AGREEMENT PENDING PURCHASE CLOSING
This AGREEMENT PENDING PURCHASE CLOSING ("Management Agreement") dated
as of this 2nd day of August, 1999 ("Execution Date") is made and entered into
by and among SourceOne Wireless Inc. ("SOWI"), SourceOne Wireless, L.L.C.
("LLC"), SourceOne Wireless II, L.L.C. ("LLC II") and Aquis Communications, Inc.
("Aquis"). SOWI, LLC, LLC II and Aquis may sometimes be referred to hereinafter
individually as "Party" and collectively as the "Parties." SOWI, LLC and LLC II
may sometimes be referred to collectively hereinafter as "SourceOne."
RECITALS
WHEREAS, SourceOne currently operates Commercial Mobile Radio Service
("CMRS") one-way paging systems ("Systems") on multiple frequencies in numerous
geographic areas throughout the United States pursuant to licenses ("Licenses")
issued to LLC II by the Federal Communications Commission ("FCC").
WHEREAS, the largest of these Systems is a one-way paging system
("Midwest System") operating pursuant to licenses ("Midwest Licenses") issued by
the FCC in the Paging And Radiotelephone Service on the frequency 931.1875 MHz
in the midwest United States. The Midwest System is made up of one hundred and
twenty-seven (127) 931.1875 MHz transmitter sites: (i) seventy-five (75)
("Midwest Transmitter Sites") of which are clearly currently operational and
used by SourceOne to provide paging service to certain subscribers ("Midwest
Subscribers"); and (ii) fifty-two (52) ("Other Midwest Transmitter Sites") of
which may not currently be operational, but SourceOne has no knowledge that such
Other Midwest Transmitter Sites have been off the air for ninety (90) or more
continuous days as represented by SourceOne herein, and have been used to
provide paging service to Midwest Subscribers. A list of the Midwest Transmitter
Sites and Other Midwest Transmitter Sites that make up the Midwest System and
associated Midwest Licenses is attached hereto as Schedule A.
WHEREAS, the remaining Systems ("Other Systems") authorized to
SourceOne pursuant to FCC Licenses issued to LLC II on other frequencies ("Other
Licenses") provide service to other subscribers ("Other Subscribers").
WHEREAS, SourceOne also provides paging service to additional
subscribers ("Additional Subscribers") in various geographic areas on systems
not licensed to SourceOne, including through resale and other agreements
("Additional Subscriber Agreements"). The term "Subscribers" as used hereinafter
will be defined to include Midwest Subscribers and Additional Subscribers.
WHEREAS, LLC II is wholly owned and controlled by LLC and LLC is, in
turn, controlled by SOWI.
WHEREAS, On April 29, 1999, SOWI, and on July 2, 1999, LLC (together
with SOWI "Debtors") filed voluntary petitions for relief in the Bankruptcy
Court for the Northern District of Illinois ("Bankruptcy Court") under chapter
11 of title 11 of the United States Code ("Bankruptcy Code"). Debtors have
continued in the possession of their assets and the management of their business
pursuant to Bankruptcy Code sections 1107 and 1108.
WHEREAS, as part of Debtors' bankruptcy cases, either simultaneously
herewith or promptly after the Execution Date, Aquis, SOWI, LLC and LLC II will
execute an asset purchase agreement ("Purchase Agreement") pursuant to which
Aquis will purchase the: (i) Midwest System, including the Midwest Licenses, the
Midwest Subscribers and all assets used in the operation of the Midwest System;
(ii) the Other Subscribers and certain other assets used by SourceOne in the
operation of the Other Systems; and (iii) the Additional Subscribers and certain
other assets used by SourceOne in the provision of service to Additional
Subscribers pursuant to Additional Subscriber Agreements.
WHEREAS, the Purchase Agreement requires (or will require) that the
Parties obtain requisite prior FCC consent to assignment of the Midwest Licenses
from LLC II to Aquis pursuant to applications (collectively "Assignment
Application") that must be filed with, processed and granted by the FCC before
the Parties can consummate sale of the assets and DE JURE assignment of the
Midwest Licenses to Aquis at a closing ("Purchase Closing") to be conducted by
the Parties pursuant to the Purchase Agreement.
WHEREAS, based on representations by SourceOne that SourceOne's dire
financial circumstances severely threaten SourceOne's ability to continue to
operate the Midwest System, Aquis has agreed to step in and assume day-to-day
operational and management control of the Midwest System and related
responsibilities pursuant to this Management Agreement until Purchase Closing.
WHEREAS, LLC II and Aquis have sought and obtained Special Temporary
Authority ("STA") for Aquis to acquire DE FACTO control of the Midwest System
pending filing and FCC grant of the Assignment Application and DE JURE
assignment of the Midwest Licenses to Aquis at Purchase Closing. This STA will
enable Aquis to provide the functions specified in this Management Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, mutually agree as follows.
1. ASSUMPTION OF MIDWEST BUSINESS. At 12:01 AM on a date to be mutually
agreed by the Parties no more than five (5) Business Days after Bankruptcy Court
approval of this Management
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Agreement ("Take-Over Date"): (i) SourceOne will transfer and Aquis will acquire
DE FACTO control of the Midwest System and assume full day-to-day operational
and management responsibilities for operation of the Midwest System, including
provision of service to Midwest Subscribers; and (ii) Aquis will commence
provision of service to Additional Subscribers pursuant to Additional Subscriber
Agreements. The functions referred to in subsections (i) and (ii) hereof will be
referred to collectively hereinafter as the "Midwest Business." In order to
effectuate this transfer, the Parties hereby agree to take the following
actions:
1.1. USE OF MIDWEST SYSTEM ASSETS. On the Take-Over Date,
SourceOne will transfer to Aquis SourceOne's rights to use, have access to and
control over each and every asset utilized by SourceOne in the operation of the
Midwest Business ("Midwest System Assets"), including, but not limited to the
following:
1.1.1. All transmission equipment located at the
Midwest Transmitter Sites, Other Midwest Transmitter Sites, or at any other
location utilized in the operation of the Midwest System.
1.1.2. The paging terminals and all associated
hardware and software utilized in the Midwest System and the "calling party
pays" platform, software and associated hardware ("CPP") used as part of the
Midwest Business to provide service to Subscribers.
1.1.3. The satellite control facilities utilized in
the Midwest System, including but not limited to any earth station facilities,
satellite space, associated wireline or wireless transmission facilities,
hardware and software, whether owned by SourceOne or utilized by SourceOne
pursuant to existing agreements with third parties.
1.1.4. All site leases, licenses or other agreements
("Site Agreements") pursuant to which SourceOne operates transmission equipment
at each of the Midwest Transmitter Sites and Other Midwest Transmitter Sites, it
being Aquis's understanding that SourceOne does not currently own the sites or
supporting structures at any of the Midwest Transmitter Sites or Other Midwest
Transmitter Sites.
1.1.5. All rights to interconnection with the public
switched telephone network ("PSTN") utilized by SourceOne in the operation of
the Midwest Business, whether pursuant to
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agreement, tariff or otherwise.
1.1.6. Certain leases, licenses or other agreements
("Office Agreements") for office space related to, or at which SourceOne
currently operates, the Midwest Business as specified at Schedule 0 hereto.
1.1.7. All office equipment, furniture and fixtures,
computer equipment, tools, vehicles, and other personal property ("Personal
Property") utilized by SourceOne in any way in connection with the Midwest
Business.
1.1.8. All software and licenses and other agreements
to utilize software ("Software") utilized by SourceOne in any way in connection
with the Midwest Business.
1.1.9. Those SourceOne employees specified on
Schedule 0 hereto ("Retained Employees"), it being expressly understood that:
(i) as of the Take-Over Date, SourceOne will terminate the employment of any
other SourceOne employees currently involved in operation of the Midwest
Business and/or reassign such other employees to operation of the Other Systems
with SourceOne assuming full and complete responsibility for all actions, costs,
expenses, claims and liabilities of any nature whatsoever associated with such
termination and/or reassignment of non-Retained Employees; and (ii) to the
extent that SourceOne will pay "stay bonuses" to Retained Employees, SourceOne
will only pay such "stay bonuses" on or after Purchase Closing, or as otherwise
provided in a Bankruptcy Court order.
1.1.10. All bank accounts ("Bank Accounts") utilized
by Source One in the operation of the Midwest Business.
1.1.11. All customer lists and goodwill for
Subscribers (collectively "Customer Lists").
1.1.12. All deposits ("Deposits") held by SourceOne
for Subscribers.
1.1.13. The right to operate the Midwest System in
accordance with the Midwest Licenses as the Midwest Licenses may be modified by
LLC II pursuant to the request of Aquis, subject only to LLC II's ongoing
obligations imposed as the DE JURE FCC licensee of the Midwest Licenses.
1.1.14. All inventory, pagers and other equipment
and/or items held for resale or lease (or already leased
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to Subscribers) by SourceOne.
1.1.15. On the Take-Over Date, all accounts
receivable held or owned by SourceOne for Subscribers, including all rights to
receive compensation from "calling party pays" agreements and all accrued but
unbilled revenue from operation of the Midwest Business (collectively, "Accounts
Receivable"), will be turned over to Aquis as manager for administration and
collection. SourceOne represents that accrued but unbilled revenues are not
older than thirty-one (31) days except that accrued but unbilled revenues for
July, 1999, are not older than forty (40) days. The Accounts Receivable
transferred on the Take-Over Date ("Take-Over Receivables") will be specified on
a schedule agreed to by the Parties and will be valued with the following
discount factors ("Discount Factors") as follows:
(a) 100% of the face amount of Accounts Receivable outstanding
including accrued but unbilled revenue for 30 days or less
before the Take-Over Date;
(b) 70% of the face amount of Accounts Receivable outstanding for
between 31 and 60 days before the Take-Over Date;
(c) 40% of the face amount of Accounts Receivable outstanding for
between 61 and 90 days before the Take-Over Date;
(d) 0% of the face amount of Accounts Receivable outstanding for
more than 90 days before the Take-Over Date; and
(e) 95% of the net amount of those certain Accounts Receivable
owed by ESBI and Ameritech and related to "calling party pays"
service.
If the Purchase Agreement closes, the Accounts Receivable will be transferred to
Aquis as Purchaser under the Purchase Agreement. If the Management Agreement is
terminated and the Purchase Closing has not occurred, then Aquis will return to
SourceOne accounts receivable from the Midwest Business whose value (after
adjustment by the Discount Factors) is not less than the discounted value of the
Take-Over Receivables less the "Net Service Revenue Adjustment" amount
("Returned Receivables Amount") subject to the first priority lien thereon in
favor of Foothill Capital Corporation, as agent. If the discounted value of the
Take-Over Receivables exceeds the Returned Receivables Amount, then Aquis
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will promptly pay SourceOne the difference subject to the first priority lien
thereon in favor of Foothill Capital Corporation, as agent. If the discounted
value of the Take-Over Receivables is less than the Returned Receivables Amount,
then such difference ("Excess Returned Receivables") will be promptly paid by
Source One to Aquis as a fee in addition to any other fees provided in this
Management Agreement. The Net Service Revenue Adjustment amount under this
Section 0 is calculated as follows: (discounted value of the Take-Over
Receivables divided by $7.26 million) TIMES actual Net Service Revenue (as
defined in Purchase Agreement Section 1.6(d)(i)).
1.1.16. All contract rights ("Contracts") held by
SourceOne and utilized in connection with the Midwest Business, such as
Additional Subscriber Agreements, agreements related to "calling party pays",
and subscriber agreements with Subscribers.
1.1.17. All books, records, models and spreadsheets
(whether in hard copy or computerized form) kept in the ordinary course and
useful, in the sole discretion of Aquis, in the operation of the Midwest
Business, including sales and marketing information and Retained Employee files.
1.1.18. All corporate names, logos, trade names,
trademarks and copyrights of SourceOne and all other intellectual property owned
by or licensed to SourceOne, used in connection with operation of the Midwest
Business.
1.1.19. Any other assets, privileges, rights, claims
or credits of every kind, character and description, whether tangible,
intangible, real, personal, or mixed and wherever located, owned, leased by
SourceOne or used, or held for use in connection with the Midwest Business as of
the Take-Over Date ("Other Assets").
1.2. NO ASSUMPTION OF LIABILITIES BY AQUIS. It is expressly understood
and agreed that the Parties intend that Aquis is not and will not be considered
to be a successor to SourceOne by reason of any theory of law or equity.
1.3. TITLE TO MIDWEST SYSTEM ASSETS. Subject to Aquis's right to use,
have access to and control over the Midwest System Assets pursuant to Section 0
hereof, title to the Midwest System Assets will remain with SourceOne during the
Term of this Management Agreement (as hereinafter defined). Title will pass to
Aquis at Purchase Closing pursuant to the Purchase Agreement; subject, however,
to the provisions of Section 0 hereof.
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1.4. GOOD FAITH COOPERATION. SourceOne agrees to cooperate in good
faith, use its best efforts and timely take (or omit to take) any additional
action that Aquis reasonably believes is necessary to: (i) effectuate the DE
FACTO transfer of control of the Midwest System and allow Aquis to assume
day-to-day operational and management control of the Midwest System; (ii) allow
Aquis to assume provision of service to Additional Subscribers pursuant to
Additional Subscriber Agreements; and (iii) allow Aquis to carry out any other
related responsibilities with respect to the Midwest Business specified in this
Management Agreement.
2. OPERATION OF THE MIDWEST BUSINESS.
2.1. AQUIS RESPONSIBILITIES. On the Take-Over Date, Aquis will
assume day-to-day operational and management control of the Midwest System using
the Midwest System Assets. Aquis will exercise a reasonable standard of care
normally exercised by operators of similar CMRS one-way paging systems in
similar circumstances; provided, however, that the Parties explicitly recognize
that Debtors' Chapter 11 bankruptcy may result in significant obstacles that may
prevent Aquis from meeting this standard of care. Aquis will use its reasonable
best efforts consistent with sound commercial practice to provide for the
successful operation of the Midwest System and Aquis will render or obtain all
services and perform or cause to be performed all duties necessary or
appropriate for the operation of the Midwest System. Aquis will also continue
provision of service to Additional Subscribers pursuant to Additional Subscriber
Agreements. Aquis's duties will including the following:
2.1.1. Operate the Midwest System for provision of
service to existing and new Midwest Subscribers in compliance with the Midwest
Licenses and applicable FCC Rules (as hereinafter defined).
2.1.2. Provide service to existing and new Additional
Subscribers pursuant to Additional Subscriber Agreements.
2.1.3. Analyze the existing technical configuration
of the Midwest System and, subject to Section 0 hereof, plan and implement any
expansion, modification or reduction of the Midwest System that Aquis believes
in its sole and unfettered discretion will increase the economic, efficient
operation of the Midwest System.
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2.1.4. Analyze the Other Midwest Transmitter Sites to
determine whether transmitting equipment at those sites (such equipment at each
site referred to as "Other Midwest Transmitter Site Equipment") is operational
and that the representations made by SourceOne at Section 0, 0 and 0 hereof
("Other Midwest Transmitter Site Representations") with respect to the Other
Midwest Transmitters Sites and all Other Midwest Transmitter Site Equipment are
accurate. To the extent that: (i) Aquis determines that any or all of the Other
Midwest Transmitter Site Representations are not accurate; or (ii) Aquis, in its
sole and unfettered discretion, determines that operation cannot and/or should
not be timely recommenced at any Other Midwest Transmitter Site in accordance
with FCC Rules for any reason whatsoever; then Aquis may instruct SourceOne to
modify the Midwest Licenses for any such Other Midwest Transmitter Site(s).
Aquis's sole remedy in the event SourceOne does not modify the Midwest Licenses
as instructed will be the Purchase Price (as defined in the Purchase Agreement)
adjustments specified at Section 1.6(e) of the Purchase Agreement.
2.1.5. Supervise, manage and train the Retained
Employees and other administrative, technical and sales staff, if any, necessary
for the operation of the Midwest Business.
2.1.6. Administer the invoicing and collection of all
accounts of Subscribers, including new subscribers to the Midwest System and new
Additional Subscribers, and Accounts Receivable; collect and receive all
payments on such accounts; and arrange for the billing and collection of all
other revenues, fees, charges or other compensation ("Revenues") due in
connection with the Midwest Business.
2.1.7. Arrange for the payment of all expenses and
fees, if any, incurred in connection with the Midwest Business after the
Take-Over Date during the Term of this Management Agreement (as hereinafter
defined) ("Expenses").
2.1.7.1.The Parties agree that Expenses will be
pro rated as of the Take-Over Date with SourceOne retaining sole responsibility
for payment of Expenses prior to the Take-Over Date and Aquis assuming
responsibility for payment of Expenses after the Take-Over Date in accordance
with this Management Agreement and subject to Section 0 hereof.
2.1.8. Maintain the Customer List and files
concerning subscriber agreements for all Subscribers; and
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2.1.9. Maintain appropriate property, casualty,
liability and other insurance for the Midwest System.
2.1.10. Maintain appropriate office recordkeeping,
bookkeeping and accounting procedures.
2.1.11. Return to any Subscribers any Deposits
transferred to Aquis pursuant to Section 0; provided, however, that the Parties
expressly agree that Aquis undertakes no responsibility for or liability to
return to any Subscriber any Deposit held by SourceOne prior to the Take-Over
Date that is not transferred by SourceOne to Aquis as of the Take-Over Date
pursuant to Section 0 hereof.
2.1.12. In providing services in connection with
operation of the Midwest Business, Aquis may make arrangements to consolidate
the provision of such services with other stations owned, operated or managed by
Aquis.
2.1.13. The Parties agree that Aquis will not enter
into any contracts or other agreements during the Term of this Management
Agreement (as hereinafter defined) that would result in an obligation to pay
expenses and fees in connection with the Midwest Business beyond the Purchase
Termination Date (as hereinafter defined); provided, however, that Aquis may
enter into such contracts and agreements upon the prior written consent of
SourceOne, such consent in SourceOne's sole discretion, and upon prior written
notice to Foothill Capital Corporation pursuant to written instructions that
Foothill Capital Corporation will provide to Aquis and SourceOne promptly after
the Execution Date; provided, however, that nothing herein shall be deemed to
constitute consent of Foothill Capital Corporation to the use of its collateral
to pay expenses incurred under such contracts and agreements after the Purchase
Termination Date (as hereinafter defined). The Parties agree that in no event
will Aquis have any liability whatsoever to pay any Expenses incurred after the
Purchase Termination Date (as hereinafter defined).
2.2. SOURCEONE OBLIGATIONS.
2.2.1. As the FCC DE JURE licensee of the Midwest
Stations pending Purchase Closing, SourceOne will exercise the minimum amount of
supervision necessary as an FCC DE JURE licensee subject to Aquis's DE FACTO
control of the Midwest System authorized by the FCC pursuant to the STA.
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2.2.2. SourceOne designates Xxxxx Xxxxx as officer of
LLC II, LLC and SOWI, who SourceOne represents and warrants will be available at
all times to assist Aquis in the operation of the Midwest Business pursuant to
this Management Agreement, including, but not limited to, signing any FCC
application or other written submissions that Aquis believes, in its sole and
unfettered discretion and as the party in DE FACTO control of the Midwest
System, should be submitted. SourceOne may specify alternate officers of LLC II,
LLC and/or SOWI upon prior written consent of Aquis.
2.2.3. SourceOne will cooperate with Aquis and use
its best efforts to assist Aquis in the operation of the Midwest Business as
specified herein, including, but not limited to:
2.2.3.1. Assisting Aquis in modifying any
signature cards related to the Bank Accounts to be transferred to Aquis pursuant
to this Management Agreement to make authorized representatives of Aquis the
sole parties authorized to conduct transactions with respect to such Bank
Accounts.
2.2.3.2. Fully cooperating with Aquis in its
review of the Other Midwest Transmitter Sites specified at Section 0 hereof and,
to the extent requested by Aquis in Aquis's sole and unfettered discretion, use
reasonable best efforts to assist in recommencement of operation of Other
Midwest Transmitter Site Equipment at the Other Midwest Transmitter Sites,
including, but not limited to: (i) replacement of nonfunctional or nonexistent
Other Midwest Transmitter Site Equipment with other equipment owned by
SourceOne; (ii) assisting Aquis in dealing with owners of Other Midwest
Transmitter Sites; and (iii) assisting Aquis in negotiating with any equipment
manufacturers or other entities with loans or other interests in Other Midwest
Transmitter Site Equipment.
2.3. ADDITIONAL OBLIGATIONS.
2.3.1. In addition to its other obligations under
this Management Agreement:
0.0.0.0.Xx the event Aquis is unable to pay all
Expenses from Revenues, funds available in Bank Accounts to be transferred to
Aquis and/or collection of any Accounts Receivable transferred to Aquis, then
Aquis will provide funds to pay such Expenses subject to the provisions of this
Section 0.
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0.0.0.0.Xx the event that Aquis is unable to pay
for any capital improvements that Aquis believes, in its sole and unfettered
discretion, should be made to the Midwest System or Midwest System Assets
("Capital Improvements"), and Aquis is unable to pay for such Capital
Improvements from Revenues, funds available in Bank Accounts to be transferred
to Aquis and/or collection of any Accounts Receivable transferred to Aquis, then
Aquis will provide funds to pay such Capital Expenditures subject to the
provisions of this Section 0. If: (i) Aquis pays for any Capital Improvement out
of its own funds or provides equipment to operate the Midwest System; and (ii)
the Purchase Closing does not occur, then Aquis may remove, at its expense,
those Capital Improvements and equipment on or after the Purchase Termination
Date (as hereinafter defined).
2.4. SOURCEONE INSPECTION. During the Term of this Management
Agreement (as hereinafter defined), SourceOne may, upon reasonable prior written
request to Aquis and at a reasonable time and place, inspect Aquis's operation
of the Midwest Business and/or the records maintained by Aquis in connection
with the operation of the Midwest Business.
3. OTHER SUBSCRIBERS ON OTHER SYSTEMS.
3.1. TRANSFER OF OTHER SUBSCRIBER ASSETS. Even though Aquis
will not acquire DE facto control of or provide any management responsibilities
for SourceOne's Other Systems pursuant to this Management Agreement, as of the
Take-Over Date, SourceOne will also transfer to Aquis SourceOne's rights to use,
have access to and control over the following ("Other Subscriber Assets"):
3.1.1. All customer lists and goodwill ("Other
Customer List") for all of SourceOne's Other Subscribers, regardless of the
SourceOne Other System on which those subscribers receive service.
3.1.2. All deposits ("Other Deposits") held by
SourceOne for Other Subscribers on Other Systems.
3.1.3. On the Take-Over Date, all accounts receivable
held or owned by SourceOne for Other Subscribers, including all rights to
receive compensation from "calling party pays" agreements and all accrued but
unbilled revenue from operation of the Other Subscriber Business (as hereinafter
defined) (collectively, "Other Accounts Receivable"), will be turned over to
Aquis as manager for administration and collection. SourceOne represents that
accrued but unbilled revenues are not
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older than thirty-one (31) days except that accrued but unbilled revenues for
July, 1999, are not older than forty (40) days. The Other Accounts Receivable
transferred on the Take-Over Date ("Take-Over Other Receivables") will be
specified on a schedule to be agreed to by the Parties and will be valued with
the following discount factors ("Discount Factors") as follows:
(a) 100% of the face amount of Other Accounts Receivable
outstanding including accrued but unbilled revenue for 30 days
or less before the Take-Over Date;
(b) 70% of the face amount of Other Accounts Receivable
outstanding for between 31 and 60 days before the Take-Over
Date;
(c) 40% of the face amount of Other Accounts Receivable
outstanding for between 61 and 90 days before the Take-Over
Date;
(d) 0% of the face amount of Other Accounts Receivable outstanding
for more than 90 days before the Take-Over Date; and
(e) 95% of the net amount of those certain Other Accounts
Receivable owed by ESBI and Ameritech and related to "calling
party pays" service.
If the Purchase Agreement closes, the Other Accounts Receivable will be
transferred to Aquis as Purchaser under the Purchase Agreement. If the
Management Agreement is terminated and the Purchase Closing has not occurred,
then Aquis will return to SourceOne accounts receivable for Other Subscribers
whose value (after adjustment by the Discount Factors) is not less than the
discounted value of the Take-Over Other Receivables less the "Net Service
Revenue Adjustment" amount ("Returned Other Receivables Amount") subject to the
first priority lien thereon in favor of Foothill Capital Corporation, as agent.
If the discounted value of the Take-Over Other Receivables exceeds the Returned
Other Receivables Amount, then Aquis will promptly pay SourceOne the difference
subject to the first priority lien thereon in favor of Foothill Capital
Corporation, as agent. If the discounted value of the Take-Over Other
Receivables is less than the Returned Other Receivables Amount, then such
difference ("Excess Returned Other Receivables") will be promptly paid by
SourceOne to Aquis as a fee in addition to any other fees provided by this
Management Agreement. The Net Service Revenue Adjustment amount under this
Section 0 is calculated as follows: (discounted value of the
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Take-Over Other Receivables divided by $7.26 million) TIMES actual Net Service
Revenue (as defined in Purchase Agreement Section 1.6(d)(i)).
3.1.4. Any pagers and related equipment owned by
SourceOne and leased to Other Subscribers as of the Take-Over Date ("Leased
Pagers").
3.2. AQUIS ACTIONS REGARDING OTHER SUBSCRIBERS. As of the
Take-Over Date:
3.2.1. It is Aquis's understanding that as of the
Take-Over Date, SourceOne may terminate operation of the Other Systems.
Accordingly, as of the Take-Over Date, Aquis may, in its sole and unfettered
discretion, take whatever action Aquis believes necessary with respect to the
Other Subscribers, including but not limited to arranging for Other Subscribers
to become Additional Subscribers who obtain service under existing Additional
Subscriber Agreements. Arrangements by Aquis to continue provision of service to
Other Subscribers during the Term of this Management Agreement (as hereinafter
defined), if any, will be referred to as "Other Subscriber Business".
3.2.2. Aquis will invoice, collect and receive
payment on all accounts of Other Subscribers, including Other Accounts
Receivable, during the Term of this Management Agreement (as hereinafter
defined).
3.2.3. Aquis will return to any Other Subscriber any
Other Deposits transferred to Aquis pursuant to Section 0 hereof; provided,
however, that the Parties expressly agree that Aquis undertakes no
responsibility for or liability to return to any Other Subscriber any Other
Deposit held by SourceOne prior to the Take-Over Date that is not transferred by
SourceOne to Aquis as of the Take-Over Date pursuant to Section 0 hereof.
3.2.4. Aquis will retain any Leased Pagers returned
by Other Subscribers during the Term of this Management Agreement (as
hereinafter defined).
3.2.5. Aquis will pay all expenses and fees, if any,
associated with the Other Subscriber Business ("Other Subscriber Expenses") and
Aquis will retain all revenues associated with or arising from the Other
Subscriber Business ("Other Subscriber Revenues") as provided in Section 0
hereof.
3.3. TITLE TO OTHER SUBSCRIBER ASSETS. Subject to
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Aquis's right to use, have access to and control over the Other Subscriber
Assets pursuant to Section 0 hereof, title to the Other Subscriber Assets will
remain with SourceOne during the Term of this Management Agreement (as
hereinafter defined). Title will pass to Aquis at Purchase Closing pursuant to
the Purchase Agreement; subject, however, to the provisions of Section 0 hereof.
4. COMPENSATION. In addition to other consideration provided for in
this Management Agreement and the Purchase Agreement, Aquis will retain as
compensation for services provided hereunder:
4.1. All "Midwest Cash Flow," if any, obtained from operation
of the Midwest Business during the Term of this Management Agreement (as
hereinafter defined). Midwest Cash Flow is defined as Revenues plus Accounts
Receivable collected by Aquis during the Term of this Management Agreement (as
hereinafter defined) plus credit balances in Bank Accounts as of the Take-Over
Date, if any, less Expenses and Capital Improvements not paid for directly by
Aquis; and
4.2. All "Other Subscriber Cash Flow," if any, obtained from
operation of the Other Subscriber Business during the Term of this Management
Agreement (as hereinafter defined). Other Subscriber Cash Flow is defined as
Other Subscriber Revenues plus Other Subscriber Accounts Receivable collected by
Aquis during the Term of this Management Agreement (as hereinafter defined) less
Other Subscriber Expenses.
5. IF NO PURCHASE CLOSING. In the event that the Purchase Agreement
terminates without Purchase Closing, the following provisions apply:
5.1. RETURN OF MIDWEST SYSTEM ASSETS. As of the date of
termination of the Purchase Agreement without Purchase Closing ("Purchase
Termination Date"), Aquis will return to SourceOne the rights to use, have
access to and control over all Midwest System Assets in existence as of the
Purchase Termination Date and SourceOne will retain title thereto.
5.2. RETURN OF DE FACTO CONTROL OF MIDWEST SYSTEM. SourceOne
and Aquis will immediately take all action necessary, including but not limited
to termination of the STA, to return to SourceOne as of the Purchase Termination
Date the DE FACTO control over the Midwest System that was transferred to Aquis.
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5.3. TERMINATION OF AQUIS OPERATION OF MIDWEST BUSINESS. As of
the Purchase Termination Date, Aquis will cease operating the Midwest Business
pursuant to Section 0 hereof and, at the request of SourceOne, will terminate
employment of any Retained Employees.
5.4. RETURN OF OTHER SUBSCRIBER ASSETS. As of the Purchase
Termination Date, Aquis will return to SourceOne the rights to use, have access
to and control over all Other Subscriber Assets in existence as of the Purchase
Termination Date and SourceOne will retain title thereto; except that if Aquis
made arrangements for continued provision of service to Other Subscribers
pursuant to any arrangement other than converting such Other Subscribers to
become Additional Subscribers under SourceOne Additional Subscriber Agreements
in existence as of the Take-Over Date, Aquis has the right, but not the
obligation, to retain such Other Subscribers without returning them to SourceOne
and without compensation to SourceOne.
5.5. CONDITION OF ASSETS. Subject to Sections 0 and 0 hereof,
the Parties expressly recognize and agree that the Midwest System Assets and
Other Subscriber Assets may have been modified during the ordinary course of
operation of the Midwest System Assets and Other Subscriber Assets
(collectively, "Asset Change") during Aquis's use thereof in accordance with
this Management Agreement. Aquis will return to SourceOne the Midwest System
Assets and Other Subscriber Assets in the form as of the Take-Over Date, except
ordinary wear and tear and other modifications contemplated by the first
sentence of this Section 0. Aquis will have no liability of any nature
whatsoever for any Asset Change unless and to the extent such Asset Change was
caused by a breach of Aquis's duty of care as set forth in Section 0 hereof.
5.6. MIDWEST SYSTEM FINAL ACCOUNTING.
5.6.1. Within thirty (30) Business Days after the
Purchase Termination Date, Aquis will provide SourceOne with a final accounting
("Final Accounting") specifying in reasonable detail:
5.6.1.1.The total of any Revenues accrued and
related to the Midwest Business during the Term of this Management Agreement (as
hereinafter defined) ("Outstanding Revenues").
5.6.1.2.The total of any Expenses incurred
15
with respect to the Midwest Business during the Term of this Management
Agreement (as hereinafter defined) ("Outstanding Expenses").
0.0.0.0.Xx the extent necessary, Outstanding
Revenues and Outstanding Expenses will be pro rated as of the Take-Over Date and
the Purchase Termination Date.
5.6.2. If Outstanding Revenues exceed Outstanding
Expenses after deducting any prior withdrawals of Midwest Cash Flow by Aquis,
then the difference will be considered "Outstanding Profit" and:
5.6.2.1.SourceOne will pay the Outstanding Profit
to Aquis as additional Midwest Cash Flow earned by Aquis pursuant to Section 0
hereof; or
5.6.2.2.SourceOne's obligation to pay the
Outstanding Profit to Aquis may be satisfied by allowing Aquis, at Aquis's
option, to retain possession of the Outstanding Revenues, credit balances in
Bank Accounts as of the Purchase Termination Date and the right to collect
Accounts Receivable using, to the extent available and at Aquis's expense, the
books and records and systems of SourceOne; and
5.6.2.3.SourceOne's obligation to pay the
Outstanding Profit and Excess Returned Receivables to Aquis is secured by: (i) a
first priority lien and security interest in the Accounts Receivable (exclusive
of the Returned Receivables Amount) and credit balances in Bank Accounts as of
the Purchase Termination Date; and (ii) a senior, first-priority lien and
security interest under Bankruptcy Code section 364(d)(1) in the Accounts
Receivable (exclusive of the Returned Receivables Amount) and credit balances in
Bank Accounts as of the Purchase Termination Date and, further, this obligation
to Aquis will be an allowed super-priority administrative expense claim under
Bankruptcy Code section 364(c)(1), having priority over any and all
administrative expense or priority claims specified in, or ordered under,
Bankruptcy Code sections 330, 331, 503(b), 506(c), or 507(b), except that this
claim will be subordinate to the claim of Foothill Capital Corporation arising
under Sections 364 or 507(b) of the Bankruptcy Code and the Carve-Out, as
defined in the final debtor-in-possession financing order. The Bankruptcy Court
order approving this Management Agreement will provide that the lien and
security interest in this Section 0 will be perfected upon entry of such
Bankruptcy Court order and without the need for filings or other actions by any
of the Parties.
16
5.7. RETURNED RECEIVABLES AMOUNT. Within thirty (30) Business
Days after the Purchase Termination Date: (i) Aquis will remit the Returned
Receivables Amount and the Returned Other Receivables Amount and pay any
deficiency as described in Sections 0 and 0 hereof. This obligation is not
subject to setoff or deduction.
5.8. DEFERRED REVENUE ADJUSTMENT. The Parties will agree in
writing as to the amount of deferred revenues as of the Take-Over Date and the
Purchase Termination Date. If deferred revenues on the Take-Over Date are less
than on the Purchase Termination Date (as calculated in the same manner as of
the Take-Over Date), then Aquis will pay the difference to SourceOne, subject to
Aquis's right to setoff this obligation against any SourceOne obligation owed to
Aquis.
5.9. RETURNED SOURCEONE DEPOSITS. The Parties will agree in
writing as to the amount of any SourceOne deposits held by third parties as of
the Take-Over Date and the Purchase Termination Date. If such deposits on the
Take-Over Date are higher than on the Purchase Termination Date (as a result of
return of any such deposits to Aquis or the use of any such deposits by or for
the benefit of Aquis), then Aquis will pay the difference to SourceOne within
thirty (30) Business Days after the Purchase Termination Date.
5.10. OTHER FINAL ACCOUNTING.
5.10.1. Within thirty (30) Business Days after the
Purchase Termination Date, Aquis will provide SourceOne with a final accounting
("Other Final Accounting") specifying in reasonable detail:
5.10.1.1. The total of any Other Subscriber
Revenues accrued and related to the Other Subscriber Business during the Term of
this Management Agreement (as hereinafter defined) ("Outstanding Other
Subscriber Revenues").
5.10.1.2. The total of any Other Subscriber
Expenses incurred with respect to the Other Subscriber Business during the Term
of this Management Agreement (as hereinafter defined) ("Outstanding Other
Subscriber Expenses").
5.10.1.3. To the extent necessary, Outstanding
Other Subscriber Revenues and Outstanding Other Subscriber Expenses will be pro
rated as of the Take-Over Date and
17
the Purchase Termination Date.
5.10.2. If Outstanding Other Subscriber Revenues
exceed Outstanding Other Subscriber Expenses after deducting any prior
withdrawals of Other Subscriber Cash Flow by Aquis, then the difference will be
considered "Outstanding Other Subscriber Profit" and:
5.10.2.1. SourceOne will pay the Outstanding Other
Subscriber Profit to Aquis as additional Other Subscriber Profits earned by
Aquis pursuant to Section 0 hereof; or
5.10.2.2. SourceOne's obligation to pay the
Outstanding Other Subscriber Profit to Aquis may be satisfied by allowing Aquis,
at Aquis's option, to retain possession of the Outstanding Other Subscriber
Revenue, credit balances in Bank Accounts as of the Purchase Termination Date
and the right to collect Other Subscriber Accounts Receivable using, to the
extent available and at Aquis's expense, the books and records and systems of
SourceOne; and
5.10.2.3. SourceOne's obligation to pay the
Outstanding Other Subscriber Profit and the Excess Returned Other Receivables to
Aquis is secured by: (i) a first priority lien and security interest in the
Other Subscriber Accounts Receivable (exclusive of the Returned Other
Receivables Amount) and credit balances in Bank Accounts as of the Purchase
Termination Date; and (ii) a senior, first-priority lien and security interest
under Bankruptcy Code section 364(d)(1) in the Other Subscriber Accounts
Receivable (exclusive of the Returned Other Receivables Amount) and credit
balances in Bank Accounts as of the Purchase Termination Date and, further, this
obligation to Aquis will be an allowed super-priority administrative expense
claim under Bankruptcy Code section 364(c)(1), having priority over any and all
administrative expense or priority claims specified in, or ordered under,
Bankruptcy Code sections 330, 331, 503(b), 506(c), or 507(b), except that this
claim will be subordinate to the claim of Foothill Capital Corporation arising
under Sections 364 or 507(b) of the Bankruptcy Code and the Carve-Out, as
defined in the final debtor-in-possession financing order. The Bankruptcy Court
order approving this Management Agreement will provide that the lien and
security interest in this Section 0 will be perfected upon entry of such
Bankruptcy Court order and without the need for filings or other actions by any
of the Parties.
5.11. Aquis has no claims against Foothill Capital Corporation
or its collateral, including without limitation,
18
claims arising under Sections 503, 506, or 552 of the Bankruptcy Code, except as
expressly set forth in Sections 0 and 0 of this Management Agreement.
6. REPRESENTATIONS AND WARRANTIES OF SOURCEONE. To induce Aquis to
enter into this Management Agreement, SourceOne hereby represents and warrants
to Aquis that:
6.1. LICENSES. SourceOne is the BONA FIDE licensee of the
Midwest Licenses and Midwest System. The Midwest Licenses for the Midwest
Transmitter Sites are, and, to the best of SourceOne's actual knowledge the
Midwest Licenses for the Other Midwest Transmitter Sites are, valid, in good
standing, in full force and effect and constitute: (i) all licenses, permits,
and authorizations required by the Communications Act of 1934, as amended (the
"Act") and all rules and regulations promulgated by the FCC thereunder ("FCC
Rules"), for the construction and operation of the Midwest System; and (ii) all
of the licenses, permits and authorizations issued by the FCC to SourceOne for
or in connection with the Midwest System. Except for the Midwest Licenses, there
are no permits, licenses or other authorizations currently held by SourceOne, or
required by law to be held by SourceOne, with respect to ownership of the
Transferred Assets (as defined in the Purchase Agreement) or operation of the
Midwest Business, except where failure to hold such a permit, license or other
authorization would not reasonably be expected to materially affect ownership of
the Transferred Assets (as defined in the Purchase Agreement) or conduct of the
Midwest Business.
6.2. MIDWEST SYSTEM CONSTRUCTION AND OPERATION. The Midwest
System was timely and properly constructed in substantial accord with its
licensed parameters, and, since commencement of operations, the Midwest System
comprised of the Midwest Transmitter Sites has operated and currently is, and,
to the best of SourceOne's actual knowledge, the Midwest System comprised of the
Other Midwest Transmitter Sites has operated and currently is operating in
compliance with all applicable laws, rules and regulations, including the Act
and FCC Rules. The Midwest System currently provides one-way paging service to
at least one unaffiliated subscriber from each of the Midwest Transmitter Sites
and no Midwest Transmitter Site has been off the air for ninety (90) or more
continuous days.
6.3. OTHER MIDWEST TRANSMITTER SITES. SourceOne has no
knowledge that the Other Midwest Transmitter Sites have been off the air for
ninety (90) or more continuous days.
19
6.4. NO ADVERSE CONDITION. SourceOne has no knowledge of any
condition imposed by the FCC on the Midwest System or Midwest Licenses which is
neither: (i) set forth on the face of the Midwest Licenses as provided by
SourceOne to Aquis or as available to the public on FCC databases; nor (ii)
applicable to the CMRS industry generally.
6.5. NO PENDING ACTION. There is no pending or, to SourceOne's
knowledge, threatened action by the FCC or any other federal, state or local
governmental authority or third party: (i) to suspend, revoke, terminate or
challenge the Midwest System, any Midwest License, the Midwest Business or the
Other Subscriber Business; or (ii) that could preclude SourceOne from entering
into or consummating the transactions specified in this Management Agreement and
the Purchase Agreement.
6.6. EXCLUSIVE USE. The Midwest Licenses grant SourceOne the
exclusive use of the frequency 931.1875 MHz within the service area defined in
FCC Rules. SourceOne is not a party to any intercarrier, frequency or facilities
sharing agreement of any kind that might in any way affect Aquis's rights to
operate (under this Management Agreement) or acquire (under the Purchase
Agreement) the Midwest System and/or the Transferred Business (as defined in the
Purchase Agreement).
6.7. ORDERS AND DECREES. Neither SourceOne, the Midwest
System, the Midwest Licenses, the Midwest Business, nor the Other Subscriber
Business are subject to any judicial or administrative order, or any ordinance
or zoning restriction, which would materially and adversely affect or impose any
condition on SourceOne, the Midwest System, the Midwest Licenses, the Midwest
Business or the Other Subscriber Business.
6.8. LITIGATION. There is no judicial or administrative
action, suit or proceeding, pending or, to SourceOne's knowledge, threatened
against or relating to SourceOne, the Midwest System, the Midwest Licenses, the
Midwest Business or the Other Subscriber Business before the FCC or any federal,
state or local court, arbitration tribunal or governmental authority which
could, individually or in the aggregate: (i) result in the voluntary or
involuntary transfer of any of the Midwest System or the Midwest Licenses; or
(ii) adversely affect any or all of SourceOne, the Midwest System, the Midwest
Licenses, the Midwest Business or the Other Subscriber Business or the
transactions contemplated in this Management Agreement or the Purchase
Agreement. SourceOne knows of no facts establishing a reasonable basis for any
such action,
20
suit, proceeding or any governmental investigation relating to the same.
6.9. COMPLIANCE WITH LAWS. SourceOne is in compliance, in all
material respects, with all applicable laws, regulations and administrative
orders of: (i) the United States, including, without limitation, the FCC; (ii)
any state; and (iii) any municipality, county, or other subdivision of any of
the foregoing, to which SourceOne, the Midwest System, the Midwest Licenses, the
Midwest Business or the Other Subscriber Business may be subject.
6.10. TAXES AND REQUIRED FILINGS. With respect to the Midwest
System, the Midwest Licenses and the Midwest Business, SourceOne has filed all
federal, state, local, foreign and other tax returns and reports of every nature
required to be filed and has paid or will pay all taxes and other assessments
due (other than certain Illinois and Chicago telecommunications taxes which
accrued prior to the filing of SourceOne's bankruptcy petition), including, but
not limited to the following FCC-mandated requirements: (i) universal service;
(ii) Telecommunications Relay Service ("TRS"); (iii) North American Numbering
Plan ("NANPA"); (iv) Local Number Portability ("LNP"); (iv) Equal Employment
Opportunity ("EEO"); (v) ownership information; (vi) regulatory fees; and (vii)
FCC submissions in connection with electronic filing requirements, including but
not limited to submissions required in connection with the FCC's Universal
Licensing System ("ULS").
6.11. THIRD PARTY AND GOVERNMENTAL CONSENTS. Aside from the
STA and approval by the Bankruptcy Court, no approval, consent, waiver, order or
authorization of, or registration, qualification, declaration, or filing with,
or notice to, any federal, state or local governmental authority or other third
party is required on the part of SourceOne in connection with the execution or
performance of this Management Agreement.
6.12. MIDWEST SYSTEM. The Midwest System Assets other than the
Other Midwest Transmitter Sites: (i) constitute all of the properties, assets,
and rights that have been used in the conduct of the Midwest Business and which
are necessary to the operation of the Midwest Business; and (ii) together with
the Other Subscriber Assets, generate all of SourceOne's Net Service Revenue (as
defined in Section 1.6(d)(i) of the Purchase Agreement). There are no assets of
SourceOne not included in the Midwest System Assets other than the Other Midwest
Transmitter Sites that are material to the operation of the Midwest Business and
the absence of which would have a material adverse effect on
21
the Midwest Business.
7. REPRESENTATIONS OF AQUIS. As of the Take-Over Date, Aquis knows of
no material statement or omission of SourceOne that gives rise to any: (i)
material breach of its representations, warranties, or covenants under this
Management Agreement or in connection with the purchase transaction; or (ii)
basis on which the FCC would not issue its consent to assignment of the Midwest
Licenses to Aquis.
8. REPRESENTATIONS AND WARRANTIES OF THE PARTIES. Each Party represents
to each other Party as appropriate that: (i) it is a legal organization, duly
organized and validly existing under the laws of the state of its organization;
(ii) it has all necessary power, authority and capacity to enter into and
perform the terms of this Management Agreement; (iii) this Management Agreement
has been authorized by all necessary action; (iv) this Management Agreement has
been duly executed by it and constitutes a valid and binding agreement
enforceable in accordance with its terms; and (v) the execution, delivery and
performance of this Management Agreement does not conflict with the Party's
organizational documents or any indenture, mortgage, deed of trust, agreement or
other instrument by which the Party is bound, and does not violate any law or
regulation, or order or decree of any court applicable to the Party.
9. FCC COMPLIANCE. The Parties agree to comply with all applicable FCC
Rules governing the Midwest Licenses and operation of the Midwest System and
specifically agree as follows:
9.1. Aquis may not represent itself as the DE JURE licensee of
the Midwest System, but Aquis may represent itself as the party in DE FACTO
control of the Midwest System.
9.2. No Party will represent itself as the legal
representative of any other Party before the FCC, but each Party will cooperate
with the other Parties with respect to matters concerning implementation of this
Management Agreement, the Midwest Licenses and the Midwest System.
9.3. In addition to all other obligations imposed on SourceOne
pursuant to this Management Agreement, SourceOne will cooperate with Aquis and
take all actions necessary to keep the Midwest Licenses valid and in full force
and effect and SourceOne will use its best efforts and cooperate with Aquis in
submission to the FCC or any other governmental authority all reports,
applications, renewals, filings or other documents necessary to
22
keep the Midwest Licenses valid and in full force and effect during the Term of
this Management Agreement.
9.4. SourceOne and Aquis are familiar with a DE JURE
licensee's responsibilities under the Act and FCC Rules. Nothing in this
Management Agreement is intended to diminish or restrict: (i) SourceOne's
remaining obligations as DE JURE licensee of the Midwest System; or (ii)
SourceOne's obligations as DE JURE and DE FACTO licensee of the Other Systems.
All Parties desire that this Management Agreement be carried out in compliance
with FCC Rules. In the event that the FCC determines that any provision of this
Management Agreement violates any FCC Rule, regulation or policy, the Parties
will make good faith efforts immediately to correct the problem to bring this
Management Agreement into compliance consistent with the intent of the Parties.
10. SOURCEONE COVENANTS. In view of the fact that Aquis anticipates
committing substantial resources to meeting its obligations pursuant to this
Management Agreement and must rely on the maintenance of the Midwest Licenses
and Midwest System to carry out its responsibilities hereunder, SourceOne
covenants and agrees that it:
10.1. Aside from claims asserted prior to SourceOne's
bankruptcy cases and those previously allowed by the Bankruptcy Court, will not
permit any liens or encumbrances to attach to the Midwest Licenses, the Midwest
System, the Midwest Business or the Other Subscriber Business and, if any such
liens and encumbrances arise, SourceOne will immediately cure and remove all
such liens and encumbrances to the extent possible;
10.2. Will not take any action that would jeopardize the
Midwest Licenses, the Midwest System, the Midwest Business or the Other
Subscriber Business or the rights of Aquis under this Management Agreement or
the Purchase Agreement;
10.3. Will immediately notify Aquis of any pending or
threatened action by the FCC or any other governmental agency, court or third
party to suspend, revoke, terminate or challenge the Midwest Licenses, the
Midwest System, the Midwest Business or the Other Subscriber Business or to
investigate the operation thereof; and
10.4. Will not interfere with Aquis's exercise or performance
of its rights and obligations pursuant to this Management Agreement.
23
11. INDEMNIFICATION.
11.1. INDEMNIFICATION BY SOURCEONE. SourceOne will defend,
indemnify and hold Aquis, any subsidiary or affiliate thereof, and its
respective successors, officers, directors and controlling persons (the
"Indemnified Aquis Group") harmless from and against any and all losses,
liabilities, damages, costs or expenses (including reasonable attorney's fees,
penalties and interest) payable to or for the benefit of, or asserted by, any
party resulting from, arising out of, or incurred as a result of: (i) the breach
of any representation made by SourceOne herein or in accordance herewith; (ii)
the breach of any warranty or covenant made by SourceOne herein or in accordance
herewith; (iii) any claim, whether made before or after the Take-Over Date, or
any litigation, proceeding or governmental investigation, whether commenced
before or after the Take-Over Date, arising out of the business of operating the
Systems prior to the Take-Over Date, or otherwise arising out of any act or
occurrence prior to, or any state of facts existing as of the Take-Over Date
(regardless of whether or not disclosed or known to Aquis as of the Take-Over
Date) arising from any act or omission of SourceOne; or (iv) SourceOne's failure
to pay, perform or discharge any of its obligations, liabilities, agreements or
commitments. Notwithstanding the provisions of this Section 0, Aquis will have
no claims for indemnification against SourceOne based on a non-willful breach of
the representations and warranties set forth in Sections 0, 0 and 0 of this
Management Agreement as they relate to Other Midwest Transmitter Sites.
11.2. INDEMNIFICATION BY AQUIS. Aquis will defend, indemnify
and hold SourceOne, and its respective successors, officers, directors and
controlling persons (the "Indemnified SourceOne Group") harmless from and
against all direct losses, liabilities, damages, costs or expenses (including
reasonable attorney's fees, penalties and interest) payable to or for the
benefit of, or asserted by, any party resulting from, arising out of, or
incurred as a result of: (i) the breach of any representation made by Aquis
herein or in accordance herewith; (ii) the breach of any warranty or covenant
made by Aquis herein or in accordance herewith; or (c) any claim, whether made
after the Take-Over Date, or any litigation, proceeding or governmental
investigation arising out of Aquis's operation of the Midwest Business or
Aquis's acting as reseller on the Other Systems pursuant to this Management
Agreement after the Take-Over Date.
11.3. SURVIVAL OF COVENANTS AND WARRANTIES. This Section 0 of
this Management Agreement will survive the
24
termination of this Management Agreement, and will be fully enforceable at law
or in equity against such other Party and its successors and assigns for a
period of one (1) year after the termination of this Management Agreement. Any
investigation at any time made by or on behalf of (or any disclosure to) any
Party will not diminish in any respect whatsoever its right to rely on the
representations and warranties of any other Party.
11.4. NOTICE OF CLAIMS.
11.4.1. Each Party will give prompt written
notice to any other Party of any claim against the Party giving notice which
might give rise to a claim by it against the other Party based upon the
indemnity provisions contained herein, stating the nature and basis of the claim
and the actual or estimated amount thereof;
11.4.2. Failure to give notice under Section 0 hereof
will not affect the obligation of the indemnifying Party to provide
indemnification in accordance with the provisions of this Section 0 unless, and
only to the extent that, such indemnifying Party is actually prejudiced thereby.
11.4.3. In the event that any action, suit or
proceeding is brought against any member of the Indemnified SourceOne Group or
the Indemnified Aquis Group with respect to which any Party may have liability
under the indemnification provisions contained herein, the indemnifying Party
will have the right, at its sole cost and expense, to defend such action in the
name of or on behalf of the indemnified Party.
11.4.4. In connection with such action, suit or
proceeding which might give rise to a claim by one Party against another Party
based on the indemnity provisions in this Section 0, the Parties will render to
each other such assistance as may reasonably be required in order to ensure the
proper and adequate defense of any such action, suit or proceeding.
11.4.5. An indemnified Party will have the right to
retain its own counsel, with the fees and expenses to be paid by the
indemnifying Party, if representation of such indemnified Party by the counsel
retained by the indemnifying Party would be inappropriate because of actual or
potential differing interests between such indemnified Party and any other Party
represented by such counsel.
11.4.6. No Party will make any settlement of any
25
claim which might give rise to liability of another Party under the
indemnification provisions contained herein without the written consent of such
other Party, which consent such other Party covenants will not be unreasonably
withheld.
11.5. Notwithstanding the provisions of this Section 0, Aquis
will not have a claim for indemnification against SourceOne based on a
nonwillful breach of the representations and warranties set forth in Sections 0,
0 and 0 hereof.
12. TERM AND TERMINATION.
12.1. TERM. The "Term" of this Management Agreement will
commence on the Take-Over Date and end on the Termination Date as defined in
Section 0 hereof.
12.2. TERMINATION. This Management Agreement will
automatically terminate on the day ("Termination Date") upon any of the
following events occurs:
12.3. Purchase Closing, in the event that Purchase Closing
occurs pursuant to the Purchase Agreement;
12.4. Termination of the Purchase Agreement on the Purchase
Termination Date in the event that Purchase Closing does not occur pursuant to
the Purchase Agreement;
12.5. The loss, revocation or expiration without renewal of
all Midwest Licenses;
12.6. Otherwise, as mutually agreed by the Parties in writing.
13. NOTICES. All notices or other communications which may be given or
made pursuant hereto will be in writing and delivered by hand delivery, courier
or facsimile transmission to the following:
If to SourceOne: with copy to:
Xxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxxx, Esquire
SourceOne Wireless, Inc. X'Xxxxxx & Xxxxxx
0000 X. Xxxxxxxxx Xxx. 0000 Xxxxxxxxxxxx Xxx., X.X.
Xxxxxxxx, XX 00000 Suite 800
Fax: (000) 000-0000 Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
26
If to Aquis: with copy to:
Xx. Xxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxx, Esquire
Aquis Communications, Inc. Xxxxxxx X. Xxxxxx &
1719A Route 10; Suite 300 Associates, Chartered
Xxxxxxxxxx, XX 00000 0000 X Xx., X.X.; 8th Fl.
Fax: (000) 000-0000 Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Each Party may designate by notice in writing a new address for it and/or its
attorney to which any notice or communication may thereafter be given. Each
notice or communication will be deemed sufficiently given and received for all
purposes at such time as it is delivered to the addressee or at such time as
delivery is refused by the addressee upon presentation.
14. AMENDMENT. This Management Agreement may not be amended, modified
or changed except in writing signed by all Parties hereto.
15. SUCCESSORS AND ASSIGNS. Aquis may assign its rights and delegate
its duties under this Management Agreement with the consent of SourceOne, which
consent may not be unreasonably withheld or delayed; provided, however, that
Aquis may assign this Management Agreement to an affiliate or subsidiary of
Aquis without SourceOne's prior consent and solely upon notice to SourceOne that
the Aquis affiliate or subsidiary agrees to be bound by the terms of this
Management Agreement and thereupon Aquis will have no further obligations
hereunder. SourceOne may not assign its rights or delegate its duties under this
Management Agreement without the prior consent of Aquis, which consent may be
denied in Aquis's sole and unfettered discretion. This Management Agreement will
be binding upon and inure to the benefit of the Parties hereto, and their
respective heirs, representatives, successors and permitted assigns.
16. GOVERNING LAW. This Management Agreement will be governed by and
construed in accordance with the laws of the State of New York without giving
effect to its principles of conflict of laws.
17. SEVERABILITY. In the event that any provision of this Management
Agreement is held to be invalid, void, or illegal by the FCC, any governmental
authority or court of competent jurisdiction, the remaining provisions of the
Management Agreement will remain in full force and effect and this Management
Agreement will be construed reasonably to preserve the original intent of
27
the Parties hereto insofar as practical.
18. INTERPRETATION. This Management Agreement is to be construed fairly
and simply and not strictly for or against any of the Parties hereto. The
section headings contained herein are for convenience of reference only, are not
part of this Management Agreement, and will not affect the meaning or
interpretation of any provision hereof.
19. ENTIRE AGREEMENT. This Management Agreement and the Purchase
Agreement constitute the entire agreement between the Parties with respect to
the transactions contemplated hereby, and supersede all prior oral or written
agreements, commitments or understandings with respect to the matters provided
for herein, except as may otherwise be specified in this Management Agreement
and/or the Purchase Agreement.
20. BUSINESS DAYS. "Business Days" for the purposes of this Management
Agreement will be considered days on which federally-chartered banks in New York
are open to the public for transaction of business.
21. COUNTERPARTS. This Management Agreement may be executed in as many
counterparts as may be required, and all counterparts will collectively
constitute a single agreement.
22. SCHEDULES. The Parties agree that they will cooperate and use their
reasonable best efforts to generate the Schedules of Midwest System Assets and
Other Subscriber Assets no later than ten (10) Business Days prior to the
Purchase Closing.
28
IN WITNESS WHEREOF, the Parties have duly executed and delivered this
Management Agreement as of the Execution Date first written above.
SOURCEONE WIRELESS II, L.L.C.
By: /s/ Xxxxxx X. Xxxxx
---------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
SOURCEONE WIRELESS, L.L.C.
By: /s/ Xxxxx X. Xxxxxx
---------------------
Name: Xxxxx X. Xxxxxx
Title: DIP Manager
SOURCEONE WIRELESS, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------
Name: Xxxxx X. Xxxxxx
Title: DIP Manager
AQUIS COMMUNICATIONS, INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------
Name: Xxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
29
