Exhibit 2.5
STOCK PURCHASE AGREEMENT
among
MJD VENTURES, INC.
W.B.W. TRUST NUMBER ONE
and
COMERCO, INC.
dated as of May 23, 2000
TABLE OF CONTENTS
This Table of Contents is not part of this Agreement but is attached for
convenience only.
ARTICLE I
PURCHASE OF STOCK ..................................................... 1
Section 1.1 PURCHASE AND SALE ................................. 1
Section 1.2 PURCHASE PRICE .................................... 1
Section 1.3 POST-CLOSING ADJUSTMENTS TO THE ADJUSTED
PURCHASE PRICE .....................................3
Section 1.4 EXCLUDED ASSETS AND LIABILITIES.................... 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER .......................... 4
Section 2.1 CORPORATE ORGANIZATION ............................ 4
Section 2.2 AUTHORIZATION ..................................... 5
Section 2.3 NO VIOLATION ...................................... 5
Section 2.4 SUBSIDIARIES AND INVESTMENTS ...................... 5
Section 2.5 STOCK RECORD BOOK ................................. 6
Section 2.6 CORPORATE BOOKS ................................... 6
Section 2.7 TITLE TO STOCK .................................... 6
Section 2.8 OPTIONS AND RIGHTS ................................ 7
Section 2.9 FINANCIAL STATEMENTS .............................. 7
Section 2.10 EMPLOYEES ......................................... 8
Section 2.11 ABSENCE OF CERTAIN CHANGES ........................ 9
Section 2.12 CONTRACTS ........................................ 10
(a) GENERALLY............................................. 10
(b) COMPLIANCE............................................ 11
Section 2.13 TRUE AND COMPLETE COPIES ......................... 11
Section 2.14 TITLE AND RELATED MATTERS ........................ 11
(a) OWNED PROPERTY, LIENS................................. 11
(b) LEASED PROPERTY....................................... 12
(c) REGULATORY/ZONING COMPLIANCE.......................... 12
(d) UTILITIES............................................. 13
(e) CONDITION............................................. 13
Section 2.15 LITIGATION........................................ 13
Section 2.16 TAX MATTERS....................................... 13
(a) GENERALLY............................................. 13
(b) GOOD FAITH............................................ 14
(c) CLAIMS................................................ 14
(d) COURSE OF BUSINESS.................................... 14
(e) WITHHOLDINGS.......................................... 15
(f) PARTNERSHIPS.......................................... 15
(g) ACCOUNTING METHOD ADJUSTMENTS......................... 15
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(h) TAX EXEMPTIONS........................................ 15
(i) TAX RETURN REVIEWS.................................... 15
(j) POWER OF ATTORNEY..................................... 15
(k) TRUE AND COMPLETE COPIES.............................. 15
Section 2.17 BANK AND BROKERAGE ACCOUNTS....................... 15
Section 2.18 COMPLIANCE WITH APPLICABLE LAWS, REGULATIONS AND
ORDERS............................................ 15
Section 2.19 EMPLOYEE BENEFIT PLANS............................ 16
Section 2.20 INTELLECTUAL PROPERTY............................. 20
Section 2.21 ENVIRONMENTAL MATTERS............................. 20
(a) GENERALLY............................................. 20
(b) PROPERTY.............................................. 20
(c) TRANSPORTATION........................................ 21
(d) NOTIFICATION OF RELEASE............................... 21
(e) LIENS................................................. 21
(f) SITE ASSESSMENTS...................................... 21
Section 2.22 CAPITAL EXPENDITURES AND INVESTMENTS.............. 21
Section 2.23 DEALINGS WITH AFFILIATES.......................... 22
Section 2.24 INSURANCE......................................... 22
Section 2.25 COMMISSIONS....................................... 22
Section 2.26 PERMITS AND REPORTS............................... 22
Section 2.27 ABSENCE OF UNDISCLOSED LIABILITIES................ 23
Section 2.28 YEAR 2000 COMPLIANCE.............................. 24
Section 2.29 DISCLOSURE........................................ 24
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER....................... 24
Section 3.1 CORPORATE ORGANIZATION............................ 25
Section 3.2 AUTHORIZATION..................................... 25
Section 3.3 NO VIOLATION...................................... 25
Section 3.4 INVESTMENT INTENT................................. 26
ARTICLE IV
COVENANTS OF THE SELLER AND THE COMPANY............................... 26
Section 4.1 REGULAR COURSE OF BUSINESS........................... 26
(a) GENERALLY............................................. 26
(b) COMPENSATION.......................................... 26
(c) INSURANCE............................................. 26
(d) CLAIMS................................................ 26
(e) SUPPLEMENT............................................ 26
Section 4.2 AMENDMENTS........................................ 27
Section 4.3 CAPITAL CHANGES................................... 27
Section 4.4 DIVIDENDS......................................... 27
Section 4.5 CAPITAL EXPENDITURES; TRANSACTIONS WITH
AFFILIATES........................................ 27
Section 4.6 BORROWING......................................... 27
Section 4.7 PROPERTY.......................................... 27
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Section 4.8 OTHER COMMITMENTS................................. 27
Section 4.9 INTERIM FINANCIAL INFORMATION, INVESTMENT K-1S.... 28
Section 4.10 CONSENTS AND AUTHORIZATIONS....................... 28
Section 4.11 ACCESS............................................ 28
Section 4.12 NOTICE OF TRANSFER................................ 28
Section 4.13 PAYMENT OF STAMP TAX.............................. 28
Section 4.14 DISCLOSURE........................................ 28
Section 4.15 COOPERATION WITH PURCHASER........................ 29
ARTICLE V
COVENANTS OF THE PURCHASER............................................ 29
Section 5.1 CONSENTS AND AUTHORIZATIONS....................... 29
Section 5.2 EMPLOYEES......................................... 29
ARTICLE VI
OTHER AGREEMENTS...................................................... 30
Section 6.1 AGREEMENT TO DEFEND............................... 30
Section 6.2 FURTHER ASSURANCES................................ 30
Section 6.3 CONSENTS.......................................... 30
Section 6.4 NO SOLICITATION OR NEGOTIATION.................... 30
Section 6.5 NO TERMINATION OF THE OBLIGATIONS BY SUBSEQUENT
DISSOLUTION....................................... 31
Section 6.6 PUBLIC ANNOUNCEMENTS.............................. 31
Section 6.7 RECORDS AND INFORMATION........................... 32
(a) RETENTION OF RECORDS.................................. 32
(b) ACCESS TO INFORMATION................................. 32
(c) DELIVERY OF CORPORATE RECORDS......................... 32
(d) WITNESSES............................................. 32
Section 6.8 INSURANCE POLICIES AND CLAIMS ADMINISTRATION...... 33
(a) INSURANCE COVERAGE PRIOR TO THE CLOSING DATE.......... 33
(b) INSURANCE COVERAGE AFTER THE CLOSING DATE............. 33
Section 6.9 OTHER TAX MATTERS................................. 33
(a) TAX RETURNS........................................... 33
(b) INFORMATION........................................... 34
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER........................ 34
Section 7.1 REPRESENTATIONS AND WARRANTIES.................... 34
Section 7.2 CONSENTS AND APPROVALS............................ 35
Section 7.3 NO MATERIAL ADVERSE CHANGE........................ 35
Section 7.4 NO PROCEEDING OR LITIGATION....................... 35
Section 7.5 SECRETARY'S CERTIFICATE........................... 35
Section 7.6 CERTIFICATES OF GOOD STANDING..................... 36
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Section 7.7 OPINION(S) OF SELLER'S COUNSEL.................... 36
Section 7.8 EMPLOYMENT AGREEMENT TERMINATION.................. 36
Section 7.9 RESIGNATIONS...................................... 36
Section 7.10 OTHER DOCUMENTS................................... 36
Section 7.11 LIENS............................................. 36
Section 7.12 DELIVERY OF MINUTE BOOKS.......................... 36
Section 7.13 DELIVERY OF FINANCIAL STATEMENTS.................. 36
Section 7.14 RENEWAL OF FRANCHISES............................. 37
Section 7.15 DISSOLUTION OF YELM WIRELESS, INC................. 37
Section 7.16 ADDITIONAL ENVIRONMENTAL TESTING.................. 37
Section 7.17 PAYOFF OF KEY BANK, N.A.'S INDEBTEDNESS AND
RELEASE OF LIENS.................................. 37
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE SELLER........................... 37
Section 8.1 REPRESENTATIONS AND WARRANTIES.................... 38
Section 8.2 CONSENTS AND APPROVALS............................ 38
Section 8.3 NO PROCEEDING OR LITIGATION....................... 38
Section 8.4 SECRETARY'S CERTIFICATE........................... 38
Section 8.5 OPINION OF PURCHASER'S COUNSEL.................... 38
ARTICLE IX
CLOSING............................................................... 39
Section 9.1 CLOSING........................................... 39
Section 9.2 CLOSING DATE PAYMENT AND RECEIPT OF SHARES........ 39
ARTICLE X
TERMINATION AND ABANDONMENT........................................... 39
Section 10.1 METHODS OF TERMINATION............................ 39
(a) MUTUAL CONSENT........................................ 39
(b) SELLER'S FAILURE TO PERFORM........................... 39
(c) PURCHASER'S FAILURE TO PERFORM........................ 40
(d) FAILURE TO CLOSE BY DECEMBER 31, 2000................. 40
(e) MATERIAL ADVERSE CHANGE............................... 40
(f) REMEDIES.............................................. 40
Section 10.2 PROCEDURE UPON TERMINATION........................ 40
(a) RETURN OF RECORDS..................................... 40
(b) CONFIDENTIALITY....................................... 41
ARTICLE XI
SURVIVAL OF TERMS; INDEMNIFICATION.................................... 41
Section 11.1 SURVIVAL; LIMITATIONS............................. 41
Section 11.2 INDEMNIFICATION BY THE SELLER..................... 41
(a) MISREPRESENTATION OR BREACH........................... 42
(b) TAXES................................................. 42
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(c) OTHER CLAIMS.......................................... 42
(d) WASHINGTON OREGON WIRELESS, LLC....................... 42
(e) FAILURE TO RECEIVE REFUNDS OR TAX CREDITS SHOWN ON THE
CLOSING BALANCE SHEET................................. 42
(f) RELATED EXPENSES...................................... 42
Section 11.3 INDEMNIFICATION BY THE PURCHASER.................. 43
(a) MISREPRESENTATION OR BREACH........................... 43
(b) TAXES................................................. 43
(c) OTHER CLAIMS.......................................... 43
(d) RELATED EXPENSES...................................... 43
Section 11.4 THIRD PARTY CLAIMS................................ 43
(a) GENERALLY............................................. 43
(b) COUNSEL............................................... 44
Section 11.5 OTHER CLAIMS...................................... 45
Section 11.6 CONTINUED LIABILITY FOR INDEMNITY CLAIMS.......... 46
Section 11.7 BASKET AMOUNT..................................... 46
(a) INDEMNIFICATION BY THE SELLER......................... 46
(b) INDEMNIFICATION BY THE PURCHASER...................... 46
(c) AGGREGATION........................................... 47
ARTICLE XII
GENERAL PROVISIONS.................................................... 47
Section 12.1 AMENDMENT AND MODIFICATION........................ 47
Section 12.2 WAIVER............................................ 47
Section 12.3 CERTAIN DEFINITIONS............................... 47
Section 12.4 NOTICES........................................... 51
Section 12.5 ASSIGNMENT........................................ 53
Section 12.6 GOVERNING LAW..................................... 53
Section 12.7 COUNTERPARTS...................................... 53
Section 12.8 HEADINGS.......................................... 54
Section 12.9 ENTIRE AGREEMENT.................................. 54
Section 12.10 NO BENEFIT........................................ 54
Section 12.11 DELAYS OR OMISSIONS............................... 54
Section 12.12 SEVERABILITY...................................... 54
Section 12.13 EXPENSES.......................................... 54
Section 12.14 TIME OF THE ESSENCE............................... 55
Section 12.15 INJUNCTIVE RELIEF................................. 55
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SCHEDULES
1.4 Excluded Assets and Liabilities
2.3 No Violations
2.4 Subsidiaries and Investments
2.5 Capital Stock
2.6 Corporate Books
2.7 List of Shareholders/No Liens on Shares
2.9 Financial Statements
2.10 Employees
2.11 Certain Changes
2.12 Contracts
2.14(a) Owned Property, Liens
2.14(b) Leased Property
2.14(c) Regulatory/Zoning Compliance
2.14(e) Condition
2.15 Litigation
2.16 Tax Matters
2.17 Bank and Brokerage Accounts
2.19 Employee Benefit Plans
2.20 Intellectual Property
2.21 Environmental Matters
2.22 Capital Expenditures and Investments
2.23 Dealings with Affiliates
2.24 Insurance
2.25 Brokerage Commission
2.26 Permits
2.27 Absence of Undisclosed Liabilities/Corporate Debt
3.3 Consents and Authorizations of Purchaser
4.9 Interim Financial Information
4.14 Article IV Disclosure Statement
EXHIBITS
7.7 Opinion of Seller's Counsel
8.5 Opinion of Purchaser's Counsel
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AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of the
23rd day of May, 2000, among MJD VENTURES, INC., a Delaware corporation (the
"PURCHASER"), and W.B.W TRUST NUMBER ONE, a Washington Trust ("W.B.W. TRUST",
referred to hereinafter as the "SELLER"), and COMERCO, INC., a Washington
corporation ("COMERCO").
RECITALS
WHEREAS, the W.B.W. Trust owns 31,250 shares of $10 par value common stock
of Comerco, such 31,250 shares of common stock constituting all of the issued
and outstanding shares of capital stock of the Company (the "COMERCO CAPITAL
STOCK");
WHEREAS, Comerco owns Two Hundred Ninety-Four (294) shares of $100 par
value common stock of YCOM Networks, Inc., a Washington corporation (formerly
Yelm Telephone Company)("YCOM"; Comerco and YCOM and all subsidiaries thereof
hereinafter referred to collectively as the "COMPANY"), constituting all of the
issued and outstanding shares of capital stock of YCOM (the "YCOM CAPITAL
STOCK") (any and all shares, options, warrants, rights and interests, legal or
equitable, in or with respect to the Comerco Capital Stock and/or the YCOM
Capital Stock hereinafter referred to collectively as the "SHARES").
WHEREAS, YCOM is an operating telephone company that provides wireline
telecommunications services in two (2) exchanges in the State of Washington
(Yelm and Rainier), serving the communities of Yelm, XxXxxxx and Rainier, in
Xxxxxxxx and Xxxxxx Counties in west central Washington, with approximately
12,780 access lines (collectively, the "EXCHANGE") (the business of YCOM is
hereinafter referred to as the "COMMUNICATIONS BUSINESS", the "BUSINESS" or the
"BUSINESS");
ARTICLE I
PURCHASE OF STOCK
Section 1.1 PURCHASE AND SALE. At the Closing Date, on the terms and
subject to the conditions set forth in this Agreement, the Seller agrees to sell
to the Purchaser, and the Purchaser agrees to purchase from the Seller, the
Shares.
Section 1.2 PURCHASE PRICE.
(a) The Purchaser shall purchase the Shares of Comerco
Capital Stock from the Seller, at a price per share of Comerco Capital Stock
(the "PRICE PER SHARE") equal to the Adjusted Purchase Price (as defined below)
divided by 31,250 (being the total number of shares of Comerco Capital Stock
issued and outstanding as of the Closing Date). The Adjusted Purchase Price (as
defined in accordance with Section 1.2(e) below) shall be the sum of Fifty-Three
Million and No/100 Dollars ($53,000,000) (the "Base Purchase Price), plus or
minus the Company's "NET TOTAL LONG TERM DEBT" as of the Closing Date as defined
in accordance with Section 1.2(b) below, plus or minus "NET WORKING CAPITAL" as
defined in accordance with Section 1.2(c) below, and plus the "SECURITIES VALUE"
as defined in accordance with Section 1.2(d) below. The Adjusted Purchase Price
shall be payable in accordance with this Article I, subject to the provisions of
Section 9.2 hereof.
(b) The Base Purchase Price shall be adjusted by adding to it or
subtracting from it, as the case may be, the Net Total Long Term Debt on the
Closing Date. For the purposes hereof, Net Total Long Term Debt shall be defined
as the Company's Total Long Term Debt on the Closing Date in excess of or less
than Total Long Term Debt of Five Million Dollars ($5,000,000), computed in
accordance with GAAP, consistently applied (on a consolidated basis). To the
extent the Company's Total Long Term Debt on the Closing Date exceeds Five
Million Dollars ($5,000,000), the Base Purchase Price shall be decreased, dollar
for dollar. To the extent the Company's Total Long Term Debt on the Closing Date
is less than Five Million Dollars ($5,000,000) the Base Purchase Price shall be
increased, dollar for dollar. The Net Total Long Term Debt of the Company shall
be based on an estimated closing balance sheet of the Company, which shall be
delivered to the Purchaser at least ten (10) days prior to the Closing Date,
prepared in good faith by Xxxxxxx, Stone & Xxxxxx, X.X., subject to the
Purchaser's review and approval thereof, which shall not be unreasonably
withheld.
(c) The Base Purchase Price shall be adjusted by adding to it or
subtracting from it, as the case may be, the Net Working Capital on the Closing
Date. For the purposes hereof, Net Working Capital shall be defined as the
Company's current assets minus current liabilities, computed in accordance with
GAAP, consistently applied (on a consolidated basis). To the extent the
Company's current assets exceed the Company's current liabilities on the Closing
Date, the Base Purchase
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Price shall be increased, dollar for dollar. To the extent the Company's current
liabilities exceed the Company's current assets on the Closing Date, the Base
Purchase Price shall be decreased, dollar for dollar. The Net Working Capital of
the Company shall be based on an estimated closing balance sheet of the Company,
which shall be delivered to the Purchaser at least ten (10) days prior to the
Closing Date, prepared in good faith by Xxxxxxx, Stone & Xxxxxx, X.X., subject
to the Purchaser's review and approval thereof, which shall not be unreasonably
withheld. Such estimated closing balance sheet shall take into account, among
other liabilities, any due on sale or similar bonuses or compensation payments
(including any payroll taxes and increased Company contributions to the
Company's other plans resulting therefrom) payable by the Company to employees
thereof as of the Closing Date as well as any commission payments payable to
Xxxxxxxxxx Capital Corporation.
(d) The Base Purchase Price shall additionally be adjusted by
adding to it the "Securities Value," which shall be the value of all shares of
capital stock of Illuminet Holdings, Inc. ("ILLUMINET") (NASDAQ Symbol "ILUM")
owned by the Company as of the Closing Date, which shall be determined by
multiplying the total number of such shares by the average closing price of a
share of Illuminet capital stock on the NASDAQ National Market, as reported in
the WALL STREET JOURNAL, for the twenty (20) business day period ending five (5)
business days prior to the Closing Date.
(e) The sum of the Base Purchase Price, plus or minus, the Net
Total Long Term Debt, plus or minus the Net Working Capital, plus the Securities
Value, all as determined above, shall be referred to herein as the "ADJUSTED
PURCHASE PRICE."
Section 1.3 POST-CLOSING ADJUSTMENTS TO THE ADJUSTED PURCHASE PRICE.
The Adjusted Purchase Price payable by the Purchaser to the Seller on the
Closing Date pursuant to Sections 1.2 and 9.2 hereof may be adjusted as follows.
As soon as possible after the Closing Date, but in no event later than ninety
(90) days after the Closing Date, the Purchaser shall prepare and submit to the
Seller a Closing balance sheet for the Company as of the close of business on
the Closing Date (the "CLOSING BALANCE SHEET"), which shall be prepared in
accordance with GAAP and consistent with the Company's past practices, and
mutually acceptable to the Seller and the Purchaser and their respective
independent public accountants. The Closing Balance Sheet shall include, as
provided in Section 12.13 hereof, any selling costs of Seller paid or accrued by
the Company as of the Closing Date, as well as any due on sale or similar
bonuses or compensation payments paid by the Company to employees thereof on the
Closing Date as well as any commission payments paid by the Company to
Xxxxxxxxxx Capital Corporation, as more fully set forth in Section 1.2(c)
hereof. Upon the Seller's and the Purchaser's mutual agreement as
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to the form and content of the Closing Balance Sheet, the amount of the Adjusted
Purchase Price shall be increased or decreased, as the case may be, by the
difference, if any, between the Net Working Capital and the Net Total Long Term
Debt determined in good faith as of the Closing Date and the Net Working Capital
and the Net Total Long Term Debt as such is determined based on the Closing
Balance Sheet. If, as a result of the foregoing post-Closing adjustment, the
Adjusted Purchase Price is increased, the Purchaser shall pay the Seller, the
amount of such increase by wire transfer of same-day funds within ten (10)
business days of the date on which the parties agree on the Closing Balance
Sheet. If as a result of the post-Closing adjustment, the Adjusted Purchase
Price is decreased, the Seller shall refund to the Purchaser, the amount of such
decrease by wire transfer of same-day funds within ten (10) business days of the
date on which the parties agree on the Closing Balance Sheet.
Section 1.4 EXCLUDED ASSETS AND LIABILITIES. Notwithstanding that this
Agreement relates to the purchase of capital stock from the Seller by the
Purchaser, which results in the Company retaining any and all of its assets and
liabilities, it is understood and agreed that the Seller shall remove from the
Company's premises prior to Closing and/or, as appropriate, remove from the
Company's books and records, only those particular assets set forth on Schedule
1.4 hereto (the "EXCLUDED ASSETS"). Further, the Seller shall assume any and all
liabilities set forth on Schedule 1.4 hereto (the "EXCLUDED LIABILITIES"). The
Purchaser agrees that it shall cause the Company to execute, and the Seller
agree to execute, any and all such bills of sale, deeds, assignments and/or
agreements as may be necessary to transfer title to the Excluded Assets to the
Seller and to assign and/or transfer the Excluded Liabilities to the Seller. The
parties hereto further agree that no other assets of the Company, whether
tangible or intangible, shall have been or shall be removed from the Company's
premises or from the Company's books and records, except as shall have been
disclosed on the Schedules hereto and/or in the ordinary course of the Company's
Business as provided herein from and after December 31, 1999 through the Closing
Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as follows (to
the extent a representation is modified by a knowledge requirement, it shall
speak to the knowledge of any or all of the Seller and the officers and
directors of the Company), with respect to each of Comerco, YCOM and all
subsidiaries thereof (in other
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words, if any representation or warranty or covenant or agreement would be
untrue as to any of Comerco, YCOM or any of their subsidiaries then the Seller
must so disclose any such untruth) (further, any fact, event, circumstance or
matter disclosed with particularity on any Schedule to this Agreement shall be
deemed to be a disclosure for the purposes of each and every Schedule to this
Agreement):
Section 2.1 CORPORATE ORGANIZATION. Both Comerco and YCOM are
corporations duly organized, validly existing and in good standing with
perpetual duration under the laws of its jurisdiction of incorporation, with
full corporate power and authority to own, operate and lease its properties and
to conduct its business as presently conducted. Seller is a trust of the state
set forth with respect to such Seller on Schedule 2.7 hereto. Comerco and YCOM
are qualified to do business and are in good standing in every jurisdiction in
which the conduct of its business, the ownership or lease of its properties, or
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby requires it to be so qualified. True, complete
and correct copies of the Company's Articles of Incorporation and bylaws (and
all amendments thereto) as presently in effect have been delivered to the
Purchaser.
Section 2.2 AUTHORIZATION. The Seller and Comerco each have full power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Board of Directors (and as appropriate,
the shareholders) of Comerco has duly authorized the execution, delivery and
performance of this Agreement, and no other corporate proceedings on its part
are necessary to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement constitutes a legal, valid and binding obligation of each of the
Seller and the Company enforceable against each such party in accordance with
its terms, subject to equitable considerations and the effect of bankruptcy and
other laws affecting the rights of creditors generally. The Seller will, at the
Closing, have full power and authority to deliver the Shares and the
certificates evidencing the Shares to the Purchaser free and clear of all Liens
as provided for herein.
Section 2.3 NO VIOLATION. Except as set forth on Schedule 2.3, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by each of the Seller and the Company does
not and will not (a) conflict with or result in a breach of the terms,
conditions or provisions of, (b) constitute a default or event of default under
(with due notice, lapse of time or both), (c) result in the
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creation of any Lien upon the Company or its capital stock or assets pursuant
to, (d) give any third party the right to accelerate any obligation under, (e)
result in a violation of, or (f) require any authorization, consent, approval,
exemption or other action by, or notice to, any Person pursuant to (I) the
Articles of Incorporation or bylaws of the Company, (ii) any applicable
Regulation (including, without limitation, the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976), (iii) any Order to which either the Seller or the
Company or any of their properties are subject, or (iv) any Contract to which
the Seller or the Company or any of their properties are subject. The Seller and
the Company have complied with all applicable Regulations and Orders in
connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby, subject to the requirements which are
conditions to the Closing.
Section 2.4 SUBSIDIARIES AND INVESTMENTS. Except as set forth on
Schedule 2.4, the Company has no subsidiaries or investments in any Person.
Attached as set forth on Schedule 2.4 is a true and complete corporate
organizational chart for the Company. Except as set forth on Schedule 2.4, the
transactions contemplated by this Agreement will not conflict with or result in
a breach of the terms, conditions or provisions of any agreement to which the
Company is a party with respect to any such subsidiaries or investments, nor
shall the transactions contemplated by this Agreement trigger any purchase, put,
call or right of first refusal rights in any Person, nor shall the transactions
contemplated by this Agreement result in a violation of, or require any
authorization, consent, approval, exemption or other action by or notice to any
Person. Any such investments constitute an asset of the Company and the Company
is the only Person with any rights thereto. Except as set forth on Schedule 2.4,
the Company does not owe any indebtedness to or on account of any of such
subsidiaries or investments, nor has the Company guaranteed any indebtedness on
behalf of, or have any other contingent obligations with respect to, any such
subsidiaries or investments, and the Company has not pledged any such
subsidiaries or investments or any other of its assets in connection with any
obligations relating to any such investment or subsidiary. The Company is not a
general partner in any of its investments, nor is any employee of the Company an
officer or director of any such investment entity. Except as set forth on
Schedule 2.4 hereto, the Company is not a party to any Partnership, Operating,
Shareholders' or Stockholders' Agreements with respect to any of the entities
discussed on Schedule 2.4 hereto. Also set forth on Schedule 2.4 hereto is a
listing of all dividends and/or distributions made with respect to any such
subsidiaries and/or investments since December 31, 1997.
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Section 2.5 STOCK RECORD BOOK. The stock record books of the Company
are complete and correct in all material respects. No shares of capital stock of
the Company are currently reserved for issuance for any purpose or upon the
occurrence of any event or condition. The Shares constitute all of the
outstanding capital stock of the Company and the Seller owns all of the
outstanding capital stock of the Company. Comerco is the true and lawful owner
of all of the outstanding capital stock of YCOM. Schedule 2.5 sets forth the
total number of authorized and issued shares of capital stock for each of
Comerco and YCOM.
Section 2.6 CORPORATE BOOKS. The corporate minute books of the Company
and of each of its subsidiaries are complete and correct in all material
respects and contain signed minutes of all of the proceedings of the
shareholders and directors of the Company and of each of its subsidiaries since
incorporation. A true and complete list of the directors and officers of the
Company and of each of its subsidiaries as of the date hereof is set forth on
Schedule 2.6.
Section 2.7 TITLE TO STOCK. The Shares are owned of record by those
shareholders and only such shareholders in such amounts as are set forth on
Schedule 2.7 hereto. No shares of preferred stock or other class of capital
stock are authorized, issued or outstanding with respect to the Company or any
of its subsidiaries. The Shares have been duly authorized and validly issued and
are fully paid and nonassessable. The Shares were issued pursuant to applicable
exemptions from registration under Federal securities laws and the securities
laws of the State of Washington, are owned by the Seller and will be sold
pursuant hereto free and clear of all Liens. Upon payment of the Adjusted
Purchase Price to the Seller in accordance with this Agreement, the Seller will
convey to the Purchaser good and marketable title to the Shares, free and clear
of all Liens whatsoever. The assignments, endorsements, stock powers and other
instruments of transfer delivered by the Seller to the Purchaser at the Closing
will be sufficient to transfer the Seller's entire interest, and all of the
interests, legal and beneficial, of Seller and of all other Persons, in and to
the Shares and thereby in the YCOM Capital Stock and in the capital stock of
each other subsidiary of the Company. No dividends or other distributions are
owed by the Company in connection with any of the Shares and, except as
specifically set forth on the Financial Statements or on Schedule 2.7 hereto,
none have been made to any shareholder of the Company or to any of the Seller
since at least December 31, 1997.
Section 2.8 OPTIONS AND RIGHTS. There are no outstanding
subscriptions, options, warrants, rights, puts, calls or other
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Contracts by which the Company is bound to issue or to repurchase or otherwise
acquire shares of its capital stock, or pursuant to which any Person has a right
to purchase or to acquire, through conversion or otherwise, shares of the
Company's capital stock.
Section 2.9 FINANCIAL STATEMENTS. The Seller has delivered to the
Purchaser correct and complete copies of (I) the audited consolidated balance
sheets of the Company as of December 31, 1997, December 31, 1998 and December
31, 1999 and the related statements of income, cash flow and retained earnings
for the fiscal year reporting periods then ended, together with all notes and
schedules thereto (the "FINANCIAL STATEMENTS") and (ii) the unaudited balance
sheet of the Company as of the period ending March 31, 2000 and the related
statement of income for such period then ended (the foregoing unaudited
statements, with all monthly unaudited statements delivered hereafter, the
"UNAUDITED FINANCIAL STATEMENTS"). The Financial Statements have been audited
without qualification by Xxxxxxx, Xxxxx & Xxxxxx, X.X., independent auditors for
the Company. The Financial Statements and the Unaudited Financial Statements (a)
have been prepared in accordance with the books and records of the Company and
(b) fairly present the financial condition and results of operations and cash
flows of the Company as of, and for the respective periods ended on, such dates,
all in conformity with GAAP consistently applied, except, with respect to the
Unaudited Financial Statements, for adjustments and notes that would result from
an audit. Since December 31, 1999 and except as fully set forth in Schedule 2.9
hereto or in the Financial Statements and the Unaudited Financial Statements,
the Company has no liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due, whether known or
unknown, and regardless of when asserted) arising out of transactions or events
heretofore entered into or any action or inaction or state of facts existing,
with respect to, or based upon transactions or events heretofore occurring.
Section 2.10 EMPLOYEES.
(a) Schedule 2.10 sets forth a list of all of the Company's
employees, officers, directors, consultants and independent contractors,
together with a description of any Contract regarding the terms of service and
the rate and basis for total compensation of such persons.
(b) Except as set forth on Schedule 2.10 hereto, the Company has
paid or made provision for the payment of all salaries and accrued wages,
accrued vacation and sick leave, and any other form of accrued, but unpaid,
compensation, and has complied in all material respects with all applicable
laws, rules and regulations
-8-
relating to the employment of labor, including those relating to wages, hours,
collective bargaining and the payment and withholding of taxes, and has withheld
and paid to the appropriate governmental authority, or is holding for payment
not yet due to such authority, all amounts required by law or agreement to be
withheld from the wages or salaries of its employees. Except as set forth on
Schedule 2.10 hereto, no amounts have been accrued on the Company's books for
vacation or sick leave in excess of the current year's obligations and no such
obligations exist. No contracts or provisions exist that would obligate the
Company to pay any severance compensation to any employee should his or her
employment with the Company be terminated for any reason from and after the date
hereof. Except as set forth on Schedule 2.10 hereto, no contracts or provisions
exist that would obligate the Company to pay any amounts to any Person upon the
change of control of the Company.
(c) Except as set forth on Schedule 2.10 hereto, the Company is
not a party to any (I) outstanding employment agreements or contracts with
officers or employees that are not terminable at will, or that provide for
payment of any bonus or commission or severance compensation, (ii) agreement,
policy or practice that requires it to pay termination or severance pay to
salaried, exempt, non-exempt or hourly employees, (iii) collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company, nor does the Seller or the Company know of any activities or
proceedings of any labor union to organize any such employees. The Company has
furnished to the Purchaser complete and correct copies of all such agreements,
if any ("EMPLOYMENT AND LABOR AGREEMENTS"). The Company has not breached or
otherwise failed to comply with any provisions of any Employment or Labor
Agreement.
(d) Except as set forth on Schedule 2.10 hereto, (I) there is no
unfair labor practice charge or complaint pending before the National Labor
Relations Board ("NLRB"), (ii) there is no labor strike, material slowdown or
material work stoppage or lockout actually pending or, to the Seller' or
Company's knowledge, threatened, against or affecting the Company, and the
Company has not experienced any strike, material slowdown or material work
stoppage, lockout or other collective labor action by or with respect to
employees of the Company, (iii) there are no charges with respect to or relating
to the Company pending before the Equal Employment Opportunity Commission, the
Department of Labor or any state, local or foreign agency responsible for the
prevention of unlawful employment practices, and (iv) the Company has not
received formal notice from any Federal, state, local or foreign agency
responsible for the enforcement of labor or employment laws
-9-
of an intention to conduct an investigation of the Company and, to the knowledge
of the Seller and Company, no such investigation is in progress.
Section 2.11 ABSENCE OF CERTAIN CHANGES. Except as set forth in
Schedule 2.11, since December 31, 1999, there has been no (a) Material Adverse
Change in the business, properties, financial statements, business prospects,
condition (financial or otherwise) or results of operations of the Company, (b)
theft, damage, destruction, removal or loss of assets or properties, whether
covered by insurance or not, having a Material Adverse Effect on the business,
properties, business prospects, condition (financial or otherwise) or results of
operations of the Company, (c) declaration, setting aside or payment of any
dividend or distribution (whether in cash, stock or property) in respect of the
Shares, or any redemption of the Shares, (d) increase in the compensation
payable to or to become payable by the Company to its employees, officers,
directors, consultants or independent contractors except in the ordinary course
of business, (e) entry by the Company into any Contract not in the ordinary
course of business, including, without limitation, any borrowing or capital
expenditure, (f) change in accounting methods or principles used by the Company,
except for any such change which is necessitated by a change in GAAP, or
required by the FCC or WUTC (which such changes shall be set forth on Schedule
2.11 hereto), (g) operation of the Company's business other than in the ordinary
course, (h) sale, assignment or transfer of any assets or properties of the
Company except in the ordinary course of business, (I) amendment or termination
of any of the Company's Permits or Contracts, (j) waiver or release of any
material right or claim of the Company, (k) labor dispute or union activity
which affects the operation of the Company, and (l) agreement by either the
Seller or the Company to take any of the actions described in the preceding
clauses (a) through (k), except as contemplated by this Agreement.
Section 2.12 CONTRACTS.
(a) GENERALLY. Except as listed on Schedule 2.12, the Company is
not a party to any Contract relating to:
(i) Bonus, pension, profit sharing, retirement, stock
option, employee stock purchase or other plans providing for deferred
compensation.
(ii) Collective bargaining agreements or any other Contract
with any labor union.
-10-
(iii) Hospitalization or medical insurance or other welfare
benefit plans or practices.
(iv) Loans to its employees, officers, directors,
shareholders or Affiliates.
(v) The borrowing or loaning of money to or from any Person
or the mortgaging, pledging or otherwise placing a Lien on any asset of
the Company, including, but not limited to, any Contract with respect to
the Company's indebtedness.
(vi) A guarantee of any obligation.
(vii) The ownership, lease (whether as lessee or lessor) or
operation of any property, real or personal.
(viii) Intangible property (including Proprietary Rights).
(ix) Warranties with respect to its services rendered or its
products sold or leased.
(x) Registration or preemptive rights with respect to any
securities.
(xi) Prohibitions preventing it from freely engaging in any
business.
(xii) The purchase, acquisition, disposition or supply of
inventory and/or other property and assets.
(xiii) Employees, independent contractors, consultants, or
other agents.
(xiv) Sales, commissions, advertising or marketing.
(xv) Unconditional purchase or payment obligations.
(xvi) Agreements between the Company and customers of the
Business.
(xvii) Agreements pertaining to the providing of internet
access or service by the Company.
(xviii) Leases, licenses, easements, rights of way, pole
attachment agreements, license agreements for joint use of poles and other
agreements regarding property rights to
-11-
earth stations, utility poles, real property, fixtures and other similar
items used in the operation of the Business.
(xix) The grant or franchise of telephone franchise rights.
(xx) Any investment or subsidiary of the Company,
including, but not limited to, those shown on Schedule 2.4 hereto.
(xxi) Any other Contract not of the type covered by any of
the foregoing items of this Section 2.12(a) requiring total payments by
the Company in excess of ten thousand dollars ($10,000).
(b) COMPLIANCE. The Company has performed all material obligations
required to be performed by it, and is not in receipt of any claim of default or
breach or notice of audit, under any Contract to which it is subject (including,
without limitation, those required to be disclosed on Schedule 2.12). Except as
disclosed on Schedule 2.12, no event has occurred which with the passage of time
or the giving of notice or both would result in a material default, breach or
event of non-compliance by the Company under any Contract to which it is
subject. Except as disclosed on Schedule 2.12, the Company has no present
expectation or intention of not fully performing all of its obligations under
any Contract to which it is subject and has no knowledge of any breach or
anticipated breach by any other party to any Contract to which it is subject.
Section 2.13 TRUE AND COMPLETE COPIES. The Seller and the Company have
delivered to the Purchaser true and complete copies of all Contracts and
documents listed in the Schedules to this Agreement, as well as copies of the
minutes of Comerco and YCOM for the last five (5) years and copies of the
minutes of Yelm Wireless, Inc. since its incorporation. Further, copies of the
stock registers of the Company and of each of its subsidiaries have been
delivered to the Purchaser.
Section 2.14 TITLE AND RELATED MATTERS.
(a) OWNED PROPERTY, LIENS. Set forth on Schedule 2.14(a) is a
description of all real and personal property owned or used by the Company. The
Company has valid and marketable title to all such property, free and clear of
all Liens, except Permitted Liens. All properties used in the Company's business
operations as of December 31, 1999 are reflected in the Financial Statements in
accordance with and to the extent required by GAAP and, as of the
-12-
date hereof, are fully set forth on Schedule 2.14(a) hereto. Seller and the
Company have delivered, with respect to any real property owned by the Company,
true and complete copies of all deeds, title policies, environmental
assessments, surveys, and other title documents relating to such real property.
Further, the Company has valid, good and marketable title to each of its
investments set forth on Schedule 2.4 hereto, free and clear of all Liens,
except as set forth on Schedule 2.14(a) hereto.
(b) LEASED PROPERTY. Set forth on Schedule 2.14(b) is a
description of all real and personal property leased by the Company. Except as
otherwise set forth on Schedule 2.14(b), the Company's leases are in full force
and effect and are valid and enforceable in accordance with their respective
terms. There exists no event of default or event which constitutes or would
constitute (with notice or lapse of time or both) a default by the Company or
any other Person under any such lease, and neither the Seller nor the Company
have received notice of such default or event. All rent and other amounts due
and payable with respect to each of the Company's leases have been paid through
the date of this Agreement. Except as set forth on Schedule 2.14(b), neither the
Seller nor the Company have received notice that the landlord with respect to
any real property or personal property lease would refuse to renew such lease
upon expiration of the period thereof upon substantially the same terms, except
for rent increases consistent with past experience or current market rates. The
Seller has delivered to the Purchaser, with respect to any leased real or
personal property, true and complete copies of all such leases and all
amendments, supplements thereto or memoranda thereof.
(c) REGULATORY/ZONING COMPLIANCE. Except as set forth on
Schedule 2.14(c), the real property owned or leased by the Company and the
buildings, structures and improvements included within such real property
(collectively, the "IMPROVEMENTS") comply with all material applicable
restrictions, building ordinances and zoning ordinances and all Regulations of
the applicable health and fire departments. No alteration, repair, improvement
or other work which could give rise to a Lien has been performed with respect to
such Improvements within the last ninety (90) days. The Company's owned or
leased real property and its continued use, occupancy and operation as currently
used, occupied and operated does not constitute a nonconforming use under any
Regulation or Order affecting such real property, and the continued existence,
use, occupancy and operation of such Improvements is not dependent on any
special permit, exception, approval or variance. There is no pending or, to the
Seller' or Company's knowledge, threatened or proposed action or proceeding by
any Authority to modify the zoning classification of, to condemn or take by the
power of eminent
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domain (or to purchase in lieu thereof), to classify as a landmark, to impose
special assessments on or otherwise to take or restrict in any way the right to
use, develop or alter all or any part of the Company's owned or leased real
property.
(d) UTILITIES. The real property owned or leased by the Company
has access, sufficient for the conduct of the Company's Business as presently
conducted and proposed to be conducted, to public roads and to all utilities,
including electricity, sanitary and storm sewer, potable water, natural gas and
other utilities used in the operation of the Company's Business as presently
conducted. Access to all such public roads and utilities will be available after
the Closing Date in the same manner and to the same extent as at the Closing
Date.
(e) CONDITION. Except as set forth on Schedule 2.14(e), since
December 31, 1999, the Company has not sold, transferred, leased, distributed or
disposed of any of its assets or properties, except for (I) transactions in the
ordinary and regular course of business, or (ii) as otherwise consented to in
writing by the Purchaser. The Company owns, or has all rights necessary to use,
all properties and assets necessary for the conduct of its business as presently
conducted. The assets and properties owned, leased or used by the Company in the
conduct of the Business are in good condition (reasonable wear and tear
excepted), are suitable for their respective uses, and comply with all
applicable Regulations. Further such assets and properties constitute all of the
assets and properties necessary for the Company to conduct its Business as now
conducted.
Section 2.15 LITIGATION. Except as set forth on Schedule 2.15, there is
(a) no Claim pending or, to the Seller's knowledge, threatened against the
Company, (b) no Claim by the Company pending or threatened against any Person,
(c) no outstanding Order relating to the Company, and (d) no Claim by any Person
relating to the Shares.
Section 2.16 TAX MATTERS.
(a) GENERALLY. Except as set forth on Schedule 2.16, Comerco, YCOM
and all their subsidiaries have timely filed all Federal, state, local and
foreign tax reports, returns, information returns and any other documents
required to be filed by each (collectively, "TAX RETURNS") and have duly paid
all Taxes shown to be due and payable on such Tax Returns and all estimated or
advance payments required by law. All Taxes for periods ending on or prior to or
including the Closing Date have been or will be as of the Closing Date fully
paid or reserved against on the Unaudited
-14-
Financial Statements and on the books of Comerco, YCOM and all their
subsidiaries, as appropriate, in accordance with GAAP. All Taxes which are
required to be withheld or collected by Comerco, YCOM and all their subsidiaries
have been duly withheld or collected and, to the extent required, have been paid
to the proper Federal, state, local or foreign authorities or properly
segregated or deposited as required by applicable Regulations. There are no
Liens for Taxes upon any property or assets of Comerco, YCOM or any of their
subsidiaries except for Liens for Taxes not yet due and payable or for Taxes
being contested in a manner permitted by applicable law (all as disclosed on
Schedule 2.16 hereto). Except as disclosed on Schedule 2.16, neither Comerco,
YCOM nor any of their subsidiaries have requested an extension of time within
which to file any Tax Return and none have waived the statute of limitations on
the right of the IRS or any other taxing authority to assess or collect
additional Taxes or to contest the information reported on any Tax Return. All
Taxes owed by any affiliated group of which Comerco, YCOM or any of their
subsidiaries has at any time been a member (whether or not shown on any Tax
Return) have been paid for each taxable period during which Comerco, YCOM or any
of their subsidiaries was a member of the affiliated group. Neither Comerco,
YCOM nor any of their subsidiaries has any liability for the unpaid Taxes of any
Person under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign law), as a transferee or successor, by contract, or
otherwise. Any amounts shown on the estimated closing balance sheet, as revised
on the Closing Balance Sheet, as Tax refunds due to the Company or Tax credits
of the Company are true and correct.
(b) GOOD FAITH. All Tax Returns described in Section 2.16(a) have
been prepared in good faith and are correct and complete in all respects, and
there is no basis for assessment of any addition to the Taxes shown thereon.
(c) CLAIMS. Except as disclosed on Schedule 2.16, (I) there are no
proceedings, examinations or claims currently pending by any taxing Authority in
connection with any Tax Returns described in Section 2.16(a) nor with respect to
the periods to which such Tax Returns relate, and (ii) there are no unresolved
issues or unpaid deficiencies or outstanding or proposed assessments relating to
any such proceedings, examinations, claims or Tax Returns. None of the Tax
Returns described in Section 2.16(a) currently is under audit or has been
audited. The items relating to the Business, properties and operations of the
Company on the Tax Returns filed by the Company (including the supporting
schedules filed therewith), copies of which have been supplied to the Purchaser,
state accurately, in all respects, the information requested with respect to
Comerco, YCOM and their
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subsidiaries, which information was derived from the books and records of the
Company.
(d) COURSE OF BUSINESS. The Company has not taken any action in
anticipation of the Closing that would have the effect of deferring any
liability for Taxes of Comerco, YCOM or any of their subsidiaries to any period
(or portion thereof) ending after the Closing Date.
(e) WITHHOLDINGS. All payments for withholding Taxes, unemployment
insurance and other amounts required to be withheld and deposited or paid to any
relevant taxing Authorities have been so withheld, deposited or paid by or on
behalf of Comerco, YCOM and all of their subsidiaries, as appropriate.
(f) PARTNERSHIPS. Except as disclosed on Schedule 2.16, the
Company is not subject to any joint venture, partnership or other arrangement or
Contract which is treated as a partnership for Federal income tax purposes. Any
tax-sharing agreement between the Company and any other Person shall terminate
as of the Closing Date and any such tax-sharing agreement is fully disclosed on
Schedule 2.16 hereto.
(g) ACCOUNTING METHOD ADJUSTMENTS. Except as disclosed on Schedule
2.16, the Company will not be required to recognize after the Closing Date any
taxable income in respect of accounting method adjustments required to be made
under any Regulation relating to Taxes, including without limitation, the Tax
Reform Act of 1986 and the Revenue Act of 1987.
(h) TAX EXEMPTIONS. None of the assets of the Company constitutes
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the IRC, and the Company is not subject to a lease, safe
harbor lease or other arrangement as a result of which the Company is treated as
the owner of leased property for Federal income tax purposes.
(i) TAX RETURN REVIEWS. An accurate and complete description of
the most recent review, if any, of the Tax Returns of the Company by the IRS or
any other taxing Authority is set forth on Schedule 2.16.
(j) POWER OF ATTORNEY. Except as set forth on Schedule 2.16
hereto, no power of attorney has been granted by the Company with respect to any
matter, including, without limitation, the payment of Taxes, which is currently
in force.
-16-
(k) TRUE AND COMPLETE COPIES. The Seller and the Company have
delivered to the Purchaser true and complete copies of all Tax Returns filed by
the Company with respect to its 1994, 1995, 1996, 1997, 1998 and 1999 fiscal
years.
Section 2.17 BANK AND BROKERAGE ACCOUNTS. Set forth on Schedule 2.17
hereto is a list of all of the bank and brokerage accounts maintained by the
Company and the authorized signatories for each such account.
Section 2.18 COMPLIANCE WITH APPLICABLE LAWS, REGULATIONS AND ORDERS.
The Company has been and is presently in material compliance with all laws,
ordinances, codes, rules, Regulations and Orders applicable to the conduct of
its Business, including, without limitation, all Regulations relating to health,
sanitation, fire, zoning, building and occupational safety.
Section 2.19 EMPLOYEE BENEFIT PLANS.
(a) Set forth on Schedule 2.19 hereto is a true and complete
list of:
(i) each employee pension benefit plan, as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA"),
maintained by the Company or to which the Company is required to make
contributions ("PENSION BENEFIT PLAN"); and
(ii) each employee welfare benefit plan, as defined in Section
3(1) of ERISA, maintained by the Company or to which the Company is
required to make contributions ("WELFARE BENEFIT PLAN").
True and complete copies of all Pension Benefit Plans and Welfare
Benefit Plans (collectively, "ERISA PLANS") have been delivered to Purchaser
together with, as applicable with respect to each such ERISA Plan, trust
agreements, the most recent summary plan description and any summary of material
modifications thereto, the most recent IRS determination letter or application
therefor with respect to any Pension Benefit Plan intended to be qualified
pursuant to Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"CODE") and the most recent valuation or actuarial report, accountant's opinion
and financial statements and the IRS Form 5500s (or 5500-C or 5500-R) and
summary annual reports for the last three years.
(b) With respect to the ERISA Plans, except as set forth on
Schedule 2.19:
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(i) there is no ERISA Plan which is a "multiemployer" plan
as that term is defined in Section 3(37) of ERISA ("MULTIEMPLOYER PLAN");
(ii) no event has occurred or (to the knowledge of the Seller
or Company) is threatened or about to occur which would constitute a
prohibited transaction under Section 406 of ERISA or under Section 4975 of
the Code for which a valid statutory, administrative or regulatory
exemption is not available;
(iii) each ERISA Plan has operated since its inception in
accordance with the reporting and disclosure requirements imposed under
ERISA and the Code and has timely filed Form 5500 (or 5500-C or 5500-R)
and predecessors thereof; and
(iv) no ERISA Plan is liable for any Federal, state, local or
foreign Taxes, other than income and Social Security Tax withholding in
connection with benefit payments thereunder.
(c) Each Pension Benefit Plan intended to be qualified under
Section 401(a) of the Code:
(i) has been qualified, from its inception, under Section
401(a) of the Code, and the trust established thereunder has been exempt
from taxation under Section 501(a) of the Code and is currently in
compliance with applicable Federal laws;
(ii) has been operated, since its inception, in accordance
with its terms and there exists no fact which would adversely affect its
qualified status; and
(iii) is not currently under investigation, audit or review
by the IRS and (to the knowledge of the Seller or Company) no such action
is contemplated or under consideration and the IRS has not asserted that
any Pension Benefit Plan is not qualified under Section 401(a) of the Code
or that any trust established under a Pension Benefit Plan is not exempt
under Section 501(a) of the Code.
(d) With respect to each Pension Benefit Plan:
(i) no liability to the Pension Benefit Guaranty
Corporation ("PBGC") under Sections 4062-4064 of ERISA has
-18-
been incurred by the Company since the effective date of ERISA and all
premiums due and owing to the PBGC have been timely paid;
(ii) the PBGC has not notified the Company or any Pension
Benefit Plan of the commencement of proceedings under Section 4042 of
ERISA to terminate any such plan;
(iii) no event has occurred since the inception of any
Pension Benefit Plan or (to the knowledge of the Seller or Company) is
threatened or about to occur which would constitute a reportable event
within the meaning of Section 4043 of ERISA;
(iv) No Pension Benefit Plan that is subject to the funding
requirements of Section 302 of ERISA and Section 412 of the Code ever has
incurred any "accumulated funding deficiency" (as defined in Section 302
of ERISA and Section 412 of the Code); and
(v) if any of such Pension Benefit Plans were to be
terminated on the Closing Date (A) no liability under Title IV of ERISA
would be incurred by the Company and (B) all benefits accrued to the day
prior to the Closing Date (whether or not vested) would be fully funded in
accordance with the actuarial assumptions and method utilized by such plan
for valuation purposes.
(e) Schedule 2.19 contains a list of all Pension Benefit Plans
and/or Multiemployer Plans, if any, to which ERISA has applied which have been
within the last ten (10) years or are in the process of being terminated by the
Company, and a description of the actions taken by the PBGC and the IRS with
respect thereto.
(f) The aggregate of the amounts of contributions by the Company
to be paid or accrued under Pension Benefit Plans is not expected by the Company
and/or the Seller to exceed approximately $810,120.00 for the 2000 fiscal year,
all of which has been or will be properly accrued or reserved for on the
Financial Statements, the Unaudited Financial Statements and/or the estimated
closing balance sheet, as revised by the Closing Balance Sheet, or are otherwise
disclosed with particularity on the Schedules hereto. To the extent required in
accordance with GAAP, the Company's Unaudited Financial Statements and Financial
Statements reflect in the aggregate an accrual of all amounts of employer
contributions accrued but unpaid by the Company under the ERISA Plans as of the
-19-
date of such Unaudited Financial Statements or Financial Statements.
(g) With respect to any Multiemployer Plan (1) the Company has
not, since its formation, made or suffered a "complete withdrawal" or "partial
withdrawal" as such terms are respectively defined in Sections 4203 and 4205 of
ERISA; (2) there is no withdrawal liability of the Company under any
Multiemployer Plan, computed as if a "complete withdrawal" by the Company had
occurred under each such Plan as of December 31, 1999; and (3) the Company has
not received notice to the effect that any Multiemployer Plan is either in
reorganization (as defined in Section 4241 of ERISA) or insolvent (as defined in
Section 4245 of ERISA).
(h) With respect to the Welfare Benefit Plans:
(i) There are no liabilities of the Company under Welfare
Benefit Plans with respect to any condition which relates to a claim filed
on or before the Closing Date that are not accrued or reserved for on the
Company's Unaudited Financial Statements.
(ii) No claims for benefits are in dispute or in litigation.
(i) Set forth on Schedule 2.19 hereto is a true and complete list
of:
(i) each employee stock purchase, employee stock option,
employee stock ownership, deferred compensation, performance, bonus,
incentive, vacation pay, holiday pay, insurance, severance, retirement,
excess benefit or other plan, trust or arrangement which is not an ERISA
Plan whether written or oral, which the Company maintains or is required
to make contributions to; and
(ii) each other agreement, arrangement, commitment and
understanding of any kind, whether written or oral, with any current or
former employee, officer, director or consultant of the Company pursuant
to which payments may be required to be made by the Company at any time
following the date hereof (including, without limitation, any employment,
deferred compensation, severance, supplemental pension, termination or
consulting agreement or arrangement).
(j) True and complete copies of all of the written plans,
arrangements and agreements referred to on Schedule 2.19 ("COMPENSATION
COMMITMENTS") have been provided to Purchaser
-20-
together with, where prepared by or for the Company, any valuation, actuarial or
accountant's opinion or other financial reports with respect to each
Compensation Commitment for the last three years. An accurate and complete
written summary has been provided to Purchaser with respect to any Compensation
Commitment which is unwritten.
(k) Each Compensation Commitment:
(i) since its inception, has been implemented in all
material respects in accordance with its terms;
(ii) is not currently under investigation, audit or review by
the IRS or any other Federal or state agency and (to the knowledge of the
Seller and Company) no such action is contemplated or under consideration;
(iii) has no liability for any Federal, state, local or
foreign Taxes, other than income and Social Security Tax withholding with
respect to benefit accruals and/or payments;
(iv) has no claims subject to dispute or litigation;
(v) has met all applicable requirements, if any, of the
Code; and
(vi) has been implemented since its inception in material
compliance with the applicable reporting and disclosure requirements
imposed under ERISA and the Code.
Section 2.20 INTELLECTUAL PROPERTY. Schedule 2.20 sets forth a complete
and accurate list of the Proprietary Rights owned or used by the Company. The
Company has no written documents or oral arrangements relating to the Company's
ownership or use of the Proprietary Rights other than as listed on Schedule
2.20. No other Person has any rights to such Proprietary Rights, except pursuant
to agreements or licenses specified on Schedule 2.20. To the Seller' and
Company's knowledge, no other Person is infringing, violating or
misappropriating any such Proprietary Right. If necessary, the Company owns or
holds valid licenses to use all Proprietary Rights used in the operation of its
business as presently conducted and proposed to be conducted, with all such
licenses being specified on Schedule 2.20.
Section 2.21 ENVIRONMENTAL MATTERS. The Company has obtained all
Environmental Permits required in connection with the
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operation of its business. The Company is and has been, and is capable of
continuing to be, in compliance in all respects with (I) the terms and
conditions of all such Environmental Permits and (ii) all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables of any applicable Environmental Law or Regulation,
Order, code, plan, decree, judgment, injunction or demand letter issued,
entered, promulgated or approved thereunder. The Company currently possesses and
maintains such Environmental Permits in its name, and no amendments or
modifications to such Environmental Permits or filings with any permitting
Authority are required to permit the acquisition of the Shares as contemplated
hereby. In addition, except as set forth on Schedule 2.21:
(a) GENERALLY. No notice, notification, demand, request for
information, citation, summons or Order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is pending
or, to the Seller's' and Company's knowledge, threatened by any Authority or
other entity with respect to the Company relating to any Environmental Permit,
license or authorization required in connection with the conduct of the business
of the Company or with respect to the generation, treatment, storage, recycling,
transportation, disposal or Release of any substance regulated under
Environmental Laws ("HAZARDOUS MATERIALS").
(b) PROPERTY.
(i) The Company has not handled any Hazardous Material on
any property now or previously owned or leased by the Company.
(ii) No PCB or asbestos is or has been present at any
property now or previously owned or leased by the Company.
(iii) There are no underground storage tanks for Hazardous
Materials, active or abandoned, at any property now or previously owned or
leased by the Company.
(iv) There has been no Release of Hazardous Materials at, on
or under any property now or previously owned or leased by the Company.
(c) TRANSPORTATION. The Company has not (I) transported or
arranged for the transportation of any Hazardous Material to any location which
is listed on the National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), listed
for possible inclusion
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on the National Priorities List by the Environmental Protection Agency in the
Comprehensive Environmental Response and Liability Information System
("CERCLIS") or on any similar state list or which is the subject of Federal,
state or local enforcement actions or other investigations or (ii) stored,
treated, transported or disposed, or arranged for storage, treatment, transport
or disposal of any Hazardous Materials, other than in compliance with
Environmental Law.
(d) NOTIFICATION OF RELEASE. No oral or written notification of a
Release of a Hazardous Material has been filed by or on behalf of the Company,
and no property now or previously owned or leased by the Company is listed or
proposed for listing on the National Priorities List under CERCLA, on CERCLIS or
on any similar state list of sites requiring investigation or clean-up.
(e) LIENS. There are no Liens arising under or pursuant to any
Environmental Laws on any of the real property owned or leased by the Company,
and no government actions have been taken or are threatened which could subject
any of such properties to such Liens. The Company is not required to place any
notice or restriction relating to the presence of Hazardous Materials at any
property owned by it in any deed to such property.
(f) SITE ASSESSMENTS. Except as set forth on Schedule 2.21, there
have been no Phase I or Phase II environmental site assessments conducted by or
which are in the possession of the Seller or the Company in relation to any
property or facility now or previously owned or leased by the Company.
Section 2.22 CAPITAL EXPENDITURES AND INVESTMENTS. The Company has no
outstanding Contracts or commitments for capital expenditures and investments,
except as set forth on Schedule 2.22 attached hereto, which Schedule includes a
list of all disbursements on account of capital expenditures and investments by
the Company since December 31, 1999. There has been no order or ruling from the
WUTC or any other regulatory body and none is threatened or expected by the
Company requiring or recommending that the Company undertake any capital
expenditures or investments. Attached to Schedule 2.22 are copies of the
Company's 2000 and 2001 fiscal years capital expenditures budgets (by project)
and, with respect to the 2000 budget, a comparison of the actual expenditures to
budget (by project) year to date.
Section 2.23 DEALINGS WITH AFFILIATES. Schedule 2.23 sets forth a
complete and accurate list of all oral or written Contracts between the Company
and any one or more of its Affiliates. Except as set forth on Schedule 2.23,
since December, 31, 1999, the
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Company has not made any payments, loaned any funds or property or made any
credit arrangement with any Affiliate or employee except for the payment of
employee salaries in the ordinary course of business.
Section 2.24 INSURANCE. The Company currently is covered by insurance
policies which provide for coverages that are usual and customary as to amount
and scope in the business of the Company. Descriptions of all such policies,
including the names of the insurer and the insured, the amount of premiums, and
the types and amounts of coverage, are set forth on Schedule 2.24. All of such
policies are in full force and effect, all premiums with respect thereto have
been paid or accrued therefor, and no notice of cancellation or termination has
been received with respect to any such policy. Such policies are sufficient for
compliance with (I) all applicable Regulations and (ii) all Contracts to which
the Company is a party. The Company has not breached or otherwise failed to
perform its obligations under any of such policies, nor has the Company received
any adverse notice from any of the insurers party to such policies with respect
to any alleged breach or failure in connection with any of such policies which
would have a Material Adverse Effect on the Company. Such policies will not
terminate or lapse by reason of the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby. Except as set forth on
Schedule 2.24, there are no pending or, to the Seller's or Company's knowledge,
threatened claims under any policy relating to the Company. Also set forth on
Schedule 2.24 is a true and complete listing of any and all claims made by the
Company under any policy since December 31, 1996.
Section 2.25 COMMISSIONS. Except as set forth on Schedule 2.25 hereto,
there are and will be no claims for brokerage commissions, finder's fees, fees
for fairness opinions or financial advisory services or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of the Seller, or the Company
(collectively, "COMMISSIONS"). Any and all such Commissions shall be paid by the
Company and taken into account for purposes of the estimated closing balance
sheet and the Closing Balance Sheet.
Section 2.26 PERMITS AND REPORTS. Schedule 2.26 hereto sets forth a
list of all permits, licenses, registrations, certificates, franchises, Orders,
approvals or other authorizations from any Authority or other Person including,
without limitation, the FCC and the WUTC and any municipalities ("PERMITS")
issued to or held by the Company in connection with its operations or the
Business. Such Permits are the only Permits that are required for the Company
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to conduct its business as presently conducted and proposed to be conducted.
Each such Permit is in full force and effect, and the Company has not received
notice that any suspension, cancellation or modification of the terms of any
such Permit is threatened. The Company is in full compliance with the terms of
each such Permit, and each of the Company and the Seller are not aware of any
reason not set forth in said Permit why any such Permit would not be renewed,
upon substantially the same terms as currently exist, upon expiration of such
Permit. Except to the extent set forth on Schedule 2.26 hereto, no other Person
is currently operating or providing telephone service within the Business'
telephone exchange area and, to the Seller' and Company's knowledge, no Person
is anticipating or contemplating doing so. Except as set forth on Schedule 2.26,
no authorization, consent or notification of or filing with any Authority is
necessary in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, and each Permit issued
to or held by the Company will continue in full force and effect following the
Closing Date. Except as set forth on Schedule 2.26, (I) all returns, reports,
applications, statements and other documents required to be filed by the Company
with the FCC, the WUTC and any other regulatory or governmental authority or
municipality (including taxing authorities) with respect to the Business on or
before the date hereof have been duly filed or properly extended as permitted by
law (details of such extensions, if any, are set forth on Schedule 2.26 hereto)
and are true and complete in all material respects, and (ii) all reporting
requirements of the FCC, the WUTC and other regulatory or governmental
authorities or municipalities (including taxing authorities) having jurisdiction
thereof have been complied with in all material respects. A listing of all
returns, reports, applications, statements and other documents which are unique
to the Business and which were filed by the Company within the past three (3)
years with the FCC, the WUTC and any other regulatory or governmental authority
(including taxing authorities) or municipality is attached hereto as Schedule
2.26; true and complete copies of all such returns, reports, applications,
statements and other documents set forth on Schedule 2.26 have been previously
provided to the Purchaser by the Seller. The transactions contemplated by this
Agreement shall not cause the Business' study area to change.
Section 2.27 ABSENCE OF UNDISCLOSED LIABILITIES. The Company does not
have any liability of any nature whatsoever (whether known or unknown, due or to
become due, accrued, absolute, contingent or otherwise), including, without
limitation, any unfunded obligation under employee benefit plans or arrangements
as described in Section 2.19 hereof or liabilities for Taxes (as
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defined in Section 2.16 hereof) or liabilities for under-reporting,
under-billing or under-collection of revenues or underpayment of revenues to a
third party or liabilities relating to investments or subsidiaries, except for
(I) liabilities stated or reserved against in the Financial Statements, (ii)
current liabilities incurred in the ordinary course of business and consistent
with past practice after the date of the Financial Statements which,
individually and in the aggregate, do not have, and cannot reasonably be
expected to have, a Material Adverse Effect, and (iii) liabilities disclosed on
Schedule 2.27 hereto. All obligations and liabilities relating in any way to the
Company's investments and subsidiaries (including future capital contributions
or guaranty commitments) are set forth on Schedule 2.4 hereto, setting forth the
maximum amount of the Company's potential obligations and the expected payment
schedule therefor. The Company is not a party to any Contract, or subject to any
articles of incorporation or bylaw provision, any other corporate limitation or
any legal requirement which has, or can reasonably be expected to have, a
Material Adverse Effect. Any and all long term obligations and liabilities of
the Company as of the date hereof are set forth on Schedule 2.27 hereto.
Section 2.28 YEAR 2000 COMPLIANCE. The Company has (a) initiated a
review and assessment of all areas within its Business and operations that could
be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Company may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to, including
and any date after December 31, 1999), (b) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (c) to date implemented
that plan in accordance with that timetable. The Seller and the Company
reasonably believe that all computer applications that are material to the
Company's Business and operations will on a timely basis be able to perform
properly date-sensitive functions for all dates before, including and after
January 1, 2000. A true and complete copy of such plan and timeline has been
provided to Purchaser. The Company has not, as of the date hereof, experienced
any Year 2000 Problems.
Section 2.29 DISCLOSURE. Neither this Agreement nor any of the
attachments, Schedules, Exhibits, written statements, documents, certificates or
other items prepared for or supplied to the Purchaser by or on behalf of the
Seller or the Company with respect to the transactions contemplated hereby
contains any untrue statement of a material fact or omits any material fact
necessary to make each statement contained herein or therein not misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as
follows:
Section 3.1 CORPORATE ORGANIZATION. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to own,
operate and lease its properties and to conduct its business as presently
conducted and proposed to be conducted. The Purchaser is qualified to do
business and is in good standing in every jurisdiction in which the conduct of
its business, the ownership or lease of its properties, or the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby requires it to be so qualified.
Section 3.2 AUTHORIZATION. The Purchaser has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Board of Directors of the Purchaser has
duly authorized the execution, delivery and performance of this Agreement, and
no other corporate proceedings on its part are necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement constitutes a legal, valid
and binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms, subject to equitable considerations and the effect of
bankruptcy and other laws affecting the rights of creditors generally.
Section 3.3 NO VIOLATION. Except as set forth on Schedule 3.3 hereto,
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby by the Purchaser do not and will not (a)
conflict with or result in a breach of the terms, conditions or provisions of,
(b) constitute a default or event of default under (with due notice, lapse of
time or both), (c) result in the creation of any Lien upon the Purchaser or its
capital stock (except upon the Shares as part of Purchaser's financing of this
transaction) or assets pursuant to, (d) give any third party the right to
accelerate any obligation under, (e) result in a violation of or (f) require any
authorization, consent, approval, exemption or other action by, or notice to,
any Person pursuant to the charter or bylaws of the Purchaser, any applicable
Regulation (including, without limitation, the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976), any Order to which the Purchaser is
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subject or any Contract to which the Purchaser or any of its properties are
subject. The Purchaser has complied with all applicable Regulations and Orders
in connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby, subject to the requirements which are
conditions to the Closing.
Section 3.4 INVESTMENT INTENT. The Purchaser represents and warrants
to the Seller that it is purchasing the Shares for investment purposes and not
with a view to distribution thereof and agrees that it shall not make any sale,
transfer, or other disposition of the Shares in violation of the Securities Act
of 1933, as amended, or the Regulations thereunder or under any other applicable
securities laws.
ARTICLE IV
COVENANTS OF THE SELLER AND THE COMPANY
Subject to the provisions of Section 4.14 hereof, from and after December
31, 1999 until the Closing Date, each of the Seller and the Company agree that
they shall have acted and shall act, or refrain from acting where so required,
to comply (and in the case of the Seller, to cause the Company to comply) with
the following:
Section 4.1 REGULAR COURSE OF BUSINESS.
(a) GENERALLY. The Company shall operate its business diligently
and in good faith, consistent with past management practices, shall maintain all
of its properties in customary repair, order and condition, shall maintain
(except for expiration due to lapse of time or cancellation by another party
pursuant to the terms thereof) in the ordinary course of business all leases and
Contracts in effect without change except as expressly provided herein and shall
comply with the provisions of all Regulations, Orders and Permits applicable to
the Company and the conduct of its business. The Company shall maintain its
financial and accounting records in a manner consistent with that employed at
December 31, 1999.
(b) COMPENSATION. The Company shall not hire any employee (except
for the replacement of non-officer employees in the ordinary course of business)
and shall not grant any increase in the compensation of any employee, officer,
board member, consultant or independent contractor.
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(c) INSURANCE. The Company shall maintain current its insurance
policies with the coverage and in the amounts set forth on Schedule 2.24.
(d) CLAIMS. The Company shall promptly notify the Purchaser of any
Claims that may be commenced against it, as well as of any threatened, suspected
or expected Claims of which the Company or the Seller may be aware.
(e) SUPPLEMENT. From time to time prior to the Closing Date, the
Seller shall promptly notify the Purchaser of any changes with respect to the
information set forth in this Agreement or the Schedules hereto and of any
matters hereafter arising which, if in existence at the date hereof, would have
been required to be set forth in this Agreement or the Schedules hereto.
Section 4.2 AMENDMENTS. No change or amendment shall be made to the
Articles of Incorporation or bylaws of the Company, and the Company shall not
merge into or consolidate with any other Person or change the character of its
Business.
Section 4.3 CAPITAL CHANGES. The Company shall not issue, sell,
purchase or redeem any Shares of its capital stock of any class or issue or sell
any securities convertible into, or options, warrants or other rights to
subscribe for, any Shares of its capital stock. The Company shall not pledge or
otherwise encumber any Shares of its capital stock, nor shall the Company allow
the transfer of any Shares of its capital stock on its stock transfer ledger or
other books and records.
Section 4.4 DIVIDENDS. The Company shall not declare, pay or set aside
for payment any dividend or other distribution in respect of its capital stock.
Section 4.5 CAPITAL EXPENDITURES; TRANSACTIONS WITH AFFILIATES. The
Company shall not make any capital expenditures, or commitments with respect
thereto, except as provided on Schedule 2.22. Further, the Company shall timely
make the capital expenditures set forth on Schedule 2.22 or discuss with the
Purchaser, after written notice of the Company's proposed changes, its reasons
for not so performing. The Company shall also make capital expenditures in the
ordinary course consistent with past practices. The Company shall not make or
accept any loan or advance to or from any of its Affiliates or Affiliates of the
Seller.
Section 4.6 BORROWING. The Company shall not incur, assume or
guarantee any indebtedness or obligation not reflected on the
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Financial Statements, except for amounts not to exceed ten thousand dollars
($10,000) in the ordinary course of business. Further, the Company shall not
incur, assume or guarantee any indebtedness or obligation of any of its
subsidiaries or investments.
Section 4.7 PROPERTY. The Company shall not sell, transfer, or dispose
of any of its assets and properties, other than in the ordinary course of
business, or allow any of its assets and properties to become subject to a Lien.
Section 4.8 OTHER COMMITMENTS. Except as set forth in this Agreement
or permitted in writing by the Purchaser from and after the date hereof, the
Company shall not enter into any transaction, make any commitment or incur any
obligation other than in the ordinary course of business.
Section 4.9 INTERIM FINANCIAL INFORMATION, INVESTMENT K-1s. Except as
set forth in Schedule 4.9 hereof, from and after the date hereof, the Company
shall supply the Purchaser with a copy of its internal monthly Unaudited
Financial Statements within forty-five (45) days after the end of each month.
Further, the Company shall provide the Purchaser with any and all financial
statements, K-1s and/or reports received with respect to investments set forth
on Schedule 2.4 hereto promptly following receipt thereof by the Company or the
Seller.
Section 4.10 CONSENTS AND AUTHORIZATIONS. The Seller and the Company
shall, promptly after the date hereof, commence efforts to obtain the consents,
waivers and authorizations listed on Schedules 2.3 and 2.26 hereto. The Seller
and the Company shall diligently pursue and use their best efforts to obtain
such consents, waivers and authorizations as promptly as practicable prior to
the Closing Date.
Section 4.11 ACCESS. Each of the Seller and the Company shall afford to
the Purchaser and its counsel, accountants, agents and other authorized
representatives and to financial institutions specified by the Purchaser
reasonable access during business hours to the Company's plants, properties,
books and records in order that the Purchaser may have full opportunity to make
such reasonable investigations as it shall desire to make of the affairs of the
Company. The Company shall cause its officers, employees and auditors to furnish
such additional financial and operating data and other information as the
Purchaser or its lender shall from time to time reasonably request.
Section 4.12 NOTICE OF TRANSFER. Each of the Seller and the Company
shall cooperate in providing any required notices to the
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appropriate Authority regarding any issues of ownership or control or change
thereof (including, without limitation, any such issues relating to the
Permits).
Section 4.13 PAYMENT OF STAMP TAX. All transfer (including any real
estate transfer tax), documentary, sales, use, stamp, registration and other
such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement shall be borne one-half (1/2) by the Seller and
one-half (1/2) by the Purchaser when due, and the parties will file on a timely
basis all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and fees,
and, if required by applicable Regulation, will, and will cause its Affiliates
to, join in the execution of any such Tax Returns and other documentation.
Section 4.14 DISCLOSURE. To the extent the Company shall have taken any
actions contrary to any of the covenants set forth in this Article IV, from and
after December 31, 1999 and prior to the date hereof, such actions are set forth
on Schedule 4.14 hereto. From and after the date hereof, the Company shall not
take any actions contrary to any of the covenants set forth in this Article IV
without the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld.
Section 4.15 COOPERATION WITH PURCHASER. Each of the Seller and the
Company shall cooperate with Purchaser as shall be necessary for Purchaser to
consummate this transaction and to obtain financing therefor, including giving
access to the Company's properties and business records as shall be necessary
for Purchaser to, among other things, obtain surveys of the real property, a
title commitment with respect to the real property and/or environmental
assessments.
ARTICLE V
COVENANTS OF THE PURCHASER
Section 5.1 CONSENTS AND AUTHORIZATIONS. The Purchaser shall, promptly
after the date hereof, commence efforts to obtain the consents, waivers and
authorizations listed on Schedule 3.3. The Purchaser shall diligently pursue and
use its best efforts to obtain such consents, waivers and authorizations as
promptly as practicable prior to the Closing Date. Purchaser shall, at its
expense, manage the process of obtaining, with the Seller and the Company's
assistance, all government consents and approvals
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required to carry out the transactions contemplated by this Agreement.
Section 5.2 EMPLOYEES. For a period of twenty-four (24) months
following the Closing, the Purchaser shall cause the Company to continue to
employ all of those employees set forth on Schedule 2.10 hereto (the "RETAINED
EMPLOYEES"); provided, however, that the Company shall retain the right to
terminate any employee at any time for cause. During such twenty-four (24) month
period, each of the Retained Employees shall be compensated at a level which is
at least equal to such Retained Employee's salary level at the time of Closing,
and no such Retained Employee shall be requested to relocate his or her office
outside of the Exchange.
Section 5.3 PAYMENT OF STAMP TAX. All transfer (including any real
estate transfer tax), documentary, sales, use, stamp, registration and other
such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement shall be borne one-half (1/2) by the Seller and
one-half (1/2) by the Purchaser when due, and the parties will file on a timely
basis all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and fees,
and, if required by applicable Regulation, will, and will cause its Affiliates
to, join in the execution of any such Tax Returns and other documentation.
ARTICLE VI
OTHER AGREEMENTS
The parties hereto further agree as follows:
Section 6.1 AGREEMENT TO DEFEND. In the event any claim of the nature
specified in Section 7.4 or Section 8.3 hereof is commenced, whether before or
after the Closing Date, the parties hereto agree to cooperate and use all
reasonable efforts to defend against and respond thereto.
Section 6.2 FURTHER ASSURANCES. On the terms and subject to the
conditions of this Agreement, the parties hereto shall use all reasonable
efforts at their own expense to take, or cause to be taken, all action, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable Regulations to consummate and make effective as promptly as possible
the transactions contemplated by this Agreement, and to cooperate with each
other in connection with the foregoing, including, without limitation, using all
reasonable efforts (a) to obtain all
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necessary waivers, consents and approvals from other parties to loan agreements,
leases, mortgages and other Contracts, (b) to obtain all necessary consents,
approvals and authorizations as are required to be obtained under any
Regulations or in connection with any Permits, (c) to lift or rescind any
injunction or restraining order or other Order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby and (d) to
fulfill all conditions to the obligations of the parties under this Agreement.
Each of the parties hereto further covenants and agrees that it shall use all
reasonable efforts to prevent a threatened or pending preliminary or permanent
injunction or other Order.
Section 6.3 CONSENTS. Without limiting the generality of Section 6.2,
each of the parties hereto shall use all reasonable efforts to obtain all
waivers, Permits, authorizations, consents and approvals of, or notice to, all
Persons and Authorities necessary, proper or advisable in connection with the
consummation of the transactions contemplated by this Agreement prior to the
Closing Date.
Section 6.4 NO SOLICITATION OR NEGOTIATION. Unless and until this
Agreement is terminated, neither the Seller nor the Company shall, and each
shall use best efforts to cause its Affiliates, and the directors, officers,
employees, representatives, agents, advisors, accountants, shareholders and
attorneys of each of them, not to initiate or solicit, directly or indirectly,
any inquiries or the making of any proposal with respect to, or engage in
negotiations concerning, or provide any confidential information or data to any
Person with respect to, or have any discussions with any Person relating to, any
acquisition, business combination or purchase of all or any significant asset
of, or any equity interest in, directly or indirectly, the Company, or otherwise
facilitate any effort or attempt to do or seek any of the foregoing and shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
Section 6.5 NO TERMINATION OF THE OBLIGATIONS BY SUBSEQUENT
DISSOLUTION. Each of the parties hereto specifically agrees that its obligations
hereunder, including, without limitation, obligations pursuant to this Article
VI, shall not be terminated by the dissolution of such party, whether by
operation of law, Regulations or otherwise.
Section 6.6 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, no party
hereto nor any Affiliate, representative or shareholder of such party, shall
disclose any of the terms of this
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Agreement to any third party, except as required by law or in connection with a
regulatory or securities filing, or to obtain the consents, waivers and
authorizations listed on Schedules 2.3, 2.26 and 3.3 and in connection with the
Purchaser's financing of the transactions contemplated hereby, without the other
parties' prior written consent. Prior to the Closing Date, the form, content and
timing of all press releases, public announcements or publicity statements (but
excluding disclosures necessitated by any securities filing) with respect to
this Agreement and the transactions contemplated hereby shall be subject to the
prior approval of both the Seller and the Purchaser, which approval shall not be
unreasonably withheld; PROVIDED, HOWEVER, that either party may withhold such
approval in its sole discretion with respect to any of the foregoing which
discloses any of the financial terms of this transaction. Prior to the Closing
Date, no press releases, public announcements or publicity statements shall be
released by either party without such prior mutual agreement. Notwithstanding
the foregoing, prior to the Closing Date, except as otherwise required by law or
in connection with a securities filing, no party hereto will disclose the
Purchase Price or the manner in which the Purchase Price is calculated, without
the prior written consent of the Purchaser and the Seller. Additionally, the
parties agree that the Company may, notwithstanding the foregoing, disclose the
existence and purchase price, terms and conditions of the pending sale
transaction contemplated by this Agreement to the Company's employees on a
need-to-know basis. Each such employee shall be advised by the Company and
Seller of his or her duty to keep such information confidential. The Purchaser
shall, at the request of the Seller and the Company, participate in any such
announcement to the Company's employees as the Seller and the Company determine
appropriate.
Section 6.7 RECORDS AND INFORMATION.
(a) RETENTION OF RECORDS. Except as otherwise required by
Regulation or agreed to in writing, the Seller and the Purchaser shall each
retain, and shall cause their respective Affiliates to retain, for a period of
at least four (4) years, or the period required by applicable Regulation,
following the Closing Date, all records, books, contracts, instruments, computer
data and other data and information (collectively, "INFORMATION") relating to
the Company.
(b) ACCESS TO INFORMATION. From and after the Closing Date, the
Seller shall afford to the Purchaser and its authorized accountants, counsel and
other designated representatives reasonable access (including using reasonable
efforts to give access to Persons or firms possessing Information) and
duplicating
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rights during normal business hours to all Information within the Seller'
possession relating to the Company, insofar as such access is reasonably
required by the Purchaser. Similarly, the Purchaser shall afford to the Seller
and their authorized accountants, counsel, and other designated representatives
reasonable access (including reasonable efforts to give access to Persons or
firms possessing Information) and duplicating rights during normal business
hours to Information within the Purchaser's possession relating to the Company
or its business as conducted prior to the Closing Date, insofar as such access
is reasonably required by the Seller.
(c) DELIVERY OF CORPORATE RECORDS. The Seller shall arrange, as
soon as practicable following the Closing Date, to the extent not previously
delivered in connection with the transactions contemplated herein, for
transportation at the Seller' cost to the Purchaser of the records in the
Seller's possession relating to the Company, including, without limitation, the
corporate minute books, stock ledgers and certificates and corporate seals of
the Company, and all Contracts and litigation files relating to the Company,
except to the extent (I) such items are already in the possession of the
Purchaser or the Company or (ii) it is necessary or appropriate for the Seller
to retain such records for use in preparation of Tax Returns under the
provisions hereof. The Seller may make and retain copies of all or any of such
records or documents at the Seller's expense.
(d) WITNESSES. At all times from and after the Closing Date, each
of the Seller and the Purchaser shall use reasonable efforts to make available
to the other, upon written request, its officers, directors, employees and
agents as witnesses to the extent that such Persons may reasonably be required
in connection with any legal, administrative or other proceedings in which the
requesting party may from time to time be involved, at no cost; PROVIDED,
however, that a party producing such witnesses shall be entitled to receive from
the requesting party, upon presentation therefor, payment for such out-of-pocket
costs and disbursements as may be reasonably incurred in producing such
witnesses.
Section 6.8 INSURANCE POLICIES AND CLAIMS ADMINISTRATION.
(a) INSURANCE COVERAGE PRIOR TO THE CLOSING DATE. The Company
shall be responsible for the administration of all claims under the Company's
insurance policies relating to periods prior to the Closing Date. If, after the
Closing Date, any claim is asserted against the Company relating to periods
prior to the Closing Date, Purchaser shall cause the Company to promptly assert
and pursue coverage and payment for such claim with the appropriate
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insurance carrier. In the case of a material claim which may have an
indemnification impact on Seller, Purchaser shall notify Seller of such claim.
In particular, the Purchaser shall cause the Company to file all necessary
claims and take all such other action to pursue such coverage. As between the
Seller, on the one hand, and the Purchaser and the Company, on the other hand,
the Purchaser and the Company shall be entitled to recover all insurance
proceeds with respect to any claim, except to the extent the Seller has
previously provided indemnification therefore to the Purchaser or the Company
under this Agreement. If the Purchaser or the Company shall pursue coverage and
payment for any claim relating to periods prior to the Closing Date on behalf of
the Company, then the Seller shall provide reasonable cooperation and assistance
to the Company and the Purchaser in connection therewith.
(b) INSURANCE COVERAGE AFTER THE CLOSING DATE. Each party shall be
responsible for establishing and maintaining its own property and casualty
insurance (including, without limitation, primary and excess general liability,
automobile, workers' compensation, property, director and officer liability,
fire, crime, surety and other similar insurance policies) for the activities and
claims of such party and its Affiliates on and after the Closing Date; provided,
however, the Purchaser shall, if it so desires, continue the Company's policies
in place as at the Closing Date and the Seller shall be obligated to obtain new
insurance policies on any of the operations and assets distributed to any of
them as Excluded Assets as provided herein.
Section 6.9 OTHER TAX MATTERS.
(a) TAX RETURNS. The Purchaser, the Seller, the Company and their
successors shall cooperate in the preparation of all Tax Returns and reports and
shall make available all necessary records and timely take all action necessary
to allow for the preparation and filing of all Tax Returns and reports. Within
ten (10) days following the Closing, the Seller shall deliver or shall cause to
be delivered to the Purchaser all books, records, returns, schedules, work
papers, and other documents (including without limitation, appraisals and other
background information) which are in the possession of the Seller or which are
not on the Company premises, and which relate to any Taxes of the Company for
any taxable period. Prior to the delivery of the materials described in the
preceding sentence, the Seller shall cooperate with the Purchaser in providing
access to such materials as is reasonably required by the Purchaser.
The parties hereto agree that the Seller shall prepare, and pay (but only
to the extent not fully paid or reserved against on
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the Financial Statements or the Unaudited Financial Statements) all Taxes
arising therefrom, all Tax Returns for the Company for the periods on or before
the Closing Date and for all Taxes arising as a result of the transactions
contemplated by this Agreement (except as provided in Sections 4.13 and 5.3
hereof). The Tax Return for the period ending on the Closing Date shall be
subject to review (but not approval) by the Purchaser prior to the filing
thereof by Seller. Upon mutual agreement between the Seller and the Purchaser,
the Company may prepare any such required Tax Returns. The Purchaser shall
prepare, and pay all Taxes arising therefrom, all Tax Returns for the Company
for the periods after the Closing Date.
(b) INFORMATION. The Purchaser and the Seller agree to furnish or
cause to be furnished to each other, as promptly as practicable, such
information (including access to books and records) and assistance relating to
the Company as is reasonably requested for the filing of any Tax Return, in
determining a Tax liability or right to refund, for the preparation of any audit
or other proceeding, and for the prosecution of any claim, suit or proceeding
relating to a proposed Tax adjustment. The Purchaser and the Seller shall
cooperate with each other in the conduct of any Tax audit or other Tax
proceedings involving the Company. The parties shall execute and deliver such
powers of attorney and other documents as are reasonably requested to carry out
the administration of the Tax provisions of this Agreement.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser under this Agreement shall be subject to
the satisfaction of each of the following conditions unless waived in writing by
the Purchaser:
Section 7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Seller and the Company contained in Article II hereof and
elsewhere in this Agreement and all information contained in any Exhibit,
Schedule or attachment hereto shall be true and correct in all material respects
when made and on the Closing Date as though then made. The Seller and the
Company shall have performed and complied in all material respects with all
agreements, covenants and conditions required by this Agreement to be performed
and complied with by them prior to the Closing Date. The Seller and the Company
shall have delivered to the Purchaser a certificate, dated the Closing Date, in
a form reasonably satisfactory to the Purchaser, certifying to the
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foregoing, and providing such supplemental information, agreements and
disclosures as shall be necessary to make such representations and warranties as
accurate on the Closing Date as on the date originally given. The Seller shall
deliver to the Purchaser all of the certificates, stock powers and other
documentation referenced in Section 9.2 hereof, evidencing the transfer to the
Purchaser of clear title to all of the Shares at the Closing, all in form and
substance satisfactory to the Purchaser and its counsel in their sole
discretion.
Section 7.2 CONSENTS AND APPROVALS. The Seller, the Company and the
Purchaser shall have obtained all consents, approvals, Orders, qualifications,
licenses, Permits, regulatory approvals (including but not limited to any
necessary consent, approval, exemption or notice as required by (A) the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 (B) the Washington
Utilities and Transportation Commission, and (c) the Towns of Yelm and Rainier,
Washington, and such other municipalities and counties as may be necessary) and
other authorizations, whether specified on Schedules 2.3, 2.26 and 3.3 hereto or
not, and shall have given all notices, required by all applicable Regulations,
Orders and Contracts binding on any of the Seller, the Company or the Purchaser
or any of their respective properties and assets, with respect to the execution,
delivery and performance of this Agreement, the financing and consummation of
the transactions contemplated herein and the conduct of the Business of the
Company in the same manner after the Closing Date as before the Closing Date.
Section 7.3 NO MATERIAL ADVERSE CHANGE. There shall have been no
Material Adverse Change in the business, properties, Financial Statements,
Unaudited Financial Statements, Schedules to this Agreement, business prospects,
regulatory climate, condition (financial or otherwise) or results of operations
of the Company since December 31, 1999 through the Closing Date. The Purchaser
shall have received a certificate, dated the Closing Date, from the Seller and
the Company, in a form reasonably satisfactory to the Purchaser, certifying to
the foregoing.
Section 7.4 NO PROCEEDING OR LITIGATION. No Order or Regulation shall
be in effect and no litigation shall have been consummated or threatened which
would prevent the consummation of the transactions contemplated hereby.
Section 7.5 SECRETARY'S CERTIFICATE. The Purchaser shall have received
a certificate, signed by the Secretaries of Comerco and YCOM dated the Closing
Date, as to the Articles of Incorporation (attaching a Secretary of State
certified copy
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thereof, with all amendments) and bylaws of Comerco and YCOM, respectively, and
the resolutions adopted by the shareholders and directors of Comerco and YCOM in
connection with this Agreement in a form reasonably satisfactory to the
Purchaser.
Section 7.6 CERTIFICATES OF GOOD STANDING. At the Closing, the Company
shall have delivered to the Purchaser certificates issued by the appropriate
governmental authorities evidencing the good standing of Comerco, YCOM and each
of their subsidiaries in their respective jurisdictions of incorporation and in
each jurisdiction in which each is qualified to do business as a foreign
corporation as of a date not more than fifteen (15) days prior to the Closing
Date.
Section 7.7 OPINION(S) OF SELLER'S COUNSEL. The Seller shall deliver
at Closing an opinion or opinions of counsel to the Seller addressed to the
Purchaser and the Purchaser's lender in substantially the form attached hereto
as Exhibit 7.7.
Section 7.8 EMPLOYMENT AGREEMENT TERMINATION. As of the close of
business on the Closing Date, after the fulfilment of all of the Company's
obligations to Xxxxxx X. Xxxxxx due upon Closing, the Company shall have
terminated the Amended and Restated Employment Agreement with Xxxxxx X. Xxxxxx,
without liability to Xx. Xxxxxx for any severance or other benefits thereunder.
Section 7.9 RESIGNATIONS. The Seller shall have caused all directors
and officers of Comerco and YCOM and all of their subsidiaries to have resigned.
Section 7.10 OTHER DOCUMENTS. The Purchaser shall have been furnished
with such other and further documents and certificates, including certificates
of the Seller, Comerco and YCOM officers, directors and others, as the Purchaser
shall reasonably request to evidence compliance with the conditions set forth in
this Agreement.
Section 7.11 LIENS. The Seller shall have removed all Liens on the
Shares and/or on the assets and properties of the Company other than Permitted
Liens.
Section 7.12 DELIVERY OF MINUTE BOOKS. The Seller shall deliver at
Closing all original minute books, corporate seals and stock transfer records of
Comerco, YCOM and of all their direct and indirect subsidiaries, as well as
original evidence of all their respective investments.
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Section 7.13 DELIVERY OF FINANCIAL STATEMENTS. The Seller shall deliver
the Unaudited Financial Statements on a monthly basis from and after the date
hereof as soon as such Unaudited Financial Statements shall have been prepared,
all as provided in Section 4.9 hereof.
Section 7.14 RENEWAL OF FRANCHISES. The Seller shall have renewed or
obtained for at least ten (10) years from the date of Closing the telephone
franchise agreements granted by the Town of Rainier, Washington, as well as by
the Counties of Xxxxxx and Thurston, Washington, and shall have similarly
renewed or obtained any other franchise agreements currently in existence or
required in connection with the Company's Business as presently conducted,
except that it is satisfactory that the Yelm, Washington franchise agreement
continue only through August 10, 2009.
Section 7.15 DISSOLUTION OF YELM WIRELESS, INC. If requested by
Purchaser, the Company shall have, prior to Closing, dissolved and liquidated,
in accordance with the laws of the State of Washington, Yelm Wireless, Inc.
Section 7.16 ADDITIONAL ENVIRONMENTAL TESTING. Prior to Closing,
Purchaser shall, at its expense, conduct additional environmental testing at
Shop #1 yard, pursuant to such scope of work as the parties hereto shall agree
prior thereto. Should Purchaser determine, in its sole discretion, that the
results of such additional testing are unsatisfactory, then Purchaser may elect
to terminate this Agreement as provided in Section 10.1(b) hereof.
Section 7.17 PAYOFF OF KEY BANK, N.A.'S INDEBTEDNESS AND RELEASE OF
LIENS. Prior to Closing, the Company shall have paid off any and all
indebtedness due or owing to Key Bank, N.A. and shall have caused the release of
record of any and all liens relating thereto. Evidence of such filed lien
releases shall be provided to Purchaser.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS
OF THE SELLER
The obligations of the Seller under this Agreement shall be subject to the
satisfaction of each of the following conditions unless waived in writing by
Seller:
Section 8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in
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Article III hereof and elsewhere in this Agreement and all information contained
in any Exhibit, Schedule or attachment hereto shall be true and correct in all
material respects when made and on the Closing Date as though then made, except
as expressly provided herein or therein. The Purchaser shall have performed and
complied in all material respects with all agreements, covenants and conditions
required by this Agreement to be performed and complied with by it prior to the
Closing Date. An officer of the Purchaser in his capacity as such shall have
delivered to the Seller a certificate, dated the Closing Date, in a form
reasonably satisfactory to the Seller, certifying to the foregoing, and
providing such supplemental information, agreements and disclosures as shall be
necessary to make such representations and warranties as accurate on the Closing
Date as on the date originally given.
Section 8.2 CONSENTS AND APPROVALS. The Purchaser, the Seller and the
Company shall have obtained all consents, approvals, orders, qualifications,
licenses, Permits, regulatory approvals, (including but not limited to any
necessary consent, approval, exemption or notice as required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976), and other authorizations,
whether specified on Schedules 2.3, 2.26 and 3.3 hereto or not, and shall have
given all notices, required by all applicable Regulations, Orders and Contracts
binding on the Purchaser, the Seller or the Company or any of their respective
properties and assets with respect to the execution, delivery and performance of
this Agreement.
Section 8.3 NO PROCEEDING OR LITIGATION. No Order or Regulation shall
be in effect and no litigation shall have been consummated or threatened which
would prevent the consummation of the transactions contemplated hereby.
Section 8.4 SECRETARY'S CERTIFICATE. The Seller shall have received a
certificate, signed by the Secretary of the Purchaser, dated the Closing Date,
as to the Articles of Incorporation and bylaws of the Purchaser and the
resolutions adopted by the directors of the Purchaser in connection with this
Agreement in a form reasonably satisfactory to the Seller.
Section 8.5 OPINION OF PURCHASER'S COUNSEL. The Purchaser shall
deliver at Closing an opinion of counsel to the Purchaser addressed to the
Seller in substantially the form attached hereto as Exhibit 8.5.
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ARTICLE IX
CLOSING
Section 9.1 CLOSING. Unless this Agreement shall have been terminated
or abandoned pursuant to the provisions of Article X hereof, a closing of the
transactions contemplated by this Agreement (the "CLOSING") shall be held on or
before October 2, 2000 (or on such date either before or after October 2, 2000
as the parties hereto shall mutually agree, which shall be on the first day of
the month which is at least ten (10) days after receipt of all WUTC, FCC,
Xxxx-Xxxxx-Xxxxxx and other approvals required as a precondition to Closing)
(the "CLOSING DATE") in the offices of the Seller' counsel; PROVIDED, that the
Closing shall occur as soon as practicable after the satisfaction of the
conditions contained in Articles VII and VIII hereof.
Section 9.2 CLOSING DATE PAYMENT AND RECEIPT OF Shares. On the Closing
Date (i) the Seller will assign and transfer to the Purchaser good and valid
title in and to the Shares, free and clear of all Liens, by delivering to the
Purchaser stock certificates representing the Shares, duly endorsed for transfer
or accompanied by duly executed stock powers endorsed in blank with requisite
stock transfer tax stamps, if any, attached; (ii) the Purchaser shall, by wire
transfer of same-day funds, pay to the Seller, the amount of the Adjusted
Purchase Price for all of the Shares; and (iii) the parties shall deliver to
each other the documents required under this Agreement to be delivered at the
Closing.
ARTICLE X
TERMINATION AND ABANDONMENT
Section 10.1 METHODS OF TERMINATION. This Agreement may be terminated
and the transactions herein contemplated may be abandoned at any time:
(a) MUTUAL CONSENT. By mutual written consent of the Purchaser and
the Seller.
(b) SELLER'S FAILURE TO PERFORM. By the Purchaser if as of the
Closing Date any of the conditions specified in Article VII hereof have not been
satisfied (and remain so unsatisfied for more than ten (10) days after the
Purchaser has notified the Seller in writing thereof) or if any of the Seller or
the Company are otherwise indefault in any material respect under this Agreement
(and remains in default for more than ten (10) days after the
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Purchaser has notified theSeller in writing of such default) or if at any time
prior to the Closing Date it becomes apparent to the Purchaser (on reasonable
grounds) that any of the Seller or the Company will be unable to satisfy one or
more of the representations and warranties in Article II hereof or one or more
of the covenants or agreements in Articles IV, VI or VII hereof.
(c) PURCHASER'S FAILURE TO PERFORM. By the Seller if as of the
Closing Date any of the conditions specified in Article VIII hereof have not
been satisfied (and remain so unsatisfied for more than ten (10) days after the
Seller has notified the Purchaser in writing thereof) or if the Purchaser is
otherwise in default in any material respect under this Agreement (and remains
in default for more than ten (10) days after the Seller have notified the
Purchaser in writing of such default) or if at any time prior to the Closing
Date it becomes apparent to the Seller (on reasonable grounds) that the
Purchaser will be unable to satisfy one or more of its representations and
warranties in Article III hereof or one or more of the covenants or agreements
in Articles V, VI or VIII hereof.
(d) FAILURE TO CLOSE BY DECEMBER 31, 2000. By either party in the
event the Closing has not occurred by December 31, 2000, unless such failure to
close shall be due to a breach of this Agreement by the party seeking to
terminate the Agreement, or such failure to close shall be due to the nonreceipt
of approval from the WUTC, which approval has been diligently sought, in which
last case this date shall be extended for one hundred twenty (120) days
automatically.
(e) MATERIAL ADVERSE CHANGE. By the Purchaser if a Material
Adverse Change shall be shown or indicated (in the sole discretion of the
Purchaser) in any of the Unaudited Financial Statements delivered after the date
hereof or otherwise with respect to any of the conditions to Closing set forth
in Section 7.3 hereof, and written notice of termination of this Agreement shall
have been given by the Purchaser within thirty (30) business days of the
Purchaser's receipt of such Unaudited Financial Statements or the Purchaser's
discovery of such Material Adverse Changes.
(f) REMEDIES. In the event of any failure to perform as described
in this Section 10.1, the nonbreaching party shall have such remedies for breach
of contract as are allowed by law in addition to or in substitution of the right
of termination.
Section 10.2 PROCEDURE UPON TERMINATION. If this Agreement is
terminated as provided herein:
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(a) RETURN OF RECORDS. Each party shall as promptly as practicable
redeliver to the party furnishing the same, all data, information and other
written material (including all copies thereof) of any other party relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof.
(b) CONFIDENTIALITY. All information received by any party hereto
with respect to the business of any other party (other than information which is
a matter of public knowledge or which has heretofore been or is hereafter
published in any publication for public distribution or filed as public
information with any governmental authority) shall not at any time be used by
such party, or disclosed to third parties.
ARTICLE XI
SURVIVAL OF TERMS; INDEMNIFICATION
Section 11.1 SURVIVAL; LIMITATIONS. All of the terms and conditions of
this Agreement, together with the representations, warranties and covenants
contained herein or in any instrument or document delivered or to be delivered
pursuant to this Agreement and the agreements of the parties to indemnify each
other as set forth in this Article XI shall survive the execution of this
Agreement and the Closing Date notwithstanding any investigation heretofore or
hereafter made by or on behalf of any party hereto and shall continue for, and
all claims with respect thereto shall be made prior to the end of, eighteen (18)
months from the Closing Date (the "INDEMNIFICATION Period"); provided, however,
that with respect to the representations set forth in Sections 2.7 and 2.8
hereof, the Indemnification Period shall survive in perpetuity, and provided
further that with respect to any claim under Section 11.2(e) and any Tax
liability of Comerco, YCOM or any of their subsidiaries which Tax liability is
attributable to any activities or transactions occurring by any of them prior to
and/or through the Closing Date, the agreement of the Seller to indemnify the
Purchaser and its Affiliates shall survive until, and all claims with respect
thereto shall be made prior to, the expiration of the applicable statute of
limitations, as such statutes of limitations may have been or be extended by
agreement from time to time.
Section 11.2 INDEMNIFICATION BY THE SELLER. After the Closing Date,
subject to the limitations set forth in Sections 11.1 and 11.7 hereof, the
Purchaser and its Affiliates (including, without limitation, Comerco and YCOM)
and their respective
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officers, directors, employees, shareholders, representatives and agents shall
be indemnified and held harmless jointly and severally by the Seller, their
respective heirs, successors, representatives and assigns, against and in
respect of any and all damage, loss, liability, cost or expense (including,
unless otherwise provided herein, the reasonable fees and expenses of counsel
and any Tax liability resulting from any indemnity payment made hereunder)
resulting from, or in respect of, any of the following:
(a) MISREPRESENTATION OR BREACH. Any misrepresentation or breach
of warranty of the Seller or the Company, or nonfulfillment of any obligation on
the part of the Company (to be performed on or prior to the Closing) or the
Seller under this Agreement, or contained in any Schedule or Exhibit to this
Agreement or in any Financial Statement or Unaudited Financial Statement
delivered by or on behalf of the Seller or the Company hereunder.
(b) TAXES. All Taxes of the Seller, of Comerco, YCOM or any of
their subsidiaries or Affiliates or with respect to their investments, including
but not limited to any and all investments sold or otherwise disposed of prior
to the Closing Date, attributable to any period prior to or through the Closing
Date, other than such Taxes in such particular amounts as are shown on the
Schedules to be due and owing as of the Closing Date and/or in such particular
amounts as are shown to be due and owing on or are specifically reserved for on
the Closing Balance Sheet.
(c) OTHER CLAIMS. Any Claim of a third party arising out of the
business or operations of the Company prior to or through the Closing Date or
any Claim relating to the Excluded Liabilities or Excluded Assets either prior
to or after the Closing Date, or any Claim resulting from or arising out of the
ownership, management or use of the Shares and/or the business of the Company
prior to or through the Closing Date, other than (with respect to all of the
foregoing) such Claims that are disclosed with particularity on the Schedules
and/or Exhibits hereto and/or are included in a particular amount and/or are
specifically reserved for on the Closing Balance Sheet.
(d) WASHINGTON OREGON WIRELESS, LLC. Any Claim arising before or
after the date hereof of any Person (including for Taxes) in any way relating to
or resulting from or arising out of or in connection with or otherwise
attributable to the Company's prior ownership of a membership interest in
Washington Oregon Wireless, LLC and the distribution thereof to Seller prior to
the date hereof.
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(e) FAILURE TO RECEIVE REFUNDS OR TAX CREDITS SHOWN ON THE CLOSING
BALANCE SHEET. The failure to receive any Tax refunds or the loss of any Tax
credits shown on the estimated closing balance sheet, as revised by the Closing
Balance Sheet, as well as any penalties or interest incurred by the Company as a
result thereof.
(f) RELATED EXPENSES. All expenses and costs, including but not
limited to legal fees, reasonably paid or incurred in connection with any such
indemnified Claim.
Section 11.3 INDEMNIFICATION BY THE PURCHASER. After the Closing,
subject to the limitations set forth in Sections 11.1 and 11.7, the Seller and
their respective heirs, successors, representatives and assigns shall be
indemnified and held harmless by the Purchaser against and in respect of any and
all damage, loss, liability, cost or expense (including, unless otherwise
provided herein, the reasonable fees and expenses of counsel and any Tax
liability resulting from any indemnity payment made hereunder) resulting from,
or in respect of, any of the following:
(a) MISREPRESENTATION OR BREACH. Any misrepresentation or breach
of warranty of the Purchaser, or nonfulfillment of any obligation on the part of
the Company (to be performed after the Closing) or the Purchaser under this
Agreement, or contained in any Schedule or Exhibit to this Agreement or from any
misrepresentation in or omission from any certificate, Schedule, Exhibit, or
instrument delivered by or on behalf of the Purchaser hereunder.
(b) TAXES. All Taxes of the Purchaser or of the Company
attributable to any period after the Closing Date.
(c) OTHER CLAIMS. Any Claim of a third party arising out of the
business or operations of the Company after the Closing Date, or any Claim
resulting from or arising out of the ownership, management or use of the Shares
and/or the Business of the Company after the Closing Date.
(d) RELATED EXPENSES. All expenses and costs, including but not
limited to legal fees, reasonably paid or incurred in connection with any such
indemnified Claim.
Section 11.4 THIRD PARTY CLAIMS.
(a) GENERALLY. Except as otherwise provided in this Agreement, the
following procedures shall be applicable with respect to indemnification for
third party Claims. Promptly after receipt by the party seeking indemnification
hereunder (hereinafter
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referred to as the "INDEMNITEE") of notice of the commencement of any action or
the assertion of any Claim, liability or obligation by a third party (whether by
legal process or otherwise), against which Claim, liability or obligation
another party to this Agreement (hereinafter the "INDEMNITOR") is, or may be,
required under this Agreement to indemnify such Indemnitee, the Indemnitee
shall, if a claim thereon is to be, or may be, made against the Indemnitor,
immediately notify the Indemnitor in writing of the commencement or assertion
thereof and give the Indemnitor a copy of such Claim or process and all legal
pleadings. The Indemnitee's failure to give timely notice as required by this
Section 11.4(a) shall not serve to eliminate or limit the Indemnitor's
obligation to indemnify the Indemnitee unless such failure prejudices the rights
of the Indemnitor, and then only to the extent of such prejudice. Moreover, the
Indemnitee shall have the right to take any actions or steps it deems reasonable
to avoid the occurrence of any prejudice to the rights of the Indemnitee. The
Indemnitor shall have the right to assume the defense of such action with
counsel of reputable standing unless with respect to such action (A) injunctive
or equitable remedies have been sought therein in respect of the Indemnitee or
its business or (B) such action is for an alleged amount of less than Five
Thousand Dollars ($5,000); PROVIDED, that the Indemnitee and counsel to the
Indemnitee shall have the right to participate in the defense of any and all
Claims pursuant to the provisions of Section 11.4(b) hereof. The Indemnitor and
the Indemnitee shall reasonably cooperate in the defense of such Claims. If the
Indemnitee shall be required by judgment or a settlement agreement to pay any
amount in respect of any obligation or liability against which the Indemnitor
has agreed to indemnify the Indemnitee under this Agreement, the Indemnitor
shall immediately pay such amount to the Indemnitee in order to enable the
Indemnitee to make such payment, and otherwise shall promptly reimburse the
Indemnitee in an amount equal to the amount of such payment, in either case,
plus all reasonable out-of-pocket expenses (including legal fees and expenses)
incurred by such Indemnitee at the specific request of the Indemnitor, as
provided above, or as otherwise authorized by Section 11.4(b) hereof, in
connection with such obligation or liability subject to this Article XI. No
Indemnitor, in the defense of any such Claim, shall, except with the consent of
the Indemnitee, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnitee of a release from all liability with
respect to such Claim. In the event that the Indemnitor does not accept the
defense of any matter for which it is entitled to assume such defense as
provided in this Section 11.4(a), the Indemnitee shall have the full right to
defend against any such Claim and shall be entitled to settle or agree to pay in
full such Claim in
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its sole discretion. With respect to any matter as to which the Indemnitor is
not entitled to assume the defense pursuant to the terms of this Section
11.4(a), the Indemnitee shall not enter into any settlement for which an
indemnification Claim will be made hereunder without the approval of the
Indemnitor, which shall not be unreasonably withheld.
(b) COUNSEL. An Indemnitee shall have the right to employ its own
counsel, but the fees and expenses of such counsel shall be at the expense of
the Indemnitee, unless (I) the employment of such counsel shall have been
authorized in writing by the Indemnitor in connection with the defense of such
Claim and the Indemnitor has agreed in writing to pay such fees and expenses, or
(ii) the Indemnitor shall not have employed counsel in the defense of such Claim
(which counsel may be in-house counsel unless and until a lawsuit has been
commenced). In either of which events, such fees and expenses of not more than
one additional counsel for the Indemnitee shall be borne by the Indemnitor.
Section 11.5 OTHER CLAIMS.
(a) In the event an Indemnitee should have a claim under this
Article XI against an Indemnitor that does not involve a third party Claim, the
Indemnitee shall promptly give notice (the "INDEMNITEE NOTICE") and the details
thereof, including copies of all relevant information and documents, to the
Indemnitor within a period of thirty (30) days following the discovery of the
claim by the Indemnitee (the "CLAIM NOTICE PERIOD"). The failure by any
Indemnitee to give the Indemnitee Notice within the Claim Notice Period shall
not impair the Indemnitee's rights hereunder except to the extent that the
Indemnitor demonstrates that it has been prejudiced thereby. The Indemnitor will
notify the Indemnitee within a period of thirty (30) days after the receipt of
the Indemnitee Notice by the Indemnitor (the "INDEMNITY RESPONSE PERIOD")
whether the Indemnitor disputes its liability to the Indemnitee under this
Article XI with respect to such Claim. If the Indemnitor notifies the Indemnitee
that it does not dispute the Claim described in such Indemnitee Notice or fails
to notify the Indemnitee within the Indemnity Response Period whether the
Indemnitor disputes the claim described in such Indemnitee Notice, the actual
damages as finally determined will be conclusively deemed to be a liability of
the Indemnitor under this Article XI and the Indemnitor shall pay the amount of
such damages to the Indemnitee on demand. If the Indemnitor notifies the
Indemnitee within the Indemnity Response Period that the Indemnitor disputes its
liability with respect to such Claim, the Indemnitor and the Indemnitee will
proceed in good faith to negotiate a resolution of such dispute, and if not
resolved through negotiations within a
-48-
period of thirty (30) days from the date of such notice or such longer period as
may be agreed to by the parties in writing, such dispute shall be resolved by
arbitration in accordance with Section 11.5(b) hereof.
(b) Any dispute required to be submitted to arbitration pursuant
to this Section 11.5 shall be finally and conclusively determined in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
(the "RULES OF ARBITRATION") then in effect by the decision of three (3)
arbitrators (the "BOARD OF ARBITRATION") selected in accordance with the Rules
of Arbitration. The Board of Arbitration shall meet in Seattle, Washington and
shall render a decision in writing (concurred in by a majority of the members of
the Board of Arbitration) with respect to and stating the amount, if any, which
the Indemnitor is required to pay to the Indemnitee in respect of the claim made
by the Indemnitee. The decision of the Board of Arbitration shall be rendered as
soon as practical following commencement of proceedings with respect thereto.
The Board of Arbitration shall cause its written decision to be delivered to the
Indemnitee and the Indemnitor. Any decision made by the Board of Arbitration
shall be final, binding and conclusive on the Indemnitee and the Indemnitor and
entitled to be enforced to the fullest extent permitted by law and entered in
any court of competent jurisdiction.
The parties hereto hereby consent to the jurisdiction of the
foregoing Board of Arbitration and to the jurisdiction of any local, state or
Federal court located in the State of Washington for the purpose of enforcing
the decision or award of the Board of Arbitration or otherwise. The parties
hereto agree that all service of process may be made on any such party by
personal delivery or by registered or certified mail addressed to the
appropriate party at the address for such party set forth in this Agreement.
All fees, costs and expenses of the prevailing party in any
arbitration, including, but not limited to, attorneys' fees, shall be paid by
the losing party and shall be awarded to the prevailing party as part of the
decision of the Board of Arbitration. For purposes hereof, a "PREVAILING PARTY"
shall mean the party which substantially prevails in its position in
arbitration. Each and every arbitration proceeding commenced pursuant to this
Section 11.5(b) shall be consolidated with any arbitration proceedings
simultaneously or previously commenced (but not concluded) under this Section
11.5(b).
Section 11.6 CONTINUED LIABILITY FOR INDEMNITY Claims. The liability of
any Indemnitor hereunder with respect to Claims
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hereunder shall continue for so long as any Claims for indemnification may be
made hereunder pursuant to this Article XI and, with respect to any such
indemnification Claims duly and timely made, thereafter until the Indemnitor's
liability therefore is finally determined and satisfied.
Section 11.7 BASKET AMOUNT.
(a) INDEMNIFICATION BY THE SELLER. Notwithstanding anything to
the contrary herein, Seller will have no liability (for indemnification or
otherwise) with respect to the matters described in Section 11.2 of this
Agreement until the total of all damages suffered by the Purchaser and/or its
Affiliates exceeds Two Hundred Thousand Dollars ($200,000.00)(the "Basket
Amount"), and then only for the amount by which such damages exceed the Basket
Amount.
(b) INDEMNIFICATION BY THE PURCHASER. Further, notwithstanding
anything to the contrary herein, Purchaser will have no liability (for
indemnification or otherwise) with respect to the matters described in Section
11.3 of this Agreement (other than the nonfulfillment, in whole or in part, of
any obligation on the part of the Purchaser under this Agreement which relates
to Section 5.2 or the payment of the Adjusted Purchase Price) until the total of
all damages suffered by the Seller and/or their Affiliates exceeds the Basket
Amount and then only for the amount by which such damages exceed the Basket
Amount.
(c) AGGREGATION. Notwithstanding the foregoing, to the extent
indemnification is sought under Sections 11.2 or 11.3 of this Agreement, any and
all claims shall be aggregated for purposes of determining if the Basket Amount
has been met. By way of example, and not by way of limitation, if Seller shall
have failed to perform three obligations of the type referred to in Section
2.12(b) hereof, each causing damages of $70,000, then payment in the amount of
$10,000 shall be made to Purchaser as provided herein (representing the excess
of such damages over the Basket Amount of $200,000).
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 AMENDMENT AND MODIFICATION. Subject to applicable
Regulations, this Agreement may be amended, modified and supplemented at any
time with respect to any of the terms contained herein, by a written agreement
signed by all of the parties hereto.
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Section 12.2 WAIVER. The failure of any party hereto to comply with any
obligation, covenant, agreement or condition herein may be waived in writing by
the other parties hereto, but such waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing.
Section 12.3 CERTAIN DEFINITIONS.
"ADJUSTED PURCHASE PRICE" shall have the meaning ascribed to such term in
Section 1.2 hereof.
"AFFILIATE" shall mean, with regard to any Person, any Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person and, with respect to any Person who is an individual, the
spouse, ancestors and descendants (lineal or by marriage) thereof. "CONTROL"
(including, with correlative meaning, the terms "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by Contract or otherwise.
"AGREEMENT" shall have the meaning ascribed to such term in the preamble
hereof.
"AUTHORITY" shall mean any governmental authority, including, without
limitation, the FCC and the WUTC and all municipalities in which Comerco, YCOM
and/or any of their subsidiaries or Affiliates engage in business, and any other
governmental, regulatory or administrative body, agency, commission, board of
arbitrators, or any court or judicial authority, whether Federal, state, local
or foreign.
"BASE PURCHASE PRICE" shall have the meaning ascribed to such term in
Section 1.2 hereof.
"BUSINESS DAY" shall mean any day that is not a Saturday or Sunday and
that in Yelm, Washington, or Charlotte, North Carolina, is not a day on which
banking institutions are generally authorized or obligated by Regulation to
close.
"CERCLA" shall have the meaning ascribed to such term in Section 2.21(c)
hereof.
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"CERCLIS" shall have the meaning ascribed to such term in Section 2.21(c)
hereof.
"CLAIM" shall mean any action, written claim, complaint, lawsuit, written
demand, suit, notice of a violation, litigation, proceeding, arbitration or
other dispute noticed in writing, or otherwise, whether civil, criminal,
administrative or otherwise, by any Authority or other Person.
"CLOSING" shall have the meaning ascribed to such term in Section 9.1
hereof.
"CLOSING DATE" shall have the meaning ascribed to such term in Section 9.1
hereof.
"CLOSING BALANCE SHEET" shall have the meaning ascribed to such term in
Section 1.3 hereof.
"COMPANY" shall have the meaning ascribed to such term in the preamble
hereof.
"CONTRACT" shall mean any agreement, contract, commitment, instrument or
other binding arrangement or understanding, whether written or oral.
"ENVIRONMENTAL LAW" shall mean any Regulation or Order, including, but not
limited to, any term or condition included in a validly issued Permit to
construct or operate a facility subject to any Regulation or Order, which
relates to or otherwise imposes liability or standards of conduct concerning
environmental matters, mining or reclamation of mined land, discharges,
emissions, releases or threatened releases of noises, odors or any pollutants,
contaminants or hazardous or toxic wastes, substances or materials, whether as
matter or energy, into ambient air, water or land or otherwise relating to the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of pollutants, contaminants or
hazardous wastes, substances or materials, including (but not limited to)
CERCLA, the Superfund Amendments and Reauthorization Act of 1986, as amended,
the Resource Conservation and Recovery Act of 1976, as amended, the Toxic
Substances Control Act of 1976, as amended, the Federal Water Pollution Control
Act Amendments of 1972, the Clean Water Act of 1977, as amended, any so-called
"SUPERLIEN" law and any other similar Regulation by any Authority in effect on
or before the Closing Date.
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"ENVIRONMENTAL PERMIT" shall mean a Permit relating to or required by any
Environmental Law.
"ERISA" shall have the meaning ascribed to such term in Section 2.19
hereof.
"ERISA PLANS" shall have the meaning ascribed to such term in Section 2.19
hereof.
"FCC" shall mean the Federal Communications Commission.
"FINANCIAL STATEMENTS" shall have the meaning ascribed to such term in
Section 2.9 hereof.
"GAAP" shall mean United States generally accepted accounting principles,
consistently applied, as in existence at the date hereof and/or at the Closing
Date.
"HAZARDOUS MATERIALS" shall have the meaning ascribed to such term in
Section 2.21(a) hereof.
"IMPROVEMENTS" shall have the meaning ascribed to such term in Section
2.14(c) hereof.
"INDEMNITEE" shall have the meaning ascribed to such term in Section
11.4(a) hereof.
"INDEMNITOR" shall have the meaning ascribed to such term in Section
11.4(a) hereof.
"IRC" or the "CODE" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"LIEN" shall mean any security interest, lien, mortgage, pledge,
hypothecation, encumbrance, claim, easement, restriction (on transfer or
otherwise) or interest of another Person of any kind or nature.
"MATERIAL ADVERSE CHANGE" shall mean any developments or changes which
would have a Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, any
circumstances, state of facts or matters which could reasonably be expected,
either individually or in conjunction with any other circumstance, state of
facts or matter, to have a
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material adverse effect in respect of such Person's business, business
prospects, properties, assets, regulatory climate, condition (financial or
otherwise) or results of operations.
"NET TOTAL LONG TERM DEBT" shall have the meaning ascribed to such term in
Section 1.2 hereof.
"NET WORKING CAPITAL" shall have the meaning ascribed to such term in
Section 1.2 hereof.
"ORDER" shall mean any judgment, decree (consent or otherwise), order,
injunction (preliminary or permanent), stipulation, ruling, decree or consent of
or by an Authority.
"PCB" shall mean polychlorinated biphenyls.
"PERMITS" shall have the meaning ascribed to such term in Section 2.26
hereof.
"PERMITTED LIENS" shall mean (I) statutory Liens for Taxes not yet due and
payable, (ii) such imperfections or irregularities of title, liens, easements,
charges or encumbrances as do not interfere with the present use of the
properties or assets subject thereto or affected thereby, do not otherwise
impair present business operations at such properties, or do not have a Material
Adverse Effect on the value of such properties and assets and (iii) Liens
existing at the Closing Date with respect to the Total Long Term Debt, but only
to the extent such particular items of Total Long Term Debt are accounted for in
determining the Adjusted Purchase Price, and such Liens are fully disclosed on
Schedule 2.14(a) hereto.
"PERSON" shall mean any corporation, partnership, joint venture,
organization, entity, Authority or natural person, together with any and all
heirs, successors, representatives and assigns thereof.
"PENSION BENEFIT PLAN" shall have the meaning ascribed to such term in
Section 2.19 hereof.
"PRICE PER SHARE" shall have the meaning ascribed to such term in Section
1.2 hereof.
"PROPRIETARY RIGHTS" shall mean all (I) patents, patent applications,
patent disclosures and all related continuation, continuation-in-part,
divisional, reissue, reexamination, utility, model, certificate of invention and
design patents, registrations
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and applications for registrations, (ii) trademarks, service marks, logos, trade
names and corporate names and registrations and applications for registration
thereof and (iii) copyrights and registrations and applications for registration
thereof.
"PURCHASER" shall have the meaning ascribed to such term in the preamble
hereof.
"REGULATION" shall mean any law, statute, regulation, ordinance,
requirement, rule, executive order or binding action of or by an Authority.
"RELEASE" shall have the meaning ascribed to such term in Section 9601(22)
of Title 42 of the United States Code.
"SELLER" or "SELLER" shall have the meaning ascribed to such term in the
preamble hereof.
"SHARES" shall have the meaning ascribed to such term in the recitals
hereof.
"TAX RETURNS" shall have the meaning ascribed to such term in Section
2.16(a) hereof.
"TAX" or "TAXES" means any income, gross receipt, net proceeds,
alternative or add-on minimum, AD VALOREM, value added, estimated, turnover,
sales, use, property, personal property (tangible and intangible), stamp,
leasing, lease, user, excise, duty, franchise, transfer, license, withholding,
payroll, employment, foreign, fuel, excess profits, occupational and interest
equalization, windfall profits, severance and other taxes, charges, fees, levies
or other assessments of any kind whatsoever (including interest, penalties,
fines and additions thereto) imposed by any taxing Authority, Federal, state,
local or foreign.
"TOTAL LONG TERM DEBT" shall have the meaning defined in the Financial
Statements, computed in accordance with GAAP, consistently applied.
"UNAUDITED FINANCIAL STATEMENTS" shall have the meaning ascribed to such
term in Section 2.9 hereof.
"WUTC" shall mean the Washington Utilities & Transportation Commission.
"WELFARE BENEFIT PLAN" shall have the meaning ascribed to such term in
Section 2.19 hereof.
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Section 12.4 NOTICES. All notices, claims, requests, demands or other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, by first class certified
mail, return receipt requested, with postage paid, or by receipted overnight
courier service to the intended recipient at the address specified below or at
such other address as shall be designated by such party in any notice to the
other parties.
NOTICES TO PURCHASER: WITH A COPY TO:
-------------------- --------------
MJD Ventures, Inc. Xxxxxxxxx Xxxxxx Xxxxxx &
000 Xxxx Xxxxxxxx Xxxxxx Xxxxxx, P.A.
Suite 250 000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000 Suite 2020
ATTN: Xxxxxx X. Xxxxxxx, Vice Chairman Xxxxxxxxx, XX 00000-0000
and Executive Vice President ATTN: Xxxxxxx X. Xxxx, Esq.
(000) 000-0000 (Phone) (000) 000-0000 (Phone)
(000) 000-0000 (Fax) (000) 000-0000 (Fax)
xxxxxxxx@xxxxxxxxx.xxx(E-Mail) xxx@xxxx.xxx (E-Mail)
NOTICES TO THE COMPANY WITH A COPY TO:
---------------------- --------------
Xxxxxx X. Xxxxxx Xxxxx X. Xxxxxxxxx
President Whalen, Firestone, Xxxxxxxx,
YCOM Networks, Inc. Xxxxxxx & Xxxxx, LLP
P. O. Xxx 000 0000 Xxxxxx Xxxxxx
Xxxx, XX 00000 Suite 2150
(000) 000-0000 (Phone) Xxxxxxx, XX 00000
(000) 000-0000 (Fax) (000) 000-0000 (Phone)
xxxxxxx@xxxxxxxxxxxx.xxx (E-Mail) (000) 000-0000 (Fax)
xxxxxxx@xxx.xxx (E-Mail)
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NOTICES TO THE SELLER WITH A COPY TO:
--------------------- --------------
Xxxxxxx X. Xxxxxxxxxxxx, Trustee Xxxxx X. Xxxxxxxxx
W.B.W. Trust Number One Whalen, Firestone, Xxxxxxxx,
c/o Fiduciary Counseling, Inc. Xxxxxxx & Xxxxx, LLP
0000 Xxxxxxxx Xxxxx, Xxxxx 0000 0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxxxxx Xxxxxx Xxxxx 0000
Xxxxxx, XX 00000 Xxxxxxx, XX 00000
(000) 000-0000 (Phone) (000) 000-0000 (Phone)
(000) 000-0000 (Fax) (000) 000-0000 (Fax)
xxx@xxx.xxx with a copy xxxxxxx@xxx.xxx. (E-Mail)
to:xxx@xxxxxxxx.xxx (E-Mail)
Xxxxxxxx X. Xxxxx, Esq.
Fiduciary Counseling, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000 (Phone)
(000) 000-0000 (Fax)
xxx@xxxxxxxx.xxx (E-Mail)
Xxxxxx X. Xxxxxx
0000 Xxxxx Xxxx, X.X.
Xxxxxxx, XX 00000
(000) 000-0000 (Phone)
xxxxxxxxxxxxx@xxxx.xxx
Section 12.5 ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other parties
hereto; PROVIDED, that the Purchaser may, without the prior written consent of
the Seller or any other party hereto, assign its rights and obligations
hereunder and under any other Contracts or documents executed or delivered in
connection herewith to (I) an Affiliate of the Purchaser, including but not
limited to FairPoint Communications, Inc. or MJD Services Corp., or (ii) its
lenders as collateral in connection with the financing of the transactions
contemplated hereby. No such assignment shall relieve the assignor of such
assignor's liability for any and all continuing obligations hereunder, however.
-57-
Section 12.6 GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Washington, without regard to its principles of conflict of
laws.
Section 12.7 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 12.8 HEADINGS. The Article and Section headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 12.9 ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding of the parties hereto with regard to the subject
matter hereof and supersedes all prior agreements, representations, warranties,
promises, covenants, arrangements and understandings, oral or written, express
or implied, among the parties with respect to such subject matter. There are no
agreements, representations, warranties, promises, covenants, arrangements or
understandings among the parties with respect to such subject matter other than
those expressly set forth or referred to herein.
Section 12.10 NO BENEFIT. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the signatories to this
Agreement and each of their respective successors and permitted assigns;
provided, however, that any damages, costs and/or expenses incurred by a
Retained Employee as a result of anybreach of Purchaser's obligations under
Section 5.2 hereof shall be deemed damages, costs and/or expenses of Seller to
which Seller's indemnification rights hereunder shall apply.
Section 12.11 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party hereto upon any breach or default
of another party hereto under this Agreement shall impair any such right, power
or remedy of such party nor shall it be construed to be a waiver of any such
breach or default or an acquiescence therein or of or in any similar breach or
default thereafter occurring. All remedies, whether under this Agreement, by
Regulation or otherwise, afforded to any party shall be cumulative and not
alternative.
Section 12.12 SEVERABILITY. Unless otherwise provided herein, if any
provision of this Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability
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of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 12.13 EXPENSES. Each of the parties hereto shall bear its own
expenses, including, without limitation, legal fees, taxes and expenses, with
respect to this Agreement and the transactions contemplated hereby (which, with
respect to such expenses incurred by or on behalf of the Seller or the Company,
shall be paid by the Seller and not by the Company). Notwithstanding the
foregoing, in the event a breach of Section 6.4 hereof occurs and the
transactions contemplated hereby are not consummated, the Seller shall pay to
the Purchaser the Purchaser's out-of-pocket fees, including, without limitation,
legal fees and expenses, incurred in connection with the transactions
contemplated hereby. Additionally, notwithstanding the foregoing, (A) with
respect to any Xxxx-Xxxxx-Xxxxxx filing necessitated by the transactions
contemplated herein, (1) the Purchaser shall pay any and all applicable filing
fees, and (2) each of the parties shall bear its own fees and expenses otherwise
incurred in connection with the preparation of such filing, and (B) with respect
to compliance with any notice and/or approval requirements of the Washington
Utilities and Transportation Commission necessitated by the transactions
contemplated herein, any and all legal fees, filing fees and expenses of
regulatory counsel incurred in connection therewith shall be paid one-half (1/2)
by the Purchaser and one-half (1/2) by the Seller (collectively).
Notwithstanding anything to the contrary hereinabove provided, the Company may
pay certain expenses on behalf of the Seller on or before the Closing Date, so
long as any such payments are taken into account in, and have been accrued for
purposes of, the estimated closing balance sheet and the Closing Balance Sheet.
Section 12.14 TIME OF THE ESSENCE. Time is strictly of the essence with
respect to the provisions of this Agreement.
Section 12.15 INJUNCTIVE RELIEF. The parties hereby agree that any
remedy at law for any breach of the provisions of this Agreement shall be
inadequate and that the nonbreaching party shall be entitled to injunctive
relief in addition to any other remedy which such nonbreaching party might have
at law or in equity.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
MJD VENTURES, INC.
/s/ Xxxxxx X. Xxxxxxx
-------------------------------------------
By: Xxxxxx X. Xxxxxxx
---------------------------------------
Title: Executive Vice President
------------------------------------
W.B.W. TRUST NUMBER ONE
/s/ Xxxxxxx X. Xxxxxxxxxxxx
-------------------------------------------
By: Xxxxxxx X. Xxxxxxxxxxxx
----------------------------------------
Title: Trustee
------------------------------------
COMERCO, INC.
/s/ Xxxxxx X. Xxxxxx
-------------------------------------------
By: Xxxxxx X. Xxxxxx
----------------------------------------
Title: President
------------------------------------
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Exhibit 7.7
Opinion of Seller's Counsel
(attached)
[LETTERHEAD OF WHALEN, FIRESTONE, XXXXXXXX, XXXXXXX & XXXXX, LLP]
_____________, 2000
MJD Ventures, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
[LENDERS TO BE DETERMINED.]
_______________________________
_______________________________
_______________________________
Re: Comerco, Inc.
Ladies and Gentlemen:
We have served as counsel to Comerco, Inc., its shareholder and
subsidiaries (Comerco with its subsidiaries collectively, the "Company"), each a
Washington corporation or a Trust sitused in the State of Washington, as the
case may be, in connection with the preparation, execution and delivery of the
Stock Purchase Agreement dated as of May 23, 2000 among MJD Ventures, Inc.
("MJD"), the Company and the sole shareholder of the Company (the
"Shareholder"), relating to the purchase of all of the shares of capital stock
of Comerco, Inc. (the "Shares") owned by the Shareholder (such Stock Purchase
Agreement, together with all Schedules thereto and all Exhibits executed by the
Company and/or the Shareholder in connection therewith, referred to collectively
hereinafter as the "Agreement"). This opinion is delivered to you pursuant to
Section 7.7 of the Agreement. All capitalized terms used herein have the meaning
assigned to them in the Agreement except as otherwise provided herein.
In connection with the opinions expressed below, we have examined and are
familiar with originals or copies, certified or otherwise identified to our
satisfaction, of such documents, corporate records and other writings of the
Company, certificates of public officials or officers of the Company, and such
other
-1-
MJD Ventures, Inc.
---------------------
_______________, 2000
Page 2
documents and writings as were deemed necessary or appropriate for the opinions
hereinafter expressed.
In making such examination and rendering the opinions set forth below, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to authentic original
documents of all documents submitted to us as certified, conformed or
photostatic copies, and the authenticity of the originals of such documents and
the legal capacity of all natural persons.
For purposes of our opinion, we have assumed that the Agreement and all
other instruments and documents executed and delivered pursuant thereto have
been duly authorized, executed and delivered by all of the parties thereto other
than the Company and the Shareholders.
Whenever a statement herein is qualified by the phrases "known to us" or
"to our best knowledge", or similar phrases, it is intended to indicate that
during the course of our representation of the Company and the Shareholders and
the transactions contemplated by the Agreement, and having made inquiry of the
Shareholders and of certain officers of the Company as to such matters, no
information that would give us actual knowledge of the inaccuracy of such
statement has come to our attention. However, we have not undertaken any
independent investigation or review to determine the accuracy of any such
statement. No inference as to our knowledge of any matters bearing on the
accuracy of any such statement should be drawn from our representation of the
Company and the Shareholders.
Our opinions as hereinafter expressed are subject to the following
qualifications:
1. Our opinions are subject to the effect of bankruptcy, fraudulent
conveyance, insolvency, reorganization, arrangement, moratorium and other
similar laws;
2. Our opinions are subject to limitations imposed by laws and judicial
decisions relating to or affecting the rights of
-2-
MJD Ventures, Inc.
---------------------
_______________, 2000
Page 3
creditors or secured creditors generally or general principles of equity
(regardless of whether enforcement is considered in proceedings at law or in
equity) upon the enforceability of any of the remedies, covenants and other
provisions of the Agreement and upon the availability of injunctive relief or
other equitable remedies;
3. We express no opinion as to the creation or enforceability of
security interests or as to the recoverability of attorneys' fees and legal
expenses;
4. We express no opinion as to the laws or the effect or applicability
of the laws of any jurisdiction other than the laws of the United States and the
State of Washington;
5. The opinions expressed herein are as of the date hereof, and we
undertake no responsibility to advise you of changes occurring after the date of
this letter.
Based upon the foregoing and subject to further assumptions, limitations
and qualifications set forth below, we are of the opinion that:
(a) Comerco, Inc. and each of its subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws of
the State of Washington with full corporate power and authority to carry
on the business in which it is presently engaged and to own, lease and
operate its properties as now being conducted and to perform its
obligations under the Agreement. The Shareholder is a trust sitused in the
State of Washington, as set forth on Schedule 2.7 to the Agreement.
(b) The execution and delivery of the Agreement has been duly
authorized and approved by the Company's board of directors and the
Shareholder. The Agreement is a valid and binding obligation of the
Company and the Shareholder, enforceable in accordance with its terms,
subject to limitations and qualifications noted above. All persons who
have executed this Agreement on behalf of the Company have
-3-
MJD Ventures, Inc.
---------------------
_______________, 2000
Page 4
been duly authorized to do so by all necessary action of the Company and
the Shareholder.
(c) The authorized capital stock of Comerco, Inc. consists of
50,000 shares of $10.00 par value common stock, of which 31,250 shares are
issued and outstanding (the "Comerco Stock"). The Shareholder is the
lawful owner of the number of shares of the Comerco Capital Stock reported
in the Agreement. Comerco, Inc. has no other class of stock authorized or
issued and outstanding. All of the issued and outstanding shares of the
Comerco Capital Stock are duly and validly issued and outstanding, are
fully paid and nonassessable, were issued in compliance with all state and
Federal laws and are held of record and beneficially by the Shareholders,
all as more fully set forth on Schedule 2.7 to the Agreement. The delivery
by the Shareholder to Purchaser at Closing of certificates representing
the Comerco Capital Stock will pass good and marketable title to all of
the Comerco Capital Stock to Purchaser free and clear of all Liens,
encumbrances, claims, restrictions and equities of any kind, other than as
disclosed on Schedule 2.7 of the Agreement. There are no outstanding
warrants, options, rights, puts, calls or other commitments of any nature
relating to the Comerco Capital Stock, and there are no outstanding
securities or debt obligations of the Company convertible into shares of
capital stock of the Company. To our best knowledge, none of the issued
and outstanding shares of capital stock of the Company was issued in
violation of preemptive rights. No shares of capital stock of the Company
are held in the treasury of the Company.
(d) The foregoing opinions are equally applicable to the capital
stock of each affiliate or subsidiary of the Corporation hereinafter set
forth, except that the authorized, issued and outstanding capital stock of
such corporations are as follows:
-4-
MJD Ventures, Inc.
---------------------
_______________, 2000
Page 5
ISSUED AND
AUTHORIZED OUTSTANDING
CORPORATION CAPITAL STOCK CAPITAL STOCK
----------- ------------- -------------
YCOM Networks, Inc. Four Hundred Fifty Two Hundred
(450) shares, $100 Ninety-Four (294)
par value common shares issued to
stock Comerco, Inc. by
Certificates No.
135 and No. 136
dated December 5,
1983 and July 9,
1984, respectively
(e) The execution, delivery and performance of the Agreement and
the consummation of the transactions contemplated by the Agreement will
not: (I) violate or result in a breach of or default or acceleration under
the Articles of Incorporation or Bylaws of the Company, as such have been
amended, or, to our best knowledge, any instrument or agreement to which
the Company or the Shareholder is a party or are bound which would have a
material adverse effect on the Company's properties or operations; (ii) to
our best knowledge, violate any judgment, order, injunction, decree or
award against or binding upon the Company or upon the Comerco Capital
Stock or other securities, property or business of the Company which would
have a material adverse effect on the Company's properties or operations;
(iii) to our best knowledge, result in the creation of any material lien,
charge or encumbrance upon the properties or assets of the Company or the
Comerco Capital Stock; or (iv) violate any law or regulation of any
jurisdiction relating to the Company or the Comerco Capital Stock or other
securities, property or business of the Company, assuming all required
regulatory approvals have been obtained in connection with the
transactions contemplated by the Agreement as provided in the Agreement.
-5-
MJD Ventures, Inc.
---------------------
_______________, 2000
Page 6
(f) To our best knowledge, there is no litigation, claim or
proceeding, pending or threatened against the Company or the Shareholders,
or against any of their respective assets or properties, or relating to
the ownership of any or all of the Comerco Capital Stock or the YCOM
Capital Stock, or which questions the validity or enforceability of the
Agreement, or which could prevent, hinder or delay consummation of the
Agreement or any of the transactions contemplated thereby.
(g) To our best knowledge, there is not pending any threatened or
existing claim, unsatisfied judgment, litigation, governmental
investigation or proceeding before any court, arbitrator or Federal, state
or other governmental commission, board or other agency by or against the
Company or the Shareholders or adversely affecting the operations or
financial condition of the Company or its business, property, business
prospects or assets.
(h) To our best knowledge, the Shareholder and the Company have
given all notices to and have obtained from all local, state and Federal
regulatory authorities any and all approvals, consents, permits and
authorizations required in order to consummate the transactions
contemplated in the Agreement.
(i) Upon completion of the transactions contemplated by the
Agreement, no Person, other than the Purchaser, shall have any ownership
or other right in and/or to the Comerco Capital Stock or to the YCOM
Capital Stock or any subsidiaries thereof.
The opinions expressed herein are solely for your benefit in connection
with the Agreement and, without our express written consent, neither our
opinions nor this opinion letter may be assigned, quoted or relied upon for any
other purpose. No other person or entity may rely upon or claim reliance upon
this opinion, and it is not to be quoted in whole or in part or otherwise
referred to by any governmental agency or other person or entity without prior
written consent of this firm.
-6-
MJD Ventures, Inc.
---------------------
_______________, 2000
Page 7
Very truly yours,
By:________________________________
Name:______________________________
Title:_____________________________
-7-
Exhibit 8.5
Opinion of Purchaser's Counsel
(attached)
XXXXXXXXX XXXXXX XXXXXX & XXXXXX, P.A.
ATTORNEYS AT LAW
XXXXXXXXX XXXXX XXXXXXXX, XXXXX 0000
000 XXXXX XXXXXXX XXXXXX
XXXXXXXXX, XXXXX XXXXXXXX 00000-0000
XXXXXXX X. XXXXX
XXXXX X. XXXXX
XXXXXXX X. XXXXXX
C. XXXXX XXXXXX, XX. TELEPHONE
XXXXXXX X. XXXX 000-000-0000
XXXXXX X. XXXXXX
XXXX X. XXXXXXX III
XXXXXXX X. XXXXXXXX III
XXXXXXX X. XXXXXXX, XX. FACSIMILE
XXXXX X. XXXXXX 000-000-0000
XXXXXX X. XXXXXX, XX.
XXXXXXX X. XXXXXXXXX, XX.
XXXXXX XXXXXX III
_______________, 2000
W.B.W. Trust
Number One
c/o Xxxxxxx X. Xxxxxxxxxxxx, Trustee
c/o Fiduciary Counseling, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx Financial Center
Xxxxxx, XX 00000
Ladies and Gentlemen:
We have acted as counsel to MJD Ventures, Inc., a Delaware corporation
("MJD" or the "Purchaser"), in connection with the purchase by the Purchaser of
all of the capital stock of Comerco, Inc. (collectively with YCOM Networks, Inc.
and all subsidiaries thereof, the "Company") from the W.B.W. Trust Number One
(the "Shareholder" or the "Seller"), pursuant to a Stock Purchase Agreement
entered into as of May 23, 2000 by, between and among the Purchaser, the Company
and the Seller (such Stock Purchase Agreement, together with all Schedules
thereto and all Exhibits executed by the Company and/or MJD in connection
therewith, referred to collectively hereinafter as the "Agreement").
This opinion is being delivered to you pursuant to Section 8.5 of the
Agreement. Capitalized terms used herein which are not otherwise defined herein
shall have the meanings set forth in the Agreement.
In connection with this transaction, we have reviewed the Articles of
Incorporation and Bylaws (the "Organizational
W.B.W. Trust
Number One
______________, 2000
Page 2
Documents") of the Purchaser, the Agreement and such other instruments and
documents as are executed and delivered pursuant to the Agreement, and have
examined such other records and information and have conducted such other
investigations as we have deemed necessary to render the opinion set forth
below. As to facts material to our opinion, we have relied upon the factual
representations of the Purchaser in the Agreement, certificates from certain
state authorities and on those certificates delivered at Closing.
We have assumed the conformity of all copies to the originals of all
documents reviewed by us, the genuineness of all signatures (other than those of
the shareholders, directors and officers of the Purchaser) and the authenticity
of all documents submitted to us (whether originals or copies).
For the purposes of our opinion, we have assumed that the Agreement and
all other instruments and documents executed and delivered pursuant thereto have
been duly authorized, executed and delivered by all of the parties thereto other
than the Purchaser.
Whenever a statement herein is qualified by the phrases "known to us" or
"to our knowledge", or similar phrases, it is intended to indicate that during
the course of our representation of the Purchaser and the transactions
contemplated by the Agreement, and having made inquiry of certain officers of
the Purchaser as to such matters, no information that would give us actual
knowledge of the inaccuracy of such statement has come to our attention.
However, we have not undertaken any independent investigation or review to
determine the accuracy of any such statement. No inference as to our knowledge
of any matters bearing on the accuracy of any such statement should be drawn
from our representation of the Purchaser.
Based upon the foregoing, and subject to the assumptions and
qualifications herein set forth, it is our opinion that:
1. MJD is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to carry on the business in which it is engaged, to own, lease and
operate its properties, and to enter into and to perform its obligations under
the Agreement.
W.B.W. Trust
Number One
______________, 2000
Page 3
2. The execution and delivery of the Agreement was duly authorized and
approved by the Board of Directors of MJD. The Agreement is a valid and binding
obligation of MJD enforceable in accordance with its terms, except that (I) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or similar laws now or hereafter in effect relating to creditors' rights in the
event of future bankruptcy, insolvency or reorganization of the Purchaser, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. All persons who
have executed the Agreement on behalf of MJD have been duly authorized to do so
by all necessary corporate action.
3. To our knowledge, MJD has given all notices to and has obtained from
all local, state and Federal regulatory authorities any approvals, consents,
permits and authorizations required in order to consummate the transactions
contemplated in the Agreement.
The opinions expressed herein are based upon and limited to matters
governed by the laws of the State of North Carolina and the State of Delaware,
and we express no opinion as to any matter governed by the laws of any other
jurisdiction. We are not authorized to practice law in the State of Delaware and
the opinions set forth herein are rendered solely upon our review of applicable
provisions of Delaware corporation law as currently published in standard
compilations and such consultations with Delaware local counsel as we have
deemed necessary or appropriate.
This opinion is given as of the date hereof and we assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter come to our attention or any changes in laws which may hereafter
occur. This opinion is limited to matters herein, and no opinion may be inferred
or implied beyond the matters expressly stated herein.
This opinion is being furnished to you in connection with the transactions
contemplated by the Agreement. This opinion is solely for your benefit and is
not to be used, circulated, quoted or otherwise referred to for any other
purpose nor relied upon by any other person or entity without our prior written
consent.
W.B.W. Trust
Number One
______________, 2000
Page 4
Finally, the opinions expressed herein represent our reasonable judgment
as to the matters of law addressed herein, based upon the facts presented or
assumed, and are not, and should not be construed or considered as, a guaranty.
Very truly yours,
XXXXXXXXX XXXXXX XXXXXX & XXXXXX, P.A.
Schedule 3.3
Consents and Authorizations of Purchaser
Approval of the Washington Utilities and Transportation Commission is
required.
Approval of the Towns of Yelm and Rainier, Washington, and the Counties of
Xxxxxx and Thurston, Washington, and any and all other municipalities as may be
required in connection with the Company's telephone and cable franchises both
with respect to renewal and change of control.
Xxxx Xxxxx Xxxxxx filing is required.
A filing with the Federal Communications Commission regarding transfer of
control of Maintenance Radio Station KAX660 is required.
Written notice within 14 days after the public announcement of change of
control needs to be given to AT&T Communications pursuant to Article 8-2 of the
AT&T Agreement.
Written Consent of Northern Telecom, Inc. to the change of control is
needed.
Written notice of the change of control may need to be given to World Wide
Wood Network, Ltd.
