EXHIBIT 2.1
AGREEMENT BETWEEN AND AMONG
WINNCOM TECHNOLOGIES, INC.,
WINNCOM TECHNOLOGIES CORP.,
AND
ANTENNAS AMERICA, INC.,
May 24, 2000
AGREEMENT
TABLE OF CONTENTS
Page
----
1. Definitions...........................................................1
-----------
1.1. Articles Of Merger...........................................1
1.2. Closing......................................................1
1.3 Closing Weighted Average Trading Price.......................1
1.4. Code.........................................................1
1.5. Constituent Corporations.....................................1
1.6. Effective Time...............................................2
1.7 GAAP.........................................................2
1.8. Maryland Law.................................................2
1.9. Material Adverse Change or Material Adverse Effect...........2
1.10. Merger.......................................................2
1.11. 1933 Act.....................................................2
1.12. 1934 Act.....................................................2
1.13. Ohio Law.....................................................2
1.14. Parent.......................................................2
1.15. Parent Closing Shares........................................2
1.16. Parent Common Stock..........................................2
1.17. SEC..........................................................2
1.18. Sub..........................................................2
1.19. Subsidiary...................................................2
1.20. Surviving Corporation........................................2
1.21 Transfer Agent...............................................2
1.22. Weighted Average Trading Price...............................2
1.23. Winncom......................................................3
1.24 Winncom Proportionate Ownership..............................3
1.25. Winncom Common Stock.........................................3
1.26. Winncom Shareholders.........................................3
2. The Merger............................................................3
----------
2.1. Merger.......................................................3
2.2. Effective Time...............................................3
3. Articles Of Incorporation, Bylaws And Directors.......................3
-----------------------------------------------
3.1. Articles And Bylaws..........................................3
3.2. Directors Of Surviving Corporation...........................3
4. Consideration.........................................................3
-------------
4.1. Cash.........................................................3
4.2. Notes........................................................3
4.3 Escrow Account...............................................4
4.4 Conversion of Shares.........................................4
4.5. Certain Effects Of The Merger................................4
4.6. Mechanics Of Exchange........................................5
4.7. Stock Transfer Books.........................................5
4.8. Payments to Winncom Shareholders.............................5
5. Representations And Warranties Of Parent..............................5
----------------------------------------
5.1. Organization And Standing....................................5
5.2 Subsidiaries.................................................5
5.3. Capitalization...............................................5
5.4. Authority; Non-Contravention.................................6
5.5. Governmental Consents........................................6
5.6. Disclosure...................................................6
5.7. Absence of Litigation........................................7
5.8 Absence of Certain Changes or Events.........................7
5.9. Reorganization...............................................8
6. Representations And Warranties Of Winncom.............................8
-----------------------------------------
6.1. Organization And Standing....................................8
6.2. Subsidiaries.................................................8
6.3. Capitalization...............................................8
6.4. Authority; Non-Contravention.................................8
6.5. Contracts And Commitments....................................9
6.6. Compliance With Other Instruments............................9
6.7. Litigation And Claims........................................9
6.8. Customers...................................................10
6.9. Insurance...................................................10
6.10. Governmental Consents.......................................10
6.11. Disclosure..................................................10
6.12. Real Estate.................................................10
6.13. Taxes.......................................................10
6.14 Workers Compensation........................................11
6.15. Employees; No Retirement Obligations........................11
6.16. Books And Records...........................................11
6.17. Copies Of Documents.........................................11
6.18. Officers, Directors, Employees And Consultants..............11
6.19. Bank Accounts...............................................12
6.20. Information.................................................12
6.21. Documents Delivered.........................................12
6.22. Material Changes............................................12
6.23. Financial Statements; Undisclosed Liabilities...............13
6.24. No Encumbrances.............................................14
6.25. No Encumbrances On Winncom Common Stock.....................14
6.26. Reorganization..............................................14
6.27. Restricted Stock............................................14
7. Representations And Warranties Regarding Sub.........................14
--------------------------------------------
7.1. Organization and Standing...................................14
7.2. Capital Structure...........................................15
7.3. Authority; Non-Contravention................................15
8. Certain Agreements...................................................15
------------------
8.1. Access And Information......................................15
8.2. Audited Financial Statements................................15
8.3. Operation Of Business.......................................16
8.4. Preservation Of Business....................................16
8.5. Allocation Of Revenues, Expenses, And Capital Investments...16
8.6. Interim Operations..........................................17
8.7. Reorganization..............................................18
8.8. Resignation Of Officers And Directors.......................18
8.9 Employment Agreement........................................18
8.10. Noncompetition Agreement....................................18
8.11. Winncom Employees Options...................................18
8.12. Accuracy Of Representations.................................18
8.13. Consents, Waivers And Approvals.............................18
8.14. Notice Of Breach Of Warranty................................18
8.15. Additional Documents; Further Assurances....................18
8.16. Notice Of Inaccurate Information............................18
8.17. Publicity...................................................19
9. Conditions To Performance By All Parties.............................19
----------------------------------------
10. Conditions Precedent To Performance By Winncom.......................19
----------------------------------------------
10.1 Approvals...................................................19
10.2. Accuracy of Representations and Warranties..................19
10.3. Compliance with Covenants...................................19
10.4. Opinion of Counsel..........................................19
10.5 Parent Share Certificates...................................20
11. Conditions Precedent To Performance By Parent And Sub................20
-----------------------------------------------------
11.1 Approvals...................................................20
11.2. Accuracy of Winncom's Representations and Warranties........20
11.3. Compliance with Covenants...................................20
11.4. Interim Financial Statements................................20
11.5. No Adverse Change, Projections..............................21
11.6 Opinion of Winncom's Counsel................................21
11.7. Consents....................................................22
12. Indemnification By Winncom Shareholders..............................22
---------------------------------------
13. Notice Of Claim......................................................23
---------------
14. Closing..............................................................23
-------
15. Intentionally Omitted................................................24
---------------------
16. Amendment Or Waiver..................................................24
-------------------
17. Entire Agreement.....................................................24
----------------
18. Notice...............................................................24
------
19. Severability.........................................................25
------------
20. Headings.............................................................25
--------
21. Counterparts.........................................................25
------------
22. Expenses.............................................................25
--------
23. Nature and Survival of Representations...............................25
--------------------------------------
24. Benefits And Assignment..............................................25
-----------------------
25. Specific Performance.................................................26
--------------------
26. Brokers..............................................................26
-------
27. Costs................................................................26
-----
28. Choice Of Law........................................................26
-------------
SCHEDULES
Schedule No. And Description
4.2(a) Form Of The 90-Day Note
4.2(b) Form Of The 180-Day Note
4.2(c) Pledge Agreement
4.3 Escrow Agreement
5.2 Parent's Subsidiaries
5.3 Parent Capitalization
5.6 Disclosures
6.1 List Of Jurisdictions Where Winncom Property Is Leased/Owned
6.5 Material Contracts, Indebtedness, Liabilities And Obligations
6.6 Violations Of Articles Of Incorporation, Bylaws, Contracts, Etc.
6.7 Litigation And Claims
6.8 Customers And Form Of Base Warranty
6.9 Insurance Policies
6.15 Employee Benefits
6.18 Employees, Directors, Officers and Consultants and Annual
Compensation Thereof
6.19 Bank Accounts
6.22 Material Changes
6.23 Winncom Financial Statements
6.24 Encumbrances
8.9 Employment Agreement
8.10 Noncompetition Agreement
8.11 Winncom Employees Options
11.5 Business Plan
14.2 Transfer Agent Instructions
AGREEMENT BETWEEN AND AMONG
WINNCOM TECHNOLOGIES, INC.
WINNCOM TECHNOLOGIES CORP.,
AND
ANTENNAS AMERICA, INC.
THIS AGREEMENT ("Agreement"), dated as of May 24, 2000, is entered into
between and among, Winncom Technologies, Inc., an Ohio corporation ("Winncom"),
Winncom Technologies Corp., a Maryland corporation and a wholly-owned subsidiary
of Parent ("Sub"), and Antennas America, Inc., a Utah corporation ("Parent").
Each of Winncom, Sub and Parent may be referred to individually as a "Party",
and all of Winncom, Sub and Parent may be referred to collectively as the
"Parties".
RECITALS
A. The Parties to this Agreement desire to effect the merger (the
"Merger") of Winncom with and into Sub pursuant to the terms and conditions of
this Agreement as a result of which (a) Sub shall be the surviving corporation,
(b) the separate corporate existence of Winncom shall cease, and (c) the holders
of the outstanding capital stock of Winncom will receive $12,000,000, payable in
a combination of cash, short-term notes, and shares of common stock of Parent,
in exchange for relinquishing all the outstanding shares of common stock, which
constitute all the outstanding securities, of Winncom.
B. The respective Boards Of Directors of Winncom, Sub and Parent, and
the stockholders of Winncom and Sub, have approved this Agreement and have
determined that Winncom should merge with and into Sub on the terms and
conditions hereinafter set forth in this Agreement.
C. The Parties desire to effectuate the Merger as a reorganization
under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and this Agreement is intended to constitute the parties' plan of
reorganization with respect to the Merger.
AGREEMENT
In consideration of the premises and the mutual representations,
warranties, covenants and agreements herein contained, the Parties agree as
follows:
1. Definitions. As used in this Agreement the following terms have the
meanings indicated:
1.1......"Articles Of Merger" refers to the articles of merger
merging Winncom into Sub and meeting the requirements of the Maryland Law and
the Ohio Law.
1.2......"Closing" refers to the consummation of the
transactions contemplated by this Agreement.
1.3......"Closing Weighted Average Trading Price" means the
Weighted Average Trading Price on the date of Closing.
1.4......"Code" refers to the Internal Revenue Code of 1986,
as amended.
1.5......"Constituent Corporations" refers to Sub and Winncom,
collectively.
1.6......"Effective Time" refers to the date and time of the
filing of the Articles Of Merger with the Secretary of State of the State of
Maryland.
1.7......"GAAP" shall mean the U.S. generally accepted
accounting principles.
1.8......"Maryland Law" refers to the Maryland General
Corporation Law.
1.9......"Material Adverse Change" or "Material Adverse
Effect" means, when used with respect to Parent or Winncom, as the case may be,
any change or effect that is or, so far as can reasonably be determined, is
likely to be materially adverse to the assets, properties, condition (financial
or otherwise), business or results of operations of Winncom, or of Parent and
its Subsidiary, taken as a whole, as the case may be.
1.10....."Merger" refers to the merger of Winncom into Sub
pursuant to the terms and conditions of this Agreement.
1.11....."1933 Act" refers to the Securities Act of 1933, as
amended.
1.12....."1934 Act" refers to the Securities Exchange Act of
1934, as amended.
1.13....."Ohio Law" means the General Corporation Law of Ohio.
1.14....."Parent" refers to Antennas America, Inc., a Utah
corporation, unless otherwise indicated.
1.15....."Parent Closing Shares" means that number of shares
of Parent Common Stock determined by dividing $6,000,000 by the Closing Weighted
Average Trading Price.
1.16....."Parent Common Stock" refers to the $.0005 par value
common stock of Parent.
1.17....."SEC" refers to the Securities And Exchange
Commission.
1.18....."Sub" refers to Winncom Technologies Corp., a
Maryland corporation, all the outstanding shares of which are owned by Parent,
unless otherwise indicated.
1.19....."Subsidiary" means any corporation, partnership,
joint venture or other legal entity of which Parent or Winncom, as the case may
be (either alone or through or together with any other Subsidiary), owns,
directly or indirectly, 50 percent or more of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity.
1.20....."Surviving Corporation" shall have the meaning set
forth in Section 2.1.
1.21....."Transfer Agent" refers to the American Securities
Transfer & Trust, Inc.
1.22....."Weighted Average Trading Price" shall mean the
average trading price of shares of Parent Common Stock for a specified period
determined by multiplying the number of shares involved in each individual trade
during the period of determination by the sale price for that trade and dividing
the sum of all those amounts by the total number of shares traded during the
relevant period of determination.
2
1.23....."Winncom" refers to Winncom Technologies, Inc., an
Ohio corporation.
1.24....."Winncom Proportionate Ownership" means, for each
shareholder of Winncom as of the time of the Closing, the decimal fraction
resulting by dividing (i) the number of shares of Winncom Common Stock owned by
that Shareholder by (ii) the total number of issued and outstanding shares of
Winncom Common Stock.
1.25....."Winncom Common Stock" refers to the no par value
common stock of Winncom.
1.26....."Winncom Shareholders" means Gregory E. Raskin and
Michael P. Maly, who collectively own all the outstanding securities of Winncom.
2. The Merger.
----------
2.1......Merger. Subject to the terms and conditions hereof,
at the Effective Time, Winncom shall be merged with and into Sub in accordance
with the laws of the State of Maryland and the State of Ohio, with Sub being the
surviving corporation. Sub is also sometimes referred to as the "Surviving
Corporation".
2.2.....Effective Time. Subject to compliance by Sub and
Winncom with the covenants and agreements of, and satisfaction of the conditions
contained in, this Agreement, the Parties shall take all actions as are required
by law to make the Merger effective, including the filing of duly executed
Articles Of Merger meeting the requirements of the Maryland Law and the Ohio Law
with the Secretary of State of the State of Maryland and the Secretary of State
of the State of Ohio. The Merger shall become effective on the date and as of
the time of the filing of the Articles Of Merger with the Secretary of State of
the State of Maryland. Such date and time are herein referred to as the
"Effective Time". The Articles Of Merger shall be executed at or prior to the
Closing and filed promptly thereafter.
3. Articles Of Incorporation, Bylaws And Directors.
-----------------------------------------------
3.1.....Articles And Bylaws. The Articles Of Incorporation and
Bylaws of Sub in effect at the Effective Time shall be the Articles Of
Incorporation and Bylaws of the Surviving Corporation.
3.2.....Directors Of Surviving Corporation. At the Effective
Time the directors of the Surviving Corporation shall be Randall P. Marx,
Richard Anderson, Donald Huebner, and Gregory E. Raskin.
4. Consideration. Subject to the terms and conditions of this
Agreement, Parent agrees to pay Winncom $3,000,000 cash, $3,000,000 in notes,
and the Parent Closing Shares in exchange for all the Winncom Common Stock of
Winncom in the manner described in this Section 4.
4.1.....Cash. At the Closing, Parent shall pay Winncom
Shareholders a total amount of $3,000,000 bank or cashier's check or equivalent
in the amounts allocated in the same relative percentages as their respective
Winncom Proportionate Ownership as set forth in Section 4.8. Of this amount,
$2,500,000 will be deposited in the Escrow Account pursuant to Section 4.3.
4.2.....Notes. At the Closing, Parent shall issue four notes
(hereinafter referred to as "the 90-Day Notes" and "the 180-Day Notes", and
referred to together as the "Notes") payable to each of the Winncom
Shareholders, in the form attached, respectively, as Schedule 4.2(a) and
Schedule 4.2(b) to this Agreement. The aggregate amounts of the Notes shall be
$3,000,000 with the 90-Day Notes aggregating $1,500,000, and the 180-day Notes
3
aggregating $1,500,000. The Notes shall not accrue interest until and unless
they become delinquent. The 90-Day Notes are due and payable 90 days after the
Closing, and the 180-Day Notes are due and payable 180 days after the Closing.
The Notes shall be secured by a pledge of 100 percent of the Surviving
Corporation Common Stock pursuant to the Pledge Agreement attached hereto as
Schedule 4.2(c). In connection with this pledge, the Surviving Corporation
common stock will be delivered to Raskin, as pledge agent for Raskin and Maly,
together with the executed Pledge Agreement, at the Closing.
4.3.....Escrow Account. At Closing, Parent shall deposit
$2,500,000 in cash, which is part of the $3,000,000 cash consideration referred
to in Section 4.1 above, and the certificates of all Parent Closing Shares in
the National City Bank of Cleveland Escrow Account (the "Escrow Account"). Also
at Closing, Winncom shall deliver the certificates representing all shares of
Winncom Common Stock to Parent. The Escrow Account shall be subject to and
governed by the terms of the Escrow Agreement, which is attached hereto as
Schedule 4.3. Within 90 days after the Closing, Parent shall deposit the
aggregate amount of $1,500,000 in payment of the 90-Day Notes in the Escrow
Account. If Parent defaults in the payment of either the 90-Day Notes or the
180-Day Notes, all the shares of Sub's common stock, together with any interest
earned in the Escrow Account, shall be transferred to the Winncom Shareholders
as set forth in Section 4.8, and all the monies deposited in the Escrow Account,
together with the certificates representing all the Parent Closing Shares, shall
be returned to Parent. If both Notes are paid according to their terms, (i) all
shares of Sub's common stock, together with all documentation related to the
security interest in those shares, shall be delivered to Parent, (ii) all Parent
Closing Shares shall be transferred to Winncom, and (iii) all the monies
deposited in the Escrow Account, together with the interest accrued thereon,
shall be delivered to Winncom Shareholders as set forth in Section 4.8. At the
end of the 180-day period from the Closing, Parent shall make a payment to
Winncom for the amount by which the Closing Net Asset Value of Winncom (as
defined in Section 8.5.1 hereinafter) exceeds $500,000, and Parent shall cause
the Winncom Shareholders to be released from their guarantees of Winncom's bank
line of credit. The Escrow Account shall terminate upon payment of both Notes
according to their terms, and the release of the guarantees of the Winncom
Shareholders covering the Key Bank indebtedness.
4.4.....Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any further action, each Winncom Shareholder will
receive, in exchange for the cancellation of all the shares of Winncom Common
Stock owned by that Shareholder, that number of Parent Closing Shares determined
by multiplying the number of Parent Closing Shares by that Shareholder's Winncom
Proportionate Ownership, together with the consideration referenced in Sections
4.1 and 4.2 hereof. No fractional Parent Closing Shares will be issued, shares
shall be rounded up to the nearest whole share.
4.5.....Certain Effects Of The Merger. At the Effective Time,
the separate existence of Winncom shall cease, and Winncom shall be merged with
and into Sub, which, as the Surviving Corporation, shall thereupon and
thereafter possess all the rights, privileges, powers and franchises of a public
as well as of a private nature, and shall be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations; and all the
rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, and all debts due to
either of the Constituent Corporations on whatever account, as well as for stock
subscriptions and all other causes in action and other interests due or
belonging to each of the Constituent Corporations, shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest, shall be thereafter as effectively
the property of the Surviving Corporation as they were of the respective
Constituent Corporations and shall not revert or be in any way impaired by
reason of the Merger, subject to the provisions of Section 8.5 of this
Agreement. All rights of creditors and all liens upon any property of either of
the Constituent Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the Constituent Corporations shall thenceforth attach
to the Surviving Corporation, and may be enforced against it to the same extent
as if said debts, liabilities and duties had been incurred or contracted by the
Surviving Corporation.
4
4.6.....Mechanics Of Exchange. At the Closing, each Winncom
Shareholder who is the holder of a certificate that immediately prior to the
Effective Time represented outstanding shares of Winncom Common Stock shall
surrender that certificate, together with any other reasonably required
documents, to Parent and that Winncom Shareholder shall be entitled, upon
surrender, to receive in exchange therefor the consideration referenced in
Section 4.4 above. If any certificate for Parent Closing Shares is to be issued
in a name other than that in which the certificate for shares of Winncom Common
Stock surrendered in exchange therefor is registered, it shall be a condition of
that exchange that the person requesting the exchange shall pay to American
Securities Transfer & Trust, Inc., 12039 West Alameda Parkway, Suite Z-2,
Lakewood, Colorado 80228, any transfer or other taxes or fees required by reason
of the issuance of certificates for Parent Closing Shares in a name other than
that of the registered holder of the Winncom certificate surrendered.
4.7.....Stock Transfer Books. At the Effective Time, the stock
transfer books of Winncom shall be closed and no transfer of Winncom Common
Stock thereafter shall be made.
4.8.....Payments to Winncom Shareholders. The consideration
described in this Section 4 shall be allocated to Winncom Shareholders as set
forth in the following table:
- ------------------------------ -------------- ----------------- ----------- ------------ -----------------
Shares of Percentage of
Winncom Winncom 90-Day 180-Day Cash and Parent
Common Stock Proportionate Note Face Note Face Closing Shares
Winncom Shareholder Held Ownership Amount Amount Received
- ------------------------------ -------------- ----------------- ----------- ------------ -----------------
Gregory E. Raskin 130 56.52% $847,800 $847,800 56.52%
- ------------------------------ -------------- ----------------- ----------- ------------ -----------------
Michael P. Maly 100 43.48% 652,200 652,200 43.48%
- ------------------------------ -------------- ----------------- ----------- ------------ -----------------
5. Representations And Warranties Of Parent.
Parent represents and warrants to Winncom as follows:
5.1......Organization And Standing. The Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Utah. Parent has the requisite corporate power to own and
operate its properties and assets, and to carry on its business as currently
conducted and as proposed to be conducted. Parent is licensed or qualified as a
foreign corporation and is in good standing in every state or other
jurisdiction, wherein the character of its property or the nature of its
activities makes such licensing or qualification necessary and wherein the
failure to be so licensed or qualified would have a Material Adverse Effect on
the business and operations of Parent, taken as a whole. Parent has furnished
Winncom with true and complete copies of its current Articles of Incorporation
and Bylaws (certified by its corporate Secretary). These copies are true,
correct and complete in the form in which they now exist and contain all
amendments through the date of this Agreement.
5.2......Subsidiaries. Parent has no partially or
wholly-owned, direct or indirect, subsidiaries, except for those listed on
Schedule 5.2.
5.3......Capitalization. Parent's entire authorized capital
stock consists of 250,000,000 shares of Parent Common Stock, par value $.0005
per share, and no shares of preferred stock. At May 24, 2000, there were
121,198,467 shares of Parent Common Stock issued and outstanding and 1,320,000
5
shares of Parent Common Stock reserved for issuance pursuant to outstanding
options and warrants. Other than as specified in Schedule 5.3, Parent has no
stock option plans or agreements. In addition, except as set forth on Schedule
5.3, Parent has granted no warrant, call, option, convertible security or other
agreement or right (contingent or otherwise) to purchase or acquire any Parent
Common Stock or any other capital stock of Parent, Parent has no commitment to
issue such warrant, call, option, convertible security or other right, and, to
the best of Parent's knowledge, Parent has no obligation, contingent or
otherwise, to purchase, redeem, or otherwise acquire any shares of Parent Common
Stock or any interest therein.
5.4......Authority; Non-Contravention. Parent has the
requisite power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by Parent of its obligations hereunder and the consummation of
the transactions contemplated hereby have been duly authorized by its Board Of
Directors, and, except for the corporate filings required by state law, no other
corporate proceedings on the part of Parent are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Parent and (assuming the due
authorization, execution and delivery hereof by Winncom) constitutes a valid and
binding obligation of Parent enforceable against Parent in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws of general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at law).
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not, conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a material
benefit under, or result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of Parent under, any
provision of (i) the Articles Of Incorporation or Bylaws (true and complete
copies of which as of the date hereof have been delivered to Winncom) of Parent,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement instrument, permit, concession, franchise or license applicable
to Parent, or (iii) any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Parent or any of its properties or assets, other
than, in the case of clauses (ii) or (iii), any such conflicts, violations,
defaults, right, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent, materially impair the ability of Parent to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
5.5......Governmental Consents. Except for actions that have
been or will be taken prior to the Closing, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any governmental or regulatory authority on the part of Parent or
its Subsidiary is required in connection with the consummation of the
transactions contemplated by this Agreement. As of the Closing, there will be no
consent of any third party that has not been obtained and that is required in
order to consummate the transactions being consummated at the Closing.
5.6......Disclosure.
(a) Parent is current in filing all required documents with
the SEC. Parent shall deliver to Winncom, on or before the Closing, its Annual
Report on Form 10-KSB for the year ended December 31, 1999 as filed with the
SEC, its quarterly report for the three months ended March 31, 2000 as filed
with the SEC, both reports attached hereto to Schedule 5.6, and all subsequent
filings with the SEC. As of their respective dates, all documents filed by
Parent with the SEC since at least January 1, 1999 (the "Parent SEC Documents")
6
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of Parent included in the Parent SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto) and fairly present the financial position of Parent at the dates
thereof and the results of its operations and statements of cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
There is no liability or obligation of any kind, whether accrued, absolute,
fixed or contingent, of Parent which is required by GAAP to be reflected or
reserved against or otherwise disclosed in the most recent financial statements
of Parent included in the Parent SEC Documents is not so reflected or reserved
against that, individually or in the aggregate, would have a Material Adverse
Effect on Parent.
(b) Neither this Agreement nor any Schedule, Exhibit or
certificate delivered in accordance with the terms hereof, contains any untrue
statement (attributable to Parent) of a material fact. Parent has fully provided
Winncom with all the written information that Winncom has requested for the
purpose of deciding whether to consummate the Merger. Parent agrees that, during
the period between execution of this Agreement and the Closing, Parent will
provide all additional information that Winncom reasonably requests.
(c) Neither this Agreement nor any of the documents executed
in connection with the transactions contemplated by this Agreement (i) contains
any misstatement of a material fact or (ii) omits to state any fact necessary to
make the statements contained thereby not misleading.
5.7......Absence of Litigation. Except as disclosed in any SEC
Report, there is no claim, action, proceeding or investigation pending or, to
the knowledge of Parent, threatened against Parent or any of its subsidiaries,
or any property or asset of Parent or any of its subsidiaries, before any court,
arbitrator or governmental authority, in each case except as would not have a
Material Adverse Effect. As of the date of this Agreement, none of Parent, any
of its subsidiaries nor any property or asset of Parent or any of its
subsidiaries is subject to any order, writ, judgment, injunction, decree,
determination or award imposed by any court, arbitration or governmental
authority, in each case except as would not have a Material Adverse Effect.
5.8......Absence of Certain Changes or Events. (a) Since
December 31, 1999, except as disclosed in any SEC Report or as contemplated by
this Agreement, there has not been any change, event or circumstance which, when
taken individually or together with all other changes, events or circumstances,
has had or may have a Material Adverse Effect, and (b) since December 31, 1999
to the date of this Agreement, except as disclosed in any SEC Reports and except
for acquisition offers made to other companies (i) each of Parent and its
subsidiaries has conducted its businesses only in the ordinary course and in a
manner consistent with past practice and (ii) there has not been (A) any
material change by Parent or any of its subsidiaries in its material accounting
policies, practices and procedures, (B) any entry by Parent or any of its
subsidiaries into any commitment or transaction material to Parent and its
subsidiaries taken as a whole other than in the ordinary course of business
consistent with past practice, (C) any declaration, setting aside or payment of
any dividend or distribution in respect of any capital stock of Parent or any of
its subsidiaries (other than cash dividends payable by any wholly owned
subsidiary to another subsidiary or Parent) or (D) any increase in the
compensation payable or to become payable to any corporate officers or heads of
divisions of Parent or any of its subsidiaries, except in the ordinary course of
business consistent with past practice, and except for (i) an employment offer
made to one individual, and (ii) a possible increase in compensation to Randall
P. Marx.
7
5.9. ....Reorganization. To the knowledge of Parent, neither
Parent nor Sub has taken any action or failed to take any action which action or
failure to take action would jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code. Without
limiting the foregoing: (i) Sub is wholly owned directly by Parent, (ii) Parent
has no plan or intention with respect to any of the following: to cause the
Surviving Corporation to issue any shares of stock following the Merger, to
reacquire any of the Parent Common Stock issued in the Merger, to liquidate the
Surviving Corporation, to merge the Surviving Corporation with or into another
corporation, to sell or otherwise dispose of any stock of the Surviving
Corporation, or to cause the Surviving Corporation to sell or otherwise dispose
of (except in the ordinary course of business) any of its assets, (iii)
following the Merger, the Surviving Corporation will continue at least one
significant historic business line of Winncom, or use at least a significant
portion of Winncom's historic business assets in a business, in each case within
the meaning of Treas. Reg.ss. 1.368-1(d), and (iv) neither Parent nor any of its
Subsidiaries own, nor have any of them owned during the past five years, any
capital stock of Winncom.
6. Representations And Warranties Of Winncom. Winncom agrees,
represents and warrants to Parent and Sub as follows:
6.1......Organization And Standing. Winncom is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Ohio. Winncom has the requisite corporate power to own and operate its
properties and assets, and to carry on its business as currently conducted and
as proposed to be conducted. Winncom is licensed or qualified as a foreign
corporation and is in good standing in every state, or other jurisdiction,
wherein the character of its property or the nature of its activities makes such
licensing or qualification necessary and wherein the failure to be so licensed
or qualified would have a Material Adverse Effect on the business and operations
of Winncom taken as a whole. Winncom does not own or lease property in any
jurisdiction other than in those listed in Schedule 6.1. Winncom has provided
Parent and Sub with a true and complete copy of its Articles Of Incorporation
certified by the Secretary Of State of Winncom's state of incorporation, and a
true and complete copy of Winncom's Code of Regulations certified to be current
by the corporate Secretary of Winncom.
6.2......Subsidiaries. Winncom has no partially or
wholly-owned, direct or indirect, Subsidiaries.
6.3......Capitalization. Winncom's entire authorized capital
stock consists of 850 shares of Winncom Common Stock. As of the date hereof,
there were 230 shares of Winncom Common Stock issued and outstanding and there
are no shareholders of Winncom other than the Winncom Shareholders listed in
Section 1.26. Winncom has no stock option plans or agreements and no other
securities outstanding. In addition, Winncom has granted no warrant, call,
option, convertible security or other agreement or right (contingent or
otherwise) to purchase or acquire any Winncom Common Stock or any other capital
stock of Winncom, Winncom has no commitment to issue such warrant, call, option,
convertible security or other right, and Winncom has no obligation, contingent
or otherwise, to purchase, redeem, or otherwise acquire any shares of Winncom's
capital stock or any interest therein or to pay any dividend or to make any
other distribution in respect thereof, except as permitted by this Agreement.
6.4......Authority; Non-Contravention. Winncom has the
requisite power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by Winncom of its obligations hereunder and the consummation of
the transactions contemplated hereby have been duly authorized by its Board Of
8
Directors and shareholders, and, except for the corporate filings required by
state law, no other corporate proceedings on the part of Winncom are necessary
to authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Winncom and
(assuming the due authorization, execution and delivery hereof by Parent and
Sub) constitutes a valid and binding obligation of Winncom enforceable against
Winncom in accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or affecting
the enforcement of creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law). The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Winncom under, any provision of (i) the Articles Of Incorporation or Code of
Regulations (true and complete copies of which as of the date hereof have been
delivered to Parent) of Winncom, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement instrument, permit, concession,
franchise or license applicable to Winncom, or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Winncom or any
of its properties or assets, other than, in the case of clauses (ii) or (iii),
any such conflicts, violations, defaults, right, liens, security interests,
charges or encumbrances that, individually or in the aggregate, would not have a
Material Adverse Effect on Winncom, materially impair the ability of Winncom to
perform its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby.
6.5......Contracts And Commitments. Other than this Agreement
and the agreements and documents contemplated herein, attached hereto as
Schedule 6.5 is (i) a list of all "material" agreements and contracts, and (ii)
all indebtedness, liabilities and other obligations known to Winncom to which
Winncom is a Party or by which Winncom is bound or subject. For purposes of this
Section 6.5, a "material" contract means any agreement which involves a total
liability or potential revenue to Winncom of $10,000 or more. True and complete
copies of such material agreements and obligations, if extant, have been made
available for inspection by Parent at the offices of Winncom. Except as set
forth on Schedule 6.5, all of the contracts and other agreements listed on
Schedule 6.5 are valid and binding upon Winncom in accordance with their terms,
and neither Winncom nor, to the knowledge of Winncom, any other Party is in
default or otherwise in breach of its obligations, nor has Winncom received or
sent notice of default or of any unresolved claim, under any such contracts or
other agreements. Except as separately identified on Schedule 6.5, no approval
or consent of any person is needed in order that the material contracts and
other agreements set forth on Schedule 6.5 continue in full force and effect
following the consummation of the transactions contemplated by this Agreement.
6.6......Compliance With Other Instruments. Winncom is not in
violation of any term of its Articles Of Incorporation or Code of Regulations,
or in any respect material to the business and operations of Winncom taken as a
whole of any contract, agreement, instrument, judgment, decree, or order, except
as set forth on Schedule 6.6 hereto. Except as set forth on Schedule 6.6,
Winncom is not in violation of any material federal, state, or local law,
ordinance, statute, rule or regulation or any other material requirement of any
governmental or regulatory body, court or arbitrator applicable to the business
of that entity. Winncom holds, or believes that in the ordinary course of
business it will be able to obtain, all licenses, permits, orders and approvals
of any federal, state or local governmental or regulatory bodies that are
material to or necessary for the conduct of the business of Winncom
(collectively, "Permits"). All Permits are in full force and effect; and no
proceeding is pending or, to the knowledge of Parent, threatened to revoke or
limit any Permit.
6.7......Litigation And Claims. Except as shown on Schedule
6.7 hereto, and except for claims of creditors of Winncom for unpaid
obligations, there is no action, suit, claim or legal, administrative or
9
arbitral proceeding or investigation (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) pending and known to
Winncom or known and currently threatened against Winncom or any properties or
assets of any of them, nor to the knowledge of Winncom is there a basis therefor
which questions the validity of this Agreement or the right of Winncom to enter
into it, or to consummate the transactions contemplated hereby, or which might
result, either individually or in the aggregate, in any Material Adverse Change
in the assets, condition, affairs or prospects of Winncom, financially or
otherwise, nor does Winncom know of any meritorious basis for the foregoing.
Neither Winncom nor any properties or assets of Winncom is a Party or subject to
the provisions of any order, writ, injunction, judgment, award or decree of any
court or government or regulatory agency or instrumentality or arbitration
tribunal of a material nature that has not been disclosed in Schedule 6.7. All
notices required to have been given to any insurance company listed as insuring
against any action, suit or claim set forth on Schedule 6.7 have been timely and
duly given and no insurance company has asserted, orally or in writing, that
such claim is not covered by the applicable policy relating to such claim.
6.8......Customers. As of the Closing, Winncom is not aware of
any claim under product warranties, product servicing or other obligations from
any of its customers. Winncom's standard product warranty language is set forth
in Schedule 6.8. Winncom will indemnify Parent for any liability for Winncom
products manufactured prior to the Closing resulting from matters outside the
scope of the warranty set forth on Schedule 6.8, such as epidemic failure,
violation of regulatory requirements, or product returns.
6.9......Insurance. Winncom maintains the insurance coverage
as described on Schedule 6.9. This is at least the same level of insurance
coverage as for the past two years.
6.10.....Governmental Consents. Except for actions that have
been or will be taken prior to the Closing, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any governmental or regulatory authority on the part of Winncom is
required in connection with the consummation of the transactions contemplated by
this Agreement. As of the Closing, there will be no consent of any third party
that has not been obtained and that is required in order to consummate the
transactions being consummated at the Closing.
6.11.....Disclosure.
(a) Neither this Agreement nor any Schedule, Exhibit, or
certificate delivered in accordance with the terms hereof contains any untrue
statement (attributable to Winncom) of a material fact. There is no fact known
to Winncom which would cause a Material Adverse Effect on the business,
prospects or financial condition of Winncom or any of its respective properties
or assets taken as a whole, which has not been set forth in this Agreement or in
the Schedules, Exhibits, or certificates furnished in connection with the
transactions contemplated by this Agreement. Winncom has fully provided Parent
with all the written information that Parent has requested for the purpose of
deciding whether to consummate the Merger, including its business plan attached
hereto on Schedule 11.5.
(b) Neither this Agreement nor any of the documents executed
in connection with transactions contemplated by this Agreement (i) contains any
misstatement of a material fact or (ii) omits to state any fact necessary to
make the statements contained thereby not misleading.
6.12.....Real Estate. Winncom owns no real estate property and
has no obligation to pay any real estate tax to the appropriate governmental
agencies.
6.13.....Taxes. Winncom is an S corporation for purposes of
the Code. All income, excise, occupation, franchise, and other taxes, duties or
charges levied, assessed or imposed upon Winncom by the United States or by any
10
government, state, municipality or governmental subdivision have been duly paid
or adequately provided for or are being timely and properly contested, and all
income, excise, franchise and other tax reports or other reports required by law
or regulation have been duly filed or extensions have been duly obtained. All
federal and state tax returns of Winncom have been filed by Winncom as required
with the appropriate governmental agency and all assessments with respect to
such periods have been paid or adequately provided for or are being timely and
properly contested. Since January 1, 1996, (a) no audit of any federal, state or
local tax returns of Winncom has been conducted, is in progress or, to Winncom's
knowledge, has been threatened, (b) Winncom has not waived any statute of
limitations with respect to any of its tax liabilities, including, without
limitation, liability for federal income or any other taxes for any period prior
to the date hereof, and (c) no consents have been filed pursuant to Section
341(f) of the Code by Winncom or any transferor corporation to Winncom. The
federal and state income tax returns of Winncom for the fiscal year ended
December 31, 1999 have been filed, and, where applicable, the taxes due
thereunder have been paid. The Winncom Shareholders will prepare and file all
federal and state income tax returns for Winncom's business for the period from
December 31, 1999 through the Effective Time. This tax return will be prepared
in sufficient detail to determine the tax basis of the investments as of that
date. The amount, if any, of unpaid Winncom personal property taxes for 1999,
and the amount, if any, of personal property taxes for 2000, that are
attributable to periods prior to the Closing, will be recorded as Liabilities as
of the Closing. The amount, if any, of personal property taxes paid by Winncom
prior to Closing that are attributable to periods after the Closing will be
recorded as a pre-paid asset as of the Closing.
6.14.....Workers Compensation. Winncom has no outstanding
claims and Winncom has no indication that any outstanding claim exists.
6.15.....Employees; No Retirement Obligations. The names of
all the employees of Winncom are set forth in Schedule 6.18. Except as shown in
Schedule 6.15, Winncom has no obligation under any pension, retirement or
similar plan or obligation, whether of a legally binding nature or in the nature
of informal understandings. Also, except as shown in Schedule 6.15, Winncom has
no employment contracts, collective bargaining agreements, health, medical,
long-term disability, dental, overriding royalty plans, or pension, bonus,
profit-sharing, stock option, or 401(k) plans, or other agreements providing for
employee remuneration or benefits, or any consulting, commission or fee
agreements with independent contractors. All of Winncom's obligations that have
or will accrue with respect to employment prior to the Closing pursuant to any
such employee plans are fully funded or are set forth on Schedule 6.15.
6.16.....Books And Records. With respect to matters occurring
since the inception of Winncom, the minute books of Winncom contain complete and
accurate records of all meetings and other corporate actions of Winncom's
shareholders, Board Of Directors and all committees, if any, appointed by the
Board Of Directors.
6.17.....Copies Of Documents. Winncom has caused to be made
available, to the extent reasonably requested by Parent, for inspection and
copying by Parent and its advisors, true, complete and correct copies of all
documents referred to in any Schedule furnished by Winncom to Parent.
6.18.....Officers, Directors, Employees And Consultants.
Schedule 6.18 sets forth the name of all the employees of Winncom and total
annual compensation, from Winncom, of each officer and director and of each
other consultant, agent or other representative of Winncom other than day
laborers and contract employees. Winncom has made no commitment or agreement to
increase the compensation or to modify the conditions or terms of engagement of
any such person and Winncom has no other liability to any such person. None of
such persons has indicated to Winncom or to any of Winncom's officers or
directors, either orally or in writing, that such person is considering possible
11
actions against, or is planning, to cancel or otherwise terminate such person's
relationship with, Winncom.
6.19.....Bank Accounts. Schedule 6.19 sets forth, as of the
date of this Agreement, Winncom's bank account or accounts including money
market and other accounts holding cash or cash equivalents (the "Bank
Accounts"). Effective as of the Closing, the signature cards on the Bank
Accounts will be changed to provide that no amounts may be withdrawn from the
Bank Accounts without the signature of one representative named by Sub.
6.20.....Information. Winncom has made available, and will
continue to make available, to Parent and to Sub, all information available to
Winncom relating to Winncom's products, assets, business and operations. All
information provided or made available to Parent or Sub is accurate, correct,
and complete in all material respects.
6.21.....Documents Delivered. Winncom has furnished to Parent
for its examination true and complete copies of the following: (a) the Articles
Of Incorporation, as amended, and the Code of Regulations, as amended, of
Winncom, certified as correct and complete by the Secretary of Winncom; (b) the
minute book of Winncom, certified as correct and complete by the Secretary of
Winncom, containing all records required to be set forth concerning all
proceedings, consents, actions and meetings of the shareholders and the Board of
Directors of Winncom; and (c) all material permits, orders, and consents (issued
by a governmental or quasi-governmental authority) received by Winncom, or with
respect to any security of Winncom, and all applications for such permits,
orders and consents, except for permits, orders and consents, or applications
therefor, issued to or received by Winncom in the ordinary course of Winncom's
business. No amendments will be made to the Articles of Incorporation or Code of
Regulations of Winncom prior to the Closing without written consent of Parent.
6.22.....Material Changes. Except as set forth in Schedule
6.22, since January 1, 2000, none of the following has occurred by or with
respect to Winncom:
6.22.1. Any material transaction by Winncom,
or any transaction or conduct of its business other than in
the usual and ordinary manner or other than in the ordinary
course of its business as conducted in the past;
6.22.2. Any capital expenditure in excess of
$10,000 by Winncom;
6.22.3. Any changes in the condition
(financial or otherwise), liabilities, assets, or business of
Winncom that, when considered individually or in the
aggregate, have a Material Adverse Effect except for general
political, national or global changes;
6.22.4. The destruction of, damage to, or
loss of any asset of Winncom (regardless of whether covered by
insurance) that, when considered individually or in the
aggregate, has a Material Adverse Effect upon the condition
(financial or otherwise) or business of Winncom;
6.22.5. Any labor matters or other events or
conditions of any character that, when considered individually
or in the aggregate, have a Material Adverse Effect upon the
condition (financial or otherwise) of Winncom except for
general political, national or global changes;
6.22.6. Any change in accounting methods or
practices (including, without limitation, any change in
depreciation or amortization policies or rates) by Winncom;
12
6.22.7. The declaration, setting aside, or
payment of a dividend or other distribution with respect to
the capital stock of Winncom, or any direct or indirect
redemption, purchase or other acquisition by Winncom of any of
its shares of capital stock, except as otherwise permitted in
this Agreement;
6.22.8. Any increase in the salary or other
compensation payable or to become payable by Winncom to any of
its officers, directors, employees or consultants, or the
declaration, payment, or commitment or obligation of any kind
for the payment by Winncom of a bonus or other additional
salary or compensation to any such person;
6.22.9. The amendment or termination of any
"material" contract, agreement, or license to which Winncom is
a party, based on the definition of "material" in Section 6.5;
6.22.10. Any loan by Winncom to any person
or entity, or the guaranteeing by Winncom of any loan;
6.22.11. Any mortgage, pledge or other
encumbrance of any asset of Winncom;
6.22.12. The waiver or release of any right
or claim of Winncom;
6.22.13. Any other events or conditions of
any character within the knowledge of Winncom that, when
considered individually or in the aggregate, have or might
reasonably be expected to have a Material Adverse Effect on
the condition (financial or otherwise), business or assets of
Winncom except for general political, economic or industry
events or conditions that Winncom reasonably believes Parent
already has knowledge of from sources other than Winncom;
6.22.14. The incurrence of any indebtedness
or any other liabilities or obligations except in the ordinary
course of its business as conducted in the past;
6.22.15. The sale, transfer, or other
disposition of any assets of Winncom except in the ordinary
course of its business as conducted in the past;
6.22.16. The issuance or sale by Winncom of
any shares of its capital stock of any class, or of any other
of its securities;
6.22.17. The granting, by Winncom, exercise
or expiration of options or other rights to purchase
securities of Winncom; or
6.22.18. Any agreement by Winncom to do any
of the things described in this Section 6.18.
6.23.....Financial Statements; Undisclosed Liabilities.
Schedule 6.23 to this Agreement sets forth the unaudited balance sheets of
Winncom as of December 31, 1999, together with the related unaudited statements
of operations for the 12 months ended December 31, 1999. That Schedule also
includes an unaudited balance sheet of Winncom as of March 31, 2000, together
with the related unaudited statements of operations for the three months ended
March 31, 2000. The financial statements in Schedule 6.23, all of which are
authenticated by the President of Winncom, are referred to as the "Winncom
Financial Statements". Except as set forth in Schedule 6.23, the Winncom
Financial Statements have been prepared on a basis consistently followed by
13
Winncom throughout the periods indicated, and fairly present the financial
position of Winncom as of the respective dates of the balance sheets included in
the Winncom Financial Statements, and the results of the operations for the
respective periods indicated. Winncom does not have any debt, liability or any
obligations of any nature, whether accrued, absolute, contingent, or otherwise,
and whether due or to become due, including a debt, liability or obligation
relating to or arising out of any act, transaction, circumstance or state of
facts that is not reflected, reserved against or noted in Winncom's balance
sheet as of March 31, 2000 that is included in the Winncom Financial Statements,
except for those debts, liabilities or obligations that are set forth in
Schedule 6.23 incurred in the ordinary course of business since the date of such
Financial Statements or which liabilities are of the type not required to be
reflected as liabilities on a balance sheet prepared in accordance with GAAP.
6.24.....No Encumbrances. All of Winncom's interests in
tangible and intangible property are free and clear of restrictions on or
conditions to transfer or assignment, and free and clear of liens, pledges,
charges, encumbrances, equities, claims, conditions, or restrictions, except for
(a) those restrictions, conditions or liens disclosed in Winncom's balance sheet
as of March 31, 2000 included in the Winncom Financial Statements, or in
Schedule 6.24 to this Agreement; (b) the lien of current taxes not yet due and
payable; and (c) matters that, in the aggregate, are not substantial and do not
materially detract from or interfere with the present or intended use of these
assets, or do not materially impair the business operations of Winncom.
6.25.....No Encumbrances On Winncom Common Stock. The Winncom
Common Stock being transferred by the Winncom Shareholders is owned by the
Winncom Shareholders free and clear of any liens, claims, encumbrances or
restrictions of any kind, and none of those shares is subject to options,
rights, warrants, or other agreements or commitments by which the Winncom
Shareholders are or may become obligated to transfer those shares of Winncom
Common Stock other than pursuant to this Agreement.
6.26.....Reorganization. To the knowledge of Winncom, Winncom
has not taken any action or failed to take any action, which action or failure
to take action would jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code. Without
limiting the foregoing: (i) as of the Effective Time and immediately following
the Merger, the Surviving Corporation will hold "substantially all" of Winncom's
properties, (ii) there is no intercorporate indebtedness between Winncom and
Parent, and (iii) immediately following the Merger, the Surviving Corporation
will be wholly owned directly by Parent, and the Surviving Corporation will not
have outstanding any type of right or obligation pursuant to which any person
could acquire capital stock of the Surviving Corporation.
6.27.....Restricted Stock. Winncom understands and agrees that
the Parent Closing Shares have not been registered under federal or state
securities laws and are "restricted" securities as defined in Rule 144 under the
1933 Act. Winncom understands and agrees that no holder of Winncom Common Stock
may sell, offer for sale, transfer, pledge or hypothecate the shares of Parent
Closing Shares to be received hereunder in the absence of an effective
registration statement covering that transaction under all applicable federal
and state securities laws, unless that transaction is exempt from registration
under all applicable federal and state securities laws, including an exemption
under Rule 144 promulgated under the 1933 Act. Each Winncom Shareholder shall
agree to be bound by the provisions of this Section 6.27 by signing a
counterpart of this Agreement prior to Closing.
7. Representations And Warranties Regarding Sub. Parent and Sub jointly
and severally represent and warrant to Winncom as follows:
7.1......Organization and Standing. Sub is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Maryland. Winncom has been provided with a copy of Sub's current Articles Of
Incorporation and Bylaws.
14
7.2......Capital Structure. The authorized capital stock of
Sub consists of 10,000 shares of common stock, par value $.001 per share, all of
which are validly issued and outstanding, fully paid and nonassessable and are
owned by Parent free and clear of all liens, claims and encumbrances.
7.3......Authority; Non-Contravention. Sub has the requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by Sub of its obligations hereunder and the consummation of the
transactions contemplated hereby have been duly authorized by its Board Of
Directors and by Parent as Sub's sole stockholder, and, except for the corporate
filings required by state law, no other corporate proceedings on the part of Sub
are necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by Sub
and (assuming the due authorization, execution and delivery hereof by Parent)
constitutes a valid and binding obligation of Sub enforceable against Sub in
accordance with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws of general applicability relating to or affecting the enforcement
of creditors' rights and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law). The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Sub under, any provision of (i) the Articles Of Incorporation or Bylaws (true
and complete copies of which as of the date hereof have been delivered to
Winncom) of Sub, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement instrument, permit, concession, franchise or
license applicable to Sub or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Sub or any of its properties or
assets, other than, in the case of clauses (ii) or (iii), any such conflicts,
violations, defaults, right, liens, security interests, charges or encumbrances
that, individually or in the aggregate, would not have a Material Adverse Effect
on Sub, materially impair the ability of Sub to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
8. Certain Agreements.
8.1......Access And Information. Winncom shall give to Parent
and Sub and their respective representatives, and Sub shall give to Winncom and
its representatives, during normal business hours from the date of execution of
this Agreement until the Effective Time, full access to all properties, books,
contracts and records (including tax returns and insurance policies) of or
relating to Winncom, Parent, or Sub, respectively, with all information
reasonably requested by the other Party. Except as agreed to by Winncom, Parent,
and Sub, all information obtained hereunder which is not otherwise public shall
be held confidential and, in the event of termination of this Agreement, all
documents (including copies thereof) obtained hereunder containing such
information shall be destroyed or returned to the Party from which they were
obtained. At the Closing, Winncom shall deliver to Parent all books, contracts,
and records (including tax returns and insurance policies) of or relating to
Winncom.
8.2......Audited Financial Statements. After the Closing,
Parent will cause, at its expense, its independent certified public accountants
to prepare audited financial statements for Winncom. The Winncom Shareholders
will cooperate, and cause Winncom's outside accountant to cooperate, with
Parent's accountants. The parties recognize that Parent, as an SEC reporting
15
company, must file with the SEC such audited statements of Winncom on a Form 8-K
within 75 days of the Effective Date.
8.3......Operation Of Business. From the date hereof to the
Effective Time, except as otherwise consented to or approved by Parent in
writing, Winncom will operate its business as presently operated in the ordinary
course, and, consistent with those operations, Winncom will substantially comply
with all applicable legal and contractual obligations, except where
noncompliance will not cause a Material Adverse Effect on its operations, and
will use reasonable efforts consistent with past practices to preserve the
goodwill of its suppliers, customers and others with whom it has business
relationships; and Winncom will not, without the written consent of Parent, (a)
institute or use any methods of purchase, sale, lease, management, accounting or
operation that are inconsistent with practices normally followed or that vary
substantially from those methods used by Winncom as of the date of this
Agreement, (b) will take any action (or omit to take any action) which action or
omission would cause any representation to be untrue at any time prior to the
Effective Time as if that representation or warranty were made at and as of the
Effective Time, or make any change in any method of reporting income or expenses
for federal income tax purposes.
8.4......Preservation Of Business. Unless it has the written
consent of Parent, Winncom will use its reasonable efforts to preserve its
business organization intact and to preserve its present relationships with
suppliers, customers and others having business relationships with it.
8.5......Allocation Of Revenues, Expenses, And Capital
Investments.
8.5.1. The determination of the purchase
price for the Winncom Common Stock includes the assumption,
based on financial statements previously provided, that, as of
the Closing, the value of the sum of Winncom's cash, inventory
according to GAAP, and collectible accounts receivable, valued
according to GAAP, excluding any accounts receivable from
officers, directors or significant shareholders (the "Asset
Value"), shall exceed its liabilities (the "Liabilities") by
$500,000. Sub will own all rights to such cash, value of
inventory and accounts receivable as of the Closing. As of the
Effective Time, the Winncom Shareholders will provide to the
Parent and Sub all information pertaining to Winncom
transactions through the Closing for purposes of determining
the Asset Value and the Liabilities of Winncom as of the
Closing. Based on these determinations, the parties will then
calculate the "Closing Net Asset Value" by subtracting the
Liabilities as of Closing from the Asset Value as of Closing.
On or before 160 days after Closing, the Parent, Sub and the
Winncom Shareholders will prepare a final Winncom Balance
Sheet as of the Closing based on all available information,.
with inventory valued according to GAAP and accounts
receivable included only to the extent they have been paid. To
the extent that the final Winncom Balance Sheet as of the
Closing reflects that the Closing Net Asset Value exceeds
$500,000, then the face amount of the 180-Day Note shall be
increased by the excess of the Closing Net Asset Value over
$500,000, and to the extent that the Closing Net Asset Value
is less than $500,000, then the face amount of the 180-Day
Note shall be reduced by the amount by which the Closing Net
Asset Value is less than $500,000.
8.5.2. Subject to Section 8.6, during the
period from the date hereof to the Closing, Winncom will
continue to process cash receipts and make cash disbursements
required in the normal course of its business subject to the
terms of this Agreement. Parent, Sub and the Winncom
Shareholders agree to maintain adequate records to support the
cash transactions being processed properly with respect to the
Closing.
8.5.3. The Winncom Shareholders shall
prepare and file or cause to be prepared and filed at
Winncom's cost all final short period tax returns for Winncom
for the period ending on the date of Closing. The Winncom
Shareholders will provide Parent with a copy of all such
returns at least ten days prior to filing and will review and
consider any comments made by the Parent. Parent, Sub and
Winncom agree that no election under Section 338(h)(10) of the
Code with respect to the sale of the Winncom Common Stock will
16
be made. In accordance with Section 1362(e)(5)(D) of the Code,
Winncom's books as of the date of Closing and all items of
income, gain, deduction and loss arising through the date of
Closing shall be determined in accordance with Winncom's
historical method of accounting with respect to specific
transactions occurring during such short period.
8.6......Interim Operations. From the date of this Agreement
to the Effective Time, Winncom will not, except as expressly contemplated by
this Agreement or unless Sub gives its prior written approval: (a) amend or
otherwise change its Articles Of Incorporation or Code of Regulations; (b) issue
or sell or authorize for issuance or sale additional shares of any class of
capital stock, or subscriptions, options (including employee stock options),
warrants, rights or convertible securities or other agreements obligating
Winncom to issue shares of its capital stock, (c) declare, set aside, make or
pay any dividend or other distribution with respect to its capital stock;
provided that Winncom is expressly permitted to make distributions to its
stockholders of the earnings of Winncom, provided that the Directors shall not
distribute earnings to the extent the Closing Net Asset Value of Winncom will be
less than $500,000 at Closing, (d) redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock; (e) issue any instrument that
permits participation in the revenues or profits of Winncom; (f) incur any
indebtedness other than in the ordinary course of business; (g) permit the sale
or encumbrance of any of the assets of Winncom other than in the ordinary course
of business; (h) enter into any employment or severance agreements or similar
agreements with any person except as otherwise specified in this Agreement; or
(i) agree to, make, engage in or allow to occur or continue any of the
following:
8.6.1. Any material transaction other than
in the ordinary course of business;
8.6.2. Any capital expenditure in excess of
$10,000;
8.6.3. Any changes in its condition
(financial or otherwise), liabilities, assets, or business
that, when considered individually or in the aggregate, have a
Material Adverse Effect;
8.6.4. The destruction of, damage to, or
loss of any asset of Winncom (regardless of whether covered by
insurance) that, when considered individually or in the
aggregate, has a Material Adverse Effect upon the condition
(financial or otherwise) or business of Winncom;
8.6.5. Any labor troubles or other events or
conditions of any character that, when considered individually
or in the aggregate, have a Material Adverse Effect upon the
condition (financial or otherwise) or business of Winncom;
8.6.6. Any change in accounting methods or
practices (including, without limitation, any change in
depreciation or amortization policies or rates);
8.6.7. Any increase in the salary or other
compensation payable or to become payable to any of its
officers or directors, or the declaration, payment, or
commitment or obligation of any kind for the payment of a
bonus or other additional salary or compensation to any such
person;
8.6.8. The material amendment or termination
of any material contract, agreement, or license to which it is
a party, other than with respect to Aironet Wireless
Communications;
8.6.9. Any loan to any person or entity, or
the guaranteeing of any loan;
8.6.10. Any mortgage, pledge or other
material encumbrance of any of its assets; or
8.6.11. The waiver or release of any right
or claim.
17
8.7......Reorganization. During the period from the date of
this Agreement through the Effective Time, unless the other Parties shall
otherwise agree in writing, none of Winncom, Sub, Parent, or any other
Subsidiary of Parent shall knowingly take or fail to take any action which
action or failure to act would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code.
8.8......Resignation Of Officers And Directors. Effective upon
Closing, all officers and directors of Winncom shall resign from all offices,
directorships and other positions with Winncom; provided that Gregory E. Raskin
shall become President and a director of Sub, as the Surviving Corporation.
8.9......Employment Agreement. At the Closing, Sub will enter
into an Employment Agreement with Gregory E. Raskin in the form attached hereto
as Schedule 8.9.
8.10.....Noncompetition Agreement. At the Closing, Sub will
enter into a Noncompetition Agreement with Gregory E. Raskin in the form
attached hereto as Schedule 8.10.
8.11.....Winncom Employees Options. After Closing, Parent will
grant to certain employees of Winncom who continue as employees of Sub options
to purchase 600,000 shares of Parent Common Stock. These options are not
exercisable until 210 days after the Closing and will terminate if the Winncom
Common Stock is not transferred to Parent from the Escrow Account as specified
in Section 4.2 within 200 days from the Closing. The number of shares into which
these options will be exercisable, as well as certain other terms of these
options, are described on Schedule 8.11.
8.12.....Accuracy Of Representations. Each Party will take all
reasonable action necessary to render accurate, as of the Closing, its
representations and warranties contained in this Agreement, and it will refrain
from taking any action that would render any such representation or warranty
inaccurate as of that time. Each Party will use its best efforts to perform or
cause to be satisfied each covenant or condition to be performed or satisfied by
it pursuant to the terms of this Agreement.
8.13.....Consents, Waivers And Approvals. As soon as
practicable after the date hereof, each of Winncom and Sub shall use its
reasonable efforts to obtain in writing all such consents, waivers, approvals
and authorizations required prior to the consummation of the Merger.
8.14.....Notice Of Breach Of Warranty. Winncom will
immediately give notice to Sub of the occurrence of any event or the failure of
any event to occur that has resulted in a breach of Winncom's representations or
warranties or a failure by Winncom to comply with any covenant, condition or
agreement contained in this Agreement. Each of Parent and Sub will immediately
give notice to Winncom of the occurrence of any event or the failure of any
event to occur that has resulted in a breach of Parent's or Sub's
representations or warranties or a failure by Parent or Sub to comply with any
covenant, condition or agreement contained in this Agreement.
8.15.....Additional Documents; Further Assurances. In addition
to the schedules and other items specifically required to be furnished
hereunder, Winncom, Parent, and Sub hereby agree that each will promptly furnish
18
to the other such further schedules, certificates and other instruments and take
such other action as may reasonably be requested in order to effectuate the
purposes of this Agreement.
8.16.....Notice Of Inaccurate Information. Winncom, Parent and
Sub each will notify the other in writing as soon as possible of any events or
occurrences that have happened or that may happen and that have caused or that
may cause any of the information contained in this Agreement or in the Schedules
to this Agreement to become inaccurate or incomplete.
8.17.....Publicity. All notices to third parties and all other
publicity concerning the transactions contemplated by this Agreement shall be
directed by Parent. The contents of the initial press release or announcement
pertaining to the transaction contemplated by this Agreement shall be mutually
agreed to by Winncom and Parent; however, nothing in this paragraph shall
preclude Parent from complying with its obligations as a reporting issuer under
the U.S. securities laws and regulations.
9. Conditions To Performance By All Parties. The obligations of all
Parties to effect the Merger shall be subject to the fulfillment at or prior to
the Effective Time of the following conditions:
9.1......The Sub shall have entered into an Employment
Agreement and a Noncompetition Agreement with Gregory E. Raskin at the Closing
in the forms of Schedule 8.9 and Schedule 8.10, respectively, attached hereto.
9.2......At the Effective Time, there shall not be in effect
any court order restraining or prohibiting consummation of the Merger, or any
pending proceeding brought by, or before, any governmental commission, board,
agency, court or body with a view to seeking, or in which it is sought, to
restrain or prohibit consummation of the Merger or in which it is sought to
obtain divestiture of a material amount of assets of either Winncom and its
Subsidiaries taken as a whole.
10. Conditions Precedent To Performance By Winncom. The obligations of
Winncom to effect the Merger shall be, at Winncom's option, subject to the
fulfillment at or prior to the Closing of the following conditions (unless any
or all of them is waived by Winncom):
10.1.....Approvals. The Merger shall have been approved by the
board of directors of Parent, by the board of directors of Sub, and by Parent as
the sole stockholder of Sub each in accordance with the applicable state laws.
10.2.....Accuracy of Representations and Warranties. The
representations and warranties of Parent and Sub set forth in this Agreement,
including the attached Schedules, shall be true and correct in all material
respects at and as of the date hereof and shall be true and correct in all
material respects at and as of the Closing as though made at and as of the
Closing, except for changes which do not have a Material Adverse Effect on
Parent or Sub and except to the extent such representations and warranties are
not true and correct by reason of actions permitted or authorized by this
Agreement or consented to in writing by Winncom. Winncom shall have received a
certificate of each of Parent and Sub, dated the Closing and duly executed by
its respective President and Secretary, as to the accuracy of their respective
representations and warranties as of the Closing.
10.3.....Compliance with Covenants. Each of Parent and Sub
shall have performed all obligations required to be performed by them and shall
have furnished all documents, schedules and instruments required to be furnished
by them under this Agreement at or prior to the Closing. Winncom shall have
received a certificate of each of Parent and Sub, dated the Closing and duly
executed by their respective Chief Executive Officers to this effect.
10.4.....Opinion of Counsel The Winncom Shareholders and
Winncom shall have received from counsel to Parent and Sub an opinion, dated the
Closing, to the following effect:
19
(i) Parent and Sub each is a corporation duly organized,
validly existing and in good standing under the laws
of the State of their respective incorporation and
has the corporate power and authority under such laws
to carry on its business as presently conducted.
(ii) the Parent Closing Shares to be issued pursuant to
this Agreement have been duly authorized and, when
initially issued in accordance with this Agreement as
at the Closing Date, will be duly and validly issued
and will be fully paid and nonassessable.
(iii) all corporate actions by Parent and Sub required to
authorize the Merger has been taken and each of this
Agreement, the Notes, the Employment Agreement and
the Noncompetition Agreement, has been duly executed
and delivered by Parent and Sub as required; each of
this Agreement, the Notes, the Employment Agreement
and the Noncompetition Agreement, is the valid and
binding obligation of Parent and Sub as applicable,
enforceable in accordance with their respective
terms, except that the enforceability of such
instruments is subject to the laws of bankruptcy and
laws of general applicability relating to or
affecting enforcement of creditors' rights, and to
judicial discretion in the application of principles
of equity.
10.5.....Parent Share Certificates. Parent shall deliver
irrevocable instructions to its Transfer Agent in the form of Schedule 14.2
hereto to deliver immediately the certificates for the Parent Closing Shares to
the Winncom Shareholders or their designees.
11. Conditions Precedent To Performance By Parent And Sub. The
obligations of Parent and Sub to effect the Merger shall be, at Parent's and
Sub's respective options, subject to the fulfillment at or prior to the Closing
of the following conditions:
11.1.....Approvals. The Merger shall have been approved by the
board of directors and shareholders of Winncom in accordance with the Ohio Law.
11.2.....Accuracy of Winncom's Representations and Warranties.
The representations and warranties of Winncom set forth in this Agreement,
including the attached Schedules, shall be true and correct in all material
respects at and as of the date hereof and shall be true and correct in all
material respects at and as of the Closing as though made at and as of the
Closing, except for changes which do not have a Material Adverse Effect on
Winncom and except to the extent such representations and warranties are not
true and correct by reason of actions permitted or authorized by this Agreement
or consented to in writing by Parent and Sub. Parent and Sub shall have received
a certificate of Winncom, dated the Closing and duly executed by its President
and Secretary as to the accuracy of its representations and warranties.
11.3.....Compliance with Covenants. Winncom shall have
performed all obligations required to be performed by it and shall have
furnished all documents, schedules and instruments required to be furnished by
it under this Agreement at or prior to the Closing. Parent and Sub shall have
received a certificate of Winncom, dated the Closing and duly executed by its
President to this effect.
11.4.....Interim Financial Statements. Parent and Sub shall
have received from Winncom copies of the unaudited consolidated financial
statements of Winncom as of and for the period from January 1, 2000 through
March 31, 2000, and those financial statements shall not reflect any materially
adverse change from the unaudited financial statements of Winncom dated as of
and for the one-year period ended December 31, 1999 (in the form included in the
Winncom Financial Statements) in the financial condition or results of
operations of Winncom, except for changes or transactions, if any, contemplated
by this Agreement.
20
11.5.....No Adverse Change, Projections. Parent and Sub shall
have received a letter from Winncom signed by its President, dated as of the
Closing stating that on the basis of a limited review (not an audit) of the
latest available accounting records of Winncom, consultations with other
responsible officers of Winncom and other pertinent inquiries that it may deem
necessary, it has no reason to believe that during the period from January 1,
2000, to a specific date not more than five business days before the Effective
Time there was any adverse change in the financial condition or results of
operations of Winncom, except for (a) changes incurred in the ordinary and usual
course of the businesses of Winncom during that period that in the aggregate are
not materially adverse, and (b) other changes or transactions, if any
contemplated by this Agreement. The President's letter shall also state that,
based on events occurring since the end of 1999, there is no reason to believe
that the projections given to Parent for calendar year 2000 included in its
business plan attached hereto as Schedule 11.5 will not be achieved; provided
that the parties recognize business and operations may differ from the
assumptions used in the projections and that projected sales and expenses fore
the balance of the year may not occur. The President's Certificate is not a
guaranty of performance.
11.6.....Opinion of Winncom's Counsel. Parent shall have
received an opinion of counsel from counsel to Winncom, dated the date of
Closing, to the effect of the following:
(i) The incorporation, existence, good standing and
capitalization of Winncom are as stated in this Agreement; the authorized shares
of Winncom Common Stock are as stated in this Agreement; all outstanding shares
of Winncom Common Stock are duly and validly authorized and issued, fully paid
and non-assessable and have not been issued in violation of any preemptive right
of stockholders; and, to the knowledge of such counsel, there is no existing
option, warrant, right, call, subscription or other agreement or commitment
obligating Winncom to issue or sell, or to purchase or redeem, any shares of its
capital stock other than as stated in this Agreement.
(ii) Winncom has full corporate power and authority to
execute, deliver and perform this Agreement and this Agreement has been duly
authorized, executed and delivered by Winncom, and (assuming the due and valid
authorization, execution and delivery by Parent and Sub) constitutes the legal,
valid and binding agreement of Winncom, enforceable with respect to Winncom in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or affecting
the enforcement of creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding at
equity or at law).
(iii) To the knowledge of such counsel, there are no actions,
suits or proceedings, pending or threatened against or affecting Winncom or its
subsidiaries, except as set forth in the Schedules to this Agreement.
(iv) The execution and performance by Winncom of this
Agreement will not violate the Articles Of Incorporation or Code of Regulations
of Winncom.
(v) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental agency or body which has not
been obtained is required on behalf of Winncom or its subsidiaries for
consummation of the transactions contemplated by this Agreement.
(vi) Except as set forth in Schedule 6.6 to this Agreement,
the execution and delivery of this Agreement by Winncom do not, and the
consummation of the transactions contemplated hereby will not conflict with or
violate any law, regulation, court order, judgment or decree applicable to
Winncom.
21
11.7.....Consents. No holders of the shares of Winncom Common
Stock outstanding prior to the Merger shall have exercised their appraisal
rights in connection with the Merger.
11.8.....On or before the Closing, all necessary approvals and
consents of any Parties as set forth in Schedule 6.5 shall have been obtained by
Winncom and delivered to Sub.
11.9.....Prior to Closing, Parent and Sub shall have been
furnished with all documents that either of them reasonably may require for the
purpose of enabling them to obtain legal advice concerning the valid exchange of
the Parent Closing Shares for Winncom Common Stock and shall have had full
access to all properties, books, contracts and records of or relating to
Winncom. All proceedings taken by Winncom in connection with the consummation of
transactions contemplated by this Agreement shall be satisfactory in form and
substance to Parent and Sub after consultation with their counsel.
12. Indemnification By Winncom Shareholders. Each Winncom Shareholder
hereby agrees to indemnify and hold harmless Parent, Sub, and their respective
officers, directors, employees and agents for their respective Winncom
Proportionate Ownership share of any and all losses, claims, damages,
liabilities, costs and expenses (including but not limited to reasonable
attorneys' fees and other expenses of investigation and defense of any claims or
actions) (collectively, the "Losses") to which they or any of them may become
subject due to, or which results from, any of the following:
12.1.....Any breach of Winncom's covenants, agreements,
warranties or representations contained in this Agreement.
12.2.....The operations of Winncom or the acts of its agents
or employees, acting in their capacities as such, prior to the Closing, except
for those resulting liabilities otherwise assumed by Parent.
12.3.....Actions or inactions of Winncom, or the agents of
Winncom acting in their capacity as agents, prior to the Closing, except for
those resulting liabilities otherwise assumed by Parent.
12.4.....Indemnification by Parent. Parent agrees to indemnify
and hold harmless each Winncom Shareholder and their successors and assigns, for
any Losses to which they or any of them may become subject due to, or which
results from any breach of Parent's or Sub's respective covenants, agreements,
warranties or representations contained in this Agreement. Neither Parent nor
the Surviving Corporation shall be responsible for any of Winncom's obligations
to indemnify and hold harmless (including any obligations to advance funds for
expenses) the present and former officers and directors of Winncom in respect of
acts or omissions occurring prior to the Effective Time.
12.5.....Limitations on Indemnification.
(a) The parties hereto hereby agree that the representations
and warranties contained in this Agreement or in any certificate, document or
instrument delivered in connection herewith, shall survive the execution and
delivery of this Agreement, and the Closing hereunder, for three years from the
Closing regardless of any investigation made by the parties hereto.
(b) Neither the Winncom Shareholders, nor Parent or Sub shall
have any liability under Section 12.1 unless the aggregate amount of Losses to
the other party finally determined to arise thereunder exceeds $25,000 (the
"Basket") and, in such event the Winncom Shareholders shall be required to pay
the entire amount of such Losses. The maximum amount of Losses for which either
the Winncom Shareholders or the Parent and/or Sub shall be liable hereunder,
other than any liability for fraud, shall not exceed $4,500,000.
22
13. Notice Of Claim. Should any Party (the "Indemnified Party") suffer
any loss, damage or expense for which the other Party (the "Indemnifying Party")
is obligated to indemnify and hold such Indemnified Party harmless pursuant to
Section 12 of this Agreement, the following shall apply: Promptly upon receipt
by the Indemnified Party of notice of any demand, assertion, claim, action or
proceeding, judicial or otherwise, with respect to any matter as to which the
Indemnifying Party is obligated to indemnify the Indemnified Party under the
provisions of this Agreement, the Indemnified Party shall give prompt notice
thereof to the Indemnifying Party, together with a statement of such information
respecting such matter as the Indemnified Party shall then have and a statement
advising that the Indemnifying Party must notify it within 10 days whether the
Indemnifying Party will undertake the defense of such matter. The Indemnifying
Party shall not be obligated to indemnify the Indemnifying Party with respect to
any matter hereunder if the Indemnified Party has failed to use its best efforts
to notify the Indemnifying Party thereof in accordance with the provisions of
the Agreement in sufficient time to permit the Indemnifying Party and its
counsel to defend against such matter and to make a timely response thereto,
including without limitation, the preparation and assertion of an answer or
other responsive motion to a complaint, petition, notice or other legal,
equitable or administrative process relating to any such claim. Notice of the
intention of the Indemnifying Party to contest any such claim, and the identity
of counsel that the Indemnifying Party intends to employ to contest any such
claim, shall be given by the Indemnifying Party to the Indemnified Party within
10 days from the date of mailing to the Indemnifying Party of notice by the
Indemnified Party of the assertion of any such claim. The Indemnified Party
shall have the right to approve the counsel named in the Notice provided
pursuant to the preceding sentence, provided that such approval shall not be
unreasonably withheld. The Indemnified Party shall have the right to participate
in such proceedings and to be represented by attorneys of its own choosing;
however, such representation shall be at the Indemnified Party's own expense if
the Indemnifying Party selects different counsel of its own choosing. If the
Indemnifying Party does not elect to contest any such claim, the Indemnifying
Party shall be bound by the results obtained with respect thereto by the
Indemnified Party, including any settlement of such claim. If the Indemnifying
Party elects to contest any claim, the Indemnified Party shall be bound by the
results obtained with respect thereto by the Indemnifying Party, including any
settlement of such claim.
14. Closing. Subject to the terms and conditions contained in this
Agreement, the Closing shall take place at 5:00 p.m. Denver time on May 24,
2000, or on such other date or at such other time as shall be agreed upon by
Winncom and Parent, at the offices of Parent. At the Closing, the following
shall occur:
14.1.....Winncom shall deliver to Parent (a) the letter of
Winncom's President dated as of the Closing as provided in Section 11.3 and
Section 11.5; (b) a certificate executed by the President and Secretary of
Winncom dated as of the Closing certifying that the representations and
warranties of Winncom in this Agreement are true and correct in all material
respects at and as of the Closing as though each representation and warranty had
been made on that date; (c) the resignation of each officer and director of
Winncom from all offices, directorship and other positions with Winncom
effective upon consummation of the Closing as provided in Section 8.8; (d) the
Employment Agreement as provided in Section 8.9; (e) the Noncompetition
Agreement as provided in Section 8.10; (f) the stock book, stock ledger, minute
book and corporate seal of Winncom; and (g) such other documents as are required
to be delivered to Parent under the terms of this Agreement.
14.2.....Parent and Sub shall deliver to Winncom or the Escrow
Agent, as provided herein, (a) a certificate executed by the President and
Secretary of each of Parent and Sub dated as of the Closing, certifying that the
representations and warranties of Parent and Sub in this Agreement are true and
23
correct in all material respects at and as of the Closing, as though each
representation and warranty had been made on that date; (b) the Employment
Agreement as provided in Section 8.9; (c) the 90-Day and 180-Day Notes; (d)
irrevocable instructions to its Transfer Agent in the form of Schedule 14.2
hereto to deliver immediately Certificates for the Parent Closing Shares; (e)
the Noncompetition Agreement as provided in Section 8.10; (f) the cash described
in Sections 4.1 and 4.3 hereof, (g) the Surviving Corporation's common stock as
provided in Section 4.2; and (h) such other documents as required to be
delivered to Winncom under the terms of this Agreement.
14.3.....Winncom, Parent, and Sub agree that they will at any
time and from time to time after the Closing, upon the request of the other
Party, perform, execute, acknowledge and deliver all such further acts, deeds,
assignments, transfers, powers of attorney and assurances as may be required for
the purpose of effectuating the consummation of the transactions contemplated by
this Agreement.
15. Intentionally Omitted.
16. Amendment Or Waiver. This Agreement may be amended, modified or
superseded, and any of the terms, covenants, representations, warranties or
condition hereof may be waived, but only by a written instrument executed by
Winncom, Parent, and Sub. Except as expressly otherwise required by applicable
law, no shareholders approval shall be required for any amendment, modification
or waiver. No waiver of any nature, in any one or more instances, shall be
deemed to be or construed as a further or continued waiver of any condition or
any breach of any other term, representation or warranty in this Agreement.
17. Entire Agreement. This Agreement, together with the Schedules
hereto, and the documents referred to herein, constitutes the entire agreement
among the Parties with respect to the Merger, and supersedes all prior
arrangements or understandings with respect thereto.
18. Notice. All notices, requests, demands, directions and other
communications ("Notices") provided for in this Agreement shall be in writing
and shall be mailed or delivered personally or sent by telecopier or facsimile
to the applicable Party at the address of such Party set forth below in this
Section 18. When mailed, each such Notice shall be sent by first class,
certified mail, return receipt requested, enclosed in a postage prepaid wrapper,
and shall be effective on the third business day after it has been deposited in
the mail. When delivered personally, each such Notice shall be effective when
delivered to the address for the respective Party set forth in this Section 18.
When sent by telecopier or facsimile, each such Notice shall be effective on the
first business day on which or after which it is sent, provided it is
supplemented by a copy of the Notice sent by certified mail, return receipt
requested. Each such Notice shall be addressed to the Party to be notified as
shown below:
PARENT:.. COPY TO:
Antennas America, Inc. Patton Boggs LLP
ATTN: Randall P. Marx 1660 Lincoln Street, Suite 1900
4860 Robb Street, Suite 101 Denver, CO 80264
Wheat Ridge, CO 80033-2163 ATTN: Alan L. Talesnick, Esq.
Facsimile No.: (303) 424-5085 Facsimile No.: (303) 894-9239
SUB:..... COPY TO:
Winncom Technologies Corp. Antennas America, Inc.
ATTN: Gregory E. Raskin ATTN: Randall P. Marx
30700 Carter Street, Unit A 4860 Robb Street, Suite 101
Solon, Ohio 44139 Wheat Ridge, CO 80033-2163
Facsimile No.: (440) 498-9511 Facsimile No.: (303) 424-5085
24
WINNCOM:. COPY TO:
Winncom Technologies, Inc. Kahn, Kleinman, Yanowitz
ATTN: Gregory E. Raskin & Arnson Co., L.P.A.
30700 Carter Street, Unit A 1301 East Ninth Street, Suite 2600
Solon, Ohio 44139 Cleveland, Ohio 44114-1824
Facsimile No.: (440) 498-9511 ATTN: Michael A. Ellis, Esq.
Facsimile No.: (216) 623-4912
Any Party may change his or its respective address for purposes of this
Section 18 by giving the other Party Notice of the new address in the manner set
forth above.
19. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, and if any provision of this Agreement shall be or become
prohibited or invalid in whole or in part for any reason whatsoever, that
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remaining portion of that provision or the
remaining provisions of this Agreement.
20. Headings. The headings to this Agreement are for convenience only;
they form no part of this Agreement and shall not affect its interpretation.
21. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
22. Expenses. Whether or not the transactions provided for herein are
consummated, each Party to this Agreement will pay its respective costs and
expenses.
23. Nature and Survival of Representations. All statements contained in
this Agreement and in the Schedules to this Agreement shall be deemed
representations and warranties by the applicable Party under this Agreement. All
representations and warranties made by the Parties in this Agreement or pursuant
to this Agreement shall be true and accurate as of the Closing in all material
respects. The obligation that the representations and warranties be accurate as
of the Closing in all material respects shall survive the Closing for three
years from the date of Closing subject to the limitations of Section 12.5 of
this Agreement. In addition, all obligations relating to indemnification under
this Agreement shall survive the Closing subject to the limitations of Section
12.5 of this Agreement.
24. Benefits And Assignment. The provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the Parties
hereto and each of the Winncom Shareholders and their respective successors and
assigns. The Parties agree that this Agreement is made solely for the benefit of
the Parties, each of the Winncom Shareholders and their respective successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. The terms "successor" or the term "successors and
assigns" as used in this Agreement shall not include any holders of the Winncom
Common Stock, or recipients of the Parent Closing Shares pursuant to this
Agreement.
25. Specific Performance. Each Party's obligation under this Agreement
is unique. If any Party should default in its obligations under this Agreement,
the Parties each acknowledge that it would be extremely impracticable to measure
the resulting damages; accordingly, the nondefaulting Party, in addition to any
other available rights or remedies, may sue in equity for specific performance,
and the Parties each expressly waive the defense that a remedy in damages will
be adequate.
25
Notwithstanding any breach or default by any of the Parties of any of
their respective representations, warranties, covenants or agreements under this
Agreement, if Closing occurs as contemplated, each of the Parties waives any
rights that it or they may have to rescind this Agreement or the transactions
consummated pursuant to it; provided, however, this waiver shall not affect any
other rights or remedies available to the Parties under this Agreement or under
the law.
26. Brokers. Each of Parent, Sub, and Winncom represents and warrants
to the others that all of their negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on directly, without the
intervention of any other person, so as not to give rise to any valid claim
against any Party hereto for a finder's fee, brokerage commission or other like
payment.
27. Costs. If any legal action or other proceeding is brought by one of
the Parties to this Agreement against another Party to this Agreement for the
enforcement of this Agreement, or because of an alleged dispute, breach, default
or misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing Party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it or they may be entitled.
28. Choice Of Law. This Agreement shall be governed by, construed,
interpreted and the rights of the Parties determined in accordance with the laws
of the State of Colorado without regard to principles of conflicts of laws.
26
IN WITNESS WHEREOF, the Parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives on the date
first above written.
SUB:
WINNCOM TECHNOLOGIES CORP.
By:
Name:
Position:
ATTEST:
WINNCOM:
WINNCOM TECHNOLOGIES, INC.
By:
Name: Gregory E. Raskin
Position: President
ATTEST:
PARENT:
ANTENNAS AMERICA, INC.
By:
Name: Randall P. Marx
Position: Chief Executive Officer
ATTEST:
Agreements Of Winncom Shareholders
Each of the undersigned Winncom Shareholders hereby acknowledges the
benefits to be received by the Winncom Shareholders pursuant to this Agreement
and each of the undersigned Winncom Shareholders agrees to, agrees to be bound
by, and agrees to be responsible for any representations, warranties, and/or
agreements and covenants, included in the provisions of Section 6.25, Section
6.27, Section 8.5, Section 12, and Section 13, other sections where applicable
and appropriate, the provisions of this Agreement, as well as to the following:
(i) Each of the undersigned Winncom Shareholders is or will be
acquiring the Parent Closing Shares in accordance with this Agreement solely for
his own account, for investment, and the Parent Closing Shares are not being
obtained with a view to or for the resale, distribution, subdivision or
fractionalization thereof; each of the undersigned Winncom Shareholders has no
agreement or arrangement for any such resale, distribution, subdivision or
fractionalization thereof; other than the private transfer of an aggregate of
55,000 Parent Closing Shares to three consultants of Winncom for past service
consideration; provided that each of these consultants will make the same
representations as are set forth in this paragraph (i) and in paragraph (ii)
below; and
(ii) Each of the undersigned Winncom Shareholders acknowledges and is
aware that the following legend will be imprinted on the Parent Closing Shares
obtained or to be obtained by each of the undersigned Winncom Shareholders:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
PLEDGED, OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED OR
QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF
WHICH IS TO BE ESTABLISHED BY AN OPINION OF COUNSEL (WHICH
OPINION AND COUNSEL SHALL BOTH BE REASONABLY SATISFACTORY TO
THE COMPANY)."
WINNCOM SHAREHOLDERS:
Date:
------------- --------------------------
Gregory E. Raskin, Individually
Date:
------------- --------------------------
Michael L. Maly, Individually
* * * * *