AMENDED AND RESTATED ACQUISITION AGREEMENT
BY AND AMONG
GTI ACQUISITION CORP.,
GLENAYRE TECHNOLOGIES, INC.,
WESTERN MULTIPLEX CORPORATION, a California corporation,
WESTERN MULTIPLEX CORPORATION, a Delaware corporation,
AND
WMC HOLDING CORP.
As of September 30, 1999
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND CERTAIN RULES OF CONSTRUCTION . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Certain Rules of Construction . . . . . . . . . . . . . . . . . . 8
ARTICLE 2
RECAPITALIZATION; PURCHASE AND SALE OF THE SHARES . . . . . . 8
2.1 Recapitalization; Purchase and Sale of Shares . . . . . . . . . . 8
2.2 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Post-Closing Purchase Price Adjustment. . . . . . . . . . . . . . 10
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF GTI AND GLENAYRE. . . . . . 11
3.1 Organization and Qualification. . . . . . . . . . . . . . . . . . 11
3.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4 No Conflict; Required Filings and Consents. . . . . . . . . . . . 15
3.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 16
3.6 Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.8 Employees and Fringe Benefit Plans. . . . . . . . . . . . . . . . 19
3.9 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.10 Personal Property Leases. . . . . . . . . . . . . . . . . . . . . 24
3.11 Lawfully Operating. . . . . . . . . . . . . . . . . . . . . . . . 24
3.12 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.13 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.14 Bank Accounts and Depositories. . . . . . . . . . . . . . . . . . 26
3.15 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.16 Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . 26
3.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.18 Affiliations. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.19 Corporate Name. . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.20 Effect of Transaction . . . . . . . . . . . . . . . . . . . . . . 27
3.21 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.22 Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.23 Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.24 Private Offering. . . . . . . . . . . . . . . . . . . . . . . . . 28
3.25 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER. . . . . . . . 29
4.1 Organization and Qualification . . . . . . . . . . . . . . . . . 29
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.3 No Conflict; Required Filings and Consents. . . . . . . . . . . . 29
4.4 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.5 Investment Representations. . . . . . . . . . . . . . . . . . . . 30
4.6 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 5
COVENANTS. . . . . . . . . . . . . . . 31
5.1 Covenants of Purchaser, GTI and Glenayre . . . . . . . . . . . . 31
5.2 Covenants of GTI and Glenayre . . . . . . . . . . . . . . . . . . 33
5.3 Covenants of Purchaser. . . . . . . . . . . . . . . . . . . . . . 36
5.4 Certain Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 36
5.5 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.6 Maintenance of Records. . . . . . . . . . . . . . . . . . . . . . 42
5.7 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 42
5.8 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 42
5.9 Non-Compete; Non-Solicitation . . . . . . . . . . . . . . . . . 42
ARTICLE 6
CONDITIONS. . . . . . . . . . . . . . . 44
6.1 Conditions to Each Party's Obligation to Close the Transactions 44
6.2 Conditions to Obligations of GTI and Glenayre to Close the
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.3 Conditions to Obligation of Purchaser to Close the Transactions 45
ARTICLE 7
INDEMNIFICATION . . . . . . . . . . . . . 47
7.1 Indemnification by GTI and Glenayre . . . . . . . . . . . . . . . 47
7.2 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.3 Definition of Loss or Losses. . . . . . . . . . . . . . . . . . . 48
7.4 Limitation of GTI's and Glenayre's Liability . . . . . . . . . . 49
7.5 Indemnification by Purchaser. . . . . . . . . . . . . . . . . . . 50
ARTICLE 8
TERMINATION . . . . . . . . . . . . . . 50
8.1 Termination by Mutual Consent . . . . . . . . . . . . . . . . . . 50
8.2 Termination by GTI, Glenayre or Purchaser . . . . . . . . . . . . 50
8.3 Termination by GTI and Glenayre . . . . . . . . . . . . . . . . . 51
8.4 Termination by Purchaser. . . . . . . . . . . . . . . . . . . . . 51
8.5 Effect of Termination and Abandonment . . . . . . . . . . . . . . 51
8.6 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 9
GENERAL PROVISIONS. . . . . . . . . . . . . 52
9.1 Effectiveness of Representations, Warranties and Covenants. . . . 52
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.3 Assignment; Binding Effect; Benefit . . . . . . . . . . . . . . . 54
9.4 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 55
9.5 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.8 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
EXHIBIT 2.1
AMENDED AND RESTATED ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "Agreement") is executed as of
September 30, 1999 by and among GTI ACQUISITION CORP., a Delaware corporation
("Glenayre"); GLENAYRE TECHNOLOGIES, INC., a Delaware corporation ("GTI");
WESTERN MULTIPLEX CORPORATION, a California corporation ("WMC" or "WMC
California"); WESTERN MULTIPLEX CORPORATION, a Delaware corporation ("WMC
Delaware"); and WMC HOLDING CORP., a Delaware corporation ("Purchaser").
STATEMENT OF PURPOSE
Glenayre, a wholly-owned subsidiary of GTI, owns all of the issued
and outstanding capital stock of WMC Delaware, which consists of 80,000,000
shares of Class B Common Stock, par value $.01 per share (the "WMC Delaware
Class B Common Stock").
The parties desire that WMC enter into (i) two term loan facilities
(collectively, the "Term Facilities") under which WMC will borrow the
aggregate principal amount of $22,000,000 (the "Term Borrowing") and (ii) a
$10 million revolving credit facility (the "Revolving Facility") under which
WMC will draw down $2 million at the Closing (the "Drawdown"), in each case
with certain providers of financing arranged by Purchaser and on
substantially the terms set forth in the commitment letter attached as
Exhibit 1 to this Agreement (the "Commitment Letter").
The proceeds from the Term Borrowing shall be used by WMC to redeem
from Glenayre 42,000,000 shares of WMC Delaware Class B Common Stock (the
"Redeemed Shares") for $21,000,000, as a result of which Glenayre shall
continue to hold 38,000,000 shares of WMC Delaware Class B Common Stock
immediately after such redemption (the "Redemption").
Immediately after the Redemption, Glenayre desires to sell to
Purchaser, and Purchaser desires to purchase from Glenayre, 35,955,000 shares
of WMC Delaware Class B Common Stock (the "Purchased Common Shares") on the
terms and subject to the conditions set forth herein, as a result of which
Glenayre shall continue to hold 2,045,000 shares of WMC Delaware Class B
Common Stock (the "Retained Shares").
NOW, THEREFORE, in consideration of the Statement of Purpose and of
the mutual agreements contained herein, the parties hereto do hereby agree as
follows:
ARTICLE 1
DEFINITIONS AND CERTAIN RULES OF CONSTRUCTION
1.1 Definitions. In addition to any other terms defined elsewhere
in this Agreement, including any Schedule or Exhibit hereto (unless such
Schedule or Exhibit provides for a different definition), as used herein, the
following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly, through one or more intermediaries, controls or
is controlled by or under common control with, such first Person.
"Assignment" means the Intellectual Property Assignment in the form
of Exhibit 2 to this Agreement.
"Balance Sheet" is defined in Section 3.9(b).
"Blue Sky Laws" means state securities Laws or "blue sky" Laws.
"Business" means all components of and activities related to the
research and development, design, manufacture, marketing, distribution,
servicing and sale of products and equipment, whether in existence or in
development, relating to atmospheric optical (excluding any short-range
communications to a mobile device -e.g., IRDA port communications), microwave
(i.e., carrier frequencies between 1 GHZ and 30 GHZ) and millimeter wave
(i.e., carrier frequencies between 30 GHZ and 300 GHZ) communications
(including unlicensed spread spectrum radio; licensed microwave and
millimeter wave radio, as defined above; and wireless ethernet bridges) and
providing only fixed point-to-point or fixed point to multipoint types of
services, specifically excluding all businesses and related products that are
capable of providing service as a mobile device or to a mobile device, as
carried on by WMC as of the Closing Date or, for purposes of Section 5.9,
during the term of Section 5.9, in all cities, counties, states and countries
in which the business of WMC is now or then being conducted or its products
are now or then being sold.
"Business Day" means any day other than a Saturday, Sunday or legal
holiday in the State of North Carolina or the State of New York.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended.
"CGCL" means the California General Corporation Law.
"Change in Control," with respect to GTI, means any of the
following:
2
(1) the acquisition, directly or indirectly after the Closing
Date, in one or a series of transactions, of 25% or more of GTI's common
stock by any "person" as that term is defined in Section 13(d)(3) of the
Exchange Act (other than an Affiliate of GTI), provided the Board of
Directors of GTI is not opposing such acquisition in a Schedule 14D-9 or
otherwise (for this purpose, if the Board of Directors of GTI initially
opposes such an acquisition but later withdraws its opposition to or
approves, in any manner whatsoever, such acquisition, then such
acquisition shall not be considered to be opposed by the Board of
Directors of GTI for purposes of this proviso);
(2) the consummation of a merger, consolidation, share exchange or
similar transaction of GTI with any other Person, as a result of which
the holders of the voting capital stock of GTI as a group would receive
less than 50% of the voting capital stock of the surviving or resulting
corporation; or
(3) the consummation of an agreement providing for the sale or
transfer (other than as security for obligations of GTI) of
substantially all the assets of GTI to a Person who is not an Affiliate
of GTI.
"Closing" means the consummation of the Transactions.
"Closing Balance Sheet" is defined in Section 2.3(a).
"Closing Date" means the date on which the Closing occurs, which
shall be effective at the close of business on such date.
"Closing Net Worth" means, as of the Closing Date, the excess of
the assets of WMC over the liabilities of WMC determined in accordance with
GAAP (except as otherwise specified in the following sentence), all as shown
on the Closing Balance Sheet (as prepared in accordance with the provisions
of Section 2.3(a)). In determining assets and liabilities hereunder, (i) all
accounting entries shall be taken into account and all known errors and
omissions shall be corrected, in each case to the extent required by GAAP,
(ii) all adjustments (including adjustments for reserves) and
reclassifications required by GAAP shall be made except that no purchase
accounting adjustments arising out of the Transactions shall be made, (iii)
all adjustments to tax assets or tax liabilities that arise due to the
Section 338(h)(10) Election will be excluded, (iv) all tax liabilities for
which GTI is responsible pursuant to Section 5.5 will be excluded, (v) all
intercompany receivables and payables shall be eliminated pursuant to Section
5.2(k), (vi) no effect shall be given to the Transactions or the Financing
and (vii) goodwill shall be eliminated.
"Code" means the Internal Revenue Code of 1986, as amended.
3
"Contract" shall mean any contract, instrument, lease, license,
indenture, agreement, option, commitment or other legally binding
arrangement.
"Customer Liens" means warehousemen's or other statutory liens of
which neither of WMC, GTI or Glenayre has actual Knowledge and which have
arisen in the course of (i) WMC loaning inventory (A) to customers while that
customer's equipment is being repaired, (B) to customers or potential
customers as demonstration units, and (C) to WMC's sales representatives as
consignment inventory ((A), (B), (C), collectively, the "Loaned Inventory"),
and (ii) WMC renting Inventory on a temporary basis (the "Rented Inventory").
"Deficiency" shall mean the amount, if any, by which the Closing
Net Worth is less than $12,505,000 as set forth on the Closing Balance Sheet.
"Disclosure Schedules" means the Disclosure Schedules dated the
date of this Agreement and delivered contemporaneously herewith.
"Environmental Laws" means all federal, state, local and foreign
laws, statutes, regulations, ordinances, decrees, judgments or orders and all
common law concerning public health or safety, worker health or safety, or
pollution or protection of the environment, as the foregoing are enacted or
in effect prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Estimated Closing Net Worth" shall mean the Closing Net Worth as
estimated by GTI in good faith and notified by GTI to Purchaser three
Business Days before the Closing. The Estimated Closing Net Worth can be
represented by a positive or negative number.
"Estimated Deficiency" shall mean the amount, if any, by which the
Estimated Closing Net Worth is less than $12,505,000.
"Estimated Excess" shall mean the amount, if any, by which the
Estimated Closing Net Worth is more than $12,505,000.
"Estimated Purchase Price" is defined in Section 2.1(d).
"Excess" shall mean the amount, if any, by which the Closing Net
Worth is more than $12,505,000 as set forth on the Closing Balance Sheet.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Financial Statements" is defined in Section 3.5.
4
"Financing" means the financing required to consummate the
Transactions.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board.
"Glenayre Additional Agreement" is defined in Section 3.3(a).
"Glenayre Electronics" means Glenayre Electronics, Inc., a Colorado
corporation and a wholly-owned subsidiary of GTI.
"Glenayre Electronics Agreements" is defined in Section 3.3(c).
"Glenayre Indemnified Parties" means GTI, Glenayre, Glenayre
Electronics and their respective officers, directors, Affiliates, successors,
permitted assigns and the officers, directors, partners and members of their
respective Affiliates.
"Governmental Authority" means any foreign, federal, state or local
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or
quasi-governmental authority.
"GTI Additional Agreements" is defined in Section 3.3(b).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and all the rules and regulations promulgated thereunder.
"Hazardous Substance" means any material, substance or waste as to
which liability or standards of conduct may be imposed pursuant to
Environmental Laws.
"Indemnity Claim" is defined in Section 7.2(a).
"Knowledge," "Know" or "Known", with respect to matters covered by
a representation, warranty or covenant set forth in this Agreement, means the
current actual knowledge (after inquiry) of the individuals identified on
Schedule 1.1(a) of the Disclosure Schedules as having such Knowledge.
"Law" or "Laws" means any and all statutes, laws, regulations,
ordinances, orders, judgments, decrees and rules of any Governmental
Authority, in each case as amended and in effect from time to time.
"Leases" is defined in Section 3.9(a).
5
"License Agreement" means the Intellectual Property License between
Glenayre Electronics and WMC substantially in the form of Exhibit 3 to this
Agreement.
"Liens" means all liens, claims, options, charges, restrictions,
security interests or encumbrances of any kind or defects in title of any
nature whatsoever.
"Loss" or "Losses" is defined in Section 7.3.
"NDA" is defined in Section 9.4.
"Notice of Claim" is defined in Section 7.2(a).
"Old WMC California Shares" is defined in Section 3.2(b).
"Outstanding Tax Claims" means (i) the tax assessment by the State
of Illinois for additional sales tax owed by WMC (which matter is currently
pending before the Illinois Department of Revenue Board of Appeals), (ii) the
Internal Revenue Service demand for the late payment by WMC of employment
taxes due for March 31, 1998, and (iii) the Internal Revenue Service demand
for the late payment by WMC of employment taxes due for March 31, 1999.
"Permitted Liens" means the following:
(1) Liens for ad valorem Taxes not yet due and payable;
(2) mechanics', materialmen's, warehousemen's, carriers' and other
similar Liens which are incurred in the ordinary course of the Business for
amounts which are not delinquent and which are not, individually or in the
aggregate, material to the operation of the Business;
(3) any Liens set forth on Schedule 1.1(b) of the Disclosure
Schedules; and
(4) all minor irregularities, encumbrances, rights-of-way and
other defects of title which do not materially interfere with the present use
of WMC's assets or the Business.
"Person" means an individual, corporation, partnership, limited
liability company, trust, association or other entity, including any
Governmental Authority.
"Purchased Common Shares" is defined in the Statement of Purpose of
this Agreement.
"Purchaser Additional Agreements" is defined in Section 4.2.
6
"Purchaser Indemnified Parties" means Purchaser, WMC and their
respective officers, directors, Affiliates, successors and permitted assigns
and the officers, directors, partners and members of their respective
Affiliates.
"Purchase Price" is defined in Section 2.1(d).
"Redeemed Shares" is defined in the Statement of Purpose of this
Agreement.
"Redemption" is defined in the Statement of Purpose of this
Agreement.
"Redemption Price" is defined in Section 2.1(b).
"Retained Shares" is defined in the Statement of Purpose of this
Agreement.
"Section 338(h)(10) Election" is defined in Section 5.5(i).
"Securities Act" means the Securities Act of 1933, as amended.
"Stockholders' Agreement" means the Stockholders' Agreement among
Glenayre, GTI, WMC Delaware and Purchaser substantially in the form of
Exhibit 4 to this Agreement.
"Sunnyvale Lease" means the lease for the Sunnyvale, California
facility operated by WMC.
"Tax" or "Taxes" means any foreign, federal, state or local income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated
or other tax, including any interest, penalty or addition thereto, and any
liability for payment of any of the foregoing as a result of any obligation
to indemnify or otherwise assume or succeed to the liability of another
Person.
"Tax Period" or "Taxable Period" means any period prescribed by any
Governmental Authority, including the United States or any state, local or
foreign government or subdivision thereof, for which a Tax Return is required
to be filed or Tax is required to be paid.
7
"Tax Return" means any return, report or information return
required to be filed with any taxing authority with respect to Taxes,
including any amendment thereof.
"Transactions" means the Redemption and the purchase of the
Purchased Common Shares by Purchaser from Glenayre pursuant to the terms of
this Agreement.
"Transition Services Agreement" means the Transition Services
Agreement between GTI and Purchaser in the form of Exhibit 5 hereto.
"Treasury Regulation" means United States Treasury Regulations
promulgated under the Code.
"WMC" or "WMC California" shall mean Western Multiplex Corporation,
a California corporation, and its successors.
"WMC Additional Agreements" is defined in Section 3.3(d).
"WMC Class B Common Stock" means the Class B Common Stock of WMC
Delaware, par value $.01 per share.
"WMC Delaware' shall mean Western Multiplex Corporation, a Delaware
corporation, and its successors.
"WMC Material Adverse Effect" means any change or effect that
(individually or in the aggregate) is or would reasonably be expected to be
materially adverse to the business, operations, results of operations or
condition (financial or otherwise) of WMC taken as a whole, excluding any
changes or effects (1) caused by changes in general economic conditions or
changes generally affecting WMC's industry and not only WMC, (2) reserved for
on the Balance Sheet or, for purposes of Article 7, to be reserved for on
the Closing Balance Sheet, or (3) caused by the Financing.
"WMC Sub" means Western Multiplex International Sales Corporation,
a former interest-charge domestic international sales corporation
incorporated under the Laws of California and a wholly-owned subsidiary of
WMC.
1.2 Certain Rules of Construction. The captions in this Agreement
are for convenience of reference only and in no way define, limit or describe
the scope or intent of any provisions or sections of this Agreement. All
references in this Agreement to Articles or Sections are references to the
Articles or Sections in this Agreement, unless some other reference is clearly
indicated. All accounting terms not specifically defined in this Agreement
8
shall be construed in accordance with GAAP. In this Agreement, unless the
context otherwise requires, (1) words describing the singular number shall
include the plural and vice versa, (2) words denoting any gender shall include
all genders and (3) references to "includes" or "including" shall mean
"includes without limitation" or "including without limitation," as applicable,
and (4) "or" is not exclusive.
ARTICLE 2
RECAPITALIZATION; PURCHASE AND SALE OF THE SHARES
2.1 Recapitalization; Purchase and Sale of Shares. At the Closing
and on the terms and subject to the conditions set forth herein, the
following transactions shall be effected:
(a) WMC Delaware shall enter into the Term Facilities and the
Revolving Facility and make the Term Borrowing and the Drawdown.
(b) WMC Delaware shall effect the Redemption for $21,000,000 (the
"Redemption Price"), payable by wire transfer of immediately available funds
to an account designated by Glenayre (such designation to be not less than
two Business Days before the Closing Date). The Redeemed Shares shall be
assigned, transferred and delivered by Glenayre to WMC Delaware upon
redemption free and clear of all Liens.
(c) Glenayre shall sell, transfer, convey and assign to Purchaser,
free and clear of all Liens (other than Liens imposed as a result of actions
by Purchaser and restrictions on transferability imposed by federal and state
securities Laws), and Purchaser shall purchase from Glenayre, all of the
Purchased Common Shares. Purchaser shall pay all transfer Taxes resulting
from the transfer of the Purchased Common Shares to Purchaser.
(d) In consideration for the Purchased Common Shares, and as
payment of the purchase price therefor, Purchaser shall pay to Glenayre, by
wire transfer in immediately available funds to an account designated by
Glenayre (such designation to be not less than two Business Days before the
Closing Date), the sum of $17,977,500, plus the Estimated Excess or minus the
Estimated Deficiency, as the case may be (the "Estimated Purchase Price"),
subject to further adjustment in accordance with Section 2.3 (as so adjusted,
the "Purchase Price").
2.2 The Closing.
(a) The Closing shall be held at the offices of Simpson Thacher & Bartlett, 3373 Hillview Avenue, Palo Alto, California (or at such other place
as the parties may agree) at 10:00 a.m., local time, (1) as promptly as
9
practicable (and in any event within two Business Days) following the day on
which all of the conditions set forth in Article 6 (other than conditions
that by their terms are to be satisfied at the Closing) shall be fulfilled or
waived in accordance herewith or (2) at such other time, date or place as
Glenayre and Purchaser may agree.
(b) At the Closing:
(1) WMC Delaware shall execute the agreements and notes
relating to the Term Facilities and the Revolving Facility and make the
Term Borrowing and the Drawdown.
(2) WMC Delaware shall pay to Glenayre the Redemption Price
as set forth in Section 2.1(b), and Glenayre shall deliver to WMC
Delaware certificates for all of the Redeemed Shares, together with
accompanying stock powers duly endorsed in blank.
(3) Glenayre shall deliver to Purchaser (i) certificates for
all of the Purchased Common Shares, together with accompanying stock
powers duly endorsed in blank, (ii) the certificate referred to in
Section 6.3(a), (iii) the consents referred to in Section 6.3(b), (iv)
the assignment of the Sunnyvale Lease from Glenayre Electronics to WMC,
(v) certified copies of all resolutions adopted by the Board of
Directors of Glenayre, GTI and/or Glenayre Electronics authorizing (as
applicable) the execution, delivery and performance of this Agreement,
the GTI Additional Agreements, the Glenayre Additional Agreement and the
Glenayre Electronics Agreements and the Transactions, (vi) the
resignations of the officers and directors of WMC listed on Schedule 2.2
of the Disclosure Schedules, (vii) the Transition Services Agreement,
duly executed by GTI, (viii) the Stockholders' Agreement, duly executed
by GTI, Glenayre and WMC Delaware, (ix) the License Agreement, duly
executed by Glenayre Electronics and WMC and (x) the Assignment, duly
executed by Glenayre Electronics and WMC.
(4) Purchaser shall (i) pay to Glenayre the Estimated
Purchase Price as provided in Section 2.1(d), (ii) deliver to Glenayre
the certificate referred to in Section 6.2(a), (iii) deliver to Glenayre
certified copies of resolutions adopted by the Board of Directors of
Purchaser authorizing the execution, delivery and performance of this
Agreement and the Purchaser Additional Agreements and the Transactions
and (iv) deliver to Glenayre the Stockholders' Agreement and the
Transition Services Agreement, duly executed by Purchaser.
2.3 Post-Closing Purchase Price Adjustment.
(a) Within 45 days following the Closing Date, Purchaser shall
deliver to Glenayre a consolidated balance sheet of WMC prepared by Purchaser
10
(in its final and binding form, the "Closing Balance Sheet") setting forth
the Closing Net Worth as of the close of business on the Closing Date. A
physical inventory shall be conducted by WMC consistent with past practice on
or after the Closing Date for the purpose of preparing the Closing Balance
Sheet, and each of Glenayre and Purchaser and their respective independent
auditors shall have the right to observe the taking of such physical
inventory. Any costs or expenses incurred by WMC in connection with such
taking of physical inventory shall be borne by WMC. The Closing Balance
Sheet shall include all known adjustments required in a year-end closing of
the books (to the extent required by GAAP) and, except as otherwise provided
in the definition of "Closing Net Worth," shall be prepared in accordance
with GAAP applied consistently with the accounting principles, policies and
methodologies used in the preparation of the balance sheet as of December 31,
1998 included in the Financial Statements (to the extent prepared in
accordance with GAAP except as otherwise provided in the definition of
"Closing Net Worth"). During the 20-day period immediately following
Glenayre's receipt of the proposed Closing Balance Sheet, Glenayre and its
representatives shall be permitted to review Purchaser's (and, subject to
execution of customary indemnities, its accountants') working papers related
to the preparation of the Closing Balance Sheet and determination of the
Closing Net Worth. The proposed Closing Balance Sheet shall become final and
binding upon the parties 20 days following Glenayre's receipt thereof, unless
Glenayre shall give written notice of its disagreement (a "Notice of
Disagreement") to Purchaser prior to such date. Any Notice of Disagreement
shall specify in reasonable detail the nature and dollar amount of any
disagreement so asserted. If a timely Notice of Disagreement is received by
Purchaser, then the Closing Balance Sheet (as revised in accordance with
clause (x) or (y) below) shall become final and binding upon the parties on
the earliest of (x) the date the parties resolve in writing any differences
they have with respect to the matters specified in the Notice of Disagreement
or (y) the date all matters in dispute are finally resolved in writing by the
Accounting Firm (as defined below). During the 20 days following delivery of
a Notice of Disagreement, the parties shall seek in good faith to resolve in
writing any differences which they may have with respect to the matters
specified in the Notice of Disagreement. During such period, Purchaser and
its representatives shall be permitted to review Glenayre's (and, subject to
execution of customary indemnities, its accountants') working papers relating
to the Notice of Disagreement. At the end of such 20-day period, the parties
shall submit to PricewaterhouseCoopers L.L.P. (the "Accounting Firm") for
review and resolution of all matters which remain in dispute and which were
properly included in the Notice of Disagreement and the Accounting Firm
shall make a final determination of the Closing Net Worth and the Purchase
Price in accordance with the guidelines and procedures set forth in this
Agreement. The Closing Balance Sheet and the determination of Closing Net
Worth shall become final and binding on the parties on the date the
Accounting Firm delivers its final resolution in writing to the parties
(which final resolution shall be delivered not more than 45 days following
11
submission of such disputed matters). The parties agree that judgment may be
entered upon the determination of the Accounting Firm in any court having
jurisdiction over the party against which such determination is to be
entered. The fees and expenses of the Accounting Firm shall be borne by
Purchaser and Glenayre in inverse proportion as they may prevail on matters
resolved by the Accounting Firm, which proportionate allocations shall also
be determined by the Accounting Firm at the time the determination of the
Accounting Firm is rendered on the merits of the matters submitted.
(b) Within three Business Days after the Closing Balance Sheet
becomes final and binding on the parties, Glenayre shall pay to Purchaser or
Purchaser shall pay to Glenayre, as applicable, an amount sufficient to
further adjust the Estimated Purchase Price (up or down as the case may be)
to the amount that would have been paid if the Estimated Excess or Estimated
Deficiency had been equal to the Excess or Deficiency, together with interest
on the amount of such adjustment at a rate equal to the rate of interest from
time to time announced publicly by The Chase Manhattan Bank as its prime
rate, calculated on the basis of the actual number of days elapsed over 365,
from the Closing Date to the date of payment, by wire transfer to Purchaser
or Glenayre, as applicable. Any such payment shall be treated as an increase
or decrease in the Purchase Price (as the case may be) or an adjustment to
the number of Purchased Common Shares in accordance with Section 5.1(g).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF GTI AND GLENAYRE
GTI and Glenayre hereby represent and warrant to Purchaser that:
3.1 Organization and Qualification. WMC is a corporation duly
organized, validly existing and in good standing under the Laws of the State
of California and has the requisite corporate power and authority to own,
lease and operate its properties, to carry on the Business, to enter into
this Agreement and the WMC Additional Agreements and to consummate the
Transactions. WMC is duly qualified or licensed as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the failure
to be so qualified or licensed would have a WMC Material Adverse Effect. WMC
Delaware is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware and has the requisite
corporate power and authority to own, lease and operate its properties, to
enter into this Agreement and the Stockholders' Agreement and to consummate
the Transactions. WMC Delaware is not qualified or licensed as a foreign
corporation.
3.2 Capitalization. (a) The authorized capital stock of WMC
Delaware consists of 200,000,000 shares of common stock of WMC, consisting of
12
100,000,000 shares of Class A Common Stock, par value $.01 per share and
100,000,000 shares of WMC Delaware Class B Common Stock, of which only
80,000,000 Shares of WMC Delaware Class B Common Stock are issued and
outstanding. No shares of Class A Common Stock have been issued. All of the
issued and outstanding shares of WMC Delaware Class B Common Stock have been,
and all of the Redeemed Shares, Purchased Common Shares and Retained Shares
will be, duly authorized and validly issued, are or will be fully paid and
nonassessable, are not or will not be subject to or issued in violation of
any purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the General
Corporation Law of the State of Delaware, the Articles of Incorporation or
Bylaws of WMC Delaware or any Contract to which WMC Delaware is a party or
otherwise bound and are or will be owned by Glenayre, free and clear of any
Liens except for this Agreement and the Stockholders' Agreement and the
restrictions on transferability imposed by federal and state securities Laws.
Immediately prior to the Closing, Glenayre will be the owner beneficially
and of record of, and have good and valid title to, all the Redeemed Shares,
the Purchased Common Shares and the Retained Shares, and immediately after
the Closing, Glenayre will be the owner beneficially and of record of all the
Retained Shares, in each case free and clear of any Liens, except for the
restrictions on transferability imposed by federal and state securities Laws
and the Stockholders' Agreement. Assuming Purchaser has the requisite power
and authority to be the lawful owner of the Purchased Common Shares, upon
delivery to Purchaser at the Closing of certificates representing the
Purchased Common Shares, duly endorsed by Glenayre for transfer to Purchaser,
and upon Glenayre's receipt of the Purchase Price, good and valid title to
the Purchased Common Shares will pass to Purchaser, free and clear of any
Liens other than those arising from acts of Purchaser or its Affiliates, the
restrictions on transferability imposed by federal and state securities Laws
and the Stockholders' Agreement. Other than this Agreement and upon its
execution the Stockholders' Agreement, the issued and outstanding shares of
WMC Delaware Class B Common Stock, Retained Shares, Redeemed Shares and
Purchased Common Shares are not and will not be subject to any voting trust
agreement or other Contract, including any Contract restricting or otherwise
relating to the voting, dividend rights or disposition of the shares of WMC
Delaware Class B Common Stock, Retained Shares, Redeemed Shares and Purchased
Common Shares. Immediately after the Closing, except for the Purchased
Common Shares and the Retained Shares or any other shares of capital stock of
WMC Delaware which Purchaser causes WMC Delaware to reserve for issuance
(including any such shares issued or reserved for issuance to employees of
WMC Delaware or WMC in connection with or immediately after the Closing),
there will be no shares of capital stock or other equity securities of WMC
Delaware issued, outstanding or reserved for issuance. There are no bonds,
debentures, notes or other indebtedness of WMC Delaware having the right to
vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which holders of WMC Delaware common stock may
vote ("Voting Company Debt"). Except as set forth above, there are no
13
options, warrants, rights, convertible or exchangeable securities, "phantom"
stock rights, stock appreciation rights, stock-based performance units, or
Contract of any kind to which WMC Delaware is a party or by which either of
them is bound (i) obligating WMC Delaware to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or other
equity interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of or other equity interest in, WMC
Delaware or any Voting Company Debt, (ii) obligating WMC Delaware to issue,
grant, extend or enter into any such option, warrant, call, right, security
or Contract or (iii) that give any Person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
accruing to holders of WMC Delaware common stock. Other than this Agreement,
there are no outstanding contractual obligations of WMC Delaware to
repurchase, redeem or otherwise acquire any shares of capital stock of WMC
Delaware. WMC Delaware does not own directly or indirectly any interest or
investment in any other Person except for WMC, and WMC Delaware does not have
any obligation to make any additional investments in any Person. Except as
contemplated by this Agreement, since the date of its incorporation, WMC
Delaware has not conducted any business, owned any assets (other than Old WMC
California Shares) or incurred or assumed any liabilities.
(b) The authorized capital stock of WMC consists of 25,000,000
shares of common stock of WMC, of which only 1,000 shares are issued and
outstanding (the "Old WMC California Shares"). All of the Old WMC California
Shares have been duly authorized and validly issued, are fully paid and
nonassessable, are not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the CGCL, the Articles of
Incorporation or Bylaws of WMC or any Contract to which WMC is a party or
otherwise bound and are owned by WMC Delaware, free and clear of any Liens.
The Old WMC California Shares are not and will not be subject to any voting
trust agreement or other Contract, including any Contract restricting or
otherwise relating to the voting, dividend rights or disposition of the Old
WMC California Shares. Immediately after the Closing, there will be no
shares of capital stock or other equity securities of WMC California issued,
outstanding or reserved for issuance. There are no bonds, debentures, notes
or other indebtedness of WMC having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which holders of WMC common stock may vote ("WMC Voting Debt"). Except as
set forth above, there are no options, warrants, rights, convertible or
exchangeable securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, or Contract of any kind to which WMC is a
party or by which either of them is bound (i) obligating WMC to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares
of capital stock or other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other equity
interest in, WMC or any WMC Voting Debt, (ii) obligating WMC to issue, grant,
14
extend or enter into any such option, warrant, call, right, security or
Contract or (iii) that give any Person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
accruing to holders of WMC common stock. There are no outstanding contractual
obligations of WMC to repurchase, redeem or otherwise acquire any shares of
capital stock of WMC. WMC does not own directly or indirectly any interest
or investment in any other Person except for WMC's ownership of shares in a
mutual insurance company through its payment of premiums in the ordinary
course of business, and WMC does not have any obligation to make any
additional investments in any Person.
3.3 Authorization.
(a) Glenayre has all necessary corporate power and authority to
execute and deliver this Agreement and the Stockholders' Agreement (the
"Glenayre Additional Agreement") and to perform its obligations hereunder and
thereunder and to consummate the Transactions. The execution and delivery of
this Agreement and the Glenayre Additional Agreement by Glenayre and the
consummation by it of the Transactions have been duly and validly authorized
by all necessary corporate action on the part of Glenayre. This Agreement
has been duly and validly executed and delivered by Glenayre and as of the
Closing it will have duly executed and delivered the Glenayre Additional
Agreement and, assuming the due authorization, execution and delivery of this
Agreement and the Glenayre Additional Agreement by Purchaser, this Agreement
constitutes, and the Glenayre Additional Agreement when executed will
constitute, a legal, valid and binding obligation of Glenayre enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
similar Laws affecting creditors' rights generally and by such principles of
equity as may affect the availability of equitable remedies.
(b) GTI has all necessary corporate power and authority to execute
and deliver this Agreement and the Stockholders' Agreement and the Transition
Services Agreement (the "GTI Additional Agreements") and to perform its
obligations hereunder and thereunder and to consummate the Transactions. The
execution, delivery and performance of this Agreement and the GTI Additional
Agreements by GTI and the consummation by it of the Transactions have been
duly and validly authorized by all necessary corporate action on the part of
GTI. This Agreement has been duly and validly executed and delivered by GTI
and as of the Closing it will have executed and delivered and the GTI
Additional Agreements and, assuming the due authorization, execution and
delivery of this Agreement and the GTI Additional Agreements by Purchaser,
this Agreement constitutes, and the GTI Additional Agreements when executed
will constitute, a legal, valid and binding obligation of GTI enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
15
similar Laws affecting creditors' rights generally and by such principles of
equity as may affect the availability of equitable remedies.
(c) Glenayre Electronics has all necessary corporate power and
authority to execute and deliver the License Agreement and the Assignment
(the "Glenayre Electronics Agreements") and to perform its obligations
thereunder. The execution, delivery and performance of the Glenayre
Electronics Agreements by Glenayre Electronics have been duly and validly
authorized by all necessary corporate action on the part of Glenayre
Electronics. As of the Closing Glenayre Electronics will have executed the
Glenayre Electronics Agreements and assuming the due authorization, execution
and delivery of the Glenayre Electronics Agreements (as applicable) by
Purchaser, each of the Glenayre Electronics Agreements when executed will
constitute a legal, valid and binding obligation of Glenayre Electronics
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency and other
similar Laws affecting creditors' rights generally and by such principles of
equity as may affect the availability of equitable remedies.
(d) WMC has all necessary corporate power and authority to execute
and deliver this Agreement, the License Agreement and the Assignment (the
"WMC Additional Agreements") and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and the
WMC Additional Agreements by WMC have been duly and validly authorized by all
necessary corporate action on the part of WMC. This Agreement has been duly
and validly executed and delivered by WMC and as of the Closing it will have
duly executed and delivered each of the WMC Additional Agreements, and,
assuming the due authorization, execution and delivery of this Agreement and
the WMC Additional Agreements (as applicable) by Purchaser, this Agreement
constitutes, and each of the WMC Additional Agreements when executed will
constitute, a legal, valid and binding obligation of WMC enforceable against
it in accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, reorganization, insolvency, moratorium or similar
Laws affecting creditors' rights generally and by such principles of equity
as may affect the availability of equitable remedies.
(e) WMC Delaware has all necessary corporate power and authority
to execute and deliver this Agreement and the Stockholders' Agreement (the
"WMC Delaware Additional Agreements") and to perform its obligations
hereunder and thereunder and to consummate the Transactions. The execution,
delivery and performance of this Agreement and the WMC Delaware Additional
Agreements by WMC Delaware and the consummation by it of the Transactions
have been duly and validly authorized by all necessary corporate action on
the part of WMC Delaware. This Agreement has been duly and validly executed
and delivered by WMC Delaware and as of the Closing it will have duly
executed and delivered each of the WMC Delaware Additional Agreements, and,
assuming the due authorization, execution and delivery of this Agreement and
16
the WMC Delaware Additional Agreements (as applicable) by Purchaser, this
Agreement constitutes, and each of the WMC Delaware Additional Agreements
when executed will constitute, a legal, valid and binding obligation of WMC
Delaware enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or similar Laws affecting creditors' rights generally
and by such principles of equity as may affect the availability of equitable
remedies.
3.4 No Conflict; Required Filings and Consents.
(a) Except as set forth on Schedule 3.4 of the Disclosure
Schedules, the execution, delivery and performance of this Agreement by
Glenayre, GTI and WMC do not, the execution, delivery and performance of each
of the GTI Additional Agreements, the Glenayre Additional Agreement, each of
the Glenayre Electronics Agreements and each of the WMC Additional Agreements
by GTI, Glenayre, Glenayre Electronics and WMC (as applicable) will not, and
the consummation by GTI, WMC and Glenayre of the Transactions and compliance
by GTI, WMC, Glenayre and Glenayre Electronics with the terms hereof and
thereof will not, (1) conflict with or violate the Certificate or Articles of
Incorporation or Bylaws of Glenayre, GTI, WMC or Glenayre Electronics, (2)
violate any Law applicable to Glenayre, GTI, WMC or Glenayre Electronics or
their respective properties or assets or (3) result in any breach of or
constitute a default (or any event which, with notice or lapse of time or
both, would become a default) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material
benefit under, or to increased, additional, accelerated or guaranteed rights
or entitlements of any Person under, or result in the creation of any Lien
(other than a Permitted Lien or as a result of the Stockholders' Agreement)
upon the Old WMC Shares, the Purchased Common Shares, the Redeemed Shares or
any of the properties or assets of Glenayre, GTI, Glenayre Electronics or WMC
under, any provision of or pursuant to any Contract, note, bond, mortgage,
deed of trust, instrument, or obligation to which WMC, Glenayre, GTI or
Glenayre Electronics is a party or by which any of their respective
properties or assets are bound, where in the case of clause (3) it would have
a WMC Material Adverse Effect.
(b) The execution, delivery and performance of this Agreement by
Glenayre, GTI and WMC do not and the execution, delivery and performance of
each of the GTI Additional Agreements, the Glenayre Additional Agreement,
each of the Glenayre Electronics Agreements and each of the WMC Additional
Agreements by Glenayre, Glenayre Electronics and WMC will not, and the
consummation of the Transactions will not, require any consent, approval or
authorization, license, permit or order of or registration, declaration or
filing with or notification to, any Governmental Authority by or with respect
to Glenayre, GTI, Glenayre Electronics or WMC except for (1) applicable
requirements if any, of the Securities Act or Blue Sky Laws, (2) filings
17
required to be made by Purchaser and GTI or Glenayre under the HSR Act, (3)
those that may be required solely by reason of the participation of Purchaser
(as opposed to any other third party) in the Transactions, and (4) as
disclosed in Schedule 3.4 of the Disclosure Schedules.
3.5 Financial Statements. Schedule 3.5 of the Disclosure
Schedules contains the unaudited financial statements of WMC as of and for
the years ended December 31, 1997 and December 31, 1998, respectively, and
as of and for the six-month period ended June 30, 1999 (collectively, the
"Financial Statements"). Except as disclosed on Schedule 3.5 of the
Disclosure Schedules, each of the Financial Statements presents fairly in all
material respects the financial position and results of operations of WMC at
the dates and for the fiscal periods then ended in accordance with GAAP
consistently applied (except for the lack of footnotes).
3.6 Subsequent Events. Except as set forth on Schedule 3.6 of the
Disclosure Schedules or reflected on the Balance Sheet, since June 30, 1999
WMC has been operated in the ordinary course and substantially in the same
manner as previously conducted and there has not been:
(a) any WMC Material Adverse Effect;
(b) any dividend paid or other distribution made on or with
respect to WMC's capital stock;
(c) any sale or other disposition of any material assets or
material interests owned or possessed by WMC, other than sales of inventory
occurring in the ordinary course of Business consistent with past practices
and prior periods;
(d) any damage, destruction or loss of such character as to
interfere materially with the continued operation of any part of the Business
(whether or not such loss was insured against);
(e) any borrowings, loans or advances by or to WMC, except for
routine travel advances and intercompany loans which will be eliminated as of
the Closing Date (through treatment as dividends or otherwise);
(f) any change in accounting practices or policies by WMC;
(g) any cancellation by WMC of any material indebtedness owing to
it, or any cancellation or settlement by WMC of any material claims against
others, except for any intercompany loans which are eliminated as of the
Closing Date;
(h) any increase in the compensation, incentive or severance
arrangements or other benefits to any officer or employee of WMC (other than
18
any incentive bonuses to be paid by Glenayre or GTI to officers or employees
of WMC in connection with the Transactions); or
(i) any change in method of accounting with respect to Taxes, any
change to a Tax election, any filing of an amended Tax Return, any settlement
or compromise of any proceeding with respect to any material tax liability;
(j) any action by WMC that would result in breach of Section
5.2(6), (13) or (15) if such action were taken after the date of this
Agreement; or
(k) any agreement or commitment by or on behalf of WMC to do or to
take any of the actions referred to above.
3.7 Tax Matters. Except as set forth in Schedule 3.7 of the
Disclosure Schedules:
(a) WMC and any Affiliated Group have filed or caused to be filed
in a timely manner (within any applicable extension periods) all material Tax
Returns required to be filed by applicable Tax Laws. All material Taxes with
respect to Taxable Periods covered by such Tax Returns, and all other
material Taxes for which WMC is or might otherwise be liable for such Taxable
Periods, have been timely paid in full or will be timely paid in full by the
due date thereof and the most recent Financial Statements reflect an adequate
reserve (in accordance with GAAP), other than with respect to deferred Taxes
reflecting the difference between the book and Tax basis in assets and
liabilities, for all Taxes payable by WMC for all Taxable Periods and
portions thereof through the date of such Financial Statements. No Liens
exist for Taxes (other than Liens for Taxes not yet due and payable) with
respect to any of the assets or properties of WMC. For purposes of this
Section 3.7, "Affiliated Group" means any affiliated group, within the
meaning of Section 1504 of the Code, of which WMC is, or since April 25, 1995
has been, a member.
(b) Since April 25, 1995, no Tax Returns of WMC or any Affiliated
Group (with respect to Taxes attributable to WMC) have been examined by the
Internal Revenue Service. No Tax Returns of WMC or any Affiliated Group
(with respect to Taxes attributable to WMC) are currently under audit or
examination by any taxing authority, and no written notice of any such
prospective audit or examination has been received by WMC or any Affiliated
Group.
(c) No deficiency resulting from any audit or examination by any
taxing authority relating to Taxes with respect to WMC remains unpaid.
Glenayre has made available to Purchaser documents setting forth the dates of
the most recent audits or examinations of WMC or any Affiliated Group by any
19
taxing authority in respect of Taxes related to WMC for all Taxable Periods
since April 25, 1995.
(d) Except for this Agreement, none of WMC or any Affiliated Group
(i) is party to or bound by any tax-sharing agreement, tax indemnity
obligation or similar agreement, arrangement or practice with respect to
Taxes attributable to WMC (including any advance pricing agreement, closing
agreement or other agreement relating to such Taxes with any taxing
authority), or (ii) has any liability for the Taxes of any other person under
Treasury Regulation Section 1.1502-6(a) (or any similar provision of state,
local or foreign Law), or as a transferee or successor, by contract or
otherwise.
(e) The Financial Statements as of December 31, 1998 properly
reflected all deferred revenue for WMC as of December 31, 1998 in accordance
with GAAP. As of December 31, 1998, none of WMC or any Affiliated Group
shall be required to include in a Taxable Period ending after the Closing
Date taxable income attributable to income of WMC that accrued in a prior
Taxable Period but was not recognized in any prior Taxable Period as a result
of the installment method of accounting, the long-term contract method of
accounting, the cash method of accounting or Section 481 of the Code or any
comparable provision of any other Tax Law, or for any other reason.
(f) None of Glenayre, GTI or any of their Affiliates has made with
respect to WMC or any property held by WMC any consent under Section 341 of
the Code; no property of WMC is "tax exempt use property" within the meaning
of Section 168(h) of the Code; WMC is not a party to any lease made pursuant
to Section 168(f)(8) of the Internal Revenue Code of 1954; and none of the
assets of WMC is subject to a lease under Section 7701(h) of the Code or
under any predecessor section thereof.
(g) None of WMC or any Affiliated Group has currently in effect
any agreements or waivers extending, or having the effect of extending, the
statute of limitations with respect to the assessment or collection of any
Tax with respect to WMC. None of WMC or any Affiliated Group has requested
any extension of time within which to file any Tax Return relating to WMC,
which return has not yet been filed. No power of attorney with respect to
any Taxes is currently in effect with any taxing authority relating to WMC.
(h) WMC and any Affiliated Group have complied in all material
respects with all applicable Laws (or have accrued in accordance with GAAP
any liability for such failure on its books and records) relating to the
payment and withholding of Taxes by WMC (including withholding of Taxes
pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or any comparable
provision of any other Tax Laws).
20
(i) WMC has delivered or made available to Purchaser complete and
correct copies of (i) all material separate or pro forma Tax Returns of WMC
since April 25, 1995 and (ii) all material private letter rulings, revenue
agent reports, information document requests, notices of proposed
deficiencies, deficiency notices, protests, petitions, closing agreements,
settlement agreements, pending ruling requests, and any similar documents,
submitted by, received by or agreed to by or on behalf of WMC since April 25,
1995.
(j) Schedule 3.7 of the Disclosure Schedules sets forth each
jurisdiction in which WMC joins or has joined for any Taxable Period ending
after 1995 in the filing of any consolidated, combined or unitary Tax Return.
(k) WMC is not "United States real property holding corporation"
within the meaning of Section 897 of the Code.
(l) Glenayre is not a "foreign person" within the meaning of
Section 1445 of the Code.
(m) Schedule 3.7 of the Disclosure Schedules sets forth, as of
December 31, 1998, the amount of any net operating loss carryforwards of WMC.
The net operating loss carryforwards are not subject to any limitation on use
under Section 382 of the Code or otherwise.
3.8 Employees and Fringe Benefit Plans.
(a) Schedule 3.8(a) of the Disclosure Schedules lists each
material employment, bonus, commission, deferred compensation, pension, stock
option, stock appreciation right, employee stock ownership, profit-sharing,
retirement, medical, vacation, retiree medical, severance pay plan or
arrangement, and each other material agreement or fringe benefit plan or
arrangement contributed to by WMC or under which current or former employees
of WMC are eligible to participate (collectively, the "Plans"). Except as
disclosed in Schedule 3.8(a) of the Disclosure Schedules, none of the Plans
are sponsored or maintained by WMC.
(b) Except as disclosed in Schedule 3.8(b) of the Disclosure
Schedules, WMC has complied in all material respects with all applicable Laws
relating to its employees' employment and/or employment relationships,
including ERISA, employment termination Laws, employment leave Laws, wage and
hour Laws, anti-discrimination Laws, employee safety Laws and workers
compensation Laws.
3.9 Title to Assets
(a) WMC owns no real property. Schedule 3.9(a) of the Disclosure
Schedules lists all leases and subleases (including amendments thereto) of
21
real property ("Leased Property") under which WMC is a lessee or sublessee
(the "Leases"). WMC has delivered to the Purchaser true and correct copies
of all Leases. Except as described in Schedule 3.9(a) of the Disclosures
Schedules, WMC has a valid and enforceable leasehold interest under all of
the Leases, subject only to the terms and conditions set forth in the Leases
and except as such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or similar Laws affecting creditors'
rights generally and by such principles of equity as may affect the
availability of equitable remedies. WMC is not in default in any material
respect (including any monetary defaults) under any Lease, and there does not
exist any event which, with notice or the lapse of time or both, would
constitute such a default by WMC thereunder. To the Knowledge of GTI,
Glenayre and WMC, except as set forth in Schedule 3.9(a) of the Disclosure
Schedules, the landlord under each Lease is not in default thereunder and
there does not exist any event which with notice or the lapse of time or both
would constitute a default by such landlord thereunder.
(b) WMC has good and valid title to all machinery and equipment,
computers (excluding software and other intellectual property contained
therein), furniture, parts, transportation equipment and other tangible
personal property (other than Inventory) reflected on the balance sheet dated
as of June 30, 1999 included in the Financial Statements (the "Balance
Sheet"), plus any such additional tangible personal property acquired after
June 30, 1999, and less any such tangible personal property disposed of in
the ordinary course of Business after June 30, 1999 (the "Equipment"), in
each case free and clear of all Liens, except for Permitted Liens and those
Liens set forth on Schedule 3.9(b) of the Disclosure Schedules. All the
Equipment has been maintained in all material respects in accordance with the
past practice of WMC and generally accepted industry practice. All leased
personal property of WMC is in all material respects in the condition
required of such property by the terms of the lease applicable thereto during
the term of the lease and upon the expiration thereof.
(c) WMC will have good and valid title to all inventory to be
reflected on the Closing Balance Sheet (the "Inventory"), in each case free
and clear of all Liens, except for Permitted Liens, those Liens set forth on
Schedule 3.9(c) of the Disclosure Schedules and Customer Liens. As of June
30, 1999, the value of Loaned Inventory was less than $450,000 and the value
of the Rented Inventory was less than $45,000. Except as set forth in
Schedule 3.9(c) of the Disclosure Schedules, since June 30, 1999, there have
not been any write-downs of the value of, or establishment of any reserves
against, any inventory, except for write-downs and reserves in the ordinary
course of Business and consistent with past practice which have not had,
either individually or in the aggregate, a WMC Material Adverse Effect.
(d) Except as set forth on Schedule 3.9(d) of the Disclosure
Schedules, all accounts receivable of WMC to be reflected on the Closing
22
Balance Sheet (the "Receivables") will have arisen from bona fide
transactions in the ordinary course of Business and will constitute valid and
enforceable claims of WMC. The Receivables will be free and clear of all
Liens, except for Permitted Liens and those Liens set forth on Schedule
3.9(d) of the Disclosure Schedules. Since June 30, 1999, there have not been
any write-offs as uncollectible of any notes or accounts receivable of WMC,
except for write-offs in the ordinary course of Business and consistent with
past practice which have not had, either individually or in the aggregate, a
WMC Material Adverse Effect.
(e) Schedule 3.9(e) of the Disclosure Schedules sets forth, as of
the date of this Agreement, a list of (1) all patents, trademark, service
mark, corporate name, domain name, trade name and copyright registrations,
and all applications for any of the foregoing, owned by WMC or used by WMC in
conducting the Business (the "Registered Intellectual Property"); and (2) all
Contracts of WMC relating to licenses of the WMC Intellectual Property (as
defined below) to third parties other than Contracts entered into in the
ordinary course of the Business. The WMC Intellectual Property owned by WMC
is referred to herein as the "Owned WMC Intellectual Property" and the WMC
Intellectual Property licensed by WMC from other Persons is referred to
herein as the "Licensed WMC Intellectual Property." Except as set forth on
Schedule 3.9(e) of the Disclosure Schedules, WMC owns or has a license to use
the Registered Intellectual Property and all trade secrets, computer
software, technology, know-how and all other intellectual property and other
proprietary rights necessary for the conduct of the Business (collectively,
the "WMC Intellectual Property") without payment to any other Person. Except
as set forth in Schedule 3.9(e) of the Disclosure Schedules, WMC owns and
possesses all right, title and interest in and to the Owned WMC Intellectual
Property free and clear of any Liens except for Permitted Liens. The rights
of WMC under all material Contracts with respect to the Licensed WMC
Intellectual Property are valid and enforceable by WMC in accordance with
their respective terms except as such enforceability may be limited by
applicable bankruptcy, insolvency and other similar Laws affecting creditors'
rights generally and by such principles of equity as may affect the
availability of equitable remedies. Except as set forth in Schedule 3.9(e)
of the Disclosure Schedules, (1) WMC has no claim(s) pending or asserted (or,
to GTI's, Glenayre's and WMC's Knowledge, threatened or unasserted) against
any other Person relating to the WMC Intellectual Property; (2) no other
Person has any claim(s) asserted (or, to GTI's, Glenayre's and WMC's
Knowledge, threatened or unasserted) against WMC relating to the WMC
Intellectual Property; and (3) the Owned WMC Intellectual Property does not
infringe, and to GTI's, Glenayre's and WMC's Knowledge the Business does not
infringe, on any intellectual property owned or controlled by any other
Person.
23
(f) Except as set forth in Schedule 3.9(f), Schedule 3.10 or
Schedule 3.17 of the Disclosure Schedules or any agreement which is related
to the Transactions or the Financing, WMC is not a party to or bound by any:
(1) written (or material oral) employment agreement or contract
that has an aggregate future liability for any 12-month period in excess
of $100,000, except for an employment agreement or contract terminable
at will by WMC without cost or penalty in excess of $25,000;
(2) covenant of WMC not to compete or other covenant of WMC
restricting in any material respect the development, manufacture,
marketing, distribution or sale of the products and services of WMC;
(3) agreement, contract or other arrangement with (A) GTI,
Glenayre or any Affiliate of GTI (other than WMC) or (B) any officer,
director or employee of WMC, GTI or any Affiliate of GTI (other than
employment agreements covered by Section 3.9(f)(1) or Plans described on
Schedule 3.8(a) of the Disclosure Schedules);
(4) lease, sublease or similar agreement with any Person (other
than WMC) under which WMC is a lessor or sublessor of, or makes
available for use to any Person (other than WMC), (A) any Leased
Property or (B) any portion of any premises otherwise occupied by WMC;
(5) (A) continuing Contract for the future purchase of materials,
supplies or equipment, (B) management, service, consulting or other
similar type of contract, in any such case which has an aggregate future
liability for any 12-month period to any Person (other than WMC) in
excess of $100,000 and is not terminable by WMC by notice of not more
than 60 days without cost or penalty in excess of $25,000 per agreement
or contract;
(6) material Contract relating in whole or in part to WMC
Intellectual Property (including any license or other agreement under
which WMC is licensee or licensor of any such WMC Intellectual
Property), except for non-disclosure agreements entered into with
employees of WMC in the ordinary course of Business and licenses of WMC
Intellectual Property in connection with the sale of WMC products in the
ordinary course of Business;
(7) Contract under which WMC has borrowed any money from, or
issued any note, bond, debenture or other evidence of indebtedness to,
any Person (other than WMC) or any other note, bond, debenture or other
evidence of indebtedness issued to any Person (other than WMC);
(8) Contract (including so-called take-or-pay or keep-well
agreements) under which (A) any Person (including WMC) has directly or
24
indirectly guaranteed indebtedness, liabilities or obligations of WMC or
(B) WMC has directly or indirectly guaranteed indebtedness, liabilities
or obligations of any Person, in each case other than endorsements for
the purpose of collection in the ordinary course of Business;
(9) Contract under which WMC has, directly or indirectly, made any
advance, loan, extension of credit or capital contribution to, or other
investment in, any Person (other than WMC), other than routine travel
advances;
(10) mortgage, pledge, security agreement, deed of trust or other
instrument granting a Lien upon any property or asset of WMC (other than
a Permitted Lien or a Lien disclosed on the Disclosure Schedules);
(11) Contract providing for indemnification of any Person with
respect to liabilities relating to any current or former business of
WMC, other than any indemnification included in sales orders or
Contracts in the ordinary course of Business;
(12) a material Contract not made in the ordinary course of
Business;
(13) a confidentiality agreement, other than confidentiality
agreements entered into by employees of WMC with WMC in the ordinary
course of Business;
(14) a Contract (including a sales order) involving the obligation
of WMC to deliver products or services for payment of more than $100,000
or extending for a term more than 180 days from the date of this
Agreement, in each case unless terminable without material payment or
penalty upon no more than 60 days' notice;
(15) a Contract for the sale of any material asset of WMC (other
than inventory sales in the ordinary course of Business) or the grant of
any preferential rights to purchase any such asset or requiring the
consent of any party to the transfer thereof;
(16) a currency exchange, interest rate exchange, commodity
exchange or similar Contract;
(17) a Contract for any joint venture, partnership or similar
arrangement;
(18) a Contract providing for the services of any dealer,
distributor, sales representative, franchisee or similar representative
involving the payment or receipt over the life of such Contract in
excess of $100,000 by WMC;
25
(19) a Contract providing for the provision of advertising
services and involving the payment or receipt over the life of such
Contract in excess of $75,000 by WMC;
(20) any Contract pursuant to which WMC is entitled to receive
aggregate payments thereunder in excess of $100,000 after the date of
this Agreement in any calendar year;
(21) other Contract to which WMC is a party or by or to which it or
any of its assets or business is bound or subject which has an aggregate
future liability to any Person (other than WMC) in excess of $100,000
and is not terminable by WMC by notice of not more than 60 days without
cost or penalty; or
(22) a Contract other than as set forth above to which WMC is a
party or by which it or any of its assets or the Business is bound or
subject that is material to the Business.
Except as set forth in Schedule 3.09(f) or 3.10 of the Disclosure
Schedules, all Contracts required to be listed in the Disclosure Schedules
pursuant to clauses (1) through (22) above (the "Material Contracts") are
valid, binding and in full force and effect and the rights of WMC under all
Material Contracts are valid and enforceable by WMC in accordance with their
respective terms except as such enforceability may be limited by applicable
bankruptcy, insolvency and other similar Laws affecting creditors' rights
generally and by such principles of equity as may affect the availability of
equitable remedies. WMC has performed all material obligations to be
performed by it to date and is not in default in any material respect (nor
does any circumstance exist which, with notice or the passage of time or
both, would result in such a default) under the Material Contracts. To the
Knowledge of GTI, Glenayre and WMC, the other party to each Material Contract
is not in default thereunder in any material respect (nor does any
circumstance exist which with notice or the passage of time or both, would
result in such a default.) None of GTI, Glenayre or WMC has, except as
disclosed in the applicable Disclosure Schedule, received any written notice
of the intention of any party to terminate any Material Contract. Purchaser
has been supplied with a true and correct copy of each of the written
Material Contracts and a general description of all oral Material Contracts.
3.10 Personal Property Leases. Schedule 3.10 of the Disclosure
Schedules sets forth (i) all leases by WMC of tangible personal property to
any other Person and (ii) all leases by WMC of tangible personal property
from any other Person, for each lease under clause (i) or (ii) with a term of
12 months or greater or which include annual payments in excess of $50,000
(collectively, "Personal Property Leases"). The rights of WMC under all
Personal Property Leases are valid and enforceable by WMC in accordance with
their respective terms except as such enforceability may be limited by
26
applicable bankruptcy, insolvency and other similar Laws affecting creditors'
rights generally and by such principles of equity as may affect the
availability of equitable remedies and shall be in full force and effect
without penalty in accordance with their terms upon the consummation of the
Transactions. WMC is not in default in any material respect (nor does any
circumstance exist which, with notice or the passage of time or both, would
result in such a default) under the Personal Property Leases. To the
Knowledge of GTI, Glenayre and WMC, the other party to each Personal Property
Lease is not in default thereunder in any material respect (nor does any
circumstance exist which, with notice or the passage of time, or both, would
result in such a default). Purchaser has been supplied with a true and
correct copy of each of the written Personal Property Leases or, in the case
of Personal Property Leases described in Item #1 of Schedule 3.10 of the
Disclosure Schedules the form of such lease attached as Attachment 11 to such
Schedule, and a general description of all material oral Personal Property
Leases.
3.11 Lawfully Operating. Except as set forth on Schedule 3.11 of
the Disclosure Schedules, WMC has complied in all material respects and is in
compliance in all material respects with all Laws applicable to WMC,
including those relating to occupational health and safety. This Section
3.11 does not relate to Environmental Laws. Except as set forth in Schedule
3.11 of the Disclosure Schedules, none of GTI, Glenayre or WMC has received
any written communication during the past two years from a Governmental
Authority that alleges that WMC is not in compliance in any material respect
with any Laws. WMC validly holds and is in compliance in all material
respects with all material permits, licenses, bonds, approvals, franchises,
certificates (including certificates of occupancy), registrations,
accreditations and other governmental authorizations necessary for the
conduct of the Business (collectively, "Permits"). Schedule 3.11 of the
Disclosure Schedules sets forth a true and complete list of all Permits.
None of the Permits are subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery of this Agreement, the
WMC Additional Agreements or the Glenayre Additional Agreements or the
consummation of the Transactions. All of the Permits which are held in the
name of any employee, officer, director, stockholder, agent or otherwise on
behalf of WMC shall be deemed included under this warranty.
3.12 Litigation. Except as set forth on Schedule 3.12 of the
Disclosure Schedules, there are no actions, suits, proceedings (including any
arbitration proceedings), judgments, settlements, decrees, injunctions or
orders outstanding, pending or, to GTI's Glenayre's and WMC's Knowledge,
threatened against WMC, or pending or threatened by WMC against any Person,
or which WMC intends to initiate, at law or in equity, or before or by any
Governmental Authority. Except as set forth in Schedule 3.12 of the
Disclosure Schedules, to the Knowledge of GTI, Glenayre and WMC, there are no
unasserted claims of the type that would be required to be disclosed in
27
Schedule 3.12 of the Disclosure Schedules if counsel for the claimant had
contacted GTI, Glenayre or WMC and which if asserted would have at least a
reasonable possibility of an adverse determination and would have a WMC
Material Adverse Effect. Except as described on Schedule 3.12 of the
Disclosure Schedules, to GTI's, Glenayre's and WMC's Knowledge, there are no
investigations or claims pending or threatened against WMC before or by any
Governmental Authority. Except as set forth on Schedule 3.12 of the
Disclosure Schedules, neither WMC is not subject to any judgment, order or
decree of any Governmental Authority.
3.13 Labor Matters. WMC is not a party to any collective
bargaining agreement or other contract with a labor union. To the Knowledge
of GTI, Glenayre and WMC, except as set forth on Schedule 3.13 of the
Disclosure Schedules, (i) there is, and during the past two years there has
been, no labor strike, material labor dispute, work stoppage or lockout
pending or, to the Knowledge of GTI, Glenayre and WMC, threatened against
WMC; (ii) no union organizational campaign is in progress with respect to the
employees of WMC and no question concerning representation exists respecting
such employees; (iii) WMC is not engaged in any unfair labor practice; (iv)
there is no unfair labor practice charge or complaint against WMC pending or,
to the Knowledge of GTI, Glenayre and WMC, threatened before the National
Labor Relations Board; (v) there are no pending or, to the Knowledge of GTI,
Glenayre and WMC, threatened charges against WMC before the Equal Employment
Opportunity Commission or any state or local agency responsible for the
prevention of unlawful employment practices; and (vi) none of GTI, Glenayre
or WMC has received written notice during the past two years of the intent of
any Governmental Authority responsible for the enforcement of labor or
employment laws to conduct an investigation of WMC and, to the Knowledge of
GTI, Glenayre and WMC, no such investigation is in progress.
To the Knowledge of GTI, Glenayre and WMC, no employee of WMC is a
party to or bound by any Contract of any nature, or subject to any judgment,
decree or order of any Governmental Authority, that may interfere with the
use of such person's best efforts to promote the interests of WMC or conflict
with the Business or the Transactions if such interference or conflict would
have a WMC Material Adverse Effect. To the Knowledge of GTI, Glenayre and
WMC, no activity of any employee of WMC as or while an employee has caused a
violation of any employment contract, confidentiality agreement, patent
disclosure agreement, or other contract or agreement which would have a WMC
Material Adverse Effect. To the Knowledge of GTI, Glenayre and WMC, neither
the execution and delivery of this Agreement, nor the conduct of the Business
by the employees of WMC will conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any
Contract under which any such employees are now obligated if such conflict or
breach would have a WMC Material Adverse Effect.
28
3.14 Bank Accounts and Depositories. Schedule 3.14 of the
Disclosure Schedules lists (i) all bank and savings accounts, certificates of
deposits, lock boxes, safe deposit boxes and other depositories of WMC and
the names of all Persons authorized to draw or sign thereon or to have access
thereto, (ii) true and correct copies of all corporate borrowing, depository
and transfer resolutions and those Persons entitled to act thereunder and
(iii) a true and correct list of all powers of attorney granted by WMC and
those Persons authorized to act thereunder.
3.15 Brokers. There is no Contract by GTI, Glenayre, WMC or any of
their Affiliates with any Person that may result in the obligation of WMC,
WMC Sub or Purchaser to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the Transactions. GTI
has entered into an agreement with Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") for investment banking services in connection with the
Transactions, and GTI or Glenayre shall pay, or cause to be paid, all of the
fees and expenses of DLJ in connection therewith.
3.16 Environmental Laws. WMC has complied in all material respects
and are in compliance in all material respects with all Environmental Laws
and WMC holds, and is in compliance in all material respects with, all
environmental permits necessary for the operation of the Business. None of
WMC, Glenayre, GTI or Glenayre Electronics has received any written notice,
claim, report or other information regarding any violation or alleged
violation by WMC of, or liability or alleged liability of WMC under,
Environmental Laws. To the Knowledge of GTI, Glenayre and WMC, there are no
Hazardous Substances on, in, or under any property currently or formerly
owned or operated by WMC and WMC has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or released
any Hazardous Substance at any location, or owned or operated any facility
at any location in a manner that has given or would give rise to any
liabilities or investigative, corrective or remedial obligations, of
Purchaser or WMC pursuant to CERCLA or any other Environmental Laws. WMC has
not retained or assumed by contract or operation of law any material
liability or obligation of another Person under any Environmental Law. To
the Knowledge of GTI, Glenayre and WMC, there are no past or present facts,
circumstances or conditions that reasonably could be expected to give rise to
any material liability of WMC under any Environmental Law. All reports,
audits assessments and other similar documents in the possession of GTI,
Glenayre or WMC relating to any material liability of WMC under any
Environmental Law or Hazardous Substance have been provided to Purchaser.
3.17 Insurance. Schedule 3.17 of the Disclosure Schedules contains
a description of each insurance policy maintained by or on behalf of WMC
with respect to its properties, assets and the Business. All such policies
are in full force and effect, all premiums due and payable thereon have been
paid (other than retroactive or retrospective premium adjustments that are
29
not yet, but may be, required to be paid with respect to any period ending
prior to the Closing Date under comprehensive general liability and workmen's
compensation insurance policies), and no notice of cancellation or
termination has been received with respect to any such policy which has not
been replaced on substantially similar terms prior to the date of such
cancellation.
3.18 Affiliations. Except as set forth on Schedule 3.18 of the
Disclosure Schedules, there are currently no intercompany Contracts or
services provided to or on behalf of WMC by GTI, Glenayre or any of their
Affiliates and after the Closing neither GTI, Glenayre or any of their
Affiliates will have any interest in any property (real or personal, tangible
or intangible) or contract used in or pertaining to the Business. Neither
Glenayre, GTI nor any of their Affiliates has any direct ownership interest
in any Person with which WMC competes or has a material business
relationship.
3.19 Corporate Name. Except as set forth in Schedule 3.19 of the
Disclosure Schedules, without limiting the generality of Section 3.9(e), to
the Knowledge of GTI, Glenayre and WMC, WMC (i) has the exclusive right to
use its name as the name of a corporation in any jurisdiction in which WMC
does business and (ii) have not received any notice of conflict during the
past two years with respect to the rights of others regarding the corporate
names of WMC. Except as set forth in Schedule 3.19 of the Disclosure
Schedules, to the Knowledge of GTI, Glenayre and WMC, no Person is presently
authorized by GTI, Glenayre or WMC to use the name of WMC. GTI and Glenayre
have previously delivered to Purchaser copies of any Contracts to which any
of them is a party granting any authorizations of the type referred to in the
previous sentence.
3.20 Effect of Transaction. Except as set forth in Schedule 3.20
of the Disclosure Schedules, no creditor, key employee, major customer or
other Person having a material business relationship with WMC has informed
GTI, Glenayre or WMC that such Person intends to change such relationship
because of the Transactions where such change would have an WMC Material
Adverse Effect.
3.21 Disclosure. No representation or warranty of GTI or Glenayre
contained in this Agreement, the Disclosure Schedules or the certificate
referred to in Section 6.2(a) contains or will contain any untrue statement
of a material fact or omits to state any material fact necessary, in light of
the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
3.22 Suppliers. Except as set forth in Schedule 3.22 of the
Disclosure Schedules, between June 30, 1999 and the date of this Agreement,
WMC has not entered into or made any material Contract for the purchase of
30
merchandise other than in the ordinary course of Business consistent with
past practice. Except for the suppliers named in Schedule 3.22 of the
Disclosure Schedules, WMC does not have any supplier from whom it purchased
more than 5% of the merchandise which it purchased during its most recent
full fiscal year. Except as set forth in Schedule 3.22 of the Disclosure
Schedules, since June 30, 1999, to the Knowledge of GTI, Glenayre and WMC,
there has not been (i) any material adverse change in the business
relationship of WMC with any supplier of merchandise named in Schedule 3.22
of the Disclosure Schedules or (ii) any material adverse change in the supply
agreements or related arrangements with any such supplier.
3.23 Customers. Except for the customers named in Schedule 3.23 of
the Disclosure Schedules, WMC does not have any customer to whom it made more
than 5% of its sales during its most recent full fiscal year. Except as set
forth in Schedule 3.23 of the Disclosure Schedules, since June 30, 1999, to
the Knowledge of GTI, Glenayre and WMC, there has not been (i) any material
adverse change in the business relationship of WMC with any customer named in
Schedule 3.23, or (ii) any material adverse change in the sales agreements or
related agreements with any such customer. During the past two years, WMC
has received no customer complaints concerning its products and services, nor
has it had any of its products returned by a purchaser thereof, other than
complaints and returns which have not, and are not likely to have,
individually a WMC Material Adverse Effect.
3.24 Private Offering. Neither GTI, Glenayre, WMC, nor any of
their Affiliates nor anyone acting on their behalf has issued, sold or
offered any security of WMC to any Person under circumstances that would
cause the issuance and sale of the Purchased Common Shares, as contemplated
by this Agreement, to be subject to the registration requirements of the
Securities Act. Neither GTI nor Glenayre, WMC, any of their Affiliates nor
anyone acting on their behalf will offer any WMC Common Stock or any part
thereof or any similar securities for issuance or sale to, or solicit any
offer to acquire any of the same from, anyone so as to make the issuance and
sale of the Purchased Common Shares subject to the registration requirements
of Section 5 of the Securities Act. Assuming the representations of
Purchaser contained in Section 4.5 are true and correct, the sale and
delivery of the Purchased Common Shares hereunder are exempt from the
registration and prospectus delivery requirements of the Securities Act.
3.25 Year 2000 Compliance.
(a) Except as set forth in Schedule 3.25 of the Disclosure
Schedules, to the Knowledge of GTI, Glenayre and WMC, all computer systems,
software, hardware, equipment, data bases and related assets ("Systems")
owned or used by the Business are Year 2000 Compliant (as defined below).
Except as set forth in Schedule 3.25 of the Disclosure Schedules, all Systems
developed by WMC and included in the Inventory and products sold by the
31
Business are Year 2000 Compliant, and all other Systems included in or used
by such Inventory or products sold by the Business are, to the Knowledge of
GTI, Glenayre and WMC, Year 2000 Compliant.
(b) The Term "Year 2000 Compliant", with respect to a System,
means that such System: (i) is capable of recognizing, processing, managing,
representing, interpreting and manipulating correctly date-related data for
dates earlier and later than January 1, 2000; (ii) has the ability to provide
date recognition for any data element without limitation; (iii) has the
ability to function automatically into and beyond the year 2000 without human
intervention and without any change in operations associated with the advent
of the year 2000; (iv) has the ability to interpret data, dates and time
correctly into and beyond the year 2000; (v) has the ability not to produce
noncompliance in existing data, nor otherwise corrupt such data, into and
beyond the year 2000; (vi) has the ability to process correctly after January
1, 2000, data containing dates before that date; and (vii) has the ability to
recognize all "leap year" dates, including February 29, 2000.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to GTI and Glenayre that:
4.1 Organization and Qualification. Purchaser is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Delaware and has the requisite corporate power and authority to own,
lease and operate its properties, to carry on its business as it is now being
conducted, to enter into this Agreement and the Purchaser Additional
Agreements and to consummate the Transactions.
4.2 Authorization. Purchaser has all necessary corporate power
and authority to execute and deliver this Agreement and the Stockholders'
Agreement and the Transition Services Agreement (the "Purchaser Additional
Agreements"), to perform its obligations hereunder and thereunder and to
consummate the Transactions. The execution, delivery and performance of this
Agreement and the Purchaser Additional Agreements by Purchaser and the
consummation by Purchaser of the Transactions have been duly and validly
authorized by all necessary corporate action on the part of Purchaser. This
Agreement has been duly and validly executed and delivered by Purchaser and
as of the Closing it will have duly executed and delivered the Purchaser
Additional Agreements, and, assuming the due authorization, execution and
delivery of this Agreement and the Purchaser Additional Agreements (as
applicable) by Glenayre, WMC and GTI, this Agreement constitutes, and the
Purchaser Additional Agreements upon execution will constitute, a legal,
valid and binding obligation of Purchaser enforceable against it in
32
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or similar Laws
affecting creditors' rights generally, and by such principles of equity as
may affect the availability of equitable remedies.
4.3 No Conflict; Required Filings and Consents.
(a) The execution, delivery and performance of this Agreement by
Purchaser do not, the execution and delivery and performance of the Purchaser
Additional Agreements by Purchaser will not and the consummation by Purchaser
of the Transactions and compliance by Purchaser with the terms hereof and
thereof will not, (1) conflict with or violate the Certificate of
Incorporation or Bylaws of Purchaser, (2) violate any Law applicable to
Purchaser or (3) result in any breach of or constitute a default (or any
event which, with notice or the passage of time or both, would result in a
default) under or pursuant to, any material Contract, note, bond, mortgage,
deed of trust, instrument, or obligation to which Purchaser is a party.
(b) The execution, delivery and performance of this Agreement by
Purchaser do not, the execution, delivery and performance of the Purchaser
Additional Agreements will not, and the consummation of the Transactions will
not, require any consent, approval, authorization, license, permit order of,
or registration, declaration or filing with or notification to, any
Governmental Authority by or with respect to Purchaser, except for (1)
applicable requirements, if any, of the Securities Act, or Blue Sky Laws, (2)
filings required to be made by Purchaser and GTI or Glenayre under the HSR
Act and (3) those that may be required solely by reason of the participation
of Glenayre, GTI and WMC (as opposed to any other third party) in the
Transactions.
4.4 No Litigation. As of the date hereof, there are no (i)
outstanding judgments, orders, injunctions or decrees of any Governmental
Authority or arbitration tribunal against Purchaser or any of its Affiliates,
(ii) lawsuits, actions or proceedings pending or, to the knowledge of
Purchaser, threatened against Purchaser or any of its Affiliates, or (iii)
investigations by any Governmental Authority which are, to the knowledge of
Purchaser, pending or threatened against Purchaser or any of its Affiliates,
and which, in the case of each of clauses (i), (ii) and (iii), have a
material adverse effect on the ability of Purchaser to consummate the
Transactions.
4.5 Investment Representations.
(a) Purchaser is acquiring the Purchased Common Shares for
investment purposes only, for its own account for the purpose of investment
and not with a present view for the resale thereof in connection with any
distribution or public offering thereof in violation of the Securities Act.
33
(b) Purchaser understands that the Purchased Common Shares have
not been registered under the Securities Act or any Blue Sky Laws and that,
accordingly, the Purchased Common Shares will not be transferable except
pursuant to an exemption from the registration and prospectus delivery
requirements of the Securities Act and any applicable Blue Sky Laws or upon
satisfaction of such requirements.
(c) Purchaser is an "accredited investor" (as such term is defined
in Rule 501 of Regulation D under the Securities Act).
4.6 Brokers. There is no Contract by Purchaser with any Person
that may result in the obligation of GTI or Glenayre to pay any finder's
fees, brokerage or agent's commissions or other like payments in connection
with the Transactions.
ARTICLE 5
COVENANTS
5.1 Covenants of Purchaser, GTI and Glenayre.
(a) During the period from the date hereof and continuing until
the Closing Date (except as expressly contemplated or permitted hereby, or to
the extent Purchaser consents in writing (which consent shall not be
unreasonably withheld or delayed) in the case of GTI's and Glenayre's
obligations and to the extent GTI and Glenayre consent in writing (which
consent shall not be unreasonably withheld or delayed) in the case of
Purchaser's obligations, each of GTI, Glenayre and Purchaser covenants with
the others that, insofar as the obligations relate to it and subject to the
terms and conditions of this Agreement, it shall cooperate and use its
reasonable efforts to cause the conditions to the other party's obligation to
close the Transactions as provided in Article 6 to be fulfilled as
expeditiously as is reasonably practicable.
(b) Purchaser, Glenayre and GTI shall cooperate with each other,
and shall cause their officers, employees, agents, auditors and
representatives to cooperate with each other, for a period of 150 days after
the Closing to ensure the orderly transition of WMC from Glenayre and GTI to
Purchaser and to minimize any disruption to the respective businesses of
Glenayre, GTI, Purchaser or WMC that might result from the Transactions.
After the Closing, upon reasonable written notice, Purchaser, Glenayre and
GTI shall furnish or cause to be furnished to each other and their employees,
counsel, auditors and representatives access, during normal business hours,
such information and assistance relating to WMC as is reasonably necessary
for financial reporting and accounting matters, litigation matters, the
preparation and filing of any Tax Returns, reports or forms or the defense of
34
any Tax claim or assessment. Each party shall reimburse the other for
reasonable out-of-pocket costs and expenses incurred in assisting the other
pursuant to this Section 5.1(b). No party shall be required by this Section
5.1(b) to take any action that would unreasonably interfere with the conduct
of its business or unreasonably disrupt its normal operations (or, in the
case of Purchaser, the business or operations of WMC).
(c) Glenayre, GTI and Purchaser agree that, from the date hereof
through the Closing Date, no public release or announcement concerning the
Transactions shall be issued by any party without the prior consent of the
other parties (which consent shall not be unreasonably withheld), except as
such release or announcement may be required by law or the rules or
regulations of any United States or foreign securities exchange, in which
case the party required to make the release or announcement shall allow the
other parties reasonable time to comment on such release or announcement in
advance of such issuance.
(d) Each of Glenayre, GTI and Purchaser shall as promptly as
practicable, but in no event later than five Business Days following the
execution and delivery of this Agreement, file or cause to be filed with the
United States Federal Trade Commission (the "FTC") and the United States
Department of Justice (the "DOJ") the notification and report form, if any,
required for the Acquisition and any supplemental information requested in
connection therewith pursuant to the HSR Act. Any such notification and
report form and supplemental information shall be in substantial compliance
with the requirements of the HSR Act. Each of Purchaser, Glenayre and GTI
shall furnish to the other parties such necessary information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission which is necessary under the HSR Act. Glenayre, GTI and
Purchaser shall keep each other apprised of the status of any communications
with, and any inquiries or requests for additional information from, the FTC
and the DOJ and shall comply promptly with any such inquiry or request. Each
of Glenayre, GTI and Purchaser shall use its reasonable efforts to obtain any
clearance required under the HSR Act for the Acquisition. Any such
supplemental information shall be in substantial compliance with the HSR Act.
Each party shall bear its own expenses in connection with such filings under
the HSR Act.
(e) On the Closing Date, Glenayre and GTI shall deliver or cause
to be delivered to Purchaser all agreements, documents, books, records and
files, including records and files stored on computer disks or tapes or any
other storage medium (collectively, "Records"), if any, in the possession of
Glenayre and GTI relating to the Business to the extent not then in the
possession of WMC, subject to the following exceptions:
(1) Purchaser recognizes that certain Records may contain
incidental information relating to WMC or may relate primarily to
35
subsidiaries or divisions of Glenayre and GTI other than WMC, and that
Glenayre and GTI may retain such Records;
(2) Glenayre and GTI may retain all Records prepared in
connection with the sale of the Purchased Common Shares and the Redeemed
Shares, including bids received from other parties and analyses relating
to WMC; and
(3) Glenayre and GTI may retain any Tax Returns, reports or
forms, and Purchaser shall be provided with copies of such returns,
reports or forms only to the extent that they relate to WMC's separate
returns or separate Tax liability.
(f) WMC shall be permitted to pay any cash dividends or other
distributions in cash to Glenayre prior to the Closing with respect to the
outstanding capital stock of WMC to the extent that cash is accrued on the
books and records of WMC.
(g) The parties shall reasonably cooperate prior to the Closing to
ensure that the Redemption complies with the applicable corporate law
requirements, including (i) making any adjustments in the Redemption Price
and the Purchase Price so long as the economic benefits to Purchaser and
Glenayre, and the relative ownership of WMC stock immediately after the
Closing, remain the same or (ii) causing WMC to re-incorporate in Delaware
if the Redemption would satisfy the statutory requirements of the Delaware
General Corporation Law and the requirements for "recap accounting." The
parties shall also reasonably cooperate to make such other changes in the
Transactions prior to the Closing so long as neither Purchaser nor Glenayre
is adversely affected by any such change.
(h) Except as otherwise provided in the Transition Services
Agreement, Glenayre, GTI and Purchaser agree that GTI and Glenayre shall have
no obligation to continue to provide any insurance coverage for WMC after the
Closing.
5.2 Covenants of GTI and Glenayre. GTI and Glenayre covenant and
agree with Purchaser that during the period from the date hereof and
continuing until the Closing Date (except as expressly contemplated or
permitted hereby or by the other Transactions or the Financing, or to the
extent that Purchaser shall otherwise consent in writing, which consent shall
not be unreasonably withheld or delayed):
(a) WMC shall carry on and conduct the Business only in the
ordinary course in substantially the same manner as previously conducted and
shall use all reasonable efforts consistent with past practices to preserve
intact its present Business organization, maintain its rights and preserve
36
its relationships with customers, suppliers, employees and others having
business dealings with it.
(b) GTI and Glenayre shall allow all designated officers,
attorneys, accountants and other representatives of Purchaser access at all
reasonable times during regular business hours to WMC's records and files,
correspondence and properties, as well as to all information relating to
commitments, contracts, titles and financial position, or otherwise
pertaining to the Business, as Purchaser shall reasonably request.
(c) Without limiting the generality of Section 5.2, except as
disclosed in Schedule 5.2(c) of the Disclosure Schedules or as otherwise
specifically contemplated by this Agreement or by the other Transactions or
the Financing, GTI and Glenayre will not and will not permit WMC to:
(1) change any provision of the Articles of Incorporation or
Bylaws of WMC;
(2) except as contemplated by this Agreement with respect to
the Transactions, change the number of shares of the authorized, issued
or outstanding capital stock of WMC, redeem or otherwise acquire any
shares of capital stock of WMC or issue or grant any option, warrant,
right or agreement to purchase the capital stock of WMC;
(3) make any capital expenditures (or enter into any leases
required to be capitalized under GAAP) individually in excess of $50,000
or in the aggregate in excess of $150,000, other than reasonable
expenditures necessary to maintain existing assets in good working order
and repair, reasonable wear and tear excepted;
(4) execute, terminate, cancel or materially amend any
Material Contract or enter into any material commitment or transaction,
in each case not in the ordinary course of Business;
(5) grant any severance or termination pay to any service
provider, except for severance benefits paid to employees of WMC
consistent with WMC's past practices;
(6) abandon, cancel, transfer or dispose of any rights to the
WMC Intellectual Property, in whole or in part, except licenses of WMC
Intellectual Property in connection with the sale of WMC products in the
ordinary course of Business consistent with past practice;
(7) incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or guarantee
any debt securities of others;
37
(8) take, or agree (in writing or otherwise) to take, any
action which would make any of the representations or warranties or
covenants of Glenayre or GTI contained in this Agreement materially
untrue or incorrect;
(9) adopt or amend in any material respect any Benefit Plan
or collective bargaining agreement, except as required by Law;
(10) grant to any officer or employee any increase in
compensation or benefits, except in the ordinary course of Business
consistent with past practice or as may be required under existing
agreements and except for any increases for which GTI or Glenayre shall
be solely obligated;
(11) permit any of its assets to become subjected to any Lien
which would have been required to be set forth in Schedules 1.1(a),
3.9(b), 3.9(c), 3.9(d) or 3.9(f) of the Disclosure Schedules if existing
on the date of this Agreement;
(12) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value;
(13) pay, loan or advance any amount to, or sell, transfer or
lease any of its assets to, or enter into any agreement or arrangement
with, Glenayre, GTI or any of their Affiliates (other than WMC);
(14) make any change in any method of accounting or accounting
practice or policy other than those required by GAAP;
(15) acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other
manner, any business or any Person or division thereof or otherwise
acquire any assets (other than inventory) which are material,
individually or in the aggregate, to WMC;
(16) sell, lease or otherwise dispose of any of its assets
which are material, individually or in the aggregate, to WMC except
sales of inventory in the ordinary course of Business consistent with
past practice;
(17) modify, amend, terminate or permit the lapse of any lease
of real property or any lease of any material personal property, except
modifications or amendments associated with renewals of existing leases
in the ordinary course of Business as to which Purchaser shall be
permitted to participate; or
38
(18) agree in writing (or otherwise if legally binding) to do
any of the foregoing.
(d) Without the prior written consent of Purchaser, GTI and
Glenayre shall not knowingly take any action which would cause or would be
reasonably likely to cause any of the conditions to the Transactions set
forth in Article 6 not to be fulfilled.
(e) Glenayre and GTI shall keep confidential, and cause their
Affiliates and instruct their officers, directors, employees and advisors to
keep confidential, all confidential information relating to WMC and the
Business, except as required by Law or administrative process and except for
information which is available to the public on the Closing Date, or
thereafter becomes available to the public other than as a result of a breach
of this Section 5.2(e). The covenant set forth in this Section 5.2(e) shall
terminate five years after the Closing Date.
(f) Glenayre and GTI shall keep, or cause to be kept, all
insurance policies set forth in Schedule 3.17 of the Disclosure Schedules, or
suitable replacements therefor, in full force and effect through the close of
business on the Closing Date.
(g) On the Closing Date, Glenayre and GTI shall, to the extent
permitted under such agreements, assign to Purchaser their rights under all
confidentiality agreements entered into by Glenayre or GTI with any Person in
connection with the proposed sale of WMC to the extent such rights relate to
WMC. Copies of such confidentiality agreements shall be provided to Purchaser
on the Closing Date.
(h) Glenayre and GTI shall have the continuing obligation until
the Closing promptly to supplement or amend the Disclosure Schedules hereto
with respect to any material matter hereafter arising or discovered which, if
existing or known at the date of this Agreement, would have been required to
be set forth or described in such Schedules; provided, however, that (i) no
supplement or amendment to such Schedules shall have any effect for the
purpose of determining the satisfaction of the conditions set forth in
Section 6.3; and (ii) if any supplement or amendment to such Schedule shall
not constitute a condition which permits Purchaser, in its sole and absolute
discretion, to refuse to close the Transactions in accordance with Section
6.3, then such supplement or amendment shall not have any effect for the
purpose of determining the indemnification obligations of Glenayre and GTI
under Article 7.
(i) Glenayre and GTI shall promptly notify Purchaser of, and
furnish Purchaser any information it may reasonably request with respect to,
the occurrence to Glenayre's or GTI's Knowledge of any event or condition or
the existence to Glenayre's or GTI's Knowledge of any fact that would cause
39
any of the conditions to Purchaser's obligation to consummate the
Transactions not to be fulfilled.
(j) To the extent permitted by applicable Law, Glenayre and GTI
covenant that all licenses, permits and authorizations which are held in the
name of any employee, officer, director, stockholder, agent or otherwise on
behalf of WMC shall be duly and validly transferred to WMC without
consideration prior to the Closing on or as soon thereafter as practicable,
and that the warranties, representations, covenants and conditions contained
in this Agreement shall apply to the same as if held by WMC as of the date
hereof.
(k) Glenayre and GTI covenant that prior to the Closing Date all
intercompany receivables and payables in respect of WMC shall be eliminated.
(l) Glenayre and GTI agree to cooperate with Purchaser in
obtaining the Financing, including by making officers and employees of WMC
available to meet with prospective Financing sources and causing WMC to
execute and deliver such agreements, consents, certificates, resolutions and
other documents as are true and accurate and necessary or desirable in
connection with the Financing.
5.3 Covenants of Purchaser. Purchaser covenants with GTI and
Glenayre that, during the period from the date hereof and continuing until the
Closing Date (except as expressly contemplated or permitted hereby, or to the
extent that GTI and Glenayre shall otherwise consent in writing, which consent
shall not be unreasonably withheld or delayed), Purchaser shall not knowingly
take any action which would cause or would be reasonably likely to cause any
of the conditions to the Transactions set forth in Article 6 not to be
fulfilled. Purchaser shall promptly notify Glenayre and GTI of, and furnish
Glenayre and GTI any information they may reasonably request with respect to,
the occurrence to Purchaser's knowledge of any event or condition or the
existence to Purchaser's knowledge of any fact that would cause any of the
conditions to Glenayre's and GTI's obligations to consummate the Transactions
not to be fulfilled.
5.4 Certain Benefit Plans.
(a) Purchaser shall provide the employees of WMC with employee
benefits that are substantially equivalent to those provided to other
employees holding similar positions with Purchaser ("Purchaser's Benefit
Plans"). Purchaser shall use reasonable efforts to cause Purchaser's Benefit
Plans to give employees of WMC credit under Purchaser's Benefit Plans (i) for
their service with WMC prior to the Closing Date for purposes of any
eligibility, vesting, waiting periods or pre-existing condition limitations
otherwise applicable under any of Purchaser's Benefit Plans and (ii) for
amounts paid under GTI's employee benefit plans toward any applicable
40
deductibles, co-payments and out-of-pocket limits as though such amounts had
been paid in accordance with the terms and conditions of Purchaser's Benefit
Plans.
(b) Glenayre shall cause WMC to withdraw as a participating
"Employer" under (and as defined in) the Glenayre Technologies, Inc. 401(k)
Profit Sharing Plan (the "Glenayre 401(k) Plan"), effective as of the Closing
Date, and from and after the Closing Date, WMC shall have no right, power,
discretion, control or authority over, or any rights or interests in or to,
the Glenayre 401(k) Plan or any of its assets, trusts or other funding media.
Employees of WMC shall be deemed to have separated from service under the
Glenayre 401(k) Plan on the Closing Date and shall be eligible to be paid
their vested benefits in accordance with the terms and provisions of the
Glenayre 401(k) Plan.
(c) All employees of WMC who are participants in the medical care
and dependent care spending account plan maintained by GTI or an Affiliate of
GTI ("Glenayre's Spending Accounts") as of the Closing Date shall become
participants in substantially equivalent medical care and dependent care
spending accounts established for such employees by Purchaser ("Purchaser's
Spending Accounts"). Any elections made by employees of WMC with respect to
Glenayre's Spending Accounts shall remain in effect and no change in
elections shall be effected as a result of such employees' becoming
participants in Purchaser's Spending Accounts. No later than 15 days after
the Closing Date, GTI shall provide Purchaser with information concerning the
amount elected by each employee of WMC to be contributed to each of
Glenayre's Spending Accounts for the plan year of the Closing, the amount of
all benefit payments made to such employees from Glenayre's Spending Accounts
for such plan year until the Closing Date and the outstanding balances in
each of Glenayre's Spending Accounts for each such employee as of immediately
prior to the Closing Date. Not later than 60 days following the Closing
Date, GTI shall transfer, or cause to be transferred, to Purchaser the net
aggregate account balances (positive and negative) in Glenayre's Spending
Accounts for such employees of WMC. In consideration of such transfer,
Purchaser shall pay from Purchaser's Spending Accounts all eligible expenses
incurred during the plan year of the Closing by such employees of WMC
(whether before or after the Closing Date) which are unpaid as of the Closing
Date in accordance with the policies in effect with respect to Purchaser's
Spending Accounts for all participants.
(d) On or as soon as practicable after the Closing Date (but in no
event later than 10 Business Days after the Closing Date), Glenayre shall
make payment to the key employees of WMC, which employees shall be selected
by Glenayre prior to the Closing Date, of bonuses (as previously disclosed to
Purchaser) in respect of such employees' participation in the consummation of
the Transactions.
41
(e) As of the Closing Date, WMC shall transfer all assets and
liabilities in respect of all current or former WMC employees who may
participate in the 1999 Deferred Compensation Plan to GTI; thereafter, WMC
shall have no liability under such Deferred Compensation Plan or any other
GTI or Glenayre Plan with respect to any current or former WMC employees,
except as otherwise provided in Section 5.4(c).
5.5 Tax Matters. GTI, Glenayre and Purchaser hereby covenant and
agree as follows with respect to certain Tax matters:
(a) GTI or Glenayre shall be responsible for, shall prepare or
cause to be prepared, and shall timely file or cause to be timely filed, all
Tax Returns of WMC and/or WMC Delaware that are required to be filed on or
prior to the Closing Date; and GTI or Glenayre shall cause WMC and/or WMC
Delaware to pay and be responsible for all Taxes due with respect to such Tax
Returns. GTI and Glenayre shall be responsible for, shall prepare or cause
to be prepared, and shall timely deliver to Purchaser for filing, and
Purchaser shall timely file, with the appropriate taxing authorities, all
separate corporate income and franchise Tax Returns of WMC and/or WMC
Delaware for Taxable Periods ending on or prior to the Closing Date that are
required to be filed after the Closing Date. Purchaser shall be responsible
for all other Tax Returns of WMC and/or WMC Delaware that are required to be
filed after the Closing Date (taking into account extensions); provided,
however, that for any Taxable Period of WMC and/or WMC Delaware that includes
(but does not end on) the Closing Date, Glenayre shall reimburse WMC and/or
WMC Delaware for the Taxes attributable through the Closing Date to the
extent (but only to the extent) not accrued (without taking into account any
accruals for deferred taxes reflecting differences between the tax and book
bases in assets and liabilities) in calculating the Closing Net Worth. WMC
and/or WMC Delaware shall be responsible for the payment of all Taxes accrued
in calculating the Closing Net Worth.
(b) To the extent permitted by Law and consistent with prior year
practice, GTI shall include, or cause to be included, WMC and/or WMC Delaware
in the United States consolidated federal income Tax Returns of GTI and all
other consolidated, combined or unitary income and franchise Tax Returns of
GTI for WMC and/or WMC Delaware's Taxable Periods ending on or prior to the
Closing Date and for that portion of WMC and/or WMC Delaware's then current
Taxable Period that has elapsed as of the Closing Date. GTI and Purchaser
shall, to the extent permitted by applicable Law, elect with the relevant
state taxing authorities where WMC and/or WMC Delaware files a separate
income and franchise Tax Return to close the Taxable Period of WMC and/or WMC
Delaware as of the Closing Date. WMC and/or WMC Delaware shall close its
books as of the close of business on the Closing Date, and Purchaser shall
deliver to GTI within 120 days following the Closing Date all information in
the possession of Purchaser or WMC and/or WMC Delaware that is necessary or
appropriate for GTI to include, or cause to be included, WMC and/or WMC
42
Delaware in such consolidated, combined or unitary Tax Returns and for the
preparation of the separate state Tax Returns.
(c) GTI, Glenayre and Purchaser shall reasonably cooperate, and
shall cause their respective officers, employees, agents, auditors and
representatives to reasonably cooperate, in preparing and filing all Tax
Returns (including amended returns and claims for refund), including
maintaining and making available to each other all records necessary in
connection with Taxes and in resolving all disputes and audits with respect
to all Taxable Periods relating to Taxes. Purchaser recognizes that GTI,
Glenayre and their agents and representatives may need access, from time to
time, after the Closing Date, to certain accounting and Tax records and
information held by WMC and/or WMC Delaware to the extent such records and
information pertain to events occurring on or prior to the Closing Date and
were used in the preparation of Tax Returns. Purchaser agrees that (i) from
and after the Closing Date, Purchaser shall, and shall cause WMC and/or WMC
Delaware to, (A) retain and maintain such records until such time as GTI and
Glenayre reasonably agree that such retention and maintenance is no longer
necessary, and (B) allow GTI, Glenayre and their agents and representatives,
at GTI's or Glenayre's expense, to inspect, review, and make copies of such
records as GTI or Glenayre may reasonably deem necessary or appropriate from
time to time, such activities to be conducted during normal business hours,
and (ii) Purchaser shall not, and shall cause each of WMC and/or WMC Delaware
not to, dispose of any of such records without first providing GTI and
Glenayre with an opportunity to take possession of such records or to make
copies thereof prior to any such disposal.
(d) Whenever any taxing authority asserts, or threatens to assert,
a claim, makes or threatens to make, an assessment or otherwise disputes or
affects the Tax reporting position of WMC and/or WMC Delaware for any Taxable
Period ending on or prior to the Closing Date, Purchaser shall promptly
inform GTI and Glenayre in writing provided, GTI and Glenayre have an
indemnification obligation to Purchaser with respect to such Taxes pursuant
to this Agreement. At GTI's and Glenayre's cost and election (which election
shall be exercised by written notice to Purchaser within 30 days after
Purchaser has so informed GTI and Glenayre), GTI, Glenayre or their
Affiliates shall control any proceedings and shall determine whether and when
to settle any such claim; provided, however, that GTI, Glenayre or their
Affiliates shall obtain WMC and/or WMC Delaware's consent (which shall not be
unreasonably withheld or delayed) if such settlement could reasonably be
expected to have the effect of increasing the future Tax liability of
Purchaser or WMC and/or WMC Delaware. GTI and Glenayre agree, or agree to
cause their Affiliates, to consult with Purchaser and keep Purchaser informed
with respect to the status of any discussion, proposal or submission with
respect to any such claim, audit or similar proceeding. If GTI and Glenayre
do not exercise such election to control such proceedings, then Purchaser
shall control such proceedings and shall consult with GTI and Glenayre and
43
keep GTI and Glenayre informed with respect to the status of any discussion,
proposal or submission with respect to any such claim, audit or similar
proceeding and shall not agree to any settlement thereof without the prior
written consent of GTI and Glenayre, which consent shall not be unreasonably
withheld.
(e) If there is an audit adjustment with respect to Taxes of WMC
and/or WMC Delaware based on income (including adjustments relating to
deductions or credits) in a pre-Closing Taxable Period that produces a Tax
benefit to Purchaser in a post-Closing Taxable Period, Purchaser shall pay to
GTI an amount equal to Purchaser's Tax benefit.
(f) All refunds or credits of Taxes for or attributable to Taxable
Periods of WMC and/or WMC Delaware ending on or before the Closing Date shall
be for the account of GTI, other than any Tax refunds or credits accrued (i)
in calculating the Closing Net Worth or (ii) attributable to a carryback of a
net operating loss or similar tax attribute to a Post-Closing Taxable Period
of WMC and/or WMC Delaware to the extent permitted by Section 5.5(g), in each
case which will be for the account of Purchaser. Purchaser, GTI or Glenayre,
as the case may be, shall cause to be forwarded to the other party or to
reimburse the other party for any such refunds or credits immediately after
such receipt or realization thereof. All refunds or credits of Taxes for or
attributable to Taxable Periods of WMC and/or WMC Delaware ending after the
Closing Date shall be for the account of Purchaser, and, if GTI or any
Affiliates of GTI receives or realizes any such refund or credit, GTI or such
Affiliate shall forward to Purchaser or reimburse Purchaser for any such
refunds or credits immediately after such receipt or realization thereof by
GTI or such Affiliate.
(g) Purchaser shall not carryback, or cause WMC and/or WMC
Delaware to carryback (and shall make or cause WMC and/or WMC Delaware to
make any available election not to carryback), any net operating loss to any
pre-Closing Taxable Period of WMC and/or WMC Delaware nor shall Purchaser
file any claims for any refunds with respect to any such pre-Closing Taxable
Period for federal or state Taxes with respect to any such net operating
losses, except to the extent required by applicable Law.
(h) All Tax sharing agreements and similar agreements (other than
the provisions of this Agreement) between WMC and/or WMC Delaware and any
other corporation shall be terminated as of the Closing Date, and there shall
be no liability to Purchaser, GTI or Glenayre under any such agreement
following the Closing Date.
(i) GTI and Purchaser shall jointly make an election described in
Section 338(h)(10) of the Code and any corresponding election under state,
local or foreign Tax Laws for which a separate election is permissible with
respect to Purchaser's acquisition of the Purchased Common Shares under this
44
Agreement (the "Section 338(h)(10) Election"); provided, however, that no
corresponding election shall be made under the Tax Laws of California. GTI
and Purchaser agree to report the transfers under this Agreement consistent
with the Section 338(h)(10) Election, and shall take no position contrary
thereto unless required to do so by applicable Tax Laws pursuant to a
Determination (as defined by Section 1313(a) of the Code). Purchaser shall
be responsible for the preparation and filing of all returns, documents,
statements or other forms that are required to be submitted to any federal,
state, county or other local Governmental Authority in connection with the
Section 338(h)(10) Election (including any "statement of section 338
election" and the United States Internal Revenue Service Form 8023, together
with any schedules or attachments thereto, that are required pursuant to
Treasury Regulation Section 1.338-1 or 1.338(h)(10)-1) (collectively, the
"Section 338 Forms") in accordance with applicable Tax Laws and the terms of
this Agreement. GTI shall execute and deliver to Purchaser such documents or
forms as are reasonably requested and are required by any Tax Laws to
properly complete the Section 338 Forms, at least 30 days prior to the date
such Section 338 Forms are required to be filed. Purchaser and GTI have
entered into an agreement (the "Allocation Agreement") concerning the
computation of the Aggregate Deemed Sale Price (as defined under applicable
Treasury Regulations) of the assets of WMC and/or WMC Delaware and the
allocation of such Aggregate Deemed Sale Price among such assets. Purchaser
and GTI shall use their best efforts to revise the Allocation Agreement to
the extent necessary to reflect any differences, if any, between the
estimated Closing Balance Sheet and the Closing Balance Sheet no later than
60 days before the last date on which the Section 338(h)(10) Election may be
filed. If, 60 days before the last date on which the Section 338(h)(10)
Election may be filed, Purchaser and GTI have not revised the Allocation
Agreement as described above, any disputed aspects of such revision shall be
resolved before the last date on which the Section 338(h)(10) Election may be
filed by a national or international accounting firm mutually agreed upon by
Purchaser and GTI having no material relationship with either Purchaser or
GTI. The costs, expenses and fees of such accounting firm shall be borne
equally by WMC and/or WMC Delaware and GTI. Purchaser and GTI agree to act
in accordance with the allocations contained in the Allocation Agreement in
any relevant returns or similar filings.
(j) GTI shall be responsible for filing any amended consolidated,
combined or unitary Tax Returns for any Taxable Period ending on or prior to
the Closing Date which are required as a result of examination adjustments
made by the Internal Revenue Service or by the applicable state, local or
foreign taxing authorities for such Taxable Period as finally determined;
provided, however, that no such Tax Return shall be filed without the prior
written consent of Purchaser (which shall not be unreasonably withheld or
delayed) if such Tax Return would have the effect of materially increasing
the Tax liability for WMC and/or WMC Delaware or materially reducing any net
operating loss, net capital loss, investment tax credit, foreign tax credit,
45
charitable deduction or other credit or tax attribute of WMC and/or WMC
Delaware which could reduce Taxes of WMC and/or WMC Delaware after the
Closing (including deductions and credits related to alternative minimum
Taxes). For those jurisdictions in which separate Tax Returns are filed by
WMC and/or WMC Delaware, any required amended returns resulting from such
examination adjustments, as finally determined, shall be prepared by GTI and
furnished to WMC and/or WMC Delaware for approval, signature and filing at
least 15 days prior to the due date for filing such Tax Returns.
(k) After the date of this Agreement, none of GTI, Glenayre or WMC
and/or WMC Delaware or any Affiliated Group shall, as to WMC and/or WMC
Delaware, make or change any Tax election, change an annual Tax Accounting
period, adopt or change any Tax election, change an annual Tax Accounting
period, adopt or change any Tax accounting method, file any amended Tax
Return, enter into any closing agreement, settle any Tax Claim or assessment,
surrender any right to claim a refund of Taxes, consent to any extension or
waiver of the statute of limitations period applicable to any Tax claim or
assessment, if any such election, adoption, change, amendment, agreement,
settlement, surrender or consent would have the effect of materially
increasing the Tax liability of WMC and/or WMC Delaware or materially
reducing any net operating loss, net capital loss, investment tax credit,
foreign tax credit, charitable deduction or any other credit or tax attribute
of WMC and/or WMC Delaware which could reduce Taxes of WMC and/or WMC
Delaware after the Closing (including deductions and credits related to
alternative minimum Taxes) without the prior written consent of Purchaser
(which consent shall not be unreasonably withheld or delayed).
(l) GTI agrees that it shall not elect to reattribute to itself
pursuant to Treasury Regulation Section 1.1502-20(g) any net operating loss
carryovers or net capital loss carryovers of WMC and/or WMC Delaware.
(m) GTI agrees to elect to allocate any consolidated limitation
under Section 382 of the Code to WMC and/or WMC Delaware to provide the
maximum use of any net operating loss carryovers of WMC and/or WMC Delaware.
(n) Prior to the Closing, GTI shall cause WMC and/or WMC Delaware
to settle all Outstanding Tax Claims and pay all amounts owing by WMC and/or
WMC Delaware, including interest and penalties, incurred by WMC and/or WMC
Delaware in connection therewith.
5.6 Maintenance of Records Glenayre, GTI and Purchaser each agrees
that it will maintain, or in the case of Purchaser cause WMC to maintain, for
at least six years after the Closing Date (or for such longer period as may be
required by applicable Law) the books, records, and documents of WMC existing
on the Closing Date retained by it or, in the case of Purchaser, retained by
WMC (collectively, "WMC Records"). For so long as each party is required
pursuant to this Section to maintain WMC Records, such party shall or, in the
46
case of Purchaser shall cause WMC to, permit the other party, during normal
business hours and upon reasonable prior notice, access to, with the right to
copy at such other party's expense, all WMC Records to the extent related to
the other party's legitimate business purpose.
5.7 Further Assurances. GTI, Glenayre and Purchaser each hereby
covenants and agrees with the others that at any time and from time to time it
will promptly execute and deliver to the other such further assurances,
instruments and documents and take such further action as the other may
reasonably request in order to carry out the full intent and purpose of this
Agreement, including (i) all actions reasonably requested in order to obtain
the Financing contemplated by the Commitment Letter, and (ii) all actions
necessary to obtain, prior to the Closing Date, all licenses, certificates,
permits, consents, approvals, authorizations and orders of Governmental
Authorities and parties to contracts relating to the Business as are
necessary for the consummation of the Transactions. At WMC's request, GTI
shall cause Glenayre Electronics to assign, or enforce for WMC's benefit (at
WMC's sole cost and expense), all rights of WMC under nondisclosure
agreements or international distributor agreements or other agreements, in
each case pertaining to the Business, entered into by GTI or its Affiliates.
5.8 Fees and Expenses. GTI, Glenayre and Purchaser shall each bear
their own respective expenses in connection with the negotiation and
preparation of this Agreement and the consummation of the Transactions,
including the fees and expenses of their respective counsel, investment
bankers, accountants and consultants. WMC shall not pay or agree to pay any
third-party out-of-pocket fees or expenses (other than incidental expenses that
are not material in the aggregate) in connection with the negotiation and
preparation of this Agreement and the consummation of the Transactions or the
Financing.
5.9 Non-Compete; Non-Solicitation.
(a) In further consideration of the Purchase Price to be paid
hereunder (and in recognition of the fact that Glenayre and GTI have had the
opportunity to become familiar with the trade secrets of WMC and other
confidential information of WMC, each of Glenayre and GTI agrees that, until
the third anniversary of the Closing Date (the "Noncompete Period"), neither
it nor any of its Affiliates shall directly or indirectly own any interest
in, manage or control or any Person engaged in, or in any manner engage in,
the Business (or any part of the Business that competes in any material
respect with WMC) anywhere in the world; provided that nothing in this
Section 5.9(a) shall prohibit Glenayre or GTI or their respective Affiliates
from (1) being a passive owner of not more than 5% of the outstanding stock
of any class of a corporation which is publicly traded; (2) engaging in any
business conducted by GTI or any Affiliate of GTI (other than WMC or WMC Sub)
on the Closing Date; (3) depleting its current inventory of satellite
receiver products (less than 70 units in stock) manufactured by GTI or its
47
Affiliates; (4) selling products manufactured by third parties that may
compete with the products manufactured or sold by WMC so long as (A) the
products do not bear a Glenayre trademark and (B) such products are sold in
connection with the sale of products by GTI or its Affiliates which are
otherwise permitted by this Section 5.9(a); and (5) engaging in any business
competing with the Business if (A) such competition results from an
acquisition by GTI or any Affiliate of GTI (whether by stock or asset
acquisition, merger, consolidation or otherwise) of the business of another
Person (the portion of such business acquired from such Person that competes
with the Business being referred to herein as the "Acquired Competing
Business"), (B) the net sales derived from such Acquired Competing Business
are less than $25,000,000 during the last 12 months before such acquisition
and constitute 15% or less of the total net sales of the business acquired
from such other Person as of the date of such acquisition and (C) GTI or its
Affiliate promptly offers Purchaser the option to purchase the Acquired
Competing Business from Glenayre or its Affiliate on substantially the same
terms and conditions as Glenayre or its Affiliate acquired the Acquired
Competing Business and if Purchaser does not exercise that option by notice
to Glenayre or its Affiliate within 60 days from receipt by Purchaser of such
offer, Glenayre or its Affiliate shall (i) within 30 days following receipt
by Glenayre of Purchaser's notice, engage a nationally recognized investment
banking firm reasonably acceptable to Purchaser to sell such Acquired
Competing Business, (ii) within 60 days after engaging such firm, distribute
offering materials to prospective purchasers and WMC and (iii) establish as a
preliminary deadline for offers for the Acquired Competing Business a date
which is no later than six months following the engagement of the investment
banking firm, in each case time being of the essence. Nothing shall preclude
WMC from bidding for the Acquired Competing Business in such process. Subject
to the foregoing, Glenayre or its Affiliate shall in any event divest such
Acquired Competing Business within 18 months after the acquisition thereof.
In addition, the restrictions of this Section 5.9(a) shall terminate upon a
Change in Control of GTI.
(b) Prior to the second anniversary of the Closing Date, none of
Glenayre or GTI or their respective Affiliates shall induce or attempt to
induce any employee of WMC to leave the employ of WMC or hire any person who
is employed by WMC as of the Closing Date or who was employed by WMC within
90 days prior to being hired by Glenayre or GTI or their respective
Affiliates, provided that following a Change of Control that occurs before
the second anniversary of the Closing Date, the provisions of this Section
5.9(b) shall continue until the third anniversary of the Closing Date.
(c) If, at the time of enforcement of this Section 5.9, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall
48
be allowed to revise the restrictions contained herein to cover the maximum
period, scope and area permitted by Law. Each of Glenayre and GTI agrees
that the restrictions contained in this Section 5.9 are reasonable.
ARTICLE 6
CONDITIONS
6.1 Conditions to Each Party's Obligation to Close the
Transactions. The respective obligation of each party to close the
Transactions shall be subject to the fulfillment at or prior to the Closing
Date of the following conditions, except to the extent that the parties
hereto may mutually waive in writing any one or more thereof in whole or in
part:
(a) There shall not be pending or threatened by any Governmental
Authority any suit, action or proceeding (or by any other Person any suit,
action or proceeding which has a reasonable likelihood of success), (A)
challenging or seeking to restrain or prohibit the Transactions or seeking to
obtain from Purchaser, GTI, Glenayre or WMC and/or WMC Delaware in connection
with the Transactions any damages that are material, (B) seeking to prohibit
or limit the ownership or operation by Purchaser or WMC and/or WMC Delaware
of any material portion of the business or assets of Purchaser or WMC and/or
WMC Delaware, to compel Purchaser or WMC and/or WMC Delaware to dispose of or
hold separate any material portion of the business or assets of Purchaser or
WMC and/or WMC Delaware in each case as a result of the Transactions, (C)
seeking to impose any material limitations on the ability of Purchaser to
acquire or hold, or exercise full rights of ownership of, the Purchased
Common Shares, including the right to vote the Purchased Common Shares on all
matters properly presented to the stockholders of WMC and/or WMC Delaware or
(D) seeking to prohibit Purchaser from effectively controlling in any
material respect the Business.
(b) All consents, authorizations, orders and approvals of any
Governmental Authority or filings or registrations with any Governmental
Authority (including the expiration or termination of the waiting period
under the HSR Act) required in connection with the execution, delivery and
performance of this Agreement or necessary to permit Purchaser and WMC to
conduct the Business following the Closing shall have been obtained or made,
except for filings required to be made after the Closing Date and except
where the failure to have obtained or made any such consent, authorization,
order, approval, filing or registration would not have a WMC Material Adverse
Effect.
49
(c) No temporary restraining order, preliminary or permanent
injunction, cease and desist order or other legal prohibition preventing the
purchase and sale of the Purchased Common Shares shall be in effect.
6.2 Conditions to Obligations of GTI and Glenayre to Close the
Transactions. The obligations of GTI and Glenayre to close the Transactions
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions, except to the extent that GTI and Glenayre may, in their
sole and absolute discretion, waive in writing any one or more thereof in whole
or in part:
(a) The representations and warranties of Purchaser made in this
Agreement qualified as to materiality shall be true and correct, and those
not so qualified shall be true and correct in all material respects, as of
the date hereof and as of the time of the Closing as though made as of such
time, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of
such earlier date). Purchaser shall have performed or complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Purchaser by the time of the
Closing. Purchaser shall have delivered to GTI and Glenayre a certificate
dated the Closing Date and signed by an authorized officer of Purchaser
confirming the foregoing.
(b) GTI and Glenayre shall have received from Purchaser certified
copies of resolutions adopted by the Board of Directors of Purchaser
authorizing the execution, delivery and performance of this Agreement and the
Purchaser Additional Agreements and the Transactions.
(c) GTI and Glenayre shall have received the Stockholders'
Agreement, duly executed by Purchaser.
6.3 Conditions to Obligation of Purchaser to Close the Transactions.
The obligations of Purchaser to close the Transactions shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions,
except to the extent that Purchaser may, in its sole and absolute discretion,
waive in writing any one or more thereof in whole or in part:
(a) The representations and warranties of GTI and Glenayre made in
this Agreement qualified as to materiality shall be true and correct, and
those not so qualified shall be true and correct in all material respects, as
of the date hereof and as of the time of the Closing as though made as of
such time, except to the extent such representations and warranties expressly
relate to an earlier date(in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
50
qualified shall be true and correct in all material respects, on and as of
such earlier date). GTI and Glenayre shall have performed or complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by GTI and Glenayre by the time of
the Closing. GTI and Glenayre shall each have delivered to Purchaser a
certificate dated the Closing Date and signed by an authorized executive
officer of GTI or Glenayre, as applicable, confirming the foregoing.
(b) All consents from Governmental Authorities or filings or
registrations with any Governmental Authority necessary to permit WMC to
conduct the Business following the Closing and the consents set forth on
Schedule 3.4 of the Disclosure Schedules shall have been obtained or made in
form and substance reasonably satisfactory to Purchaser.
(c) Purchaser shall have received from GTI and Glenayre certified
copies of all resolutions adopted by the Board of Directors of GTI and
Glenayre authorizing the execution, delivery and performance of this
Agreement, the GTI Additional Agreements and the Glenayre Additional
Agreement (as applicable) and the Transactions. Purchaser shall have
received from Glenayre Electronics certified copies of all resolutions
adopted by the Board of Directors of Glenayre Electronics authorizing the
execution, delivery and performance of the Glenayre Electronics Agreements.
Purchaser shall have received from GTI and Glenayre certified copies of all
resolutions adopted by the Board of Directors of WMC Delaware authorizing the
execution, delivery and performance of this Agreement, the WMC Delware
Additional Agreements, the Financing and the Transactions.
(d) Purchaser shall have received from Glenayre the resignations
of the officers and directors of WMC listed on Schedule 2.2 of the Disclosure
Schedules.
(e) WMC and Glenayre Electronics shall have entered into the
Transition Services Agreement.
(f) Purchaser shall have received from Glenayre a certificate in
the form prescribed by Treasury Regulation Section 1.1445-2(b)(2) certifying
that Glenayre is a nonforeign person for purposes of Section 1445 of the
Code.
(g) WMC Delaware shall have received the Term Borrowing and the
Drawdown in accordance with the terms, and subject to the conditions of the
Commitment Letter.
(h) Purchaser shall have received the Stockholders' Agreement,
duly executed by Glenayre, WMC Delaware and GTI.
51
(i) Purchaser shall have received reasonable assurances that WMC
Sub is no longer a subsidiary of WMC.
(j) Purchaser shall have received the Assignment and the License
Agreements, each duly executed by Glenayre Electronics and WMC.
(k) WMC shall have been released as a guarantor of any borrowing
or other obligation of GTI, Glenayre or their Affiliates.
(l) The Sunnyvale Lease shall have been assigned from Glenayre
Electronics to WMC, pursuant to an assignment in form and substance
reasonably satisfactory to Purchaser.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by GTI and Glenayre. Subject to the limitations
set forth in Section 7.4, GTI and Glenayre shall jointly and severally
indemnify and hold harmless the Purchaser Indemnified Parties from and
against any and all Loss or Losses that any of them shall incur, arising out
of (1) the breach of any representation or warranty made by GTI or Glenayre
in this Agreement; (2) any breach of any covenant to be performed by GTI or
Glenayre under this Agreement; (3) any Taxes imposed on or payable by WMC
which are not accrued (without taking into account any accrual for deferred
taxes reflecting differences between tax and book bases in assets and
liabilities) in calculating the Closing Net Worth (w) with respect to any
Taxable Period or portion thereof that ends on or before the Closing Date,
(x) as a result of the Section 338(h)(10) Election with respect to the
acquisition of the Purchased Common Shares as referred to in Section 5.5(i)
hereof, (y) under Treasury Regulation Section 1.1502-6(a) (or any similar
provision of state, local or foreign Law) by reason of WMC being included in
any consolidated, affiliated, combined or unitary group at any time on or
before the Closing Date as a transferee, by contract or otherwise or (z)
relating to any payments required to be made under any Tax indemnity, Tax
sharing, Tax allocation agreement or similar agreement; or (4) the claim
asserted by Custom Telecommunications, Inc. described in Item #2(d) of
Schedule 3.9(e) of the Disclosure Schedules or (5) the conduct, operation or
ownership of WMC Delaware on and prior to October 25, 1999.
7.2 Procedure.
(a) If any matter shall arise that may give rise to a claim by a
Purchaser Indemnified Party against GTI or Glenayre under the provisions of
Section 7.1 or by a Glenayre Indemnified Party against Purchaser under the
provisions of Section 7.5 (in either case, an "Indemnity Claim"), the party
52
or parties claiming indemnification (the "Indemnified Party") shall give
written notice thereof (the "Notice of Claim") to the party or parties
against whom indemnification is claimed (the "Indemnifying Party") as
promptly as reasonably practicable, stating the specific nature of the
Indemnity Claim with reasonable detail as to the alleged basis of the
Indemnity Claim and the Section of this Agreement of which a violation is
alleged, provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent (and only
to the extent) the Indemnifying Party shall have been prejudiced as a result
of such failure. Subject to Section 5.5(d), if any Indemnity Claim is based
upon any claim, demand, suit or action of any third party against an
Indemnified Party (a "Third Party Claim"), then the Indemnified Party shall
or, in the event Purchaser is the Indemnified Party shall cause WMC to,
undertake the defense of such Third Party Claim, shall conduct such defense
as would be reasonable and prudent Person to whom no indemnity were available
and shall permit the Indemnifying Party (at its sole expense) to participate
in (but not control) such defense. The Indemnified Party shall periodically
consult with the Indemnifying Party and keep the Indemnifying Party informed
of any settlement negotiations and the status thereof with respect to such
Third Party Claim.
(b) If the Indemnified Party and the Indemnifying Party are unable
to resolve an Indemnity Claim within 45 days after the Indemnifying Party
receives the Notice of Claim, then the Indemnity Claim shall be referred by
Indemnified Party to, and be settled by, binding arbitration in accordance
with the then applicable Rules of Commercial Arbitration of the American
Arbitration Association. The arbitration panel or arbitrator (as applicable)
shall be selected as provided in Section 7.2(c). The arbitration panel or
arbitrator (as applicable) shall determine the amount, if any, of the
Indemnity Claim which is proper. The venue of the arbitral proceedings shall
be in New York, New York. In reaching a decision, the arbitration panel or
arbitrator (as applicable) shall apply the principles of law of a New York
court, in applying New York law, would use in the event of litigation on the
same issues. The arbitration panel or arbitrator (as applicable) shall
permit and facilitate such discovery as any of the parties to the arbitration
shall reasonably request. The decision rendered by the arbitration panel or
arbitrator (as applicable) shall be final and binding on the Indemnified
Party and then Indemnifying Party. Judgment on the award rendered by the
arbitration panel or arbitrator (as applicable) may be entered in any court
having jurisdiction thereof. The fees and expenses incurred in connection
with such arbitration (including attorneys' fees) shall be borne by the
Indemnified Party and the Indemnifying Party in inverse proportion as they
may prevail on matters resolved by such arbitration panel or arbitrator (as
applicable), which proportionate allocations shall also be determined by such
arbitration panel or arbitrator (as applicable) at the time judgment is
rendered thereby.
53
(c) If the Indemnified Party and the Indemnifying Party cannot
resolve an Indemnity Claim within the 45-day period specified in Section
7.2(b), then promptly thereafter the Indemnified Party shall name an
individual to serve as an arbitrator on the arbitration panel to determine
the Indemnity Claim and shall give the Indemnifying Party notice thereof;
within 10 days after such notice, the Indemnifying Party shall name a second
individual to serve as an arbitrator on such arbitration panel. If the
Indemnifying Party does not name a second individual to serve on the
arbitration panel within such 10-day period, then the arbitrator named by the
Indemnified Party shall serve as the sole arbitrator. If the individual
named by the Indemnifying Party and the individual named by the Indemnified
Party, respectively, cannot agree on a third member within 10 days, then the
selection of a third individual to serve on the arbitration panel shall be
made by the American Arbitration Association or if the American Arbitration
Association fails to choose an arbitrator within 15 days after request by the
Indemnified Party or the Indemnifying Party, the third arbitrator shall be
appointed upon the application of either the Indemnified Party or the
Indemnifying Party to the United States District Court of the Southern
District of New York, or, in the event the jurisdictional requirements of
such Court are not satisfied, to the State Supreme Court of New York County,
New York.
7.3 Definition of Loss or Losses. For purposes of this Agreement,
"Loss" or "Losses" shall mean any and all liabilities, losses, damages, fees,
fines, Taxes, penalties, costs and expenses (including reasonable
accountants' and attorneys' fees) of every nature and character. The amount
of any indemnified Loss hereunder shall be reduced by the amount of (i)
insurance proceeds net of deductibles actually used and incidental expenses
and premium increases reasonably anticipated to result therefrom, (ii)
proceeds or amounts actually received from third parties directly with
respect to such Loss (regardless of when received), and (iii) any actual Tax
benefits which are currently realizable by the Indemnified Party in
connection with or as a result of such Loss. To the extent such Loss does not
give rise to a currently realizable Tax Benefit, and instead gives rise to a
subsequently realized Tax benefit to the Indemnified Party, such party shall
refund to the Indemnifying Party the amount of such Tax benefit when, as and
if realized. The amount of any indemnifiable Loss hereunder shall also be
increased by the amount of any current Tax cost incurred by the Indemnified
Party arising from the receipt of indemnity payments hereunder. In computing
the amount of any such Tax cost or Tax benefit, the Indemnified Party shall
be deemed to recognize all other items of income, gain, loss, deduction, or
credit before recognizing any item arising from the receipt of any indemnity
payment hereunder or the incurrence or payment of any indemnified Loss. Any
indemnity payment under this Agreement shall be treated as an adjustment to
the Purchase Price for Tax purposes, unless otherwise required by Law.
54
7.4 Limitation of GTI's and Glenayre's Liability. Notwithstanding
any provision of the Agreement to the contrary, except in the case of actual
common law fraud on the part of GTI, Glenayre or WMC the liability of GTI and
Glenayre to Purchaser and the Purchaser Indemnified Parties shall be limited
as follows:
(a) After the Closing GTI and Glenayre shall not be liable or
responsible in any manner whatever to Purchaser or the Purchaser Indemnified
Parties, whether for indemnification or otherwise, except for indemnity as
expressly provided in this Article 7, and this Article 7 provides the
exclusive remedy and cause of action of Purchaser or any of the Purchaser
Indemnified Parties against GTI and Glenayre with respect to any matter
arising out of or in connection with this Agreement or the Transactions
(except for equitable relief in the nature of specific performance or
injunctive relief).
(b) GTI and Glenayre shall not have any liability with respect to
any Loss to the extent (and only to the extent) that GTI or Glenayre is
prejudiced as a result of (i) Purchaser's failure to take, or cause to be
taken, such action as may be reasonably necessary under the circumstances to
protect its interests and to otherwise mitigate the Loss, or (ii) Purchaser's
failure to provide GTI and Glenayre with prompt and continuing notice as
provided in Section 5.5(d) or 7.2(a), as applicable.
(c) GTI and Glenayre shall not have any liability for any Loss or
Losses otherwise indemnifiable under Section 7.1(1) or 7.1(4), other than
with respect to breaches of Sections 3.2, 3.3, 3.7 and 3.15, Tax matters
under Section 5.5 and Indemnity Claims under Section 7.1(3), to the extent of
the first $750,000 on a cumulative aggregate basis, of such Loss or Losses.
(d) GTI and Glenayre shall not have any liability to Purchaser
under Section 7.1 for any Loss or Losses, other than with respect to breaches
of Sections 3.2, 3.3, 3.7 and 3.15, Tax matters under Section 5.5 and
Indemnity Claims under Section 7.1(3), on a cumulative aggregate basis, in
excess of 33 1/3% of the total amount of the Purchase Price (as adjusted
pursuant to Section 2.3) and the Redemption Price.
(e) GTI and Glenayre shall not have any liability for any Loss
otherwise indemnifiable under Section 7.1(1), other than with respect to
breaches of Sections 3.2, 3.3, 3.7 and 3.15, Tax matters under Section 5.5
and Indemnity Claims under Section 7.1(3), arising out of any matter
disclosed in all material respects in the Disclosure Schedules or in any
certificate provided by GTI or Glenayre to Purchaser on or before the
Closing.
(f) GTI and Glenayre shall not have any liability for any Loss
otherwise indemnifiable hereunder with respect to which a Notice of Claim has
55
not been given to GTI and Glenayre within the applicable time periods set
forth in Section 9.1.
(g) Purchaser shall have no right to indemnification under Section
7.1 with respect to any Loss to the extent that the matter forming the basis
for such Loss was specifically taken into account in the calculation of the
Closing Net Worth (that is, no "double counting").
(h) The limitations of Section 7.4(c), (d) and (e) shall not apply
to breaches of Sections 3.2, 3.3, 3.7 and 3.15, Tax matters under Section 5.5
or Indemnity Claims under Section 7.1(3).
7.5 Indemnification by Purchaser. Purchaser shall indemnify and
hold harmless the Glenayre Indemnified Parties from and against all Loss or
Losses that any of them incur, arising out of (1) the breach of any
representation or warranty made by Purchaser in this Agreement, (2) any
breach of any covenant to be performed by Purchaser under this Agreement or
(3) any liability of GTI or Glenayre Electronics with respect to the
Sunnyvale Lease arising following the Closing with respect to the period
following the Closing.
ARTICLE 8
TERMINATION
8.1 Termination by Mutual Consent. This Agreement may be
terminated and the Transactions may be abandoned at any time prior to the
Closing Date, by the mutual written consent of GTI, Glenayre and Purchaser.
8.2 Termination by GTI, Glenayre or Purchaser. This Agreement may
be terminated and the Transactions may be abandoned by either GTI, Glenayre
or Purchaser if (1) the Transactions shall not have been consummated by
November 15, 1999; provided, however, that the party (or its Affiliates)
seeking to terminate this Agreement pursuant to this clause (1) has not
caused such failure to close by any action or inaction constituting a breach
of any of its representations, warranties, commitments or agreements
contained in this Agreement, or (2) any Governmental Authority shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Transactions and such
order, decree, ruling or other action shall have become final and
nonappealable; provided, however, that the party (or its Affiliates) seeking
to terminate this Agreement pursuant to this clause (2) shall have used all
reasonable efforts to remove such order, decree, ruling or action or to enter
into any agreement contemplated by this Agreement to be entered into prior to
the Closing.
56
8.3 Termination by GTI and Glenayre. This Agreement may be
terminated and the Transactions may be abandoned at any time prior to the
Closing Date by action or authorization of GTI and Glenayre if (1) there has
been a material breach by Purchaser of any representation or warranty
contained in this Agreement; (2) there has been a material breach of any of
the covenants or agreements set forth in this Agreement on the part of
Purchaser, which breach is not curable or, if curable, is not cured within 30
days after written notice of such breach is given by GTI and Glenayre to
Purchaser; or (3) all of the conditions precedent to Purchaser's obligation
to close the Acquisition shall have been satisfied for at least five Business
Days (other than conditions that by their terms are to be satisfied at the
Closing) but Purchaser shall nevertheless willfully refuse to close the
Transactions for any reason other than those set forth in Sections 8.2 and
8.4.
8.4 Termination by Purchaser. This Agreement may be terminated
and the Transactions may be abandoned at any time prior to the Closing Date
by action or authorization of Purchaser if (1) there has been a breach by GTI
or Glenayre of any representation or warranty contained in this Agreement
which would be reasonably likely to have a WMC Material Adverse Effect; (2)
there has been a material breach of any of the covenants or agreements set
forth in this Agreement on the part of GTI or Glenayre, which breach is not
curable or, if curable, is not cured within 30 days after written notice of
such breach is given by Purchaser to GTI and Glenayre; or (3) all of the
conditions precedent to GTI's and Glenayre's obligations to close the
Transactions shall have been satisfied for at least five Business Days (other
than conditions that by their terms are to be satisfied at the Closing) but
GTI and Glenayre shall nevertheless willfully refuse to close the
Transactions for any reason other than those set forth in Sections 8.1 and
8.3.
8.5 Effect of Termination and Abandonment. Upon termination of
this Agreement pursuant to this Article, this Agreement shall be void and of
no further effect, and there shall be no liability by reason of this
Agreement or the termination thereof on the part of any party hereto or on
the part of the respective directors, officers, employees, agents or
shareholders of any of them, in each case except for the provisions of (i)
the NDA relating to the obligation of Purchaser to keep confidential certain
information and data obtained by it, (ii) Sections 2.1(a) and 5.8 relating to
certain expenses, (iii) Section 5.7 relating to finder's fees and broker's
fees, (iv) Sections 8.1, 8.2, 8.3 and 8.4 and this Section 8.5. Nothing in
this Section 8.5 shall be deemed to release any party from any liability for
any breach by such party of the terms and provisions of this Agreement or to
impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement.
57
8.6 Extension; Waiver. At any time prior to the Closing Date, GTI
and Glenayre, on the one hand, or Purchaser, on the other hand, may (1)
extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (2) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (3) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of GTI, Glenayre or Purchaser to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 9
GENERAL PROVISIONS
9.1 Effectiveness of Representations, Warranties and Covenants.
(a) The representations and warranties in this Agreement shall
survive the Closing as follows:
(1) the representations and warranties set forth in Section
3.7 (Tax Matters) shall expire five years after the Closing Date, but
Indemnity Claims with respect to Taxes may be made under Section 7.1(3)
until the expiration of the 30 day period following the statute of
limitations with respect to matters covered by Section 7.1(3);
(2) the representations and warranties set forth in Section
3.16 (Environmental Laws) shall survive until the expiration of two
years after the Closing Date;
(3) the representations and warranties set forth in Section
3.2 (Capitalization), Section 3.3 (Authorization), Section 3.15
(Brokers), Section 4.2 (Authorization), Section 4.6 (Investment
Representations) and Section 4.7 (Brokers) shall not terminate; and
(4) all other representations and warranties in this
Agreement shall terminate on the later of (A) 60 days after receipt by
the Purchaser of WMC's audited financial statements for the year ended
December 31, 1999 and (B) April 30, 2001;
provided that any representation or warranty in respect of which indemnity
may be sought under Section 7.1 and the indemnity with respect thereto, shall
survive the time at which it would otherwise terminate pursuant to this
Section 9.1 if a Notice of Claim with respect to the inaccuracy or breach or
potential inaccuracy or breach thereof shall have been given to the party
against whom such indemnity may be sought prior to such time.
58
(b) The covenants and all other agreements in this Agreement shall
survive until the expiration of the applicable statute of limitations with
respect to the liabilities in question.
9.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, if delivered
personally or 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 facsimile numbers specified below:
(a) If to Glenayre:
GTI Acquisition Corp.
One Capital Place
P.O. Box 1034
Grand Cayman, British West Indies
Attention: President
Facsimile No.: (345) 949-8499
with copies to:
Glenayre Technologies, Inc.
5935 Carnegie Boulevard
Charlotte, North Carolina 28209
Attention: President
Facsimile No.: (704) 553-7878
Kennedy Covington Lobdell & Hickman, L.L.P.
Bank of America Corporate Center
100 N. Tryon Street
Suite 4200
Charlotte, NC 28202
Attention: Eugene C. Pridgen
Facsimile No.: (704) 331-7598
(b) If to GTI:
Glenayre Technologies, Inc.
5935 Carnegie Boulevard
Charlotte, North Carolina 28209
Attention: President
Facsimile No.: (704) 553-7878
59
with a copy to:
Kennedy Covington Lobdell & Hickman, L.L.P.
Bank of America Corporate Center
100 N. Tryon Street
Suite 4200
Charlotte, NC 28202
Attention: Eugene C. Pridgen
Facsimile No.: (704) 331-7598
(c) If to Purchaser:
WMC Holding Corp.
c/o Leeward Technology Partners
101 California Street
Suite 2825
San Francisco, CA 94111
Attention: Jonathan N. Zakin
Facsimile No.: (415) 772-9289
and:
WMC Holding Corp.
c/o Ripplewood Holding LLC
One Rockefeller Plaza
32nd Floor
New York, NY 10020
Attention: Jeff Hendren
Facsimile No.: (212) 218-2778
with a copy to:
Simpson Thacher & Bartlett
3373 Hillview Avenue
Palo Alto, CA 94304
Attention: Daniel Clivner
Facsimile No.: (650) 251-5002
9.3 Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned
by any of the parties hereto without the prior written consent of the other
parties, except that Purchaser may assign this Agreement and its rights and
obligations hereunder in connection with a merger or consolidation involving
WMC or in connection with a sale of stock or assets of WMC or other
disposition of WMC or the Business. Notwithstanding the foregoing, without
the consent of Glenayre and GTI, (a) Purchaser may assign its right to
purchase the Purchased Common Shares or any portion thereof hereunder and its
60
related obligations hereunder (including with respect to Employees) to an
Affiliate of Purchaser and (b) Purchaser may assign its rights hereunder by
way of security and such secured party may assign such rights by way of
exercise of remedies; provided, however, that no assignment shall limit or
affect the assignor's obligations hereunder. Subject to the preceding
sentences, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Any attempted assignment in violation of this Section 9.3 shall be
void.
9.4 Entire Agreement. Except for the Non-Disclosure Agreement,
dated as of June 25, 1999, between GTI and Ripplewood Holdings (the "NDA"),
this Agreement (together with the other agreements contemplated hereunder)
and the Disclosure Schedules constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto.
9.5 Amendment. This Agreement may not be modified or amended,
except by an instrument in writing signed on behalf of Glenayre, GTI and
Purchaser.
9.6 Governing Law. The validity of this Agreement, the
construction of its terms and the determination of the rights and duties of
the parties hereto shall be governed by and construed in accordance with the
laws of the United States and those of the State of New York applicable to
contracts made and to be performed wholly within such state and
without regard to the conflict of laws principles thereof.
9.7 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the
parties hereto.
9.8 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
61
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first written above.
GTI ACQUISITION CORP.
By: /s/ John C. Berens
---------------------------
Name: John C. Berens
Title: President
GLENAYRE TECHNOLOGIES, INC.
By: /s/ Clarke H. Bailey
----------------------------
Name: Clarke H. Bailey
Title: Chairman
WESTERN MULTIPLEX CORPORATION, a California corporation
By: /s/ Stanley C. Cipcienski
----------------------------
Name: Stanley C. Cipcienski
Title: Chief Financial Officer
WESTERN MULTIPLEX CORPORATION, a Delaware corporation
By: /s/ Jeffrey M. Hendren
---------------------------
Name: Jeffrey M. Hendren
Title: Secretary
WMC HOLDING CORP.
By: /s/ Jeffrey M. Hendren
--------------------------
Name: Jeffrey M. Hendren
Title: Vice President
EX-2.2
3
AMENDMENT TO ACQUISITION AGREEMENT 10-31-99
EXHIBIT 2.2
AMENDMENT
TO
ACQUISITION AGREEMENT
AMENDMENT (this "Amendment"), dated as of October 31, 1999, by and
among GTI ACQUISITION CORP., a Delaware corporation ("Glenayre"); GLENAYRE
TECHNOLOGIES, INC., a Delaware corporation ("GTI"); WESTERN MULTIPLEX
CORPORATION, a California corporation ("WMC California"); WESTERN MULTIPLEX
CORPORATION, a Delaware corporation ("WMC Delaware") and WMC HOLDING CORP., a
Delaware corporation ("Purchaser"), to the Acquisition Agreement, dated as of
September 30, 1999, by and among Glenayre, GTI, WMC California and Purchaser
(the "Acquisition Agreement").
STATEMENT OF PURPOSE
Glenayre, GTI, WMC California and Purchaser are parties to the
Acquisition Agreement;
The Acquisition Agreement provided that the parties would
reasonably cooperate prior to the Closing to ensure that the Redemption
complies with the applicable corporate law requirements and requirements for
"recap accounting" treatment, including making appropriate modifications to
the Acquisition Agreement, if necessary;
In connection therewith, Glenayre has contributed 100% of the
capital stock of WMC California to WMC Delaware, a wholly owned subsidiary of
Glenayre, in exchange for 80,000,000 shares of Class B Common Stock, par
value $.01 per share, of WMC Delaware, and the parties desire that the
Transactions (other than the Charter Amendment) shall apply with respect to
the Class B Common Stock of WMC Delaware rather than the common stock of WMC
California, as provided in the Acquisition Agreement;
Glenayre, GTI, WMC California and Purchaser therefore desire to
amend the Acquisition Agreement to reflect the foregoing changes and to add
WMC Delaware as a party thereto.
NOW, THEREFORE, in consideration of the Statement of Purpose and of
the mutual agreements contained herein, the parties hereto do hereby agree as
follows:
1. Amendment of the Preamble.
-------------------------
a. The Preamble of the Acquisition Agreement is hereby amended in its
entirety to read as follows:
"THIS ACQUISITION AGREEMENT (this "Agreement") is executed as of
September 30, 1999 by and among GTI ACQUISITION CORP., a Delaware
corporation ("Glenayre"); GLENAYRE TECHNOLOGIES, INC., a Delaware
corporation ("GTI"); WESTERN MULTIPLEX CORPORATION, a California
corporation ("WMC" or "WMC California"); WESTERN MULTIPLEX CORPORATION,
a Delaware corporation ("WMC Delaware"); and WMC HOLDING CORP., a
Delaware corporation ("Purchaser")."
b. Except as amended by this Amendment, all references to "WMC" in the
Acquisition Agreement shall be deemed references to "WMC California".
2. Amendment of the Statement of Purpose.
-------------------------------------
a. The Statement of Purpose of the Acquisition Agreement is hereby
amended in its entirety to read as follows:
"Glenayre, a wholly-owned subsidiary of GTI, owns all of the issued and
outstanding capital stock of WMC Delaware, which consists of 80,000,000
shares of Class B Common Stock, par value $.01 per share (the "WMC
Delaware Class B Common Stock").
The parties desire that WMC enter into (i) two term loan facilities
(collectively, the "Term Facilities") under which WMC will borrow the
aggregate principal amount of $22,000,000 (the "Term Borrowing") and
(ii) a $10 million revolving credit facility (the "Revolving Facility")
under which WMC will draw down $2 million at the Closing (the
"Drawdown"), in each case with certain providers of financing arranged
by Purchaser and on substantially the terms set forth in the commitment
letter attached as Exhibit 1 to this Agreement (the "Commitment
Letter").
The proceeds from the Term Borrowing shall be used by WMC to redeem from
Glenayre 42,000,000 shares of WMC Delaware Class B Common Stock (the
"Redeemed Shares") for $21,000,000, as a result of which Glenayre shall
continue to hold 38,000,000 shares of WMC Delaware Class B Common Stock
immediately after such redemption (the "Redemption").
Immediately after the Redemption, Glenayre desires to sell to Purchaser,
and Purchaser desires to purchase from Glenayre, 35,955,000 shares of
WMC Delaware Class B Common Stock (the "Purchased Common Shares") on the
terms and subject to the conditions set forth herein, as a result of
which Glenayre shall continue to hold 2,045,000 shares of WMC Delaware
Class B Common Stock (the "Retained Shares")."
-2-
3. Amendment of Article 1
----------------------
a. Section 1.1. of the Acquisition Agreement is hereby amended by
deleting the references to "Charter Amendment". Sections 1.1
(Transactions), 3.3(d), 3.4(b)(4), 5.2(c)(1) and 5.8 of the Acquisition
Agreement are hereby amended by deleting the reference to "Charter Amendment"
contained therein.
b. Section 1.1. of the Acquisition Agreement is hereby amended by
deleting the definition of "Old WMC Shares" and inserting in lieu thereof the
following:
"'Old WMC California Shares"is defined in Section 3.2(b)."
c. Section 1.1. of the Acquisition Agreement is hereby amended by
deleting the definition of "Stockholders' Agreement" and inserting in lieu
thereof the following:
"Stockholders' Agreement" means the Stockholders' Agreement among
Glenayre, GTI, WMC Delaware and Purchaser substantially in the
form of Exhibit 4 to this Agreement."
d. Section 1.1 of the Acquisition Agreement is hereby amended by
adding the following definitions, in alphabetical order:
"'WMC" or "WMC California" shall mean Western Multiplex
Corporation, a California corporation, and its successors."
"'WMC Delaware' shall mean Western Multiplex Corporation, a
Delaware corporation, and its successors."
"'WMC Class B Common Stock" means the Class B Common Stock of WMC
Delaware, par value $.01 per share."
4. Amendment of Article 2
----------------------
a. Section 2.1(a) of the Acquisition Agreement is hereby amended in
its entirety to read as follows:
"WMC Delaware shall enter into the Term Facilities and the
Revolving Facility and make the Term Borrowing and the Drawdown."
b. Section 2.1(b) of the Acquisition Agreement is hereby amended in
its entirety to read as follows:
"WMC Delaware shall effect the Redemption for $21,000,000 (the
"Redemption Price"), payable by wire transfer of immediately
-3-
available funds to an account designated by Glenayre (such
designation to be not less than two Business Days before the
Closing Date). The Redeemed Shares shall be assigned, transferred
and delivered by Glenayre to WMC Delaware upon redemption free and
clear of all Liens."
c. Section 2.1(d) of the Acquisition Agreement is hereby amended by
deleting the reference to "$18,031,000" in the fourth line and inserting in
lieu thereof the number "$17,977,500."
d. Paragraphs (1) and (2) of Section 2.2(b) of the Acquisition
Agreement are hereby amended in their entirety to read as follows:
"(1) WMC Delaware shall execute the agreements and notes
relating to the Term Facilities and the Revolving
Facility and make the Term Borrowing and the Drawdown.
(2) WMC Delaware shall pay to Glenayre the Redemption Price as set
forth in Section 2.1(b), and Glenayre shall deliver to WMC
Delaware certificates for all of the Redeemed Shares, together
with accompanying stock powers duly endorsed in blank."
e. Paragraph (3) of Section 2.2(b) of the Acquisition Agreement is
hereby amended by substituting clause (viii) in its entirety to read as
follows:
"the Stockholders' Agreement, duly executed by GTI, Glenayre and
WMC Delaware,"
5. Amendment of Article 3
----------------------
a. Section 3.1 of the Acquisition Agreement is hereby amended by
adding the following sentence at the end thereof:
"WMC Delaware is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware and has
the requisite corporate power and authority to own, lease and
operate its properties, to enter into this Agreement and the
Stockholders' Agreement and to consummate the Transactions. WMC
Delaware is not qualified or licensed as a foreign corporation."
b. Section 3.2 of the Acquisition Agreement is hereby amended by
adding a new paragraph (a) as follows and renumbering the existing paragraph
as paragraph (b):
-4-
"The authorized capital stock of WMC Delaware consists of
200,000,000 shares of common stock of WMC, consisting of
100,000,000 shares of Class A Common Stock, par value $.01 per
share and 100,000,000 shares of WMC Delaware Class B Common Stock,
of which only 80,000,000 Shares of WMC Delaware Class B Common
Stock are issued and outstanding. No shares of Class A Common
Stock have been issued. All of the issued and outstanding shares
of WMC Delaware Class B Common Stock have been, and all of the
Redeemed Shares, Purchased Common Shares and Retained Shares will
be, duly authorized and validly issued, are or will be fully paid
and nonassessable, are not or will not be subject to or issued in
violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right
under any provision of the General Corporation Law of Delaware, the
Articles of Incorporation or Bylaws of WMC Delaware or any Contract
to which WMC Delaware is a party or otherwise bound and are or will
be owned by Glenayre, free and clear of any Liens except for this
Agreement and the Stockholders' Agreement and the restrictions on
transferability imposed by federal and state securities Laws.
Immediately prior to the Closing, Glenayre will be the owner
beneficially and of record of, and have good and valid title to,
all the Redeemed Shares, the Purchased Common Shares and the
Retained Shares, and immediately after the Closing, Glenayre will
be the owner beneficially and of record of all the Retained Shares,
in each case free and clear of any Liens, except for the
restrictions on transferability imposed by federal and state
securities Laws and the Stockholders' Agreement. Assuming Purchaser
has the requisite power and authority to be the lawful owner of the
Purchased Common Shares, upon delivery to Purchaser at the Closing
of certificates representing the Purchased Common Shares, duly
endorsed by Glenayre for transfer to Purchaser, and upon Glenayre's
receipt of the Purchase Price, good and valid title to the
Purchased Common Shares will pass to Purchaser, free and clear of
any Liens other than those arising from acts of Purchaser or its
Affiliates, the restrictions on transferability imposed by federal
and state securities Laws and the Stockholders' Agreement. Other
than this Agreement and upon its execution the Stockholders'
Agreement, the issued and outstanding shares of WMC Delaware Class
B Common Stock , Retained Shares, Redeemed Shares and Purchased
Common Shares are not and will not be subject to any voting trust
agreement or other Contract, including any Contract restricting or
otherwise relating to the voting, dividend rights or disposition of
the shares of WMC Delaware Class B Common Stock, Retained Shares,
Redeemed Shares and Purchased Common Shares. Immediately after the
Closing, except for the Purchased Common Shares and the Retained
Shares or any other shares of capital stock of WMC Delaware which
Purchaser causes WMC Delaware to reserve for issuance (including
-5-
any such shares issued or reserved for issuance to employees of WMC
Delaware or WMC in connection with or immediately after the
Closing), there will be no shares of capital stock or other equity
securities of WMC Delaware issued, outstanding or reserved for
issuance. There are no bonds, debentures, notes or other
indebtedness of WMC Delaware having the right to vote (or
convertible into, or exchangeable for, securities having the right
to vote) on any matters on which holders of WMC Delaware common
stock may vote ("Voting Company Debt"). Except as set forth above,
there are no options, warrants, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, or Contract of any kind to which WMC
Delaware is a party or by which either of them is bound (i)
obligating WMC Delaware to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or
other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other
equity interest in, WMC Delaware or any Voting Company Debt, (ii)
obligating WMC Delaware to issue, grant, extend or enter into any
such option, warrant, call, right, security or Contract or (iii)
that give any Person the right to receive any economic benefit or
right similar to or derived from the economic benefits and rights
accruing to holders of WMC Delaware common stock. Other than this
Agreement, there are no outstanding contractual obligations of WMC
Delaware to repurchase, redeem or otherwise acquire any shares of
capital stock of WMC Delaware. WMC Delaware does not own directly
or indirectly any interest or investment in any other Person except
for WMC, and WMC Delaware does not have any obligation to make any
additional investments in any Person. Except as contemplated by
this Agreement, since the date of its incorporation, WMC Delaware
has not conducted any business, owned any assets (other than Old
WMC California Shares) or incurred or assumed any liabilities."
c. Section 3.2 of the Acquisition Agreement is hereby amended by
amending new paragraph (b) to read in its entirety as follows:
"The authorized capital stock of WMC consists of 25,000,000 shares
of common stock of WMC, of which only 1,000 shares are issued and
outstanding (the "Old WMC California Shares"). All of the Old WMC
California Shares have been duly authorized and validly issued, are
fully paid and nonassessable, are not subject to or issued in
violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right
under any provision of the CGCL, the Articles of Incorporation or
Bylaws of WMC or any Contract to which WMC is a party or otherwise
bound and are owned by WMC Delaware, free and clear of any Liens.
The Old WMC California Shares are not and will not be subject to
-6-
any voting trust agreement or other Contract, including any
Contract restricting or otherwise relating to the voting, dividend
rights or disposition of the Old WMC California Shares.
Immediately after the Closing, there will be no shares of capital
stock or other equity securities of WMC California issued,
outstanding or reserved for issuance. There are no bonds,
debentures, notes or other indebtedness of WMC having the right to
vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which holders of WMC common
stock may vote ("WMC Voting Debt"). Except as set forth above,
there are no options, warrants, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, or Contract of any kind to which WMC
is a party or by which either of them is bound (i) obligating WMC
to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other equity interests
in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other equity interest in, WMC or any
WMC Voting Debt, (ii) obligating WMC to issue, grant, extend or
enter into any such option, warrant, call, right, security or
Contract or (iii) that give any Person the right to receive any
economic benefit or right similar to or derived from the economic
benefits and rights accruing to holders of WMC common stock. There
are no outstanding contractual obligations of WMC to repurchase,
redeem or otherwise acquire any shares of capital stock of WMC.
WMC does not own directly or indirectly any interest or investment
in any other Person except for WMC's ownership of shares in a
mutual insurance company through its payment of premiums in the
ordinary course of business, and WMC does not have any obligation
to make any additional investments in any Person."
d. Section 3.3 of the Acquisition Agreement is hereby amended by
amending the first and second sentences of paragraph (d) to read in their
entirety as follows:
"WMC has all necessary corporate power and authority to execute and
deliver this Agreement, the License Agreement and the Assignment
(the "WMC Additional Agreements") and to perform its obligations
hereunder and thereunder. The execution, delivery and performance
of this Agreement and the WMC Additional Agreements by WMC have
been duly and validly authorized by all necessary corporate action
on the part of WMC."
e. Section 3.3 of the Acquisition Agreement is hereby amended by adding
a new paragraph (e) at the end thereof as follows:
-7-
"(e) WMC Delaware has all necessary corporate power and authority
to execute and deliver this Agreement and the Stockholders'
Agreement (the "WMC Delaware Additional Agreements") and to perform
its obligations hereunder and thereunder and to consummate the
Transactions. The execution, delivery and performance of this
Agreement and the WMC Delaware Additional Agreements by WMC
Delaware and the consummation by it of the Transactions have been
duly and validly authorized by all necessary corporate action on
the part of WMC Delaware. This Agreement has been duly and validly
executed and delivered by WMC Delaware and as of the Closing it
will have duly executed and delivered each of the WMC Delaware
Additional Agreements, and, assuming the due authorization,
execution and delivery of this Agreement and the WMC Delaware
Additional Agreements (as applicable) by Purchaser, this Agreement
constitutes, and each of the WMC Delaware Additional Agreements
when executed will constitute, a legal, valid and binding
obligation of WMC Delaware enforceable against it in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or
similar Laws affecting creditors' rights generally and by such
principles of equity as may affect the availability of equitable
remedies."
6. Amendment of Article 5
----------------------
a. Section 5.5 of the Acquisition Agreement is hereby amended by
adding the words "and/or WMC Delaware" following each reference to "WMC" in
such Section.
7. Amendment of Article 6
----------------------
a. Section 6.1 of the Acquisition Agreement is hereby amended by
adding the words "and/or WMC Delaware" following each reference to "WMC" in
paragraph (a).
b. Paragraph (c) of Section 6.3 of the Acquisition Agreement is hereby
amended by adding the following sentence at the end thereof:
"Purchaser shall have received from GTI and Glenayre certified
copies of all resolutions adopted by the Board of Directors of WMC
Delaware authorizing the execution, delivery and performance of
this Agreement, the WMC Delware Additional Agreements, the
Financing and the Transactions."
c. Paragraphs (g) and (h) of Section 6.3 of the Acquisition Agreement
are hereby amended in their entirety to read as follows:
-8-
"(g) WMC Delaware shall have received the Term Borrowing and the
Drawdown in accordance with the terms, and subject to the
conditions of the Commitment Letter.
(h) Purchaser shall have received the Stockholders' Agreement,
duly executed by Glenayre, WMC Delaware and GTI."
8. Amendment of Article 7
----------------------
a. Section 7.1 of the Acquisition Agreement is hereby amended by
adding clause (5) at the end thereof as follows:
"or (5) the conduct, operation or ownership of WMC Delaware on and
prior to October 25, 1999."
b. Section 7.5 of the Acquisition Agreement is hereby amending clause
(3) thereof to read in its entirety as follows:
"(3) any liability of GTI or Glenayre Electronics with respect to
the Sunnyvale Lease arising following the Closing with respect to
the period following the Closing."
9. Amended and Restated Acquisition Agreement.
------------------------------------------
For ease of reference, the parties shall execute and deliver an amended
and restated Acquisition Agreement in the form attached hereto.
10. Definitions.
-----------
Capitalized terms not otherwise defined herein shall have the meaning
ascribed to such terms in the Acquisition Agreement.
11. Counterparts.
------------
This Amendment may be executed in two or more counterparts, and by
different parties on separate counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
* * *
-9-
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
GTI ACQUISITION CORP.
By: /s/ Jon C. Berens
----------------------------
Name: Jon C. Berens
Title: President
GLENAYRE TECHNOLOGIES, INC.
By: /s/ Clarke H. Bailey
----------------------------
Name: Clarke H. Bailey
Title: Chairman
WESTERN MULTIPLEX CORPORATION, a California
corporation
By: /s/ Stanley Cipcienski
----------------------------
Name: Stanley Cipcienski
Title: Chief Financial Officer
WESTERN MULTIPLEX CORPORATION, a Delaware
corporation
By: /s/ Jeffrey M. Hendren
----------------------------
Name: Jeffrey M. Hendren
Title: Secretary
WMC HOLDING CORP.
By: /s/ Jeffrey M. Hendren
----------------------------
Name: Jeffrey M. Hendren
Title: Vice President
-10-
Acquisition Agreement - GTI Acquisitions Corp., Glenayre Technologies Inc., Western Multiplex Corp. and WMC Holding Corp.
Was this helpful?