EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
By and Among
US UNWIRED INC.
SAINTS SUB, LLC
and
GEORGIA PCS MANAGEMENT, L.L.C.
dated as of
February 8, 2002
Table of Contents
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ARTICLE I
THE MERGER
Section 1.01. The Merger.............................................................................. 1
Section 1.02. Closing; Closing Date; Effective Time................................................... 1
Section 1.03. Effect of the Merger.................................................................... 1
Section 1.04. Articles of Organization; Operating Agreement........................................... 2
Section 1.05. Directors and Officers.................................................................. 2
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.01. Merger Consideration; Conversion and Cancellation of Securities......................... 2
Section 2.02. Exchange and Surrender of Certificates.................................................. 5
Section 2.03. Options to Purchase the Company Membership Units........................................ 6
Section 2.04. Dissenting Members...................................................................... 7
ARTICLE III
REGISTRATION RIGHTS; LOCK-UP
Section 3.01. Registration of Buyer Shares............................................................ 8
Section 3.02. Buyer Underwritten Registrations........................................................ 8
Section 3.03. Obligations of Recipients............................................................... 9
Section 3.04. Lock-Up................................................................................. 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
Section 4.01. Membership Units........................................................................ 10
Section 4.02. Organization; Authorization of Agreement................................................ 10
Section 4.03. Absence of Conflicts.................................................................... 10
Section 4.04. Investment Representations; Waiver of Dissenters Rights................................. 11
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.01. Organization and Qualification; Subsidiaries............................................ 12
Section 5.02. Articles of Organization; Operating Agreement; Other Organizational Documents........... 12
Section 5.03. Capitalization.......................................................................... 12
Section 5.04. Authority............................................................................... 14
Section 5.05. No Conflict; Required Filings and Consents.............................................. 14
Section 5.06. Permits; Compliance..................................................................... 14
Section 5.07. Financial Statements.................................................................... 15
Section 5.08. Absence of Certain Changes or Events.................................................... 15
Section 5.09. Absence of Litigation................................................................... 16
Section 5.10. Company Employee Benefit Plans; Labor Matters........................................... 16
Section 5.11. Taxes................................................................................... 19
Section 5.12. Environmental Matters................................................................... 20
Section 5.13. Takeover Statutes....................................................................... 22
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Section 5.14. Brokers................................................................................. 22
Section 5.15. Insurance............................................................................... 22
Section 5.16. Properties.............................................................................. 22
Section 5.17. Leases.................................................................................. 22
Section 5.18. No Undisclosed Liabilities.............................................................. 23
Section 5.19. Certain Contracts....................................................................... 23
Section 5.20. Distributors and Suppliers.............................................................. 25
Section 5.21. Sprint Agreement Compliance............................................................. 25
Section 5.22. Intellectual Property................................................................... 26
Section 5.23. Related Party Transactions.............................................................. 27
Section 5.24. Inventory............................................................................... 27
Section 5.25. Accounts Receivable..................................................................... 27
Section 5.26. Bank Accounts........................................................................... 28
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 6.01. Organization and Qualification.......................................................... 28
Section 6.02. Charter and Bylaws...................................................................... 29
Section 6.03. Capitalization.......................................................................... 29
Section 6.04. Authority............................................................................... 30
Section 6.05. No Conflict; Required Filings and Consents.............................................. 30
Section 6.06. Permits; Compliance..................................................................... 31
Section 6.07. Reports; Financial Statements........................................................... 32
Section 6.08. Absence of Certain Changes or Events.................................................... 32
Section 6.09. Absence of Litigation................................................................... 32
Section 6.10. No Undisclosed Liabilities.............................................................. 33
Section 6.11. Sprint Agreement Compliance............................................................. 33
ARTICLE VII
COVENANTS
Section 7.01. Affirmative Covenants................................................................... 34
Section 7.02. Company Negative Covenants.............................................................. 34
Section 7.03. Buyer Negative Covenants................................................................ 36
Section 7.04. Access and Information.................................................................. 37
Section 7.05. Members Covenant........................................................................ 38
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.01. Appropriate Action; Consents; Filings................................................... 38
Section 8.02. Tax Treatment........................................................................... 40
Section 8.03. Public Announcements.................................................................... 41
Section 8.04. Employee Benefit Plans.................................................................. 41
Section 8.05. Merger Sub.............................................................................. 42
Section 8.06. Escrow Agreement........................................................................ 42
Section 8.07. Members' Contribution................................................................... 42
Section 8.08. Covenant not to Compete................................................................. 43
Section 8.09. Indemnification and Insurance........................................................... 45
Section 8.10. Audited Year End Financials............................................................. 45
Section 8.11. Reserved................................................................................ 45
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Section 8.12. Member Promissory Notes................................................................. 45
Section 8.13. Member Releases......................................................................... 45
Section 8.14. Company Releases........................................................................ 46
ARTICLE IX
CONDITIONS
Section 9.01. Conditions to Obligations of Each Party................................................. 47
Section 9.02. Additional Conditions to Obligations of the Buyer Companies............................. 47
Section 9.03. Additional Conditions to Obligations of Company......................................... 49
ARTICLE X
INDEMNIFICATION; ESCROW FUNDS; SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
Section 10.01. By the Members for Breaches by the Company.............................................. 50
Section 10.02. By a Member for Breaches by such Member................................................. 50
Section 10.03. By Buyer................................................................................ 50
Section 10.04. Defense of Third Party Claims........................................................... 50
Section 10.05. Payment; Arbitration.................................................................... 51
Section 10.06. Satisfaction of Claims from Escrow Shares............................................... 52
Section 10.07. Liability Limitations; Survival of Representations and Warranties....................... 53
Section 10.08. Net Working Capital Indemnification..................................................... 53
Section 10.09. Indemnification for Taxes............................................................... 54
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.01. Termination............................................................................. 56
Section 11.02. Effect of Termination................................................................... 57
Section 11.03. Amendment............................................................................... 57
Section 11.04. Waiver.................................................................................. 57
Section 11.05. Fees, Expenses and Other Payments....................................................... 57
ARTICLE XII
GENERAL PROVISIONS
Section 12.01. Notices................................................................................. 58
Section 12.02. Certain Definitions..................................................................... 59
Section 12.03. Headings................................................................................ 60
Section 12.04. Severability............................................................................ 60
Section 12.05. Entire Agreement........................................................................ 60
Section 12.06. Assignment.............................................................................. 60
Section 12.07. Parties in Interest..................................................................... 60
Section 12.08. Specific Performance.................................................................... 60
Section 12.09. Failure or Indulgence Not Waiver; Remedies Cumulative................................... 61
Section 12.10. Governing Law........................................................................... 61
Section 12.11. Counterparts............................................................................ 61
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Exhibits
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Exhibit A - Consent of Members
Exhibit B - Escrow Agreement
Exhibit C - Registration Rights Agreement
Exhibit D - Member's Addresses for Notices
Exhibit E - Solicited Optionholders
Exhibit F - Solicited Members
Exhibit G - Company's Counsel Opinion
Exhibit H - Net Exercise Amendment
Exhibit I - Net Appreciation Amendment
Exhibit J - Non-Competition Agreement
Exhibit K - Key Employee Net Exercise Amendment
Exhibit L - Buyer's Counsel Opinion
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 8, 2002 (this
"Agreement"), is by and among US Unwired Inc., a Louisiana corporation
("Buyer"), Saints Sub, LLC, a Georgia limited liability company and wholly owned
subsidiary of Buyer ("Merger Sub"), Georgia PCS Management, L.L.C., a Georgia
limited liability company (the "Company") and the persons named on the signature
page hereof under the caption "Members" or that execute a Member Addendum (as
defined in Section 8.01(f)) (collectively, the "Members"). Buyer and Merger Sub
are sometimes referred to herein as the "Buyer Companies."
WHEREAS, the board of directors of Buyer and the management committee
of the Company have determined the Merger is fair to, and in the best interests
of, it and its stockholders or members, as applicable, and have approved and
adopted this Agreement and the transactions contemplated hereby;
WHEREAS, this Agreement and the Merger have been duly authorized and
approved by the members of the Company in accordance with the Company's articles
of organization and operating agreement and with the Limited Liability Company
Act of the State of Georgia (the "Georgia LLCA"), which approval is attached
hereto as Exhibit A; and
WHEREAS, Merger Sub, upon the terms and subject to the conditions of
this Agreement and in accordance with the Georgia LLCA, will merge with and into
the Company (the "Merger").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Georgia LLCA,
at the Effective Time (as defined in Section 1.02 of this Agreement), Merger Sub
shall be merged with and into the Company whereby, the separate existence of
Merger Sub shall cease and the Company shall continue as the surviving limited
liability company (the "Surviving Company"). The name of the Surviving Company
shall be Georgia PCS Management, L.L.C.
Section 1.02. Closing; Closing Date; Effective Time. The
consummation of the Merger and the closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxx &
Xxxxxx L.L.P., 0000 Xxxxxx, Xxxxxxx, Xxxxx as soon as practicable (but in any
event within two business days) after the satisfaction or, if permissible,
waiver of the conditions set forth in Article IX, or at such other date, time
and place as Buyer and the Company may agree in writing (the date of the Closing
being the "Closing Date"). As promptly as practicable on the Closing Date, the
parties hereto shall cause the Merger to be consummated by filing articles of
merger with the Secretary of State of the State of Georgia, in such form as
required by, and executed in accordance with, the relevant provisions of, the
Georgia LLCA (the time of such filing being the "Effective Time").
Section 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
Georgia LLCA. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall continue with, or vest in, as the
case may be, the Surviving Company, and all debts, liabilities and duties of the
Company and Merger Sub shall continue to
be, or become, as the case may be, the debts, liabilities and duties of the
Surviving Company. As of the Effective Time, the Surviving Company shall be a
direct wholly-owned subsidiary of Buyer.
Section 1.04. Articles of Organization; Operating Agreement. At the
Effective Time, the articles of organization and operating agreement of the
Company shall be amended and restated to conform to the articles of organization
and operating agreement of Merger Sub, in each case, as in effect immediately
prior to the Effective Time and shall thereafter continue to be the articles of
organization and operating agreement, respectively, of the Surviving Company
until amended as provided therein and pursuant to the Georgia LLCA.
Section 1.05. Directors and Officers. The directors and officers of
Merger Sub immediately prior to the Effective Time shall continue to serve in
their respective offices of the Surviving Company from and after the Effective
Time, in each case until their respective successors are duly elected or
appointed and qualified or until their resignation or removal.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.01. Merger Consideration; Conversion and Cancellation of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of the Buyer Companies, the Company or their respective
stockholders or members, as the case may be:
(a) Subject to Sections 2.02(e) and 2.04, each Company
Membership Unit (as defined in Section 5.03(a)) issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive a fraction of a share of Class A common stock, $0.01 par value per
share, of Buyer ("Buyer Common Stock") equal to the result obtained by dividing
the Per Company Membership Unit Valuation (as defined below) by the Average
Pre-Closing Trading Price (as defined below) (the "Exchange Ratio"), subject to
the escrow of a portion of such shares pursuant to the terms and conditions set
forth in Section 2.01(n). For purposes of the foregoing, the Per Company
Membership Unit Valuation shall be equal to the quotient obtained by dividing
(A) (i) the product of the total of 5,500,000 plus any Additional Shares (as
defined below) minus any Subtracted Shares (as defined below) and the Average
Pre-Closing Trading Price plus (ii) if Buyer Option Shares are to be issued
pursuant to Section 2.03, the aggregate exercise price attributable to all
Company Options outstanding as of the Effective Time as to which a Net Exercise
Amendment (as defined below) has been delivered by (B) the sum of the total
number of Company Membership Units outstanding as of the Effective Time
(excluding any Company Membership Units issued pursuant to Section 8.07(b))
plus, if the Buyer Option Shares are to be issued pursuant to Section 2.30, the
total number of Company Options outstanding as of the Effective Time as to which
a Net Exercise Amendment has been delivered. The shares of Buyer Common Stock to
be issued by Buyer pursuant to this Article II (including any Escrow Shares (as
defined below) and any Buyer Option Shares (as defined below)) and any shares of
Buyer Common Stock that may be issued pursuant to Section 10.08 shall be
referred to herein as the "Buyer Shares."
(b) The "Additional Shares" shall equal the quotient
obtained by dividing (1) the Additional Cash Merger Consideration by (2) the
average per share last reported sale price of Buyer Common Stock as quoted by
The Nasdaq Stock Market ("Nasdaq") as reported in The Wall Street Journal for
the 15 trading days immediately preceding the fifth trading day prior to the
Closing Date (the "Average Pre-Closing Trading Price").
(c) The "Additional Cash Merger Consideration" shall
equal the sum of (i) the Net Working Capital Surplus and (ii) the Positive Debt
Adjustment Amount.
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(d) The "Net Working Capital Surplus" shall equal the
amount by which, if any, the Estimated Net Working Capital (as defined below) is
greater than zero.
(e) The "Positive Debt Adjustment Amount" shall equal the
excess, if any, of (1) $57,000,000, over (2) the sum of (x) the UAR Payment (as
defined in Section 2.03(a)), (y) the amount of Certified Indebtedness (as
defined in Section 9.02(m)) plus any premium or penalty payable upon the
prepayment of such Indebtedness on the Closing Date and (z) the amount by which,
if any, the Estimated Net Working Capital is less than zero.
(f) The "Subtracted Shares" shall equal (1) 1.25 times
(2) the quotient obtained by dividing (i) the Excess Debt by (ii) the Average
Pre-Closing Trading Price.
(g) The "Excess Debt" shall equal the excess, if any, of
(1) the sum of (a) the UAR Payment, (b) the amount of Certified Indebtedness
plus any premium or penalty payable upon the prepayment of such Indebtedness on
the Closing Date and (c) the amount by which, if any, the Estimated Net Working
Capital is less than zero, over (2) $57,000,000.
(h) "Indebtedness" shall mean (i) all obligations for
borrowed money or purchase money indebtedness, whether or not evidenced by a
note, bond, debenture or similar instrument, including without limitation
letters of credit and capital leases, as such term is defined by GAAP (as
defined below) including principal and accrued interest but excluding (1) any
indebtedness incurred by the Company after January 31, 2002 and prior to the
Closing Date to fund capital expenditures of the Company made after January 31,
2002 and prior to the Closing Date agreed to in writing by Buyer and (2) up to
$250,000 of indebtedness incurred by the Company after January 31, 2002 to fund
operating cash losses after January 31, 2002 and prior to the Closing Date (such
excluded items referred to in clause (1) and (2) above being referred to herein
as the "Excluded Items") (ii) all payment obligations of the Company to Nations
Media Partners and Powell, Goldstein, Xxxxxx & Xxxxxx LLP and (iii) all payment
obligations of the Company under the Lump Sum Compensation Agreements set forth
on Schedule 7.02(n) of the Company Disclosure Schedule. Notwithstanding the
foregoing, the amount of "Indebtedness" outstanding on any date in question
shall be reduced by the amount of any cash received by the Company pursuant to
Section 8.07(c) of the Agreement.
(i) "Estimated Net Working Capital" shall mean (1) the
Company's total consolidated current assets as of December 31, 2001 minus (2)
the Company's total consolidated current liabilities as of December 31, 2001,
each as determined in accordance with U.S. generally accepted accounting
principals ("GAAP"), consistently applied provided, however, that such
calculation shall exclude (i) any Indebtedness of the Company and its
subsidiaries outstanding as of December 31, 2001, (ii) any assets of the
Company, as shown on the Company's audited balance sheet for December 31, 2001,
relating to the Subordinated Capital Certificates (as defined herein) owned by
the Company as of December 31, 2001 (including any receivables related thereto),
(iii) any promissory notes outstanding as of December 31, 2001 under which the
Company is the holder and a Member is the obligor and (iv) any cash or cash
equivalents that will be returned to the Members pursuant to Section 8.12. Such
calculation shall be based upon the audited balance sheet of the Company as of
December 31, 2001 contemplated by Section 9.02(k). For purposes of this
Agreement, "Subordinated Capital Certificates" shall mean the subordinated
capital certificates representing an investment in Rural Telephone Finance
Cooperative ("RTFC") purchased by the Company in connection with the Loan
Agreement (as defined herein) or the Line of Credit (as defined herein). For
purposes of this Agreement, the "Loan Agreement" shall mean that certain Loan
Agreement made as of September 1, 1999, by and among the Company, Georgia PCS
Leasing, L.L.C. and RTFC and the "Line of Credit" shall mean the Rural Telephone
Finance Cooperative Secured Revolving Line of Credit Agreement, dated as of
September 1, 1999, among the Company, Georgia PCS Leasing, L.L.C. and RTFC.
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(j) If between the date of this Agreement and the
Effective Time the outstanding shares of Buyer Common Stock shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Exchange Ratio shall be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
(k) All Company Membership Units converted pursuant to
Section 2.01(a) shall no longer be outstanding and shall automatically be
cancelled and retired and cease to exist, and each holder of a certificate (the
"Certificates") previously evidencing the Company Membership Units ("Converted
Units") shall cease to have any rights with respect thereto except the right to
receive Buyer Shares, cash in lieu of fractional shares to be paid in accordance
with Section 2.02(e) and any distributions to the extent provided in Section
2.02(a). The Buyer Shares and the cash payable pursuant to Section 2.02(e) are
collectively referred to herein as the "Merger Consideration."
(l) Each membership unit of Merger Sub ("Merger Sub
Units") issued and outstanding immediately prior to the Effective Time, and all
rights in respect thereof, shall cease to exist and be converted into one
validly issued membership unit of the Surviving Company.
(m) The shares of Buyer Common Stock issued and
outstanding immediately prior to the Effective Time shall be unaffected by the
Merger and such shares shall remain issued and outstanding.
(n) At the Effective Time, Buyer will cause to be
delivered to, and directly deposited with, Bank of New York or, at Buyer's
option, another national bank (the "Escrow Agent"), for the account and future
potential benefit of the holders of Company Membership Units immediately prior
to the Effective Time (including the Members), a stock certificate representing
1,100,000 of the Buyer Shares otherwise issuable to such holders pursuant to
Section 2.01(a), which certificate shall be registered as follows: "Bank of New
York f/b/o the Former Holders of Membership Units of Georgia PCS Management,
L.L.C." All such shares of Buyer Common Stock so delivered to the Escrow Agent,
together with all subsequent dividends or distributions of cash, other shares of
Buyer Common Stock or property received in respect of such shares while
deposited with the Escrow Agent shall be referred to as "Escrow Shares." A pro
rata number of the Escrow Shares (determined on the basis of the respective
ownership interest of each holder of Company Membership Units immediately prior
to the Effective Time, subject to adjustments by the Escrow Agent to eliminate
fractional shares) shall be subtracted from the number of shares of Buyer Common
Stock each holder of Company Membership Units at the Effective Time is entitled
to receive pursuant to the Merger. The Escrow Shares shall be held by the Escrow
Agent pursuant to the terms and conditions of an Escrow Agreement in
substantially the form attached hereto as Exhibit B (the "Escrow Agreement")
between Buyer and the Members' Representative (as hereinafter defined) or his
successor pursuant to the terms of the Escrow Agreement. The Members hereby
constitute and appoint Xxxxxx Xxxxxx as the Members' Representative (the
"Members' Representative") pursuant to this Agreement and the Escrow Agreement,
and authorize and empower the Members' Representative to act for and on their
behalf as contemplated by this Agreement and the Escrow Agreement. A decision,
act, waiver, consent or instruction of the Members' Representative shall
constitute a decision of all Members and shall be final, binding and conclusive
upon each such Member. The Escrow Agreement shall authorize the Members'
Representative to control the disposition of such Escrow Shares pursuant to the
terms of the Escrow Agreement. The Members' Representative shall have no
personal liability as a result of any actions taken in such position (i) to
Buyer or any of Buyer's affiliates unless such actions constitute gross
negligence or willful misconduct or (ii) to any holder of Company Membership
Units at the Effective Time, in either case with respect to the disposition of
the Escrow Shares or any other action taken as the Members' Representative.
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Section 2.02. Exchange and Surrender of Certificates.
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(a) Subject to Section 2.04, as soon as practicable after
the Effective Time, each holder of a Certificate shall be entitled, upon
surrender of the Certificate to Buyer or its transfer agent (as specified in the
letter of transmittal described in Section 2.02(c)), to receive in exchange
therefor a certificate or certificates representing the number of whole shares
of Buyer Common Stock that such holder has a right to receive in accordance with
Section 2.01(a) (less the shares of Buyer Common Stock that will be issued and
deposited with the Escrow Agent for the account of such person as Escrow
Shares), certain dividends and other distributions to the extent provided in
this Section 2.02(a) and a cash payment in lieu of fractional shares of Buyer
Common Stock, if any, in accordance with Section 2.02(e). Unless and until any
such Certificates shall be so surrendered and exchanged, no dividends or other
distributions payable to the holders of record of Buyer Common Stock as of any
time subsequent to the Effective Time shall be paid to the holders of such
Certificates. Upon the surrender and exchange of such Certificates, however,
there shall be paid to the record holders of such Certificates the amount of
dividends and other distributions, if any, which as of a record date on or after
the Effective Time and prior to such surrender shall have become payable with
respect to such whole shares of Buyer Common Stock. No party hereto (or Buyer's
transfer agent) shall be liable to any former holder of Converted Units for any
cash, Buyer Common Stock or dividends or other distributions thereon delivered
to a public official pursuant to applicable abandoned property, escheat or
similar Law.
(b) All shares of Buyer Common Stock issued upon the
surrender for exchange of Certificates in accordance with the terms hereof
including any cash paid in accordance with Section 2.02(e) shall be deemed to
have been issued and paid in full satisfaction of all rights pertaining to such
Converted Units.
(c) As promptly as practicable after the Effective Time,
Buyer will send or cause to be sent to each record holder of the Company
Membership Units at the Effective Time a letter of transmittal and other
appropriate materials for use in surrendering Certificates as contemplated by
Section 2.02(a). Such letter of transmittal shall be executed and delivered to
Buyer and shall specify that, by surrendering such Certificate, subject only to
such holder's receipt of the Merger Consideration and any dividends or other
distributions to which such holder is entitled to receive pursuant to Section
2.02(a), such holder shall be deemed to have waived all rights and claims and to
have released and discharged Buyer, Merger Sub, the Company and their respective
officers, directors, management committee members and affiliates from any and
all claims and liabilities whatsoever, whether known or unknown, both at Law and
in equity, arising out of any matter, cause or event occurring contemporaneously
with or prior to the Effective Time, that such holder would otherwise be
entitled to assert against such persons solely by virtue of being or having been
a member of the Company, other than such holders right to receive Escrow Shares
pursuant to the terms and conditions contained herein and any other rights that
may arise pursuant to this Agreement.
(d) If any certificate for shares of Buyer Common Stock
is to be issued in a name other than that in which the Certificate surrendered
in exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed, with
signatures guaranteed, and otherwise in proper form for transfer and that the
person requesting such exchange shall have paid to Buyer or its transfer agent
any transfer or other Taxes required by reason of the issuance of a certificate
for shares of Buyer Common Stock in such other name, or established to the
satisfaction of Buyer or its transfer agent that such Tax has been paid or is
not payable.
(e) No fraction of a share of Buyer Common Stock will be
issued as a result of the Merger. In lieu of any such fractional shares that
otherwise would have been issued in the Merger, Buyer will pay each applicable
holder an amount in cash (without interest and rounded to the nearest cent)
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determined by multiplying (a) the Average Pre-Closing Trading Price by (b) the
fractional interest of a share of Buyer Common Stock to which such holder would
otherwise be entitled (after taking into account all Converted Units held of
record by such holder at the Effective Time).
(f) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, unless otherwise agreed by
Buyer, the posting by such person of a bond, in such amount as Buyer may direct
and in a form satisfactory to Buyer, as indemnity against any claim that may be
made against it with respect to such Certificate, Buyer will issue, in exchange
for such lost, stolen or destroyed Certificate, the Merger Consideration (less
the shares of Buyer Common Stock that will be issued and deposited with the
Escrow Agent for the account of such person as Escrow Shares) and any dividends
or other distributions to which the holder thereof is entitled to receive
pursuant to Section 2.02(a) in the manner provided in this Article II.
(g) Buyer shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any former
holder of Converted Units such amounts as Buyer (or any affiliate thereof) is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign Tax Law. To the extent
that amounts are so withheld by Buyer, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the former holder of
the Converted Units in respect of which such deduction and withholding was made
by Buyer (or any affiliate thereof).
(h) Buyer and each of the Members agree that, for income
tax purposes, Merger Sub is a transitory entity that was formed solely to engage
in the Merger, which is intended solely to effect the acquisition of the Company
Membership Units by Buyer from the Members. Buyer and the Members further agree
that the Merger is not intended to be a merger of two partnerships that is
governed by the provisions of Internal Revenue Code ss.708 and the Treasury
Regulations for income tax purposes. Buyer and the Members further agree,
however, that if it is finally determined that the Merger is subject to the
provisions of the Internal Revenue Code ss.708, then the Merger shall be treated
by Buyer and the Members as a sale of exchange by each of the Members of its
Company Membership Units for the Merger Consideration received in the
transaction in accordance with the provisions of Treasury Regulation
ss.1.708-1(c)(4).
Section 2.03. Options to Purchase the Company Membership Units.
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(a) Each option granted by the Company to purchase
Company Membership Units, all of which are set forth on Schedule 5.03(d) of the
Company Disclosure Schedule, (a "Company Option") that is outstanding and
unexercised immediately prior to the Effective Time and with respect to which
the optionee has executed and delivered a "Net Exercise Amendment" (and in the
case of each Key Employee, a Non-Competition Agreement (as defined herein)) as
contemplated by Section 9.02(l) hereof, shall at the Effective Time be
cancelled, shall cease to represent a right to acquire Company Membership Units
and shall from and after the Effective Time solely represent the right to
receive a number of shares of Buyer Common Stock (rounded down to the nearest
whole number) equal to the product of (1) the number of Company Membership Units
subject to such Company Option immediately prior to the Effective Time and (2)
the Option Exchange Ratio (as defined below). Each Company Option that is
outstanding and unexercised immediately prior to the Effective Time and with
respect to which the optionee has executed and delivered a "Net Appreciation
Amendment" as contemplated by Section 9.02(l) hereof shall at the Effective Time
be cancelled, shall cease to represent a right to receive any payments or other
property from the Company and shall from and after the Effective Time solely
represent the right to receive a payment of an amount in cash equal to (if
positive) the product of (i) the number of Company Membership Units subject to
such Company Option, (ii) the Option Exchange Ratio
6
and (iii) the Average Pre-Closing Trading Price. The "Option Exchange Ratio"
shall mean a fraction the numerator of which is the Per Company Membership Unit
Valuation minus $1.00 and the denominator of which is the Average Pre-Closing
Trading Price. If the calculation above results in a negative number, such
Company Option shall be cancelled at the Effective Time and the holder thereof
shall not be entitled to receive any shares of Buyer Common Stock or any cash
payment in respect thereof. As soon as practicable following the Effective Time
and subject to the terms of the Net Exercise Amendment, Buyer shall deliver one
or more certificates representing any shares of Buyer Common Stock due to the
holder of a Company Option. Within five business days following the Closing Date
Buyer shall mail checks representing any cash payments due to holders of Company
Options. The shares of Buyer Common Stock to be issued pursuant to this Section
2.03(a) shall be referred to herein as the "Buyer Option Shares." The aggregate
cash payment to be made by Buyer pursuant to this Section 2.03(a) to holders of
Company Options shall be referred to herein as the "UAR Payment."
(b) Each Company Option that is outstanding and
unexercised immediately prior to the Effective Time and with respect to which
the optionee has not executed and delivered either a Net Exercise Amendment or a
Net Appreciation Amendment as contemplated by Section 9.02(l) hereof, shall at
the Effective Time, without any action or approval by the option holder, be
cancelled and shall cease to represent any right to acquire Company Membership
Units or Buyer Common Stock.
(c) Buyer may condition issuing the Buyer Option Shares
or making the UAR Payment to a person otherwise entitled to receive such shares
or payment pursuant to this Section 2.03 on such person, in writing, waiving all
rights and claims and releasing and discharging Buyer, Merger Sub, the Company
and their respective officers, directors, management committee members,
attorneys, accountants and affiliates from any and all claims and liabilities
whatsoever, whether known or unknown, both at Law and in equity, arising out of
any matter, cause or event occurring contemporaneously with or prior to the
Effective Time, that such person would otherwise be entitled to assert against
such persons solely by virtue of being or having been a holder of Company
Options.
Section 2.04. Dissenting Members. Any Company Membership Units that
are issued and outstanding immediately prior to the Effective Time and that are
held by a member who properly exercised dissenters' rights (the "Dissenting
Units") under the Georgia LLCA will not be converted into the right to receive
the Merger Consideration unless and until such holder shall have failed to
perfect, or shall have effectively withdrawn or lost, such holder's right to
appraisal under the Georgia LLCA. Any such holder of Dissenting Units shall be
entitled only to receive the value of such Company Membership Units in cash as
determined in accordance with the Georgia LLCA upon surrender of the certificate
or certificates representing such Dissenting Units. If any such holder shall
have failed to perfect or shall have effectively withdrawn or lost their
dissenters' rights, then as of the occurrence of such event, each Company
Membership Unit held by such holder shall thereupon be deemed to have been
converted into and to have become, as of the Effective Time, the right to
receive, without any interest thereon, the Merger Consideration and any
dividends or other distributions to which such holder is entitled to receive
pursuant to Section 2.02(a). The Company shall give Buyer (i) prompt notice of
any notice or demand for dissenters' rights received by the Company and (ii) the
right to participate in all negotiations and proceedings with respect to any
such demands or notices. The Company shall not, without the prior written
consent of Buyer, make any payment with respect to, or settle, offer to settle
or otherwise negotiate, any such demands.
7
ARTICLE III
REGISTRATION RIGHTS; LOCK-UP
Section 3.01. Registration of Buyer Shares.
----------------------------
(a) Buyer shall prepare and shall file with the
Securities and Exchange Commission (the "SEC"), not later than the Shelf Filing
Date (as defined below) a "shelf" registration statement (the "Shelf
Registration") pursuant to Rule 415 under the Securities Act of 1933, as amended
(the "Securities Act") providing for the sale by each recipient of the
Registrable Securities (as defined below), pursuant to this Agreement or the
Merger. For purposes of this Section 3.01(a), the "Shelf Filing Date" shall be
the earlier of (i) the date that is 120 days after the effective date (such
effective date being referred to herein as the "IWO Effective Date") of the
merger (the "IWO Merger")contemplated by the Agreement and Plan of Merger by and
among Buyer, Northeast Unwired Inc. and IWO Holdings, Inc. dated as of December
19, 2001 (the "IWO Merger Agreement") and (ii) the date that is 30 days after a
termination of the IWO Merger Agreement pursuant to its terms. Buyer agrees to
use reasonable best efforts to cause the registration statement to be declared
effective as soon as practicable after it has been filed with the SEC. Buyer
agrees to use its reasonable best efforts to keep such Shelf Registration
continuously effective for a period ending on the earliest to occur of (i) the
second anniversary of the effective date of such Shelf Registration, (ii) the
date on which all Registrable Securities covered thereby have been sold or
otherwise transferred or disposed of by the Members, and (iii) the date upon
which all of such Registrable Securities that have not been otherwise
transferred or disposed may be sold by the Member holders thereof within three
months of such date pursuant to Rule 144 under the Securities Act. For purposes
of this Section 3.01(a), "Registrable Securities" shall mean Buyer Shares issued
to any Member or any holder of a Company Option that executes and delivers a Net
Exercise Amendment and any securities issued or distributed in respect thereof,
or in substitution therefor, in connection with any stock split, dividend,
spin-off or combination, or any reclassification, recapitalization, merger,
consolidation, share exchange or other similar reorganization or business
combination. As to any particular Registrable Securities, once issued, such
Registrable Securities shall cease to be Registrable Securities when (i) a
registration statement with respect to the sale by the applicable holder of such
securities has become effective under the Securities Act and such securities
have been disposed of in accordance with such registration statement, (ii) such
securities have been Transferred pursuant to Rule 144 (or any successor
provision) under the Securities Act, (iii) with respect to any recipient of
Registrable Securities pursuant to this Agreement or the Merger all such
Registrable Securities held by such recipient can be resold pursuant to Rule 144
(or any successor provision) under the Securities Act or (iv) such securities
have been otherwise transferred, and new certificates for such securities not
bearing a legend restricting further transfer have been delivered by the
Company.
(b) With respect to the Shelf Registration, Buyer shall
have the rights and obligations of the "Issuer" under Sections 4, 5, 6, 7 and 8
of the registration rights agreement attached hereto as Exhibit C as if such
registration of Registrable Securities was made pursuant to such registration
rights agreement. Notwithstanding the foregoing, if the IWO Merger is
consummated the plan of distribution provided for in the Shelf Registration
shall not include an underwritten public offering.
Section 3.02. Buyer Underwritten Registrations. (a) For purposes of
this Agreement, the "Registration Rights Agreement" shall mean, if the merger
contemplated by the IWO Merger Agreement (the "IWO Merger") is consummated, the
registration rights agreement actually executed by and among Buyer and the other
parties named therein in connection with the IWO Merger. The Registration Rights
Agreement shall be in the form of the registration rights agreement attached
hereto as Exhibit C with such additions, deletions or modifications prior to
execution thereof as agreed to by the parties therein, provided that no such
addition, deletion or modification prior to execution thereof shall materially
adversely affect the order of priority to Members with respect to the
availability of registrations, the
8
holdback obligations of the Member in connection with any underwritten offering
or the Members' rights to indemnity and allocation of and responsibility for
expenses in connection with any such registration, in each case without the
written consent of Members owning a majority of the outstanding Company
Membership Units. If at any time following consummation of the IWO Merger, Buyer
proposes to register under the Securities Act the sale of any shares of Buyer
Common Stock in an underwritten offering (a "Demand Underwritten Registration")
as a result of a demand made pursuant to Section 2 of the Registration Rights
Agreement, each Member and each recipient of Registrable Securities pursuant to
a Net Exercise Amendment shall be entitled to participate in such Underwritten
Registration to the extent permitted by and in accordance with the terms and
conditions of Section 2 of the Registration Rights Agreement.
(b) If at any time following consummation of the IWO
Merger, Buyer proposes to register under the Securities Act the sale of any
shares of Buyer Common Stock in an underwritten offering, whether or not for
sale for its own account but excluding any Demand Underwritten Registration (an
"Other Underwritten Registration"), each Member and each recipient of
Registrable Securities pursuant to a Net Exercise Amendment shall be entitled to
participate in such offering to the extent permitted by and in accordance with
the terms and conditions of Section 3 of the Registration Rights Agreement.
Section 3.03. Obligations of Recipients. Each Member hereby adopts
and agrees (and each holder of a Company Option that executes a Net Exercise
Amendment will adopt and agree pursuant to such Net Exercise Amendment) to be
bound by all provisions of the Registration Rights Agreement applicable to
"Holders" thereunder as fully as if such terms were contained herein. Exhibit D
sets forth each Member's address for Notices pursuant to the Registration Rights
Agreement.
Section 3.04. Lock-Up.
-------
(a) Each of the Members agrees (and each holder of a
Company Option that executes a Net Exercise Amendment will agree pursuant to
such Net Exercise Amendment) that, from and after the Effective Time and
continuing until the date that is 361 days after the IWO Effective Date, such
Member (or such optionholder) will not offer to sell, sell, contract to sell,
transfer, assign, distribute, pledge, make any short sale of, loan, grant any
option for the purchase of, or otherwise directly or indirectly dispose of, or
announce an offering of, any shares of Buyer Common Stock or securities
convertible into or exchangeable for Buyer Common Stock (collectively,
"Transfer") that may be owned, beneficially or of record, by such Member (or
such optionholder) without the prior written consent of Buyer unless such
Transfer complies with the provisions hereof (the "Resale Restriction").
Notwithstanding the foregoing and subject to the Members' (or optionholders')
rights to participate in and Transfer Buyer Common Stock in any Demand
Underwritten Registration or Other Underwritten Registration, with respect to
each Member (or such optionholder) (i) if the IWO Effective Date occurs on or
prior to May 31, 2002, (1) 20% of the Buyer Shares issued to such Member (or
such optionholder) shall be released from the Resale Restriction on the date
that is 121 days after the IWO Effective Date and (2) an additional 20% of the
Buyer Shares issued to such Member (or such optionholder) shall be released from
the Resale Restriction every 60 days thereafter, (ii) if the IWO Effective Date
occurs after May 31, 2002, (1) 20% of the Buyer Shares issued to such Member (or
such optionholder) shall be released from the Resale Restriction on the date
that is 121 days after the IWO Effective Date, (2) an additional 20% of the
Buyer Shares issued to such Member (or such optionholder) shall be released from
the Resale Restriction on the date that is 161 days after the IWO Effective
Date, (3) 30% of the Buyer Shares issued to such Member (or such optionholder)
shall be released from the Resale Restriction on the date that is 201 days after
the IWO Effective Date and (4) the remaining Buyer Shares issued to such Member
(or such optionholder) shall be released from the Resale Restriction on April
15, 2003 and (iii) if the IWO Merger Agreement is terminated by any party
thereto, (1) 20% of the Buyer Shares issued to such Member (or such
9
optionholder) shall be released from the Resale Restriction on the date that is
121 days after the Closing Date and (2) an additional 20% of the Buyer Shares
issued to such Member (or such optionholder) shall be released from the Resale
Restriction every 60 days thereafter. Notwithstanding, the foregoing, the
restrictions contained in this Section 3.04 shall not prohibit the Members named
in Section 8.02(i) from distributing the shares of Buyer Common Stock received
by such Member in the Merger to their respective stockholders as contemplated by
Section 8.02(i), provided that each such stockholder has agreed to be bound by
the lock-up provisions of this Section 3.04.
(b) The Resale Restrictions shall apply to each Member
(and optionholder) proportionately provided that a Member (or optionholder) may
allocate the Resale Restriction lapse applicable to any of its Buyer Shares to
another Member (or optionholder) if the assigning Member (or optionholder) and
the assignee Member (or optionholder) provide at least five business days prior
written notice to Buyer and the assigning Member (or optionholder) agrees in
writing that an equivalent number of its Buyer Shares shall not be released from
the Resale Restriction.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
Each Member hereby, severally and not jointly, represents and warrants
to the Buyer Companies and to each of the other Members that:
Section 4.01. Membership Units. Such Member is the beneficial and
record owner of the number of Company Membership Units as set forth in Schedule
4.01 of the disclosure schedule delivered to Buyer by the Company on the date
hereof (the "Company Disclosure Schedule"), free and clear of any lien, claim,
pledge, encumbrance or other adverse claim. Except for such Company Membership
Units set forth in the Company Disclosure Schedule, such Member does not own
beneficially or of record, any other equity security, including without
limitation any option, warrant or right entitling the holder thereof to purchase
or otherwise acquire any equity interests of the Company.
Section 4.02. Organization; Authorization of Agreement. Such
Member, to the extent not a natural person, is duly organized, validly existing
and in good standing under the Laws of the jurisdiction set forth on Schedule
4.02 of the Company Disclosure Schedule. Schedule 4.02 of the Company Disclosure
Schedule sets forth each Affiliate of such Member (as defined by Rule 405
promulgated under the Securities Act) but excluding any person that may be
deemed an Affiliate solely as a result of serving as an officer or director of
any applicable person. Schedule 4.02 of the Company Disclosure Schedule sets
forth, to the extent a natural person, the state of residence of such Member.
Such Member has full legal right, power, capacity and authority to execute,
deliver and perform its obligations pursuant to this Agreement and to execute,
deliver and perform its obligations under each instrument required hereby to be
executed and delivered by such Member at the Closing. This Agreement has been
duly executed and delivered by such Member and this Agreement constitutes and,
to the extent it purports to obligate such Member, each such instrument will
constitute (assuming due authorization, execution and delivery by each other
party thereto), the legal, valid and binding obligation of such Member
enforceable against it in accordance with its terms.
Section 4.03. Absence of Conflicts.
--------------------
(a) Except as disclosed in Schedule 4.03(a) of the
Company Disclosure Schedule, the execution and delivery of this Agreement by
such Member does not, and the consummation of the transactions contemplated
hereby will not (i) to the extent applicable, conflict with or violate the
charter or bylaws, or the equivalent organizational documents, in each case as
amended or restated, of such Member, (ii) conflict with or violate any federal,
state, foreign or local law, statute, ordinance, rule,
10
regulation, order, judgment or decree (collectively, "Laws") applicable to such
Member or by which any of such Member's assets or properties is bound or subject
or (iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or
require payment under, or result in the creation of a lien or encumbrance on any
of the Company Membership Units pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which such Member is a party or by or to which such
Member or any of its Company Membership Units is bound or subject, except where
such matter would not reasonably be expected to have a Company Material Adverse
Effect (as defined herein) or a materially adverse effect on the ability of the
Member or Buyer to consummate the transactions contemplated hereby in the manner
contemplated hereby or fulfill its obligations hereunder.
(b) Except as disclosed in Schedule 4.03(b) on the
Company Disclosure Schedule, the execution and delivery of this Agreement by
such Member does not, and consummation of the transactions contemplated hereby
will not, require such Member to obtain any consent, license, permit, approval,
waiver, authorization or order of, or to make any filing with or notification
to, any governmental, administrative or regulatory authority, agency,
commission, court or instrumentality, whether national, federal, regional,
state, provincial, territorial, local, domestic or foreign (collectively,
"Governmental Entities") or third person.
Section 4.04. Investment Representations; Waiver of Dissenters
Rights.
(a) Such Member, either alone or with its purchaser
representative as defined in Rule 501(h) under the Securities Act, if any, is
capable of evaluating the merits and risks of its investment in the Buyer
Shares. Such Member, by reason of such Member's business or financial
experience, either alone or with its purchaser representative, if any, has the
capacity to protect such Member's own interests in connection with the
acquisition of Buyer Shares hereunder. Such Member is an "accredited investor"
as defined in Rule 501 of Regulation D promulgated pursuant to the Securities
Act with respect to Buyer, except, with respect to any Member that becomes a
"Member" by executing a Member Addendum, as otherwise expressly provided in such
Member Addendum. Such Member has received a copy of each of the Buyer SEC
Reports (as defined in Section 6.06(a)).
(b) Such Member understands that the Buyer Shares may be
"restricted securities" under the applicable federal securities laws and that
the Securities Act and the rules of the SEC provide in substance that such
Member may dispose of the shares of Buyer Common Stock only pursuant to an
effective registration statement under the Securities Act or an exemption
therefrom. As a consequence, such Member understands that it must bear the
economic risk of the investment in the Buyer Shares for an indefinite period of
time. Such Member agrees not to make any offer to Transfer or to Transfer all or
any part of the Buyer Shares received by such member in violation of the
Securities Act or the rules and regulations thereunder and will hold all such
shares subject to all applicable provisions of the Securities Act and the rules
and regulations thereunder.
(c) Such Member hereby irrevocably waives any right under
the Georgia LLCA to dissent from the Merger, and obtain payment of the fair
value of his, her or its membership interest in the Company in connection with
the Merger.
11
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Buyer Companies that:
Section 5.01. Organization and Qualification; Subsidiaries. Each of
the Company and its subsidiaries is a limited liability company or corporation
duly organized, validly existing and in good standing under the Laws of the
jurisdiction of its organization or incorporation, has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted and is duly qualified and in good standing to do
business in the State of Georgia, which is the only jurisdiction in which the
nature of the business conducted by it or the ownership or leasing of its
properties makes such qualification necessary. Schedule 5.01 of the Company
Disclosure Schedule sets forth, as of the date of this Agreement, a true and
complete list of all of the Company's directly or indirectly owned subsidiaries,
together with (A) the jurisdiction of incorporation or organization of each
subsidiary and the percentage of each subsidiary's outstanding capital stock or
other equity interests owned by the Company or another subsidiary of the
Company, and (B) an indication of whether each such subsidiary is a "Significant
Subsidiary" as defined in Section 12.02 of this Agreement.
Section 5.02. Articles of Organization; Operating Agreement; Other
Organizational Documents. The Company has heretofore furnished to Buyer complete
and correct copies of the articles of organization, operating agreements,
charter, bylaws or the equivalent organizational documents, in each case as
amended or restated, of the Company and each of its subsidiaries. Neither the
Company nor any of its subsidiaries is in violation of any of the provisions of
its articles of organization or charter or any material provision of its
operating agreement or bylaws (or other equivalent organizational documents).
Section 5.03. Capitalization.
--------------
(a) As of the date of this Agreement, 21,311,652
membership units of the Company (the "Company Membership Units") were issued and
outstanding. Schedule 5.03(a) of the Company Disclosure Schedule sets forth, as
of the date hereof, a true and correct list of each record holder of Company
Membership Units and the number of Company Membership Units owned by each such
holder. As of the date of this Agreement, 3,319,619 Company Membership Units
were reserved for future issuance pursuant to outstanding Company Options.
(b) Except as described in this Section 5.03 or in
Schedule 5.03(b) of the Company Disclosure Schedule, as of the date of this
Agreement, no membership interests or other equity securities or equity
appreciation rights of the Company are issued or outstanding or reserved for any
purpose. Each of the outstanding membership or other equity interests in each of
the Company and its subsidiaries is, and each such interest issuable upon the
exercise of the Company Options will be when issued, duly authorized, validly
issued, and, in the case of shares of capital stock, fully paid and
nonassessable, and has not been, or will not be, issued in violation of (nor are
any of the authorized equity interests in such entities subject to) any
preemptive or similar rights created by statute, the articles of organization,
operating agreement, charter or bylaws (or the equivalent organizational
documents) of the Company or any of its subsidiaries, or any agreement to which
the Company or any of its subsidiaries is a party or bound, and such outstanding
membership or other equity interests owned by the Company or a subsidiary of the
Company are owned free and clear of all security interests, liens, claims,
pledges, agreements, limitations on the Company's or such subsidiaries' voting
rights, charges or other encumbrances of any nature whatsoever. Except as set
forth in Schedule 5.03(b) of the Company Disclosure Schedule, all shares of
capital stock or other equity interests in each subsidiary of the Company are
owned by the Company or by a direct or indirect wholly-owned subsidiary of the
Company.
12
(c) Except as set forth in Section 5.03(a) above or in
Schedule 5.03(c)(i) of the Company Disclosure Schedule, there are no outstanding
securities, options, warrants or other rights (including registration rights),
agreements, arrangements or commitments of any character to which the Company or
any of its subsidiaries is a party relating to the issued or unissued equity
interests of the Company or any of its subsidiaries or obligating the Company or
any of its subsidiaries to grant, issue, deliver or sell, or cause to be
granted, issued, delivered or sold, any membership or other equity interests in
the Company or any of its subsidiaries, by sale, lease, license or otherwise.
Except as set forth in Schedule 5.03(c)(ii) of the Company Disclosure Schedule,
there are no obligations, contingent or otherwise, of the Company or any
subsidiary of the Company to (i) repurchase, redeem or otherwise acquire any
membership or other equity interests in the Company or any subsidiary of the
Company; (ii) dispose of any membership or other equity interest in the Company
or any subsidiary of the Company; or (iii) (other than advances to subsidiaries
in the ordinary course of business) provide funds to, or make any investment in
(in the form of a loan, capital contribution or otherwise), or provide any
guarantee with respect to the obligations of, any subsidiary of the Company or
any other person. Except as described in Schedule 5.03(c)(iii) of the Company
Disclosure Schedule, none of the Company nor any of its subsidiaries (x)
directly or indirectly owns, (y) has agreed to purchase or otherwise acquire or
(z) holds any interest convertible into or exchangeable or exercisable for, 5%
or more of the capital stock or other equity interests of any person (other than
the subsidiaries of the Company set forth in Schedule 5.01 of the Company
Disclosure Schedule). Except as set forth in Schedule 5.03(c)(iv) of the Company
Disclosure Schedule and except for any agreements, arrangements or commitments
between the Company and its subsidiaries or between such subsidiaries, there are
no agreements, arrangements or commitments of any character (contingent or
otherwise) pursuant to which any person is or may be entitled to receive any
payment based on the revenues or earnings, or calculated in accordance
therewith, of the Company or any of its subsidiaries. There are no voting
trusts, proxies or other agreements or understandings to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound with respect to the voting of any membership or other
equity interests in the Company or any of its subsidiaries. Except as set forth
in Schedule 5.03(c)(v) of the Company Disclosure Schedule, there are no bonds,
debentures, notes or other indebtedness of the Company or any of its
subsidiaries having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which members of the
Company may vote.
(d) The Company has delivered to Buyer complete and
correct copies of (i) all option plans and all other equity incentive plans of
the Company (the "Company Option Plans") and the form of the Company Option
issued pursuant to such Company Option Plans, including all amendments thereto
and (ii) all the Company Options that are not in the form thereof provided under
clause (i) above. Schedule 5.03(d) of the Company Disclosure Schedule sets forth
a complete and correct list of all outstanding Company Options, including any
not granted pursuant to the Company Option Plan, setting forth as of the date
hereof (i) the exercise price of each outstanding Company Option, (ii) the
number of Company Options presently exercisable, (iii) assuming no amendment or
waiver of the terms thereof, the number of Company Options that will become
exercisable upon the execution and delivery of this Agreement or on account of
the Merger or any other transaction contemplated hereby and (iv) the name of the
holder of such option and the state of residence of such person. All Company
Options outstanding immediately as of the Effective Time will be terminated at
the Effective Time either in accordance with their terms or in accordance with
the terms of Section 2.03.
(e) Except as set forth in Schedule 5.03(e) of the
Company Disclosure Schedule, no membership interest in the Company is owned
beneficially or of record by any person or persons who are aliens or
corporations organized under the laws of a foreign government within the meaning
of Section 310(b) of the Federal Communications Act of 1934, as amended (the
"Communications Act").
13
(f) Schedule 5.03(f) of the Company Disclosure Schedule
contains true and correct copies of the most recent accredited investor
certificates executed and delivered to the Company by each holder of Company
Membership Units or Company Options.
Section 5.04. Authority. The Company has all requisite power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by all
necessary limited liability company action and no other proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. The management committee and the members of
the Company have approved this Agreement, the Merger and the other transactions
contemplated hereby. No additional vote of the members of the Company or of the
holders of any other securities of the Company (equity or otherwise) is required
by Law or the articles of organization or operating agreement of the Company for
the Company to adopt this Agreement and approve and consummate the Merger. This
Agreement has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery thereof by the Buyer Companies,
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
Section 5.05. No Conflict; Required Filings and Consents.
------------------------------------------
(a) Assuming that the Company Approvals (as defined in
Section 5.05(b)) have been obtained and that the filings and notifications
described in Section 5.05(b) have been made, the execution and delivery of this
Agreement by the Company does not, and the consummation of the transactions
contemplated hereby will not (i) conflict with or violate the articles of
organization or operating agreement, or the equivalent organizational documents,
in each case as amended or restated, of the Company or any of its subsidiaries,
(ii) conflict with or violate in any material respect any Laws applicable to the
Company or any of its subsidiaries or by which any of their respective assets or
properties is bound or subject or (iii) except as described in Schedule 5.05(a)
of the Company Disclosure Schedule, result in any material breach of or
constitute a material default (or an event that with notice or lapse of time or
both would become a material default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require payment
under, or result in the creation of a lien or encumbrance on any of the
properties or assets of the Company or any of its subsidiaries pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by or to which the Company or any of its subsidiaries
or any of their respective assets or properties is bound or subject.
(b) The execution and delivery of this Agreement by the
Company does not, and consummation of the transactions contemplated hereby will
not, require the Company or any of its subsidiaries to obtain any consent,
license, permit, approval, waiver, authorization or order of (collectively, the
"Company Approvals"), or to make any filing with or notification to, any
Governmental Entities or third person, except (i) as set forth in Schedule
5.05(b) of the Company Disclosure Schedule, (ii) for applicable requirements, if
any, of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act") and the filing and recordation of appropriate merger documents
as required by the Georgia LLCA or (iii) where the failure to obtain such
Company approvals, or to make such filings or notifications, would not prevent
the Company from performing any of its obligations under this Agreement and
would not reasonably be expected to result in any material liability to, or the
loss of any material right or benefit of, the Company or its subsidiaries.
Section 5.06. Permits; Compliance. Each of the Company and its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents,
14
certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted
(collectively, the "Company Permits"); and there is no action, proceeding or
investigation pending or, to the knowledge of the Company, threatened regarding,
and no event has occurred that has resulted in or after notice or lapse of time
or both would reasonably be expected to result in, revocation, suspension,
adverse modification, non-renewal, impairment, restriction, termination or
cancellation of, or order of forfeiture or substantial fine with respect to, any
of the Company Permits or, to the knowledge of the Company, the personal
communications service licenses held by WirelessCo L.P., Sprint Spectrum L.P. or
any of their respective affiliates (collectively, "Sprint PCS") that are the
subject of the Company Sprint Agreements (as defined in Section 5.21(a)) (the
"Company Sprint Licenses"). None of the Company nor any of its subsidiaries is
or has been in conflict with, or in default or violation of (a) any Law
applicable to the Company or any of its subsidiaries or by or to which any of
their respective assets or properties are bound or subject or (b) any of the
Company Permits, including the Company Sprint Licenses. None of the Company nor
any of its subsidiaries has received from any Governmental Entity any written
notification with respect to possible conflicts, defaults or violations of Laws
or Company Permits. No facts are known to the Company or any of its subsidiaries
which if known by a Governmental Entity of competent jurisdiction would present
a substantial risk that any Company Permit could be revoked, suspended,
adversely modified, not renewed, impaired, restricted, terminated, forfeited or
a substantial fine imposed against the Company or any of its subsidiaries, and
neither the execution by the Company of this Agreement nor the consummation of
the Merger or any of the other transactions contemplated by this Agreement is
reasonably likely to result in the occurrence of any of the consequences set
forth in this Section 5.06.
Section 5.07. Financial Statements. Included in Schedule 5.07 of
the Company Disclosure Schedule are true and complete copies of the financial
statements of the Company consisting of (i) audited balance sheets of the
Company as of December 31, 2000, 1999 and 1998, and the related audited
statements of income, changes in stockholders' equity and cash flows for the
calendar years then ended (including the notes or other supplementary
information thereto) (the "Company Audited Financial Statements"), which
financial statements have been audited, and are accompanied by the signed audit
reports of the Company's independent public accountants for each of such
calendar years, and (i) an unaudited balance sheet of the Company as of December
31, 2001, and the related unaudited statements of income, changes in
stockholders' equity and cash flows for the twelve months then ended and for the
corresponding period of the Company's prior calendar year (the "Company Interim
Financial Statements," and, collectively with the Company Audited Financial
Statements, the "Company Financial Statements"). Each of the Company Financial
Statements have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except (A) to the extent required by
changes in GAAP and (B) as may be indicated in the notes thereto) and (ii)
fairly present the consolidated financial position of the Company and its
subsidiaries as of the respective dates thereof and the consolidated results of
operations and cash flows for the periods indicated (including reasonable
estimates of normal recurring year-end adjustments), except that the Company
Interim Financial Statements are subject to the adjustments set forth in Section
5.07 of the Company Disclosure Schedule. Except for the adjustments and
restatements set forth in Section 5.07 of the Company Disclosure Schedule, there
will be no adjustments or restatements to the Company Financial Statements. The
books and records of the Company and its subsidiaries have been and are being
maintained in accordance with GAAP and reflect only actual transactions. As of
December 31, 2001, the Company had $52,436,395 in outstanding indebtedness and
$752,237 million in cash, cash equivalents, restricted cash and investment
securities within the meaning of GAAP.
Section 5.08. Absence of Certain Changes or Events. Except as set
forth in Schedule 5.08 of the Company Disclosure Schedule, since December 31,
2000 through the date hereof, the Company and its subsidiaries have conducted
their respective businesses only in the ordinary course and in a manner
consistent with past practice and there has not been (i) any material damage,
destruction or loss (whether
15
or not covered by insurance) with respect to any material assets of the Company
or any of its subsidiaries; (ii) any material change by the Company or its
subsidiaries in their accounting methods, principles or practices; (iii) except
for dividends by a subsidiary of the Company to the Company or another
subsidiary of the Company, any declaration, setting aside or payment of any
distributions in respect of the Company Membership Units or the shares of stock
of, or other equity interests in, any subsidiary of the Company, or any
redemption, purchase or other acquisition by the Company or any of its
subsidiaries of any of the Company's securities or any of the securities of any
subsidiary of the Company; (iv) any increase in the benefits under, or the
establishment or amendment of, any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, option (including, without
limitation, the granting of equity options, equity appreciation rights,
performance awards, or restricted equity awards), equity purchase or other
employee benefit plan, or any increase in the compensation payable or to become
payable to directors, management committee members, officers or employees of the
Company or its subsidiaries, except for (A) increase in salaries or wages
payable or to become payable in the ordinary course of business and consistent
with past practice or (B) the granting of equity options in the ordinary course
of business to employees of the Company or its subsidiaries who are not
directors, management committee members or officers of the Company; (v) any
revaluation by the Company or any of its subsidiaries of any of their assets,
including the writing down of the value of inventory or the writing down or off
of notes or accounts receivable, other than in the ordinary course of business
and consistent with past practices; (vi) any entry by the Company or any of its
subsidiaries into any commitment or transaction material to the Company and its
subsidiaries, taken as a whole (other than this Agreement and the transactions
contemplated hereby); or (vii) any material increase in indebtedness for
borrowed money. Except as set forth in Schedule 5.08 of the Company Disclosure
Schedule, since December 31, 2001, there has not been a Company Material Adverse
Effect or an event, occurrence or development which would be reasonably expected
to have a Company Material Adverse Effect The term "Company Material Adverse
Effect" as used in this Agreement shall mean any change, effect, event or
occurrence that is or would reasonably be expected to be materially adverse to
the current or future financial condition, results of operations, business,
properties or operations of the Company and its subsidiaries, taken as a whole;
provided, however, that any such change, effect, event or occurrence arising out
of or attributable to (A) general economic, political or financial market
conditions, (B) action taken by the Company with the prior written consent of
Buyer, (C) the Company's compliance with its covenants under, or the terms and
conditions of, this Agreement, (D) conditions generally affecting the wireless
telecommunications industry or Sprint PCS affiliates, except to the extent such
conditions have a materially disproportionate impact on the Company as compared
to Buyer, (E) the execution or announcement of this Agreement or (F) operating
losses, decreases in the Company's current assets or increases in indebtedness
in each case to the extent consistent with the Company's business plan for
fiscal year 2002 previously provided to Buyer shall be excluded from the
determination of a Company Material Adverse Effect.
Section 5.09. Absence of Litigation. Except as set forth in
Schedule 5.09 of the Company Disclosure Schedule, there is no material claim,
action, suit, litigation, proceeding, arbitration or, to the knowledge of the
Company, investigation of any kind, at Law or in equity, pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries or any properties or rights of the Company or any of its
subsidiaries and neither the Company nor any of its subsidiaries is subject to
any continuing order, consent decree or settlement agreement of, or other
similar written agreement with, or, to the knowledge of the Company, continuing
investigation by, any Governmental Entity, court or arbitration tribunal, or any
judgment, order, writ, injunction, decree, cease-and-desist order or award of
any Governmental Entity, court or arbitrational tribunal.
Section 5.10. Company Employee Benefit Plans; Labor Matters.
---------------------------------------------
(a) Schedule 5.10(a) of the Company Disclosure Schedule
sets forth each employee benefit plan, program, arrangement and contract
(including, without limitation, any "employee benefit
16
plan", as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), including all amendments thereto, maintained or
contributed to by the Company or any of its subsidiaries, or with respect to
which the Company or any of its subsidiaries has or could incur liability,
including without limitation, under Section 4069, 4212(c) or 4204 of ERISA,
whether or not such plan, program, arrangement or contract has been terminated
prior to the date of this Agreement (the "Company Benefit Plans"). The Company
has made available to Buyer a true and correct copy of (i) the most recent
annual report (Form 5500) filed with the Internal Revenue Service (the "IRS")
with respect to each Company Benefit Plan, (ii) each Company Benefit Plan, (iii)
each trust agreement relating to each Company Benefit Plan, (iv) the most recent
summary plan description for each Company Benefit Plan for which a summary plan
description is required, including any summary of material modifications, (v)
the most recent actuarial report or valuation relating to each Company Benefit
Plan subject to Title IV of ERISA and (vi) the most recent determination letter,
if any, issued by the IRS with respect to any Company Benefit Plan intended to
be qualified under Section 401 of the Code.
(b) Except as set forth in Schedule 5.10(b), with respect
to the Company Benefit Plans, no event has occurred and there exists no
condition or set of circumstances, in connection with which the Company or any
of its subsidiaries could be subject to any liability under the terms of such
Company Benefit Plans, ERISA, the Code or any other applicable Law. Except as
otherwise set forth in Schedule 5.10(b) of the Company Disclosure Schedule:
(i) Each Company Benefit Plan has been
administered in accordance with its terms and applicable Law
and, as to any Company Benefit Plan intended to be qualified
under Section 401 of the Code, such Company Benefit Plan
satisfies the requirements of such Section and has received a
favorable IRS determination letter that includes all changes
required to be made by applicable Law or has timely filed a
request for a determination letter covering such required
amendments;
(ii) There are no actions, suits or claims
pending (other than routine claims for benefits) or, to the
knowledge of the Company, threatened against, or with respect
to, any of the Company Benefit Plans or their assets, and
there is no basis for any such action, suit or claim;
(iii) All contributions required to be made to the
Company Benefit Plans pursuant to their terms and provisions
and applicable Law have been made timely;
(iv) No Company Benefit Plan is subject to Title
IV of ERISA; and
(v) In connection with the consummation of the
transactions contemplated by this Agreement, no payments have
or will be made (including the acceleration of any vesting)
under the Company Benefit Plans or any of the programs,
agreements, policies or other arrangements described in
Section 5.10(d) of this Agreement which, in the aggregate,
would result in imposition of the sanctions imposed under
Sections 280G and 4999 of the Code.
(c) Neither Company nor any of its subsidiaries is a
party to any collective bargaining or other labor union contracts. No collective
bargaining agreement is being negotiated by the Company or any of its
subsidiaries. There is no pending or, to the knowledge of the Company,
threatened labor dispute, strike or work stoppage against the Company or any of
its subsidiaries which may interfere with the respective business activities of
the Company or any of its subsidiaries. None of the Company, any of its
subsidiaries or any of their respective representatives or employees has
committed any unfair labor practices in connection with the operation of the
respective businesses of the Company or its
17
subsidiaries, and there is no pending or threatened charge or complaint against
the Company or any of its subsidiaries by the National Labor Relations Board or
any comparable state agency.
(d) Except as set forth in Schedule 5.10(d), neither the
Company nor any of its subsidiaries is a party to or is bound by any change of
control or severance plans, agreements, programs or policies. Schedule 5.10(d)
of the Company Disclosure Schedule sets forth, and the Company has provided to
Buyer true and correct copies of, (i) all employment agreements with officers of
the Company or its subsidiaries; (ii) all agreements with consultants of the
Company or its subsidiaries; (iii) all non-competition agreements with the
Company or a subsidiary executed by officers of the Company; and (iv) all
compensation, including equity based and benefit plans, programs, agreements and
other arrangements of the Company or its subsidiaries with or relating to its
employees, members of the management committee or consultants.
(e) Except as provided in Schedule 5.10(e) of the Company
Disclosure Schedule, (x) no Company Benefit Plan provides retiree medical or
retiree life insurance benefits to any person and (y) neither Company nor any of
its subsidiaries is contractually or otherwise obligated (whether or not in
writing) to provide any person with life insurance or medical benefits upon
retirement or termination of employment, other than as required by the
provisions of Sections 601 through 608 of ERISA and Section 4980B of the Code.
(f) Except as provided in Schedule 5.10(f) of the Company
Disclosure Schedule, neither Company nor any of its subsidiaries contributes to
or has an obligation (including any secondary obligation) to contribute to, and
prior to the date of this Agreement has not contributed to or had an obligation
to contribute to, a multiemployer plan within the meaning of Section 3(37) of
ERISA.
(g) Except as set forth in Schedule 5.10(g) of the
Company Disclosure Schedule, the Company has not amended, or taken any other
actions with respect to any of the Company Benefit Plans or any of the plans,
programs, agreements, policies or other arrangements described in Section
5.10(d) of this Agreement since December 31, 2000.
(h) Except as set forth in Schedule 5.10(h), each Company
Benefit Plan may be unilaterally amended or terminated at any time by the
Company or a subsidiary of the Company without liability other than for benefits
accrued thereunder prior to the date of such amendment or termination.
(i) No present or former employee or independent
contractor performing services for the Company has a claim pending or, to the
knowledge of the Company, has threatened to make a claim against the Company,
including any claim for (i) overtime pay, other than overtime pay for the
current payroll period, (ii) wages, salaries or profit sharing (excluding wages,
salaries or profit sharing for the current payroll period), (iii) vacations,
time off or pay in lieu of vacation or time off, other than vacation or time off
(or pay in lieu thereof) earned in respect of the Company's current fiscal year,
(iv) any violation of any rule or contract relating to minimum wages or maximum
hours of work, (v) discrimination against employees on any basis, (vi) unlawful
or wrongful employment or termination practices, (vii) unlawful retirement,
termination or labor relations practices or breach of contract or (viii) any
violation of occupational safety or health standards. There are no
administrative charges, arbitration or mediation proceedings or court complaints
pending or, to the knowledge of the Company, threatened against the Company
before the U.S. Equal Employment Opportunity Commission or any state or federal
court or agency or any other entity concerning alleged employment
discrimination, contract violation or any other matters relating to the
employment of labor.
(j) The Company is and has been in compliance in all
material respects with applicable rules and regulations relating to the
employment of labor, including employment and
18
employment practices, terms and conditions of employment, wages and hours, equal
opportunity, occupational health and safety, severance, termination or
discharge, collective bargaining and the payment of employee welfare and
retirement and other taxes, the Worker Adjustment Retraining and Notification
Act (without giving effect to any action that may be taken by the Buyer
Companies at or following the Effective Time) and the Immigration Reform and
Control Act of 1986, each as amended, and are not engaged in any unfair labor
practice or any material violation of any other law, rule or regulation
concerning employment or retention of independent contractors.
(k) Schedule 5.10(k) of the Company Disclosure Schedule
sets forth, for the Company, a true and complete list of management committee
members and officers who perform services for the Company, and for each such
person includes a complete and accurate summary description of the material
compensation paid to such person (including the date of the most recent increase
thereof) and any severance pay, lump sum or other payment, compensation or other
remuneration that such person is or would be eligible to receive, or has
received, upon termination of employment or service or as a result of the
Merger.
Section 5.11. Taxes.
-----
(a) Except as set forth in Schedule 5.11(a) of the
Company Disclosure Schedule, (i) all returns and reports ("Tax Returns") of or
with respect to any Tax which are required to be filed on or before the Closing
Date by or with respect to the Company or any its subsidiaries have been or will
be duly and timely filed, (ii) all items of income, gain, loss, deduction and
credit or other items ("Tax Items") required to be included in each such Tax
Return have been or will be so included and all information provided in each
such Tax Return is true, correct and complete, (iii) all Taxes which have become
or will become due with respect to the period covered by each such Tax Return
have been or will be timely paid in full, (iv) all withholding Tax requirements
imposed on or with respect to the Company or any of its subsidiaries have been
or will be satisfied in full in all respects, and (v) no penalty, interest or
other charge is or will become due with respect to the late filing of any such
Tax Return or late payment of any such Tax.
(b) Schedule 5.11(b) of the Company Disclosure Schedule
lists all federal, state, local and foreign income Tax Returns filed with
respect to any of the Company and its subsidiaries for the six taxable years
ending prior to the date hereof, indicates those Tax Returns that have been
audited, indicates those Tax Returns that are currently the subject of audit,
and indicates those Tax Returns whose audits have been closed.
(c) Except as set forth in Schedule 5.11(c) of the
Company Disclosure Schedule, there is not in force any extension of time with
respect to the due date for the filing of any Tax Return of or with respect to
the Company or any its subsidiaries or any waiver or agreement for any extension
of time for the assessment or payment of any Tax of or with respect to the
Company or any of its subsidiaries.
(d) There is no claim against the Company or any of its
subsidiaries for any Taxes, and no assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect to the
Company or any of its subsidiaries other than those disclosed (and to which are
attached true and complete copies of all audit or similar reports) in Schedule
5.11(d) of the Company Disclosure Schedule.
(e) The total amounts set up as liabilities for current
and deferred Taxes in the financial statements referred to in Section 5.07(b) of
this Agreement are sufficient to cover the payment of all Taxes, whether or not
assessed or disputed, which are, or are hereafter found to be, or to have been,
19
due by or with respect to the Company and any of its subsidiaries up to and
through the periods covered thereby.
(f) Neither the Company nor any of its subsidiaries have
entered into any Tax allocation or sharing agreement with any other person.
(g) Except for statutory liens for current Taxes not yet
due, no liens for Taxes exist upon the assets of any of the Company or its
subsidiaries.
(h) Neither the Company nor any of its subsidiaries will
be required to include any amount in income for any taxable period beginning
after December 31, 2001 as a result of a change in accounting method for any
taxable period ending on or before December 31, 2001 or pursuant to any
agreement with any Tax authority with respect to any such taxable period.
Neither the Company nor any of its subsidiaries will be required to include in
any period ending after the Closing Date any income that accrued in a prior
period but was not recognized in any prior period as a result of the installment
method of accounting, the completed contract method of accounting, the long-term
contract method of accounting or the cash method of accounting.
(i) Neither the Company nor any of its subsidiaries owns
any interest in any controlled foreign corporation (as defined in section 957 of
the Code), passive foreign investment company (as defined in section 1296 of the
Code) or other entity the income of which is required to be included in the
income of the Company or such subsidiary.
(j) Except as set forth in Schedule 5.11(j) of the
Company Disclosure Schedule, none of the property of the Company or any of its
subsidiaries is subject to a safe-harbor lease (pursuant to section 168(f)(8) of
the Internal Revenue Code of 1954 as in effect after the Economic Recovery Tax
Act of 1981 and before the Tax Reform Act of 1986) or is "tax-exempt use
property" (within the meaning of section 168(h) of the Code) or "tax-exempt bond
financed property" (within the meaning of section 168(g)(5) of the Code).
(k) Neither the Company nor any of its subsidiaries have
entered into any agreement or arrangement with any taxing authority that
requires any of the Company and its subsidiaries to take any action or to
refrain from taking any action.
(l) Throughout the period beginning with its formation
and ending at the Effective Time (i) the Company has been classified as a
partnership for United States federal income tax purposes, and (ii) each
subsidiary of the Company has been classified as either a partnership or an
entity that is disregarded as separate from its owner for United States federal
income tax purposes.
Section 5.12. Environmental Matters Except as set forth in Schedule
5.12 of the Company Disclosure Schedule: (i) the properties, operations and
activities of the Company and its subsidiaries are in compliance in all material
respects with all applicable Environmental Laws; (ii) the Company and its
subsidiaries and the properties and operations of the Company and its
subsidiaries are not subject to any existing, pending or, to the knowledge of
the Company, threatened action, suit, investigation, inquiry or proceeding by
any third person, including without limitation, any governmental authority,
under any Environmental Law; (iii) all notices, permits, exemptions,
registrations, licenses, or similar authorizations, if any, required to be
obtained or filed by the Company or any of its subsidiaries under any
Environmental Law in connection with any material aspect of the business of the
Company or its subsidiaries, including without limitation, those relating to the
generation, treatment, storage, transport, disposal or release of a Hazardous
Substance, have been duly obtained or filed and will remain valid and in effect
after the Merger, and the Company and its subsidiaries are in compliance in all
material respects
20
with the terms and conditions of all such notices, permits, exemptions,
registrations, licenses and similar authorizations; (iv) the Company and its
subsidiaries have satisfied and are currently in compliance in all material
respects with all financial responsibility requirements applicable to their
operations and imposed by any governmental authority under any Environmental
Law, and the Company and its subsidiaries have not received any notice of
noncompliance with any such financial responsibility requirements; (v) there are
no physical or environmental conditions existing on any property of the Company
or its subsidiaries or resulting from the Company's or such subsidiaries'
operations or activities, past or present, on-site or, to the knowledge of the
Company, offsite, at any location, that would give rise to any on-site or
off-site investigatory or remedial obligations imposed on the Company or any of
its subsidiaries under any Environmental Laws; (vi) to the Company's knowledge,
since the effective date of the relevant requirements of applicable
Environmental Laws and to the extent required by such applicable Environmental
Laws, all Hazardous Substances generated by the Company and its subsidiaries
have been transported only by carriers duly licensed, as applicable, by
governmental authorities and authorized under Environmental Laws to transport
such substances, and disposed of only at treatment, storage, and disposal
facilities duly licensed, as applicable, by governmental authorities and
authorized under Environmental Laws to treat, store or dispose of such
substances; (vii) there has been no exposure of any person or property to
Hazardous Substances, nor has there been any release of Hazardous Substances
into the environment by the Company or its subsidiaries or in connection with
their properties, operations or activities, in either event that could
reasonably be expected to give rise to any material claim against the Company or
any of its subsidiaries for damages or compensation; and (viii) the Company and
its subsidiaries have made available to Buyer all internal and external
environmental audits, studies or activities, correspondence and related
documents on environmental matters in the possession of the Company or its
subsidiaries relating to any of the current or former properties, operations or
activities of the Company and its subsidiaries.
For purposes of this Agreement, the term "Environmental Laws" shall
mean any and all laws, statutes, ordinances, rules, regulations, common law,
judgments, settlements, decrees or orders of any governmental authority
pertaining to health, safety or the environment currently in effect in any and
all jurisdictions in which the party in question and its subsidiaries own or
have owned property or conduct or have conducted business, including without
limitation, the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Hazardous & Solid Waste Amendments Act
of 1984, as amended, the Superfund Amendments and Reauthorization Act of 1986,
as amended, the Hazardous Materials Transportation Act, as amended, the Oil
Pollution Act of 1990, as amended, any state Laws implementing the foregoing
federal Laws, and any state Laws pertaining to the handling of oil and gas
exploration and production wastes or the use, maintenance, and closure of pits
and impoundments, and all other environmental conservation or protection Laws.
For purposes of this Agreement, the term "Hazardous Substances" shall mean: (i)
any "waste," "hazardous waste," "industrial waste," "solid waste," "hazardous
material," "hazardous substance," "toxic substance," "hazardous material,"
"pollutant," or "contaminant" as those or similar terms are defined, identified,
or regulated under any Environmental Laws; (2) any asbestos, polychlorinated
biphenyls, or radon; (3) any petroleum, petroleum hydrocarbons, petroleum
products, crude oil and any components, fractions, or derivatives thereof; and
(4) any substance that, whether by its nature or its use, is subject to
regulation under any Environmental Law or results in any governmental authority
requiring any environmental investigation, remediation, or monitoring thereof.
Also for purposes of this Agreement, "release" shall have the meaning specified
in CERCLA, and "disposal" shall have the meaning specified in RCRA; provided,
however, that to the extent the Laws of the state in which the property is
located establish a meaning for "release" or "disposal" that is broader than
that specified in either CERCLA or RCRA, such broader meaning shall apply.
21
Section 5.13. Takeover Statutes. No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover Law, state or federal
(each, a "Takeover Statute") is applicable to the Company in connection with the
Merger or the other transactions contemplated hereby.
Section 5.14. Brokers. Except for Nations Media Partners, no
broker, finder or investment banker is entitled to any brokerage, finder's or
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company or
any of its subsidiaries. Prior to the date of this Agreement, the Company has
delivered to Buyer a complete and correct copy of all compensation agreements
pursuant to which Nations Media Partners will be entitled to any payment
relating to the transactions contemplated by this Agreement.
Section 5.15. Insurance. Schedule 5.15 of the Company Disclosure
Schedule sets forth an accurate and complete list of all insurance coverage
currently in effect or that was in effect at any time during the past five years
for the Company and its subsidiaries, including in each case the name of the
underwriter, the risks insured, the coverage amounts and related limits, the
deductibles, the expiration date and all significant riders. Except as set forth
in Schedule 5.15 of the Company Disclosure Schedule, none of the Company nor any
of its subsidiaries has received any notice of cancellation or termination with
respect to any insurance policy of the Company or its subsidiaries. The
insurance policies of the Company and of its subsidiaries are valid and
enforceable policies.
Section 5.16. Properties.
----------
(a) Except as set forth in Schedule 5.16(a) of the
Company Disclosure Schedule, each of the Company and its subsidiaries has good
and marketable title, free and clear of all liens, encumbrances, mortgages,
pledges, charges, defaults or equitable interests, to all of the properties and
assets, real and personal, tangible or intangible, that are reflected on the
most recent balance sheet contained in the Company Interim Financial Statements
or acquired after the date of such balance sheet, except for dispositions of
such properties or assets in the ordinary course of business consistent with
past practice and except for (i) liens for Taxes not yet due and payable or
contested in good faith by appropriate proceedings, (ii) such matters of title,
easements and encumbrances, if any, as do not materially and adversely interfere
with the use of the property as such property is used on the date of this
Agreement and (iii) mechanic's, materialmen's, workmen's, repairmen's,
warehousemen's, carrier's and other similar liens and encumbrances arising in
the ordinary course of business (the items in clauses (i) (ii) and (iii)
collectively, the "Company Permitted Liens").
(b) Schedule 5.16(b) of the Company Disclosure Schedule
sets forth an accurate and complete list and description of all real property
owned by the Company or any of its subsidiaries and all buildings and
improvements thereon.
Section 5.17. Leases.
------
(a) Schedule 5.17(a) of the Company Disclosure Schedule
contains an accurate and complete list of each lease pursuant to which the
Company or any of its subsidiaries leases any real property (which list excludes
leases or licenses of tower space to which the Company or any of its
subsidiaries is a party ("Company Tower Leases") and leases of land containing
towers) (each, including the leases and licenses described in the immediately
preceding parenthetical, a "Company Lease")). A true and complete copy of each
Company Lease has heretofore been made available to Buyer.
(b) Each Company Lease is valid, binding and enforceable
in all material respects in accordance with its terms and is in full force and
effect. The leasehold estate created by each Company Lease of real property (an
"Company Leased Premise") is free and clear of all liens and encumbrances
22
other than any Company Permitted Liens. There are no existing material defaults
by the Company or any of its subsidiaries under any of the Company Leases, and,
to the knowledge of the Company, no event has occurred that (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute a material default under any Company Lease. None of Company nor
any of its subsidiaries has received any written notice that any lessor under
any Company Lease will not consent (where such consent is necessary) to the
consummation of the Merger without requiring any modification of the rights or
obligations of the lessee thereunder that is a material change to the rights or
obligations under such lease.
Section 5.18. No Undisclosed Liabilities. Except (i) as disclosed
in the Company Interim Financial Statements and (ii) for liabilities and
obligations incurred in the ordinary course of business and consistent with past
practice of the Company and its subsidiaries since the date of the balance sheet
contained in the Company Interim Financial Statements, none of the Company nor
any of its subsidiaries has any liability, commitment or obligation of any
nature, whether or not absolute, accrued, contingent or otherwise that would be
required to be reflected or reserved against in a consolidated balance sheet of
the Company and its subsidiaries prepared in accordance with GAAP as of the date
hereof.
Section 5.19. Certain Contracts.
-----------------
(a) Except for contracts or agreements described in
clauses (i), (iii), (iv), (v), (vii), (viii), (xiii), (xiv), (xvi), (xvii),
(xx), (xxi) and (xxii) that provide for aggregate payments to any person in any
calendar year of less than $100,000, Schedule 5.19(a) of the Company Disclosure
Schedule contains as of the date of this Agreement a complete and accurate list
of each of the following contracts, each of which has been made available to
Buyer by the Company:
(i) contracts or agreements of the Company or
any of its subsidiaries relating to indebtedness, liability
for borrowed money or the deferred purchase price of property
(excluding trade payables in the ordinary course of business)
or any guarantee or other contingent liability in respect of
any indebtedness or obligation of any person (other than the
endorsement of negotiable instruments for collection in the
ordinary course of business);
(ii) contracts or agreements that contain
restrictions with respect to payment of dividends or any other
distribution in respect of the equity of the Company or any of
its subsidiaries;
(iii) any letters of credit or similar
arrangements relating to the Company or any of its
subsidiaries;
(iv) any employment or consulting agreements with
any employee of the Company or any of its subsidiaries or
other person on a consulting basis;
(v) any management, consulting or advisory
agreements, or severance plans or arrangements for any present
or former employee of the Company or any of its subsidiaries;
(vi) any non-disclosure agreements and
non-compete agreements binding present and former employees of
the Company or any of its subsidiaries;
(vii) any agreement under which the Company or any
of its subsidiaries is lessee of or holds or operates any
property, real or personal;
23
(viii) any agreement under which the Company or any
of its subsidiaries is lessor of or permits any third party to
hold or operate any property, real or personal;
(ix) any agreement relating to the acquisition or
divestiture of membership interests, capital stock or other
equity securities, assets (other than acquisitions or
divestitures of assets in the ordinary course of business) or
business of any person pursuant to which the Company or any of
its subsidiaries is a party or has any liability, contingent
or otherwise;
(x) any powers of attorney granted by or on
behalf of the Company or any of its subsidiaries;
(xi) any agreement, other than agreements entered
into in the ordinary course of the Company's or any of its
subsidiaries' business consistent with past practice, which
prevents the Company or any of its subsidiaries from
disclosing confidential information;
(xii) any agreement that in any way purports to
prohibit the Company or any of its subsidiaries from freely
engaging in business anywhere in the State of Georgia or
competing with any other person;
(xiii) any sales distribution agreements, franchise
agreements and advertising agreements relating to the Company
or any of its subsidiaries;
(xiv) any warranty, guaranty or other similar
undertaking with respect to a contractual performance extended
by the Company or any of its subsidiaries;
(xv) any agreement pursuant to which the Company
or any of its subsidiaries has agreed to defend, indemnify or
hold harmless any other Person, other than the Company Tower
Leases;
(xvi) any agreement pursuant to which the Company
or any of its subsidiaries has agreed to settle any liability
for Taxes;
(xvii) any agreement pursuant to which the Company
has agreed to shift or allocate the liability of the Company,
any of its subsidiaries or any other person for Taxes;
(xviii) any agreement pursuant to which the Company
may be required to file a registration statement under the
Securities Act with respect to any securities issued by the
Company;
(xix) any joint venture agreement or partnership
agreement to which the Company or any of its subsidiaries is a
party;
(xx) any requirements or output contracts to
which the Company or any of its subsidiaries is a party;
(xxi) any vendor agreements to which the Company
or any of its subsidiaries is a party;
24
(xxii) any construction contracts or construction
management contracts to which the Company or any of its
subsidiaries is a party;
(xxiii) any agreement between the Company or any of
its subsidiaries, on the one hand, and any of their respective
members, on the other hand; and
(xxiv) any other agreement to which the Company or
any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound and which is material to the
Company and its subsidiaries taken as a whole.
(b) Except as set forth in Schedule 5.19(b) of the
Company Disclosure Schedule, with respect to each Company Contract (as defined
below): (i) such Company Contract is in full force and effect and is valid,
binding and enforceable in accordance with its terms; (ii) none of the Company
nor any of its subsidiaries is in material breach or material default thereof,
nor has the Company or any of its subsidiaries received notice that it is in
material breach of or material default thereof; and (iii) no event has occurred
which, with notice, or lapse of time or both, would constitute a breach or
default thereof by the Company or any of its subsidiaries or, to the knowledge
of the Company, by any other party thereto or would permit termination, material
modification, or acceleration thereof by any other party thereto. Except as set
forth in Schedule 5.19(b) of the Company Disclosure Schedule, none of the
Company nor any of its subsidiaries is a party to any oral contract, agreement,
or other arrangement which, if reduced to written form, would be required to be
listed in Schedule 5.19(a) of the Company Disclosure Schedule under the terms of
this Section 5.19. The Company has made available to Buyer an accurate
description of each oral contract, agreement or other arrangement set forth in
Schedule 5.19(b) of the Company Disclosure Schedule.
(c) Each contract, arrangement, commitment or
understanding of any type or form required to be set forth in Schedule 5.19(a)
of the Company Disclosure Schedule, whether or not set forth in Schedule 5.19
(a) of the Company Disclosure Schedule, is referred to herein as a "Company
Contract".
Section 5.20. Distributors and Suppliers. Except as set forth in
Schedule 5.20 of the Company Disclosure Schedule, since December 31, 2000, there
has not been any material adverse change in the business relationship of the
Company or any of its subsidiaries with any distributor who accounted for more
than 2% of Company's sales (on a consolidated basis) during the period from
December 31, 2000 to September 30, 2001, or with any supplier from whom the
Company or any of its subsidiaries purchased more than 5% of the goods or
services (on a consolidated basis) which it purchased during the period from
December 31, 2000 to September 30, 2001. Except as set forth in Schedule 5.20 of
the Company Disclosure Schedule, none of the Company nor any of its subsidiaries
has knowledge of any termination or intended termination by any such distributor
or supplier of its business relationship with the Company or any of its
subsidiaries or any modification or intended modification of its business
relationship with the Company or any of its subsidiaries in a manner which is
adverse in any material respect to the Company, and none of the Company nor any
of its subsidiaries has knowledge of any facts which could reasonably be
expected to form an adequate basis for such termination or modification.
Section 5.21. Sprint Agreement Compliance.
---------------------------
(a) Schedule 5.21(a) of the Company Disclosure Schedule
sets forth a complete and accurate list of all agreements, together with all
amendments, waivers or other changes thereto, between the Company, its
subsidiaries or any of its affiliates, on the one hand, and Sprint PCS, on the
other hand (collectively, the "Company Sprint Agreements"). The Company has made
available to Buyer a true and complete copy of each of the Company Sprint
Agreements. There are no unwritten amendments to, or waivers or other changes
under, any Company Sprint Agreement.
25
(b) Each of the Company Sprint Agreements is valid,
binding and enforceable in all material respects in accordance with its terms,
and is and shall be in full force and effect in all material respects without
penalty in accordance with its terms upon consummation of the Merger and the
other transactions contemplated by this Agreement, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and limitations on the availability of
equitable remedies. The Company and its subsidiaries have performed all material
obligations required to be performed by them under, and they are not in material
default under or in material breach of, nor in receipt of any claim of default
or breach under, any of the Company Sprint Agreements. 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 noncompliance by the Company or any of its
subsidiaries, or which would permit termination, cancellation or material
modification by Sprint PCS, under any of the Company Sprint Agreements. None of
the Company nor any of its subsidiaries has knowledge of any cancellation or
anticipated cancellation by Sprint PCS of any of the Company Sprint Agreements.
The Company and its subsidiaries have provided Buyer with copies of all written
notices (excluding e-mail messages) received by it from Sprint PCS during the
last six months (i) delivered pursuant to the official notice provisions of the
Company Sprint Agreements or (ii) alleging a breach of the Company Sprint
Agreements.
(c) The Company and its subsidiaries are in compliance in
all material respects with the schedule and other goals established by the
network build-out plan set forth in the Company Sprint Agreements to the extent
required by the Company Sprint Agreements. Except as set forth in the Sprint
Compliance Report relating to the October 2001 inspection of the Company, copies
of which have been provided to Buyer, the Company and its subsidiaries have
completed their build-out and network launch as of the date of such report.
Section 5.22. Intellectual Property.
---------------------
(a) "Intellectual Property" means all intellectual
property rights of every kind, including (i) all United States or foreign
patents and all United States or foreign patent applications, (ii) all trade
secret or confidential information, including without limitation, marketing,
customer, planning, financial, research, development and technical information
and data; (iii) all rights of copyright, including registrations and
applications for registration thereof, and (iv) all trademarks, service marks,
trademark registrations and applications, service xxxx registrations and
applications, trade names and trade dress.
(b) The Company and its subsidiaries own or have the
right to use or license, and to license others to use, if necessary, all
Intellectual Property material to the businesses of the Company and its
subsidiaries as such businesses are conducted on the date hereof (the "Company
Intellectual Property"). Except as set forth in Schedule 5.22 of the Company
Disclosure Schedule: (i) no written claim of invalidity or conflicting ownership
rights with respect to any Company Intellectual Property has been made by a
third person and the Company Intellectual Property is not the subject of any
pending or, to the Company's knowledge, threatened action, suit, claim,
investigation, arbitration or other proceeding; (ii) no person has given notice
to the Company or any of its subsidiaries that the Company or any of its
subsidiaries or licensees is infringing or misappropriating or has infringed or
misappropriated the Intellectual Property of any third person; (iii) the conduct
of the businesses of the Company and its subsidiaries does not and will not
infringe or misappropriate any Intellectual Property of any third person; (iv)
to the Company's knowledge, no other person is interfering with, infringing
upon, misappropriating or otherwise coming into conflict with the rights of the
Company and its subsidiaries to use or exploit any Company Intellectual
Property; and (v) the execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated hereby will
not impair the right of the Surviving Company to make, use, sell, license or
dispose of, or to bring any action for the infringement
26
of, any Company Intellectual Property. In addition, the matters disclosed in
Schedule 5.22 of the Company Disclosure Schedule would not reasonably be
expected to have a Company Material Adverse Effect.
Section 5.23. Related Party Transactions. Except as set forth in
Schedule 5.23 of the Company Disclosure Schedule, to the knowledge of the
Company, no Member or stockholder nor any officer or management committee member
of the Company or any of its subsidiaries owns or holds, directly or indirectly,
any interest in (excepting holdings solely for passive investment purposes of
securities of publicly held and traded entities constituting less than 5% of the
equity of any such entity), or is an officer, director, employee or consultant
of any person that is, a competitor, lessor, lessee, customer or supplier of the
Company or any of its subsidiaries or which conducts a business similar to any
business conducted by the Company or any of its subsidiaries. No Member,
stockholder, officer or management committee member of the Company or any of its
subsidiaries (a) owns or holds, directly or indirectly, in whole or in part, any
Company Intellectual Property, (b) has any claim, charge, action or cause of
action against the Company or any of its subsidiaries, except for claims for
reasonable unreimbursed travel or entertainment expenses, accrued vacation pay
or accrued benefits under any employee benefit plan existing on the date hereof,
(c) has made, on behalf of the Company or any of its subsidiaries, any payment
or commitment to pay any commission, fee or other amount to, or to purchase or
obtain or otherwise contract to purchase or obtain any goods or services from,
any other person of which any Member, stockholder, officer or management
committee member of the Company or any of its subsidiaries is a partner, member
or stockholder (excepting holdings solely for passive investment purposes of
securities of publicly held and traded entities constituting less than 5% of the
equity of any such entity), (d) owes any money to the Company or any of its
subsidiaries or (e) has any interest in any property, real or personal, tangible
or intangible, used in or pertaining to the business of the Company or any of
its subsidiaries.
Section 5.24. Inventory. Except as disclosed in Schedule 5.24 of
the Company Disclosure Schedule, the inventories of the Company reflected on the
latest balance sheet included in the Company Interim Financial Statements, or
acquired by the Company after the date thereof and prior to the Effective Time
(i) are of a quality useable or saleable in the ordinary course of business, and
are of a quantity sufficient to enable the Company to carry on its business as
currently conducted, (ii) are carried at amounts which reflect valuations at the
lower of cost or market, (iii) have been determined in accordance with GAAP, and
(iv) except to the extent provided for in the reserve set forth on the latest
balance sheet included in the Company Interim Financial Statements, in
accordance with GAAP, do not include any obsolete, nonconforming or defective
materials or any items that were, or should have been, at any prior time
written-off or written-down by the Company. Except as disclosed in Schedule 5.24
of the Company Disclosure Schedule, the Company and its subsidiaries have, and
the Surviving Company will have, no liability for any refunds, allowances or
returns in respect of products sold or services provided prior to the date
hereof (or the Effective Time, as applicable) or in respect of products included
in the inventory of the Company as of the Effective Time and distributed,
shipped or sold by or for the account of the Surviving Company after the
Effective Time, except to the extent of the reserves therefor reflected on the
latest balance sheet included in the Company Interim Financial Statements, in
accordance with GAAP. Except as set forth in Schedule 5.24 of the Company
Disclosure Schedule, all inventories disposed of subsequent to the date of the
latest balance sheet included in the Company Interim Financial Statements have
been disposed of only in the ordinary course of business and at prices and under
terms that are normal and consistent with past practice.
Section 5.25. Accounts Receivable. Except as set forth in Schedule
5.25 of the Company Disclosure Schedule, all outstanding accounts, notes and
loans receivable reflected on the latest balance sheet included in the Company
Interim Financial Statements or accrued by the Company or any subsidiary after
the date thereof and prior to the Effective Time are due and valid claims
against account
27
debtors for goods or services delivered or rendered, collectible in full within
90 days of delivery and subject to no defenses, offsets or counterclaims, except
to the extent reserved against on the latest balance sheet included in the
Company Interim Financial Statements, as applicable, in accordance with GAAP.
The Surviving Company has no obligation pursuant to any rule or regulation of
any Governmental Entity (whether in bankruptcy or insolvency proceedings or
otherwise) to repay, return, refund or forfeit any receivables collected by the
Company prior to the Effective Time or any receivables reflected on the latest
balance sheet included in the Company Interim Financial Statements, which the
Surviving Company collects after the Effective Time. Except as set forth in
Schedule 5.25 of the Company Disclosure Schedule, all receivables arose in the
ordinary course of business, none of the obligors of such receivables have
refused or given notice that it refuses to pay the full amount thereof and none
of the obligors of such receivables is an affiliate of the Company. Except as
set forth in Schedule 5.25 of the Company Disclosure Schedule, no receivables
are subject to prior assignment or Lien. Except as reflected on the latest
balance sheet included in the Company Interim Financial Statements, the Company
has not incurred any liabilities to customers for discounts, returns,
promotional allowances or otherwise. Except as disclosed in Schedule 5.25 of the
Company Disclosure Schedule, the Company has no liabilities for any refunds,
allowances or returns in respect of products or services distributed, shipped or
sold by or for the account of the Company or any subsidiary on or prior to the
Effective Time, except to the extent of the reserves therefor reflected on the
latest balance sheet included in the Company Interim Financial Statements, as
applicable, in accordance with GAAP. Neither the Company nor any of its
subsidiaries has any receivables arising out of secured transactions.
Section 5.26. Bank Accounts. Schedule 5.26 of the Company
Disclosure Schedule sets forth the names and addresses of all banks, trust
companies, savings and loan associations and other financial institutions at
which the Company maintains an account, deposit, safe deposit box, lock box or
other arrangement for the collection of accounts receivable or line of credit or
other loan facility relationship or accounts of any nature and the names of all
persons authorized to draw thereon, make withdrawals therefrom or have access
thereto. Prior to or at the Effective Time, the Company will deliver or make
available to Buyer copies of all records pertaining to such bank accounts.
Schedule 5.26 of the Company Disclosure Schedule sets forth an accurate and
complete list of all certificates of deposit, debt or equity securities and
other investments owned, beneficially or of record, by the Company
("Investments"). The Company and its subsidiaries have good and marketable title
to all of the Investments.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer Companies hereby represent and warrant to the Company that:
Section 6.01. Organization and Qualification. Each of the Buyer
Companies is a corporation duly organized, validly existing and in good standing
under the Laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted and is duly qualified and in
good standing to do business in each jurisdiction in which the nature of the
business conducted by it or the ownership or leasing of its properties makes
such qualification necessary, other than where the failure to be so duly
qualified and in good standing would not reasonably be expected to have a Buyer
Material Adverse Effect. The term "Buyer Material Adverse Effect" as used in
this Agreement shall mean any change, effect, event or occurrence that is or
would reasonably be expected to be materially adverse to the current or future
financial condition, results of operations, business, properties or operations
of Buyer and its subsidiaries, taken as a whole; provided, however, that any
such change, effect, event or occurrence arising out of or attributable to (A)
general economic, political or financial market conditions, (B) action taken by
Buyer with the prior written consent of the Company, (C) Buyer' compliance with
its covenants under, or the terms and conditions of, this Agreement, (D)
conditions generally affecting the wireless
28
telecommunications industry or Sprint PCS affiliates, except to the extent such
conditions have a materially disproportionate impact on Buyer as compared to the
Company, (E) the execution or announcement of this Agreement or (F) any decline
in the market price per share of Buyer Common Stock (but not any change, effect,
event or occurrence underlying such decline to the extent such change, effect,
event or occurrence would otherwise constitute a Buyer Material Adverse Effect),
shall be excluded from the determination of a Buyer Material Adverse Effect.
Section 6.02. Charter and Bylaws. Buyer has heretofore furnished to
the Company a complete and correct copy of the charter and bylaws or other
applicable organizational documents, as amended or restated, of each of the
Buyer Companies. None of the Buyer Companies is in violation of any of the
provisions of its charter or any material provision of its bylaws.
Section 6.03. Capitalization.
--------------
(a) The authorized capital stock of Buyer consists of (i)
500,000,000 shares of Buyer Common Stock, of which as of December 10, 2001,
27,751,598 shares were issued and outstanding, (ii) 300,000,000 shares of class
B common stock, $0.01 par value per share (the "Buyer Class B Common Stock"), of
which as of December 10, 2001, 56,600,144 shares were issued and outstanding and
(iii) 200,000,000 shares of preferred stock, $0.01 per value per share, of which
as of December 10, 2001, no shares were issued and outstanding. As of December
10, 2001, no shares were held in treasury by Buyer and 6,635,580 shares of Buyer
Common Stock were reserved for future issuance pursuant to outstanding options
granted under the 1999 Amended and Restated Buyer Equity Incentive Plan. Except
as described in this Section 6.03 or in Schedule 6.03(a) of the Buyer Disclosure
Schedule, as of December 10, 2001, no shares of capital stock or other equity
securities of Buyer are issued or outstanding or reserved for any purpose. Each
of the outstanding shares of capital stock or other equity securities of Buyer
and each of its subsidiaries is duly authorized, validly issued and, in the case
of shares of capital stock, fully paid and nonassessable, and has not been
issued in violation of (nor are any of the authorized shares of capital stock or
other equity securities of Buyer or any of its subsidiaries subject to) any
preemptive or similar rights created by statute, the charter or bylaws of Buyer
or any of its subsidiaries, or any agreement to which Buyer or any of its
subsidiaries is a party or bound.
(b) Except as set forth in Section 6.03(a) above or in
Schedule 6.03(b)(i) of the Buyer Disclosure Schedule, as of the date hereof (and
with respect to registration rights as of the Closing Date), there are no
outstanding securities, options, warrants or other rights (including
registration rights), agreements, arrangements or commitments of any character
to which Buyer or any of its subsidiaries is a party relating to the issued or
unissued capital stock or other equity interests of Buyer or any of its
subsidiaries or obligating Buyer or any of its subsidiaries to grant, issue,
deliver or sell, or cause to be granted, issued, delivered or sold, any shares
of the capital stock or other equity interests of Buyer or any of its
subsidiaries, by sale, lease, license or otherwise. Except as set forth in
Schedule 6.03(b)(ii) of the Buyer Disclosure Schedule, there are no obligations,
contingent or otherwise, of Buyer or any of its subsidiaries (i) to repurchase,
redeem or otherwise acquire any shares of capital stock or other equity interest
of Buyer or any of its subsidiaries or (ii) to dispose of any shares of capital
stock or equity interests in any subsidiary of Buyer. Except as set forth in
Schedule 6.03(b)(iii) of the Buyer Disclosure Schedule, there are no voting
trusts, proxies or other agreements or understandings to which Buyer or any of
its subsidiaries is a party or by which Buyer or any of its subsidiaries is
bound with respect to the voting of any shares of capital stock of Buyer.
(c) Buyer is the sole member of Merger Sub. All of the
membership interests owned by Buyer were duly authorized and validly issued and
not subject to preemptive rights created by statute, Merger Sub's articles of
organization or operating agreement or any other agreement to which Merger Sub
is a party or its bound.
29
(d) The shares of Buyer Common Stock to be issued
pursuant to the Merger will be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute, Buyer's
charter or bylaws or any agreement to which Buyer is a party or is bound.
(e) Buyer and its subsidiaries are in compliance with the
foreign ownership and voting provisions of the Communications Act.
Section 6.04. Authority. Each of the Buyer Companies (as
applicable) has all requisite corporate or limited liability company power and
authority to execute and deliver this Agreement, the Registration Rights
Agreement (subject to any approvals necessary to consummate the IWO Merger) and
the other agreements contemplated hereby and thereby and to perform its
obligations hereunder and thereunder and, to consummate the transactions
contemplated hereby and thereby. Except, with respect to the Registration Rights
Agreement, for any approvals required to consummate the IWO Merger, the
execution and delivery of this Agreement, the Registration Rights Agreement and
the other agreements contemplated hereby and thereby by each of the Buyer
Companies parties thereto and the consummation by each of the Buyer Companies of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate or limited liability company action and no other
corporate or limited liability company proceedings on the part of any of the
Buyer Companies are necessary to authorize this Agreement, the Registration
Rights Agreement and the other agreements contemplated hereby and thereby or to
consummate the transactions contemplated hereby and thereby. The board of
directors of Buyer has approved this Agreement, the Registration Rights
Agreement and the other agreements contemplated hereby and thereby, the Merger
and the other transactions contemplated hereby and thereby. No vote of the
stockholders of Buyer or any class thereof, or of the holders of any other
securities of Buyer (equity or otherwise), is required by Law, the rules of the
Nasdaq Stock Market or the certificate of incorporation or bylaws of Buyer for
Buyer to consummate the Merger or issue the Buyer Shares. This Agreement has
been duly executed and delivered by each of the Buyer Companies and, assuming
the due authorization, execution and delivery thereof by the Company,
constitutes the legal, valid and binding obligation of each of the Buyer
Companies enforceable against each of the Buyer Companies in accordance with its
terms. Upon consummation of the IWO Merger, the Registration Rights Agreement
will be duly executed and delivered by Buyer and, assuming the due
authorization, execution, and delivery thereof by the Company and/or the other
parties thereto, will constitute the legal, valid and binding obligations of
Buyer, enforceable against Buyer in accordance with its terms, subject to any
limitations on the enforceability of any indemnification provisions contained
therein under applicable Law.
Section 6.05. No Conflict; Required Filings and Consents
------------------------------------------
(a) Assuming that the Buyer Approvals (as defined in
Section 6.05(b)) have been obtained and the filings and notifications described
in Section 6.05(b) have been made and assuming that each of the Members'
representations and warranties contained in Section 4.04 of the Agreement are
true and correct in all respects, the execution and delivery of this Agreement,
the Registration Rights Agreement and the other agreements contemplated hereby
and thereby by each of the Buyer Companies parties thereto does not, and the
consummation of the transactions contemplated hereby will not (i) conflict with
or violate the charter or bylaws, or the equivalent organizational documents, in
each case as amended or restated, of Buyer or any of its subsidiaries, (ii)
conflict with or violate in any material respect any Laws applicable to Buyer or
any of its subsidiaries or by which any of their respective assets or properties
is bound or subject, or (iii) result in any material breach of or constitute a
material default (or an event that with notice or lapse of time or both would
become a material default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or require payment under, or result
in the creation of a lien or encumbrance on any of the properties or assets of
Buyer or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit,
30
franchise or other instrument or obligation to which Buyer or any of its
subsidiaries is a party or by or to which Buyer or any of its subsidiaries or
any of their respective assets or properties is bound or subject.
(b) The execution and delivery of this Agreement, the
Registration Rights Agreement and the other agreements contemplated hereby and
thereby by each of the Buyer Companies does not, and the consummation of the
transactions contemplated hereby and thereby will not, require any of the Buyer
Companies to obtain any consent, license, permit, approval, waiver,
authorization or order of (the "Buyer Approvals"), or to make any filing with or
notification to, any Governmental Entity or third person, except (i) as
disclosed in Schedule 6.05(b) of the Buyer Disclosure Schedule, or (ii) for
applicable requirements, if any, of the Securities Act, the HSR Act, the
Communications Act and applicable Blue Sky Laws and the filing and recordation
of appropriate merger documents as required by the Georgia LLCA or (iii) where
the failure to obtain such Buyer Approvals, or to make such filings or
notifications, would not prevent the Buyer Companies from performing any of
their respective obligations under this Agreement and would not reasonably be
expected to result in any material liability to, or the loss of any material
right or benefit of, Buyer or its subsidiaries.
Section 6.06. Permits; Compliance. Each of Buyer and its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "Buyer
Permits"); and there is no action, proceeding or investigation pending or, to
the knowledge of the Company, threatened regarding, and no event has occurred
that has resulted in or after notice or lapse of time or both could reasonably
be expected to result in, revocation, suspension, adverse modification,
non-renewal, impairment, restriction, termination or cancellation of, or order
of forfeiture or substantial fine with respect to, any of the Buyer Permits or,
to the knowledge of Buyer, the personal communications service licenses held by
Sprint PCS that are the subject of the Buyer Sprint Agreements (as defined in
Section 6.11(a)) (the "Buyer Sprint Licenses"), except in any such case where
the failure to possess such Buyer Permits or where any such action, proceeding,
investigation or event would not reasonably be expected to either (i) have a
Buyer Material Adverse Effect or (ii) prevent, materially delay or materially
impair the ability of the Buyer Companies to consummate the transactions
contemplated by this Agreement. None of Buyer nor any of its subsidiaries is or
has been in conflict with, or in default or violation of (a) any Law applicable
to Buyer or any of its subsidiaries or by or to which any of their respective
assets or properties are bound or subject or (b) any of the Buyer Permits,
including the Buyer Sprint Licenses, except for any such conflicts, defaults or
violations described in the Buyer SEC Reports (as defined below) filed prior to
the date hereof or described in Schedule 6.06 of the Buyer Disclosure Schedule
or which would not reasonably be expected to have a Buyer Material Adverse
Effect. None of Buyer nor any of its subsidiaries has received from any
Governmental Entity any written notification with respect to possible conflicts,
defaults or violations of Laws or Buyer Permits, except for written notices
relating to possible conflicts, defaults or violations described in the Buyer
SEC Reports filed prior to the date hereof or that would not reasonably be
expected to have a Buyer Material Adverse Effect. No facts are known to the
Buyer or any of its subsidiaries which if known by a Governmental Entity of
competent jurisdiction would present a substantial risk that any Buyer Permit
could be revoked, suspended, adversely modified, not renewed, impaired,
restricted, terminated, forfeited or a substantial fine imposed against the
Buyer or any of its subsidiaries, except as described in the Buyer SEC Reports
filed prior to the date hereof or described in Schedule 6.06 of the Buyer
Disclosure Schedule or for any such revocation, suspension, modification,
non-renewal, impairment, termination, forfeiture or fine which would not
reasonably be expected to have a Buyer Material Adverse Effect, and neither the
execution by the Buyer of this Agreement nor the consummation of the Merger or
any of the other transactions contemplated by this Agreement is reasonably
likely to result in the occurrence of any of the consequences set forth in this
Section 6.06.
31
Section 6.07. Reports; Financial Statements.
-----------------------------
(a) Since April 4, 2000, Buyer and its subsidiaries have
filed all forms, reports, statements and other documents required to be filed
with the SEC, including, without limitation, (i) all Annual Reports on Form
10-K, (ii) all Quarterly Reports on Form 10-Q, (iii) all proxy statements
relating to meetings of stockholders (whether annual or special) and (iv) all
Current Reports on Form 8-K (collectively, the "Buyer SEC Reports"). The Buyer
SEC Reports, including all Buyer SEC Reports filed after the date of this
Agreement and prior to the Effective Time, were or will be prepared in all
material respects in accordance with the requirements of the Securities Act and
the Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Buyer SEC Reports. The Buyer SEC Reports,
including all Buyer SEC Reports filed after the date of this Agreement and prior
to the Effective Time, did not at the time they were filed, or will not at the
time they are filed, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Buyer SEC
Reports filed prior to the Effective Time (i) have been or will be prepared in
all material respects in accordance with the published rules and regulations of
the SEC and GAAP applied on a consistent basis throughout the periods involved
(except (A) to the extent required by changes in GAAP and (B) with respect to
the Buyer SEC Reports filed prior to the date of this Agreement, as may be
indicated in the notes thereto) and (ii) fairly present or will fairly present
the consolidated financial position of Buyer and its subsidiaries as of the
respective dates thereof and the consolidated results of operations and cash
flows for the periods indicated, except that any unaudited interim financial
statements were or will be subject to normal recurring year-end adjustments.
Section 6.08. Absence of Certain Changes or Events. Except as
disclosed in the Buyer SEC Reports filed prior to the date of this Agreement or
as set forth in Schedule 6.08 of the Buyer Disclosure Schedule since December
31, 2000 through the date hereof there has not been (i) any material damage,
destruction or loss (whether or not covered by insurance) with respect to any
material assets of the Buyer or any of its subsidiaries; (ii) any material
change by Buyer or its subsidiaries in their accounting methods, principles or
practices; (iii) any material revaluation by the Buyer or any of its
subsidiaries of any of their assets, including the writing down of the value of
inventory or the writing down or off of notes or accounts receivable, other than
in the ordinary course of business and consistent with past practices and (iv)
any entry by the Buyer or any of its subsidiaries into any commitment or
transaction that is required to be disclosed in a Current Report on Form 8-K.
Except as disclosed in the Buyer SEC Reports filed prior to the date of this
Agreement, since December 31, 2000, there has not been a Buyer Material Adverse
Effect or any event, occurrence or development which would be reasonably
expected to have a Buyer Material Adverse Effect.
Section 6.09. Absence of Litigation. Except as disclosed in the
Buyer SEC Reports filed prior to the date of this Agreement or as set forth in
Schedule 6.09 of the Buyer Disclosure Schedule, there is no claim, action, suit,
litigation, proceeding, arbitration or, to the knowledge of Buyer, investigation
of any kind, at Law or in equity, pending or, to the knowledge of Buyer,
threatened against Buyer or any of its subsidiaries or any properties or rights
of Buyer or any of its subsidiaries, other than any such claims, actions, suits,
litigation, proceedings, arbitrations or investigations that would not
reasonably be expected to have a Buyer Material Adverse Effect. Neither Buyer
nor any of its subsidiaries is subject to any continuing order, consent decree
or settlement agreement of, or other similar written agreement with, or, to the
knowledge of Buyer, continuing investigation by, any Governmental Entity, court
or arbitration tribunal, or any judgment, order, writ, injunction, decree,
cease-and-desist order or award of any
32
Governmental Entity, court or arbitrational tribunal, except for matters which
would not reasonably be expected to have a Buyer Material Adverse Effect.
Section 6.10. No Undisclosed Liabilities. Except (i) as disclosed
in the consolidated financial statements contained in the Buyer SEC Reports
filed prior to the date hereof, (ii) for liabilities and obligations incurred in
the ordinary course of business and consistent with past practice of Buyer and
its subsidiaries since the date of the latest balance sheet contained in the
most recent Buyer SEC Report on Form 10-Q filed prior to the date hereof, (iii)
as disclosed in Schedule 6.10 of the Buyer Disclosure Schedule and (iv) for
liabilities that would not reasonably be expected to have a Buyer Material
Adverse Effect, none of Buyer nor any of its subsidiaries has any liability,
commitment or obligation of any nature, whether or not absolute, accrued,
contingent or otherwise that would be required to be reflected or reserved
against in a consolidated balance sheet of Buyer and its subsidiaries prepared
in accordance with GAAP as of the date hereof.
Section 6.11. Sprint Agreement Compliance.
---------------------------
(a) Schedule 6.11(a) of the Buyer Disclosure Schedule
sets forth a complete and accurate list of all agreements, together with all
amendments, waivers or other changes thereto, between Buyer, its subsidiaries or
any of its affiliates, on the one hand, and Sprint PCS, on the other hand
(collectively, the "Buyer Sprint Agreements"). Buyer has made available to the
Company a true and complete copy of each of the Buyer Sprint Agreements. There
are no unwritten amendments to, or waivers or other changes under, any Buyer
Sprint Agreement.
(b) Each of the Buyer Sprint Agreements is valid, binding
and enforceable in all material respects in accordance with its terms, and is
and shall be in full force and effect in all material respects without penalty
in accordance with its terms upon consummation of the Merger and the other
transactions contemplated by this Agreement, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and limitations on the availability of
equitable remedies. Buyer and its subsidiaries have performed all material
obligations required to be performed by them under, and they are not in material
default under or in material breach of, nor in receipt of any claim of default
or breach under, any of the Buyer Sprint Agreements. 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 noncompliance by Buyer or any of its
subsidiaries, or which would permit termination, cancellation or material
modification by Sprint PCS, under any of the Buyer Sprint Agreements. None of
Buyer nor any of its subsidiaries has knowledge of any cancellation or
anticipated cancellation by Sprint PCS of any of the Buyer Sprint Agreements.
Buyer and its subsidiaries have provided the Company with copies of all written
notices (excluding e-mail messages) received by them from Sprint PCS during the
last six months (i) delivered pursuant to the official notice provisions of the
Buyer Sprint Agreements or (ii) alleging a breach of the Buyer Sprint
Agreements.
(c) Buyer and its subsidiaries are in compliance in all
material respects with the schedule and other goals established by the network
build-out plan set forth in the Buyer Sprint Agreements to the extent required
by the Buyer Sprint Agreements. Except as set forth in the Sprint Compliance
Report dated as of December 6, 2001 and the Exhibit 2.1 Compliance Memorandum
dated December 18, 2001, copies of which have been provided to the Company,
Buyer and its subsidiaries have completed their build-out and network launch as
of the date of such report.
33
ARTICLE VII
COVENANTS
Section 7.01. Affirmative Covenants. The Company and Buyer hereby
covenant and agree that, prior to the Effective Time, unless otherwise expressly
contemplated by this Agreement, otherwise provided in Schedule 7.01 of the
Company Disclosure Schedule or the Buyer Disclosure Schedule, or consented to in
writing by the other, it will and will cause its subsidiaries to operate its
business in all material respects in the usual and ordinary course consistent
with past practices. The Company hereby covenants and agrees that, prior to the
Effective Time, unless otherwise expressly contemplated by this Agreement or
consented to in writing by Buyer, it will and will cause its subsidiaries to:
(a) use its reasonable best efforts to preserve
substantially intact its business organization, maintain its material rights and
franchises, retain the services of its respective officers and key employees and
maintain its relationships and goodwill with its customers and suppliers;
(b) maintain and keep its material properties and assets
in as good repair and condition as at present, ordinary wear and tear excepted,
and maintain supplies and inventories in quantities consistent with its
customary business practice; and
(c) use its reasonable best efforts to keep in full force
and effect insurance and bonds comparable in amount and scope of coverage to
that currently maintained.
Section 7.02. Company Negative Covenants. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by Buyer,
from the date of this Agreement until the Effective Time, the Company will not
do, and will not permit any of its subsidiaries to do, any of the foregoing:
(a) (i) increase the compensation payable to or to become
payable to any director, management committee member, officer or employee; (ii)
grant any severance or termination pay (other than pursuant to the normal
severance policies of the Company or its subsidiaries as in effect on the date
of this Agreement, copies of which policies have been furnished to Buyer) to, or
enter into or amend any employment or severance agreement with, any director,
management committee member, officer or employee; (iii) establish, adopt or
enter into any employee benefit plan or arrangement; (iv) except as may be
required by applicable Law, amend, or take any other actions with respect to,
any of the Company Benefit Plans or any of the plans, programs, agreements,
policies or other arrangements described in Section 5.10(d) of this Agreement or
(v) declare or pay any bonus to, or make any loan to, any director, management
committee member, officer or employee;
(b) make any distribution in respect of, or declare or
pay any dividend on, outstanding membership interests, shares of capital stock
or other equity interests of the Company or any of its subsidiaries, except for
dividends or other distributions by a wholly owned subsidiary of the Company to
the Company or another wholly owned subsidiary of the Company;
(c) (i) except as described in Schedule 5.03(c)(ii) of
the Company Disclosure Schedule, redeem, purchase or otherwise acquire any of
its or any of its subsidiaries' membership interests, capital stock or other
equity interests or any securities or obligations convertible into or
exchangeable for any of its or its subsidiaries' membership interests, capital
stock or other equity interests (other than any such acquisition directly from
any wholly owned subsidiary of the Company in exchange for capital contributions
or loans to such subsidiary), or any options, warrants or conversion or other
rights to acquire any of its or its subsidiaries' membership interests, capital
stock or other equity interests or any such securities or obligations (except in
connection with the exercise of outstanding Company
34
Options in accordance with their terms); (ii) effect any reorganization or
recapitalization; or (iii) split, combine or reclassify any of its or its
subsidiaries' membership interests, capital stock or other equity interests or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, its or its subsidiaries' membership
interests, capital stock or other equity interests;
(d) (i) except as described in Schedule 5.03(c)(i) of the
Company Disclosure Schedule and except as contemplated by Section 8.07(b),
issue, deliver, award, grant or sell, or authorize or propose the issuance,
delivery, award, grant or sale (including the grant of any security interests,
liens, claims, pledges, limitations in voting rights, charges or other
encumbrances) of, any of its or its subsidiaries' membership interests, capital
stock or other equity interests, any securities convertible into or exercisable
or exchangeable for any such shares or interests, or any rights, warrants or
options to acquire any such shares or interests (except for the issuance of up
to 200,000 Company Options and any Company Membership Units upon the exercise of
outstanding Company Options in accordance with their terms; provided that the
Company shall not issue Company Membership Units upon exercise of a Company
Option unless the Company shall first obtain a certificate from the holder
thereof that such holder is an "accredited investor" as defined in Rule 501 of
Regulation D promulgated pursuant to the Securities Act with respect to Buyer);
(ii) amend or otherwise modify the terms of any such rights, warrants or options
the effect of which shall be to make such terms more favorable to the holders
thereof; (iii) take any action to optionally accelerate the exercisability of
any such rights, options or warrants;
(e) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a portion of the
assets of, or by any other manner, any other person or division thereof, or
otherwise acquire or agree to acquire any assets of any other person, except for
the purchase of assets from suppliers or vendors in the ordinary course of
business and consistent with past practice;
(f) sell, lease (as lessor), exchange, mortgage, pledge,
transfer or otherwise dispose of, or agree to sell, lease (as lessor), exchange,
mortgage, pledge, transfer or otherwise dispose of, any of its assets or any
assets of any of its subsidiaries, except for dispositions of inventories and of
assets in the ordinary course of business and consistent with past practice;
(g) release any third party from its obligations, or
grant any consent, under any existing standstill provision under any
confidentiality or other agreement, or fail to fully enforce any such agreement
upon Buyer's request;
(h) adopt or propose to adopt any amendments to its
articles of organization or operating agreement.
(i) (i) change any of its methods of accounting in effect
at October 31, 2001, or (ii) make or rescind any express or deemed election
relating to Taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes
(except where the amount of such settlements or controversies, individually or
in the aggregate, does not exceed $50,000) or change any of its methods of
reporting income or deductions for federal income tax purposes from those
employed in the preparation of the federal income tax returns for the taxable
year ending December 31, 2000, except, in each case, as may be required by Law
or GAAP;
(j) incur any obligation for borrowed money or purchase
money indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except (i) in the ordinary course of business consistent
with past practice and in no event in excess of $250,000 in the aggregate, (ii)
any indebtedness that constitutes an Excluded Item and (iii) up to an additional
$750,000 of indebtedness incurred after January 31, 2002; provided that any
borrowings permitted pursuant to this Section 7.02(j) that are made under the
Loan Agreement shall be variable rate loans;
35
(k) enter into any arrangement, agreement or contract
with any third party (other than customers in the ordinary course of business)
which provides for an exclusive arrangement with that third party or is
substantially more restrictive on the Company or substantially less advantageous
to the Company than arrangements, agreements or contracts existing on the date
hereof;
(l) (i) enter into, renew, amend or waive in any material
manner, or terminate or give notice of a proposed renewal or material amendment,
waiver or termination of, any Company Contract, agreement or lease to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective properties is bound, other than in the
ordinary course of business or (ii) enter into, renew, amend, waive or
terminate, or give notice of a proposed renewal, amendment, waiver or
termination of, any Company Sprint Agreement;
(m) knowingly take or cause to be taken any action that
could reasonably be expected to materially delay, or materially and adversely
affect, the consummation of the transactions contemplated hereby;
(n) except as otherwise disclosed in Schedule 7.02(n) of
the Company Disclosure Schedule, enter into or amend any contract, agreement or
arrangement with any officer, director, management committee member, employee,
consultant, member or stockholder of the Company or any of its subsidiaries or
with any affiliate or associate of any of the foregoing;
(o) acquire additional territory or related assets from
Sprint PCS, other than inventory and assets used in the ordinary course of
business in the Company's existing territory;
(p) pay, satisfy, discharge or settle any claims,
liabilities or obligations (absolute, accrued, contingent or otherwise), other
than in the ordinary course of business and consistent with past practice or
pursuant to mandatory terms of any contract in effect on the date hereof,
involving payments by the Company or any of its subsidiaries in excess of
$50,000, individually or in the aggregate;
(q) make any loans, advances or capital contributions to,
or investments in any other person, other than (i) by the Company or a
subsidiary of the Company to or in the Company or any direct or indirect wholly
owned subsidiary of the Company or (ii) pursuant to and in accordance with the
terms of any Company Contract or other legal obligations of the Company or any
of its subsidiaries existing at the date of this Agreement and set forth in
Schedule 7.02(q) of the Company Disclosure Schedule;
(r) enter into any new line of business;
(s) make any capital expenditures other than those set
forth in Schedule 7.02(s) of the Company Disclosure Schedule or which constitute
an Excluded Item and are approved in writing by Buyer; or
(t) convert any variable rate loan made under the Loan
Agreement to a fixed rate loan under the Loan Agreement; or
(u) agree in writing or otherwise to do any of the
foregoing other than for such of the foregoing as is required by this Agreement.
Section 7.03. Buyer Negative Covenants. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by the
Company, from the date of this Agreement until the Effective Time, the Buyer
will not do, and will not permit any of its subsidiaries to do, any of the
foregoing:
36
(a) except as otherwise permitted by that certain
Indenture dated as of October 29, 1999 by and among Buyer, the Guarantors (as
defined therein) and State Street Bank and Trust Company, as trustee, as may be
amended from time to time (the "Buyer Indenture"), make any distribution in
respect of, or declare or pay any dividend on, outstanding shares of capital
stock or other equity interests of Buyer or any of its subsidiaries, except for
dividends or other distributions by a wholly owned subsidiary of Buyer to Buyer
or another wholly owned subsidiary of Buyer;
(b) (i) except as otherwise permitted by the Buyer
Indenture, redeem, purchase or otherwise acquire any of its or any of its
subsidiaries' capital stock or other equity interests or any securities or
obligations convertible into or exchangeable for any of its or its subsidiaries'
capital stock or other equity interests (other than any such acquisition
directly from any wholly owned subsidiary of Buyer in exchange for capital
contributions or loans to such subsidiary), or any options, warrants or
conversion or other rights to acquire any of its or its subsidiaries' capital
stock or other equity interests or any such securities or obligations (except in
connection with the exercise of outstanding options to purchase capital stock of
Buyer in accordance with their terms); or (ii) effect any reorganization or
recapitalization;
(c) acquire or agree to acquire in a binding agreement,
by merging or consolidating with, by purchasing an equity interest in or a
portion of the assets of, or by any other manner, any other person or division
thereof, or otherwise acquire or agree to acquire any material assets of any
other person, except pursuant to the IWO Merger Agreement and for transactions
which if consummated would not be required to be reported in a Current Report on
Form 8-K under Item 2 thereof;
(d) sell, lease (as lessor), exchange, mortgage, pledge,
transfer or otherwise dispose of, or agree to sell, lease (as lessor), exchange,
mortgage, pledge, transfer or otherwise dispose of, any of its material assets
or any material assets of any of its subsidiaries, except for dispositions that
would not be required to be reported in a Current Report on Form 8-K under Item
2 thereof;
(e) enter into, renew, amend, waive or terminate, or give
notice of a proposed renewal, amendment, waiver or termination of, any Buyer
Sprint Agreement, except as required to consummate the transactions contemplated
by the IWO Merger Agreement and as would not reasonably be expected to have a
Buyer Material Adverse Effect;
(f) knowingly take or cause to be taken any action that
could reasonably be expected to materially delay, or materially and adversely
affect, the consummation of the transactions contemplated hereby; or
(g) agree in writing or otherwise to do any of the
foregoing.
Section 7.04. Access and Information.
----------------------
(a) The Company shall, and shall cause its subsidiaries
to (i) afford to Buyer and Buyer's officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives (collectively, the
"Buyer Representatives") reasonable access at reasonable times, upon reasonable
prior notice, to the Company's officers, employees, agents, properties, offices
and other facilities and to the books and records thereof and (ii) furnish
promptly to Buyer and the Buyer Representatives such information concerning the
Company's business, properties, contracts, records and personnel (including,
without limitation, financial, operating and other data and information) as may
be reasonably requested, from time to time, by Buyer.
37
(b) Notwithstanding the foregoing provisions of this
Section 7.04, the Company shall not be required to grant access or furnish
information to Buyer to the extent that such access or the furnishing of such
information is prohibited by Law. No investigation by Buyer made heretofore or
hereafter shall affect the representations and warranties of the Company which
are herein contained and each such representation and warranty shall survive
such investigation.
(c) The information received pursuant to Section 7.04(a)
that is non-public shall be deemed to be "Confidential Information" for purposes
of the Confidentiality Agreement.
(d) From the date of this Agreement until the Effective
Time, the Company agrees to provide Buyer with copies of any and all material
written correspondence between the Company and its subsidiaries on the one hand
and Sprint PCS on the other hand. From the date of this Agreement until the
Effective Time, Buyer agrees to provide the Company with copies of any updates
to the Sprint Compliance Report dated as of December 6, 2001.
Section 7.05. Members Covenant. None of the Members shall knowingly
take or cause to be taken any action that would reasonably be expected to
materially delay, or materially and adversely affect, the consummation of the
transactions contemplated hereby. None of the Members shall transfer any Company
Membership Units owned by such Member prior to the Effective Time. Each of the
Members (other than the Key Employees) that hold Company Options will execute a
Net Exercise Amendment within 15 days after the date of this Agreement and in
any event prior to the Closing Date.
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.01. Appropriate Action; Consents; Filings.
-------------------------------------
(a) The Company, the Members and Buyer shall each use,
and shall cause each of their respective subsidiaries to use, their reasonable
best efforts to (i) take, or cause to be taken, all appropriate action, and do,
or cause to be done, all things necessary, proper or advisable under applicable
Law or otherwise to consummate and make effective the transactions contemplated
by this Agreement, (ii) obtain from any Governmental Entities any consents,
licenses, permits, waivers, approvals, authorizations or orders required to be
obtained or make any filings with or notifications or submissions to any
Governmental Entity (other than described in the following clause (iii))
required to be made by Buyer, the Members or the Company or any of their
subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, the Merger, (iii) make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement
and the Merger, required under (A) the HSR Act and (B) any other applicable Law;
provided that Buyer, the Members and the Company shall cooperate with each other
in connection with the making of all such filings and submissions, including
providing copies of all such documents to the nonfiling party and its advisors
prior to filings and, if requested, shall accept all reasonable additions,
deletions or changes suggested in connection therewith. The Company, the Members
and Buyer shall furnish all information required for any application or other
filing or submission to be made pursuant to the rules and regulations of any
applicable Law in connection with the transactions contemplated by this
Agreement. Buyer and the Company shall request early termination of the waiting
period with respect to the Merger under the HSR Act.
(b) Buyer, the Members and the Company agree to cooperate
with respect to, and shall cause each of their respective subsidiaries to
cooperate with respect to, and agree to use their reasonable best efforts to
contest and resist, any action, including legislative, administrative or
judicial action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order
38
(whether temporary, preliminary or permanent) of any Governmental Entity that is
in effect and that restricts, prevents or prohibits the consummation of the
Merger or any other transactions contemplated by this Agreement.
(c) Each of the Company, the Members and Buyer shall give
(or shall cause their respective subsidiaries to give) any notices to third
persons, and use, and cause their respective subsidiaries to use, their
reasonable best efforts to obtain any third persons consents (A) necessary,
proper or advisable to consummate the transactions contemplated by this
Agreement, (B) otherwise required under any contracts, licenses, leases or other
agreements in connection with the consummation of the transactions contemplated
hereby or (C) required to prevent a Company Material Adverse Effect from
occurring prior to the Effective Time or a Buyer Material Adverse Effect from
occurring after the Effective Time. In the event that any party shall fail to
obtain any such third person consent, such party shall use its reasonable best
efforts, and shall take any such actions reasonably requested by the other
parties, to limit the adverse effect upon the Company and Buyer, their
respective subsidiaries, and their respective businesses resulting, or which
could reasonably be expected to result after the Effective Time, from the
failure to obtain such consent.
(d) Nothing in this Agreement shall require Buyer or
Merger Sub to agree to or permit the Company to agree to, the imposition of
conditions, the payment of any material amounts or any requirement of
divestiture to obtain any Company Approvals or Buyer Approvals, and in no event
shall any party take, or be required to take, any action that would or could
reasonably be expected to have a Buyer Material Adverse Effect or a Company
Material Adverse Effect.
(e) The Company and Buyer shall each promptly notify the
other of (i) any material change in its current or future business, financial
condition or results of operations, (ii) any complaints, investigations or
hearings (or communications indicating that the same may be contemplated) of any
Governmental Entities with respect to the transactions contemplated hereby or
its business, (iii) the institution or the threat of material litigation
involving it or any of its subsidiaries or (iv) any event or condition that
might reasonably be expected to cause any of its representations, warranties,
covenants or agreements set forth herein not to be true and correct at the
Effective Time.
(f) Buyer, the Members and the Company agree to cooperate
to prepare as promptly as practicable after the date hereof an Offering
Memorandum (the "Offering Memorandum") with respect to the offering and the
potential sale and delivery of shares of Buyer Common Stock pursuant to this
Agreement to the Solicited Persons (as defined below). The Members and the
Company agree that the information concerning the Company or the Members
furnished by or on behalf of the Company and the Members to Buyer for inclusion
in the Offering Memorandum shall not contain any untrue statement of any
material fact or omit to state any material fact required to be stated therein.
Buyer agrees that the information concerning Buyer for inclusion in the Offering
Memorandum shall not contain any untrue statement of any material fact or omit
to state any material fact required to be stated therein. Promptly following
preparation of the Offering Memorandum, the Company will deliver copies of the
Offering Memorandum, together with (i) a Key Employee Net Exercise Amendment (as
defined in Section 9.02(d)) and a Non-Competition Agreement (as defined in
Section 9.02(l)) to each of the Key Employees, (ii) a Net Exercise Amendment (as
defined in Section 9.02(d)) to each holder of Company Options named in Exhibit E
hereto and (iii) a "Member Addendum" in form and substance reasonably
satisfactory to Buyer to each member of the Company named in Exhibit F hereto
and to each person who becomes a Member of the Company pursuant to Section
7.02(d) pursuant to which such member agrees to become a party to this Agreement
as a Member. The persons referred to in clauses (i), (ii) and (iii) of the
immediately preceding sentence shall be referred to herein as the "Solicited
Persons". The Company shall use its reasonable best efforts to promptly prepare,
obtain and deliver to Buyer all documentation, and to cause the Solicited
Persons to take all actions necessary to satisfy the condition contained in
39
Section 9.02(l). Neither, Buyer, the Company nor any of the Members shall
request that any Solicited Person execute a Net Exercise Amendment, a
Non-Competition Agreement or a Member Addendum prior to delivery of the Offering
Memorandum to such Solicited Person.
Section 8.02. Tax Treatment.
-------------
(a) With respect to any Tax Return covering a taxable
period ending on or before the Closing Date that is required to be filed after
the Closing Date with respect to any of the Company and its subsidiaries, Buyer
shall cause such Tax Return to be prepared and shall cause to be included in
such Tax Return all Tax Items required to be included therein. Not later than 30
days prior to the due date of each such Tax Return, Buyer shall deliver a copy
of such Tax Return to the Members. Not later than 5 days prior to the due date
of such Tax Return, the Members shall pay to Buyer the amount of Taxes shown due
on such Tax Return. Upon receipt thereof Buyer shall cause the Company to file
the Tax Return and timely pay the Taxes shown due on such Tax Return.
(b) With respect to any Tax Return covering a taxable
period beginning on or before the Closing Date and ending after the Closing Date
that is required to be filed after the Closing Date with respect to any of the
Company and its subsidiaries, Buyer shall cause such Tax Return to be prepared,
and shall cause to be included in such Tax Return all Tax Items required to be
included therein. Buyer shall determine (by an interim closing of the books as
of the Closing Date, except for ad valorem Taxes which shall be prorated on a
daily basis) the Tax which would have been due with respect to the period
covered by such Tax Return if such taxable period ended on and included the
Closing Date (the "Pre-Closing Tax"). Not later than 30 days prior to the due
date of each such Tax Return, Buyer shall deliver a copy of such Tax Return to
the Members together with a statement of the Pre-Closing Tax. Not later than 5
days prior to the due date of such Tax Return, the Members shall pay to Buyer
the amount of the Pre-Closing Tax. Upon receipt thereof Buyer shall cause the
Company to file the Tax Return and timely pay the Taxes shown due on such Tax
Return.
(c) Notwithstanding anything to the contrary herein, any
franchise Tax paid or payable with respect to any of the Company and its
subsidiaries shall be allocated to the taxable period during which the income,
operations, assets or capital comprising the base of such Tax is measured,
regardless of whether the right to do business for another taxable period is
obtained by the payment of such franchise Tax.
(d) Any amounts paid or payable pursuant to paragraphs
(a) or (b) of this Section 8.02 shall be treated by the parties as an adjustment
to the Merger Consideration.
(e) Any Tax Return to be prepared pursuant to the
provisions of this Section 8.02 shall be prepared in a manner consistent with
practices followed in prior years with respect to similar Tax Returns, except as
otherwise required by law or fact.
(f) Buyer and the Members shall cooperate fully, and
shall cause the Company and each of its subsidiaries to cooperate fully, as and
to the extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Section 8.02 and any audit, litigation or
other proceeding (each a "Proceeding") with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such Proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. The
Members will, and will cause the Company and each of its subsidiaries to, (i)
retain all books and records with respect to Tax matters pertinent to the
Company and its subsidiaries relating to any taxable period beginning before the
Closing Date until the earlier of six years after the Closing Date or the
expiration of the applicable statute
40
of limitations of the respective taxable periods, and to abide by all record
retention agreements entered into with any taxing authority, and (ii)
thereafter, upon request, allow Buyer to take possession of such books and
records. The Members further agree, upon request, to use their reasonable best
efforts to obtain any certificate or other document from any governmental
authority or any other person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed on Buyer or any of the Company and its
subsidiaries (including, but not limited to, with respect to the transactions
contemplated hereby). Buyer and the Members further agree, upon request, to
provide the other party with all information regarding the Company and its
subsidiaries that either party may be required to report to any taxing
authority.
(g) The Members shall be responsible for the payment of
all state and local transfer, sales, use, stamp, registration or other similar
Taxes resulting from the transactions contemplated by this Agreement.
(h) Buyer shall withhold 10 percent of the Merger
Consideration paid to each Member unless (i) such Member provides to Buyer on or
before the Closing Date a certificate of non-foreign status of such Member which
meets the requirements of Treasury Regulation Section 1.1445-2(b)(2), or (ii)
Buyer receives a certification by the Company with respect to the Company
Membership Units which meets the requirements of Treasury Regulation Section
1.1445-2(c)(3) dated within 30 days prior to the Closing Date. However,
notwithstanding the previous sentence, Buyer will withhold 10 percent of the
Purchase Price paid to a Member if Buyer has actual notice that the
certification relied on to avoid such withholding is false, or if Buyer receives
notice that such certification is false pursuant to Treasury Regulation Section
1.1445-4.
(i) Buyer and each of ComSouth Management II, Inc.,
Loretto Telecommunications, Inc., Xxxxxx Xxxxxxxxxx Xxxxx, Inc., Xxxxxx Xxxxxxxx
Xxxxx, Inc., Xxxxx Xxxxxxxxxx Xxxxxxxx, Inc., Georgia PCS Corporation, PTC
Holdings, Inc. and Xxxxxx, PCS, Inc. expressly acknowledge and agree that it is
their intent that the exchange of Company Membership Units by each of ComSouth
Management II, Inc., Loretto Telecommunications, Inc., Xxxxxx Xxxxxxxxxx Xxxxx,
Inc., Xxxxxx Xxxxxxxx Xxxxx, Inc., Xxxxx Xxxxxxxxxx Xxxxxxxx, Inc., Georgia PCS
Corporation, PTC Holdings, Inc. and Xxxxxx, PCS, Inc. for the Merger
Consideration is intended to be in furtherance of separate plans of
reorganization within the meaning of Internal Revenue Code Section 368(a)(1)(C).
Accordingly, Buyer and each of ComSouth Management II, Inc., Loretto
Telecommunications, Inc., Xxxxxx Xxxxxxxxxx Xxxxx, Inc., Xxxxxx Xxxxxxxx Xxxxx,
Inc., Xxxxx Xxxxxxxxxx Xxxxxxxx, Inc., Georgia PCS Corporation, PTC Holdings,
Inc. and Xxxxxx, PCS, Inc. agree to report the Merger as a reorganization
consistent with the provisions of Internal Revenue Code Section 368(a)(1)(C),
and with Treasury Regulations issued thereunder or with rulings and other tax
authority relating thereto, and will not take any position inconsistent with
such treatment except as otherwise may be required by law.
Section 8.03. Public Announcements. Buyer and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law. Prior to making any filings with any third person or
Governmental Entity with respect to any press release or public announcement
each party shall consult with the other.
Section 8.04. Employee Benefit Plans. From the Effective Time
through December 31, 2002, Buyer will cause the Surviving Company or any of its
subsidiaries, as the case may be, to provide generally to Affected Employees
employee benefits under employee benefit and welfare plans on terms and
conditions which when taken as a whole are substantially similar to those
provided by Buyer and its subsidiaries to their similarly situated officers and
employees; provided that with respect to stock option or other plans involving
the potential issuance of Buyer Common Stock, this provision shall be satisfied
if
41
Affected Employees who have positions that are comparable to those of employees
of Buyer and its subsidiaries who are eligible to participate in stock option
plans of Buyer and its subsidiaries are eligible to receive awards or grants
thereunder. For purposes of participation, vesting and benefit accrual under
employee benefit plans of Buyer and its subsidiaries, the service of the
Affected Employees prior to the Effective Time shall be treated as service with
Buyer and its subsidiaries. Following the Effective Time, Buyer also shall cause
the Surviving Company and its subsidiaries to honor in accordance with their
terms all employment, severance, salary continuation, consulting and other
compensation contracts disclosed in Schedules 5.10(d), 5.19(b) or 7.02(n) of the
Company Disclosure Schedule between the Company or any of its subsidiaries and
any current or former director, management committee member, officer, or
employee thereof, and all provisions for vested benefits or other vested amounts
earned or accrued through the Effective Time under the Company Benefit Plans.
"Affected Employees" means individuals who are actively employed by the Company
or any of its subsidiaries as of the Effective Time and who remain employed with
Buyer or any subsidiary of Buyer at and after the Effective Time.
Section 8.05. Merger Sub. Prior to the Effective Time, Merger Sub
shall not conduct any business or make any investments other than in connection
with its organization and as specifically contemplated by this Agreement and
will not have any material assets or liabilities except as necessary for
purposes of consummating the transactions contemplated hereby and will not have
any subsidiaries.
Section 8.06. Escrow Agreement.(a) The Company shall use its
reasonable best efforts to insure that the Members' Representative shall execute
and deliver, along with Buyer and the Escrow Agent, the Escrow Agreement.
Section 8.07. Members' Contribution.
---------------------
(a) The Members jointly and severally agree that, if one
or more Key Employees do not execute Net Exercise Amendments within 10 days
after the delivery of the Offering Memorandum to them, then if the Company shall
determine to convert any Company Options held by such Key Employee into unit
appreciation rights, the Members shall contribute to the Company prior to the
Closing Date cash in an amount necessary to satisfy the Company's obligations
under the applicable Net Appreciation Amendments entered into by such Key
Employees or otherwise necessary to satisfy the Company's cash obligations, if
any, to such Key Employees upon exercise of the Key Employees' Company Options
prior to the Effective Time.
(b) The Members jointly and severally agree that, if
immediately prior to the anticipated Closing Date any holder of Company
Memberships Units shall have exercised and not withdrawn its dissenters' rights
with respect to the Merger under the Georgia LLCA, then, at Buyer's election,
the Members shall purchase or otherwise acquire (which obligation shall be a
joint and several obligation of the Members) from the Company prior to the
Effective Time a number of newly issued Company Membership Units equal to the
aggregate number of Dissenting Units for an aggregate purchase price, payable in
cash, equal to the number of Company Membership Units being purchased multiplied
by the product of the (x) Exchange Ratio times (y) the Average Pre-Closing
Trading Price. Prior to the Effective Time, the Company shall not use the cash
received pursuant to this Section 8.07(b) for any purpose not approved in
writing by Buyer.
(c) The Members jointly and severally agree that, if
immediately prior to the anticipated Closing Date, but for the application of
this Section 8.07(c), the sum of (i) the Certified Indebtedness plus any premium
or penalty payable upon the prepayment of such Indebtedness on the Closing Date,
(ii) the amount by which, if any, the Estimated Net Working Capital is less than
zero and (iii) the UAR Payment would exceed $57,750,000 (such sum being referred
to as the "Closing Cash Requirements"), then the Members shall purchase or
otherwise acquire (which obligation shall be a joint
42
and several obligation of the Members) from the Company prior to the Effective
Time newly issued Company Membership Units for an aggregate purchase price,
payable in cash, equal to the lesser of (A) $500,000 or (B) the amount by which
the Closing Cash Requirements would exceed $57,750,000 but for this Section
8.07(c). Prior to the Effective Time, the Company shall not use the cash
received pursuant to this Section 8.07(c) for any purpose not approved in
writing by Buyer.
Section 8.08. Covenant not to Compete.
-----------------------
(a) Each of the Members (other than Members that held
less than 1% of the outstanding Company Membership Units immediately prior to
the Effective Time) and the persons named on the signature page hereto under the
caption "Parent Companies" ("Parent Companies") agrees that the transactions
contemplated by this Agreement constitute consideration for the covenant not to
compete set forth below. For purposes of this Section 8.08, the term "Members"
shall refer to both the Members and the "Parent Companies."
(b) Each of the Members hereby agrees that commencing on
the Effective Time and continuing for a period of one year thereafter unless
prior written consent is provided by Buyer and except as otherwise provided in
Section 8.08 of the Company Disclosure Schedule, such Member shall not directly
or indirectly engage in any Competitive Activities (as hereinafter defined)
anywhere within the Territory.
(c) The term "Competitive Activities" as used herein
shall mean:
(i) directly or indirectly engaging in,
continuing in or carrying on any business in competition with,
or functionally equivalent to, the wireless telecommunications
business (but not including paging) of the Company, including
the Surviving Company, or any business substantially
equivalent thereto in the Territory (as defined below) (the
"Business"), including owning, controlling, participating in,
joining, operating, or managing or being a partner, member or
stockholder of any business which competes with or is engaged
in or carries on any aspect of the Business provided, that
each Member may purchase or otherwise acquire up to (but not
more than) one percent (1%) of any class of securities of any
enterprise (but without otherwise participating in the
activities of such enterprise), if such securities are listed
on any national or regional securities exchange or have been
registered under Section 12(g) of the Exchange Act;
(ii) consulting with, advising or assisting in
any way with respect to the Business, whether or not for
consideration, any corporation, partnership, firm or other
business organization which is now or at the time of such
consultation, advice, or assistance is a competitor of the
Business including, but not limited to, advertising or
otherwise endorsing the products or services of any such
competitor; soliciting clients or customers of Buyer or its
subsidiaries (or persons or entities from which Buyer or its
subsidiaries have solicited orders for the sale of any
Business service within the last three years) or otherwise
serving as an intermediary for any such competitor; loaning
money or rendering any other form of financial assistance to
any such competitor; and
(iii) inducing or attempting to induce any
director, officer, employee, agent, or customer, supplier or
lessor of Buyer or its subsidiaries to terminate such position
or relationship with Buyer or its subsidiaries.
(d) The parties agree that the term "Territory" as used
in this Section shall mean the service area set forth in the Company's Sprint
Management Services Agreement dated June 8, 1998.
43
(e) Each Member understands and acknowledges that the
foregoing restrictions may limit its ability to engage in a business similar to
the Business, but acknowledge that it is receiving sufficiently high
consideration and benefits from Buyer under this Agreement to justify and
compensate for such restrictions. It is expressly understood and agreed that
Buyer and each of the Members consider the restrictions contained in subsection
(b) above to be reasonable and necessary for the purposes of preserving and
protecting the Business and goodwill purchased by Buyer. Nevertheless, if any of
the aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or over broad as to geographic area, time, or scope of activity to
be restricted, or otherwise unenforceable, the parties intend for and hereby
request that the restrictions therein set forth to be modified by such court so
as to be reasonable and enforceable and, as so modified by the court, to be
fully enforced.
(f) Each of Xxxxxx Xxxxxx, III, Xxxxxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxx, Xx. and Xxxx X. Xxxx (the "Key Employees") and the Members
agree and acknowledge that they have had access to and knowledge of the trade
secrets and confidential information of the Company. In order to protect the
trade secrets and confidential information of the Business, both before and
after the Closing Date, each of the Key Employees and Members agrees that until
the second anniversary of the Effective Time, it shall not, disclose to others,
use, copy or permit to be copied or used, any secret or confidential information
of Buyer or the Company or relating to the Business. The term "secret or
confidential information of Buyer or the Company or relating to the Business"
shall include, without limitation, Buyer's and/or the Company's plans,
strategies, costs, prices, applications and functionality of products and
services, results of studies, tests, investigations, or experiments, training
manuals and procedures, the status and content of the Company's and Buyer's
contracts with vendors, customers, distributors, and the like.
(g) If any of the Members or Key Employees commits a
breach, or overtly threatens to commit a breach, of any of the provisions of
this Section 8.08, Buyer shall have the following nonexclusive rights and
remedies:
(i) the right and remedy to have the provisions
of this Section 8.08 specifically enforced by any court having
jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury and
continuing damage to Buyer and its subsidiaries and the
Company, and that the exact amount of which would be difficult
to ascertain and that in any event money damages will not
provide an adequate remedy and Buyer shall be entitled to
injunctive relief restraining any violation of this Section
8.08; and
(ii) the right and remedy to require that such
Members or Key Employees, severally and not jointly, account
for and pay over to Buyer all compensation, profits, monies,
accruals, increments or other benefits (hereinafter
collectively referred to as the "Benefits") derived or
received by such Member or Key Employee as the result of any
transactions constituting a breach of any of the provisions of
this Section 8.08, each of the Members and Key Employees
hereby agreeing to account for and pay over to Buyer the
Benefits received by such Member or Key Employee.
Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to Buyer, at law or in equity.
(h) The parties hereto intend to and hereby confer
jurisdiction to enforce the covenants contained in this Section 8.08 upon the
state and federal courts in Georgia.
44
(i) If any action, suit or other proceedings at law or in
equity is brought to enforce the covenants contained in this Section 8.08, or to
obtain money damages for the breach thereof, and such action results in the
award of a judgment for money damages or in the granting of any injunction in
favor of Buyer, all expenses (including reasonable attorneys' fees and expenses)
of Buyer, in such action, suit or other proceeding shall (on demand of Buyer) be
paid by the Members and Key Employees involved; provided that, if in any such
action, suit or proceeding, the Members or Key Employees involved is the
prevailing party, then Buyer shall, upon demand, pay all expenses (including
reasonable attorneys' fees) incurred by the Members or Key Employees involved in
connection therewith.
Section 8.09. Indemnification and Insurance. For a period of two
years after the Effective Time, (i) Buyer agrees that all rights to
indemnification for acts or omissions occurring prior to the Effective Time
existing as of the date hereof in favor of the former and present management
committee members or officers of the Company as provided in the Company's
articles of organization or operating agreement shall survive the Merger and
shall continue in full force and effect and (ii) Buyer shall use its reasonable
best efforts to maintain in effect (at the expense of the Surviving Company) the
current policies of directors' and officers' liability insurance maintained by
the Company (or substitute policies providing at least the same coverage and
limits and containing terms and conditions which are not materially less
advantageous) with respect to claims arising from facts or events which occurred
before the Effective Time; provided, however that in no event shall this
covenant require annual expenditures of more than $6,000 of the last annual
premiums paid prior to the date hereof by the Company for such insurance.
Notwithstanding the foregoing, if on or before the second anniversary of the
Effective Time any former or present management committee member or officer
delivers written notice to Buyer of a specific claim against such person for
which such person is reasonably likely to be entitled to indemnification
pursuant to the Company's articles of organization or operating agreement, such
rights to indemnification described in clause (i) above shall continue until the
resolution of such claim. This Section 8.09 is intended to be for the benefit
of, and shall be enforceable by, the persons referred to in clause (i) of the
foregoing sentence, their heirs and personal representatives, and shall be
binding on Buyer and its successors and assigns.
Section 8.10. Audited Year End Financials. The Company shall use
its reasonable best efforts to promptly prepare and deliver to Buyer the
financial statements contemplated by Section 9.02(k) and to cause Ernst & Young,
LLP to deliver its unqualified audit report covering such financial statements.
Section 8.11. Reserved.
--------
Section 8.12. Member Promissory Notes. The Company shall deliver to
each of the Members a release effective as of the Effective Time that cancels
the outstanding promissory notes set forth in Schedule 8.12 of the Company
Disclosure Schedule and discharges the Members from their obligations
thereunder. On the Closing Date, the Surviving Company shall deliver the
cancelled original promissory notes and the checks described in Schedule 8.12 of
the Company Disclosure Schedule to the applicable Members.
Section 8.13. Member Releases.
---------------
(a) Effective as of the Effective Time, each Member and
each of such Members' affiliates (excluding the Company and its subsidiaries)
(collectively, the "Sellers") hereby releases and forever discharges each of the
managers, officers, management committee members, other Members, attorneys,
accountants, financial advisors and other representatives of the Company and any
of their respective affiliates, stockholders and controlling persons
(individually, a "Releasee" and collectively, "Releasees") from any and all
claims, demands, proceedings, causes of action, orders, obligations, contracts,
agreements, debts and liabilities whatsoever, whether known or unknown,
suspected or
45
unsuspected, fixed or contingent, both at law and in equity, which each of the
Sellers or any of their respective affiliates now has, have ever had or may at
any time hereafter have against any Releasee arising contemporaneously with,
prior to or following the Effective Time on account of or arising out of,
directly or indirectly, any matter, cause, circumstance or event relating,
directly or indirectly, to the conduct, management or operation of the business
and affairs of the Company and any affiliate of the Company prior to the
Effective Time; provided, however, that nothing contained herein shall operate
to release, or be deemed to constitute a release by, any Releasee who is also a
Seller or an affiliate of a Seller, of any right that such Releasee may have to
indemnification (or similar rights) whether arising under this Agreement or the
Company's articles of organization, any operating agreement or any other
agreement or instrument of or by the Company that purports to create any such
rights in favor of any Releasee.
(b) Each Seller hereby irrevocably covenants to refrain
from, directly or indirectly, (i) asserting, initiating or causing to be
asserted or initiated, any claim or demand, or (ii) commencing, instituting or
causing to be commenced or instituted or otherwise participating in or
supporting, any proceeding of any kind against any Releasee, based upon any
matter purported to be released hereby.
(c) Without in any way limiting any of the rights and
remedies otherwise available to any Releasee, each Seller, jointly and
severally, shall indemnify and hold harmless each Releasee from and against any
and all loss, liability, claim, damage (including incidental and consequential
damages) or expense (including costs of investigation and defense and reasonable
attorney's fees) whether or not involving third party claims, arising directly
or indirectly from or in connection with (i) the assertion by or on behalf of
the Sellers or any of their affiliates of any claim or other matter purported to
be released pursuant hereto and (ii) the assertion by any third party of any
claim or demand against any Releasee which claim or demand arises directly or
indirectly from, or in connection with, any assertion by or on behalf of the
Sellers or any of their affiliates against such third party of any claims or
other matters purported to be released pursuant hereto.
Section 8.14. Company Releases.
----------------
(a) Effective as of the Effective Time, the Company and
each of its affiliates (collectively, the "Company Parties") hereby releases and
forever discharges each of the managers, officers, management committee members
and any of their respective affiliates (excluding the Members) in their capacity
as such (individually, a "Company Releasee" and collectively, "Company
Releasees") from any and all claims, demands, proceedings, causes of action,
orders, obligations, contracts, agreements, debts and liabilities whatsoever,
whether known or unknown, suspected or unsuspected, fixed or contingent, both at
law and in equity, which each of the Company or any of its respective affiliates
now has, have ever had or may at any time hereafter have against any Company
Releasee arising contemporaneously with or, prior to the Effective Time on
account of or arising out of, directly or indirectly, any matter, cause,
circumstance or event relating, directly or indirectly, to the conduct,
management or operation of the business and affairs of the Company or any
affiliate of the Company prior to the Effective Time (each, a "Company Claim");
provided, however, that nothing contained herein shall operate to release, or be
deemed to constitute a release by, the Company Parties of any Company Claim (i)
made in writing by any Company Party against any of the Company Releasees prior
to the second anniversary of the Closing Date or (ii) based on acts or omissions
by the applicable Company Releasee which involve fraud or a knowing violation of
law by such Company Releasee which directly results in material damages to the
Company.
(b) Each Company Party hereby irrevocably covenants to
refrain from, directly or indirectly, after the second anniversary of the
Closing Date, (i) asserting, initiating or causing to be asserted or initiated,
any Company Claim to the extent released hereby, or (ii) commencing, instituting
or
46
causing to be commenced or instituted or otherwise participating in or
supporting, any proceeding of any kind against any Company Releasee, based upon
any Company Claim to the extent to be released hereby.
ARTICLE IX
CONDITIONS
Section 9.01. Conditions to Obligations of Each Party. The
respective obligations of each party to effect the Merger and the other
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing Date of the following conditions:
(a) No Order. No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and has the
effect of making the Merger or the other transactions contemplated hereby
illegal or otherwise prohibiting consummation of the Merger or the other
transactions contemplated hereby.
(b) Government Consents. The applicable waiting period
under the HSR Act with respect to the Merger and the transactions contemplated
by this Agreement shall have expired or been terminated and any other approvals
of any Governmental Entity shall have been obtained.
(c) Other Consents. Buyer and the Company shall have
received evidence reasonably satisfactory to Buyer and the Company that the
consents and approvals set forth in Schedule 9.01(c) shall have been obtained.
Section 9.02. Additional Conditions to Obligations of the Buyer
Companies. The obligations of the Buyer Companies to effect the Merger and the
other transactions contemplated hereby are also subject to the satisfaction at
or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this Agreement (which
for purposes of this subparagraph (a) shall be read as though none of them
contained any Company Material Adverse Effect or other materiality
qualifications), except for the representations and warranties contained in
Sections 5.01, 5.03 and 5.04) shall be true and correct in all respects as of
the date of this Agreement and as of the Closing Date as though made on and as
of such date (except to the extent such representations and warranties
specifically relate to a specified date, in which case such representations and
warranties shall be true and correct as of such date), except where the failure
of such representations and warranties in the aggregate to be true and correct
in all respects has not had, and would not reasonably be expected to have, a
Company Material Adverse Effect. Each of the representations and warranties of
the Company set forth in Sections 5.01, 5.03 and 5.04 of this Agreement shall be
true and correct in all material respects on the date of this Agreement and on
the Closing Date as if made on and as of such date (except for such
representations and warranties made as of a specified date, which shall be true
and correct in all material respects as of such date). The Buyer Companies shall
have received a certificate of the Chairman and the Chief Financial Officer of
the Company, dated the Closing Date, to such effect.
(b) Representations and Warranties of the Members. Each
of the representations and warranties of the Members shall be true and correct
in all respects on the date of this Agreement and on the Closing Date as if made
on and as of such date (except for such representations and warranties made as
of a specified date, which shall be true and correct in all material respects as
of such date), except where the failure of such representations and warranties
in the aggregate to be true and correct would not reasonably be expected to have
a Company Material Adverse Effect or materially impair the ability of the
Company, the Members or the Buyer Companies to consummate the transactions
contemplated by this
47
Agreement, fulfill their obligations hereunder or issue the Buyer Shares without
registration under the Securities Act. The Buyer Companies shall have received a
certificate of each of the Members, dated as of the Closing Date, to such
effect.
(c) Agreements and Covenants of the Company. The Company
shall have performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with by it
on or prior to the Closing Date. The Buyer Companies shall have received a
certificate of the Chairman and the Chief Financial Officer of the Company,
dated the Closing Date, to that effect.
(d) Agreements and Covenants of the Members. Each of the
Members shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by it on or prior to the Closing Date. The Buyer Companies shall have
received a certificate of each of the Members, dated the Closing date, to such
effect.
(e) Absence of Regulatory Conditions. There shall not be
any action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger, by any Governmental Entity in
connection with the grant of a regulatory approval necessary which imposes any
condition or restriction upon the Buyer Companies or the business or operations
of the Company which would reasonably be expected to have a Company Material
Adverse Effect or a Buyer Material Adverse Effect.
(f) Third Person Consents. The Company shall have
provided to Buyer evidence reasonably satisfactory to Buyer that the Company has
obtained the consents and approvals set forth in Schedule 9.02(f) of the Company
Disclosure Schedule.
(g) Opinion of Counsel. Buyer shall have received from
Powell, Goldstein, Xxxxxx & Xxxxxx LLP, counsel to the Company, an opinion dated
the Closing Date covering the matters set forth in Exhibit G.
(h) Escrow Agreement. Buyer shall have received the
Escrow Agreement, duly executed and delivered by the Members' Representative and
the Escrow Agent.
(i) Reserved.
(j) Additional Cash Merger Consideration Calculation. The
sum of (i) the Certified Indebtedness plus any premium or penalty payable upon
the prepayment of such Indebtedness on the Closing Date, (ii) the amount by
which, if any, the Estimated Net Working Capital is less than zero and (iii) the
UAR Payment does not exceed $57,750,000.
(k) Audited Year End Financials. The Company shall have
delivered to Buyer true and complete copies of the financial statements of the
Company consisting of an audited balance sheet of the Company as of December 31,
2001 and the related audited statements of income, changes in stockholders'
equity and cash flows for the twelve months ended December 31, 2001 (including
the notes or other supplementary information thereto), which financial
statements shall have been audited and accompanied by an unqualified audit
report of Ernst & Young, LLP and shall have been prepared in accordance with
GAAP applied on a consistent basis through the period.
(l) Options. The Company shall have delivered to Buyer no
later than three business days prior to the Closing Date (i) a "Net Exercise
Amendment" in the form attached hereto as Exhibit H from each holder of a
Company Option, other than a Key Employee, who is an "accredited investor" as
48
defined in Rule 501 of Regulation D promulgated under the Securities Act with
respect to Buyer which Net Exercise Amendment provides that all Company Options
held by such holder shall be converted at the Effective Time into the right to
receive Buyer Option Shares as provided in Section 2.03(a) hereof, (ii) a "Net
Appreciation Amendment" in the form attached hereto as Exhibit I from all other
holders of Company Options, other than Key Employees; which Net Appreciation
Amendment provides that all Company Options held by such holder shall be
converted at the Effective Time into the right to receive a cash payment as
provided in Section 2.03(a) hereof and (iii) from each Key Employee, (A) a
"Non-Competition Agreement" in the form attached hereto as Exhibit J and (B) a
"Key Employee Net Exercise Amendment" in the form attached hereto as Exhibit K.
(m) Indebtedness Certificate. The Company shall have
delivered a certificate (the "Indebtedness Certificate") of the Chief Financial
Officer of the Company certifying as to the amount of Indebtedness of the
Company and its subsidiaries outstanding as of the Closing Date (the "Certified
Indebtedness") plus any premium or penalty payable upon the prepayment of such
Indebtedness on the Closing Date, and shall have given Buyer reasonable access
to the books and records of the Company necessary to determine the accuracy of
such certificate.
(n) Number of Shares. Buyer shall have received evidence
from the Company reasonably satisfactory to Buyer and based on the most recently
available financial information of the Company that no more than 6,000,000 Buyer
Shares will be required to be issued pursuant to the terms of this Agreement.
Section 9.03. Additional Conditions to Obligations of Company. The
obligations of the Company to effect the Merger and the other transactions
contemplated hereby are also subject to the satisfaction at or prior to the
Closing Date of the following conditions:
(a) Representations and Warranties. Each of the
representations and warranties of the Buyer Companies contained in this
Agreement (which for purposes of this subparagraph (a) shall be read as though
none of them contained any Buyer Material Adverse Effect or other materiality
qualification), except for the representations and warranties contained in
Sections 6.01, 6.03 and 6.04, shall be true and correct in all respects on the
date of this Agreement and as of the Closing Date as though made on and as of
such date (except to the extent such representations and warranties specifically
relate to a specified date, in which case such representations and warranties
shall be true and correct as of such specified date), except where the failure
of such representations and warranties in the aggregate to be true and correct
in all respects has not had, and would not reasonably be expected to have, a
Buyer Material Adverse Effect. Each of the representations and warranties of the
Buyer Companies set forth in Sections 6.01, 6.03 and 6.04 of this Agreement
shall be true and correct in all material respects on the date of this Agreement
and on the Closing Date as if made on and as of such date (except for such
representations and warranties made as of a specified date, which shall be true
and correct in all material respects as of such date). The Company shall have
received a certificate of the President and the Chief Financial Officer of each
of the Buyer Companies, dated the Closing Date, to such effect.
(b) Agreements and Covenants. The Buyer Companies shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them on
or prior to the Closing Date. The Company shall have received a certificate of
the President and the Chief Financial Officer of each of the Buyer Companies,
dated the Closing Date, to that effect.
(c) Opinion of Counsel. The Company shall have received
from Xxxxxx & Xxxxxx L.L.P, counsel to Buyer, an opinion dated the Closing Date
covering the matters set forth in Exhibit L.
49
ARTICLE X
INDEMNIFICATION; ESCROW FUNDS; SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
Section 10.01. By the Members for Breaches by the Company. Subject
to the terms and conditions of this Article X, the Members (and, by virtue of
approval of the Merger by the holders of Company Membership Units in accordance
with the Georgia LLCA and as a result of the potential reduction in the Merger
Consideration up to the amount of the Escrow Shares for claims made pursuant to
this Article X, each other holder of Company Membership Units immediately prior
to the Effective Time) hereby agree, jointly and severally but any liability
arising hereunder being limited strictly to be in proportion to (and not exceed)
their respective ownership interests in the Escrow Fund, to indemnify, defend
and hold harmless Buyer and its direct and indirect subsidiaries (including the
Surviving Company after the Effective Time) and their respective directors,
officers, employees and controlled and controlling persons (collectively, "Buyer
Affiliates"), from and against all Damages (as defined below) and Claims (as
defined below) asserted against, imposed upon, or incurred by Buyer or any Buyer
Affiliate, directly or indirectly, by reason of, arising out of, or resulting
from (a) the inaccuracy or breach as of the date hereof or as of the Closing
Date of any representation or warranty of the Company contained in or made
pursuant to this Agreement excluding Damages that are the subject of the Net
Working Capital Indemnification under Section 10.08, or (b) the breach of any
covenant or agreement of the Company contained in or made pursuant to this
Agreement. As used in this Article X, the term (i) "Claim" means any and all
claims, causes of action, demands, lawsuits, suits, proceedings, governmental
investigations or audits and administrative orders and (ii) "Damages" means all
debts, liabilities, obligations, losses, including diminution of value, damages,
costs and expenses, whether actual, consequential or punitive, interest
(including, without limitation, prejudgment interest), penalties, reasonable
legal fees, disbursements and costs of investigations, deficiencies, levies,
duties and imposts.
Section 10.02. By a Member for Breaches by such Member. Subject to
the terms and conditions of this Article X, each Member, severally and not
jointly, hereby agrees to indemnify, defend and hold harmless Buyer and the
Buyer Affiliates, from and against all Damages and Claims asserted against,
imposed upon or incurred by any such person, directly or indirectly, by reason
of, arising out of or resulting from (a) the inaccuracy or breach as of the date
hereof or as of the Closing Date of any representation or warranty of such
Member contained in or made pursuant to this Agreement or (b) the breach of any
covenant or agreement of such Member contained in or made pursuant to this
Agreement.
Section 10.03. By Buyer. Subject to the terms and conditions of this
Article X, Buyer hereby agrees to indemnify, defend and hold harmless each
Member and its directors, officers, employees, partners and controlled and
controlling persons (collectively, "Member Affiliates"), from and against all
Damages and Claims asserted against, imposed upon or incurred by any such
person, directly or indirectly, by reason of, arising out of or resulting from
(a) the inaccuracy or breach as of the date hereof or as of the Closing Date of
any representation or warranty of Buyer contained in or made pursuant to this
Agreement (which for purposes of this Section 10.03 shall be read as though none
of them contained any Buyer Material Adverse Effect or other materiality
qualification) to the extent that such inaccuracy or breach has a Buyer Material
Adverse Effect or (b) the breach of any covenant or agreement of Buyer contained
in or made pursuant to this Agreement.
Section 10.04. Defense of Third Party Claims. In addition to the
provisions of Section 10.05, the obligations and liabilities of any party to
indemnify any other party under this Article X with respect to Claims or Damages
relating to or arising from third parties (a "Third Party Claim"), shall be
subject to the following terms and conditions:
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(a) The party or parties to be indemnified hereunder
(whether one or more, the "Indemnified Party") will give the other party or
parties (whether one or more, the "Indemnifying Party") prompt written notice of
any such Third Party Claim, and the Indemnifying Party may undertake the defense
thereof by representatives chosen by it upon written notice to the Indemnified
Party provided within 20 days of receiving notice of such Third Party Claim (or
sooner if the nature of the Third Party Claim so requires). Failure of the
Indemnified Party to give such notice shall not affect the Indemnifying Party's
duty or obligations under this Article X, except to the extent the Indemnifying
Party is prejudiced thereby. The Indemnified Party shall make available to the
Indemnifying Party or its representatives all records and other materials
required by them and in the possession or under the control of the Indemnified
Party, for the use of the Indemnifying Party and its representatives in
defending any such Claim, and shall in other respects give reasonable
cooperation in such defense. After the Effective Time, in any circumstance in
which the holders of Company Membership Units immediately prior to the Effective
Time (including the Members) would be the Indemnifying Parties with respect to
Claims made pursuant to Section 10.01, the Members' Representative shall act as
Indemnifying Party on behalf of such holders for purposes of the procedural
provisions of this Article X and shall have full authority to act as
attorneys-in-fact for each of the Members.
(b) If the Indemnifying Party, within 20 days after
notice of any such Third Party Claim (or sooner if the nature of the Third Party
Claim so requires), fails to defend such Third Party Claim actively and in good
faith, then the Indemnified Party will (upon further notice) have the right to
undertake the defense, compromise or settlement of such Third Party Claim, or
consent to the entry of a judgment with respect thereto, and the Indemnifying
Party shall thereafter have no right to challenge the Indemnified Party's
defense, compromise or settlement thereof.
(c) Notwithstanding anything in this Article X to the
contrary (i) if there is a reasonable possibility, in the Indemnified Party's
opinion, that a Third Party Claim may adversely affect the Indemnified Party
other than as a result of money damages or other money payments, the Indemnified
Party shall have the right to defend, compromise or settle such Third Party
Claim (provided that the Indemnified Party shall not settle or consent to any
judgment without first obtaining the consent of the Indemnifying Party, which
shall not be unreasonably withheld), and (ii) the Indemnifying Party shall not,
without the written consent of the Indemnified Party, settle or compromise any
Third Party Claim or consent to the entry of any judgment which does not include
as an unconditional term thereof the giving by the claimant or the plaintiff to
the Indemnified Party of an unconditional release from all liability in respect
of such Third Party Claim.
Section 10.05. Payment; Arbitration. Upon the occurrence of a Claim
or Damages, other than a Third Party Claim, for which indemnification is
believed to be due under this Article X (excluding Section 10.09), the
Indemnified Party shall provide notice of such Claim or Damages to the
Indemnifying Party, stating the circumstances giving rise to the Claim or
Damages, specifying the amount of the Claim or Damages and making a request for
any payment then believed due. Any such claim for indemnification shall be
conclusive against the Indemnifying Party in all respects 20 days after receipt
by the Indemnifying Party of such notice, unless within such period the
Indemnifying Party sends the Indemnified Party a notice disputing the propriety
of such claim. Such notice of dispute shall describe the basis for such
objection and the amount of the claim as to which the Indemnifying Party does
not believe should be subject to indemnification. Upon receipt of any such
notice of objection, both the Indemnified Party and the Indemnifying Party shall
use their reasonable best efforts to cooperate and arrive at a mutually
acceptable resolution of such dispute within the next 30 days. If a mutually
acceptable resolution cannot be reached between the Indemnified Party and the
Indemnifying Party with such 30-day period, either party may submit the dispute
for resolution by a panel of three arbitrators selected from the panels of
arbitrators of the American Arbitration Association in a city mutually selected
by the Indemnifying Party and Indemnified Party (or, if no city can be mutually
agreed upon within 15 days,
51
then in New York, New York); provided, however, that (i) one arbitrator shall be
selected by the Indemnified Party, the second arbitrator shall be selected by
the Indemnifying Party, and the third arbitrator shall be selected by the two
previously selected arbitrators and (ii) in all respects, such panel shall be
governed by the American Arbitration Association's then existing Commercial
Arbitration Rules. If it is finally determined that all or a portion of such
claim amount is owed to the Indemnified Party, the Indemnifying Party shall,
within 10 days of such determination, pay the Indemnified Party such amount
owed, together with interest from the date that the Indemnified Party initially
requested such payment until the date of actual payment, at an annual rate equal
to the prime interest rate then generally in effect on the date of payment as
set forth in The Wall Street Journal in shares of Buyer Common Stock in
accordance with Section 10.06. Subject to Section 10.06, upon the occurrence of
a Third Party Claim, the Indemnified Party shall be entitled to payment of such
Claim upon presentation of a notice setting forth the information specified in
the first sentence of this Section 10.05, and thereafter the Indemnifying party
shall have the right to contest such Claim during the time periods and pursuant
to the means set forth in this Section 10.05 for Claims other than Third Party
Claims.
Section 10.06. Satisfaction of Claims from Escrow Shares.
Notwithstanding anything to the contrary contained in Section 10.05, 10.08 or
10.09, after the Effective Time, any obligations and liabilities of holders of
Company Membership Units immediately prior to the Effective Time (including the
Members) to Buyer or any Buyer Affiliate pursuant to Section 10.01, 10.08 or
10.09 of this Agreement shall be satisfied solely from payments of the Escrow
Shares to Buyer or such Buyer Affiliate. Pursuant to the terms of the Escrow
Agreement, if the holders of Company Membership Units immediately prior to the
Effective Time (including the Members) are determined to owe an amount pursuant
to the procedures set forth in Section 10.05, 10.08 or 10.09, as applicable,
then the amount due the Indemnified Party hereunder shall be satisfied by the
delivery to the Indemnified Party pursuant to the Escrow Agreement of Escrow
Shares equal in value to the amount of the claim to be satisfied with respect to
claims under Section 10.05 or 10.09 or with respect to claims under Section
10.08 as provided in Section 10.08, and the claim shall be deemed paid and
satisfied upon receipt by the Indemnified Party of certificates representing
such number of Escrow Shares duly endorsed for transfer to the Indemnified
Party. Except with respect to claims made pursuant to Section 10.08, the per
share value of the Escrow Shares for purposes of this Article X and the Escrow
Agreement with respect to a particular claim shall be the Market Value (as
defined herein) of the Escrow Shares as of the date that such claim becomes
payable by the Indemnifying Party to the Indemnified Party pursuant hereto. The
"Market Value" of an Escrow Share as of any date shall be determined as follows:
(i) in the event that the Buyer Common Stock is listed on a securities exchange
or quoted on Nasdaq, the "Market Value" of an Escrow Share shall be equal to the
average of the last reported sale price of Buyer Common Stock as reported on
such exchange or as quoted by Nasdaq as reported in The Wall Street Journal for
the 15 trading days immediately preceding such date, (ii) in the event that the
Buyer Common Stock is traded in the over-the-counter markets, the "Market Value"
of an Escrow Share shall be equal to the average of the closing bid and asked
prices for a share of Buyer Common Stock as reported in such market for the 15
trading days immediately preceding such date, and (iii) if the Buyer Common
Stock is not traded on any such exchange or markets as of such date, then the
"Market Value" of an Escrow Share shall be equal to the fair market value of a
share of Buyer Common Stock as determined in good faith by the board of
directors of Buyer. The Members' Representative shall have the power and
authority to make all decisions with regard to the settlement of claims brought
pursuant to Section 10.01, 10.08 or 10.09 of this Agreement from the Escrow
Shares. If the Members' Representative becomes unable to carry out his duties as
Members' Representative, his replacement shall be chosen as determined pursuant
to the Escrow Agreement. The Members, on the one hand, and the Buyer, on the
other hand, each agree to pay 50% of all expenses relating to the Escrow Agent.
The Members agree to pay all expenses relating to the exercise by the Members'
Representative of his duties hereunder and under the Escrow Agreement, including
reasonable out of pocket expenses of the Members' Representative incurred in
such capacity and reasonable attorneys' fees.
52
Section 10.07. Liability Limitations; Survival of Representations
and Warranties. All representations, warranties, covenants and agreements in
this Agreement or made pursuant hereto shall survive the Closing and any
investigation thereof; provided, however, that in no event shall any Indemnified
Party be permitted to make any claim under Article X unless such claim is first
asserted on or before the second anniversary of the Closing Date. After the
Effective Time, indemnification pursuant to this Article X shall be the sole and
exclusive remedy of the parties for any breach of this Agreement, except with
respect to (i) actual fraud or (ii) breach of any covenants or agreements to be
performed after the Effective Time, including without limitation the
registration provisions of Article III hereof. After the Effective Time, all
claims by Buyer and the Buyer Affiliates pursuant to Sections 10.01, 10.08 or
10.09 shall be limited to the Escrow Shares.
Section 10.08. Net Working Capital Indemnification.
-----------------------------------
(a) The Actual Indebtedness (as defined below) and the
Actual Net Working Capital (as defined below) shall be determined following the
Closing Date in accordance with the terms and conditions of this Section 10.08.
(b) If Actual Net Working Capital is less than Estimated
Net Working Capital, subject to Section 10.06, the holders of Company Membership
Units immediately prior to the Effective Time (including the Members) shall be
required to pay to Buyer and the Escrow Agent shall release to Buyer, within
five business days of the final determination of the Actual Net Working Capital
pursuant to the terms of this Section 10.08, a number of Escrow Shares equal to
the difference between (1) the number of Buyer Shares issued on the Closing Date
and (2) the number of Buyer Shares that would have been issued on the Closing
Date if the Estimated Net Working Capital equaled the Actual Net Working
Capital. If Actual Indebtedness is greater than Certified Indebtedness, subject
to Section 10.06, the holders of Company Membership Units immediately prior to
the Effective Time (including the Members) shall be required to pay to Buyer and
the Escrow Agent shall release to Buyer, within five business days of the final
determination of the Actual Indebtedness pursuant to the terms of this Section
10.08, a number of Escrow Shares equal to the difference between (1) the number
of Buyer Shares issued on the Closing Date and (2) the number of Buyer Shares
that would have been issued on the Closing Date if the Certified Indebtedness
equaled the Actual Indebtedness.
(c) If Actual Net Working Capital is greater than
Estimated Net Working Capital, Buyer shall be required to issue to the holders
of Company Membership Units immediately prior to the Effective Time (including
the Members) on a pro rata basis (determined on the basis of the number of
Company Membership Units owned immediately prior to the Effective Time, subject
to downward adjustment by Buyer to eliminate any fractional shares) (a "Pro Rata
Basis"), within five business days of the final determination of the Actual Net
Working Capital pursuant to this Section 10.08, a number of shares of Buyer
Common Stock equal to the difference between (1) the number of Buyer Shares that
would have been issued on the Closing Date if the Estimated Net Working Capital
equaled Actual Net Working Capital and (2) the number of Buyer Shares issued on
the Closing Date. If Actual Indebtedness is less than Certified Indebtedness,
Buyer shall be required to issue to the holders of Company Membership Units
immediately prior to the Effective Time (including the Members) on a Pro Rata
Basis, within five business days of the final determination of the Actual
Indebtedness pursuant to Section 10.08, a number of shares of Buyer Common Stock
equal to the difference between (1) the number of Buyer Shares that would have
been issued on the Closing Date if the Certified Indebtedness equaled the Actual
Indebtedness and (2) the number of Buyer Shares issued on the Closing Date.
(d) Buyer may elect to offset any obligation of Buyer to
issue shares of Buyer Common Stock pursuant to Section 10.08(c) with any Escrow
Shares required to be released to Buyer pursuant to Section 10.08(b).
53
(e) For purposes of this Agreement, "Actual Net Working
Capital" shall mean the difference between the Company's total consolidated
current assets as of the Closing Date less the Company's total consolidated
current liabilities as of the Closing Date, each as determined in accordance
with GAAP, consistently applied and as finally determined pursuant to this
Section 10.08; provided, however, that such calculation shall exclude (i) any
Indebtedness of the Company outstanding as of the Closing Date, (ii) any assets
of the Company relating to the Subordinated Capital Certificates (including any
receivables related thereto), (iii) the Excluded Items, (iv) any promissory
notes outstanding as of the Closing Date under which the Company is the holder
and a Member is the obligor, (v) any cash or cash equivalents that will be
returned to the Members pursuant to Section 8.12 and (vi) any cash received by
the Company pursuant to Section 8.07. For purposes of such calculation, in the
event the Closing Date does not occur on the first or last day of a month, all
items that need allocation will be allocated on the basis of a 30 day month
based on the actual number of days elapsed from the first day of the month
through the Closing Date. After the Closing Date, the Actual Indebtedness and
the Actual Net Working Capital of the Company will be determined in accordance
with the provisions hereof, by Buyer and the Members' Representative based on
the Company's balance sheet as of the Closing Date, which shall be prepared by
Buyer in accordance with GAAP consistently applied and provided to the Members'
Representative within 30 days after the date of delivery to the Company of all
of the Sprint Settlement Reports with respect the Company covering the period
that includes the Closing Date. Within 15 days of receipt of such balance sheet,
the Members' Representative shall provide any comments relating to such balance
sheet to Buyer. If within 15 days after receipt of such comments of the Members'
Representative, the Members' Representative and Buyer have not finally agreed on
the relevant portions of such balance sheet necessary to calculate the Actual
Indebtedness and the Actual Net Working Capital, the Members' Representative and
Buyer shall request Ernst & Young, LLP (the fees and expenses of which shall be
paid 50% by Buyer and 50% by the Members (in the aggregate)) to calculate the
Actual Indebtedness and the Actual Net Working Capital. In such event, Buyer and
the Members' Representative agree to use their reasonable best efforts to cause
Ernst & Young, LLP to submit to Buyer and the Members Representative such
calculation of the Actual Indebtedness and the Actual Net Working Capital not
later than 30 days after the date of such initial request of Ernst & Young, LLP.
Ernst & Young, LLP's calculation of the Actual Indebtedness and the Actual Net
Working Capital of the Company shall be final, conclusive and binding on the
parties.
Section 10.09. Indemnification for Taxes.
-------------------------
(a) From and after the Closing Date, the Members (and, by
virtue of approval of the Merger by the holders of Company Membership Units in
accordance with the Georgia LLCA and as a result of the potential reduction in
the Merger Consideration up to the amount of the Escrow Shares for claims made
pursuant to this Article X, each other holder of Company Membership Units
immediately prior to the Effective Time) hereby agree, jointly and severally but
any liability arising hereunder being limited strictly to be in proportion (and
not exceed) their respective ownership interests in the Escrow Fund, to
indemnify, defend and hold harmless Buyer and its direct and indirect
subsidiaries (including the Surviving Company after the Effective Time) from any
and all Taxes, together with any costs, expenses, losses or damages, including
reasonable expenses of investigation and attorneys' and accountants' fees and
expenses, arising out of or incident to the determination, assessment or
collection of such Taxes reduced by any refunds or recoveries of Taxes,
including interest thereon, from offsetting adjustments to any other taxable
period of the Company that arise as a direct result of any adjustments giving
rise to the claim for an indemnification for Taxes hereunder (collectively, "Tax
Losses") (i) imposed on the Company or any of its subsidiaries in respect of its
income, business, property or operations or for which it may otherwise be liable
for any taxable period or portion thereof ending on or prior to the Closing
Date, or (ii) resulting from the inaccuracy or breach as of the date hereof or
as of the Closing Date of the Company's representations and warranties set forth
in Section 5.11 or any breach of the Members' covenants set forth in Section
8.02. Notwithstanding anything contained in this Article X to the contrary,
54
Sections 10.01, 10.04 and 10.05 shall not apply to any indemnification
contemplated by this Section 10.09.
(b) If any claim (an "Indemnified Tax Claim") is made by
any taxing authority that, if successful, would result in the indemnification of
Buyer, the Company or any of its subsidiaries (the "Tax Indemnified Party") by
the holders of Company Membership Units immediately prior to the Effective Time
(including the Members), the Tax Indemnified Party shall promptly, but in no
event later than 90 days after receipt of notice from the taxing authority of
such claim, notify the Members' Representative in writing of such fact;
provided, however, that the failure to provide such notice within such 90-day
period shall not relieve the holders of Company Membership Units immediately
prior to the Effective Time (including the Members) of their obligations
hereunder provided that such failure shall not prevent the Members'
Representative from contesting such Indemnified Tax Claim in accordance with the
provisions of Section 10.09(c).
(c) Buyer shall take such reasonable action in connection
with a Proceeding involving an Indemnified Tax Claim as the Members'
Representative shall reasonably request in writing from time to time, including
the selection of counsel and experts and the execution of powers of attorney;
provided that (i) within 30 days after the notice required by Section 10.09(b)
of this Agreement has been delivered (or such earlier date that any payment of
Taxes with respect to such claim is due but in no event sooner than 5 days after
the Members' Representative's receipt of such notice), the Members'
Representative's request that such claim be contested, (ii) the Members'
Representative shall have agreed to pay to the Tax Indemnified Party all costs
and expenses that the Tax Indemnified Party incurs in connection with contesting
such claim, including, without limitation, reasonable attorneys' and
accountants' fees and disbursements, (iii) such action would not likely increase
the amount of Taxes payable by Buyer, the Company or any of its subsidiaries for
any period for which the holders of Company Membership Units immediately prior
to the Effective Time (including the Members) are not obligated to indemnify
Buyer, the Company and its subsidiaries, (iv) if the Tax Indemnified Party is
requested by the Members' Representative to pay the Tax claimed and xxx for a
refund, or if the Indemnified Tax Claim is otherwise paid, the holders of
Company Membership Units immediately prior to the Effective Time (including the
Members) shall have advanced to the Tax Indemnified Party, on an interest-free
basis, the amount of such claim, (v) such claim involves only money damages and
does not seek an injunction or other equitable relief, and (vi) settlement of,
or an adverse judgment with respect to, such claim would not, in the good faith
judgment of the Tax Indemnified Party, likely establish a precedential custom or
practice adverse to the continuing business interests of the Tax Indemnified
Party. In the event any of the above conditions is or becomes unsatisfied (A)
the Tax Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, such Indemnified Tax
Claim in any manner it may deem appropriate (and the Tax Indemnified Party need
not consult with, or obtain any consent from, any Seller in connection
therewith), (B) the holders of Company Membership Units immediately prior to the
Effective Time (including the Members) will reimburse the Tax Indemnified Party
promptly and periodically for the costs of defending against such Indemnified
Tax Claim (including attorneys' fees and expenses), and (C) the holders of
Company Membership Units immediately prior to the Effective Time (including the
Members) will remain responsible for any Tax Losses the Tax Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Indemnified Tax Claim to the fullest extent provided in this
Section 10.09. The Tax Indemnified Party shall not make any payment of an
Indemnified Tax Claim for at least 30 days (or such shorter period as may be
required by applicable law) after the giving of the notice required by Section
10.09(b) of this Agreement with respect to such claim, shall give to the
Members' Representative any information requested related to such claim, and
otherwise shall cooperate with the Members' Representative in order to contest
effectively any such claim.
55
(d) Subject to the provisions of Section 10.09(c) of this
Agreement, the Tax Indemnified Party shall enter into a settlement with respect
to such Proceeding or prosecute such Proceeding to a determination in a court or
other tribunal of initial or appellate jurisdiction, as the Members'
Representative may reasonably request.
(e) Promptly after the extent of the liability of the Tax
Indemnified Party with respect to an Indemnified Tax Claim shall be established
by the final judgment or decree of a Court or a final and binding settlement
with a Governmental Entity having jurisdiction thereof, the holders of Company
Membership Units immediately prior to the Effective Time (including the Members)
shall pay to Buyer the amount of any Tax Losses Buyer may become entitled by
reason of the provisions of this Section 10.09.
(f) If, after actual receipt by the Tax Indemnified Party
of an amount advanced by the holders of Company Membership Units immediately
prior to the Effective Time (including the Members) pursuant to Section
10.09(c)(iv) of this Agreement, the extent of the liability of the Tax
Indemnified Party with respect to the Indemnified Tax Claim shall be established
by the final judgment or decree of a court or other tribunal or a final and
binding settlement with an administrative agency having jurisdiction thereof,
the Tax Indemnified Party shall promptly repay to the holders of Company
Membership Units immediately prior to the Effective Time (including the Members)
the amount advanced to the extent of any refund received by the Tax Indemnified
Party with respect to such claim together with any interest received thereon
from the applicable taxing authority and any recovery of legal fees from such
taxing authority, net of any Tax Losses suffered or to be suffered by the Tax
Indemnified Party with respect to such claim. Notwithstanding the foregoing, the
Tax Indemnified Party shall not be required to make any payment hereunder before
such time as the holders of Company Membership Units immediately prior to the
Effective Time (including the Members) shall have made all payments or
indemnities then due with respect to the Tax Indemnified Party pursuant to this
Agreement.
(g) Any payment from the holders of Company Membership
Units immediately prior to the Effective Time (including the Members) to Buyer
pursuant to this Section 10.09 shall be treated for Tax purposes as a reduction
in the Merger Consideration.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time:
(a) by mutual consent of Buyer and the Company;
(b) by Buyer, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have become
untrue, in either case only if the conditions set forth in Section 9.02(a),
Section 9.02(b), 9.02(c) or 9.02(d) of this Agreement, as the case may be, would
be incapable of being satisfied; provided, that such breach or untruth has not
been cured within 30 days following the earlier of receipt by Buyer of written
notice of such breach or untruth from the Company or receipt by the Company of
written notice of such breach or untruth from Buyer;
(c) by the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of the Buyer Companies set forth in
this Agreement, or if any representation or warranty of the Buyer Companies
shall have become untrue, in either case only if the conditions set forth in
Section 9.03(a) or Section 9.03(b) of this Agreement, as the case may be, would
be incapable of being
56
satisfied; provided, that such breach or untruth has not been cured within 30
days following the earlier of receipt by the Company of written notice of such
breach or untruth from Buyer or receipt by Buyer of written notice of such
breach or untruth from the Company;
(d) by either Buyer or the Company, if there shall be any
Law, order, injunction or decree which is final and nonappealable preventing the
consummation of the Merger;
(e) by either Buyer or the Company, if the Merger shall
not have been consummated before March 31, 2002; provided, however, that the
right to terminate this Agreement under this Section 11.01(e) shall not be
available to any party whose failure or whose affiliates' failure to perform any
material covenant, agreement or obligation hereunder has been the cause of, or
resulted in, the failure of the Merger to occur on or before such date;
The right of any party hereto to terminate this Agreement pursuant to
this Section 9.01 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
management committee members, representatives or agents, whether prior to or
after the execution of this Agreement.
Section 11.02. Effect of Termination. Except as provided in Section
11.05 of this Agreement, in the event of the termination of this Agreement
pursuant to Section 11.01, this Agreement shall forthwith become void, there
shall be no liability on the part of the Buyer Companies, the Company or the
Members or their respective officers, directors, management committee members,
stockholders or members and all rights and obligations of any party hereto shall
cease, except that nothing herein shall relieve any party of any liability for
(i) any breach of such party's covenants or agreements contained in this
Agreement or (ii) any willful breach of such party's representations or
warranties contained in this Agreement. If it is judicially determined that
termination of this Agreement was caused by an intentional breach of this
Agreement, then, in addition to any other remedies at Law or in equity for
breach of this Agreement, the party so found to have intentionally breached this
Agreement shall indemnify and hold harmless the other parties for their Expenses
(as defined in Section 11.05). No termination of this Agreement shall affect the
obligations of the parties under the Confidentiality Agreement.
Section 11.03. Amendment. This Agreement may not be amended except
by an instrument in writing signed by Buyer, on the one hand, and either the
Members' Representative or Members holding at least a majority of the
outstanding Company Membership Units as of the date hereof, on the other hand.
Section 11.04. Waiver. At any time prior to the Effective Time, any
party hereto entitled to the benefits thereof may (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto and (c)
waive compliance by the other party with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party or parties to be bound thereby.
For purposes of this Section 11.04, the Buyer Companies as a group shall be
deemed to be one party.
Section 11.05. Fees, Expenses and Other Payments.
---------------------------------
(a) Except as provided in Sections 11.02, all Expenses
(as defined in paragraph (b) of this Section 11.05) incurred by the parties
hereto shall be borne solely and entirely by the party which has incurred such
Expenses whether or not the Merger is consummated.
57
(b) "Expenses" as used in this Agreement shall include
all out-of-pocket expenses (including, without limitation, all fees and expenses
of counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement.
ARTICLE XII
GENERAL PROVISIONS
Section 12.01. Notices. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission to the telecopier
number specified below:
(a) If to any of the Buyer Companies, to:
US Unwired Inc.
000 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
(b) If to the Company:
Georgia PCS Management, L.L.C.
0000 Xxxxx Xxxx
Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxxxx Xxxxxx & Xxxxxx, LLP
16th Floor, 000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx or Xxxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
(c) If to the Members, to the Members' Representative:
Xxxxxx Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxx, XX 00000
Telecopier No.: (000) 000-0000
58
with a copy to:
Xxxxxx Xxxxxxxxx Xxxxxx & Xxxxxx, LLP
16th Floor, 000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx or Xxxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
Section 12.02. Certain Definitions. For the purposes of this
Agreement, the term:
(a) "affiliate" means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, another person;
(b) a person shall be deemed a "beneficial owner" of or
to have "beneficial ownership" of capital stock or other equity securities in
accordance with the interpretation of the term "beneficial ownership" as defined
in Rule 13d-3 under the Exchange Act, as in effect on the date hereof; provided
that a person shall be deemed to be the beneficial owner of, and to have
beneficial ownership of, capital stock or other equity securities that such
person or any affiliate of such person has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise;
(c) "business day" means any day other than a day on
which banks in the State of New York are authorized or obligated to be closed;
(d) "Confidentiality Agreement" means that certain
Confidentiality Agreement dated as of September 6, 2001 between Buyer and the
Company;
(e) "control" (including the terms "controlled,"
"controlled by" and "under common control with") means the possession, directly
or indirectly or as trustee or executor, of the power to direct or cause the
direction of the management or policies of a person, whether through the
ownership of stock or other equity securities or as trustee or executor, by
contract or credit arrangement or otherwise;
(f) "knowledge" or "known" means, with respect to any
matter in question, that which is actually known by any officer or management
committee member of the Company or any Key Employee;
(g) "person" means an individual, corporation,
partnership, limited liability company, joint stock company, association, trust,
estate, unincorporated organization, other entity or group (as defined in
Section 13(d) of the Exchange Act);
(h) "Significant Subsidiary" means any subsidiary of the
Company that would constitute a Significant Subsidiary of such party within the
meaning of Rule 1-02 of Regulation S-X of the SEC;
(i) "subsidiary" or "subsidiaries" of the Company, Buyer,
the Surviving Company or any other person, means any entity, whether
incorporated or unincorporated, of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
is directly or indirectly owned or
59
controlled by such party or by one or more of its respective subsidiaries or by
such party and any one or more of its respective subsidiaries; and
(j) "Tax" or "Taxes" means any and all taxes, charges,
fees, levies, assessments, duties or other amounts payable to any federal,
state, local or foreign taxing authority or agency, including, without
limitation, (A) income, franchise, profits, gross receipts, minimum, alternative
minimum, estimated, ad valorem, value added, sales, use, service, real or
personal property, capital stock, license, payroll, withholding, disability,
employment, social security, workers compensation, unemployment compensation,
utility, severance, excise, stamp, windfall profits, transfer and gains taxes,
(B) customs, duties, imposts, charges, levies or other similar assessments of
any kind, and (C) interest, penalties and additions to tax imposed with respect
thereto.
(k) "taxing authority" means, with respect to any Tax,
the governmental entity or political subdivision thereof that imposes such Tax,
and the agency (if any) charged with the collection of such Tax for such entity
or subdivision, including any governmental or quasi-governmental entity or
agency that imposes, or is charged with collecting, social security or similar
charges or premiums.
Section 12.03. Headings. The 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 references herein are, unless the
context otherwise requires, references to sections of this Agreement.
Section 12.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
Section 12.05. Entire Agreement. This Agreement (together with the
Exhibits, the Company Disclosure Schedule and the Buyer Disclosure Schedule) and
the Confidentiality Agreement constitute the entire agreement of the parties,
and supersede all prior agreements and undertakings, both written and oral,
among the parties or between any of them, with respect to the subject matter
hereof. The Company agrees that nothing contained in this Agreement, or the
transactions contemplated hereby or thereby, shall be deemed to violate the
Confidentiality Agreement.
Section 12.06. Assignment. This Agreement shall not be assigned by
any party prior to the Effective Time.
Section 12.07. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement except as expressly provided in Sections 8.09, 8.13 and 8.14.
Section 12.08. Specific Performance. The parties hereby acknowledge
and agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel
60
performance of such party's obligations and to the granting by any court of the
remedy of specific performance of its obligations hereunder.
Section 12.09. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any party hereto in the exercise
of any right hereunder shall impair such right or be construed to be a waiver
of, or acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. Except as otherwise
expressly provided in Article X hereof, all rights and remedies existing under
this Agreement are cumulative to, and not exclusive to, and not exclusive of,
any rights or remedies otherwise available.
Section 12.10. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the Laws of the State of New York, regardless
of the Laws that might otherwise govern under applicable principles of conflicts
of Law.
Section 12.11. Counterparts. This Agreement may be executed in
multiple counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
61
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
US UNWIRED INC.
By:
--------------------------------------
Name:
Title:
SAINTS SUB, LLC
By: US UNWIRED INC.
By:
----------------------------------
Name:
Title:
GEORGIA PCS MANAGEMENT, L.L.C.
By:
--------------------------------------
Name:
Title:
MEMBERS:
XXXX PCS, INC.
By:
--------------------------------------
Name:
Title:
XXXXX XXXXXX
-----------------------------------------
XXXXXXXX PCS, INC.
62
By:
--------------------------------------
Name:
Title:
XXX XXXXXXXX
-----------------------------------------
XXXXXX XXXXXXXXXX
-----------------------------------------
XXXX XXXXXXXX
-----------------------------------------
XXXXXXX XXXXXXXXXX
-----------------------------------------
X.X. XXXXXXXXXX
-----------------------------------------
XXXXX XXXXX
-----------------------------------------
COASTAL UTILITIES, INC.
By:
--------------------------------------
Name:
Title:
COMSOUTH MANAGEMENT II, INC.
63
By:
--------------------------------------
Name:
Title:
COMSOUTH PROPERTIES, INC.
By:
--------------------------------------
Name:
Title:
DARIEN TELEPHONE, INC.
By:
--------------------------------------
Name:
Title:
XXXX XXXXX XXXXXX
-----------------------------------------
XXXXXX XXXXXXX
-----------------------------------------
XX XXXXXXX
-----------------------------------------
XXXXXXXX XXXXXXX
-----------------------------------------
XXXX XXX XXXXXXX
-----------------------------------------
XXXXX XXXXXXX
-----------------------------------------
64
ELLIJAY TELEPHONE CO.
By:
--------------------------------------
Name:
Title:
XXXX X. XXXXXXXX
-----------------------------------------
XXXXXXX X. XXXXXXXX
-----------------------------------------
XXXXXXXX X. XXXXXX
-----------------------------------------
XXXXX X. XXXXX
-----------------------------------------
XXXXXXX X. XXXXXXXX
-----------------------------------------
LORETTO TELECOMMUNICATIONS, INC.
By:
--------------------------------------
Name:
Title:
LORETTO COMMUNICATION SERVICES, INC.
By:
--------------------------------------
Name:
Title:
65
XXXXXX XXXXXXXXXX XXXXX, INC.
By:
--------------------------------------
Name:
Title:
XXXXXX XXXXXXXXXX XXXXX
-----------------------------------------
XXXXXX XXXXXXXX XXXXX, INC.
By:
--------------------------------------
Name:
Title:
XXXXXX XXXXXXXX XXXXX
-----------------------------------------
XXXXX XXXXXXXXXX XXXXXXXX, INC.
By:
--------------------------------------
Name:
Title:
DESDA PASSARRELA XXXXX
-----------------------------------------
GEORGIA PCS CORPORATION
By:
--------------------------------------
Name:
Title:
NORTHEAST FLORIDA TELEPHONE COMPANY, INC.
By:
--------------------------------------
Name:
Title:
66
PTC HOLDINGS, INC.
By:
--------------------------------------
Name:
Title:
PLANT TELEPHONE COMPANY
By:
--------------------------------------
Name:
Title:
XXXXX X. XXXXXXXX
-----------------------------------------
XXXXX XXXXX X. XXXXXXX
-----------------------------------------
XXXXXX X. XXXXXXXXXX
-----------------------------------------
XXXXXX X. XXXXXXXX
-----------------------------------------
XXXXXX X. XXXX
-----------------------------------------
PROGRESSIVE HOLDING COMPANY
By:
--------------------------------------
Name:
Title:
67
XXXXX XXXXXXX
-----------------------------------------
XXXXXX XXXXX
-----------------------------------------
XXXXXXX X. XXXXXX
-----------------------------------------
XXX X. XXXXXXXXX
-----------------------------------------
XXXXXX XXXXXXX, JR.
-----------------------------------------
XXXXX XXXX.
-----------------------------------------
RINGGOLD TELEPHONE PCS CORP.
By:
--------------------------------------
Name:
Title:
XXXXXX PCS, INC.
By:
--------------------------------------
Name:
Title:
68
XXXXXX TELEPHONE & ELECTRIC COMPANY
By:
--------------------------------------
Name:
Title:
69
PARENT COMPANIES
(solely with respect to Section 8.08):
XXXX TELEPHONE COMPANY, INC.
By:
--------------------------------------
Name:
Title:
XXXXXXXX TELEPHONE COMPANY, INC.
By:
--------------------------------------
Name:
Title:
PROGRESSIVE RURAL TELEPHONE CO-OP, INC..
By:
--------------------------------------
Name:
Title:
TELEVIEW COMMUNICATIONS, INC.
By:
--------------------------------------
Name:
Title:
CITIZENS TELEPHONE COMPANY, INC.
By:
--------------------------------------
Name:
Title:
RINGGOLD TELEPHONE COMPANY
By:
--------------------------------------
Name:
Title:
70
KEY EMPLOYEES
(solely for purposes of Section 8.08):
XXXXXX XXXXXX, III
-----------------------------------------
XXXXXXXX X. XXXXXX
-----------------------------------------
XXXXXXX X XXXXX, XX.
-----------------------------------------
XXXX X. XXXX
-----------------------------------------
71
