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-