Closing Agreement between Advanced Wireless Systems, Inc. and Digital Wireless Systems, Inc. (August 6, 2000)

Contract Categories: Business Finance › Purchase Agreements
Summary

This agreement is between Advanced Wireless Systems, Inc. (the buyer) and Digital Wireless Systems, Inc. (the seller), who is undergoing bankruptcy reorganization. It finalizes the sale of certain assets, including wireless licenses, from the seller to the buyer. Due to regulatory and financial constraints, the agreement adjusts the purchase price, sets out a temporary lease for the licenses until FCC approval, and outlines conditions for delivering audited financial statements. The agreement also details how shares will be distributed or withheld based on these conditions and sets deadlines for compliance.

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EX-2.5 6 0006.txt CLOSING AGREEMENT Exhibit 2.5 CLOSING AGREEMENT THIS CLOSING AGREEMENT dated the 6th day of August, 2000, by and between Advanced Wireless Systems, Inc. ("Purchaser") and Digital Wireless Systems, Inc. ("Seller"). RECITALS 1. WHEREAS, Seller is a debtor in a Chapter 11 case pending in the United States Bankruptcy Court for the Middle District of Tennessee, and as a Chapter 11 debtor has confirmed a plan of reorganization (the "Plan of Reorganization") approved by court order entered May 28, 2000; and 2. The Plan of Reorganization approved the sale of assets from Seller to Purchaser pursuant to the terms and conditions of an asset purchase agreement (the "Purchase Agreement") dated February 15, 2000; and 3. Purchaser and Seller are prepared to proceed with the closing of this sale (the "Closing") under certain terms and conditions. D. Purchaser and Seller have agreed that the attached Schedule A represents a calculation of three adjustments to the purchase price of the Assets being sold: (1) adjustment due to the price adjustment provision of the Purchase Agreement, (2) adjustment due to failure to deliver Licenses, as specified in Section 2 below, and (3) adjustment due to failure to deliver audited financial statements, as specified in Section 7 below. NOW, THEREFORE, premises considered and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Seller is unable to transfer title to its multipoint distribution service (the "Licenses") until the parties can obtain FCC approval of the assignment of Seller's licenses to Purchaser. Pending this approval, Seller agrees to lease the transmission capacity on the channels to be assigned to Purchaser pursuant to a spectrum lease agreement to be executed at Closing. The parties hereto agree to file assignment applications with the FCC within ten days of Closing. 2. Seller and Purchaser agree that the purchase price of the Assets to be transferred at Closing is reduced by 1,100,000 shares, in consideration of the inability of Seller to transfer the Licenses. The reduction in the purchase price will be withheld from the shares to be issued to the Seller's interest holders in accordance with the attached Schedule A. The adjustment in the purchase price shall be deducted from the Class 5 Claimants' shares, pro rata according to their percentage ownership of the Seller immediately prior to Closing. 3. Seller and Purchaser agree to enter into the spectrum lease agreement attached as Exhibit 1. The spectrum lease agreement provides that the monthly rental for the Licenses shall be 100,000 shares of Purchaser's Common Stock per month for the first twelve months of the lease. The Seller and Purchaser agree that, if substantially all of the Licenses have not been transferred to Purchaser by August 1, 2001, they will renegotiate the monthly rental price of the spectrum lease agreement. 4. With respect to the licenses relating to Station WHT 707 previously held by Wireless Advantage, Inc. and which are now in Seller's name by order of the Bankruptcy Court entered March 28, 2000, Seller agrees to use its reasonable efforts to obtain cooperation from Wireless Advantage, Inc. in order to effectuate the assignment of such licenses by the FCC. 5. Seller shall use reasonable efforts to obtain a court order from the Bankruptcy Court acknowledging the assignment of all leases and executory contracts under Seller's name to Purchaser as contemplated under the Purchase Agreement. 6. Seller shall have thirty days from Closing to perform the due diligence and make the required disclosures under the Purchase Agreement regarding such sections of the Purchase Agreement as 5.6, 5.13, 5.15, 5.20, 5.25, 5.26 and 5.27 as they relate to licenses, spectrum leases and compliance with FCC rules. 7. Seller is unable to deliver audited financial statements of the Seller at Closing, as required by Section 5.5 of the Purchase Agreement and does not have the funds to obtain such audited statements. Seller and Purchaser will cooperate, at Purchaser's expense, in obtaining audited financial statements' for Seller's operations that comply with requirements contained in Form 8-K for reporting on significant acquisitions. Purchaser will reserve and hold back from the purchase price, 803,397 shares of Purchaser's Common Stock, to be deducted from the DWSI directors' shares according to the amounts expressed in Schedule A. If the parties are unsuccessful in obtaining the required audited financial statements for Seller, using reasonable commercial efforts, within 70 days after Closing. The purchase price will be reduced by the said 307,410 shares and such shares will not be issued. If the audited statements are obtained within 70 days, the 307,410 reserved shares will be issued to the Seller's interest holders as provided in the attached Schedule A. The 307,410 reserved shares shall be placed into escrow for the benefit of the scheduled holders, subject to the terms of this paragraph. IN WITNESS WHEREOF, the parties have executed this Closing Agreement as of the date first written above. DIGITAL WIRELESS, INC. ADVANCE WIRELESS SYSTEMS, INC. By: ________________________ By: ___________________ David D. Schlueter Thomas W. Howard Chief Executive Officer President Schedule A To Closing Agreement Price Adjustments: 30-Day Average Closing Price of AWSS Common Stock (Thru 7/7/00) = $0.9950 Theoretical Price Adjustment as of 7/7/00 = 844,221 Units of Equity Actual Price Adjustment made as of 7/7/0 = $0.8584 30-Day Average Closing Price of AWSS Common Stock (As of Friday 8/4/00) = $0.8584 Total Price Adjustment = 2,251,631 Units of Equity Additional Price Adjustment Between 7/7/00 to 8/4/00 (i.e., 2,251,631 minus 869,632 = 1,381,999 Units of Equity
Addn. Price Adjust- AWSS ment Price Units of From Adjusted AWSS Adjust- Equity 7/7/00 AWSS Units ment Issued Thru License Audit Units Claims of Equity 7/7/00 on 8/6/00 8/4/00 Escrow Escrow of Equity - ------------------------------------------------------------------------------------------------------------ Class 4 $447,127 894,258 94,365 988,623 157,327 0 0 1,145,950 - ------------------------------------------------------------------------------------------------------------ Class 5 Shares DWSI % - ------------------------------------------------------------------------------------------------------------ Baton Rouge LLC 982,142 26.25% 1,865,233 203,410 2,068,643 321,566 288,113 0 2,102,096 Carolyn Breaks 2,217 0.06% 4,210 460 4,670 726 650 3,914 832 William Counts 1,773 0.05% 3,367 367 3,734 581 520 3,131 664 Willard Fey 1,995 0.05% 3,789 413 4,202 653 585 3,523 747 Frank Franco 665 0.02% 1,263 138 1,401 217 195 1,174 249 Future Vision Wireless Cable, Inc. 999,738 26.72% 1,898,650 207,176 2,105,826 327,206 293,275 0 2,139,757 Joseph Paradis 77,217 2.06% 146,646 15,997 162,643 25,278 22,652 136,334 28,935 Reading Partnership 931,596 24.90% 1,769,238 193,068 1,962,306 304,891 273,286 0 1,993,911 David Schlueter 77,217 2.06% 146,646 15,997 162,643 25,278 22,652 136,334 28,935 Shreveport Partnership 666,983 17.83% 1,266 699 138,242 1,404,941 218,276 195,661 0 1,427,556 - ------------------------------------------------------------------------------------------------------------ 3,741,543 100.00% 7,105,742 775,267 7,881,009 1,224,672 1,097,589 284,410 7,723,682 Adjustments 869,632 1,381,999 1,097,589 284,410 8,869,632 Total Class 4 and Class 5 Units of Equity 8,000,000 8,869,632 8,869,632