EXHIBIT 10.1
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
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ARTICLE 1 DEFINITIONS AND CERTAIN RULES OF CONSTRUCTION..............................................2
1.1 Definitions.........................................................................2
1.2 Certain Rules of Construction.......................................................9
ARTICLE 2 RECAPITALIZATION; PURCHASE AND SALE OF THE SHARES..........................................9
2.1 Recapitalization; Purchase and Sale of Shares......................................10
2.2 The Closing........................................................................10
2.3 Post-Closing Purchase Price Adjustment.............................................11
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF GTI AND GLENAYRE........................................12
3.1 Organization and Qualification.....................................................12
3.2 Capitalization.....................................................................12
3.3 Authorization......................................................................14
3.4 No Conflict; Required Filings and Consents.........................................16
3.5 Financial Statements...............................................................17
3.6 Subsequent Events..................................................................17
3.7 Tax Matters........................................................................18
3.8 Employees and Fringe Benefit Plans.................................................20
3.9 Title to Assets....................................................................20
3.10 Personal Property Leases...........................................................24
3.11 Lawfully Operating.................................................................25
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..........................................................................27
3.18 Affiliations.......................................................................27
3.19 Corporate Name.....................................................................27
3.20 Effect of Transaction..............................................................28
3.21 Disclosure.........................................................................28
3.22 Suppliers..........................................................................28
3.23 Customers..........................................................................28
3.24 Private Offering...................................................................28
3.25 Year 2000 Compliance...............................................................29
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.........................................30
4.4 No Litigation......................................................................30
4.5 Investment Representations.........................................................30
4.6 Brokers............................................................................31
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........................................................................38
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...........................................................................46
7.1 Indemnification by GTI and Glenayre................................................46
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....................................................50
8.4 Termination by Purchaser...........................................................51
8.5 Effect of Termination and Abandonment..............................................51
8.6 Extension; Waiver..................................................................51
ARTICLE 9 GENERAL PROVISIONS........................................................................51
9.1 Effectiveness of Representations, Warranties and Covenants.........................51
9.2 Notices............................................................................52
9.3 Assignment; Binding Effect; Benefit................................................54
9.4 Entire Agreement...................................................................54
9.5 Amendment..........................................................................54
9.6 Governing Law......................................................................54
9.7 Counterparts.......................................................................55
9.8 Severability.......................................................................55
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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.
ACGCL" means the California General Corporation Law.
"Change in Control," with respect to GTI, means any of the
following:
(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);
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(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.
"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.
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"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.
"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).
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"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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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).
"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
5
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.
"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.
6
"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.
"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
7
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 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
8
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 ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (or at such
other place as the parties may agree) at 10:00 a.m., local time, (1) as promptly
as 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.
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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 (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 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
10
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
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
11
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 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.
12
(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, 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.
13
(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 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
14
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.
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
▇▇▇▇▇▇▇▇, ▇▇▇, ▇▇▇▇▇▇▇▇
▇▇
Electronics or WMC 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, (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 any incentive bonuses to be paid by Glenayre or GTI to officers or
employees of WMC in connection with the Transactions); or
16
(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
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 ss. 1.1502-6(a) (or any similar provision of state, local or foreign
Law), or as a transferee or successor, by contract or otherwise.
17
(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).
(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.
18
(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 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
19
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 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 ▇▇▇▇, 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
20
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.
(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;
21
(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
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;
22
(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 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
23
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 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
24
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.
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 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ 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
25
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 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.
26
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
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
27
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
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
28
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 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.
29
(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 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).
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(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 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.
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(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 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;
32
(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;
(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;
33
(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
(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
34
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 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
35
Purchaser's Benefit Plans and (ii) for amounts paid under GTI's employee benefit
plans toward any applicable 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.
(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).
36
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 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
37
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 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
38
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 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 ss. 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
39
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,
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 ss. 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.
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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 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
41
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 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.
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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.
(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
43
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 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
44
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 Delaware
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 ss. 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.
(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
45
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 ss. 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 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.
46
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.
(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.
47
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 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").
48
(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.
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.
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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.
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
50
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.
(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.: (▇▇▇) ▇▇▇-▇▇▇▇
51
with copies to:
Glenayre Electronics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
Bank of America Corporate Center
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to GTI:
Glenayre Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
Bank of America Corporate Center
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to Purchaser:
WMC Holding Corp.
c/o Leeward Technology Partners
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
52
and:
WMC Holding Corp.
c/o Ripplewood Holding LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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 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
53
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.
54
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first written above.
GTI ACQUISITION CORP.
By: s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
GLENAYRE TECHNOLOGIES, INC.
By: s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman
WESTERN MULTIPLEX CORPORATION, a
California corporation
By: s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
Title: C.F.O.
WESTERN MULTIPLEX CORPORATION, a
Delaware corporation
By: s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
WMC HOLDING CORP.
By: s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
55
EXHIBIT 2
INTELLECTUAL PROPERTY ASSIGNMENT
--------------------------------
THIS ASSIGNMENT dated this 1st day of November, 1999, from
GLENAYRE ELECTRONICS, INC. ("Electronics"), a Colorado corporation having a
place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
on behalf of itself, its parent corporation Glenayre Technologies, Inc. ("GTI"),
and all of their respective subsidiaries except WMC (collectively, "Assignors")
to WESTERN MULTIPLEX CORPORATION, a California corporation having a place of
business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("WMC").
WHEREAS, pursuant to the Glenayre Omnibus Intellectual
Property Agreement effective December 31, 1994 ("Omnibus Agreement"),
Electronics was designated as sole owner of all present and future intellectual
property rights of Electronics, GTI and their wholly-owned subsidiaries;
WHEREAS, after GTI acquired all of the outstanding capital
stock of WMC in April 1995 (the "Glenayre Acquisition"), and WMC became a
wholly-owned subsidiary thereof, an addendum to the Omnibus Agreement was
executed as of June 20, 1995 (the "Addendum"), whereby all intellectual property
rights of WMC were assigned to Electronics, except for certain trademarks
scheduled in the Addendum;
WHEREAS, pursuant to the Acquisition Agreement by and among
GTI, GTI Acquisition Corp. ("Glenayre"), and WMC dated as of September 30, 1999
("Acquisition Agreement"), Glenayre, a wholly-owned subsidiary of GTI that owned
the shares of WMC as of such date, has agreed to sell the shares of WMC to WMC
Holding Corp.; and
WHEREAS, now that WMC shall no longer be a subsidiary of
Glenayre, Assignors wish to assign to WMC, and WMC wishes to accept the
assignment of all of intellectual property rights that WMC transferred to
Electronics pursuant to the Addendum, and to confirm its ownership of all
intellectual property rights that have remained the property of WMC and were
never transferred to Electronics;
NOW, THEREFORE, for good and valuable consideration (including
that recited in the Acquisition Agreement), the receipt and sufficiency of which
is hereby acknowledged, Assignors hereby assign, transfer and convey to WMC, its
successors, assigns and nominees forever, any and all of Assignors' entire
right, title and interest to and under the following:
1. all intellectual property rights (including without
limitation, all patents, patent applications, inventions, copyrights and
copyrightable works, software, mask works, databases, technology, systems,
know-how, processes, formulae, designs, blueprints, models, confidential or
proprietary information) that (i) WMC or its predecessor owned prior to the
Glenayre Acquisition, or (ii) WMC developed independent from Assignors after the
Glenayre Acquisition, to the extent that Assignors claim any ownership interest
in the foregoing, either pursuant to the Addendum or otherwise;
2. U.S. Patent Application Serial No. 09/033,507, "Method
and Apparatus for Isolating High-Frequency Signals in a Multi-Layer Printed
Circuit Board" (filed March 2, 1998) and a continuing U.S. Patent Application
Serial No. 09/053,045, "Method and Apparatus for Isolating High-Frequency
Signals in a Printed Circuit Board" (filed April 1, 1998), and all reissues,
re-examinations, continuations, continuations-in-part, divisions, inventions,
trade secrets, technology and know-how related thereto (together with 1, the
"Assigned IP");
3. any and all other rights, priorities and privileges
provided under United States, state or foreign law, or multinational law,
compact, treaty, protocol, convention or organization, with respect to the
foregoing, and any and all rights in, to and under any and all licenses and
other agreements and documents relating to any of the Assigned IP ("Related
Rights");
4. any and all rights to ▇▇▇ at law or in equity for any
infringement, imitation, impairment, distortion, dilution or other unauthorized
use or conduct in derogation of the Assigned IP or Related Rights occurring
prior to the Closing Date (as defined in the Acquisition Agreement), including
the right to receive all proceeds and damages therefrom; and
5. any and all rights to obtain renewals, reissues,
re-examinations, continuations, continuations-in-part, divisions, extensions or
other legal protections pertaining to the Assigned IP or Related Rights.
6. To the extent that Assignors do not claim any
ownership interest in any of the Assigned IP or Related Rights, or any other
intellectual property owned or used by WMC, this Assignment shall serve as an
acknowledgment and confirmation by Assignors of WMC's continuing ownership of
such intellectual property and a disclaimer of all current and future ownership
rights therein. Without limiting the generality of the foregoing, Assignors
confirm that WMC has been and remains the owner of (i) the trademarks scheduled
to the Addendum as remaining with WMC; namely:
WM, WESTERN MULTIPLEX CORPORATION AND DESIGN (U.S. Reg. No.
1,317,724);
WM AND DESIGN (U.S. Reg. No. 1,298,505); and
WESTERN MULTIPLEX, WESTERN MULTIPLEX CORPORATION, WM AND
DESIGN (common law);
(ii) the trademarks WM WESTERN MULTIPLEX CORPORATION (U.S. Reg. No. 2,067,842)
and WM & DESIGN (U.S. Reg. No. 2,076,271); and (iii) the Internet domain name
"▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇" and all systems, equipment and intellectual
property rights used on or in connection with, or otherwise related to the
Internet web site operated in connection with such domain name, including all
hardware, software, applications, site content, graphics, audiovisual displays,
"look and feel," trademarks and logos (except as otherwise provided in the
Acquisition Agreement), networks, connectivity, and all rights in any
third-party licenses or other agreements relating to such web site.
2
7. WMC, its successors and assigns, shall hold the
rights to the Assigned IP and Related Rights for and during the existence of the
foregoing, as fully and as entirely as the same would have been held and enjoyed
by Assignors had this Assignment not been made. Assignors agree that all
Assigned IP and Related Rights are no longer covered or governed by, or subject
to the Omnibus Agreement and/or the Addendum.
8. This Assignment is effective as of the Closing Date.
Assignors shall, at WMC's expense but without further consideration, comply with
any reasonable request by WMC to execute any additional documents and to take
any further action necessary to protect, secure, vest and record good, valid and
marketable title to the foregoing Assigned IP and Related Rights in WMC.
9. This Assignment may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the undersigned have caused this
Assignment to be duly executed and delivered as of the date first above written.
GLENAYRE ELECTRONICS, INC.
(on behalf of itself and all other Assignors)
By:__________________________________________
Name:
Title:
Date:
WESTERN MULTIPLEX CORPORATION
By:__________________________________________
Name:
Title:
Date:
3
EXHIBIT 3
INTELLECTUAL PROPERTY LICENSE
-----------------------------
THIS LICENSE AGREEMENT dated this 1st day of November, 1999,
by and between GLENAYRE ELECTRONICS, INC. ("Electronics"), a Colorado
corporation having a place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on behalf of itself, its parent corporation Glenayre
Technologies, Inc., and all of their respective subsidiaries except WMC
(collectively, "Glenayre") and WESTERN MULTIPLEX CORPORATION, a California
corporation having a place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("WMC").
WHEREAS, pursuant to the Glenayre Omnibus Intellectual
Property Agreement effective December 31, 1994 ("Omnibus Agreement"),
Electronics was designated as sole owner of all present and future intellectual
property rights of Electronics, GTI and their wholly-owned subsidiaries and
granted a royalty-free and non-exclusive license to all such entities other than
itself to use such intellectual property rights;
WHEREAS, after GTI acquired all of the outstanding capital
stock of WMC in April 1995 (the "Glenayre Acquisition"), and WMC became a
wholly-owned subsidiary thereof, an addendum to the Omnibus Agreement was
executed as of June 20, 1995 (the "Addendum"), whereby WMC was bound to the
Omnibus Agreement as if it were an original party thereto;
WHEREAS, pursuant to the Acquisition Agreement by and among
GTI, GTI Acquisition Corp. and WMC dated as of September 30, 1999 ("Acquisition
Agreement"), GTI Acquisition Corp., a wholly-owned subsidiary of GTI that owned
the shares of WMC as of such date, has agreed to sell the shares of WMC to WMC
Holding Corp.; and
WHEREAS, now that WMC shall no longer be a subsidiary of GTI
Acquisition Corp., Electronics wishes to license to WMC, and WMC wishes to
accept, the license of all intellectual property rights that WMC uses in the
Business (as defined in the Acquisition Agreement) and WMC wishes to license,
and Glenayre wishes to accept, the license of all intellectual property rights
that WMC will own as of the Closing Date (as defined in the Acquisition
Agreement); and
NOW, THEREFORE, for good and valuable consideration (including
that recited in the Acquisition Agreement), the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
Article 1. GRANT OF LICENSES.
------------------
Section 1.1. Licenses to WMC.
----------------
(a) Glenayre hereby grants to WMC a worldwide, non-exclusive,
royalty-free right and license under any and all intellectual property,
including without limitation, patents, patent applications, inventions,
copyrights and copyrightable works, software, mask works, databases,
technology, systems, know-how, processes, formulae,
confidential or proprietary information ("Intellectual Property") that
were delivered to or used by WMC prior to the Closing Date and relate
to the ▇▇▇▇.▇▇▇▇ fractional radio development ("LYNX IP"), (i) to
continue to use the LYNX IP after the Closing Date and for so long as
WMC markets or services the ▇▇▇▇.▇▇▇▇ fractional radio or any successor
upgrade product of materially similar functionality; (ii) to make, have
made, use, distribute, offer and sell and service the ▇▇▇▇.▇▇▇▇
fractional radio and any successor upgrade product of materially
similar functionality; and (iii) subject to Article 5, to copy,
distribute and make derivative works based upon the LYNX IP to the
extent necessary to service and upgrade the ▇▇▇▇.▇▇▇▇ fractional radio
and any successor upgrade product of materially similar functionality.
(b) Glenayre hereby grants to WMC a perpetual, worldwide,
non-exclusive, royalty-free right and license under any and all
Intellectual Property relating to Glenayre's application software
platform (as used in the Glenayre GL-C9000 Base Station Controller)
that includes the following major functions: Real-time operating system
interface, TCP/IP network protocol stack, PPP interface, routing, and
network management (the "Software"), (i) to continue to use the
Software after the Closing Date to make, have made, use, distribute,
offer and sell current and future microwave radio products for the
Business; and (iii) subject to Article 5, to copy, distribute and make
derivative works based upon the Software to the extent necessary to
service and upgrade WMC's microwave radio products in connection with
the Business.
(c) Glenayre hereby grants to WMC a worldwide, non-exclusive,
royalty-free right and license to use the name "Glenayre" (i) for one
year, in connection with WMC's operation of the Business outside the
United States and Canada; provided that, WMC may also use the name
"Glenayre" within the United States and Canada during such time, solely
to the extent such use is on products made by machines imprinted,
tooled, dyed, cast or embedded with the name "Glenayre"; (ii) for one
year, in connection with the electronic mail address
"▇▇▇.▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇"; provided that, within a reasonable time after
the Closing Date, WMC shall make all reasonable efforts to begin
transitioning to an e-mail address that does not contain the name
"Glenayre"; and (iii) for three years, solely to the extent such use is
on internal circuit boards imprinted with the name "Glenayre." The
license in the preceding sentence is limited to WMC's use of the name
only in immediate proximity to the words "Western Multiplex" or
"Western Multiplex Corporation." WMC agrees that all uses of the name
shall maintain the quality standards in effect as of the Closing Date.
Section 1.2. License to Glenayre.
--------------------
(a) Subject to Glenayre's non-competition obligations under
Section 5.9 of the Acquisition Agreement, WMC hereby grants to Glenayre
a non-exclusive, royalty-free right and license, for the life thereof,
under U.S. Patent Application Serial No. 09/033,507, "Method and
Apparatus for Isolating High-Frequency Signals in a Multi-Layer Printed
Circuit Board" (filed March 2, 1998) and a continuing U.S. Patent
Application Serial No. 09/053,045, "Method and Apparatus for Isolating
High-Frequency Signals in a Printed Circuit Board" (filed April 1,
1998), and all technology and know-
2
how related thereto, (i) to make, have made, use, distribute, offer and
sell current and future products and services in connection with
Glenayre's business; and (ii) subject to Article 5, to copy, distribute
and make derivative works in connection with Glenayre's business.
(b) WMC hereby grants to Glenayre a temporary worldwide,
non-exclusive, royalty-free right and license to use any trademarks
owned by WMC solely to the extent necessary to allow Glenayre the
benefits of Section 5.9(a)(3) of the Acquisition Agreement regarding
depletion of current inventory; provided that this license shall expire
after six months, even if such depletion is not yet completed. Glenayre
agrees that all uses of such trademarks shall maintain the quality
standards in effect as of the Closing Date.
Section 1.3. No Other Property. Each party acknowledges that
the licenses granted to it in Article 1 cover only Intellectual Property that
the licensing party owns and do not grant to the licensed party any rights or
licenses in any Intellectual Property owned by any third parties.
Article 2. OWNERSHIP OF INTELLECTUAL PROPERTY.
-----------------------------------
Section 2.1. Ownership. Each party agrees that, as between
itself and the other party, the party licensing any Intellectual Property
hereunder is the sole and exclusive owner of all right, title and interest in
and to such Intellectual Property, subject to the licensed rights granted
hereunder. Each party agrees not to directly or indirectly question, attack,
contest or in any other manner impugn the validity and/or enforceability of the
other party's Intellectual Property licensed hereunder ("Licensed Property") or
its rights therein, including without limitation, in any action in which
enforcement of a provision of this Agreement is sought; nor shall either party
willingly become a party adverse to the other party in litigation in which a
third party contests the validity and/or enforceability of any Licensed Property
or such licensing party's rights therein.
Section 2.2. Improvements. After the Effective Date, if
either Glenayre or WMC creates any improvements, modifications, derivative works
and/or upgrades based upon the other party's Licensed Property ("Improvements"),
such party creating the Improvement shall own all Intellectual Property rights
therein; provided that, each party shall not, and shall not allow third parties
to use any such Improvements in connection with products, services and/or
businesses or operations that are beyond the scope of such party's right to use
the underlying Licensed Property under Article 1.
Article 3. MAINTENANCE. Each party agrees to take
actions, pay fees and execute documents as reasonably necessary to protect and
maintain its own Licensed Property, such that the licensed party thereunder does
not lose the benefits of this agreement.
4
Article 4. MATERIAL BREACH AND TERMINATION.
--------------------------------
Section 4.1. Material Breach. In the event that either
party materially breaches any of its obligations under this Agreement (in such
case, the "Breaching Party"), the other party (the "Non-Breaching Party") may,
by written notice, require that the Breaching Party take corrective action. The
Breaching Party shall immediately take whatever steps are necessary to remedy
the breach, at its sole cost and expense. If the Breaching Party does not (i)
remedy such breach within 60 days of receipt of such notice or (iii) use its
best efforts within such 60-day period to cure such breach and make substantial
progress toward cure, the Breaching Party shall immediately cease using any and
all Licensed Property affected by the breach until such breach is remedied, and
the Non-Breaching Party may apply to a court of competent jurisdiction for
appropriate relief. If such court determines that a material breach of this
Agreement has occurred and has not been cured, or that the Breaching Party has
not made substantial progress towards cure, or that such breach is not capable
of being cured in a reasonable amount of time, then the Non-Breaching Party
shall be entitled to all rights and remedies available at law or in equity,
including without limitation termination of all licenses granted to the
Breaching Party herein and the Breaching Party shall be deemed to have
irrevocably and unconditionally consented to the entry of an order by a court of
competent jurisdiction granting an injunction against further use of the
Licensed Property.
Section 4.2. Default. Either party may terminate the
licenses it has granted under this Agreement at any time, upon written notice,
if the other party makes an assignment for the benefit of creditors, admits in
writing its inability to pay debts as they mature, has a trustee or receiver
appointed for a substantial part of its assets, or, to the extent enforceable
under the U.S. Bankruptcy Code, has instituted against it a proceeding in
bankruptcy which is acquiesced in, is not dismissed within 120 days, or results
in an adjudication of bankruptcy. If such an event occurs, the non-bankrupt
party shall have the right, in addition to its other rights and remedies, to
suspend the bankrupt party's rights regarding the Licensed Property while the
bankrupt party attempts to remedy the situation.
Section 4.3. After Termination. Upon termination of any
license under Article 1, the parties agree to cooperate so as best to preserve
the value of the applicable Licensed Property. Upon such termination, the
licensed party agrees immediately to discontinue all use of the applicable
Licensed Property.
Article 5. CONFIDENTIALITY.
----------------
Section 5.1. Technology. Each party shall use commercially
reasonable efforts, including executing all necessary contractual provisions, to
prevent unauthorized third parties from modifying, altering, changing,
reproducing, reverse engineering, dissembling, decompiling, distributing or
copying the other party's licensed property or deriving any source code or
algorithms therefrom.
Section 5.2. Confidential Information. In connection with
this Agreement, each party (each a "Disclosing Party") may each disclose certain
Confidential Information (as hereinafter defined) to the other party (each a
"Receiving Party"). "Confidential Information,"
4
subject to the provisions of Section 5.4, shall mean (i) any information
disclosed by one party to the other either before or after the Closing Date and
designated in writing as confidential, proprietary, or marked with words of like
import; and (ii) any information orally or visually conveyed, if the Disclosing
Party provides specific written notice that such oral or visual communication
shall be deemed Confidential Information and delivers such writing to the
Receiving Party within 10 days after the oral or visual conveyance.
Section 5.3. Restricted Disclosure. Each party
acknowledges the confidential and proprietary nature of the other party's
Confidential Information and agree that as the Receiving Party, it shall use the
same level of care it accords its own confidential information (but in any
event, no less than a reasonable standard of care) not to reveal or disclose any
Confidential Information for any purpose (except as permitted by the following
sentence) to any third party not a Receiving Party, nor use any Confidential
Information for any purpose other than as contemplated hereby, in each case,
without the prior written consent of the Disclosing Party. In the event that a
Receiving Party wishes to disclose Confidential Information to a third party
(other than another Receiving Party), it may do so only with the express written
consent of the Disclosing Party or if the third party is a reputable party and
signs an agreement with the Receiving Party that is appropriate under the
circumstances and is reasonably calculated to ensure the confidentiality of the
applicable Confidential Information according to terms at least as protective as
those set forth in this Section 5. Upon request, the Disclosing Party shall have
the right to review such agreements to ensure that the foregoing obligation is
fulfilled.
Section 5.4. Exceptions. Notwithstanding anything
contained herein to the contrary, Confidential Information shall not include
information which:
(a) at or prior to the time of disclosure by the Disclosing
Party was known to or independently developed by the Receiving Party as
evidenced by one or more documents, except to the extent unlawfully
appropriated by the Receiving Party or third party;
(b) at or after the time of disclosure by the Disclosing Party
becomes generally available to the public through no wrongful or
negligent act or omission on the Receiving Party's part;
(c) is later developed by the Receiving Party independent of
any Confidential Information it receives from the Disclosing Party:
(d) the Receiving Party receives from a third party free to
make such disclosure without breach of any legal obligation; or
(e) is required to be disclosed pursuant to any statute,
regulation, order, subpoena or document discovery request, provided
that prior written notice of such disclosure is furnished to the
Disclosing Party as soon as practicable in order to afford the
Disclosing Party an opportunity to seek a protective order (it being
agreed that if the Disclosing Party is unable to obtain or does not
seek a protective order and the Receiving
5
Party is legally compelled to disclose such information, disclosure of
such information may be made without liability).
Section 5.5. Injunctive Relief. In view of the
difficulties of placing a monetary value on the Confidential Information, the
Disclosing Party may be entitled to a preliminary and final injunction without
the necessity of posting any bond or undertaking in connection therewith to
prevent any further breach of this Article 5 or further unauthorized use of
Confidential Information. This remedy is separate and apart from any other
remedy the Disclosing Party may have.
Section 5.6. Remedial Measures. Licensor or Licensee, as
the case may be, shall notify the Disclosing Party immediately upon discovery of
any prohibited use or disclosure of the Confidential Information, or any other
breach of this Article 5 by a Receiving Party, and shall fully cooperate with
the Disclosing Party to help the Disclosing Party regain possession of the
Confidential Information and prevent the further prohibited use or disclosure of
the Confidential Information.
Article 6. INFRINGEMENT. Each party agrees to notify
the other party immediately after it becomes aware of any actual or threatened
Infringement of the other party's Licensed Property by a third party.
Article 7. BANKRUPTCY. The licenses in Article 1
(excluding the trademark licenses) shall be deemed to be, for purposes of
Section 365(n) of the U.S. Bankruptcy Code, licenses to rights in "intellectual
property" as defined in Section 101 of the Bankruptcy Code. The parties agree
that the licensed party thereunder shall retain and may fully exercise all of
its rights and elections under the Bankruptcy Code. In the event that a
bankruptcy proceeding under the Bankruptcy Code is commenced by or against the
licensing party, the licensed party shall be entitled, at its option, to: (a)
retain all of its rights under this Agreement (including without limitation the
rights and licenses granted under Article 1 hereof) pursuant to Section 365(n)
of the U.S. Bankruptcy Code; or (b) receive a complete duplicate of, or complete
access to, all Intellectual Property licensed hereunder constituting
"intellectual property" under Section 101 of the Bankruptcy Code and all
embodiments thereof. If such Intellectual Property is not already in the
licensed party's possession, it shall be promptly delivered to the licensed
party upon such party's written request (i) upon any such commencement of a
bankruptcy proceeding, unless the licensing party elects to continue to perform
all of its obligations under this Agreement; or (ii) upon the rejection of this
Agreement by or on behalf of the licensing party.
Article 8. MISCELLANEOUS.
--------------
Section 8.1. Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally,
if telecopied or mailed, first class mail, postage prepaid, return receipt
requested, or by overnight courier as follows:
6
If to Glenayre:
GTI Acquisition Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ West Indies
Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Glenayre Electronics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
Bank of America Corporate Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
If to WMC:
WMC Holding Corp.
c/o Leeward Technology Partners
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
WMC Holding Corp.
c/o Ripplewood Holding LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
7
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the date of personal
delivery or telecopy, on the third business day after the mailing thereof or on
the first day after delivery by overnight courier.
Section 8.2. Entire Agreement. This Agreement constitutes
the entire agreement between the parties hereto and supersedes all prior
agreements and understandings, oral and written, between the parties hereto with
respect to the subject matter hereof.
Section 8.3. Binding Effects; Benefit. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. Nothing in this Agreement, expressed or
implied, is intended to confer on any Person other than the parties hereto or
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
Section 8.4. Assignments and Sublicenses.
----------------------------
(a) This Agreement, or any portion thereof or license
therein, may not be assigned or sublicensed by either party to any
person not controlled by, controlling or under common control with such
party, either directly or indirectly, without the prior written consent
of the other party, such consent not to be withheld unreasonably;
provided that, either party may assign this Agreement in connection
with a sale of all or substantially all of its capital stock or assets;
provided that, such successor or purchaser shall be expressly bound by
all of the assigning or sublicensing party's obligations hereunder,
including without limitation, all non-competition obligations.
(b) In the event of any permitted assignment, (i) this
Agreement shall be binding upon the successors, assigns and/or
purchasers of any assigning party; and (ii) all reference herein to
Glenayre or WMC shall mean both Glenayre and WMC and their respective
assignees, and the assignees shall not be entitled to assign further
this Agreement or sublicense rights governed hereby without the prior
written consent of the other party.
Section 8.5. Amendment; Waiver. This Agreement, including
this Section, may be amended, supplemented or otherwise modified only by a
written instrument executed by the parties hereto. No waiver by either party of
any of the provisions hereof shall be effective unless explicitly set forth in
writing and executed by the party so waiving. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation,
8
any investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants, or agreements contained herein, and in any documents
delivered or to be delivered pursuant to this Agreement. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
Section 8.6. 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.
Section 8.7. Further Assurances. Each party agrees to
execute such further documentation and perform such further actions, including
the recordation of such documentation with appropriate authorities, as may be
reasonably requested by the other party hereto to evidence and effectuate
further the purposes and intents set forth in this Agreement and to maintain and
protect the validity and/or ownership rights of any Intellectual Property
licensed hereunder. Any such actions shall be at the expense of the requesting
party, but without any further compensation.
Section 8.8. Section Headings; Table of Contents. The
section headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
Section 8.9. Severability. If any provision of this
Agreement shall be declared by any court of competent jurisdiction to be
illegal, void or unenforceable, all other provisions of this Agreement shall not
be affected and shall remain in full force and effect.
Section 8.10. Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original and all of which together shall be deemed to be one and the same
instrument.
9
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
GLENAYRE ELECTRONICS, INC.
(on behalf of itself, Glenayre Technologies,
Inc. and all of their respective subsidiaries)
By:
-------------------------------------------
Name:
Title:
Date:
WESTERN MULTIPLEX CORPORATION
By:
-------------------------------------------
Name:
Title:
Date:
10
EXHIBIT 4
--------------------------------------------------------------------------------
STOCKHOLDERS' AGREEMENT
AMONG
WESTERN MULTIPLEX CORPORATION,
WMC HOLDING CORP.,
GTI ACQUISITION CORP.
AND
GLENAYRE TECHNOLOGIES, INC.
DATED AS OF
OCTOBER 31, 1999
--------------------------------------------------------------------------------
11
TABLE OF CONTENTS
Page
I. INTRODUCTORY MATTERS.......................................................1
1.1 Defined Terms................................................1
-------------
1.2 Construction.................................................4
------------
II. TRANSFERS.................................................................4
2.1 Limitations on Transfer......................................4
-----------------------
2.2 Right of First Refusal.......................................5
----------------------
2.3 Transfers to Affiliates......................................6
-----------------------
2.4 Tag-Along Rights.............................................6
----------------
2.5 Drag-Along Rights............................................8
-----------------
III. REGISTRATION RIGHTS......................................................9
3.1 Piggyback Rights.............................................9
----------------
3.2 Other Registration Related Matters..........................10
----------------------------------
3.3 Indemnification.............................................12
---------------
IV. ADDITIONAL AGREEMENTS....................................................15
4.1 Right to Purchase Additional Common Stock...................15
-----------------------------------------
4.2 Transactions With Affiliates................................16
----------------------------
4.3 Restrictions on Certain Fees................................17
----------------------------
V. MISCELLANEOUS.............................................................17
5.1 Additional Securities Subject to Agreement..................17
------------------------------------------
5.2 Covenant by GTI.............................................17
---------------
5.3 Termination.................................................17
-----------
5.4 Notices.....................................................17
-------
5.5 Further Assurances..........................................17
------------------
5.6 Non-Assignability...........................................18
-----------------
5.7 Amendment; Waiver...........................................18
-----------------
5.8 Third Parties...............................................18
-------------
5.9 Governing Law...............................................18
-------------
5.10 Specific Performance........................................18
--------------------
5.11 Entire Agreement............................................18
----------------
5.12 Titles and Headings.........................................18
-------------------
5.13 Severability................................................18
------------
5.14 Counterparts................................................18
------------
5.15 Reporting Requirements......................................19
----------------------
5.16 Representations.............................................19
---------------
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of October 31, 1999 (this
"Agreement"), among Western Multiplex Corporation, a Delaware corporation (the
"Company"), WMC Holding Corp., a Delaware corporation (together with its
successors, "WMC Holding"), GTI Acquisition Corp., a Delaware corporation
(together with its successors, "Glenayre") and Glenayre Technologies, Inc., a
Delaware corporation (together with its successors, "GTI").
RECITALS:
A. The Company, WMC Holding, Glenayre and GTI are parties to
an Acquisition Agreement, dated as of September 30, 1999, as amended and
restated on October 31, 1999 (the "Acquisition Agreement"), pursuant to which,
among other things, the Company will redeem 42,000,000 shares of Class B Common
Stock, par value $.01 per share ("Class B Common Stock"), from Glenayre (the
"Redemption") and WMC Holding will purchase 35,955,000 shares of Class B Common
Stock from Glenayre (the "Stock Purchase");
B. Immediately following the Transactions (as defined herein),
Glenayre will hold 2,045,000 shares of Class B Common Stock and WMC Holding will
hold 35,955,000 shares of Class B Common Stock, and no shares of Class A Common
Stock, par value $.01 per share, will be outstanding; and
C. The parties hereto wish to provide for certain matters
relating to Glenayre's holdings of Class B Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
X. INTRODUCTORY MATTERS
10.1 Defined Terms. In addition to the terms defined elsewhere
herein, the following terms have the following meanings when used herein with
initial capital letters:
"AFFILIATE" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control
with, such specified Person; provided, that officers, directors or
employees of the Company will not be deemed to be Affiliates of a
stockholder of the Company for purposes hereof solely by reason of
being officers, directors or employees of the Company.
"AGREEMENT" means this Agreement, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"ASSUMPTION AGREEMENT" means a writing reasonably satisfactory
in form and substance to Glenayre and the Company whereby a Permitted
Transferee of shares of Common Stock becomes a party to, and agrees to
be bound by, to the same extent as its transferor by the terms of, this
Agreement.
"BOARD" means the Board of Directors of the Company.
"BUSINESS DAY" means a day other than a Saturday, Sunday or
other day on which commercial banks in the State of North Carolina or
the State of New York are authorized or required by law to close.
"CLASS A COMMON STOCK" means the Class A Common Stock of the
Company, par value $.01 per share.
"CLASS B COMMON STOCK" means the Class B Common Stock of the
Company, par value $.01 per share.
"COMMON STOCK" means the shares of Class A Common Stock and
Class B Common Stock of the Company and any Common Stock issued as (or
issuable upon the conversion or exercise of any warrant, right, option
or other convertible security which is issued as) a dividend or other
distribution with respect to, or in exchange for, or in replacement of,
or by way of a stock split of, such Common Stock.
"FULLY DILUTED SHARES" means the aggregate of (i) the number
of shares of Common Stock issued and outstanding (other than shares of
Common Stock held in the treasury of the Company or held by any
Subsidiary) and (ii) the number of shares of Common Stock issuable upon
(x) the exercise of any then exercisable in-the-money outstanding
options, warrants or similar instruments (other than such instruments
held by the Company or any Subsidiary) and (y) the exercise of any then
exercisable conversion or exchange rights with respect to any
outstanding securities or instruments (other than such securities or
instruments held by the Company or any Subsidiary).
"IPO" means the completion of an initial Public Offering and
the sale to the public of Common Stock by the Company.
"PERMITTED TRANSFEREES" means any Person to whom shares of
Common Stock are Transferred in a Transfer in accordance with Section
2.2 or 2.3 or otherwise not in violation of this Agreement and who is
required to, and does, enter into an Assumption Agreement, and includes
any Person to whom a Permitted Transferee of Glenayre (or a Permitted
Transferee of a Permitted Transferee) so further Transfers shares of
Common Stock and who is required to, and does, become bound by the
terms of this Agreement.
"PERSON" means any individual, corporation, limited liability
company, partnership, trust, joint stock company, business trust,
unincorporated association, joint venture, governmental authority or
other legal entity of any nature whatsoever.
2
"PUBLIC OFFERING" means the sale of shares of any class of the
Common Stock to the public pursuant to an effective registration
statement (other than a registration statement on Form S-4 or S-8 or
any similar or successor form) filed under the Securities Act.
"REGISTRABLE SECURITIES" means (i) any Common Stock held by
Glenayre or its Permitted Transferees following the Transactions, (ii)
any Common Stock issued as (or issuable upon the conversion or exercise
of any warrant, right, option or other convertible security which is
issued as) a dividend or other distribution with respect to, or in
exchange for, or in replacement of, such Common Stock, and (iii) any
Common Stock issued by way of a stock split of the Common Stock
referred to in clauses (i) or (ii) or this clause (iii). For purposes
of this Agreement, any Registrable Securities will cease to be
Registrable Securities when (A) a registration statement covering such
Registrable Securities has been declared effective and such Registrable
Securities have been disposed of pursuant to such effective
registration statement, (B) all Registrable Securities may be offered
and sold pursuant to Rule 144 (or any similar provision then in effect)
under the Securities Act in a single transaction or series of
transactions over a 90-day period, (C) such Registrable Securities are
sold by a Person in a transaction in which rights under the provisions
of this Agreement are not assigned in accordance with this Agreement,
or (D) such Registrable Securities cease to be outstanding.
"REGISTRATION EXPENSES" means any and all expenses incident to
the performance by the Company of its obligations under Sections 3.1 or
3.2, including (i) all SEC, stock exchange, National Association of
Securities Dealers, Inc. and other comparable regulatory agencies,
registration and filing fees, (ii) all fees and expenses of the Company
in complying with securities or blue sky laws (including fees and
disbursements of counsel for the underwriters in connection with blue
sky qualifications), (iii) all printing, messenger and delivery
expenses of the Company, (iv) the fees and disbursements of counsel for
the Company and of its independent accountants, including the expenses
of any "cold comfort" letters required by or incident to such
performance and compliance, and (v) fees and disbursements customarily
paid by issuers of securities (but not underwriters' or sales agents'
discounts or similar compensation).
"RIPPLEWOOD" means Ripplewood Holding L.L.C. (or its
successor) and its Affiliates (other than WMC Holding or any employee,
officer or director of WMC Holding or the Company).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, as the same may
be amended from time to time.
"STOCKHOLDERS" means each of the holders of Common Stock.
"TRANSACTIONS" means the Redemption and the Stock Purchase.
3
"TRANSFER" means a transfer, sale, assignment, pledge,
hypothecation or other disposition, whether directly or indirectly
pursuant to the creation of a derivative security, the grant of an
option or other right, the imposition of a restriction on disposition
or voting or transfer by operation of law, or, in the case of GTI, any
change in the beneficial ownership of Glenayre or any other Affiliate
of GTI that is a Stockholder so that such Stockholder is no longer a
wholly-owned Affiliate of GTI.
"WMC HOLDING COMMON STOCK" means common stock issued by WMC
Holding or issuable upon the conversion or exercise of any warrant,
right, option or other convertible security of WMC Holding or as a
dividend or other distribution with respect to, or in exchange for, or
in replacement of, or by way of a stock split of, such WMC Holding
Common Stock.
10.2 Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party. Unless the
context otherwise requires: (a) "or" is not exclusive, (b) words in the singular
include the plural, and in the plural include the singular, (c) the words
"hereof", "herein", and "hereunder" and words of similar import when used in
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section references are to this Agreement unless
otherwise specified, and (d) references to "includes" or "including" shall mean
"includes without limitation" or "including without limitation."
XI. TRANSFERS
11.1 Limitations on Transfer. (a) Prior to an IPO, Glenayre
and its Permitted Transferees may not Transfer any shares of Common Stock other
than (i) in connection with a Public Offering effected in accordance with
Section 3.1(a), (ii) in accordance with Section 2.3, 2.4 or 2.5 or (iii)
following the second anniversary hereof, in accordance with Section 2.2.
(b) In the event of any purported Transfer by Glenayre or any
of its Permitted Transferees of any shares of Common Stock in violation of the
provisions of this Agreement, such purported Transfer will be void and of no
effect and the Company will not give effect to such Transfer.
(c) Each certificate representing shares of Common Stock
issued to Glenayre or any of its Permitted Transferees will bear a legend on the
face thereof substantially to the following effect (with such additions thereto
or changes therein as the Company may be advised by counsel are required by law
or necessary to give full effect to this Agreement, the "Legend"):
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A STOCKHOLDERS' AGREEMENT AMONG WESTERN MULTIPLEX CORPORATION (ATHE
COMPANY"), WMC HOLDING CORP., GTI ACQUISITION CORP. AND GLENAYRE
TECHNOLOGIES, INC., A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY. NO
4
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH STOCKHOLDERS' AGREEMENT. THE
HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES
TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH STOCKHOLDERS' AGREEMENT.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED
UNDER THAT ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
The Legend will be removed by the Company by the delivery of substitute
certificates without such Legend in the event of (i) a Transfer permitted by
this Agreement and in which the Transferee is not required to enter into an
Assumption Agreement or (ii) the termination of Article II pursuant to the terms
hereof, provided however, that the second paragraph of Legend will only be
removed if at such time it is no longer required for purposes of the Securities
Act and other applicable securities laws.
(d) Except as permitted by Section 2.3, each of Glenayre and
its Permitted Transferees shall have no right to Transfer, and the Company shall
have no obligation to record any purported Transfer, of Class B Common Stock.
The Company shall instead cause all such shares of Class B Common Stock proposed
to be Transferred to be converted into or exchanged for an equal number of
shares of Class A Common Stock immediately prior to such Transfer (after giving
effect to any adjustment that may be necessary or appropriate as a result of any
conversion or exercise of any warrant, right, option or other convertible
security issuable in respect of Class A Common Stock or Class B Common Stock or
as a dividend or other distribution with respect to, or in exchange for, or in
replacement of, or by way of a stock split of, such Common Stock). References in
Section 2.2 to Transfer Stock, references in Section 2.4 to Common Stock of the
Tagging Stockholder and references in Section 2.5(a) to Common Stock of Glenayre
and its Permitted Transferees shall be deemed references to Class A Common Stock
converted or exchanged pursuant to this paragraph (d).
11.2 Right of First Refusal. (a) Each of Glenayre and its
Permitted Transferees agrees that, if, following the second anniversary hereof,
such Stockholder (the "Offeree") receives a bona fide offer (a "Transfer Offer")
to purchase all or any portion of the Common Stock (the "Transfer Stock") then
owned by such Offeree from any Person (the "Offeror"), other than an Affiliate
of such Offeree, which such Offeree wishes to accept, such Offeree shall cause
the Transfer Offer to be reduced to writing and shall provide a written notice
(the "Transfer Notice") of such Transfer Offer to the Company and WMC Holding;
provided that, there shall not be more than three Permitted Transferees pursuant
to this Section 2.2. The Transfer Notice shall also contain an irrevocable offer
to sell the Transfer Stock to the Company for cash and, if the Company shall
decline to accept such offer, WMC Holding or Ripplewood (in the manner set forth
below) at a price equal to the price contained in, and upon the same terms and
conditions as the terms and conditions contained in, the Transfer Offer and
shall be accompanied by a true and
5
complete copy of the Transfer Offer (which shall identify the Offeror, the
Transfer Stock, the price contained in the Transfer Offer and the other material
terms and conditions of the Transfer Offer); provided that none of Glenayre or
any Permitted Transferee shall be entitled to accept any offer pursuant to this
Section 2.2 which provides for any consideration other than cash, cash
equivalents, marketable securities, securities with registration rights similar
to those contemplated in Section 3.1 or securities which may be Transferred
pursuant to Rule 144 or 145 (or any successor rules) under the Securities Act.
At any time within 30 days after the date of the receipt by the Company and WMC
Holding of the Transfer Notice, the Company shall have the option to exercise
its right to purchase (or assign its right to one of its subsidiaries) or, if
the Company and its subsidiaries shall decline to exercise such option, WMC
Holding shall have the right to exercise such option to purchase (or assign its
right to any party) all of the Transfer Stock covered by the Transfer Offer at
the same price and on the same terms and conditions as the Transfer Offer. If
such election is made, within 15 days after such election, the Company or WMC
Holding or one of their aforementioned assignees shall deliver a certified bank
check or checks in the appropriate amount to such Offeree against delivery of
certificates or other instruments representing the Transfer Stock, appropriately
endorsed by such Offeree. If the Company or WMC Holding or one of their
aforementioned assignees has not given notice of its intention to exercise such
right to purchase within such 30 day period or has not tendered the purchase
price for such Transfer Stock in the manner set forth above within such 15 day
period, such Offeree shall be free for a period of 90 days from the end of such
30 day or 15 day period, as the case may be, to transfer the Transfer Stock to
the Offeror on terms which are no more favorable in any material respect to the
Offeror than the terms and conditions set forth in the Transfer Notice. If for
any reason such Offeree does not Transfer the Transfer Stock to the Offeror on
such terms and conditions, the provisions of this Section 2.2 shall again be
applicable to the Transfer Stock.
(b) The closing of the purchase of the Transfer Stock upon
exercise of the option pursuant to Section 2.2(a) shall take place at the
principal office of the Company on a date specified by the buyer no later than
the last day of the 15 day period after the election is made.
11.3 Transfers to Affiliates. Glenayre and its Permitted
Transferees may Transfer any or all of the shares of Common Stock held by any of
them to any of their respective wholly-owned Affiliates who duly executes and
delivers an Assumption Agreement, provided that in connection therewith the
Company has been furnished with an opinion in form and substance reasonably
satisfactory to the Company of counsel reasonably satisfactory to the Company
that such Transfer is exempt from or not subject to the provisions of Section 5
of the Securities Act and any other applicable securities laws.
11.4 Tag-Along Rights. (a) So long as this Agreement remains
in effect, with respect to (i) any proposed Transfer by WMC Holding of shares of
Common Stock owned by WMC Holding to any Person not an Affiliate or officer,
director or employee of WMC Holding or the Company, other than in a Public
Offering or as contemplated by Section 4.2(c), or (ii) any proposed Transfer by
Ripplewood of shares of WMC Holding Common Stock to any Person not an Affiliate
or officer, director or employee of WMC Holding or the Company, other than in a
Public Offering or as contemplated by Section 4.2(c), in each case whether
pursuant to a stock sale, a tender or exchange offer or any other sale
transaction (any such transaction, a "WMC
6
Holding Sale"), WMC Holding will have the obligation, and each of Glenayre and
its Permitted Transferees will have the right, to require the proposed
transferee (a "Proposed Transferee") to purchase from each of Glenayre and its
Permitted Transferees who exercises its rights under Section 2.4(b) (a "Tagging
Stockholder") a number of shares of Common Stock up to the product (rounded up
to the nearest whole number) of (i) the quotient determined by dividing (A) the
aggregate number of shares of Common Stock owned by such Tagging Stockholder by
(B) the aggregate number of shares of Common Stock owned by WMC Holding, the
Tagging Stockholder and any other Stockholder entitled to participate in the WMC
Holding Sale, and (ii) in the case of a sale of Common Stock, the total number
of shares of Common Stock proposed to be directly or indirectly Transferred to
the Proposed Transferee or in the case of a sale of WMC Holding Common Stock,
the product of (x) the quotient determined by dividing the number of shares of
WMC Holding Common Stock being Transferred divided by the total number of shares
of WMC Holding Common Stock owned by Ripplewood at such time, times (y) the
aggregate number of shares of Common Stock of the Company owned by WMC Holding
or Ripplewood at such time), upon the same terms and conditions (including time
of payment and form of consideration) as to be paid and given to WMC Holding (or
Ripplewood, as the case may be); provided, that in order to be entitled to
exercise its right to sell shares of Common Stock to the Proposed Transferee
pursuant to this Section 2.4, each Tagging Stockholder must agree to make to the
Proposed Transferee the same representations, warranties, covenants, indemnities
and agreements as WMC Holding agrees to make in connection with the proposed WMC
Holding Sale so long as they are made severally and not jointly; and provided,
further, that no Tagging Stockholder shall be required to make representations,
warranties or covenants or provide indemnification with respect to any matter
other than its ownership of the shares of Common Stock to be Transferred, its
ability to Transfer such shares free and clear of all encumbrances and its
authority and due authorization to Transfer such shares. Each Tagging
Stockholder will be responsible for its proportionate share of the costs
incurred in connection with the WMC Holding Sale to the extent not paid or
reimbursed by the Company or the Proposed Transferee.
(b) WMC Holding will give notice to each Tagging Stockholder
of each proposed WMC Holding Sale at least 15 Business Days prior to the
proposed consummation of such WMC Holding Sale, setting forth the number of
shares of Common Stock or WMC Holding Common Stock, as the case may be, proposed
to be so Transferred, the name and address of the Proposed Transferee, the
proposed amount and form of consideration (and if such consideration consists in
part or in whole of property other than cash, WMC Holding will provide such
information, to the extent reasonably available to WMC Holding, relating to such
consideration as the Tagging Stockholder may reasonably request in order to
evaluate such non-cash consideration) and other terms and conditions of payment
offered by the Proposed Transferee, and a representation that the Proposed
Transferee has been informed of the tag-along rights provided for in this
Section 2.4. WMC Holding will deliver or cause to be delivered to each Tagging
Stockholder copies of all transaction documents relating to the proposed WMC
Holding Sale as the same become available. The tag-along rights provided by this
Section 2.4 must be exercised by each Tagging Stockholder within 10 days
following receipt of the notice required by the preceding sentence by delivery
of a written notice to WMC Holding indicating the desire of such Tagging
Stockholder to exercise its rights and specifying the number of shares of Common
Stock it desires to sell. The Tagging Stockholder will be entitled under this
Section 2.4
7
to Transfer to the Proposed Transferee the number of shares of Common Stock
calculated in accordance with Section 2.4(a).
(c) If any Tagging Stockholder exercises his, her or its
rights under Section 2.4(a), the closing of the purchase of the Common Stock
with respect to which such rights have been exercised will take place
concurrently with the closing of the sale of Common Stock or WMC Holding Common
Stock, as the case may be, to the Proposed Transferee.
11.5 Drag-Along Rights. (a) So long as this Agreement remains
in effect, if WMC Holding or its stockholders receives an offer from a Person
other than an Affiliate of WMC Holding (a "Third Party") to purchase (other than
in a Public Offering) either (i) at least a majority of the shares of Common
Stock then outstanding or (ii) at least a majority of the shares of WMC Holding
Common Stock then outstanding, and, in either case, such offer is accepted by
WMC Holding or its stockholders, then each of Glenayre and its Permitted
Transferees hereby agrees that, if requested by WMC Holding, it will Transfer to
such Third Party on the same terms and conditions (including time of payment and
form of consideration) as to be paid and given to WMC Holding or its
stockholders, the number of shares of Common Stock equal to the number of shares
of Common Stock owned by it multiplied by the percentage of the then outstanding
shares of Common Stock to which the Third Party offer is applicable.
(b) WMC Holding will give notice (the "Drag-Along Notice") to
each of Glenayre and its Permitted Transferees of any proposed Transfer giving
rise to the rights of WMC Holding set forth in Section 2.5(a) as soon as
practicable following WMC Holding's or its stockholders acceptance of the offer
referred to in Section 2.5(a). The Drag-Along Notice will set forth the number
of shares of Common Stock proposed to be so Transferred, the name and address of
the Third Party, the proposed amount and form of consideration (and if such
consideration consists in part or in whole of property other than cash, WMC
Holding will provide such information, to the extent reasonably available to WMC
Holding, relating to such consideration as Glenayre and its Permitted
Transferees may reasonably request in order to evaluate such non-cash
consideration), the number of shares of Common Stock sought and the other terms
and conditions of the offer; provided that none of Glenayre or any Permitted
Transferee shall be obligated to accept pursuant to this Section 2.5 any
consideration other than cash, cash equivalents, marketable securities,
securities with registration rights similar to those contemplated in Section 3.1
or securities which may be Transferred pursuant to Rule 144 or 145 (or any
successor rules) under the Securities Act. WMC Holding will endeavor to notify
Glenayre and its Permitted Transferees at least 20 days (and in any event shall
notify Glenayre and its Permitted Transferees at least 10 Business Days) in
advance of entering into a definitive agreement in connection with such offer.
In any such agreement, Glenayre and its Permitted Transferees will be required
(i) to make or agree to the same representations, warranties and indemnities as
WMC Holding so long as they are made severally and not jointly (provided that
Glenayre and its Permitted Transferees will not be required to make
representations, warranties or covenants or provide indemnification with respect
to any matter other than their respective ownership of the shares of Common
Stock to be Transferred, their respective ability to Transfer such shares free
and clear of all encumbrances and their respective authority and due
authorization to Transfer such shares), and (ii) to pay their proportionate
share of the costs incurred in connection with such WMC Holding Sale to the
extent not paid or reimbursed by the
8
Company or the Transferee or Third Party. If the Transfer referred to in the
Drag-Along Notice is not consummated within 90 days from the date of the
Drag-Along Notice, WMC Holding must deliver another Drag-Along Notice in order
to exercise its rights under this Section 2.5 with respect to such Transfer or
any other Transfer.
XII. REGISTRATION RIGHTS
12.1 Piggyback Rights. (a) Each time the Company is planning
to file a registration statement under the Securities Act in connection with the
sale of Common Stock by (i) the Company (other than in connection with a
registration statement on Forms S-4 or S-8 or any similar or successor form) or
(ii) WMC Holding (the Company or WMC Holding in such case, the "Initiating
Party"), the Company will give prompt written notice thereof to Glenayre and its
Permitted Transferees at least 20 Business Days prior to the anticipated filing
date of such registration statement. Upon the written request of Glenayre and
any Permitted Transferee made within 10 Business Days after the receipt of any
such notice from the Company, which request will specify the Registrable
Securities (such securities, together with any other shares of Common Stock
requested to be included in such registration statement by any other Person
pursuant to similar registration rights, the "Piggy-Back Shares") intended to be
disposed of by Glenayre or such Permitted Transferee in such offering, the
Company will use reasonable efforts to effect the registration under the
Securities Act of all Piggy-Back Shares which the Company has been so requested
to register by Glenayre or such Permitted Transferee to the extent required to
permit the disposition of the Piggy-Back Shares so registered; provided, that
(x) if, at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, any Initiating Party determines for any
reason not to proceed with the proposed registration, the Company may at its
election give written notice of such determination to each holder of Piggy-Back
Shares and thereupon will be relieved of its obligation to register any
Piggy-Back Shares in connection with such registration, (y) if such registration
involves an underwritten offering, each such holder must sell its shares to the
underwriters on the same terms and conditions as apply to the Initiating Parties
and (z) the Company shall have no obligation to register Class B Common Stock
and may instead cause all such shares of Class B Common Stock that are
Piggy-Back Shares to be converted into or exchanged for an equal number of
shares of Class A Common Stock immediately prior to such registration (after
giving effect to any adjustment that may be necessary or appropriate as a result
of any conversion or exercise of any warrant, right, option or other convertible
security issuable in respect of Class A Common Stock or Class B Common Stock or
as a dividend or other distribution with respect to, or in exchange for, or in
replacement of, or by way of a stock split of, such Common Stock).
(b) If a registration pursuant to this Section 3.1 involves an
underwritten offering and the managing underwriter or underwriters advise the
Company in writing that, in their opinion, (i) the number of securities which
the Initiating Party intends to include in such registration, together with the
Piggy-Back Shares, exceeds the largest number of such securities which can be
sold in such offering without having an adverse effect on such offering
(including, but not limited to, the price at which such securities can be sold)
or (ii) the inclusion of the Piggy-Back Shares in such registration would have
an adverse effect on such offering, then the
9
Company will include in such registration (A) first, 100% of the securities
proposed to be sold by the Company and (B) second, to the extent that the number
of securities requested to be included in such registration can, in the opinion
of such managing underwriter, be sold without having the adverse effect referred
to above, the number of securities which WMC Holding and the holders of
Piggy-Back Shares have requested to be included in such registration, such
amount to be allocated pro rata among WMC Holding and all such holders on the
basis of the relative number of securities requested to be registered by WMC
Holding and each such holder (provided that any securities thereby allocated to
WMC Holding or any such holder that exceed the request of WMC Holding or such
holder will be reallocated among WMC Holding and the remaining requesting
holders in like manner).
12.2 Other Registration Related Matters. (a) If the Board
determines that the registration and distribution of Registrable Securities (A)
could impede, delay or interfere with any pending material financing,
acquisition, corporate reorganization or other significant transaction involving
the Company or (B) could require disclosure of non-public material information,
the disclosure of which could adversely affect the Company, the Company will
promptly give the requesting holders written notice of such determination and
will be entitled to postpone the filing or effectiveness of a registration
statement for a reasonable period of time not to exceed 180 calendar days in any
calendar year (a "Section 3.2(a) Period"); provided, however, that in connection
therewith the Company will be required to deliver to the requesting holders a
general statement, signed by the chief financial officer of the Company,
describing in reasonable detail the reasons for such postponement or restriction
on use and an estimate of the anticipated delay. The Company will promptly
notify the requesting holders of the expiration or earlier termination of a
Section 3.2(a) Period.
(b) The Company may require any Person that is selling shares
of Common Stock in a Public Offering pursuant to Section 3.1 (each a "Holder")
to furnish to the Company in writing such information regarding such Person and
the distribution of the shares of Common Stock which are included in a Public
Offering as may from time to time reasonably be requested in writing in order to
comply with the Securities Act.
(c) The Company will pay all Registration Expenses in
connection with each registration or proposed registration of Registrable
Securities pursuant to Section 3.1. Notwithstanding the foregoing, (i) the fees
or expenses of counsel to the Holders or of any other expert hired directly by
the Holders will be the sole responsibility of the Holders and (ii) the Holders
will be responsible for their respective pro rata shares (determined by
reference to the number of shares included in the applicable registration) of
all underwriting discounts and commissions and transfer taxes.
(d) No later than ten days before filing any registration
statement or prospectus, or any amendments or supplements thereto, in connection
with any registration or proposed registration of Registrable Securities
pursuant to Sections 3.1, the Company will furnish to counsel of the Holders
copies of all documents proposed to be filed.
(e) The Company will furnish to each Holder such number of
copies of the applicable registration statement and of each amendment or
supplement thereto (in each case
10
including all exhibits), such number of copies of the prospectus included in
such registration statement (including each preliminary prospectus and summary
prospectus), in conformity with the requirements of the Securities Act, and such
other documents as such Holder may reasonably request in order to facilitate the
disposition of Registrable Securities by such Holder.
(f) The Company will use reasonable efforts to register or
qualify Registrable Securities covered by a registration statement under such
other securities or blue sky laws of such jurisdictions as each Holder
reasonably requests, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
Holder, except that the Company will not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
where, but for the requirements of this Section 3.2(f), it would not be
obligated to be so qualified, to subject itself to taxation in any such
jurisdiction, or to consent to general service of process in any such
jurisdiction.
(g) The Company will use reasonable efforts to cause the
Registrable Securities covered by a registration statement to be registered with
or approved by such other governmental agencies or authorities as may be
necessary to enable the Holder thereof to consummate the disposition thereof.
(h) The Company will notify each Holder of Registrable
Securities covered by a registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act promptly
after the Company becomes aware that the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing, and at the request of any such Holder, prepare and
furnish to such Holder a reasonable number of copies of an amended or
supplemental prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances than existing.
(i) The Company will enter into such customary agreements
(including an underwriting agreement in customary form) and take such other
actions as sellers of a majority of securities covered by a registration
statement or the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Registrable Securities.
(j) The Company will make available for inspection by any
Holder of Registrable Securities covered by a registration statement, by any
underwriter participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent retained
by any such Holder or any such underwriter, all pertinent financial and other
records, pertinent corporate documents and properties of the Company, and cause
all of the Company's officers, directors and employees to supply all information
reasonably requested by any such Holder, underwriter, attorney, accountant or
agent in connection with such registration statement.
11
(k) The Company will obtain a "cold comfort" letter or letters
from the Company's independent public accountants in customary form and covering
matters of the type customarily covered by "cold comfort" letters as the sellers
of a majority of the securities covered by the registration statement reasonably
request .
(l) Each Holder agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
3.2(h), such Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Holder's receipt of the copies of the amended or
supplemented prospectus contemplated by Section 3.2(h) and, if so directed by
the Company, such Holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such Holder's possession,
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice. In the event the Company gives any such notice, the
period for which the Company will be required to keep the registration statement
effective will be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to Section 3.2(h) to
and including the date when each Holder has received the copies of the
supplemented or amended prospectus contemplated by Section 3.2(h).
(m) Each Holder will, in connection with an offering of the
Company's securities, upon the request of the Company or of the underwriters
managing any underwritten offering of the Company's securities, agree in writing
not to effect any sale, disposition or distribution of Registrable Securities
(other than those included in the registration or in a private sale to a third
party that is otherwise in accordance with the terms of this Agreement if such
third party agrees to be bound by this Agreement, including this clause (m))
without the prior written consent of the managing underwriter for such period of
time (not to exceed 180 days) from the effective date of such registration as
the Company or the underwriters may specify.
12.3 Indemnification. (a) Indemnification by the Company. In
the event of any registration of any securities of the Company under the
Securities Act pursuant to Section 3.1, the Company hereby indemnifies and
agrees to hold harmless, to the extent permitted by law, each Holder of
Registrable Securities covered by such registration statement, each Affiliate of
such Holder and their respective directors and officers or general and limited
partners (and the directors, officers, Affiliates and controlling Persons
thereof), each other Person who participates as an underwriter in the offering
or sale of such securities and each other Person, if any, who controls such
Holder or any such underwriter within the meaning of the Securities Act
(collectively, the "Indemnified Parties"), against any and all losses, claims,
damages or liabilities, joint or several, and expenses to which such Indemnified
Party may become subject under the Securities Act, common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof, whether or not such Indemnified Party is a party
thereto) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto, or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
12
therein not misleading in the light of the circumstances then existing, and the
Company will reimburse such Indemnified Party for any legal or other expenses
reasonably incurred by it in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided, that the Company will
not be liable to any Indemnified Party in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
in any such preliminary, final or summary prospectus, or any amendment or
supplement thereto in reliance upon and in conformity with written information
with respect to such Indemnified Party furnished to the Company by such
Indemnified Party for use in the preparation thereof; and provided, further,
that the Company will not be liable to any Person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
Person, if any, who controls such underwriter within the meaning of the
Securities Act, under the indemnity agreement in this Section 3.3 with respect
to any preliminary prospectus or the final prospectus or the final prospectus as
amended or supplemented, as the case may be, to the extent that any such loss,
claim, damage or liability of such underwriter or controlling Person results
from the fact that such underwriter sold Registrable Securities to a Person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the final prospectus or of the final prospectus as then
amended or supplemented, whichever is most recent, if the Company has previously
furnished copies thereof to such underwriter. Such indemnity will remain in full
force and effect regardless of any investigation made by or on behalf of such
Holder or any Indemnified Party and will survive the Transfer of such securities
by such Holder.
(b) Indemnification by the Holders and Underwriters. The
Company may require, as a condition to including any Registrable Securities in
any registration statement filed in accordance with Section 3.1, that the
Company shall have received an undertaking reasonably satisfactory to it from
the Holder of such Registrable Securities to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 3.3(a)) the Company,
all other Holders or any prospective underwriter, as the case may be, and any of
their respective Affiliates, directors, officers and controlling Persons, with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary, final or summary prospectus
contained therein, or any amendment or supplement, if (and only if) such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information with respect to such
Holder furnished to the Company by such Holder expressly for use in the
preparation of such registration statement, preliminary, final or summary
prospectus or amendment or supplement, or a document incorporated by reference
into any of the foregoing. Such indemnity will remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any of
the Holders, or any of their respective Affiliates, directors, officers or
controlling Persons and will survive the Transfer of such securities by such
Holder.
(c) Notices of Claims, Etc. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 3.3, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, that the failure of the
13
indemnified party to give notice as provided herein will not relieve the
indemnifying party of its obligations under Section 3.3(a) or 3.3(b), except to
the extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party will be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. If, in such
indemnified party's reasonable judgment, having common counsel would result in a
conflict of interest between the interests of such indemnified and indemnifying
parties, then such indemnified party may employ separate counsel reasonably
acceptable to the indemnifying party to represent or defend such indemnified
party in such action, it being understood, however, that the indemnifying party
will not be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for all such indemnified parties (and not
more than one separate firm of local counsel at any time for all such
indemnified parties) in such action. No indemnifying party will consent to entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation.
(d) Other Indemnification. Indemnification similar to that
specified in this Section 3.3 (with appropriate modifications) will be given by
the Company and each Holder of Registrable Securities with respect to any
required registration or other qualification of securities under any federal or
state law or regulation or governmental authority other than the Securities Act.
(e) Contribution. If recovery is not available under the
foregoing indemnification provisions of this Section 3.3 for any reason other
than as expressly specified therein, the parties required to provide
indemnification by the terms thereof will contribute to liabilities and expenses
of the indemnified party except to the extent that contribution is not permitted
under Section 11(f) of the Securities Act. In determining the amount of
contribution to which the respective parties are entitled, consideration will be
given to the relative benefits received by each party from the offering of the
Registrable Securities (taking into account the portion of the proceeds realized
by each), the parties' relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the opportunity to
correct and prevent any misstatement or omission and any other equitable
considerations appropriate under the circumstances.
(f) Non-Exclusivity. The obligations of the parties under this
Section 3.4 will be in addition to any liability which any party may otherwise
have to any other party.
14
XIII. ADDITIONAL AGREEMENTS
13.1 Right to Purchase Additional Common Stock. (a) Subject to
paragraph 4.1(d), in the event the Company proposes to issue Common Stock to WMC
Holding, Ripplewood or any other Affiliate of WMC Holding at any time prior to
the second anniversary hereof and that such issuance would have the effect of
reducing Glenayre's and its Permitted Transferees percentage ownership of the
Fully Diluted Shares below the lesser of 5.1% or the percentage owned by
Glenayre and its Permitted Transferees at such time, the Company hereby grants
to Glenayre the right to purchase in lieu of WMC Holding, Ripplewood or such
other Affiliate, in accordance with Section 4.1(b), a number of shares of any
Common Stock which the Company issues equal to the product of (a) the total
number of shares of such Common Stock which the Company issues at such time and
(b) a fraction, the numerator of which shall be the total number of Fully
Diluted Shares then outstanding and beneficially owned by Glenayre, and the
denominator of which shall be the total number of Fully Diluted Shares then
outstanding. If Glenayre does not purchase any or all of its pro rata portion of
Common Stock, WMC Holding, Ripplewood or any other Affiliate of WMC Holding
shall be free to purchase Glenayre's pro rata portion of Common Stock. The
rights of Glenayre under this Section 4.1 shall terminate if unexercised within
20 days after receipt of the Notice of Issuance referred to in Section 4.1(b).
(b) In the event that the Company proposes to undertake an
issuance that is subject to Glenayre's rights under Section 4.1(a), it shall
give Glenayre written notice (a "Notice of Issuance") of its intention,
describing all material terms of the Common Stock, the price and all material
terms upon which the Company proposes to issue such Common Stock. Glenayre shall
have 20 days from the date of the Notice of Issuance to agree to purchase all or
any portion of Glenayre's pro rata share of such Common Stock (as determined
pursuant to Section 4.1(a)) for the same consideration, if such consideration
shall consist solely of cash, or for cash, Cash Equivalents or Marketable
Securities having an equivalent value to the consideration payable by WMC
Holding or such other Affiliate of the Company at the time of payment as
determined pursuant to the valuation procedures set forth in the Notice of
Issuance by giving written notice to the Company, with a copy to WMC Holding,
and stating therein the quantity of Common Stock to be purchased by such
Stockholder; provided, however, to the extent a payment of non-cash
consideration by WMC Holding or such other Affiliate of the Company, as
contemplated by this Section 4.1(b), consists of any assets, securities or
capital stock acquired from a non-Affiliate substantially contemporaneously with
such payment, then the value of such assets, securities or capital stock for
purposes of this Section 4.1(b) shall equal the price paid or to be paid by WMC
Holding or such other Affiliate to the non-Affiliate; provided, further, that
any capital stock issued by WMC Holding or such other Affiliate of the Company
to acquire assets, securities or capital stock from a non-Affiliate shall be
valued at the same time as it is valued under the terms of any agreement with
such non-Affiliate.
(c) Except as otherwise agreed by Glenayre and WMC Holding,
the price payable for any shares of Common Stock to be issued by the Company
prior to the first anniversary hereof shall be based upon an equity value for
the Company equal to the Purchase Price for the Purchased Common Shares (as such
terms are defined in the Acquisition Agreement).
15
(d) It is expected that whenever WMC Holding issues any WMC
Holding Common Stock (or options, warrants or other rights to purchase WMC
Holding Common Stock) following the date hereof, the Company will issue a
equivalent number of shares of Common Stock (or options, warrants or other
rights to purchase Common Stock). Notwithstanding anything to the contrary
contained in Section 4.1, Section 4.1(a),(b) and (c) shall not be applicable to
any such issuance of Common Stock by the Company to WMC Holding in connection
with the issuance by WMC Holding to any officer, director or employee of WMC
Holding or the Company or to any Person not an Affiliate of Ripplewood,
including, without limitation, in connection with any acquisition by WMC Holding
or the Company of assets, securities or capital stock from a non-Affiliate in
which WMC Holding is issuing WMC Holding Common Stock to such non-Affiliate;
provided that WMC shall notify Glenayre in writing of all material terms of the
Common Stock, the price and all material terms upon which the Company proposes
to issue any Common Stock to which the exceptions set forth in this Section
4.1(d) applies.
13.2 Transactions With Affiliates. (a) Except for transactions
subject to Glenayre's rights under Section 4.1 (which shall be governed by such
Section and not by this Section 4.2(a)), the Company shall not, and WMC Holding
shall not permit the Company to, directly or indirectly, enter into any single
transaction or series of related transactions with any Affiliate of the Company
(other than the Company or any of its Subsidiaries) unless such transaction or
series of related transactions, including the issuance of shares of Common Stock
to an Affiliate of the Company, is on terms that are no less favorable to the
Company or any such Subsidiary, as the case may be, than would be available in a
comparable transaction or transactions with an unrelated third party.
(b) WMC Holding and its Affiliates may provide administrative
or cash management services in the ordinary course of the Company's businesses
and may receive compensation therefor and reimbursement for its costs and
expenses in connection therewith on no less favorable terms than such services
are provided to any other Affiliate of WMC Holding.
(c) Notwithstanding anything to the contrary contained in this
Section 4.2, (i) WMC shall have the right to cause the merger of Western
Multiplex Corporation, a California corporation, with and into the Company, with
the Company as the surviving corporation, (ii) WMC shall have the right to cause
the Class B Common Stock to be converted into Class A Common Stock, and (iii)
WMC Holding shall have the right to convert into a limited liability company and
distribute its assets (including the shares of Common Stock) to its
stockholders, merge or consolidate with the Company, with either party as the
surviving corporation, or to cause the liquidation of the Company and
distribution of all of its assets to the Stockholders, or to amend the
certificate of incorporation of the Company to provide for the conversion of all
shares of Common Stock into shares of WMC Holding Common Stock, or any similar
transaction that combines the ownership of WMC Holding and the Company, in the
case of (i), (ii) and (iii), without Glenayre's consent or affirmative vote;
provided that, the rights and ownership interest of Glenayre are not adversely
affected by any such transaction (except that to the extent WMC Holding ceases
to exist, the obligations of WMC Holding set forth in Article III shall be
assumed only by Ripplewood and not the other shareholders of WMC Holding, and
except for the difference in the votes per share of Class A Common Stock and
Class B Common
16
Stock); and provided, further, that WMC Holding shall notify Glenayre in writing
of all material terms of any such transaction to which this Section 4.2(c)
applies no less than 20 days prior to effecting any such transaction.
13.3 Restrictions on Certain Fees. Except as previously
disclosed to Glenayre, neither WMC Holding nor any other Affiliate of WMC
Holding (other than the Company) shall accept from the Company, and the Company
shall not pay to WMC Holding or any other Affiliate of the Company (other than
the Company), any management, consulting, investment banking or similar fee
without the prior written consent of Glenayre, which shall not be unreasonably
withheld.
XIV. MISCELLANEOUS
14.1 Additional Securities Subject to Agreement. Each of
Glenayre and its Permitted Transferees agrees that any other equity securities
of the Company which it hereafter acquires by means of a stock split, stock
dividend, or distribution will be subject to the provisions of this Agreement to
the same extent as if held on the date hereof.
14.2 Covenant by GTI. GTI hereby covenants to cause Glenayre
and any other Stockholder that is an Affiliate of GTI to comply with the terms
of this Agreement and not to take any action directly or indirectly through any
Affiliate that is expressly prohibited by this Agreement or has the purpose or
effect of circumventing the express terms of this Agreement.
14.3 Termination. The provisions of this Agreement specified
below will terminate and be of no further force and effect (other than with
respect to prior breaches) as follows: (i) with respect to Sections 2.1, 2.2,
2.3, 2.4, 2.5, 5.15 and Article IV upon completion of an IPO; (ii) with respect
to Sections 3.1 and 3.2 and Article IV, at such time as Glenayre or any of its
Permitted Transferees owns no Registrable Securities; (iii) with respect to
Section 3.3, upon the expiration of the applicable statutes of limitations; and
(iv) with respect to all other Sections of this Agreement, at such time as all
Sections of this Agreement other than such other Sections have terminated.
14.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, by telegram, by telex or
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the addresses set forth in Section 9.2 of the Acquisition
Agreement (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 5.4).
14.5 Further Assurances. The parties hereto will sign such
further documents, cause such meetings to be held, resolutions passed, exercise
their votes and do and perform and cause to be done such further acts and things
as may be necessary in order to give full effect to this Agreement and every
provision hereof.
17
14.6 Non-Assignability. This Agreement will inure to the
benefit of and be binding on the parties hereto and their respective successors
and permitted assigns. This Agreement may not be assigned by any party hereto
without the express prior written consent of the other parties, and any
attempted assignment, without such consents, will be null and void; provided,
however, that WMC Holding may assign or delegate its rights hereunder to any
Affiliate of WMC Holding so long as such Affiliate executes and delivers to the
Company an Assumption Agreement satisfactory to the Company.
14.7 Amendment; Waiver. This Agreement may be amended,
supplemented or otherwise modified only by a written instrument executed by the
parties hereto. No waiver by any party of any of the provisions hereof will be
effective unless explicitly set forth in writing and executed by the party so
waiving. Except as provided in the preceding sentence, no action taken pursuant
to this Agreement, including any investigation by or on behalf of any party,
will be deemed to constitute a waiver by the party taking such action of
compliance with any covenants or agreements contained herein. The waiver by any
party hereto of a breach of any provision of this Agreement will not operate or
be construed as a waiver of any subsequent breach.
14.8 Third Parties. This Agreement does not create any rights,
claims or benefits inuring to any person that is not a party hereto nor create
or establish any third party beneficiary hereto.
14.9 Governing Law. This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.
14.10 Specific Performance. Without limiting or waiving in any
respect any rights or remedies of the parties hereto under this Agreement now or
hereinafter existing at law or in equity or by statute, each of the parties
hereto will be entitled to seek specific performance of the obligations to be
performed by the other in accordance with the provisions of this Agreement.
14.11 Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof.
14.12 Titles and Headings. The section headings contained in
this Agreement are for reference purposes only and will not affect the meaning
or interpretation of this Agreement.
14.13 Severability. If any provision of this Agreement is
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement will not be affected and
will remain in full force and effect.
14.14 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed to be an original and all
of which together will be deemed to be one and the same instrument.
18
14.15 Reporting Requirements. (a) So long as the Company is
not subject to the reporting requirements under Section 12 or 15 of the
Securities Exchange Act of 1934, as amended, as promptly as practicable, but in
no event later than 120 days after the end of each fiscal year ending after the
date hereof or 60 days after the end of each fiscal quarter ending after the
date hereof, as the case may be, the Company shall furnish to Glenayre true and
correct copies of (i) in the case of any such fiscal year, the audited
consolidated balance sheets and the related audited consolidated statements of
income and cash flows of the Company and its subsidiaries as of the last day of
and for the fiscal year then ended, together with the accompanying report of the
Company's auditors thereon, and (ii) to the extent available, in the case of
each fiscal quarter, the unaudited consolidated balance sheets and related
unaudited consolidated statements of income and cash flows of the Company and
its subsidiaries for the fiscal quarter then ended, which financial statements
shall be prepared in accordance with United States generally accepted accounting
principles (in each case, together with any notes relating thereto); provided,
that notwithstanding the foregoing, for so long as Glenayre and its Permitted
Transferees own shares of Common Stock, the Company shall deliver to Glenayre
and each of its Permitted Transferees true and complete copies of such financial
and other information as is provided from time to time to any financing source
of the Company or WMC Holding and, provided, further, that if the Company ceases
to be required to provide financial and other information to its financing
sources during such time, the Company shall nonetheless thereafter continue to
provide to Glenayre such financial and other information in the form and on the
schedule previously provided to such financing sources.
(b) In the event that the Company is not preparing financial
statements described in clause (ii) of paragraph (a) above, then as promptly as
practicable, the Company will deliver to Glenayre true and complete copies of
such other regularly-prepared financial statements, reports and analyses as may
be prepared by the Company or any subsidiary thereof relating to the business or
operations of the Company or any subsidiary thereof.
(c) Glenayre agrees to keep confidential all nonpublic
information made available to Glenayre pursuant to this Section 5.15; provided,
however, that Glenayre will not be required to maintain as confidential any such
information that (a) becomes generally available to the public other than as a
result of a disclosure by Glenayre or (b) is required to be disclosed pursuant
to the terms of a valid subpoena or order by governmental authority or other
legal requirement.
14.16 Representations. Each of the parties hereto represents
that this Agreement has been duly executed and delivered by such party and
constitutes a legal, valid and binding obligation of such party enforceable
against it in accordance with the terms of this Agreement.
19
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
WESTERN MULTIPLEX CORPORATION
By:
----------------------------
Name:
Title:
WMC HOLDING CORP.
By:
----------------------------
Name:
Title:
GTI ACQUISITION CORP.
By:
----------------------------
Name:
Title:
GLENAYRE TECHNOLOGIES, INC.
By:
----------------------------
Name:
Title:
20
EXHIBIT 5
================================================================================
TRANSITION SERVICES
AGREEMENT
BETWEEN
GLENAYRE TECHNOLOGIES, INC.
AND
WMC HOLDING CORP.
DATED AS OF
SEPTEMBER 30, 1999
================================================================================
Transition Services Agreement
-----------------------------
This Agreement, dated as of September 30, 1999, is by and
between Glenayre Technologies, Inc., a Delaware corporation ("GTI"), and WMC
Holding Corp., a Delaware corporation ("Purchaser").
RECITALS
WHEREAS, GTI, GTI Acquisition Corp., a Delaware corporation
("Glenayre"), Western Multiplex Corporation ("WMC") (collectively, "Sellers")
and Purchaser entered into an Acquisition Agreement, dated as of September 30,
1999 (as may be amended from time to time, the "Acquisition Agreement"),
pursuant to which, among other things, WMC's certificate of incorporation will
be amended to increase the number of authorized shares of common stock to
200,000,000 and to convert each share of common stock of the Company outstanding
immediately prior to such amendment into 80,000,000 shares of Common Stock (as
defined in the Acquisition Agreement), WMC will redeem 42,000,000 shares of
Common Stock from Glenayre and Purchaser will purchase 35,955,000 shares of
Common Stock from Glenayre; and
WHEREAS, immediately following the transactions contemplated
by the Acquisition Agreement, Glenayre will hold 2,045,000 shares of Common
Stock and Purchaser will hold 35,955,000 shares of Common Stock; and
WHEREAS, GTI, directly and through certain of its
Subsidiaries' operations other than WMC, currently provides certain services to
WMC, and Purchaser wishes that GTI shall continue to provide certain services to
WMC after the closing of the transactions contemplated by the Acquisition
Agreement (the "Closing") and GTI wishes to provide such services or cause such
services to be provided for a limited duration, all as more fully set forth
herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise set forth in this Agreement, capitalized
terms shall have the meanings set forth in the Acquisition Agreement.
1.1 "Attributable Cost" has the meaning set forth in
Attachment B hereto.
1.2 "Effective Date" means the date of the Closing.
1.3 "GTI Cost" means the Attributable Cost to GTI or its
Affiliates of each Service as reflected on the applicable Attachment A for such
Service or such other price for any Service as Purchaser and GTI, each in their
sole discretion, may mutually agree in writing.
1.4 "Service" or "Services" means (i) the applicable service
or services listed in Attachment X and (ii) any other Services that were
provided by a Service Provider to WMC prior to the Effective Date that are not
provided pursuant to (i) and which Purchaser and GTI mutually agree in writing
to be provided or obtained hereunder, in each case, substantially as and to the
extent provided to WMC immediately prior to the Effective Date by a Service
Provider, unless otherwise stated with respect to a particular service in
Attachment X.
1.5 "Service Provider" means (a) GTI or any Subsidiary
providing to or obtaining for WMC the particular Service pursuant to Section 2.1
or (b) any third party that is providing a Service to GTI or any Subsidiary at
the time of the Closing, which Service the third party is to provide to WMC
pursuant to Section 2.1.
1.6 "Subsidiary" and "Subsidiaries" means, except where used
as part of the defined term having the meaning set forth in Subsection 1.5, any
corporation(s) in an unbroken chain of corporations beginning with GTI if each
of the corporations other than the last corporation in the unbroken chain then
owns stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
1.7 "Term" has the meaning set forth in Section 3.1.
1.8 The words "hereof", "herein", and "hereunder" and words
of similar import, when used in this Agreement, shall refer to this Agreement as
a whole and not to any particular provision of this Agreement. The terms defined
in the singular shall have a comparable meaning when used in the plural, and
vice versa. References herein to a specific Section, Subsection or Attachment
shall refer, respectively, to Sections, Subsections or Attachments of this
Agreement, unless the express context otherwise requires. Wherever the word
"include", "includes", or "including" is used in this Agreement, it shall be
deemed to be followed by the words "without limitation". The term "or" is not
exclusive.
ARTICLE II
SERVICES
--------
2.1 On the terms and conditions of this Agreement, GTI hereby
agrees to provide Services, cause one or more of their Subsidiaries to provide
Services, or, subject to Section 2.2, cause a third party that is providing a
Service to WMC at the time of the Closing to continue to provide such Service,
to WMC for the Term with respect to each Service. GTI shall be entitled, at its
discretion at any time during the Term, to alter or modify the manner in which
any Service is provided or to outsource the performance of any Service, provided
that any such alteration, modification or outsourcing does not materially affect
the quality or functionality of the Service delivered to WMC.
2
2.2 Subject to Section 4.3, GTI's obligation to deliver any
Service is conditioned upon GTI obtaining the consent, where necessary, of any
relevant third party Service Provider. GTI agrees to use commercially reasonable
efforts to obtain such consent, and if such consent has not been obtained
following GTI' exercise of commercially reasonable efforts, the parties hereto
will use their commercially reasonable efforts to arrange for alternative
methods of delivering any such Service.
2.3 As soon as reasonably practicable, but in no event later
than 10 days hereafter, Purchaser shall provide written notice to GTI of each
service listed in Attachment X for which Purchaser desires GTI complete and
deliver a separate version of Attachment A. Within 10 days thereafter, GTI
shall, for each such service listed in Attachment X, complete and deliver a
version of Attachment A for each such service and all information required
thereby to Purchaser. Within 10 days after receipt of Attachment A, Purchaser
shall provide GTI in writing with (i) a list of each service for which a version
of Attachment A has been delivered by GTI to Purchaser, which Purchaser desires
GTI to provide Purchaser under the terms of this Agreement, and (ii) any
comments on the proposed GTI Cost for each such service in each territory. GTI
and Purchaser will promptly thereafter enter into cooperative, good faith
negotiations to resolve any disagreements as to what the GTI Cost shall be for
each such service in each such territory. GTI and Purchaser agree to utilize
mutual best efforts to complete by the Closing a version of Attachment A with
respect to each service Purchaser desires GTI to provide, with respect to each
territory in which Purchaser desires GTI to provide each such service. It is the
intention of the parties that the foregoing process shall be completed by the
Closing. The time periods set forth in this Section 2.3 are intended to be
targets and nothing shall prevent either party from revising such target time
periods and neither party shall be relieved of any obligation as a result of any
failure of the other party to meet the foregoing target time periods.
2.4 GTI shall have no obligation hereunder to provide any
Service other than as contemplated by Section 1.4.
2.5 Any Service provided to WMC by a third party Service
Provider shall, to the extent within the power of GTI and subject to any
controlling agreement with such third party Service Provider, be provided (i) on
economic terms that are no less favorable to WMC than the economic terms upon
which such third party Service Provider provides such Service or an essentially
similar service to GTI and its Subsidiaries and (ii) in a manner which is in all
pertinent respects substantially comparable to that in which such third party
Service Provider provides such Service or such similar service, as the case may
be, to GTI and its Subsidiaries. Notwithstanding the foregoing, Purchaser
acknowledges that GTI has no control over the Services provided by the third
party Service Provider.
ARTICLE III
TERM OF AGREEMENT
-----------------
3.1 Subject to Article VII, this Agreement shall commence on
the Effective Date and shall terminate with respect to each Service on the first
anniversary of the Effective
3
Date (the "Termination Date"); provided that, in the event any submitted version
of Attachment A states a different expiration date in respect of a particular
Service, the Service to which such different date relates shall terminate on
such date (in respect of each Service, the period from the Effective Date to the
Termination Date, or the termination date listed in the version of Attachment A
submitted for such Service, if applicable, is the "Term").
3.2 Neither the termination of this Agreement with respect to
a Service pursuant to Article VII nor the expiration of this Agreement with
respect to a Service pursuant to Section 3.1 shall affect (i) the liability of a
party for breach of this Agreement, (ii) the obligations of a party to make
payments when due hereunder or (iii) the provisions contained in Articles IV, VI
and VIII and Sections 5.2 and 5.3 of Article V (and related definitions), each
of which shall survive the termination or expiration of this Agreement.
ARTICLE IV
PRICING AND PAYMENT
-------------------
4.1 Subject to Sections 4.2, 4.3 and 4.4, each Service
rendered pursuant to this Agreement shall be charged to and payable by Purchaser
monthly at the GTI Cost for such Service. To the extent practicable, unless
otherwise agreed by the parties, the amount payable by Purchaser in respect of
each Service shall be a specified amount per hour or per task, as applicable,
based on GTI Cost for such Service. To the extent not included in the GTI Cost,
any pass-through cost incurred in connection with the provision of a Service by
a Service Provider to WMC (e. g., postage; licenses), reasonably allocated
between GTI and WMC to the extent appropriate, shall be promptly reimbursed to
the Service Provider by Purchaser upon receipt of an invoice from the Service
Provider.
4.2 (a) During the Term, should Purchaser request that any
Service Provider make any change to a Service which would cause the Service to
no longer be provided in substantially the manner and to the extent that it was
provided by a Service Provider to WMC prior to the Effective Date, a Service
Provider shall make such change if (but only if) Purchaser and such Service
Provider mutually agree upon such change. The price charged by such Service
Provider to WMC for such changed Service shall be the Attributable Cost (or such
other price as shall be agreed upon by GTI and Purchaser in writing.
(b) All costs (including labor costs) incurred by a Service
Provider to separate WMC's operations from GTI's operations (e.g., costs related
to terminating distribution arrangements, transferring inventory, data extracts,
database deletions) following the Effective Date and any costs incurred by GTI
to disconnect WMC users from systems, etc., which would have been incurred by
GTI even if Services had not been provided hereunder, shall be the
responsibility of GTI.
4.3 In the event any cost is incurred by GTI or any
Subsidiary in connection with obtaining or soliciting the consent of any third
party Service Provider, or, where such consent is not obtained, in the event any
cost is incurred by GTI or any Subsidiary in connection
4
with providing an alternative method of delivering the Service, such cost shall
be reimbursed by Purchaser subject to satisfaction of the express conditions
that (a) Purchaser has received an invoice from GTI which is reasonably detailed
with respect to such costs, along with copies of all corresponding invoices
received by GTI, and (b) prior to incurring any such costs, GTI requested and
obtained Purchaser's written consent.
4.4 Credit terms shall be net thirty (30) days from the date
of receipt of invoice. In the case of disputed invoices, in the event Purchaser
promptly provides the Service Provider which issued the invoice with an
explanation of the dispute, Purchaser shall not be obligated to pay that portion
of the invoice that is reasonably in dispute until the dispute is resolved, but
Purchaser shall be obligated for the undisputed portion thereof.
ARTICLE V
LIMITED WARRANTY AND LIABILITY
------------------------------
5.1 GTI warrants that Services to be provided by GTI and/or
any GTI Subsidiary shall be performed at an equivalent level of quality in
respect of a particular Service to that provided to WMC by GTI and/or a such GTI
Subsidiary, as the case may be, prior to the date hereof (regardless of from
whom such prior Service was provided). GTI does not warrant the quality of any
Services provided by a third party Service Provider.
5.2 Except as otherwise provided in this Section 5.2 or
otherwise in respect of any liabilities incurred pursuant to Section 7.2, GTI
and the Subsidiaries shall have no liability under or as a result of this
Agreement. Subject to Article VII, GTI's and the Subsidiaries' maximum liability
and Purchaser's sole remedy in the event performance of Services rendered by GTI
or any GTI Subsidiary or third party Service Provider fails to comply with the
terms of this Agreement is a refund of the purchase price paid to GTI or any GTI
Subsidiary for such Services or, at Purchaser's option and subject to
availability, the provision of Services curing the breaching Services. The
preceding sentence shall not be applicable to the extent such non-compliance
arises out of the intentional misconduct or gross negligence of GTI or a
Subsidiary or their agents or employees. GTI and the Subsidiaries shall have no
responsibility to maintain insurance to cover any or all loss or damage to goods
to which WMC has title that are in GTI's or a Subsidiary's possession or
control, except that there shall be such liability for costs attributable to the
failure to maintain insurance if GTI and Purchaser have agreed in accordance
with the terms of this Agreement that such insurance coverage will be provided
as a Service hereunder.
5.3 Purchaser will indemnify and hold harmless GTI, the
Subsidiaries and their respective employees and agents with respect to any
damages or losses incurred by GTI, the Subsidiaries or their respective
employees or agents arising out of the provision of Services, except to the
extent of GTI's or such Subsidiary's intentional misconduct or gross negligence.
5
ARTICLE VI
CONFIDENTIALITY
---------------
6.1 In the course of providing Services under this Agreement,
GTI and its Subsidiaries and their employees may receive or have access to
information or materials that are confidential or proprietary to WMC. GTI and
its Subsidiaries and their employees shall each use such information and
materials only in connection with the performance or utilization of Services
hereunder and shall safeguard such confidential and proprietary information and
materials against disclosure to all others, both during the Term and for a
period of two (2) years thereafter. GTI's and its Subsidiaries' and their
employees' obligations hereunder shall not apply to any such information or
material that (i) is or becomes public knowledge without disclosure by such
Person in connection herewith; (ii) is lawfully acquired by such Person, its
agents, counsel, or other advisers from a source not under any obligation to
Purchaser or WMC regarding disclosure of such information; or (iii) is disclosed
by such Person under operation of law or with the prior written consent of
Purchaser or WMC.
6.2 Upon Purchaser's request, GTI will use commercially
reasonable efforts wherever feasible to cause any third party Service Provider
to enter into a confidentiality agreement containing substantially the same
restrictions as Section 6.1, with respect to information or materials that are
confidential or proprietary to WMC.
ARTICLE VII
TERMINATION
-----------
7.1 This Agreement shall be construed as a separate and
independent agreement for each and every type of Service provided under this
Agreement. Any termination or expiration of this Agreement with respect to a
particular Service shall not terminate this Agreement with respect to any other
Services then being provided under this Agreement.
7.2 Subject to Section 7.1 hereof, a party may terminate this
Agreement or, at such party's option, terminate or suspend the performance of
any Service hereunder if there has occurred a material breach of this Agreement
by the other party with respect to such Service and the terminating party has
given written notice to the other party of its intent to terminate under this
Section 7.2 (which notice adequately informs the other party of its reasons
therefor) at least thirty (30) days prior to such termination date, unless
within the period of such thirty (30) days after receipt of such notice the
breaching party remedies the breach. For so long as a material breach is not
remedied, the non-breaching party may choose to suspend its own performance with
respect to such Service, provided that the suspending party shall be liable for
any resulting costs or losses in the event a legally binding authority
(including authority that is mutually conferred by the parties) subsequently
determines that no breach actually occurred.
7.3 Upon expiration of the Term or termination of the
Agreement with respect to any Service, all rights under this Agreement to
receive such Service will cease.
6
7.4 Upon sixty (60) days' prior written notice to GTI,
Purchaser may terminate this Agreement with respect to any Service unless
earlier notice is otherwise required by the terms of a contract with a third
party Service Provider.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by facsimile or sent, postage prepaid, by registered, certified or
express mail or reputable overnight courier service and shall be deemed given
when received, as follows:
(i) If to Purchaser,
WMC Holding Corp.
c/o Leeward Technology Partners
Leeward Management Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Ripplewood Holding L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
7
(ii) if to GTI,
Glenayre Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
Bank of America Corporate Center
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
8.2 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 (as defined in the Acquisition Agreement).
Notwithstanding the foregoing, without the consent of Glenayre and GTI,
Purchaser may assign its rights and obligations hereunder to an Affiliate (as
defined in the Acquisition Agreement) of Purchaser; 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 8.2
shall be void.
8.3 Amendment. This Agreement may not be modified or amended,
except by an instrument in writing signed on behalf of GTI and Purchaser.
8.4 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.
8.5 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.
8
8.6 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 unenforceability
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.
8.7 Entire Agreement. Except for the terms of the Acquisition
Agreement, this Agreement constitutes the entire agreement of the parties with
respect to the provision of the Services and supersedes in all respects any
prior understanding or agreement, written or oral. To the extent the Acquisition
Agreement, or any other document or other agreement executed in connection with
the Acquisition Agreement, is in conflict with any term or provision of this
Agreement or any Attachment to this Agreement with respect to any Service
expressly described in an Attachment, this Agreement will take precedence. To
the extent this Agreement is in conflict with any Attachment, the Attachment
will take precedence.
8.8 Relationship of Parties. Each party in performing its
obligations and duties hereunder shall be conclusively deemed to be an
independent contractor and not under the control and supervision of the other
party hereto and nothing in this Agreement shall be read to create any agency,
partnership or joint venture of GTI and Purchaser or to create any trust or
other fiduciary relationship between them. GTI shall not participate in or share
the profits or losses from the activities of Purchaser except to the extent, if
any, that such profits or losses are solely attributable to GTI retaining an
equity interest in WMC (that is, as a WMC shareholder).
8.9 Force Majeure. Neither GTI nor any of its Subsidiaries
shall be held responsible for failure of or delay in delivery, nor shall WMC be
held responsible for failure of or delay in receiving Services hereunder, if
such failure or delay is due to an act of God or public enemy, war, government
acts or regulations, fire, flood, embargo, quarantine, epidemic, labor strike or
work stoppage by workers, accident, unusually severe weather or other cause
similar or dissimilar to the foregoing, beyond their control (each such event, a
"Force Majeure" occurrence).
Subject to the following paragraph, in the event of failure of the provision or
acceptance of Services under this Agreement as a result of a Force Majeure
occurrence, the invoice price of such Services ordered may be reduced
accordingly by written notice by either party to the other.
If the performance of this Agreement by either party or any
obligation hereunder is prevented, restricted or interfered with by reason of a
Force Majeure occurrence, the party whose performance is so affected, upon
giving prompt notice to the other party, shall be excused from such performance
to the extent of the effects of such Force Majeure; provided, however, that the
party so affected shall take all reasonable steps to avoid or remove such causes
of nonperformance and shall continue performance hereunder with dispatch
whenever such causes are removed.
9
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
Glenayre Technologies, Inc. WMC Holding Corp.
By:_____________________________ By:_______________________________
Title:__________________________ Title:____________________________
10
ATTACHMENT A TO THE
TRANSITION SERVICES
AGREEMENT
Ref. #: ____
TRANSITION SERVICES TO BE PROVIDED BY GTI TO PURCHASER
------------------------------------------------------
Person Providing Service:
-------------------------
Function: Service Area:
--------- -------------
Description of Service:
-----------------------
Date Service Will Terminate: Estimated Costs:
---------------------------- ----------------
Volume(s) Assumed for Estimation: Basis for Billing (CHECK ONE OR MORE
--------------------------------- BOXES BELOW AND FURTHER EXPLAIN):
[ ] Fixed Cost
[ ] Fixed Rate/Actual Usage
[ ] Actual Costs
Insurance (CHECK IF APPLICABLE):
---------
[ ] Cost includes insurance coverage for Purchaser's goods in GTI's
possession or control.
Frequency of Billing (if Other Than Monthly):
---------------------------------------------
Information/Tasks Required from Purchaser for GTI to Provide Service:
---------------------------------------------------------------------
Limitations on Scope of Service (Purchaser's ability to Obtain More/Less Service
during Term):
Purchaser Receiver: ____ (initials) GTI's Provider: ____ (initials)
-------------------- ---------- -------------------- ----------
(Print Name) (Date) (Print Name) (Date)
[ ] Check here if detailed supporting documentation also agreed upon.
ATTACHMENT B TO THE
TRANSITION SERVICES AGREEMENT
ATTRIBUTABLE COST
-----------------
The term "Attributable Cost" represents the reasonable charge
incurred in providing a Service according to this Attachment B. The intent is to
attribute to a Service the direct costs in the provision of such Service,
including reasonable personnel costs, but not including charges for general
overhead (e.g., office space, unless specially leased in connection with
providing a Service) of GTI or its Affiliates. Attributable Costs shall include,
to the extent applicable, if at all, costs at average labor rates for personnel
who provide Services; materials; packaging; warehousing; storage; shipping and
transportation; and reasonably required third party costs directly incurred in
providing a Service. Costs incurred for third party services, and material
purchase prices used in attributing the costs of materials to a Service, will be
no higher than actual prices paid for such services and materials, passing along
to Purchaser the benefit of any volume or other discounts available to GTI.
ATTACHMENT X
TO THE TRANSITION SERVICES AGREEMENT
FINANCE:
Tax C Assistance with consistent practices, access and gathering
of information and compliance with respect to:
Federal Income Tax Returns
State Income Tax Returns
Franchise Tax Returns
Form 5500 Filings
Research & Development Tax Credit Filings
HUMAN RESOURCES:
Administration C Assistance with consistent practices, access and
gathering of information and compliance with respect to:
Benefits Administration
Defined Contribution Plan
Section 125 Plan
Deferred Compensation Plan
Workers' Compensation
Personnel Issues (e.g., redundancies, dismissals, employee complaints
and claims, including EAP) C Consultation
MISCELLANEOUS:
Legal (specifically requested on a case-by-case basis)
Legal and Business Affairs Support(1)
Patent
International Regulatory/Homologation(2) (specifically requested on a
case-by-case basis)
Risk Management/Insurance(3)
Qualified Supplier Utilization: WMC may sell products through Glenayre
to all existing Glenayre customers with whom Glenayre has certified
supplier status, or where Glenayre is in the process of obtaining such
certification, as of the Closing date).
Special Services(4)
--------------------
(1) GTI will provide legal services specifically requested on a case-by-case
basis, which shall be billed directly to WMC, provided such services (a) do not
present an actual or potential legal or business conflict; and (b) would not
constitute the unauthorized practice of law under any applicable bar association
or governmental rules.
(2) Does not include name changes on certificates which are covered by the
Acquisition Agreement.
(3) Limited, subject to feasibility regarding the availability of particular
varieties of coverage, to providing business insurance coverage to WMC for 30
days, general administration, first party claims review and analysis, obtaining
of quotations and advice regarding general risk management.
(4) ▇▇▇▇▇▇▇▇ ▇▇, who is to become an employee of Glenayre Electronics, Inc.,
shall perform services requested by WMC on its behalf.