidiaries ("API
LEASED REAL PROPERTY" distinguishing between the stores, transmission sites,
office premises and other Leased Real Property comprising the API Leased Real
Property.
6.6.1 INTENTIONALLY OMITTED.
6.6.2 ACTIONS. There are no pending or, to the knowledge of API,
threatened condemnation proceedings or other Actions with respect to any API
Real Property.
6.6.3 REAL PROPERTY LEASES OR OTHER AGREEMENTS. Except for the
API Real Property Leases listed on TDS Disclosure Letter Schedule 6.6, there
are no material leases, subleases, licenses, occupancy agreements, options,
rights, concessions or other agreements or arrangements, written or oral,
granting to any Person the right to purchase, use or occupy any API Leased
Real Property. Except as set forth in TDS Disclosure Letter Schedule 6.6,
with respect to each API Real Property Lease, API or its Subsidiaries have
and will transfer to TSR Wireless at the Closing a valid leasehold interest
in the leasehold estate, free and clear of all Encumbrances other than
Permitted Encumbrances. Except as set forth on TDS Disclosure
40
Letter Schedule 6.6, all API Real Property Leases are valid, binding and
enforceable in all material respects in accordance with their terms and are
in full force and effect. Except as set forth on TDS Disclosure Letter
Schedule 6.6, API and its Subsidiaries enjoy peaceful and undisturbed
possession of all real property subject to such API Real Property Leases, and
API and its Subsidiaries have in all material respects performed all the
material obligations required to be performed by them through the date hereof
with respect to such API Real Property Leases, and each API Real Property
Lease is assignable (upon receipt of necessary landlord Consents) in
connection with the transactions contemplated hereby.
6.6.4 CERTIFICATE OF OCCUPANCY. API and its Subsidiaries have
received all required material approvals of Governmental Authorities (including,
without limitation, Permits and material certificates of occupancy or other
similar certificates permitting lawful occupancy of the API Leased Real
Property) required in connection with the present use of the API Leased Real
Property and all improvements thereon.
6.6.5 UTILITIES. All API Leased Real Property and the
improvements thereon are supplied with utilities and other services necessary
for the operation of such facilities as currently operated.
6.6.6 IMPROVEMENTS, FIXTURES AND EQUIPMENT. All Leasehold
Improvements, and all Fixtures and Equipment and other tangible assets owned,
leased or used by API or its Subsidiaries on the API Leased Real Property are
sufficient in all material respects for the operation of the API Business as
presently conducted.
6.6.7 NO SPECIAL ASSESSMENT. Other than to the extent such
Contracts relate to the Excluded Assets, API and its Subsidiaries have not
received notice of any special assessment relating to any API Leased Real
Property or any portion thereof, and API has no knowledge of any pending or
threatened special assessment, other than any special assessments disclosed in
TDS Disclosure Letter Schedule 6.6.
6.7 CONTRACTS AND COMMITMENTS.
6.7.1 CONTRACTS. Other than to the extent such Contracts relate
to the Excluded Assets, TDS Disclosure Letter Schedule 6.7 sets forth a complete
and accurate list of all Contracts of API and its Subsidiaries of the following
categories:
(i) Reseller Contracts (provided, that, with respect to reseller
agreements with customers only reseller agreements with customers for at least
2,000 or more pagers and with respect to reseller agreements with third party
vendors only material national reseller agreements along with totals by region
of reseller agreements with third party vendors), distribution, franchise, lease
and license (other than with respect to software that is available in consumer
retail stores and subject to "shrink wrap" license agreements) Contracts;
41
(ii) Sales, commission, consulting, agency or advertising
Contracts which are not cancelable on thirty (30) calendar days notice;
(iii) Options to buy any property, real or personal, or
options to sell or sublet any API Leased Real Property or personal property
included in the API Assets;
(iv) Contracts involving expenditures or Liabilities in excess of
$250,000 over the life of the Contract or otherwise material to API and its
Subsidiaries;
(v) Contracts containing covenants limiting the freedom of
API or its Subsidiaries to engage in any line of business or compete with any
Person;
(vi) Intentionally omitted;
(vii) All Contracts with LECs for provision of Interconnection
to API ("API INTERCONNECTION CONTRACTS"), including: (a) all such API
Interconnection Contracts regardless of whether such agreements have yet been
submitted to or approved by the relevant PUCs; (b) a listing of any requests
for interconnection filed by API with PUC(s) pursuant to Section 252(a) of
the Communications Act and a brief description of the status of the PUC
proceeding with respect to each such request; (c) a brief description of
outstanding negotiations between API and LECs regarding provision of
Interconnection by LECs regardless of whether such negotiations are pursuant
to a request for interconnection submitted by API pursuant to Section 252(a)
of the Communications Act; and (d) any related agreements between API and
LECs regarding Interconnection.
(viii) All Personal Property Leases of API and its
Subsidiaries ("API PERSONAL PROPERTY LEASES") excluding Contracts with customers
for lease of pagers; and
(ix) All Contracts not listed pursuant to Sections 6.7.1 (i)
through 6.7.1 (viii) but which are (a) material to the API Business; or (b) not
made in the ordinary course of the API Business.
Except as set forth in TDS Disclosure Letter Schedule 6.7, API has delivered or
made available to TSR Paging true, correct and complete copies of each of the
Contracts listed on TDS Disclosure Letter Schedule 6.7 and TDS Disclosure Letter
Schedule 6.8, including all amendments and supplements thereto other than API
Personal Property Leases with individual customers on standard forms (the
standard forms having been supplied).
6.7.2 ABSENCE OF BREACHES OR DEFAULTS. Except as set forth in
TDS Disclosure Letter Schedule 6.6, all of the Contracts to which API or any
Subsidiary of API is a party or bound ("API CONTRACTS") are valid and in full
force and effect. API or its Subsidiaries have duly performed all of their
material obligations under such Contracts to the extent those obligations to
perform have accrued, and no material violation of, or material default or
breach under, such Contracts by API or its Subsidiaries, or, to TDS's
knowledge, any other party has
42
occurred and neither API nor its Subsidiaries, nor, to TDS's knowledge, any
other party has repudiated any material provisions thereof.
6.7.3 PRODUCT WARRANTY. API and its Subsidiaries have
committed no act, and there has been no omission, which would result in, and
there has been no occurrence which would give rise to, any material product
liability or material liability for breach of warranty (whether covered by
insurance or not) on the part of API or its Subsidiaries, with respect to
products sold, or services rendered prior to the Closing.
6.8 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS. TDS Disclosure Letter Schedule
6.8 sets forth a complete and accurate list of the names and addresses of API
and its Subsidiaries' (i) ten (10) largest direct customers and the ten (10)
largest reseller customers for November 1997 for each sales region, showing the
approximate recurring revenue in dollars by API and its Subsidiaries to each
such customer during such month; and (ii) five (5) largest suppliers for January
through November 1997 showing the approximate total purchases in dollars by API
and its Subsidiaries from each such supplier during such period. As of the date
hereof, neither API nor any of its Subsidiaries has received any communication
from any customer or supplier named on TDS Disclosure Letter Schedule 6.8 of any
intention to terminate or reduce purchases from or supplies to API and its
Subsidiaries.
6.9 OPERATION OF THE API BUSINESS. Except as set forth in TDS Disclosure
Letter Schedule 6.9, (i) TDS and API have conducted the API Business only
through API and its Subsidiaries and not through any other divisions or any
direct or indirect Subsidiary or Affiliate of TDS and (ii) no part of the API
Business is operated by TDS or API through any entity other than API and its
Subsidiaries.
6.10 INVENTORY. All Inventory of API and its Subsidiaries ("API
INVENTORY") is of good, usable and merchantable quality and, except as set forth
on TDS Disclosure Letter Schedule 6.10, does not include obsolete or
discontinued items not otherwise saleable for ten dollars ($10) or more in the
ordinary course of business. Except as set forth on TDS Disclosure Letter
Schedule 6.10 or in amounts which are not material;
6.10.1 all API Inventory is of such quality as to meet the quality
control standards of API and any applicable governmental quality control
standards;
6.10.2 all API Inventory is saleable as current Inventory at the
current prices thereof in the ordinary course of business;
6.10.3 all API Inventory is recorded on the books of the API Business
and in the API Interim Balance Sheet at the net book value determined in
accordance with GAAP;
6.10.4 except for a write-down made in September 1996, and September
1997 no write-down in inventory has been made or should have been made pursuant
to GAAP
43
during the past two years. Except for items undergoing repair off premises, in
the possession of employees or customers all API Inventory is located at the API
Leased Real Property.
6.11 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither API or any
Subsidiaries of API, nor any officer, employee or agent of API or its
Subsidiaries, nor any other Person acting on their behalf, has, directly or
indirectly, within the past five years given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other Person
who is or may be in a position to help or hinder the API Business (or assist in
connection with any actual or proposed transaction relating to the API Business)
(i) which subjected or might have subjected API or any of its Subsidiaries to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) which if not given in the past, might have had a Material
Adverse Effect, (iii) which if not continued in the future, might have a
Material Adverse Effect or subject TSR Wireless to suit or penalty in any
private or governmental litigation or proceeding, (iv) for any of the purposes
described in Section 162(c) of the Code or (v) for the purpose of establishing
or maintaining any concealed fund or concealed bank account.
6.12 NO CONFLICT OR VIOLATION. Subject to Sections 8.2, 11.6 and 12.6
hereof and except as set forth on TDS Disclosure Letter Schedule 6.12, neither
the execution, delivery or performance of this Agreement, the Ancillary
Agreements or the Option Agreement by TDS and/or API (as applicable) nor the
consummation by TDS and/or API (as applicable) of the transactions contemplated
hereby, including the Merger, and thereby will (a) violate or conflict with any
provision of the Certificate of Incorporation or Bylaws of TDS or API or any of
API's Subsidiaries, (b) violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any Encumbrance
(other than a Permitted Encumbrance) upon any of the API Assets under, or
require any Consent under any of the terms, conditions or provisions of any API
Contract, any Financing Obligation of API, any Authorization, any API Real
Property Lease, API Personal Property Lease, franchise, Permit, agreement, or
other instrument or obligation (i) to which API or any of its Subsidiaries is a
party or (ii) by which the API Assets are bound, (c) violate any statute, rule,
regulation, ordinance, code, order, judgment, ruling, writ, injunction, decree
or award to which API or any of its Subsidiaries or the API Assets is subject,
(d) impose any Encumbrance (other than a Permitted Encumbrance) on the API
Assets. Except as specified in TDS Disclosure Letter Schedule 6.12, or in
connection with necessary corporate approvals by API of the Merger and
transactions contemplated hereby, no Consent is required to be obtained or made
by API or any of its Subsidiaries in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
44
6.13 REGULATORY MATTERS.
6.13.1 FCC LICENSES.
(i) TDS Disclosure Letter Schedule 6.13.1 lists (a) each FCC
License used in the operation of the API Business ("API FCC LICENSE") and, in
each case, the name of the licensee, the call sign, the operating frequency or
frequencies, the location and the expiration date of the API FCC License; and
(b) each FCC License Application filed as part of the operation of the API
Business ("API FCC LICENSE APPLICATION") as of the date hereof and, in each
case, the name of the applicant, the proposed frequency or frequencies, the
proposed location and the FCC file number of the API FCC License Application.
Pursuant to the provisions of Section 10.2.1, TDS has made available to TSR
Paging for inspection copies of each API FCC License and API FCC License
Application.
(ii) Except as set forth on TDS Disclosure Letter Schedule
6.13.1, (A) none of the API FCC Licenses or API FCC License Applications is
subject to any purchase, sale, option or right of first refusal agreements; (B)
API has good and marketable title, to the extent allowed by law, to the API FCC
Licenses; and (C) subject to the regulatory jurisdiction of the FCC , API holds
all API FCC Licenses free and clear of all Encumbrances.
(iii) TDS Disclosure Letter Schedule 6.13.1 lists each 000
XXx one-way paging frequency for which API or any of its Subsidiaries currently
has nationwide exclusivity ("API 929 MHz EXCLUSIVE FREQUENCY"). Except as set
forth in TDS Disclosure Letter Schedule 6.13.1, for each API 929 MHz Exclusive
Frequency: (i) API and its Subsidiaries timely constructed and placed into
operation in accordance with FCC Rules sufficient transmitters to comply with
FCC 929 MHz Exclusivity Requirements; (ii) API and its Subsidiaries have
continued to operate sufficient transmitters to comply with the terms and
conditions of such API FCC Licenses and Authorizations, the Communications Act,
the FCC Rules and all applicable state laws and regulations.
6.13.2 INTENTIONALLY OMITTED.
6.13.3 FILINGS, ETC.
(i) The API FCC Licenses and API FCC License Applications and
are the only FCC and PUC Permits and Authorizations necessary to conduct the API
Business. Except as set forth on TDS Disclosure Letter Schedule 6.13.3, API and
its Subsidiaries have duly and in a timely fashion secured or filed under
applicable law all necessary Permits and Authorizations from, and have filed all
required registrations, applications, reports and any other documents with, the
FCC, and, if applicable, any PUC and any other Governmental Authority exercising
jurisdiction or having jurisdiction over API and its Subsidiaries, in each case,
with respect to the API Business. Except as set forth on TDS Disclosure Letter
Schedule 6.13.3, (a) the API FCC Licenses (b) all other Authorizations are in
full force and effect, are
45
valid for the balances of the current license term, are not impaired by acts or
failures to make required filings on the part of API or any of its Subsidiaries,
and are free and clear of restrictions that may reasonably be expected to limit
the full operation of the API FCC Licenses or Authorizations, in each case
without adverse conditions, restrictions or impairments, except for such
conditions as are generally applicable to holders of such FCC Licenses and
Authorizations. No renewal of any API FCC License would constitute a major
environmental action under the rules of the FCC.
(ii) Except as set forth on TDS Disclosure Letter Schedule
6.13.3, neither API nor its Subsidiaries is subject to any Order or any pending
or, to the knowledge of TDS, threatened, Action (excluding rule making that has
general industry applicability) which affects or would be expected to affect, in
any material respect, the validity of any API FCC License, or result in the
revocation, termination, or adverse modification thereof, or impair the renewal
thereof. Except as set forth on TDS Disclosure Letter Schedule 6.13.3, no event
has occurred and is continuing (excluding rule making that has general industry
applicability) that could reasonably be expected to (a) result in the
revocation, termination, non-renewal or adverse modification of any API FCC
License or (b) materially and adversely affect any rights of API or its
Subsidiaries thereunder.
6.13.4 FEES. API and its Subsidiaries have paid all franchise,
license, regulatory or other fees and charges which have become due and payable
pursuant to any applications, filings, recordings and registrations with, and
all Authorizations and Permits from, the FCC, any PUC or any other Governmental
Authority, in respect of the API Business.
6.13.5 SHARING AGREEMENTS. Except as set forth on TDS Disclosure
Letter Schedule 6.13.5, neither API nor any of its Subsidiaries is a party to
any agreement for the shared use of facilities or equipment used in connection
with the API Business.
6.13.6 OPERATIONS. The equipment operating pursuant to the API FCC
Licenses or PUC Authorizations of API and its Subsidiaries is operating in all
material respects in accordance with the terms and conditions of such API FCC
License or Authorizations, the Communications Act, the FCC Rules and all
applicable state laws and regulations.
6.13.7 CONSTRUCTION. Except as set forth on TDS Disclosure Letter
Schedule 6.13.7 all construction for facilities that API intends to place in
service proposed in any API FCC License is proceeding in a manner that may
reasonably be expected to allow compliance with applicable FCC construction
benchmarks, the completion of such construction and commencement of operations
within the time specified in the relevant API FCC License.
46
6.14 FINANCIAL STATEMENTS; RECEIVABLES; PUBLIC FILINGS.
6.14.1 FINANCIAL STATEMENTS. The API Financial Statements are
attached hereto as TDS Disclosure Letter Schedule 6.14.1. The API Financial
Statements (a) were prepared in accordance with the Books and Records of API and
its Subsidiaries, (b) were prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods covered
thereby subject, in the case of the API Unaudited Financial Statements, to the
absence of footnotes and to normal year-end adjustments and (c) fairly present
(i) the consolidated assets, liabilities (including all reserves) and financial
position of API and its Subsidiaries (other than AMS) and (ii) the assets,
Liabilities (including all reserves) and financial position of AMS in each case
as of the respective dates thereof and the results of operations and changes in
cash flows for the periods then ended, consolidated as appropriate. The API
Audited Financial Statements have been audited by Xxxxxx Xxxxxxxx LLP,
independent certified public accountants, whose reports thereon are included
with such API Audited Financial Statements.
6.14.2 RECEIVABLES. All of the receivables of API and its
Subsidiaries (including accounts receivable, loans receivable and advances)
which have arisen in connection with the API Business and which are reflected in
the Interim Financial Statements, and all such receivables which will have
arisen since the Interim Balance Sheet Date, have arisen only from BONA FIDE
transactions in the ordinary course of business. All receivables of API and its
Subsidiaries on the date of this Agreement are, and on the Closing Date will be,
good and collectible in the ordinary course of business of API within 120 days
of their incurrence, subject to any applicable reserves set forth in the Interim
Balance Sheet of API. TDS has no knowledge of any facts or circumstances
generally which would result in any material increase in the uncollectability of
such receivables as a class in excess of the reserves therefor set forth on the
Interim Financial Statements. TDS Disclosure Letter Schedule 6.14.2 hereto
accurately lists as of November 28, 1997 all receivables arising out of or
relating to the API Business in excess of $1,000, the amount owing and the aging
of such receivable and the name and last known address of the party from whom
such receivable is owing.
6.14.3 FILINGS. TDS Disclosure Letter Schedule 6.14.3 sets forth a
list of all reports filed by API with the SEC under the Exchange Act during the
period from January 1, 1995 to the date hereof (collectively, the "SEC
REPORTS"), true and correct copies of which have been made available to TSR
Paging. None of the SEC Reports, as of their respective dates (as amended
through the date hereof) contained any untrue statement of material fact or
omitted to state a material fact with respect to the API Business required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
6.15 BOOKS AND RECORDS. API and its Subsidiaries have made and kept (and
given TSR Paging access to) the Books and Records of API, which, in all material
respects accurately and fairly reflect the activities of API and its
Subsidiaries that would be so recorded.
47
6.16 LITIGATION. Except as set forth on Schedules 6.13.3 and 6.16 there is
no Action or Order, pending or to the knowledge of API threatened (a) against,
related to or affecting (i) API or any of its Subsidiaries or the API Assets, or
(ii) any stockholders (including TDS) officers or directors of API or any of its
Subsidiaries (in each case, in such capacity) and which either (A) may be
reasonably expected to result in Damages in excess of $100,000 in respect of any
individual Order for the payment of money damages (or $200,000 in the
aggregate), or (B) seeks as of the date hereof to delay, limit or enjoin the
transactions contemplated by this Agreement, the Ancillary Agreements, the
Merger Agreement or the Option Agreement or (b) in which TDS (in a matter
directly related to API or the API Business), API or any of its Subsidiaries is
a plaintiff, including any derivative suits brought by or on behalf of TDS, API
or any of its Subsidiaries. None of TDS (in a matter directly related to API or
the API Business), API or any of its Subsidiaries is in default with respect to
or subject to any Order, and to the knowledge of TDS, there are no unsatisfied
Orders against API or any of its Subsidiaries or the API Assets.
6.17 COMPLIANCE WITH LAW. API and its Subsidiaries are and have been in
compliance in all material respects with all Authorizations, Regulations, and
Permits in respect of the API Assets and the API Business; IT BEING UNDERSTOOD
that nothing in this representation is intended to address any compliance issues
that are the subject of any other representation or warranty set forth herein.
6.18 NO BROKERS. Except for the fees payable to Credit Suisse First Boston
and BancBoston Securities Inc. in connection with the transactions contemplated
hereby, which shall be paid by TDS, no broker, finder or similar agent is
entitled to any finder's fee, brokerage fees or commission or similar payment
from TDS, API or any of its Subsidiaries in connection with the transactions
contemplated hereby.
6.19 NO OTHER AGREEMENTS TO SELL THE API ASSETS. Neither TDS nor API nor
any of their respective officers, directors or affiliates have any commitment or
legal obligation, absolute or contingent, to any other Person other than TSR
Wireless and TSR Paging to sell, assign, transfer or effect a sale of the API
Assets (other than Sales of Inventory in the ordinary course of business), to
sell or effect a sale of the capital stock of API or any of its Subsidiaries
(other than in connection with existing employee stock option and stock purchase
plans to effect any merger, consolidation, exclusive license, liquidation,
dissolution or other reorganization of API or any of its Subsidiaries, or to
enter into any agreement or cause the entering into of an agreement with respect
to any of the foregoing business combination transactions.
6.20 PROPRIETARY RIGHTS.
6.20.1 PROPRIETARY RIGHTS. TDS Disclosure Letter Schedule 6.20
lists all of API and its Subsidiaries' domestic and foreign registrations of
trademarks and of other marks, trade names or other trade rights, and all
pending applications for any such registrations, all of API's and its
Subsidiaries' registered copyrights and all of API's and its Subsidiaries'
patents
48
and pending patent applications, and all agreements under which API or its
Subsidiaries are licensed to use Proprietary Rights.
6.20.2 OWNERSHIP AND PROTECTION OF PROPRIETARY RIGHTS. API or
one of its Subsidiaries owns and/or has the right to use each of the
Proprietary Rights listed on TDS Disclosure Letter Schedule 6.20. The
Proprietary Rights listed on TDS Disclosure Letter Schedule 6.20 constitute
all of the Proprietary Rights necessary to conduct the API Business in the
manner presently conducted. None of the Proprietary Rights is involved in
any pending or, to the knowledge of TDS, threatened litigation. No other
Person (i) has the right to use any of the Proprietary Rights, except
pursuant to the Contracts; or (ii) to TDS' knowledge, except as set forth in
TDS Disclosure Letter Schedule 6.20, is infringing upon any Proprietary
Rights. To TDS' knowledge, the use by API and its Subsidiaries of the
Proprietary Rights is not infringing upon or otherwise violating the rights
of any third party. No proceedings have been instituted against or notices
received by API or any of its Subsidiaries that are presently outstanding
alleging that the use by API or any of its Subsidiaries of the Proprietary
Rights infringes upon or otherwise violates any rights of a third party in or
to such Proprietary Rights. All Proprietary Rights are assignable by API and
its Subsidiaries to TSR Wireless in the manner contemplated by this Agreement.
6.21 ENVIRONMENTAL MATTERS.
6.21.1 COMPLIANCE WITH ENVIRONMENTAL LAW. Each of API and its
Subsidiaries has complied and is in compliance in all material respects with all
applicable Environmental Laws pertaining to any of the properties and assets of
the API Business (including the Facilities of API and its Subsidiaries ("API
FACILITIES")) and the use and ownership thereof, and to the operation of the API
Business. No violation by API or any of its Subsidiaries is being alleged of
any applicable Environmental Law relating to any of the properties and assets of
the API Business including the API Facilities or the use, occupation or
ownership thereof, or to the operation of the API Business.
6.21.2 OTHER ENVIRONMENTAL MATTERS. Neither API nor to the
knowledge of API any other Person (including any tenant or subtenant) has caused
or taken any action that will result in, and neither API nor any of its
Subsidiaries is subject to, any material Liability relating (i) environmental
conditions on, under, or about the API Facilities, including without limitation,
the air, soil and groundwater conditions at such Facilities or (ii) the past or
present use, management, handling, transport, treatment, generation, storage,
disposal or Release of any Hazardous Materials. TDS has disclosed and made
available to TSR Paging all information, including, without limitation, all
studies, analyses and test results, in the possession, custody or control of or
otherwise known to TDS relating to (x) the environmental conditions on, under or
about the API Facilities, and (y) any Hazardous Materials used, managed,
handled, transported, treated, generated, stored or Released by API or any other
Person on, under, about or from any of the API Facilities, or otherwise in
connection with the use or operation of the API Business.
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6.22 TAX MATTERS.
6.22.1 API has (or by the Closing will have) duly and timely filed
all Tax returns relating to the API Business with respect to Taxes through the
Closing Date for which TSR Wireless could have post-closing liability ("API PCD
TAXES") required to be filed on or before the Closing Date ("API PCD TAX
RETURNS"). Except for API PCD Taxes set forth on TDS Disclosure Letter Schedule
6.22, which are being contested in good faith and by appropriate proceedings,
the following API PCD Taxes have (or by the Closing Date will have) been duly
and timely paid: (i) all API PCD Taxes shown to be due on the API PCD Tax
Returns, (ii) all deficiencies and assessments of API PCD Taxes of which API has
or by the Closing Date will have received written notice. All Taxes required to
be withheld by or on behalf of API in connection with amounts paid or owing to
any employee, independent contractor, creditor or other party with respect to
API ("API WITHHOLDING TAXES") have been withheld, and such withheld taxes have
either been duly and timely paid to the proper Governmental Authorities or set
aside in accounts for such purpose.
6.22.2 Except as set forth on TDS Disclosure Letter Schedule 6.22,
(i) all API PCD Tax Returns have been examined by the relevant taxing authority
or the period for assessment of the Taxes in respect of which such Tax returns
were required to be filed has expired, and (ii) no agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any API PCD Taxes or API Withholding Taxes, and no power of
attorney with respect to any such Taxes, has been filed with the Internal
Revenue Service ("IRS") or any other Governmental Authority.
6.22.3 Except as set forth on TDS Disclosure Letter Schedule 6.22,
(i) there are no API PCD Taxes or API Withholding Taxes for which a deficiency
has been asserted in writing by any Governmental Authority to be due and (ii) no
issue has been raised in writing by any Governmental Authority in the course of
any audit with respect to API PCD Taxes or API Withholding Taxes. Except as set
forth on TDS Disclosure Letter Schedule 6.22.3, no API PCD Taxes and no API
Withholding Taxes are currently under audit by any Governmental Authority of
which API has, or will have by the Closing, received written notice.
6.22.4 TSR Wireless will not be required to deduct and withhold any
amount pursuant to section 1445(a) of the Code upon the transfer of the API
Business to TSR Wireless.
6.22.5 Except as set forth on TDS Disclosure Letter Schedule 6.22,
there is no assessment or Action or administrative appeal pending, or threatened
of which API has received assessment or written notice against or relating to
API in connection with API PCD Taxes.
6.23 INVESTMENT INTENT. TDS is acquiring its Membership Interests for its
own account for investment and with no present intention of distributing or
reselling such
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Membership Interests or any part thereof. TDS is fully informed as to the
applicable limitations upon any distribution or resale of Membership
Interests, which have not been registered pursuant to the Securities Act.
TDS agrees not to distribute or resell any of the Membership Interests if
such distribution or resale would constitute a violation of the Securities
Act by TDS.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF TSR WIRELESS
TSR Wireless hereby represents and warrants to the Transferors as follows:
7.1 ORGANIZATION OF TSR WIRELESS. TSR Wireless is a limited liability
company duly formed validly existing and in good standing under the laws of the
State of Delaware. Copies of the Certificate of Formation and Limited Liability
Company Agreement of TSR Wireless, heretofore delivered by TSR Wireless to each
of the Transferors, are accurate and complete as of the date hereof. TSR
Wireless is duly qualified to do business and is in good standing in each
jurisdiction in which such qualification is required or will be required as a
result of the transactions contemplated by this Agreement by applicable law,
except where the failure to be so qualified will not have a material adverse
effect on the ability of TSR Wireless to consummate the transactions
contemplated hereby. TSR Wireless has not engaged in any activity other than in
connection with the transactions contemplated hereby.
7.2 AUTHORIZATION. TSR Wireless has full corporate power and authority to
execute and deliver this Agreement, the Ancillary Agreements and the Option
Agreement and to perform its obligations hereunder and thereunder. The
execution, delivery and performance by TSR Wireless of this Agreement, the
Ancillary Agreements and the Option Agreement has been duly authorized by all
requisite action on the part of TSR Wireless. This Agreement and the Option
Agreement have been duly executed and delivered by TSR Wireless and are valid
and binding obligations of TSR Wireless and each of the Ancillary Agreements
when executed at Closing will constitute a valid and binding obligation of TSR
Wireless enforceable against TSR Wireless in accordance with their respective
terms.
7.3 NO CONFLICT OR VIOLATION. Neither the execution and delivery of this
Agreement, the Ancillary Agreements or the Option Agreement by TSR Wireless, nor
the performance of its obligations hereunder and thereunder will result in (i) a
violation of or a conflict with any provision of the Certificate of Formation of
TSR Wireless or the TSR Wireless LLC Agreement, or (ii) violate or conflict with
or result in a breach of or constitute a default under any term or provision of
any contract, agreement, commitment, lease, license, franchise or permit or
other instrument or obligation to which TSR Wireless is a party or is bound, or
(iii) a violation by TSR Wireless of any Regulation or Order to which TSR
Wireless is subject.
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7.4 CONSENTS AND APPROVALS. No Authorization, Consent or Permit, is
required to be made or obtained by TSR Wireless in connection with TSR
Wireless's execution, delivery and performance of this Agreement.
7.5 BROKER AND FINDERS. Neither TSR Wireless nor any of its Affiliates
has entered into any agreement or incurred any obligation, directly or
indirectly, for the payment of any brokerage fees, commissions or finder's fee
in connection with the transactions contemplated by this Agreement.
7.6 LITIGATION AND PROCEEDINGS. There are no Actions pending or, to the
best of knowledge of TSR Wireless, threatened against the consummation by TSR
Wireless of the transactions contemplated hereby.
7.7 COMPLIANCE WITH LAW. TSR Wireless is, and since its organization has
been, in compliance in all material respects with all applicable Regulations and
Permits.
ARTICLE VIII
COVENANTS OF THE TRANSFERORS AND TSR WIRELESS
The Transferors and TSR Wireless hereby each covenant as follows:
8.1 FURTHER ASSURANCES. Each of the parties hereto agrees, both before
and after the Closing, (i) to use their respective best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, the Ancillary Agreements and the Merger, (ii) to
execute any documents, instruments or conveyances of any kind which may be
reasonably necessary or advisable to carry out any of the transactions
contemplated hereunder and under the Ancillary Agreement and the Merger, (iii)
to cooperate with each other in connection with the foregoing, including using
their respective best efforts (A) to obtain all necessary Authorizations and
Consents; (B) to obtain all necessary Permits as are required to be obtained
under any Regulations, (C) to effect all necessary registrations and filings,
including, without limitation, submissions of information requested by
Governmental Authorities, and (D) to fulfill all conditions to this Agreement
provided, in connection with the Merger, the use of best efforts (x) shall
require TDS to offer merger consideration of $2.25 per share in cash (net) to
acquire the outstanding Common Stock of API in the Merger not owned by TDS,
(y) subject to approval of the Merger by a special committee of the independent
directors of the Board of Directors of API, shall require TDS to forthwith
consummate the Merger upon acquiring ninety (90) or more percent of the
outstanding Common Stock of API and if TDS shall fail to acquire ninety (90)
percent of the outstanding Common Stock of API, to proceed forthwith and
consummate the Merger in accordance with applicable state law and (z) shall not
require TDS to complete a merger which does not have the recommendation of a
special committee of independent directors of API; PROVIDED,
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HOWEVER, that neither shall be required to make any material payments, commence
litigation or agree to any material modifications to the terms of any Contracts,
Real Property Leases or Permits in connection with the foregoing.
Notwithstanding the generality of this Section 8.1, TSR Paging's due diligence
review of the API FCC Licenses has raised certain discrepancies and errors that
TSR Paging believes should be corrected prior to Closing. API will use its
reasonable commercial efforts, with TSR Paging's cooperation, to correct such
discrepancies and errors prior to Closing and will correct such errors and
discrepancies within its control.
8.2 FCC CONSENT. Each of the parties hereto acknowledges and agrees that
the transactions contemplated by this Agreement, including but not necessarily
limited to assignment of the TSR Paging FCC Licenses to TSR Wireless and
assignment of the API FCC Licenses to TSR Wireless, can only by accomplished
upon receipt of prior FCC Consent. Without in any way limiting the generality
of Section 8.1 hereof, the parties agree to cooperate with each other, including
using their respective best efforts, to promptly prepare, file with the FCC,
prosecute and obtain FCC grant by Final FCC Order within the time frame
specified in Section 15.1.1 (ii) of this Agreement of the applications necessary
to obtain all required FCC Consent, including but not necessarily limited to
applications to obtain FCC Consent to assignment of the API FCC Licenses to TSR
Wireless (collectively, the "API-TSR WIRELESS ASSIGNMENT APPLICATION") and to
obtain FCC Consent to assignment of the TSR Paging FCC Licenses to TSR Wireless
(collectively, the "TSR PAGING-TSR WIRELESS ASSIGNMENT APPLICATION"). With
respect to the API-TSR Wireless Assignment Application and the TSR Paging-TSR
Wireless Assignment Application: (A) TDS will prepare those portions of such
applications required for TDS, API and/or their Subsidiaries; (B) TSR Paging
will prepare those portions of such applications required for TSR Paging; (C)
TSR Wireless will specify the manner in which TSR Wireless's portions of such
applications are prepared; (D) TSR Wireless will pay all FCC-imposed filing fees
with respect to the API-TSR Wireless Assignment Application; and (E) TSR
Wireless will pay all FCC-imposed filing fees with respect to the TSR Paging-TSR
Wireless Assignment Application.
8.3 NOTIFICATION OF CERTAIN MATTERS. From the date hereof through the
Closing, each Transferor shall give prompt notice to TSR Wireless and the other
Transferor and TSR Wireless shall give prompt notice to each Transferor of
(a) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any of the Transferors' or TSR Wireless's
respective representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect and (b) any failure of any
Transferor or to comply with or satisfy any of its respective covenants,
conditions or agreements to be complied with or satisfied by it under this
Agreement; PROVIDED, HOWEVER, that such disclosure shall not be deemed to cure
any breach of a representation, warranty, covenant or agreement, or to satisfy
any condition.
ARTICLE IX
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COVENANTS OF TSR PAGING
TSR Paging hereby covenants as follows:
9.1 ACCESS TO INFORMATION.
9.1.1 From the date hereof through the Closing, subject to any
confidentiality obligations of TSR Paging, TSR Paging shall, and shall cause its
officers, directors and employees to, afford TDS and its Representatives, during
normal business hours and upon reasonable notice to TSR Paging and in a manner
which will not unduly interfere with the operation of the TSR Paging Business,
complete access at all reasonable times to the TSR Paging Assets for the purpose
of inspecting the same, and to the officers and employees of TSR Paging, and
shall furnish TDS and its Representatives all financial, operating and other
data and information as TDS may reasonably request, except to the extent that
such access would violate any Regulation to which TSR Paging, its employees, the
TSR Paging Assets or the TSR Paging Business is subject; PROVIDED that TSR
Paging shall have the right to have a Representative present at all such times;
and PROVIDED FURTHER that such access shall be at the expense of the party
exercising its rights hereunder. Notwithstanding such access and the
information provided to TDS after the date hereof, TDS and TSR Wireless each
acknowledge and agrees that TSR Paging makes no representation or warranty,
express or implied, at common law, by statute or otherwise, except as
specifically set forth in this Agreement.
9.2 EMPLOYEE AND EMPLOYEE BENEFIT MATTERS.
9.2.1 TSR Paging shall use all reasonable efforts to cause all
employees of TSR Paging to make available their employment services to TSR
Wireless (the "TSR PAGING EMPLOYEES"). Effective as of the Closing Date, TSR
Wireless shall offer employment to all of the TSR Paging Employees on the same
terms and conditions and with the same benefits as enjoyed by them prior to the
Closing Date and shall assume all Liabilities of TSR Paging in respect of the
TSR Paging Employees or other beneficiaries or dependents, including all
Liabilities under the Employee Plans of TSR Paging and all Liabilities in
relation to life, disability, accidental death or dismemberment, supplemental
unemployment compensation, medical, dental, hospitalization, other health or
other welfare or fringe benefits or expense reimbursements. In connection
therewith, TSR Wireless shall assume all of TSR Paging's responsibility for,
become the successor plan sponsor of, and assume, each of TSR Paging's Employee
Plans.
9.2.2 From and after the Closing, TSR Wireless shall assume and
become solely responsible for any and all Liabilities of TSR Paging in respect
of each TSR Paging Employee, or the beneficiary or dependent of each such TSR
Paging Employee, to provide post-employment welfare benefits to such TSR Paging
Employee, beneficiary or dependent following termination of employment with TSR
Wireless.
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9.2.3 From and after the Closing Date, TSR Wireless shall assume
and be solely responsible for any and all Liabilities relating to or arising in
connection with the requirements of section 4980B of the Code to provide
continuation of health care coverage under any Employee Plan of TSR Paging in
respect of TSR Paging Employees and their covered dependents.
9.2.4 From and after the Closing Date, TSR Wireless shall assume
and be solely responsible for any and all Liabilities to or in respect of any
TSR Paging Employee relating to or arising in connection with any and all claims
for workers' compensation benefits arising in connection with any occupational
injury or disease occurring or existing on or prior to the Closing Date.
9.2.5 TSR Paging will, and TSR Wireless will, (i) treat TSR
Wireless as a "successor employer' and TSR Paging as a "predecessor," within the
meaning of sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to TSR
Paging Employees who are employed by TSR Wireless for purposes of Taxes imposed
under the United States Federal Unemployment Tax Act ("FUTA") or the United
States Federal Insurance Contributions Act ("FICA") and (ii) cooperate with each
other to avoid, to the extent possible, the filing of more year within which the
Closing Date occurs.
9.2.6 At the request of TSR Wireless with respect to any
particular applicable Tax law relating to employment, unemployment insurance,
social security, disability, workers' compensation payroll, health care or other
similar Tax other than Taxes imposed under FICA and FUTA, TSR Paging will and
TSR Wireless will, (i) treat TSR Wireless as a successor employer and TSR Paging
as a predecessor employer, within the meaning of the relevant provisions of such
Tax law, with respect to TSR Paging Employees who are employed by TSR Wireless
and (ii) cooperate with each other to avoid, to the extent possible, the filing
of more than one individual information reporting form pursuant to each such Tax
law with respect to each TSR Paging Employee for the calendar year within which
the Closing Date occurs.
9.2.7. Before and after the Closing, TSR Paging will use all
reasonable efforts to cause TSR Wireless to take, or cause to be taken, all
actions necessary, proper or advisable to carry out its obligations hereunder.
9.3 CONDUCT OF BUSINESS. From the date hereof through the Closing TSR
Paging shall, except as contemplated by this Agreement, or as consented to by
TDS in writing, operate its business in the ordinary course and substantially in
accordance with past practice and will use its best efforts not to take any
action inconsistent with this Agreement. Without limiting the generally of the
foregoing, TSR Paging shall not, except as specifically contemplated by this
Agreement:
9.3.1 engage in any transaction not permitted by Sections 5.10 and
5.11 of the Securities Purchase Agreement dated July 17, 1995 between, amongst
other Persons, TSR Paging and the Investors;
55
9.3.2 do any other act which would cause any representation or
warranty of TSR Paging in this Agreement to be or become untrue in any material
respect; or
9.3.3 enter into any agreement, or otherwise become obligated, to
do any action prohibited hereunder.
9.3.4 directly or indirectly, (a) enter into any merger,
consolidation or reorganization in which TSR Paging is not the surviving
corporation or (b) transfer or agree to transfer all or substantially all TSR
Paging's Assets, unless prior to such merger, consolidation, reorganization or
asset transfer (collectively, a "TRANSACTION"), the surviving corporation or the
transferee, respectively, shall have agreed in writing (i) to assume the
obligations of TSR Paging under this Agreement, and for that purpose references
in the Exchange and Registration Rights Agreement to "Registrable Securities"
shall be deemed to include any securities which API or its shareholders would be
entitled to receive pursuant to any such Transaction, or (ii) to purchase the
API Assets and the API Assumed Liabilities or otherwise acquire the API Business
for consideration consisting of cash, a cash equivalent or freely transferable
and marketable securities (or, if not freely transferable and marketable,
subject to restrictions no more onerous than on the securities received by the
Investors in the Transaction), PROVIDED that such consideration (x) shall be the
same type of consideration as payable to TSR Paging or its shareholders in
connection with the Transaction, (y) shall be payable on the same terms as the
consideration paid to TSR Paging in the Transaction, (z) shall be in an amount
that bears the same proportion to the consideration paid to TSR Paging in the
Transaction as the initial Membership Interest of API pursuant to Section 3.1
bears to the initial Membership Interest of TSR Paging pursuant to Section 3.1
(i.e., the aggregate consideration paid in such a Transaction for TSR Paging and
for the API Assets and API Assumed Liabilities shall be allocated 70% to TSR
Paging and 30% to API), and PROVIDED FURTHER that the obligation to purchase the
API Assets and the API Assumed Liabilities or otherwise acquire the API Business
shall be contingent on and subject only to the satisfaction by API or TDS of
closing conditions comparable to those set forth in Sections 11.6 and 11.7, and
other usual and customary closing conditions in acquisitions of paging
businesses.
9.4 1997 FINANCIAL STATEMENTS. TSR Paging shall prepare its audited
financial statements for the fiscal year ending on December 31, 1997 and deliver
a copy thereof to TDS on or before May 1, 1998.
ARTICLE X
COVENANTS OF TDS
TDS hereby covenants as follows:
10.1 NO SOLICITATION.
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10.1.1 NO SOLICITATION. From the date hereof through the Closing
or the earlier termination of this Agreement, TDS shall not, and shall use its
best efforts to cause its Representatives not to, directly or indirectly, enter
into, solicit, initiate or continue any discussions or negotiations with, or
encourage or respond to any inquires or proposals by, or participate in any
negotiations with, or provide any information to, or otherwise cooperate in any
other way with, any Person, other than TSR Paging and its Representatives,
concerning any sale of all or any substantial portion of the API Assets or the
API Business, or of any shares of capital stock of API or its Subsidiaries, or
any merger, consolidation, liquidation, dissolution or exclusive licensing
arrangement or similar transaction involving API or its Subsidiaries (each such
transaction being referred to herein as a "PROPOSED API ACQUISITION
TRANSACTION").
10.1.2 NOTIFICATION. TDS shall promptly notify TSR Paging if any
discussions or negotiations are sought to be initiated, any inquiry or proposal
is made, or any information is requested with respect to any Proposed API
Acquisition Transaction and notify TSR Paging of the terms of any proposal which
it may receive in respect of any such Proposed API Acquisition Transaction,
including, without limitation, the identity of the prospective purchaser or
soliciting party, except to the extent that any such notification would violate
any now existing agreement of TDS or API.
10.2 ACCESS TO INFORMATION.
10.2.1 From the date hereof through the Closing, TDS shall, and shall
cause API and their respective officers, directors and employees to, afford TSR
Paging and its Representatives, during normal business hours and upon reasonable
notice to TDS and API and in a manner which will not interfere with the
operation of the API Business, complete access at all reasonable times to the
API Assets and the API Business for the purpose of inspecting the same, and to
the officers and employees of API, and shall furnish TSR Paging and its
authorized representatives all financial, operating and other data and
information as TSR Paging may reasonably request, except to the extent that such
access would violate any governmental regulation, law or order to which TDS,
API, their employees or the API Assets are subject; PROVIDED that API shall have
the right to have Representatives present at all such times; and PROVIDED
FURTHER that such access shall be at the expense of TSR Paging. Notwithstanding
such access and the information provided to TSR Paging after the date hereof,
TSR Paging and TSR Wireless acknowledge and agree that TDS makes no
representations or warranties, express or implied, at common law, by statute or
otherwise, except as specifically set forth in this Agreement.
10.2.2 TSR Paging shall have the right, at its sole cost and
expense to (i) after consultation with and with the consent of API (not to be
unreasonably withheld or delayed) conduct tests of the soil surface or
subsurface waters and air quality at, in, on, beneath or about the API Leased
Real Property, and such other procedures as may be recommended by an independent
environmental consultant selected by TSR Paging (the "CONSULTANT") based on its
reasonable professional judgment, in a manner consistent with good engineering
practice, (ii)
57
inspect records, reports, permits, applications, monitoring results, studies,
correspondence, data and any other information or documents relevant to
environmental conditions or environmental noncompliance, and (iii) inspect all
buildings and equipment at the API Facilities, including without limitation the
visual inspection of the API Facilities for asbestos-containing construction
materials; PROVIDED, in each case, such tests and inspections shall be conducted
only (a) during regular business hours; and (b) in a manner which will not
interfere with the operation of the API Business and/or the use of, access to or
egress from the API Facilities.
10.2.3 TSR Paging's right to conduct tests, inspect records and
other documents, and visually inspect all buildings and equipment at the API
Facilities shall also be subject to the following terms and conditions:
(i) All testing performed on TSR Paging's behalf shall be conducted
by the Consultant;
(ii) A Representative of TDS shall have the right to accompany the
Consultant as it performs testing;
(iii) Except as otherwise required by law, any information
concerning the API Leased Real Property gathered by TSR Paging or the Consultant
as the result of, or in connection with, the testing shall be kept confidential
in accordance with subsection (iv) below and shall not be revealed to, or
discussed with, anyone other than Representatives of TSR Paging or
Representatives of TDS who agree to comply with the provisions of subsection
(iv) below; and
(iv) In the event that any party to this Agreement or any party set
forth in subsection 10.2.3(iii) is requested or required to disclose information
described in subsection 10.2.2, TSR Paging shall provide TDS or TDS shall
provide TSR Paging, as the case may be, with prompt notice of such request so
that TDS or TSR Paging, as the case may be, may seek an appropriate protective
order or waiver by the other party's compliance with this Agreement. If, in the
absence of a protective order or the receipt of a waiver hereunder, such party
is nonetheless, in the opinion of its counsel, compelled to disclose such
information to any tribunal or else stand liable for contempt or suffer other
censure or penalty, such party will furnish only that portion of the information
which is legally required and will exercise its reasonable efforts to obtain
reliable assurance that confidential treatment will be afforded to the disclosed
information. The requirements of this subsection 10.2.3(iv) shall not apply to
information in the public domain or lawfully acquired on a nonconfidential basis
from others.
10.3 CONDUCT OF BUSINESS. From the date hereof through the Closing TDS
shall cause API, except as contemplated by this Agreement, or as consented to by
TSR Paging in writing to operate its business in the ordinary course and
substantially in accordance with past practice (except with respect to certain
API FCC Licenses and API FCC License Applications and certain reductions in
planned License build-outs as described in TDS Disclosure Letter
58
Schedule 6.13.7) and will use its best efforts not to take any action
inconsistent with this Agreement. Without limiting the generality of the
foregoing, TDS shall not, and shall cause API and each of its Subsidiaries not
to, except as specifically contemplated by this Agreement:
10.3.1 change or amend the Certificate of Incorporation or Bylaws
of API or any of API's Subsidiaries, except as otherwise required by law;
10.3.2 enter into, extend, modify, terminate or renew any API
Contract disclosed, or which would have been required to be disclosed on TDS
Disclosure Letter Schedule 6.7 if entered into, extended or modified prior to
the date of this Agreement, or any API Real Property Lease;
10.3.3 sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any API FCC License, API FCC License
Application except those previously identified in TDS Disclosure Letter Schedule
10.3.3 or any other API Assets, or any interests therein other than sales and
leases of Inventory in the ordinary course of business;
10.3.4 acquire by merger or consolidation with, or merge or
consolidate with, or purchase substantially all of the assets of, or otherwise
acquire any material assets or business of any Person;
10.3.5 fail to expend funds for budgeted capital expenditures or
commitments as set forth in the budget of API attached hereto as Exhibit I
including, without limitation, maintaining levels of spare parts sufficient to
maintain and upgrade the network infrastructure as reasonably necessary and
maintain the present level of Pagers in Service;
10.3.6 fail to maintain the API Assets in substantially their
current state of repair, excepting normal wear and tear, or fail to replace
consistent with API's past practice inoperable, worn-out or obsolete or
destroyed API Assets or fail to maintain the Inventory levels of API and its
Subsidiaries at the levels on the Interim Balance Sheet Date (subject to
reductions in Inventory not exceeding ten (10) percent of such Inventory on the
Interim Balance Sheet Date in accordance with prudent business practice);
10.3.7 make any loans or advances to any Person, except for normal
advances in respect of expenses incurred by employees in the ordinary course of
business.
10.3.8 for one year from the date of this Agreement, Transfer or
agree to Transfer all or any part of the API Note or any interest therein to any
Person otherwise than pursuant to the Option Agreement.
10.3.9 take or omit to take any action which will result in the
further default under (not otherwise waived) or any acceleration of any API
Intercompany Liabilities or any other Financing Obligations;
59
10.3.10 fail to take all commercially reasonable actions reasonably
necessary to retain employees of API and its Subsidiaries in the employment of
API or the applicable Subsidiary through the Closing.
10.3.11 do any other act which would cause any representation or
warranty of TDS in this Agreement to be or become untrue in any material
respect; or
10.3.12 enter into any agreement, or otherwise become obligated, to
do any action prohibited hereunder.
10.4 1997 FINANCIAL STATEMENTS. TDS shall cause API to prepare its audited
financial statements for the fiscal year ending on December 31, 1997 and deliver
a copy thereof to TSR Paging on or before May 1, 1998.
10.5 THE MERGER. In support of and in furtherance of TDS' obligations in
Article VIII in connection with the Merger and this Article X to cause API to
take and refrain from taking certain acts and obligations, TDS shall ensure that
any merger agreement entered into with API (i) provides for the direct or
indirect acquisition by TDS of all outstanding shares of capital stock of API
not presently owned by TDS or its Affiliates in exchange for consideration other
than capital stock of API; and (ii) imposes similar covenants on API as are
imposed on TDS in this Article X in respect of API.
10.6 SUPPORT OF API. TDS shall continue to provide API with such financial
support and assistance as it requires to continue operating the API Business in
the ordinary course of business, including without limitation under the API
Intercompany Indebtedness (taking into account the waiver of certain defaults
dated March 5, 1997).
10.7 TRANSITIONAL SERVICES AGREEMENT. At the Closing, TDS and TSR Wireless
shall enter into a transitional services agreement (the "TRANSITIONAL SERVICES
AGREEMENT") in the form attached hereto as Exhibit G, pursuant to which TDS or
its Affiliates, including API, shall provide certain transitional services in
connection with information systems and lock-box services for such charges,
periods and other terms as set forth therein.
10.8 EMPLOYEES. The Transferors and TSR Wireless shall agree upon
appropriate procedures with respect to the allocation of costs of employees of
API and its Subsidiaries (the "API EMPLOYEES"). Notwithstanding the foregoing,
neither TSR Wireless or TSR Paging shall become liable for any Liabilities or
any benefits to which the API Employees are entitled in respect of their
employment prior to the employment of any API Employees by TSR Wireless to the
extent not included in current liabilities of API assumed pursuant to Section
2.4.2.
10.9 MONTHLY CERTIFICATES. If the Closing shall not have occurred by the
following applicable dates: (i) on or before July 15, 1998, TDS shall deliver a
certificate (the "JUNE CERTIFICATE") to TSR Paging setting forth the Pagers in
Service and the Net Recurring Pager Revenues of API and its Subsidiaries as at
and for the month ended June 30, 1998 and, if
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applicable, the API Pager Shortfall and the API Revenue Shortfall as at and for
the month ended June 30, 1998; (ii) on or before August 15, 1998, TDS shall
deliver a certificate (the "JULY CERTIFICATE") to TSR Paging setting forth the
Pagers in Service and the Net Revenues of API and its Subsidiaries as at and for
the month ended July 31, 1998 and, if applicable, the API Pager Shortfall and
the API Revenue Shortfall as at and for the month ended July 31, 1998 and (iii)
on or before September 15, 1998, TDS shall deliver a certificate (the "AUGUST
CERTIFICATE") to TSR Paging setting forth the Pagers in Service and the Net
Revenues of API and its Subsidiaries as at and for the month ended August 31,
1998 and, if applicable, the API Pager Shortfall and the API Revenue Shortfall
as at and for the month ended August 31, 1998.
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF TSR PAGING
The obligation of TSR Paging to effect the Closing is subject to the
satisfaction, on or prior to the Closing, of each of the following conditions,
any of which may be waived by TSR Paging in the discretion of TSR Paging:
11.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of TDS contained in this Agreement shall be true and correct in all
respects (in the case of any representation or warranty containing a materiality
qualification) or in all material respects (in the case of any representation or
warranty not containing any materiality qualification) at and as of the date of
this Agreement and at and as of the Closing, and TDS shall have performed and
satisfied all material agreements and covenants required hereby to be performed
by it, and shall have caused API to perform all material actions to be performed
by API, prior to the Closing.
11.2 NO INJUNCTION, ETC.. Consummation of the transactions contemplated
hereby and by the Ancillary Agreement, the Merger Agreement and the Option
Agreement shall not have been restrained, enjoined or otherwise prohibited by
any applicable law, including any order, injunction, decree or judgment of any
court or other Governmental Authority. No court or other Governmental Authority
shall have enacted any applicable law which would make illegal the consummation
of the transactions contemplated hereby and thereby and no proceeding with
respect to the application of any such applicable law to such effect shall be
pending.
11.3 OPINION OF COUNSEL. TDS shall have delivered to TSR Paging opinions
of Sidley and Austin and Xxxxxx & Xxxxxxxx, L.L.P., respectively, counsel and
special regulatory counsel to TDS, dated as of the Closing Date, in
substantially the forms attached hereto as Exhibits E-1 and E-2, respectively.
11.4 CERTIFICATES. TDS shall furnish TSR Paging with such certificates of
its duly authorized officers and others to evidence compliance with the
conditions set forth in this Article XI as may be reasonably requested by TSR
Paging.
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11.5 CORPORATE DOCUMENTS. TSR Paging shall have received from TDS
resolutions adopted by the boards of directors of TDS, any corporation which is
a constituent corporation in the Merger and API as applicable, approving this
Agreement, the Ancillary Agreements, the Merger and the Option Agreement and the
transactions contemplated hereby and thereby, certified by the corporate
secretary of each Person, as applicable.
11.6 CONSENTS. All Authorizations, Consents and Permits necessary to
effect the transfer of the API Assets to TSR Wireless and the performance of the
other obligations of TDS hereunder shall have been obtained except (other than
in the case of Authorizations, Consents and Permits of the FCC) where the
failure to obtain any such Authorization, Consent or Permit would not reasonably
be expected to have a Material Adverse Effect.
11.7 MERGER. The Merger shall have been consummated.
11.8 MATERIAL ADVERSE CHANGE. No Material Adverse Change shall have
occurred in respect of the API Business. For the purposes of this Section 11.8,
Material Adverse Change shall include, without limitation, a reduction in the
number of Pagers in Service of API and its Subsidiaries or the Net Monthly Pager
Revenues of API and its Subsidiaries as at the last day of and for the month
prior to the month in which the Closing occurs below 581,250 and $4,350,000,
respectively. Not less than three (3) Business Days prior to the Closing Date,
TDS shall deliver a certificate to TSR Paging setting forth the information
described above, which shall take effect as an additional representation and
warranty of TDS hereunder. No certification pursuant to this Section 11.8 shall
affect the rights and obligations of the parties pursuant to Section 3.2, nor
shall any waiver by TSR Paging of its rights under this Section 11.8 constitute
a waiver of its rights under Section 3.2. If TSR Paging shall have exercised
the Option Extension, this Section 11.8 shall no longer apply.
11.9 OTHER AGREEMENTS. TDS and TSR Wireless shall have executed and
delivered the Ancillary Agreements to which they are each a party in the forms
attached as exhibits hereto.
11.10 INTENTIONALLY OMITTED.
11.11 INTENTIONALLY OMITTED.
11.12 TENANT ESTOPPEL CERTIFICATES. TSR Paging shall have received
tenant estoppel certificates addressed to TSR Wireless with respect to the API
Leased Real Property indicated with a (*) on TDS Disclosure Letter Schedule 6.6,
which certificates shall be reasonably satisfactory to TSR Paging or in the form
required by the applicable lease of such API Leased Real Property.
11.13 CLOSING CURRENT ASSETS. The API Inventory, the cash and cash
equivalents of API and the receivables of API as at the Closing Date to be
transferred to TSR Wireless hereunder shall have an aggregate value of at least
ninety percent (90%) of that shown on the
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Interim Balance Sheet of API, determined in a manner consistent with GAAP and
with the preparation of the Interim Balance Sheet of API. Upon the Closing, TDS
shall deliver a certificate to TSR Paging setting forth the information
described above, which shall take effect as an additional representation and
warranty of TDS hereunder.
ARTICLE XII
CONDITIONS TO OBLIGATIONS OF TDS
The obligation of TDS to effect the Closing is subject to the
satisfaction, on or prior to the Closing, of each of the following conditions,
any of which may be waived by TDS in the discretion of TDS:
12.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of TSR Paging and TSR Wireless contained in this Agreement shall be
true and correct in all respects (in the case of any representation or warranty
containing any materiality qualification) in all material respects (in the case
of any representation or warranty not containing any materiality qualification)
at and as of the date of this Agreement and at and as of the Closing (other than
any breaches of any such representations or warranties as result from any Claims
by stockholders of API), and TSR Paging and TSR Wireless shall have performed
and satisfied all material agreements and covenants required hereby to be
performed by them prior to the Closing.
12.2 NO INJUNCTION, ETC.. Consummation of the transactions contemplated
hereby and by the Ancillary Agreements, the Merger Agreement and the Option
Agreement shall not have been restrained, enjoined or otherwise prohibited by
any applicable law, including any order, injunction, decree or judgment of
any court or other Governmental Authority. No court or other Governmental
Authority shall have enacted any applicable law which would make illegal the
consummation of the transactions contemplated hereby and thereby and no
proceeding with respect to the application of any such applicable law to such
effect shall be pending.
12.3 OPINIONS OF COUNSEL. TSR Paging shall have delivered to TDS opinions
of Xxxxxx & Xxxxxxx and Xxxxxxx X. Xxxxxx & Associates, respectively counsel and
special regulatory counsel to TSR Paging, dated as of the Closing Date, in
substantially the forms attached hereto as Exhibits F-1 and F-2, respectively.
12.4 CERTIFICATES. TSR Paging shall furnish TDS with such certificates of
its duly authorized officers and others to evidence compliance with the
conditions set forth in this Article XII as may be reasonably requested by TDS.
12.5 CORPORATE DOCUMENTS. TDS shall have received from TSR Paging
resolutions adopted by the board of directors of TSR Paging and resolutions of
TSR Wireless, as
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applicable, approving this Agreement, the Ancillary Agreements and the Option
Agreement and the transactions contemplated hereby and thereby, certified by the
corporate secretary or Managing Member of each Person, as applicable.
12.6 CONSENTS. All Authorizations, Consents and Permits necessary to
effect the transfer of the TSR Paging Assets to TSR Wireless and the performance
of the other obligations of TSR Paging hereunder shall have been obtained except
(other than in the case of Authorizations, Consents and Permits of the FCC)
where the failure to obtain any such Authorization, Consent or Permit would not
reasonably be expected to have a Material Adverse Effect.
12.7 MERGER. The Merger shall have been consummated.
12.8 MATERIAL ADVERSE CHANGE. No Material Adverse Change shall have
occurred in respect of the TSR Paging Business. For the purposes of this
Section 12.8, Material Adverse Change shall include, without limitation, a
reduction in the number of Pagers in Service of TSR Paging or the Net Monthly
Pager Revenues of TSR Paging as at and for the last day of the month prior to
the month in which the Closing occurs below 945,000 and $4,125,000,
respectively. Not less than three (3) Business Days prior to the Closing Date,
TSR Paging shall deliver a certificate to TDS setting forth the information
described above, which shall take effect as an additional representation and
warranty of TSR Paging hereunder. No certification pursuant to this Section
shall affect the rights and obligations of the parties pursuant to Section 3.2,
nor shall any waiver by TSR Paging of its rights under this Section constitute a
waiver of its rights under Section 3.2. If TSR Paging shall have exercised the
Extension Option, this Section 12.8 shall no longer apply.
12.9 OTHER AGREEMENTS. TSR Paging, TSR Wireless, the stockholders of TSR
Paging and the Investors shall have executed and delivered the Ancillary
Agreements to which they are party in the forms attached as exhibits hereto.
12.10 INTENTIONALLY OMITTED.
12.11 CLOSING CURRENT ASSETS. The TSR Paging Inventory, the cash and
cash equivalents of TSR Paging and the receivables of TSR Paging as at the
Closing Date to be transferred to TSR Wireless hereunder shall have an
aggregate value of not at least ninety percent (90%) of that shown on the
Interim Balance Sheet of TSR Paging, determined in a manner consistent with
GAAP and with the preparation of the Interim Balance Sheet of TSR Paging.
Upon the Closing, TSR Paging shall deliver a certificate to TDS setting forth
the information described above, which shall take effect as an additional
representation and warranty of TSR Paging hereunder.
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ARTICLE XIII
RISK OF LOSS; CONSENTS TO ASSIGNMENT OF CONTRACTS, REAL PROPERTY
LEASES AND PERSONAL PROPERTY LEASES
13.1 RISK OF LOSS. From the date hereof through the Closing Date, all risk
of loss or damage to the property included (i) in the API Assets shall be borne
by TDS; and (ii) in the TSR Paging Assets shall be borne by TSR Paging; and
thereafter in each case shall be borne by TSR Wireless. If any material portion
of the API Assets or the TSR Paging Assets (collectively, "ASSETS") is destroyed
or damaged by fire or any other cause on or prior to the Closing Date, the
applicable Transferor shall give written notice to TSR Wireless and the other
Transferor as soon as practicable after, but in any event within five (5)
calendar days of, discovery of such damage or destruction, including
specification of the amount of insurance, if any, covering such Assets and the
amount, if any, which the applicable Transferor is otherwise entitled to receive
as a consequence of such damage or destruction. Prior to the Closing, the other
Transferor shall have the option, which shall be exercised by written notice to
the applicable Transferor within ten (10) calendar days after receipt of the
applicable Transferor's notice or if there are not ten (10) calendar days prior
to the Closing Date, as soon as practicable prior to the Closing Date, of (a)
accepting such Assets in their destroyed or damaged condition in which event TSR
Wireless shall be entitled to the proceeds of any insurance or other proceeds
payable with respect to such loss, or the cash equivalent thereof and to
indemnification for any uninsured portion of such loss pursuant to Section 14.4,
and the full Units shall be issued to the applicable Transferor, (b) if agreed
by the Applicable Transferor, excluding such Assets from this Agreement, in
which event the allocation of Units shall be adjusted proportionately, as
mutually agreed between the parties or (c) after providing the Applicable
Transferor with a reasonable opportunity to cure, terminating this Agreement in
accordance with Section 15.1, if such damage or destruction is a Material
Adverse Effect.
13.2 CONSENTS TO ASSIGNMENT OF CONTRACTS, REAL PROPERTY LEASES AND PERSONAL
PROPERTY LEASES. Anything in this Agreement to the contrary notwithstanding,
this Agreement shall not constitute an agreement to assign any Contract, Real
Property Lease or Personal Property Lease, or any claim or right or any benefit
arising thereunder or resulting therefrom, if an attempted assignment thereof,
without the Consent of a third party thereto, would constitute a breach thereof
or in any way adversely affect the rights of TSR Wireless thereunder. If such
Consent is not obtained, or if an attempted assignment thereof would be
ineffective or would affect the rights thereunder so that TSR Wireless would not
receive all such rights, the Transferors and TSR Wireless will cooperate, in all
reasonable respects, to obtain such Consent as soon as practicable and, until
such Consent is obtained, to provide to TSR Wireless the benefits under any of
the foregoing to which such Consent relates (with TSR Wireless responsible for
all the liabilities and obligations thereunder). In particular, in the event
that any such Authorization or Consent is not obtained prior to Closing, then
TSR Wireless and the Transferors shall enter into such arrangements (including
subleasing or subcontracting if permitted) to provide to the parties the
economic and operational equivalent of obtaining such Consent and assigning such
Contract, Real Property Lease or Personal
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Property Lease, including enforcement for the benefit of TSR Wireless of all
claims or rights arising thereunder, and the performance by TSR Wireless of the
obligations thereunder.
ARTICLE XIV
ACTIONS BY TSR WIRELESS AND TRANSFERORS AFTER THE CLOSING
14.1 FURTHER ACTIONS. On and after the Closing Date, TSR Wireless and the
Transferors will take all appropriate actions and execute all documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to confirm or effect TSR Wireless's ownership, possession and control
(in accordance with this Agreement) of the Assets and assumption of the TSR
Paging Assumed Liabilities and the API Assumed Liabilities.
14.2 SURVIVAL OF REPRESENTATIONS, ETC.. The representations, warranties,
covenants and agreements of the Transferors and TSR Wireless contained herein
shall survive the Closing Date for the period set forth in this Section 14.2:
(i) all such representations and warranties and all claims and causes of action
with respect thereto shall terminate upon expiration of two (2) years after the
Closing Date, except that the representations and warranties in Sections 5.1,
6.1 and 7.1 (Organization), 5.2, 6.2 and 7.2 (Authorization) 5.13 and 6.13
(Regulatory Matters) and 5.18 and 6.18 (No Brokers) and all claims and causes of
action with respect thereto shall survive indefinitely and the representations
and warranties in Sections 5.21 and 6.21 (Environmental Matters) and 5.22 and
6.22 (Tax Matters), and all claims and causes of action with respect thereto
shall survive until the expiration of the applicable statute of limitations
(with extensions) (including, in the case of any Taxes, the statute of
limitations, as such may be extended, in respect of the collection of any Tax)
with respect to the matters addressed in such Sections; and (ii) each such
covenant and agreement shall survive the Closing and remain in full force and
effect unless otherwise limited by its terms. The termination of the
representations and warranties provided herein shall not affect the rights of a
party in respect of any Claim made by such party in a writing received by the
other party prior to the expiration of the applicable survival period provided
herein.
14.3 BOOKS AND RECORDS. TSR Wireless agrees that it will cooperate with
and make available to the Transferors during normal business hours, all Books
and Records, information and employees (without substantial disruption of
employment) which are necessary or useful in connection with any tax inquiry,
audit, investigation or dispute, any litigation or investigation or any other
matter requiring any such Books and Records, information or employees for any
reasonable business purpose (including any matter concerning a potential breach
of any representation or warranty or covenant of a party under this Agreement);
IT BEING UNDERSTOOD that all Books and Records shall be maintained by TSR
Wireless for seven (7) years following the Closing. Except as otherwise
required in Section 14.4, the investigating Transferor shall bear all of the
out-of-pocket costs and expenses (including, without limitation, attorneys'
fees, but excluding reimbursement for salaries and employee benefits) reasonably
incurred in
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connection with providing such Books and Records, information or employees. TSR
Wireless will give TDS notice of any breach or potential breach by TSR Paging of
any representation or warranty. All information received pursuant to this
Section 14.3 shall be subject to the confidentiality provisions of Section 14.6.
14.4 INDEMNIFICATION.
14.4.1 BY TSR PAGING. TSR Paging shall indemnify, save and hold
harmless, on an After Tax Basis, (x) TSR Wireless and its Subsidiaries, and
their respective directors, officers and employees (other than the Transferred
Employees) (the "TSR WIRELESS INDEMNITEES") and (y) TDS and its Affiliates and
Subsidiaries, and their respective directors, officers, shareholders and
employees (the "TDS INDEMNITEES") from and against any and all costs, losses,
Taxes, Liabilities, damages, lawsuits, deficiencies, claims, demands, and
expenses (whether or not arising out of third-party claims), including, without
limitation, reasonable attorneys' fees and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing herein,
(collectively, "DAMAGES"), incurred in connection with, arising out of,
resulting from (i) subject to Section 14.4.7(i), Section 14.4.7 (iv) and Section
14.4.7(vi), any breach of any representation or warranty made by TSR Paging in
this Agreement or (ii) subject to Section 14.4.7(i), Section 14.4.7(iv) and
Section 14.4.7(vi), any breach of any covenant or agreement made by TSR Paging
in this Agreement.
14.4.2 BY TDS. TDS shall indemnify, save and hold harmless, on an
After Tax Basis, (x) TSR Paging, its Affiliates and Subsidiaries, and their
respective directors, officers, shareholders and employees (the "TSR PAGING
INDEMNITEES" and together with the TDS Indemnitees, the TSR Wireless Indemnitees
and the Investor Indemnitees, the "INDEMNITEES") and (y) the TSR Wireless
Indemnitees from and against any and all Damages incurred in connection with,
arising out of, resulting from (i) subject to Section 14.4.7(ii) and Section
14.4.7(iv) and Section 14.4.7 (vii), any breach of any representation or
warranty made by TDS, API or any Subsidiary of API in this Agreement; (ii)
subject to Section 14.4.7(ii) and Section 14.4.7(iv) and Section 14.4.7 (vii),
any breach of any covenant or agreement made by TDS in this Agreement; (iii) any
API Excluded Liability and (iv) any Claim by any shareholder of TDS or API other
than MIS Charges. TDS shall indemnify, save and hold harmless the Investors and
their respective members, investors, funds, directors, officers, partners and
employees (the "INVESTOR INDEMNITEES") from and against any and all Damages
incurred in connection with, arising out of, or resulting from any Claim by any
shareholder of TDS or API.
14.4.3 BY TSR WIRELESS. TSR Wireless shall indemnify, save and
hold harmless, on an After Tax Basis, the TSR Paging Indemnitees and the TDS
Indemnitees from and against any and all Damages incurred in connection with,
arising out of, resulting from (i) subject to Section 14.4.7(iii) and Section
14.47(iv), any breach of any representation or warranty made by TSR Wireless in
this Agreement; (ii) subject to Section 14.4.7(iii) and Section 14.4.7(iv), any
breach of any covenant or agreement made by TSR Wireless in this Agreement;
(iii) any TSR Paging Assumed Liability; and (iv) any API Assumed Liability;
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14.4.4 DAMAGES. The term "Damages" as used in this Section 14.4 is
not limited to matters asserted by third parties, but includes Damages incurred
or sustained by an Indemnitee in the absence of third party claims. Payments by
an Indemnitee of amounts for which such Indemnitee is indemnified hereunder
shall not be a condition precedent to recovery.
14.4.5 DEFENSE OF CLAIMS. If a claim for Damages (a "CLAIM") is to
be made by an Indemnitee, such Indemnitee shall, subject to Section 14.2, give
written notice (a "CLAIM NOTICE") to the indemnifying party as soon as
practicable after such Indemnitee becomes aware of any fact, condition or event
which may give rise to Damages for which indemnification may be sought under
this Section 14.4. If any lawsuit or enforcement action is filed against any
Indemnitee hereunder, notice thereof (a "THIRD PARTY NOTICE") shall be given to
the indemnifying party as promptly as practicable (and in any event within
fifteen (15) calendar days after the service of the citation or summons). The
failure of any indemnified party to give timely notice hereunder shall not
affect rights to indemnification hereunder, except to the extent that the
indemnifying party demonstrates actual damage caused by such failure. After
receipt of a Third Party Notice, if the indemnifying party shall acknowledge in
writing to the indemnified party that the indemnifying party shall be obligated
under the terms of its indemnity hereunder in connection with such lawsuit or
action, then the indemnifying party shall be entitled, if it so elects, (i) to
take control of the defense and investigation of such lawsuit or action, (ii) to
employ and engage attorneys of its own choice to handle and defend the same, at
the indemnifying party's cost, risk and expense unless the named parties to such
action or proceeding include both the indemnifying party and the indemnified
party and the indemnified party has been advised in writing by counsel that
there may be one or more legal defenses available to such indemnified party that
are different from or additional to those available to the indemnifying party,
and (iii) to compromise or settle such claim, which compromise or settlement
shall be made only with the written consent of the indemnified party, such
consent not to be unreasonably withheld. The indemnified party shall cooperate
in all reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; and the indemnified party may, at its own cost, participate
in the investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. The parties shall also cooperate with each other in any
notifications to insurers. If the indemnifying party fails to assume the
defense of such claim within fifteen (15) calendar days after receipt of the
Third Party Notice, the indemnified party against which such claim has been
asserted will (upon delivering notice to such effect to the indemnifying party)
have the right to undertake the defense, compromise or settlement of such claim
and the indemnifying party shall have the right to participate therein at its
own cost; PROVIDED, HOWEVER, that such claim shall not be compromised or settled
without the written consent of the indemnifying party, which consent shall not
be unreasonably withheld. In the event the indemnified party assumes the
defense of the claim, the indemnified party will keep the indemnifying party
reasonably informed of the progress of any such defense, compromise or
settlement.
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14.4.6 BROKERS AND FINDERS. Pursuant to the provisions of this
Section 14.4, each Selling Party and TSR Wireless shall indemnify, hold harmless
and defend the other parties from the payment of any and all broker's and
finder's expenses, commissions, fees or other forms of compensation which may be
due or payable from or by the indemnifying party, or may have been earned by any
third party acting on behalf of the indemnifying party in connection with the
negotiation and execution hereof and the consummation of the transactions
contemplated hereby.
14.4.7 LIMITATIONS.
(i) TSR Paging shall not be liable to any TDS Indemnitee or
any TSR Wireless Indemnitee for any Damages with respect to the matters
contained in Section 14.4.1(i) or Section 14.4.1(ii) except to the extent the
Damages therefrom exceed, in the aggregate, $1,000,000, provided however that
once such Damages, in the aggregate, exceed such sum, TSR Paging shall be
liable for all such Damages and not just the excess.
(ii) TDS shall not be liable to any TSR Paging Indemnitee or
any TSR Wireless Indemnitee for any Damages with respect to the matters
contained in Section 14.4.2(i) or Section 14.4.2(ii) except to the extent the
Damages therefrom exceed, in the aggregate, $1,000,000, provided however that
once such Damages, in the aggregate, exceed such sum, TDS shall be liable for
all such Damages and not just the excess.
(iii) TSR Wireless shall not be liable to any TSR Paging
Indemnitee or any TDS Indemnitee for any Damages with respect to the matters
contained in Section 14.4.3(i) or Section 14.4.3(ii) except to the extent the
Damages therefrom exceed, in the aggregate, $1,000,000, provided however that
once such Damages, in the aggregate, exceed such sum, TSR Wireless shall be
liable for all such Damages and not just the excess.
(iv) The indemnification provided by this Section 14.4 shall
be in addition to any other remedy of the parties hereto including damages,
specific performance and injunctive relief, provided that the limitations set
forth in Sections 14.4.7(i) through 14.4.7(iii) shall still apply with
respect to the matters contained in Sections 14.4.1(i), 14.4.1(ii),
14.4.2(i), 14.4.2(ii), 14.4.3(i) and 14.4.3(ii).
(v) No claim based on a breach of any representation or
warranty shall be valid unless first made in writing within the survival
periods set forth in Section 14.2.
(vi) Unless TDS shall terminate this Agreement pursuant to
Section 15.1.1(iv)(a) or (c), TSR Paging's liability with respect to any
breach of any representation or warranty made by TSR Paging in this Agreement
to the extent that any Damages constitute TSR Paging Assumed Liabilities
shall be to indemnify, save and hold harmless TSR Wireless and its Affiliates
and Subsidiaries and TSR Paging shall be liable to the TDS Indemnitees with
respect to any such breach only to the extent of the costs of defending any
Claim by a third party made against such Indemnitee arising out of or related
to such breach in accordance with
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Section 14.4.5, provided, (i) any Damages in connection therewith which are also
suffered by TSR Wireless shall be satisfied by payments made to TSR Wireless and
(ii) TSR Paging shall not be responsible to indemnify, save and hold harmless
such TDS Indemnitees in respect of any Claim by any shareholder of TDS or API.
(vii) Unless TSR Paging shall terminate this Agreement
pursuant to Section 15.1.1(iii)(a) or (c), TDS' liability with respect to any
breach of any representation or warranty made by TDS in this Agreement to the
extent that any Damages constitute TDS Assumed Liabilities shall be to
indemnify, save and hold harmless TSR Wireless and its Affiliates and
Subsidiaries and TDS shall be liable to the TSR Paging's Indemnitees with
respect to any such breach only to the extent of the costs of defending any
Claim by a third party made against such Indemnitee arising out of or related
to such breach in accordance with Section 14.4.5, provided, (i) any Damages
in connection therewith which are also suffered by TSR Wireless shall be
satisfied by payments made to TSR Wireless and (ii) TDS shall not be
responsible to indemnify, save and hold harmless such TSR Paging Indemnitees
in respect of any Claim by any shareholder of TSR Paging.
14.5 BULK SALES, TRANSFER TAXES.
14.5.1 It may not be practicable to comply or attempt to comply with
the procedures of the "Bulk Sales Act" or similar law of any or all of the
states in which the Assets are situated or of any other state which may be
asserted to be applicable to the transactions contemplated hereby. Accordingly,
TSR Wireless and the Transferors waive any requirements, to the extent they are
entitled to benefits thereunder, for compliance with any or all of such laws.
Each Transferor hereby agrees that the indemnity provisions of Section 14.4
hereof shall apply to any Damages of TSR Wireless arising out of or resulting
from the failure of such Transferor to comply with any such laws.
14.5.2 Following the Closing, TSR Wireless shall be responsible for
the timely payment of, and shall severally indemnify and hold harmless each
Transferor against, all sales (including, without limitation, use, value added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes and fees ("TRANSFER TAXES")), arising
out of or in connection with or attributable to the transactions effected by a
Transferor pursuant to this Agreement and the Ancillary Agreements. Subject to
the foregoing, each Transferor shall prepare and timely file all Tax returns
required to be filed in respect of Transfer Taxes, PROVIDED that TSR Wireless
shall be permitted to prepare any such Tax returns that are the primary
responsibility of TSR Wireless under applicable law.
14.6 ASSISTANCE FOR FILING OF TAX RETURNS. Each Transferor and TSR
Wireless agrees (i) to furnish or cause to be furnished to each other upon
request, as promptly as practicable, such information and assistance (including
access to books, records and correspondence received from any taxing authority)
relating to the TSR Paging Business, the TSR Paging Assets, the API Business,
and the API Assets as is reasonably necessary for the preparation and filing of
any Tax return, claim for refund or audit, and the presentation or defense of
any
70
Action relating to Taxes; (ii) to provide timely notice to each interested party
in writing of any pending or threatened Tax audits or assessments relating to
Taxes in respect of the TSR Paging Business, TSR Paging Assets, API Business or
API Assets for which another party may have a liability under Section 14.4 and
Section 14.5.2.
ARTICLE XV
MISCELLANEOUS
15.1 TERMINATION.
15.1.1 TERMINATION. This Agreement may be terminated at any time
prior to Closing:
(i) By mutual written consent of the Transferors;
(ii) By TSR Paging or TDS by written notice to the other
parties if the Closing shall not have occurred on or before 5:00 p.m. New
York City time on September 30, 1998; PROVIDED HOWEVER, that this provision
shall not be available to TDS if TSR Paging has the right to terminate this
Agreement under clause (iii) of this Section 15.1.1, and this provision shall
not be available to TSR Paging if TDS has the right to terminate this
Agreement under clause (iv) of this Section 15.1.1;
(iii) By TSR Paging by written notice to TDS if (a) the
representations and warranties of TDS shall not have been true and correct in
all respects (in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) as of the
date when made, (b) if any of the conditions set forth in Article XI shall
not have been, or if it becomes apparent that any of such conditions will not
be, fulfilled by 5:00 p.m. New York City time on September 30, 1998, (c) TDS
shall fail to comply with or perform any covenant or agreement to be complied
with or performed by TDS pursuant to this Agreement unless such failure
described in (b) or (c) shall be due to the failure of TSR Paging to perform
or comply with any of the conditions, agreements or covenants hereof to be
performed or complied with by it prior to the Closing or (d) the special
committee of independent directors of API appointed to consider the
acquisition by TDS of the Common Stock of API not owned by TDS shall fail to
approve the Merger on or before February 12, 1998 or shall subsequently
withdraw its recommendation of the Merger other than as a result of a breach
of a representation or covenant of TSR Paging hereunder; or
(iv) By TDS by written notice to TSR Paging if (a) the
representations and warranties of TSR Paging shall not have been true and
correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects (in the
case of any representation or warranty without any materiality
71
qualification) as of the date when made, (b) if any of the conditions set forth
in Article XII shall not have been, or if it becomes apparent that any of such
conditions will not be, fulfilled by 5:00 p.m. New York City time on September
30, 1998 or (c) TSR Paging shall fail to comply with or perform any covenant or
agreement to be complied with or performed by TSR Paging pursuant to this
Agreement unless such failure described in (b) or (c) shall be due to the
failure of TDS to perform or comply with any of the conditions, agreements or
covenants hereof to be performed or complied with by it prior to the Closing.
(v) By TDS by written notice delivered to TSR Paging within ten
(10) Business Days following delivery of the June Certificate to TSR Paging if
the number of Pagers in Service of API and its Subsidiaries or the Net Monthly
Pager Revenues of API and its Subsidiaries set forth on the June Certificate as
at and for the month ending June 30, 1998 are below 581,250 and $4,350,000,
respectively, unless TSR Paging pays $1,500,000 to TDS by wire transfer of
immediately available funds as set forth in the wire instructions attached
hereto as Exhibit H ("WIRE TRANSFER") within fifteen (15) Business Days of
receipt by TSR Paging of such written notice of termination from TDS (the
"EXTENSION OPTION"). Any notice to terminate this Agreement under this Section
15.1.1(v) may not be withdrawn, unless permitted by TSR Paging, and shall take
effect on the sixteenth (16th) Business Day following receipt by TSR Paging of
the written notice of termination from TDS, unless TSR Paging shall first have
exercised the Extension Option, PROVIDED, HOWEVER, that TDS shall not be able to
exercise its right to terminate this agreement pursuant to clause 15.1.1(v) if,
at the time it would otherwise exercise such right, TDS is in material breach of
a representation or warranty (in the case of a representation or warranty not
qualified as to materiality) or is in breach of a representation or warranty (in
the case of a representation or warranty qualified as to materiality). Solely
for purposes of Section 15.1.1(v) and Section 15.1.1(vi), TDS shall not be
deemed in breach of the Agreement if TDS has acted in good faith with respect to
its obligations under Sections 10.3.5, 10.3.10 and 10.6.
(vi) If TSR Paging has exercised the Extension Option, by TDS by
written notice delivered within ten (10) Business Days following delivery of
each of the July Certificate and the August Certificate, unless TSR Paging pays
$1,500,000 to TDS by Wire Transfer with fifteen (15) Business Days of receipt by
TSR Paging of such written notice of termination from TDS. Any notice to
terminate this Agreement under this Section 15.1.1(vi) may not be withdrawn
unless permitted by TSR Paging, and shall take effect on the sixteenth (16th)
Business Day following receipt by TSR Paging of the relevant written notice of
termination from TDS, unless TSR Paging shall first have paid $1,500,000 to TDS
as set forth above, PROVIDED, HOWEVER, that TDS shall not be able to exercise
its right to terminate this agreement pursuant to clause 15.1.1(v) if, at the
time it would otherwise exercise such right, TDS is in material breach of a
representation or warranty (in the case of a representation or warranty not
qualified as to materiality) or is in breach of a representation or warranty (in
the case of a representation or warranty qualified as to materiality). Solely
for purposes of Section 15.1.1(v) and Section 15.1.1(vi), TDS shall not be
deemed in breach of the Agreement if TDS has acted in good faith with respect to
its obligations under Sections 10.3.5, 10.3.10 and 10.6.
72
(vii) By TSR Paging at any time after it has exercised the
Extension Option.
15.1.2 IN THE EVENT OF TERMINATION. In the event of termination of
this Agreement:
(i) Each party will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the
party furnishing the same;
(ii) The provisions of Sections 15.10 and 15.12 shall
continue in full force and effect;
(iii) No party hereto shall have any liability or further
obligation to any other party to this Agreement, except as stated in this
Section 15.1.2, and Section 14.4.6 and 15.7, except for any breach of this
Agreement by such party occurring prior to the proper termination of this
Agreement; and
(iv) The provision of Section 10.3.8 shall continue in full
force and effect if TSR Paging terminates the Agreement pursuant to Section
15.1.1(iii)(d).
15.2 ASSIGNMENT. Neither this Agreement, the Ancillary Agreements nor any
of the rights or obligations hereunder or thereunder may be assigned by any
party without the prior written consent of the other parties thereto; except
that TSR Wireless may, without such consent, assign all such rights to any
lender as collateral security and assign all such rights and obligations to a
wholly-owned subsidiary (or a partnership controlled by TSR Wireless) of TSR
Wireless or, after the Closing, to a successor in interest to TSR Wireless which
shall assume all obligations and liabilities of TSR Wireless under this
Agreement (PROVIDED that no assignment shall release the assigning party from
responsibility for its obligations hereunder). Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, and no other Person shall
have any right, benefit or obligation under this Agreement as a third party
beneficiary or otherwise.
15.3 NOTICES. All notices under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method provided that such transmission is confirmed by telephone; the day after
it is sent, if sent for next day delivery to a domestic address by overnight
mail; and upon receipt, if sent by certified or registered mail, return receipt
requested. In each case notice shall be sent to:
If to TDS, addressed to:
00 Xxxxx XxXxxxx Xxxxxx
00
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Chief Financial Officer
With copies to:
Sidley & Austin
0 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
Sidley & Austin
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
If to TSR Paging, addressed to:
TSR Paging Inc.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx
With copies to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
TA Associates, Inc.
Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax:(000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
and to
74
Spectrum Equity Investors
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
If to TSR Wireless, addressed to:
TSR Wireless, LLC
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx
With copies to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Sidley & Austin
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
TA Associates, Inc.
Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax:(000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
and to
Spectrum Equity Investors
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
75
or to such other place and with such other copies as either party may
designate as to itself by written notice to the others.
15.4 CHOICE OF LAW. This Agreement shall be construed, interpreted and the
rights of the parties determined in accordance with the internal law, and not
the law of conflicts, of the State of New York.
15.5 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, the
Ancillary Agreements, together with all exhibits and schedules hereto and
thereto (including the Disclosure Schedule) and the Option Agreement and the
Confidentiality Agreement constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. This Agreement may not be amended or supplemented except by an
instrument in writing signed on behalf of each of the parties hereto. No
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
15.6 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.7 EXPENSES. Except as otherwise specified in this Agreement, each party
hereto shall pay its own legal, accounting, out-of-pocket and other expenses
incident to this Agreement and to any action taken by such party in preparation
for carrying this Agreement into effect.
15.8 INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
15.9 TITLES. The titles, captions or headings of the Articles and Sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
15.10 PUBLIC STATEMENTS AND PRESS RELEASES. The parties hereto
covenant and agree that, except as provided for below, each will not from and
after the date hereof make, issue or release any public announcement, press
release, statement or acknowledgment of the existence of, or reveal publicly the
terms, conditions and status of, the transactions provided for herein, without
the prior written consent of the other parties as to the content and time of
release of and the media in which such statement or announcement is to be made;
PROVIDED, HOWEVER,
76
that in the case of announcements, statements, acknowledgements or revelations
which any party is required by law to make, issue or release, the making,
issuing or releasing of any such announcement, statement, acknowledgment or
revelation by the party so required to do so by law shall not constitute a
breach of this Agreement if such party shall have given, to the extent
reasonably possible, not less than two (2) calendar days prior notice to the
other parties, and shall have attempted, to the extent reasonably possible, to
clear such announcement, statement, acknowledgment or revelation with the other
parties. Each party hereto agrees that it will not unreasonably withhold any
such consent or clearances.
15.11 KNOWLEDGE. Whenever this Agreement refers to the "knowledge of
TSR Paging", or a similar phrase, it refers to the collective actual and
constructive knowledge of Xxxxxxx XxXxxxxx, Xxxxxx Xxxxx and Xxxxxxxx X. Xxxxx
after reasonable inquiry. Wherever this Agreement refers to the "knowledge of
TDS" or a similar phrase, it refers to the collective actual and constructive
knowledge of the key management employees of TDS and API and its Subsidiaries
including Xxxxxxxx Xxxxxxxx, Xxxxx X. Xxxxxxx, Xx., Xxxxx Xxxxxxxxxx and Xxxxxx
Xxxxxxx after reasonable inquiry.
15.12 CONFIDENTIAL INFORMATION.
15.12.1 In connection with the negotiation of this Agreement, the
preparation for the consummation of the transactions contemplated hereby, and
the performance of obligations hereunder, each party acknowledges that it has
had and will have access to confidential information relating to the other
parties, including technical or marketing information, ideas, methods,
developments, inventions, improvements, business plans, trade secrets,
statistical data, diagrams, drawings, specifications or other proprietary
information relating thereto, together with all analyses, compilations, studies,
customer lists, pricing information or other documents, records or data prepared
by each party or their respective Subsidiaries (if any) or Representatives which
contain or otherwise reflect or are generated from such information
("CONFIDENTIAL INFORMATION"). The term "Confidential Information" does not
include information received by any party or its Subsidiaries in connection with
the transactions contemplated hereby which (i) is or becomes generally available
to the public other than as a result of a disclosure by such party or its
Subsidiaries or Representatives, (ii) was within any such party's possession
prior to its being furnished to such party by or on behalf of one of the other
parties in connection with the transactions contemplated hereby, provided that
the source of such information was not known by the party now possessing the
Confidential Information to be bound by a confidentiality agreement with or
other contractual, legal or fiduciary obligation of confidentiality to any party
or any other Person with respect to such information or (iii) becomes available
to any party on a non-confidential basis from a source other than one of the
other parties and their Subsidiaries, if any, or any of their respective
Representatives, provided that such source is not bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to such other parties or any other Person with respect to such
information.
77
15.12.2 TSR Paging and TDS and TSR Wireless and their respective
Subsidiaries shall treat all Confidential Information as confidential, preserve
the confidentiality thereof and not disclose any Confidential Information,
except to their respective Representatives and Affiliates who need to know such
Confidential Information in connection with the transactions contemplated hereby
and except to the board of directors of API and their Representatives. Each
party shall, and shall cause its Subsidiaries to use all reasonable efforts to
cause its Representatives to treat all Confidential Information as confidential,
preserve the confidentiality thereof and not disclose any Confidential
Information. Each party shall be responsible for any breach of this Agreement
by any of its Subsidiaries or Representatives. If, however, Confidential
Information is disclosed, such party shall immediately notify the other parties
in writing and take all reasonable steps required to prevent further disclosure.
15.12.3 Until the Closing or the termination of this Agreement, all
Confidential Information shall remain the property of the party who originally
possessed such information. In the event of the termination of this Agreement
for any reason whatsoever, each party shall, and shall cause its Subsidiaries
and Representatives to destroy or return to the other parties all Confidential
Information (including all copies, summaries and extracts thereof) furnished to
it by the other parties in connection with the transactions contemplated hereby.
15.12.4 If any of the parties or their Subsidiaries, Representatives
or Affiliates is requested or required (by oral questions, interrogatories,
requests for information or documents in legal proceedings, subpoena, civil
investigative demand or other similar process) or is required by operation of
law to disclose any Confidential Information, such party shall provide the other
parties with prompt written notice of such request or requirement, which notice
shall, if practicable, be at least 48 hours prior to making such disclosure, so
that the other parties may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Agreement. If, in the
absence of a protective order or other remedy or the receipt of such a waiver,
any party and/or any of its Subsidiaries and Representatives is nonetheless, in
the opinion of counsel, legally compelled to disclose Confidential Information,
then that party may disclose that portion of the Confidential Information which
such counsel advises is legally required to be disclosed, provided that the
party uses its reasonable efforts to preserve the confidentiality of the
Confidential Information, whereupon such disclosure shall not constitute a
breach of this Agreement.
15.12.5 This Agreement shall supersede the confidentiality agreement
dated as of May 8, 1997 between TSR Paging and TDS.
78
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers thereunto
duly authorized, all as of the day and year first above written.
TSR PAGING INC.
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------------------
Name Xxxxxxxx X. Xxxxx
--------------------------------------------
Its President
--------------------------------------------
TELEPHONE AND DATA SYSTEMS, INC.
By /s/ Xxxxx X. Xxxxxxxxxx
--------------------------------------------
Name Xxxxx X. Xxxxxxxxxx
--------------------------------------------
Its Vice President - Acquisitions
--------------------------------------------
TSR WIRELESS LLC
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------------------
Name Xxxxxxxx X. Xxxxx
--------------------------------------------
Its President
-------------------------------------------
79
SCHEDULE 1.1
1. Contract dated 3/13/97 with Microspace Communications for Stream 3, 64 KBS
segment.
2. All contracts with Subscriber Computing.
3. All agreements between API and its employees.
4. The following Agreements between API and TDS:
a. Exchange Agreement, dated January 1, 1994, between TDS and API.
b. Registration Rights Agreement, dated January 1, 1994, between TDS and
API.
c. Revolving Credit Agreement, dated January 1, 1994, between TDS and
API.
d. Intercompany Agreement, dated January 1, 1994, between TDS and API.
e. Tax Allocation Agreement, dated January 1, 1994, between TDS and API.
f. Employee Benefit Plans Agreement, dated January 1, 1994, between TDS
and API.
g. Cash Management Agreement, dated January 1, 1994, between TDS and API.
h. Insurance Cost Sharing Agreement, dated January 1, 1994, between TDS
and API.
5. Licenses for SAP and Ceridian Software (licensed to TDS). See Schedule
6.7(i)(f).
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