Exhibit 2.1
STOCK PURCHASE AGREEMENT
between
CENTURYTEL, INC.
and
ALLTEL COMMUNICATIONS, INC.
dated as of
March 19, 2002
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TABLE OF CONTENTS Page
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ARTICLE 1 DEFINITIONS.............................................1
1.1 Terms.......................................................1
1.2 Interpretation.............................................15
ARTICLE 2 STOCK SALE.............................................15
2.1 Purchase and Sale of Shares................................15
2.2 Purchase Price.............................................15
2.3 Closing Date Statement.....................................16
2.4 Affiliate Assets...........................................18
2.5 Closing....................................................19
2.6 Cash Distributions to Seller...............................19
2.7 Deliveries at Closing......................................20
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER...............21
3.1 Ownership..................................................21
3.2 Organization...............................................21
3.3 Authority..................................................21
3.4 Cellular Entities and CenturyTel Entities..................22
3.5 No Other Investments.......................................24
3.6 No Conflict................................................24
3.7 Financial Statements.......................................25
3.8 Absence of Certain Changes.................................26
3.9 Material Contracts.........................................26
3.10 Insurance..................................................27
3.11 Taxes......................................................28
3.12 Litigation.................................................30
3.13 Authorizations.............................................30
3.14 Employee Benefit Plans.....................................32
3.15 Real Property..............................................34
3.16 Assets; Condition of Assets................................34
3.17 Sufficiency of Assets and Real Property....................36
3.18 Environmental Matters......................................36
3.19 Labor Relations............................................36
3.20 Compliance with Law........................................37
3.21 Notes and Accounts Receivable..............................37
3.22 Inventory..................................................37
3.23 Intellectual Property Matters..............................38
3.24 Availability of Documents..................................38
3.25 Subscribers; Rate Plans; Form of Agreements................38
3.26 Absence of Undisclosed Liabilities.........................39
3.27 First Refusal Rights.......................................39
3.28 Brokers or Finders.........................................39
3.29 Towers.....................................................39
3.30 Roaming....................................................40
3.31 Certain Relationships......................................41
3.32 Bundled Subscribers........................................41
3.33 Business Relationships.....................................42
3.34 Disclosure.................................................42
3.35 No Other Representations or Warranties.....................43
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER................43
4.1 Organization...............................................43
4.2 Authority..................................................43
4.3 No Conflict................................................43
4.4 Brokers or Finders.........................................44
4.5 Financial Resources........................................44
4.6 No Other Representations or Warranties.....................44
ARTICLE 5 COVENANTS AND AGREEMENTS...............................44
5.1 Regulatory Approvals.......................................44
5.2 Third Party Consents.......................................45
5.3 Interim Reports; Updated Information.......................46
5.4 Conduct of the Business....................................46
5.5 First Refusal Right........................................49
5.6 Unbundling.................................................53
5.7 Notification of Certain Matters............................53
5.8 Satisfaction of Conditions.................................53
5.9 Cooperation................................................53
5.10 CenturyTel Entities........................................54
5.11 Capital Expenditures.......................................54
5.12 Exclusivity................................................54
5.13 SEC Basis Financial Statements.............................55
5.14 Network Access and Modifications...........................55
5.15 Approvals and Disapprovals.................................57
5.16 Tower Documents............................................57
5.17 Certain Distributions......................................57
5.18 Asset Listing..............................................57
5.19 Acknowledgements...........................................58
ARTICLE 6 CONDITIONS PRECEDENT TO THE CLOSING....................59
6.1 Conditions Precedent to Obligations of Buyer...............59
6.2 Conditions Precedent to Obligations of Seller..............62
ARTICLE 7 EMPLOYEE RELATED COVENANTS.............................63
7.1 Employment of Transferred Employees........................63
7.2 Assumption of Agreements; Severance........................65
7.3 Recognition of Transferred Employee Service................65
7.4 Payment of Bonuses.........................................66
7.5 No Duplicate Benefits; Dependents and Beneficiaries........66
7.6 Transferred Employee Benefit Matters.......................66
7.7 Welfare Plans..............................................67
7.8 Paid Time Off..............................................68
7.9 Employee Rights............................................68
7.10 WARN Act Requirements......................................69
7.11 Communications with Employees..............................69
ARTICLE 8 TAX COVENANTS..........................................69
8.1 Tax Sharing Agreements.....................................69
8.2 Liability for Taxes, Filing Returns........................69
8.3 Audits.....................................................70
8.4 Cooperation on Tax Matters.................................71
8.5 Defense of Tax Claim.......................................71
8.6 Resolution of Disagreements Between Buyer and Seller.......72
8.7 Tax Elections..............................................72
8.8 Post-Closing Elections.....................................72
8.9 Transfer Taxes.............................................73
8.10 Section 754 Elections......................................73
8.11 Allocation of Purchase Price...............................73
8.12 Section 338(h)(10) Election................................73
8.13 Tax Carryovers.............................................74
8.14 Refunds....................................................74
8.15 Post-Closing Transactions not in the Ordinary Course;
Indemnification...........................................74
ARTICLE 9 OTHER COVENANTS........................................74
9.1 Confidentiality............................................74
9.2 Information Releases.......................................75
9.3 Intellectual Property......................................75
9.4 Insurance..................................................75
9.5 Further Assurances.........................................76
ARTICLE 10 INDEMNIFICATION........................................76
10.1 Survival of Representations, Warranties and Covenants......76
10.2 Indemnification............................................77
10.3 Limitations on Claims for Losses...........................78
10.4 Indemnification Procedure as to Third-Party Claims.........79
10.5 Adjustment For Insurance and Tax Benefits..................80
10.6 Payment....................................................80
10.7 Other Rights and Remedies..................................81
10.8 Tax Indemnification........................................81
10.9 Treatment of Indemnity Payments............................81
ARTICLE 11 TERMINATION............................................82
11.1 Termination................................................82
11.2 Limitation on Right of Termination.........................82
11.3 Effect of Termination......................................83
ARTICLE 12 MISCELLANEOUS..........................................83
12.1 Notices....................................................83
12.2 Expenses...................................................83
12.3 Successors and Assigns.....................................84
12.4 Amendments.................................................84
12.5 Captions...................................................84
12.6 Entire Agreement...........................................84
12.7 Waiver.....................................................84
12.8 Third Parties..............................................84
12.9 Counterparts...............................................84
12.10 Governing Law..............................................84
12.11 Severability...............................................85
12.12 Specific Performance.......................................85
Exhibits
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Exhibit A - Form of Assignment Instrument
Exhibit B - Form of Legal Opinion of Seller's Counsel
Exhibit C - Form of Regulatory Opinion of Seller's Counsel
Schedules
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Schedule 1.1(a) - Accounting Principles
Schedule 1.1(b) - Agreed Value of Each Cellular Entity
Schedule 1.1(c) - Seller Persons with Knowledge
Schedule 1.1(d) - Buyer Persons with Knowledge
Schedule 2.4(a) - Affiliate Assets (Cellular Interests)
Schedule 2.4(b) - Excluded Licenses
Schedule 3.2(b) - Organizational Documents
Schedule 3.4(a) - CenturyTel Entities
Schedule 3.4(b) - Minority Interests
Schedule 3.4(c) - Cellular Interest Holders
Schedule 3.4(d) - First Refusal Rights
Schedule 3.4(e) - Capital Contributions
Schedule 3.4(f) - Cellular Agreements
Schedule 3.5 - No Other Investments
Schedule 3.6 - Consents, Approvals and Authorizations
Schedule 3.7(a) - Company Financial Statements
Schedule 3.7(b) - Operated Cellular Entity Financial Statements
Schedule 3.8 - Material Adverse Changes
Schedule 3.9(a) - Material Contracts
Schedule 3.10 - Insurance Policies
Schedule 3.11 - Tax Matters
Schedule 3.11(f) - Tax Jurisdictions
Schedule 3.11(q) - Seller Group Members
Schedule 3.11(s) - Partnerships
Schedule 3.12(a) - Litigation
Schedule 3.12(b) - Fines and Penalties
Schedule 3.13(a) - Company Authorizations
Schedule 3.14(a) - Employment Benefit Plans and Agreements
Schedule 3.15(a) - Real Property
Schedule 3.15(b) - Existing Real Property Liens
Schedule 3.16(a) - Assets
Schedule 3.16(b) - Existing Asset Liens
Schedule 3.16(d) - Affiliate Rights
Schedule 3.17 - Sufficiency of Assets and Real Property
Schedule 3.18 - Environmental Matters
Schedule 3.18(e) - Storage Tanks
Schedule 3.19 - Labor Relations
Schedule 3.20 - Compliance with Law
Schedule 3.21 - Notes and Accounts Receivable
Schedule 3.22 - Inventories
Schedule 3.23(a) - Intellectual Property
Schedule 3.23(c) - IP Claims
Schedule 3.25 - Subscribers and Agreements
Schedule 3.26 - Liabilities
Schedule 3.27 - First Refusal Rights
Schedule 3.28 - Brokers and Finders Fees of Seller
Schedule 3.29(a) - Towers
Schedule 3.30(a) - Roaming
Schedule 3.30(b) - SID or BID Loading Obligations
Schedule 3.30(c) - Roaming Charge Claims
Schedule 3.31(b) - Certain Relationships
Schedule 3.32 - Bundled Subscribers
Schedule 3.33 - Business Relationships
Schedule 4.3 - Consents, Approvals and Authorizations of Buyer
Schedule 4.4 - Brokers or Finders Fees of Buyer
Schedule 5.3 - Interim Reports
Schedule 5.4 - Conduct of Business
Schedule 5.5(a) - Form of Waiver and Release
Schedule 5.5(b)(i) Form of Offer Notice
Schedule 5.5(b)(ii) Form of Purchase Agreement
Schedule 5.5(c) - Form of follow-up Offer Notices
Schedule 5.6 - Bundling
Schedule 5.10(a) - Affiliate Contracts to be Terminated at Closing
Schedule 5.11 - Capital Expenditure Budget
Schedule 5.14(c) - Commercial Mobile Service Switches
Schedule 5.14(g) - Switch Upgrades
Schedule 5.19 - Acknowledgements
Schedule 6.1(b) - Regulatory Approvals
Schedule 6.2(b) - Regulatory Approvals
Schedule 7.1(a) - Active Employees, Transition Employees and
Leave Recipients
Schedule 7.2(b) - Severance Schedule
Schedule 8.12 - Section 338(h)(10) Election Allocation
Schedule 10.2(a) - Seller Disclosed Claims
Schedule 10.2(b) - Buyer Disclosed Claims
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of March 19, 2002, is entered
into between CenturyTel, Inc., a Louisiana corporation ("Seller"), and ALLTEL
Communications, Inc., a Delaware corporation ("Buyer").
R E C I T A L S
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, all Shares (as defined below) of CenturyTel Wireless, Inc., a
Louisiana corporation (the "Company"), in accordance with the terms and
conditions of this Agreement (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, the
parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Terms. For purposes of this Agreement (including the Schedules
hereto), the following terms are defined as set forth below:
"Acknowledgement" is defined in Section 5.19.
"Acquisition" means any acquisition of capital stock, equity interests,
voting securities, limited partner interests, general partner interests,
membership interests, units or other equity or similar interests, of any Person
or any acquisition of assets, properties or rights of a Person (other than sales
of goods or services in the ordinary course of business), including any
acquisition structured as a merger, consolidation, business combination,
liquidation, dissolution, reorganization, recapitalization, share exchange or
similar transaction.
"Active Employees" is defined in Section 7.1(b).
"Adequate Service" means, collectively, the requirements of the
applicable statutes and rules and regulations of the FCC regarding adequate
service (47 CFR 24.203(b)).
"Adjusted Purchase Price" is defined in Section 2.2(a).
"Affiliate" or "affiliate" means, as to any Person, any other Person
that, directly or indirectly, is in Control of, is Controlled by, or is under
common Control with, such Person.
"Affiliate Assets" is defined in Section 2.4(a).
"Affiliated Charges" means expenses billed or allocated to the
CenturyTel Entities by Seller or any of its Affiliates, and as reflected as
Affiliated Charges in Schedule 3.7(a) and calculated on a basis consistent with
GAAP and the accounting principles and methodologies set forth on Schedule
1.1(a), including, without limitation, expenses related to finance and
accounting, human resources, treasury, data processing, corporate and wireless
management, legal, marketing, network planning and other corporate functions.
"Agreed Value" means the amount set forth on Schedule 1.1(b) for the
aggregate value of all Cellular Interests in each Cellular Entity.
"Agreement" means this Stock Purchase Agreement and all Schedules and
Exhibits attached hereto, as amended, restated, modified or supplemented from
time to time in accordance with the terms and conditions hereof or thereof.
"ALLTEL" means ALLTEL Corporation, a Delaware corporation.
"Allocation" is defined in Section 8.12(b).
"Amended E-911 Waiver" is defined in Section 5.1(a).
"Applicable Rate" means the "Prime Rate" set forth in the "Money Rates"
table of The Wall Street Journal, New York edition, on the date of calculation,
plus two percent (2%).
"Arbitrator" is defined in Section 2.3(c).
"Asset Listing" is defined in Section 5.18(b).
"Assets" means, collectively, all of the assets, properties and rights
owned, leased or licensed by the CenturyTel Entities or used or held for use in
the Business, including without limitation all assets, properties and rights
reflected in the Most Recent Fiscal Year End Company Financial Statements and
the Operated Cellular Entity Current Balance Sheets or related to or held for
use in connection with the Company PCS Licenses, and not sold, retired or
otherwise disposed of since the date thereof in the ordinary course of business
consistent with past practices and consistent with this Agreement other than the
Excluded Assets.
"Assignment Instrument" is defined in Section 2.4(a).
"Authorizations" means, as to any Person, all licenses, permits,
franchises, orders, approvals, concessions, registrations, qualifications and
other authorizations issued or granted to such Person by or under all federal,
state, local or foreign laws and Governmental Authorities and all industry or
other nongovernmental self-regulatory organizations.
"Base Purchase Price" is defined in Section 2.2(a).
"BID" means a five-digit code administered by CIBERNET Corporation that
may be used instead of a SID for billing purposes to indicate a specific service
area within a SID.
"BTA" means a Basic Trading Area.
"Business" means the business of (i) owning the Cellular Interests and
the Company FCC Authorizations and (ii) providing Cellular Service by the
CenturyTel Entities.
"Business Day" means any day other than Saturday, Sunday or other day
on which commercial banks in New York City, New York are closed.
"Buyer" is defined in the Preamble.
"Buyer Defined Contribution Plan" is defined in Section 7.6(c).
"Buyer Indemnitee" means the Buyer, its Affiliates, and their
respective officers, directors, managers, agents, employees, successors and
assigns.
"Buyer Pension Plan" is defined in Section 7.6(c).
"Buyer Welfare Plans" is defined in Section 7.7(a).
"Capital Expenditure Amount" is defined in Section 5.11.
"Capital Expenditure Budget" is defined in Section 5.11.
"Cellular Agreements" means the general partnership agreements, limited
partnership agreements, membership agreements, operating agreements,
organizational documents or similar instruments under which the rights of
holders of Cellular Interests are governed, together with any amendments,
supplements and modifications thereto and waivers in effect thereunder.
"Cellular Entities" means all Persons engaged in Cellular Service in
which the Company or any Affiliate of the Company, either directly or
indirectly, owns any capital stock, limited partner interest, general partner
interest, membership interest, unit or other equity or similar interest.
"Cellular Interest" means any capital stock, limited partner interest,
general partner interest, membership interest, unit or other equity or similar
interest in a Cellular Entity owned by the Company or any Affiliate of the
Company, other than any Excluded Cellular Interest.
"Cellular Service" means the marketing, selling and/or provisioning of
Commercial Mobile Service, including, without limitation, on a wholesale and
retail basis.
"CenturyTel X-000 Xxxxxx" is defined in Section 3.13(b).
"CenturyTel Entities" means any or all of the Company and its
Subsidiaries, including, without limitation, the Operated Cellular Entities.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, 42 U.S.C. Section 9601 et. seq.
"Claim" is defined in Section 10.4(a).
"Closing" means the consummation of the Stock Sale in accordance with
Section 2.5.
"Closing Date" means the date on which the Closing occurs, as
determined in accordance with Section 2.5.
"Closing Date Statement" is defined in Section 2.3(a).
"Closing Net Working Capital" means Net Working Capital as of and
including the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commercial Mobile Service" has the meaning set forth in 47 U.S.C.
Section 332(d).
"Communications Act" means the Communications Act of 1934, as amended,
47 U.S.C. Section 151 et. seq.
"Company" is defined in the Preamble.
"Company Authorizations" is defined in Section 3.13.
"Company FCC Authorizations" means (i) all Company PCS Licenses and
(ii) all FCC Authorizations issued to a CenturyTel Entity or Cellular Entity,
including, without limitation, those Company PCS Licenses and FCC Authorizations
identified on Schedule 3.13(a).
"Company Financial Statements" is defined in Section 3.7(a).
"Company Intellectual Property" means all Intellectual Property that is
used in the Business, including, without limitation, the Intellectual Property
set forth on Schedule 3.23(a).
"Company MSAs/RSAs" means those MSAs and RSAs listed on Schedule
3.13(a).
"Company PCS Licenses" mean the personal communication service licenses
issued by the FCC to MVI Corp. for the MTAs and BTAs listed on Schedule 3.13(a).
"Confidentiality Agreement" means the non-disclosure agreement between
ALLTEL and Seller dated October 24, 2001.
"Control," and its correlative meanings "Controlling" and "Controlled,"
mean the possession, direct or indirect, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities or other ownership interest, by contract, or
otherwise.
"Current Assets" means those assets of the CenturyTel Entities
classified as "current assets" in accordance with GAAP, less the Proportionate
Share of such CenturyTel Entities owned by Persons who are not Affiliates of
Seller, other than any (i) cash equivalents or any other amounts that have been
or will be distributed to Seller in accordance with Section 2.6, (ii) Inventory
other than cellular handsets and accessories, (iii) Inventory that is obsolete,
discontinued, used, damaged or defective, (iv) receivables that have been
classified as doubtful or uncollectible in accordance with GAAP, and (v)
Intercompany Receivables.
"Current Liabilities" means those liabilities of the CenturyTel
Entities classified as "current liabilities" in accordance with GAAP, less the
Proportionate Share of such CenturyTel Entities owned by Persons who are not
Affiliates of Seller, other than any Intercompany Payables.
"Damaged Assets" is defined in Section 9.4.
"Distribution" means any dividend, distribution or other payment of
cash or any other assets, properties or rights by a CenturyTel Entity or
Cellular Entity to a stockholder, partner, member, unit holder, or other equity
or similar interest holder.
"Due Date" is defined in Section 10.6(a).
"E-911 Waiver" is defined in Section 5.1(a).
"Effective Time" is defined in Section 2.5.
"Eligible Employees" is defined in Section 7.1(a).
"Employee Pension Benefit Plan" has the meaning set forth in Section
3(2) of ERISA, 29 U.S.C. Section 1002(2).
"Employee Welfare Benefit Plan" has the meaning set forth in Section
3(1) of ERISA, 29 U.S.C. Section 1002(1).
"Employment Agreement" is defined in Section 3.14(a).
"Environmental Claims" means any and all administrative or judicial
actions, suits, orders, claims, Liens, notices, violations or proceedings
related to any applicable Environmental Law or any Environmental Permit brought,
issued or asserted by (i) a Governmental Authority for compliance, damages,
penalties, removal, response, remedial or other action in accordance with any
applicable Environmental Law or Environmental Permit or (ii) any Person other
than a Governmental Authority seeking damages, contribution, remediation or
other action for personal injury or property damage resulting from the release
of a Hazardous Material at, to or from any present or former facility of any
CenturyTel Entity or any real property upon which any present or former facility
of any CenturyTel Entity is or was located or upon which the Business is or was
operated.
"Environmental Condition" means, as to any property, any condition or
circumstance, including without limitation, the presence of any unregistered
above or below ground storage tank for Hazardous Materials or the presence of
Hazardous Materials, that (i) requires abatement or correction under the
Environmental Laws, (ii) gives rise to any civil or criminal Liability under any
Environmental Law relating to the use or occupancy of such property or (iii)
constitutes a public or private nuisance.
"Environmental Law" means any law relating to or otherwise imposing
Liability or standards of conduct concerning pollution or protection of the
environment, including without limitation, laws relating to Releases or
threatened Releases of Hazardous Materials or other chemicals or industrial
pollutants, substances, materials or wastes into the environment (including,
without limitation, ambient air, surface water, ground water, mining or
reclamation or mined land, land surface or subsurface strata), Environmental
Conditions, or otherwise relating to the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup, transport or handling
of Hazardous Materials and other pollutants, contaminants or chemicals.
Environmental Laws shall include without limitation CERCLA, the Hazardous
Material Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act
(42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
Section 2601 et seq.), the Occupational Safety and Health Act (29 U.S.C. Section
651 et seq.), the National Historic Preservation Act (16 U.S.C. Section 470 et
seq.), NEPA, the Federal Insecticide Fungicide and Rodenticide Act (7 U.S.C.
Section 136 et seq.), and the Surface Mining Control and Reclamation Act of 1977
(30 U.S.C. Section 1201 et seq.), and any analogous laws thereunder, all as from
time to time in effect, and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
"Environmental Permits" means all permits, licenses, approvals,
authorizations, or consents required by any Governmental Authority under any
applicable Environmental Law and includes any and all orders, consent orders or
binding agreements issued or entered into by a Governmental Authority under any
applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, 29 U.S.C. Section 1001 et. seq.
"ERISA Plans" means Employee Pension Benefit Plans and Employee
Welfare Benefits Plans.
"Estimated Sales Acquisition Cost" is defined in Section 2.2(b).
"Estimated Capital Expenditure Amount" is defined in Section 2.2(b).
"Estimated Net Working Capital" is defined in Section 2.2(b).
"Estimated Purchase Price" is defined in Section 2.2(a).
"Excluded Assets" means the Excluded Licenses, any Excluded Cellular
Interests and the assets, properties and rights described in Section 5.5(d)(iii)
or Schedule 3.17.
"Excluded Cellular Interest Amounts" means, with respect to any
Excluded Cellular Interests, the greater of (i) the Agreed Value of the Cellular
Interests that have become such Excluded Cellular Interests in accordance with
either Section 5.5(d) or 5.19 or (ii) any payments received, or to be received,
by Seller or any of its Affiliates in the event such Excluded Cellular Interest
has been sold or transferred, or is to be sold or transferred, by Seller or any
Affiliate of Seller to any First Refusal Right Holder.
"Excluded Cellular Interest" is a Cellular Interest that becomes
excluded, in accordance with the terms and conditions of Section 5.5(d) or
Section 5.19, from the Cellular Interests for which the Buyer is to assume
Control at the Closing.
"Excluded Licenses" means the personal communication service licenses
issued by the FCC to MVI Corp. for the MTAs and BTAs listed on Schedule 2.4(b).
"Existing Liens" means those Liens listed on Schedules 3.15(b) and
3.16(b).
"FCC" means the United States Federal Communications Commission.
"FCC Authorization" means any Authorization issued by the FCC to a
Person to construct, own and operate Commercial Mobile Service systems,
including, without limitation, associated microwave facilities, and all
construction permits that have been applied for to the FCC or issued by the FCC
to such Person with respect to construction of Commercial Mobile Service systems
and related stations and facilities.
"FCC Construction Notification Requirement" is defined in Section
3.13(c).
"FCC Construction Requirement" is defined in Section 3.13(c).
"FCC Mandates" means, collectively, the requirements of the applicable
statutes and rules and regulations of the FCC regarding (i) the Communications
Assistance for Law Enforcement Act (Pub. L. No. 103-414.108 Stat.4279 (1994)
(codified as amended in 18 U.S.C. Sections 2522 and 3121 and 47 U.S.C. Sections
229, 1001-1010)) and the rules promulgated thereunder at 47 CFR Subpart J
Sections 22.1000 et. seq., (ii) E-911 (47 CFR Section 20.18), including without
limitation E-911/TTY Digital Compatibility (47 CFR Section 20.18(c)), and (iii)
Number Portability (47 CFR Section 52.31), and (iv) Number Pooling (including
the ability to support roaming of pooled numbers) (47 CFR Section 52.20).
"Final Order" means any Governmental Order as to which (i) no timely
request for a stay or any similar request is pending, no stay is in effect, the
action or decision has not been vacated, reversed, set aside, annulled or
suspended and any deadline for filing such a request that may be designated by
statute or regulation has passed, (ii) no petition for rehearing or
reconsideration or application for review is pending, and the time for the
filing of any such petition or application has passed, (iii) no Governmental
Authority has undertaken to reconsider the action on its own motion, and the
time within which it may affect such reconsideration has passed and (iv) no
appeal is pending (including administrative or judicial review) or in effect,
and any deadline for filing any such appeal that may be specified by statute or
rule has passed.
"First Refusal Exercise" is defined in Section 5.5(d)(i).
"First Refusal Exercise Event" means the occurrence of any First
Refusal Exercise with respect to any Cellular Interest listed on Schedule 3.27
that is agreed upon by the parties in writing as triggering a First Refusal
Exercise Event.
"First Refusal Right" means any right of first refusal, right of first
offer, preemptive right, right to consent, put right, call right, tag along
right, default or similar right or other adverse claim of any kind or nature
whatsoever in favor of any Person with respect to a Cellular Interest.
"First Refusal Percentage" means the portion of a Cellular Interest
(represented as a percentage) that may be purchased or acquired, or has been
purchased or acquired, by a First Refusal Right Holder in accordance with a
First Refusal Right.
"First Refusal Right Holder" means any Person identified in Schedule
3.27 who owns or holds or who Buyer reasonably believes may claim a First
Refusal Right.
"GAAP" means United States generally accepted accounting principles, as
interpreted or applied in accordance with the rules, regulations and orders of
the SEC and the accounting principles set forth on Schedule 1.1(a).
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof or any entity or enterprise (including,
without limitation, a court) exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Governmental Order" means, as to any Person, any judgment, injunction,
decree, order or other determination of any Governmental Authority, including,
without limitation, the FCC, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Ground Lease" means a lease of real property, easement, right of way,
or other right of use agreement, pursuant to which a CenturyTel Entity holds a
leasehold interest, leasehold estate or other real property interest or other
right of use agreement for a Tower Site, together with any amendments,
supplements and modifications thereto and waivers in effect thereunder.
"Hazardous Material" means any hazardous or toxic substance, material
or waste which is regulated by any Governmental Authority, including, without
limitation, any material or substance that is (i) defined as a "hazardous
substance" under applicable state law, (ii) petroleum, (iii) asbestos, (iv)
designated as a "hazardous substance" pursuant to Section 311 of the Federal
Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et. seq. (33
U.S.C. Section 1321), (v) defined as a "hazardous waste" pursuant to Section
1004 of the Federal Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 6901 et. seq. (42 U.S.C. Section 6903), (vi) defined as a
"hazardous substance" pursuant to Section 101 of CERCLA, (vii) defined as a
"regulated substance" pursuant to Section 9001 of the Federal Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et. seq. (42
U.S.C. Section 6991), or (viii) otherwise regulated under the Toxic Substances
Control Act, 15 U.S.C. Section 2601, et. seq., the Clean Air Act, as amended, 42
U.S.C. Section 7401, et. seq., the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. Section 1801, et. seq., or the Federal Insecticide, Fungicide
and Rodenticide Act, as amended, 7 U.S.C. Section 136, et. seq.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, 15 U.S.C. Section 18a.
"Indebtedness" means, as of the date of calculation, all obligations or
other liabilities of a Person (i) for borrowed money, (ii) in respect of letters
of credit, bankers' acceptances or other similar instruments or reimbursement
obligations with respect thereto, (iii) to pay the deferred purchase price of
any asset, property or right, (iv) under capitalized leases, (v) under an
interest rate, currency or other swap, cap, floor or collar agreement, hedge
agreement, forward contract, or other similar instrument or agreement or foreign
currency hedge, exchange, purchase or similar instrument or agreement, (vi) of
the types described in clauses (i) through (v) above guaranteed directly or
indirectly by such Person or its Subsidiaries and (vii) under any mortgage, deed
of trust, indenture, security agreement or other agreement securing any of the
foregoing obligations; except that "Indebtedness" shall not include Current
Liabilities.
"Indemnitee" is defined in Section 10.4(a).
"Indemnitor" is defined in Section 10.4(a).
"Intellectual Property" means all copyrights, patents, trademarks,
trade names, service marks, URLs, other proprietary rights and applications for
the foregoing and all software, firmware, trade secrets, proprietary
technologies, know-how, inventions, discoveries, improvements, processes and
formulas (secret or otherwise) and other forms of intellectual property (whether
owned or licensed).
"Intercompany Payable" means a Liability of a CenturyTel Entity or
Cellular Entity to an Affiliate of such Person.
"Intercompany Receivable" means a Liability of an Affiliate of a
CenturyTel Entity or Cellular Entity to any CenturyTel Entity or Cellular
Entity.
"Inventory" means all inventory held by or for the Business for
consumption by or sale to any Person, including, without limitation, cellular
handsets and accessories, whether or not obsolete, discontinued, damaged or
defective.
"IRS" means the United States Internal Revenue Service.
"Knowledge" or "Knows" and words of similar import with respect to
Seller or any of its Affiliates, means the knowledge of the Persons whose names
are set forth on Schedule 1.1(c) hereto, and, with respect to Buyer, means the
knowledge of the Persons whose names are set forth on Schedule 1.1(d) hereto, in
each case after reasonable investigation.
"Labor Contract" is defined in Section 3.14(a).
"Leave Recipient" is defined in Section 7.1(b).
"Liability" means any direct or indirect Indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense, obligation,
responsibility or liability, fixed or unfixed, known or unknown, contingent or
not contingent, asserted or unasserted, xxxxxx or inchoate, liquidated or
unliquidated or secured or unsecured.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest, voting trust agreement, or other adverse claim of any kind or nature
whatsoever (including, without limitation, any First Refusal Right or any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing).
"Losses" means any and all damages, deficiencies, Liabilities, costs,
and expenses.
"Material Acknowledgement" means an Acknowledgement with respect to any
Cellular Interest listed on Schedule 5.19 that is agreed upon by the parties in
writing as constituting a Material Acknowledgement.
"Material Contract" is defined in Section 3.9(b).
"Minority Interests" means all Cellular Interests other than Cellular
Interests in the Operated Cellular Entities.
"Most Recent Fiscal Year End Company Financial Statements" is defined
in Section 3.7(a).
"MSA" means a Metropolitan Statistical Area.
"MTA" means a Major Trading Area.
"Multiemployer Plan" is defined in Section 3.14(e).
"NEPA" means the National Environmental Policy Act of 1969, as amended,
42 U.S.C. Section 4321, et. seq.
"Net Working Capital" means Current Assets minus Current Liabilities.
"Network Construction" is defined in Section 5.14(c).
"Network Operations Personnel" is defined in Section 5.14(a).
"Network Plan" is defined in Section 5.14(b).
"Offer Notice" is defined in Section 5.5(b).
"Offer Price" means the purchase price (i) payable for any portion of a
Cellular Interest that any Third Party has the right to purchase in accordance
with a First Refusal Right and (ii) calculated in accordance with Section
5.5(b).
"Operated Cellular Entity" means any Cellular Entity as to which either
the Company or one of its Subsidiaries (i) owns fifty percent or more of the
capital stock, limited partner interests, general partner interests, membership
interests, units or other equity or similar interests issued by such Cellular
Entity or (ii) manages such Cellular Entity under a Cellular Agreement, a
management agreement or other contractual arrangement.
"Operated Cellular Entity Current Balance Sheet" is defined in
Section 3.7(b).
"Operated Cellular Entity Financial Statements" is defined in
Section 3.7(b).
"Party" or "party" means a party to this Agreement.
"Percentage Interest" means the portion allocated to a relevant Person
of the earnings, profits, Losses and Distributions of a Cellular Entity or
CenturyTel Entity in accordance with the Cellular Agreement or other
organizational documents of such Cellular Entity or CenturyTel Entity.
"Permitted Liens" means (i) Liens for current Taxes and assessments not
yet due and payable, (ii) standard utility easements, covenants and restrictions
of record that are immaterial in character, amount and extent, do not secure
Indebtedness, and that do not detract from the value or interfere with the
present or reasonably intended use of the assets or properties they affect,
(iii) mechanics', carriers', workers', repairers' and other statutory Liens
arising in the ordinary course of business and which have not become due and
payable, (iv) existing zoning or similar Requirements of Law or ordinances that
do not materially, individually or in the aggregate, interfere with the present
or reasonably intended use of the assets or properties they affect, (v) leases
disclosed in the Schedules, and (vii) any other Liens that do not materially,
individually or in the aggregate, interfere with the present or reasonably
intended use of the assets or properties they affect.
"Person" means an individual, general partnership, limited partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, unincorporated organization, joint venture,
Governmental Authority or other entity or enterprise of whatever nature.
"Plans" are defined in Section 3.14(a).
"Postpay Subscribers" means the aggregate number of active mobile
telephone numbers in service subscribed to the CenturyTel Entities for
Commercial Mobile Service (excluding telephone numbers assigned pursuant to
prepaid and reseller contracts or arrangements or relating to any Excluded
Cellular Interest or Excluded Assets).
"Purchase Price" is defined in Section 2.2(a).
"Proportionate Share" means, with respect to any amount, the product of
the relevant Person's Percentage Interest times such amount.
"PSAP" is defined in Section 3.13(b).
"Real Property" is defined in Section 3.15.
"Release" has the meaning given to such term, or any term of similar
import, in the Environmental Laws, including, without limitation, Section
101(22) of CERCLA, 42 U.S.C. 9601(22).
"Requirement of Law" means, as to any Person, any permit, license,
judgment, order, decree, statute, law, ordinance, rule, regulation or
arbitration award issued or promulgated by a Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or assets
or to which such Person or any of its property or assets is subject.
"Resolution Period" is defined in Section 2.3(b).
"Resolved Item" is defined in Section 2.3(b).
"Retained Liabilities" means all Liabilities of Seller and its
Affiliates, including without limitation, the CenturyTel Entities (other than
Current Liabilities for which the Buyer receives an adjustment to the Purchase
Price in accordance with Article 2) relating to, arising out of or in connection
with, or resulting from the Business during the period up to and including the
Effective Time, including, without limitation, any Liabilities with respect to
(i) any and all actions, suits, claims, proceedings, investigations or demands
brought by a Person pertaining thereto to the extent the event, fact,
circumstance or condition giving rise thereto occurred or came into existence at
any time prior to and including the Effective Time or which result from or arise
out of any action or inaction during the period prior to and including the
Effective Time, (ii) any Indebtedness, (iii) Existing Liens (other than
Permitted Liens), (iv) Excluded Assets, (v) any Distribution in accordance with
Section 2.6, or (vi) Intercompany Payables.
"Retirement Eligible Transferred Employee" is defined in Section
7.7(b).
"Roaming Expense" means expenses incurred in accordance with GAAP by
the CenturyTel Entities for Commercial Mobile Service provided to subscribers of
the CenturyTel Entity by other Commercial Mobile Service providers, including,
without limitation, expenses related to air time, toll and other charges
applicable thereto.
"Roaming Partners" is defined in Section 3.30(a).
"Roaming Revenue" means revenue recognized in accordance with GAAP by
the CenturyTel Entities for Cellular Service provided by CenturyTel Entities to
subscribers of other Commercial Mobile Service providers, including, without
limitation, revenues related to air time, toll and other charges applicable
thereto.
"RSA" means a Rural Service Area.
"Sales Acquisition Cost" means the costs incurred by the CenturyTel
Entities in a manner consistent with the covenants and agreements in this
Agreement for the sales and marketing of the products and services of the
Business and shall include the cost of handsets and related accessories, less
amounts received from subscribers therefor. Sales Acquisition Cost shall be
calculated (i) on a basis consistent with the accounting principles and
methodologies set forth on Schedule 1.1(a) hereto and shall not include costs
that were allocated or charged during the twelve months ended December 31, 2001
under the categories "Operating," "General & Administrative," "Customer
Service," "Depreciation and Amortization" and "Affiliated Charges" as shown on
the attached Schedule 1.1(a), (ii) for the period commencing January 1, 2002 and
up to and including the month in which the Closing occurs; prorated for the
number of days, if any, between the Closing Date and the last day of the
calendar month in which the Closing Date occurs and (iii) to exclude any costs
that were incurred as a result of a breach of any covenant or agreement in this
Agreement and shall include the full amount of any costs that have been reduced
as a result of a breach of any covenant or agreement of this Agreement.
"SEC" means the United States Securities and Exchange Commission.
"SEC Basis Financial Statements" is defined in Section 5.13.
"Section 338(h)(10) Election" is defined in Section 8.12(a).
"Securities Act" means the Securities Act of 1933, as amended, 15
U.S.C. Section 77a et. seq.
"Seller" is defined in the Preamble.
"Seller Deductible" is defined in Section 10.3(a).
"Seller Group" means the group of Persons filing consolidated federal
income Tax Returns of which Seller is the common parent.
"Seller Indemnitee" means the Seller, its Affiliates and their
respective officers, directors, managers, agents, employees, successors and
assigns.
"Seller Pension Plans" is defined in Section 7.6(a).
"Seller Straddle Period Taxes" is defined in Section 8.2(c).
"Seller Transaction Representations" is defined in Section 10.1(a)(i).
"Seller Welfare Plans" is defined in Section 7.7(b).
"Shares" means the entire authorized, issued and outstanding shares of
capital stock of the Company and any and all outstanding rights, options,
warrants, conversion rights, stock appreciation rights and other equity or
similar interests in the Company.
"SID" means the five-digit code assigned to each market by the FCC for
each FCC Authorization.
"State Commissions" is defined in Section 3.13.
"Stock Sale" means the sale of the Shares contemplated by Section 2.1.
"Straddle Period" is defined in Section 8.2(c).
"Subsidiary" means, as to any Person, any other Person (i) of which
such Person directly or indirectly owns 50% or more of the issued and
outstanding capital stock, limited partner interests, general partner interests,
membership interests, units or other equity or similar interests, (ii) of which
such Person possesses the right to elect 50% or more of the directors, managers
or Persons holding similar positions or (iii) which such Person Controls
directly or indirectly through one or more Persons.
"Targeted Capital Expenditure Amount" means, with respect to the
CenturyTel Entities, $5,000,000 multiplied times the number of calendar months
during the period commencing January 1, 2002 and up to and including the month
in which the Closing occurs.
"Targeted Sales Acquisition Cost" means, with respect to the CenturyTel
Entities, $8,166,666 multiplied times the number of calendar months during the
period commencing January 1, 2002 and up to and including the month in which the
Closing occurs; prorated for the number of days, if any, between the Closing
Date and the last day of the calendar month in which the Closing Date occurs.
"Tax" or "Taxes" means any federal, state, local or foreign tax
(including, without limitation, any income tax, franchise tax, doing business
tax, branch profits tax, capital gains tax, value-added tax, ad valorem tax,
excise tax, transfer tax, employment tax, social security tax, sales tax, use
tax, property tax, or any other kind of tax or payment in lieu of tax no matter
how denominated), levy, assessment, tariff, duty (including any customs duty),
deficiency or other fee, and any related charge or amount (including any fine,
penalty, interest or addition to tax), imposed, assessed or collected by or
under the authority of any Governmental Authority or payable in accordance with
any tax-sharing agreement or any other contract relating to the sharing or
payment of any such tax, levy, assessment, tariff, duty, deficiency or fee.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form or other document or information filed
with or submitted to or required to be filed with or submitted to, any
Governmental Authority in connection with the determination, assessment,
collection or payment of any Tax or in connection with the administration,
implementation or enforcement of or compliance with any legal requirement
relating to any Tax.
"Third Party" means any Person other than Buyer, Seller or any of their
respective Affiliates.
"Third-Party Interest" means any capital stock, limited partner
interest, general partner interest, membership interest, unit or other equity or
similar interest in a Cellular Entity owned by any Person other than the Company
or any Affiliate of the Company.
"Total Subscribers" means the aggregate number of active mobile
telephone numbers in service subscribed to the CenturyTel Entities for
Commercial Mobile Service.
"Tower Documents" means each of the following with respect to each
Tower Site: (i) a fully executed Ground Lease or, if applicable, a deed, (ii)
chain of all applicable assignments or transfers of Ground Leases or, if
applicable, deeds, (iii) a Phase I environmental site assessment report, (iv) a
real property boundary survey (including, without limitation, all access and
utility easements), (v) a 1A or 2C site survey, (vi) all easements and the chain
of applicable assignments or transfers of such easements, (vii) written evidence
of full compliance with NEPA, in a form reasonably acceptable to Buyer
(including, without limitation, letters from applicable Governmental Authorities
assessing any effects on fish and wildlife and on sites within the jurisdiction
of any federal or state historic preservation authority), (viii) title reports,
commitments or policies of the CenturyTel Entity's leasehold or fee simple
interest, (ix) Tower site plans, Tower drawings, and foundation plans, (x) all
lease, license and sublease agreements whereby any Third Party uses or has the
right to use any portion of the Tower Site, and (xi) final zoning approval or
determination, conditional use permits, or a letter stating that no zoning was
required and the basis thereof.
"Towers" mean all communication towers (i) owned, leased or licensed by
the CenturyTel Entities, or for which such entity holds an easement,
right-of-way or other right to use or (ii) used in the Business, including,
without limitation, those set forth on Schedule 3.29(a).
"Tower Sites" is defined in Section 3.29(a).
"Transition Employee Conversion Date" is defined in Section 7.1(a).
"Transition Employees" is defined in Section 7.1(b).
"Transition Services Agreement" means the Transition Services Agreement
dated as of the date hereof, between Buyer and Seller.
"Transferred Employees" is defined in Section 7.1(b).
"Unresolved Item" is defined in Section 2.3(c).
1.2 Interpretation. Unless the context otherwise requires, (i) all references to
Sections, Articles or Schedules are to Sections, Articles or Schedules of or to
this Agreement, (ii) all references to "Schedules" are to the Schedules attached
hereto and made a part hereof, (iii) each accounting term not otherwise defined
in this Agreement has the meaning assigned to it in accordance with GAAP, (iv)
all references to "Treas. Reg." refer to the U.S. Treasury Regulations governing
federal income tax matters promulgated under the Code, as such regulations may
be amended from time to time (including corresponding provisions of succeeding
regulations), (v) all references to any statute or law, including, without
limitation, the Code, Communications Act, ERISA, and NEPA, shall include any and
all rules and regulations promulgated thereunder, as amended from time to time,
(vi) the term "including" means "including without limitation," (vii) all
references to any particular statute shall be deemed to refer to such statute as
amended through the Closing Date or any successor statute, (viii) the words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and (ix) the meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such terms.
ARTICLE 2
STOCK SALE
2.1 Purchase and Sale of Shares. Subject to the terms and conditions
set forth in this Agreement and on the basis of and in reliance upon the
representations, warranties, covenants and agreements set forth herein, at the
Closing Seller shall grant, sell, transfer and deliver to Buyer the entire
right, title and interest of Seller in and to, and Buyer shall purchase from
Seller, the Shares, free and clear of all Liens.
2.2 Purchase Price.
(a) In consideration of the Stock Sale and the transactions
contemplated hereby and subject to the terms and conditions of this Agreement,
Buyer will pay to Seller an aggregate amount of cash equal to $1,650,000,000
(the "Base Purchase Price"), minus (i) the aggregate amount of all Excluded
Cellular Interest Amounts (as so adjusted, the "Adjusted Purchase Price"), plus
(ii) Estimated Net Working Capital, if such amount is positive (or minus
Estimated Net Working Capital, if such amount is negative), minus (iii) the
amount, if any, by which the Targeted Capital Expenditure Amount exceeds the
Estimated Capital Expenditure Amount and minus (iv) the amount, if any, by which
the Targeted Sales Acquisition Cost exceeds the Estimated Sales Acquisition Cost
(the Adjusted Purchase Price, as adjusted for items (ii), (iii) and (iv), the
"Estimated Purchase Price"). The Base Purchase Price is equal to the sum of the
Agreed Values of all Cellular Interests. The Estimated Purchase Price shall be
subject to adjustment as provided in Section 2.3 (as adjusted, the "Purchase
Price"). The Estimated Purchase Price shall be paid by wire transfer of
immediately available funds in U.S. dollars to an account to be designated by
Seller in writing to Buyer no later than two Business Days prior to the Closing
Date.
(b) Not less than 14 calendar days prior to the Closing Date,
Seller will deliver to Buyer (i) a written statement (with appropriate
supporting documentation) of its good faith calculation of Closing Net Working
Capital (the "Estimated Net Working Capital"), the Capital Expenditure Amount
through the Closing Date (the "Estimated Capital Expenditure Amount"), and the
Sales Acquisition Cost (the "Estimated Sales Acquisition Cost") with Estimated
Net Working Capital and Estimated Sales Acquisition Cost to be calculated on a
basis consistent with the accounting principles and methodologies set forth on
Schedule 1.1(a) and (ii) the Estimated Purchase Price based thereon. Seller
shall cooperate with Buyer to provide Buyer with a reasonable opportunity to
review and comment upon Seller's calculation of the Estimated Net Working
Capital, Estimated Capital Expenditure Amount and Estimated Sales Acquisition
Cost. Seller shall provide Buyer and its authorized representatives reasonable
access during normal business hours and without significant disruption to the
business of the Seller and its Affiliates and to all books, records and
employees of Seller and its Affiliates having relevant information concerning
the Estimated Net Working Capital, Estimated Capital Expenditure Amount and
Estimated Sales Acquisition Cost. Within 10 calendar days after receipt of
Seller's calculation of the Estimated Purchase Price, Buyer shall, in a written
notice to Seller, either accept Seller's calculation of the Estimated Purchase
Price or provide a written notice containing Buyer's good faith calculation of
the Estimated Net Working Capital Amount, the Estimated Capital Expenditure
Amount and Estimated Sales Acquisition Cost and describing any objections to
Seller's calculation with particularity. If Seller shall not have received a
written notice of a revised calculation within this 10 calendar day period,
Buyer will be deemed irrevocably to have accepted Seller's calculation of the
Estimated Purchase Price. If Buyer notifies Seller of its revised calculation in
accordance with this Section, Buyer and Seller shall attempt to resolve their
differences through representatives who are duly authorized to negotiate with
respect to all differences, and any resolution by them as to disputed amounts
shall be in writing. If the parties are not able to resolve their differences
prior to the Closing Date, the parties shall use the arithmetic mean of the two
calculations of Estimated Purchase Price delivered by each of Buyer and Seller
in accordance with this Section 2.2(b) for the purposes of calculating the
Estimated Purchase Price.
2.3 Closing Date Statement.
(a) Within 60 calendar days after the Closing Date, Seller shall
prepare and deliver to Buyer a written statement (with appropriate supporting
documentation) (collectively, the "Closing Date Statement") of the Closing Net
Working Capital, the Capital Expenditure Amount and the Sales Acquisition Cost
calculated on a basis consistent with GAAP and the accounting principles and
methodologies set forth on Schedule 1.1(a).
(b) Within 30 calendar days after receipt of the Closing Date
Statement, Buyer shall, in a written notice to Seller, either accept the Closing
Date Statement or describe any objections (as permitted under this Section
2.3(b) with reasonable particularity). If Seller shall not have received a
written notice of proposed adjustments within this 30 calendar day period, Buyer
will be deemed irrevocably to have accepted such Closing Date Statement. In
addition, any item included in the Closing Date Statement that is not objected
to by Buyer with reasonable particularity shall be deemed to have been
irrevocably accepted by Buyer ("Resolved Items") and any amounts included within
such item shall be deemed to be final, binding and conclusive. If Buyer notifies
Seller of its objections to the Closing Date Statement in accordance with this
Section, the parties shall, within 10 calendar days (or such longer period as
the parties may mutually agree) following such notice (the "Resolution Period"),
attempt through representatives who are duly authorized to negotiate with
respect to all outstanding differences to resolve their differences, and any
written resolution by them as to any disputed amounts shall be final, binding
and conclusive.
(c) Any amounts remaining in dispute at the conclusion of the
Resolution Period ("Unresolved Items") shall be submitted to binding arbitration
in the state of Delaware for a resolution of the Unresolved Items. Except as
otherwise provided in this Section 2.3(c), the arbitration shall be pursuant to
the Commercial Arbitration Rules of the American Arbitration Association.
(i) The arbitrator (the "Arbitrator") shall be selected by the
parties in good faith and in a timely fashion, but in no event later
than 10 calendar days after the expiration of the Resolution Period.
In the event that the parties are unable to agree on the selection of
the Arbitrator, either party may request the American Arbitration
Association to appoint the Arbitrator. Prior to the commencement of
hearings, the Arbitrator shall take an oath of impartiality.
(ii) The arbitration proceedings and all testimony, filings,
documents and information relating to or presented during the
arbitration proceedings shall be deemed to be information subject to
the confidentiality provisions of this Agreement.
(iii) Any determination rendered pursuant to this Section
2.3(c) shall be final, conclusive and binding upon the parties and any
judgment thereon may be entered and enforced in any court of competent
jurisdiction. The Arbitrator shall set forth in writing the deter-
mination of the Unresolved Items and a calculation of the Closing Net
Working Capital, Capital Expenditure Amount or Sales Acquisition Cost,
based upon the amount of Resolved Items and the Arbitrator's deter-
minations of the Unresolved Items.
(iv) Unless Buyer and Seller otherwise mutually agree in
writing, Buyer and Seller shall share the fees and expenses of the
Arbitrator based on the following formulas: (i) Seller shall pay a
portion of such fees and expenses equal to the total of such fees and
expenses multiplied by a fraction, the numerator of which is the
dollar amount of Unresolved Items resolved in favor of Buyer and the
denominator of which is the total dollar amount of Unresolved Items;
and (ii) Buyer shall pay a portion of fees and expenses equal to the
total of such fees and expenses multiplied by a fraction, the
numerator of which is the dollar amount of Unresolved Items resolved
in favor of Seller and the denominator of which is the total dollar
amount of Unresolved Items. Each party shall bear all the fees, costs
and expenses of its own attorneys, experts and witnesses; provided,
however, that in connection with any judicial proceeding to compel
arbitration pursuant to this Agreement or to confirm, vacate or
enforce any determination rendered pursuant to this Section 2.3(c),
the prevailing party in such a proceeding shall be entitled to recover
reasonable attorney's fees and expenses incurred in connection with
such proceeding, in addition to any other relief to which it may be
entitled.
(d) Upon any (i) agreement or deemed agreement by Buyer and Seller
as to the Closing Net Working Capital, Capital Expenditure Amount or Sales
Acquisition Cost or (ii) the Arbitrator's determination of the Closing Net
Working Capital, Capital Expenditure Amount or Sales Acquisition Cost, the
parties shall, based thereupon, calculate the Purchase Price. If the Purchase
Price as finally determined above is greater than the Estimated Purchase Price,
Buyer shall promptly, but no later than two Business Days after such agreement
or determination, pay to Seller the amount of such difference. If the Purchase
Price as finally determined above is less than the Estimated Purchase Price,
Seller shall promptly, but no later than two Business Days after such agreement
or determination, pay to Buyer the amount of such difference.
(e) Any amount paid in accordance with this Section 2.3 shall bear
interest from and after the Closing Date through but excluding the date of
payment, at the rate per annum equal to the Applicable Rate on the Closing Date.
Such interest shall accrue daily on the basis of a 365-day year.
(f) All amounts payable in accordance with this Section 2.3 shall
be paid by delivery of immediately available funds by wire transfer in U.S.
dollars to, in the case of amounts payable by Buyer, the account identified by
Seller in accordance with Section 2.2 above or an alternate account that Seller
may designate in writing or, in the case of amounts payable by Seller, to such
account as Buyer may designate in writing to Seller.
(g) During the period of any review or dispute as provided in this
Section 2.3, Seller shall provide Buyer and its authorized representatives
reasonable access during normal business hours and without significant
disruption to the business of Seller and its Affiliates, to all books, records
and employees of Seller and its Affiliates having relevant information
concerning the Closing Date Statement to the extent that such information was
used in the calculation of the Closing Net Working Capital, Capital Expenditure
Amount or Sales Acquisition Cost reflected thereon.
2.4 Affiliate Assets.
(a) To the extent necessary Seller shall, and shall cause any of
its Affiliates to, transfer and assign prior to the Closing Date all of Seller's
and any of its Affiliate's right, title and interest in and to (i) assets,
properties and rights of every kind and description whatsoever, including,
without limitation, real and personal property, that are used primarily in the
Business but are owned by Seller or any of its Affiliates other than the
CenturyTel Entities (the "Affiliate Assets") to the Company or one or more of
its wholly-owned Subsidiaries and (ii) the Cellular Interests listed on Schedule
2.4(a) to the applicable CenturyTel Entity for each such Cellular Interest
specified on Schedule 2.4(a), in each case under clauses (i) and (ii) in the
form of the assignment instrument attached hereto as Exhibit A (the "Assignment
Instrument") or the applicable purchase agreement in the form attached hereto as
Schedule 5.5(b)(ii).
(b) Buyer acknowledges that it will not be acquiring the Excluded
Licenses listed on Schedule 2.4(b), and that Seller may cause MVI Corp. to
transfer and assign on or before the Closing Date all right, title and interest
of MVI Corp. in and to the Excluded Licenses to Seller or one of its Affiliates.
Any transfers or other actions taken with respect to the Excluded Licenses
pursuant to this Section 2.4(b) shall be without recourse to, and shall not
impose any Liability upon, any CenturyTel Entity from and after the Closing
Date. Without limiting the generality of the preceding sentence and in addition
to the indemnification obligations of Seller set forth elsewhere herein, Seller
shall indemnify, defend and hold harmless each Buyer Indemnitee against and in
respect of any and all Losses or Taxes incurred or suffered by any Buyer
Indemnitee that result from, relate to or arise out of any breach of this
Section 2.4(b).
2.5 Closing. Unless this Agreement shall have been earlier
terminated in accordance with the terms and conditions of this Agreement, the
Closing shall occur, unless otherwise agreed to in writing by the parties, at
9:00 a.m. central time on the last Business Day of the calendar month in which
the last condition precedent set forth in Article 6 (other than such other
conditions precedent that are not capable of being satisfied until the Closing)
is satisfied or waived. If the Closing occurs, for purposes of this Agreement
the Closing shall be deemed to have occurred at 11:59 p.m. central time on the
Closing Date (the "Effective Time"). The Closing shall take place at the office
of Buyer in Little Rock, Arkansas.
2.6 Cash Distributions to Seller. Prior to the Closing, Seller may
cause the Company, in one or more transactions among or involving the CenturyTel
Entities, to pay to Seller all cash received by Company or any CenturyTel Entity
that constitutes an Excluded Cellular Interest Amount. In addition, at or prior
to the Closing and subject to the terms and conditions of this Agreement and the
applicable Cellular Agreements, Seller may, at its option, cause the Company, in
one or more series of dividends, distributions or transactions among or
involving the CenturyTel Entities, to pay Seller some or all of all other cash
then held by the CenturyTel Entities (other than cash (i) attributable to the
Proportionate Share of such CenturyTel Entities owned by Persons other than
Seller or its Affiliates, which amounts may be paid to such Persons in the event
Seller elects to effect the transactions contemplated hereunder through
dividends, distributions or other transactions that by law must treat all equity
holders equally, (ii) arising or resulting from a breach of any covenant or
agreement in this Agreement or (iii) received from insurance as a result of any
damage or destruction of Assets), including cash attributable to Taxes on the
income of each CenturyTel Entity through the Effective Time. In connection with
these transactions, Seller may, in its discretion, cause all intercompany
accounts between any CenturyTel Entity, on the one hand, and Seller and any of
its Affiliates (other than a CenturyTel Entity), on the other hand, to be
satisfied and cancelled. All transfers and distributions effected by the Seller
pursuant to this Section 2.6 shall be without recourse to, and shall not impose
any Liability upon, any CenturyTel Entity from and after the Closing Date.
Without limiting the generality of the preceding sentence and in addition to the
indemnification obligations of Seller set forth elsewhere herein, Seller shall
indemnify, defend and hold harmless each Buyer Indemnitee against and in respect
of any and all Losses or Taxes incurred or suffered by any Buyer Indemnitee that
result from, relate to or arise out of any breach of this Section 2.6.
2.7 Deliveries at Closing. At the Closing and subject to the terms
and conditions herein contained:
(a) Deliveries by Seller. Seller shall deliver to Buyer:
(i) a certificate representing all Shares, duly endorsed and
in form for transfer to Buyer or accompanied by a stock power endorsed
in blank in a form reasonably acceptable to Buyer;
(ii) written evidence of the satisfaction, waiver or
termination in accordance with Section 5.5 of all First Refusal Rights
listed on Schedule 3.27;
(iii) an Acknowledgement, duly executed and delivered by all
necessary Persons in accordance with Section 5.19, with respect
to each Cellular Interest listed on Schedule 5.19 (other than
with respect to any such Cellular Interest that has become an
Excluded Cellular Interest in accordance with Section 5.19);
(iv) the original corporate (or similar records for non-
corporate Persons) books and records for each CenturyTel Entity
containing (1) true, correct and complete copies of all Cellular
Agreements, articles of incorporation, bylaws, operating agreements or
similar organizational documents (including, without limitation, all
amendments, supplements and modifications thereto and waivers in
effect thereunder) for each CenturyTel Entity, (2) capital stock,
limited partner interest, general partner interest, membership
interest, unit or other equity or similar interest records for each
CenturyTel Entity, (3) minutes of meetings of directors, managers,
shareholders, members or persons exercising similar functions with
respect to each CenturyTel Entity, and (4) any other similar records
regularly maintained by each CenturyTel Entity;
(v) the original corporate (or similar records for non-
corporate Persons) books and records for each Cellular Entity (other
than a CenturyTel Entity) relating to the ownership of Minority
Interests containing (1) to the Knowledge of Seller, true, correct and
complete copies of all Cellular Agreements, articles of incorporation,
bylaws, operating agreements or similar organizational documents
(including, without limitation, all amendments, supplements and
modifications thereto and waivers in effect thereunder) for each
Cellular Entity, (2) capital stock, limited partner interest, general
partner interest, membership interest, unit or other equity or similar
interest records for the Minority Interests, and (3) any other similar
records regularly maintained with respect to the Minority Interests;
and
(vi) the Assignment Instruments.
(b) Deliveries by Buyer. Buyer shall pay to Seller the Estimated
Purchase Price in accordance with Section 2.2.
(c) Other Deliveries. The parties hereto shall also deliver to
each other the agreements, closing certificates, and other documents and
instruments required to be delivered pursuant to this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Ownership. The Shares, which represent the entire authorized,
issued and outstanding capital stock of the Company, consist of 100 shares of
common stock, no par value. No shares of capital stock of the Company are held
in treasury. The Shares have been duly authorized and validly issued and are
fully paid and nonassessable. Seller is the sole record and beneficial owner of
the Shares, free and clear of any Liens, and upon consummation of the Stock Sale
and the transactions contemplated by this Agreement, Buyer will acquire good,
valid and marketable title to the Shares, free and clear of any Liens. There are
no preemptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, agreements, arrangements or
commitments to issue, sell or transfer any shares of capital stock of the
Company or any securities or obligations convertible or exchangeable into or
exercisable for, or giving any Person a right to subscribe for or acquire, any
shares of capital stock of the Company, and no securities or obligations
evidencing such rights are authorized, issued or outstanding. There are no
voting trusts, proxies or other agreements or understandings with respect to the
voting of the capital stock of the Company. No bonds, debentures, notes or other
obligations are outstanding that provide the holders of such obligations the
right to vote (including, without limitation, the right to vote following
conversion or exercise of such obligations) with the Seller on any matter.
3.2 Organization.
(a) Seller is a duly incorporated, validly existing corporation,
and is in good standing under the laws of Louisiana. The Company is a duly
incorporated, validly existing corporation, and is in good standing under the
laws of Louisiana. The Company has all necessary power, authority and legal
right to own or lease its assets and to carry on its business substantially as
it is currently being conducted, and is duly qualified and licensed to do
business and is in good standing in each jurisdiction where the ownership or
operation of its properties and assets or the conduct of its business requires
such qualification.
(b) Attached hereto as Schedule 3.2 are true, correct and
complete copies of the articles of incorporation and bylaws of the Company
(including, without limitation, all amendments, supplements and modifications
thereto and waivers in effect thereunder).
3.3 Authority. Seller has all necessary corporate power, authority
and legal right to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Seller of this Agreement have been duly approved and authorized by all necessary
action on the part of Seller, including, without limitation, by Seller's board
of directors. Neither the execution and delivery of this Agreement nor the
performance of any obligations hereby requires the approval of the stockholders
of Seller. This Agreement has been duly executed and delivered by Seller and,
assuming the due execution and delivery by parties other than Seller,
constitutes the legal, valid and binding obligations of Seller enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy laws and other similar laws affecting creditors' rights
generally and general principles of equity.
3.4 Cellular Entities and CenturyTel Entities.
(a) Schedule 3.4(a) lists with respect to each CenturyTel
Entity other than the Company, (i) its name, (ii) its jurisdiction of
incorporation or organization, (iii) its entire authorized capital stock,
limited partner interests, general partner interests, membership interests,
units, or other equity or similar interests, (iv) its entire issued and
outstanding capital stock, limited partner interests, general partner interests,
membership interests, units, or other equity or similar interests, including,
without limitation, all Cellular Interests and Third-Party Interests, (v) the
name of each record and beneficial holder of its capital stock, limited partner
interests, general partner interests, membership interests, units, or other
equity or similar interests, including, without limitation, the Cellular
Interests and Third-Party Interests, (vi) the Percentage Interest of each record
and beneficial owner and (vii) the current capital contribution account balance
(or account balance for any equity or other similar interests) with respect to
each Cellular Interest and each Third-Party Interest. The Company has no
Subsidiaries other than the CenturyTel Entities identified on Schedule 3.4(a).
The Cellular Interests identified on Schedule 3.4(a) represent the entire right,
title and interest of the Seller and its Affiliates in and to the Cellular
Entities. Except as set forth on Schedule 3.4(a), each CenturyTel Entity (or its
applicable Affiliate) that owns a Cellular Interest set forth on Schedule 3.4(a)
has equal rights of participation (as represented by the Percentage Interest set
forth on Schedule 3.4(a)) with any owners of Third-Party Interests in the
earnings, profits, Losses and Distributions of the applicable Cellular Entity.
(b) Schedule 3.4(b) lists with respect to each Cellular Entity
in which the Company or any of its Affiliates holds a Minority Interest, (i) its
name, (ii) its jurisdiction of incorporation or organization, (iii) its entire
authorized capital stock, limited partner interests, general partner interests,
membership interests, units, or other equity or similar interests, (iv) its
Cellular Interests and, to the Knowledge of Seller, its other entire issued and
outstanding capital stock, limited partner interests, general partner interests,
membership interests, units, or other equity or similar interests, including,
without limitation, all Third-Party Interests, (v) the name of each record and
beneficial holder of its Cellular Interests and, to the Knowledge of Seller, its
other capital stock, limited partner interests, general partner interests,
membership interests, units, or other equity or similar interests, including,
without limitation, the Third-Party Interests, (vi) the Percentage Interest of
each CenturyTel Entity and, to the Knowledge of Seller, each other record and
beneficial owner and (vii) the current capital contribution account balance (or
account balance for any equity or other similar interests) with respect to each
Cellular Interest and, to the Knowledge of Seller, each Third Party Interest.
The Cellular Interests identified on Schedule 3.4(b) represent the entire right,
title and interest of the Seller and its Affiliates in and to the Cellular
Entities in which the Company or any of its Affiliates holds a Minority
Interest. Except as set forth on Schedule 3.4(b), to the Knowledge of Seller,
each CenturyTel Entity (or its applicable Affiliate) that owns a Cellular
Interest set forth on Schedule 3.4(b) has equal rights of participation (as
represented by the Percentage Interest set forth on Schedule 3.4(b)) with any
owners of Third-Party Interests in the earnings, profits, Losses and
Distributions of the applicable Cellular Entity.
(c) Except as disclosed on Schedule 3.4(c), the CenturyTel
Entity (or its applicable Affiliate) identified on Schedule 3.4(a) or Schedule
3.4(b) as the holder of any Cellular Interest is the sole record and beneficial
owner of such Cellular Interest free and clear of any Liens, such CenturyTel
Entity (or its applicable Affiliate) has good, valid and marketable title to
such Cellular Interest, and all such Cellular Interests are duly authorized,
validly issued and fully paid.
(d) Except as contemplated hereby or as set forth on Schedule
3.4(d), (i) no CenturyTel Entity or Affiliate of Seller holding a Cellular
Interest, and, to the Knowledge of Seller, no Third Party has any obligation to
sell, transfer or assign or has entered into an agreement regarding the sale,
transfer or assignment of any right, title or interest in any Cellular Interest
or any capital stock, limited partner interests, general partner interests,
membership interests, units, or other equity or similar interests in any
CenturyTel Entity, (ii) there are no preemptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, agreements, arrangements or commitments to issue, sell or transfer any
Cellular Interests or any other capital stock, limited partner interests,
general partner interests, membership interests, units, or other equity or
similar interests of any CenturyTel Entity or, to the Knowledge of Seller, any
other Cellular Entity, or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to subscribe
for or acquire, any Cellular Interests or any other capital stock, limited
partner interests, general partner interests, membership interests, units, or
other equity or similar interests of any CenturyTel Entity or, to the Knowledge
of Seller, any other Cellular Entity, and no securities or obligations
evidencing such rights are authorized, issued or outstanding with respect to any
CenturyTel Entity or, to the Knowledge of Seller, any other Cellular Entity,
(iii) no CenturyTel Entity and, to the Knowledge of Seller, no other Cellular
Entity, has received any notice or has any Knowledge of any existing or claimed
right of first refusal, right of first offer, preemptive right, right to
consent, put right, call right, tag along right, default or similar right or
other adverse claim of any kind or nature whatsoever in favor of any Person with
respect to any Third-Party Interest, (iv) there are no voting trusts, proxies or
other agreements or understandings with respect to the voting of the Cellular
Interests, capital stock, limited partner interests, general partner interests,
membership interests, units or other equity or similar interests of any
CenturyTel Entity or, to the Knowledge of Seller, any other Cellular Entity, and
(v) no CenturyTel Entity and, to the Knowledge of Seller, no other Cellular
Entity, has any outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the holders of Cellular Interests or
any other capital stock, limited partner interests, general partner interests,
membership interests, units, or other equity or similar interests of such
Cellular Entity or CenturyTel Entity on any matter.
(e) Each CenturyTel Entity other than the Company is a
corporation, limited liability company, general partnership or limited
partnership duly organized or formed, validly existing and in good standing
under the laws of its jurisdiction of organization or formation, has all
necessary corporate, partnership or limited liability company power, authority
and legal right to own or lease its assets and to carry on its business
substantially as it is currently being conducted, and is duly qualified and
licensed to do business, and is in good standing, in each jurisdiction where the
ownership or operation of its properties and assets or the conduct of its
business requires such qualification. Except as set forth on Schedule 3.4(e),
with respect to each CenturyTel Entity and Cellular Entity, (i) no current or
former stockholder, general partner, limited partner, member, unit holder or
other Person is contesting the ownership of capital stock, limited partner
interests, general partner interests, membership interests, units, or other
equity or similar interests or the Percentage Interests relating to such
CenturyTel Entity or any Distributions or contributions relating thereto, or, to
the Knowledge of Seller, relating to such Cellular Entity or any Distributions
or contributions relating thereto, (ii) there is not pending any call by such
Cellular Entity or CenturyTel Entity for capital contributions, and there are no
plans for any such capital contributions by any such CenturyTel Entity, or, to
the Knowledge of Seller, by any such Cellular Entity and (iii) Seller and all
Affiliates of Seller have made any and all capital contributions required to
have been made by them to the Cellular Entities and, to the Knowledge of Seller,
all holders of Third-Party Interests have made any and all capital contributions
required to have been made by them to the Cellular Entities.
(f) Schedule 3.4(f) contains a true, correct and complete
description (by title) of each Cellular Agreement, including, without
limitation, (i) the name of the Cellular Entity and each party thereto and (ii)
the date of each agreement or amendment, supplement or modification thereto and
waivers in effect thereunder. The Cellular Agreements are valid and enforceable
against the CenturyTel Entity that is a party thereto or bound thereby and, to
the Knowledge of Seller, against any other party thereto or bound thereby, in
accordance with its terms except to the extent such enforceability may be
limited by bankruptcy laws and other similar laws affecting creditors' rights
generally and general principles of equity. Except as disclosed on Schedule
3.4(f), the CenturyTel Entity (or its applicable Affiliate) that is a party
thereto or bound thereby is not, and to the Knowledge of Seller no other party
thereto or bound thereby is, in breach or default under any Cellular Agreement,
and no event caused by, relating to or affecting the CenturyTel Entity (or its
applicable Affiliate) that is a party thereto or bound thereby has occurred
which with or without the giving of notice or lapse of time, or both, would
constitute a breach or default, or permit termination, modification or
acceleration thereunder, and to the Knowledge of Seller, no event caused by,
relating to or affecting any other party thereto or bound thereby has occurred
which with or without the giving of notice or lapse of time, or both, would
constitute a breach or default by such other party thereunder or bound thereby,
or permit termination, modification or acceleration thereunder.
3.5 No Other Investments. Except as disclosed on Schedule 3.5 and
except for the Minority Interests and its interests in any Subsidiaries, no
CenturyTel Entity has any ownership, equity or other investment interest,
either of record, beneficially or equitably, in any Person.
3.6 No Conflict. Upon compliance with Section 5.5 and upon the
receipt of the consents, approvals and Authorizations set forth on Schedule 3.6
and compliance with any applicable requirement of the HSR Act for the Stock
Sale, the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby by Seller and any of its
Affiliates do not and will not (with or without giving of notice or the passage
of time or both) violate, conflict with or result in the breach of any term,
condition or provision of, or require the consent or approval of or notice to
any other Person, or result in the termination, modification or cancellation of,
or accelerate the performance required by, or result in the creation of any
Lien, or otherwise adversely affect the existing rights or obligations of Seller
or the CenturyTel Entities, as the case may be, under (i) the charter and other
organizational documents of Seller and the CenturyTel Entities (including,
without limitation, the Cellular Agreements), (ii) any existing Requirement of
Law, including, without limitation, any rules, regulations or orders of the FCC
or any State Commissions, (iii) any judgment, order, writ, injunction, decree or
award of any Governmental Authority or any other Governmental Order which is
applicable to Seller, any Affiliate of Seller, or the CenturyTel Entities, or,
to the Knowledge of Seller, the Cellular Entities, (iv) any Indebtedness of any
CenturyTel Entity or, to the Knowledge of Seller, any other Cellular Entity, or
(v) any Material Contract or Company Authorization. Except as aforesaid, no
consent, approval or Authorization, filing or notification with any Governmental
Authority or any counterparty to any Material Contract or any other Person is
required in connection with the Stock Sale, the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby by Seller or any of its Affiliates.
3.7 Financial Statements.
(a) Attached as Schedule 3.7(a) are the following financial
statements for the Company (collectively, the "Company Financial Statements"):
(i) the unaudited combined balance sheets and statements of income for the
CenturyTel Entities and the Business as of and for the year ended December 31,
2000, and (ii) the unaudited combined balance sheets and statements of income
for the CenturyTel Entities and the Business as of and for the year ended
December 31, 2001 (the "Most Recent Fiscal Year End Company Financial
Statements"). The Company Financial Statements have been prepared in accordance
with GAAP, applied on a consistent basis throughout the periods covered thereby,
present fairly the results of operations and the financial condition of the
CenturyTel Entities and the Business as of or for such dates, do not contain any
material omissions and have been prepared from the books and records of the
CenturyTel Entities. The books and records of the CenturyTel Entities have been
maintained in accordance with GAAP. The balance sheets contained in the Company
Financial Statements do not include any material assets or liabilities that are
not a part of the CenturyTel Entities and the Business. The income statements
contained in the Company Financial Statements do not reflect the operations or
results of any Person other than the CenturyTel Entities and the Business and
reflect all costs and expenses that historically have been incurred by or
allocated to the CenturyTel Entities and the Business for the periods presented.
(b) Attached hereto as Schedule 3.7(b) are the following financial
statements for each Operated Cellular Entity: the audited or, to the extent
audited are not available, the unaudited balance sheets and statements of income
for each Operated Cellular Entity as of and for the years ended December 31,
2000 and December 31, 2001 (the "Operated Cellular Entity Financial Statements"
and each such balance sheet at December 31, 2001, the "Operated Cellular Entity
Current Balance Sheet"). The Operated Cellular Entity Financial Statements have
been prepared in accordance with GAAP, applied on a consistent basis throughout
the periods covered thereby, present fairly the results of operations and the
financial condition of the applicable Operated Cellular Entity as of and for
such dates, do not contain any material omissions and have been prepared from
the books and records of the applicable Operated Cellular Entity. The books and
records of each Operated Cellular Entity have been maintained in accordance with
GAAP.
(c) The balance sheets of the Company Financial Statements and
Operated Cellular Entity Financial Statements do not include amounts for the
capitalized costs of cellular handsets or accessories or any marketing,
advertising or similar costs related to the acquisition of subscribers.
3.8 Absence of Certain Changes. Except as set forth on Schedule
3.8, since December 31, 2001, neither the Seller nor any of its Affiliates
(including, without limitation, the CenturyTel Entities), has taken any action
or failed to take any action which, if such action were taken or failed to be
taken, would constitute a breach of any of the provisions of Section 5.4.
3.9 Material Contracts.
(a) Except as listed and described on Schedule 3.9(a), no
CenturyTel Entity is a party to any of the following (whether written or oral,
express or implied), and neither Seller nor any of its Affiliates is a party to
or bound by any of the following (whether written or oral, expressed or implied)
relating to the operation of the Business, which will continue to bind or impose
any liability on any CenturyTel Entity or Cellular Entity after the Closing
Date:
(i) agreement, contract, lease, license or commitment, or
series of related agreements, contracts, leases, licenses or
commitments, other than roaming agreements, which involves an
expenditure or receipt of more than $100,000 during any calendar year
after December 31, 2000;
(ii) agreement, contract or commitment limiting or restraining
it from engaging in any business or pursuing any strategic initiative
or competing in any manner including, without limitation, with respect
to engaging in Cellular Service, personal communications services,
internet services, long distance, local telephone service or other
communications services of any kind or description whatsoever;
(iii) agreement, contract or commitment for billing or customer
care services or ancillary services thereto;
(iv) agreement, contract or commitment for fraud services;
(v) agreement, contract or commitment with a clearinghouse or
other Person for settlement services;
(vi) agreement, contract or commitment for interconnection,
reciprocal compensation, switching, transport, back haul, contour
extension, or agreement involving air to ground service;
(vii) agreement, contract or commitment with respect to
outstanding Indebtedness;
(viii) management agreement, contract or commitment not
disclosed on Schedule 3.33;
(ix) any agreement, contract or commitment with Seller or any
Affiliate of Seller not disclosed on Schedule 3.33;
(x) confidentiality or non-disclosure agreement, contract or
commitment in accordance with which it has agreed to keep confidential
and/or not to use or disclose information obtained from any other
Person, other than those entered into in the ordinary course of the
Business, consistent with past practice;
(xi) agreement, contract, commitment or arrangement with any
labor union or other representative of employees;
(xii) commission, reseller, dealer, distributorship or sales
agency agreement, contract or commitment;
(xiii) agreement, contract, lease, license, commitment or
similar arrangement with respect to the ownership, operation, leasing
or licensing of cell sites, network sites, space on towers, office
space, call centers or retail store or kiosk locations (other than any
agreement, contract, lease, license, commitment or similar arrangement
involving the payment by Seller or any Affiliate of less than $10,000
per annum or that is terminable by the Seller or its applicable
Affiliate upon 30 days or less notice without Liability);
(xiv) agreement, contract or commitment or other arrangement
relating to the formation or Control of any Person (other than a
Cellular Agreement); and
(xv) other material agreement, contract or commitment not
made in the ordinary course of operation of the Business consistent
with past practice.
(b) Each of the agreements, contracts, commitments, leases,
licenses, arrangements, plans and other instruments, documents and undertakings
required to be listed on Schedule 3.9(a), Schedule 3.23(a), Schedule 3.30(a) or
Schedule 3.33 (collectively, the "Material Contracts") is valid and enforceable
against the CenturyTel Entity or its Affiliate that is a party thereto or bound
thereby and, to the Knowledge of Seller, against any other party thereto or
bound thereby, in accordance with its terms except to the extent such
enforceability may be limited by bankruptcy laws and other similar laws
affecting creditors' rights generally and general principles of equity. The
CenturyTel Entity or its Affiliate that is a party thereto or bound thereby is
not, and to the Knowledge of Seller no other party thereto or bound thereby is,
in breach or default under any Material Contract, and no event caused by,
relating to or affecting the CenturyTel Entity or its Affiliate that is a party
thereto or bound thereby has occurred which with or without the giving of notice
or lapse of time, or both, would constitute a breach or default, or permit
termination, modification or acceleration thereunder, and to the Knowledge of
Seller, no event caused by, relating to or affecting any other party thereto has
occurred which with or without the giving of notice or lapse of time, or both,
would constitute a breach or default by such other party thereunder or bound
thereby, or permit termination, modification or acceleration thereunder.
(c) Except for powers of attorneys that permit Seller's FCC counsel
to file documents with the FCC on Seller's behalf, there are no outstanding
powers of attorney executed on behalf of any CenturyTel Entity or relating to
the Business.
3.10 Insurance. Schedule 3.10 sets forth a list and brief description
(including nature of coverage, limits, deductibles and premiums with respect to
each type of coverage) of all policies of insurance in effect and maintained,
owned or held by Seller or any of its Affiliates for the benefit of or in
connection with the Assets, the CenturyTel Entities or the Business. Seller or
its applicable Affiliate has complied with the applicable provisions of such
insurance policies and has not failed to give any notice or present any claim
thereunder in a due and timely manner. Such policies are in full force and
effect and are free from any right of termination on the part of the insurance
carriers, each of which are, to Seller's Knowledge, financially sound and
reputable. Neither Seller nor any of its Affiliates has received any notice of
cancellation or nonrenewal of any such policy, any refusal of coverage
thereunder or any notice or indication that any insurer under any such policy is
no longer willing or able to perform its obligations thereunder or to renew any
such policy in the future. Seller has delivered to Buyer an accurate summary of
(i) all such policies and (ii) the most recent inspection reports, if any,
received from insurance underwriters as to the condition of the assets and
properties of the Business.
3.11 Taxes. Except as disclosed in Schedule 3.11:
(a) Tax Returns. Seller and the CenturyTel Entities have duly and
timely filed (after taking into account all applicable extensions of time for
such filings) all material Tax Returns that are required to be filed on or
before the date hereof with the IRS or other applicable Taxing authorities, and
no extensions with respect to such Tax Returns have been requested or granted
and all such Tax Returns are true, complete and correct in all material
respects. All Taxes due and payable on such Tax Returns have been paid.
(b) Accrued Tax Liabilities. All Taxes for which the CenturyTel
Entities are or may be liable in respect of periods (or portions thereof) ending
on or before the Closing Date, have been timely paid, or the Closing Date
Statement specifically and fully reserves for such Taxes (but excluding any
reserve for deferred Taxes established to reflect a timing difference between
book and Tax income) up to and including the Closing Date (as if the Taxable
period ended on the Closing Date).
(c) Payroll Taxes. All payroll Taxes required to be withheld by the
CenturyTel Entities have been withheld and have been remitted or will be
remitted to the appropriate Taxing authorities.
(d) Tax Liens. There are no Liens for Taxes upon any of the
assets of the CenturyTel Entities except for statutory Liens covering Taxes not
yet due and payable.
(e) Tax Audits. Seller has delivered to Buyer true, correct and
complete copies of all federal income Tax Returns (other than Seller's
consolidated group returns), federal audit and examination reports, and federal
statements of deficiencies agreed to by the CenturyTel Entities for all periods
since January 1, 1998 and will deliver to Buyer any such documents received on
or before the Closing Date immediately upon receipt. Neither Seller nor any
CenturyTel Entity has received written notice of any deficiencies for any Taxes
asserted or assessed against it that remain unpaid. Seller has not received any
written notice that Tax Returns relating to any CenturyTel Entities are
currently being or may be audited or examined by the IRS or any other Taxing
authority. No examinations, actions, suits or proceedings with respect to Taxes
are pending or to the Knowledge of Seller threatened against any CenturyTel
Entity. No power of attorney with respect to any matter relating to Taxes of any
CenturyTel Entity will be in effect after the Closing Date.
(f) Taxing Jurisdictions. No CenturyTel Entity has received notice
of a claim made by any Taxing authority in a jurisdiction where such entity does
not file Tax Returns that such entity is or may be subject to Tax in such
jurisdiction. Schedule 3.11(f) sets forth a list of states in which the
CenturyTel Entities file Tax Returns, including sales Tax returns.
(g) Waivers and Extensions. No waiver or extension of any statute
of limitations as to any Tax matter has been given by any CenturyTel Entity.
(h) Collapsible Corporation. No CenturyTel Entity has filed a
consent under Section 341(f) of the Code nor has any such entity agreed to have
any such provision of corresponding state, local or foreign income Tax law apply
to any disposition of any asset such entity owns.
(i) Accounting Methods. No CenturyTel Entity is required to make
any adjustments with respect to a change in Tax accounting methods and no such
entity has proposed such adjustment or received written notice that the IRS or
another Taxing authority has proposed such adjustment.
(j) Tax Rulings. Since January 1, 1998, there are no Tax rulings,
requests for rulings or closing agreements with any Taxing authority with
respect to any CenturyTel Entity which will have any adverse effect on the Tax
liability of any CenturyTel Entity after the Closing Date.
(k) Tax Indemnities. No CenturyTel Entity has any contractual
obligation to indemnify any other Person with respect to Taxes.
(l) Section 355(e). No CenturyTel Entity has distributed the stock
of any corporation in a transaction satisfying the requirements of Section 355
of the Code since April 16, 1997. No stock of any CenturyTel Entity has been
distributed in a transaction satisfying the requirements of Section 355 of the
Code since April 16, 1997.
(m) Sections 168 and 103. No CenturyTel Entity is a party to any
safe harbor lease within the meaning of Section 168(f)(8) of the Code, as in
effect prior to amendment by the Tax Equity and Fiscal Responsibility Act of
1982. None of the assets of any CenturyTel Entity has been financed with, or
directly or indirectly secures, any industrial revenue bonds or Indebtedness,
the interest on which is Tax-exempt under Section 103(a) of the Code. None of
the assets of the CenturyTel Entities is Tax-exempt use property within the
meaning of Section 168(h) of the Code.
(n) FIRPTA. No CenturyTel Entity is a foreign person within the
meaning of Section 1445 of the Code.
(o) Affiliated Group. Since January 1, 1998, none of the CenturyTel
Entities has been a member of an affiliated group filing a consolidated federal
income Tax Return (other than the Seller Group) or had any Liability for the
Taxes of any person (other than the Seller Group) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract or otherwise.
(p) Withholding Taxes. The CenturyTel Entities have complied in all
material respects with all applicable Requirements of Law relating to the
withholding of Taxes and the payment thereof (including, without limitation,
withholding of Taxes under Sections 1441 and 1442 of the Code, or similar
provision under foreign laws), and timely and properly withheld from employee
wages and paid over to the proper governmental authorities all amounts required
to withhold and paid over under applicable laws.
(q) Section 338(h)(10) Representations. Seller represents that it
filed a consolidated federal income Tax Return with the Seller Group for the
Taxable year immediately preceding the current Taxable year and that each
CenturyTel Entity listed on Schedule 3.11(q) is a member of the Seller Group.
(r) Tax Attributes. Other than as a result of this transaction,
none of the CenturyTel Entities' Tax attributes are subject to the limitations
of Code Sections 382, 383 or 384 or Treas. Reg. Section 1.1502-21(c).
(s) Treatment as a Partnership. Except as set forth on Schedule
3.11(s), no CenturyTel Entity is a party to any joint venture, partnership, or
other arrangement or contract, which could be treated as a partnership for
federal income Tax purposes.
3.12 Litigation.
(a) No CenturyTel Entity is subject to any outstanding judgment,
order, writ, injunction, decree or award of any Governmental Authority. Except
as disclosed on Schedule 3.12(a), there is no litigation, arbitration,
investigation or other proceeding, or injunction or final judgment relating
thereto, pending against any CenturyTel Entity or relating to the Business or
any Cellular Interest nor, to the Knowledge of Seller, is any such litigation,
arbitration, investigation or other proceeding threatened before any
Governmental Authority, and Seller Knows of no reasonably likely basis for any
such litigation, arbitration, investigation or proceeding.
(b) Schedule 3.12(b) lists all civil fines, penalties, and any
orders, writs, judgments, injunctions, decrees, determinations, or other awards
of any Governmental Authority which have been imposed or levied against any
CenturyTel Entity or in connection with the Business or any Cellular Interest,
together with all settlements by any CenturyTel Entity or any of its Affiliates
of any legal claims actually brought or threatened against such CenturyTel
Entity or in connection with the Business or any Cellular Interest, from and
after January 1, 2000, other than civil fines, penalties, orders, writs,
judgments, decrees, determinations, awards or settlements for monetary damages
which in each case involves an amount of less than $10,000.
3.13 Authorizations.
(a) The Company FCC Authorizations disclosed on Schedule 3.13(a)
constitute all FCC Authorizations that have been issued or granted to the
CenturyTel Entities (other than the Excluded Licenses) and, to the Knowledge of
Seller, the other Cellular Entities and, with respect to the CenturyTel
Entities, are the only FCC Authorizations necessary and, with respect to the
other Cellular Entities, to the Knowledge of Seller, are the only FCC
Authorizations necessary, to own or operate the Business and their respective
assets as currently conducted. The CenturyTel Entities and, to the Knowledge of
Seller, the other Cellular Entities hold all Authorizations with or under all
Requirements of Law and Governmental Authorities, including, without limitation,
all Authorizations from applicable state public utilities commissions or similar
state regulatory bodies ("State Commissions"), that are necessary and
appropriate for them to own or operate the Business and their respective assets,
properties and rights (together with the Company FCC Authorizations, the
"Company Authorizations," it being understood that the terms "Company FCC
Authorizations" and "Company Authorizations" shall include, without limitation,
the licenses disclosed on Schedule 3.13(a)). Schedule 3.13(a) sets forth a true,
correct and complete list of the Company FCC Authorizations and the other
material Company Authorizations used in connection with the Business and the
identity of the Person that holds each such Authorization. All Company
Authorizations are valid and in full force and effect, exclusively held by a
CenturyTel Entity or Cellular Entity, free and clear of any legal
disqualifications, conditions or other restrictions, and free and clear of all
Liens (in each case other than those customarily or routinely on such Company
Authorizations). There is not pending or, to the Knowledge of Seller, threatened
against any CenturyTel Entity and, to the Knowledge of Seller, there is not
pending or threatened against any other Cellular Entity, any application,
action, petition, objection or other pleading, or any proceeding, with the FCC
or any other Governmental Authority that challenges, questions or contests the
validity of, or any right, title and interest of the holder under, or
nonrenewal, termination, revocation, forfeiture or suspension of, any Company
Authorization. No CenturyTel Entity or, to the Knowledge of Seller, no other
Cellular Entity, is in default or has received any notice of any claim of
default, with respect to any Company Authorization. Each CenturyTel Entity and,
to the Knowledge of Seller, each other Cellular Entity has complied in all
respects with, and is not in violation of, any Requirement of Law to which the
Company Authorizations are subject, including, without limitation, rules,
regulations or orders of the FCC and any applicable State Commission. No
CenturyTel Entity or, to the Knowledge of Seller, no other Cellular Entity has
failed to adhere to the requirements, terms, conditions or restrictions of any
license, permit or authorization necessary to the ownership of the Company
Authorizations. Each CenturyTel Entity and, to the Knowledge of Seller, each
other Cellular Entity has fully and timely paid and is current in all respects
all local, state and federal fees, charges and assessments relating to the
Business and the Company Authorizations, including, without limitation, FCC
regulatory fees and universal service contributions. Except as otherwise
governed by any applicable Requirement of Law, all of the Company Authorizations
that are material to any CenturyTel Entity and, to the Knowledge of Seller, all
of the Company Authorizations that are material to any other Cellular Entity,
are renewable by their terms without the need to comply with any special
qualification procedures.
(b) Each of the Seller, the CenturyTel Entities, and their
respective Affiliates are currently, and have been at all times with respect to
the operation of the Business, in material compliance with (i) the Petition of
CenturyTel Wireless, Inc. for Limited Waiver as filed on September 25, 2001, as
amended, restated, modified or supplemented from time to time (collectively, the
"CenturyTel E-911 Waiver"), (ii) Section 20.18 of the Rules and Regulations of
the FCC (47 CFR Sec. 20.18) as amended or otherwise clarified by the FCC, and
(iii) the other FCC Mandates. Neither the CenturyTel Entities, nor to the
Knowledge (which will not require any investigation involving a contact or
inquiry of a Third Party) of Seller, the Cellular Entities in which the
CenturyTel Entity owns a Minority Interest have received a request from any
Public Safety Answering Point (the "PSAP") or Governmental Authority with
jurisdiction or control over a PSAP, requesting the provision of Phase II E-911
service in any area in which the CenturyTel Entities or the Cellular Entities
provide Cellular Service.
(c) The Company PCS Licenses disclosed on Schedule 3.13(a) are all
of the personal communication licenses that have been issued or granted to
Seller or any Affiliate of Seller for any BTA or MTA in Dubuque, Iowa or the
state of Wisconsin. All Company PCS Licenses are valid and in full force and
effect, exclusively held by the Seller or its Affiliates disclosed on Schedule
3.13(a), free and clear of any legal disqualifications, conditions or other
restrictions, and free and clear of all Liens (in each case other than those
customarily or routinely on such Company PCS Licenses). There is not pending or,
to the Knowledge of Seller, threatened against Seller or any Affiliate any
application, action, petition, objection or other pleading, or any proceeding,
with the FCC or any other Governmental Authority that challenges, questions or
contests the validity of, or any right, title and interest of the holder under,
or nonrenewal, termination, revocation, forfeiture or suspension of, any Company
PCS License. Neither Seller nor any Affiliate is in default or has received any
notice of any claim of default, with respect to any Company PCS License. The
Seller and its applicable Affiliate have (A) complied in all respects with, and
are not in violation of, any Requirement of Law to which the Company PCS
Licenses are subject, including, without limitation, rules, regulations or
orders of the FCC and any applicable State Commission, (B) constructed, or will
construct no later than April 28, 2002, sufficient facilities to provide
Adequate Service to at least one-quarter of the population in each of the
licensed service areas associated with the Company PCS Licenses ("FCC
Construction Requirement") and (C) filed or will timely file, fully complete and
accurate construction notifications with the FCC certifying that it has
satisfied the FCC Construction Requirement with respect to each of the Company
PCS Licenses, and such notifications have been granted by the FCC, or to
Seller's Knowledge, will be granted by the FCC in the ordinary course ("FCC
Construction Notification Requirement"). To Knowledge of Seller, there are no
microwave relocation obligations applicable to the Company PCS Licenses that
would trigger a reimbursement obligation to an operator in the licensed service
areas associated with the Company PCS Licenses upon the initiation of service by
the licensee of the Company PCS Licenses. Except as otherwise governed by any
applicable Requirement of Law, all of the Company PCS Licenses are renewable by
their terms without the need to comply with any special qualification
procedures. The provision of Cellular Services by the CenturyTel Entities,
pursuant to a Company PCS License, does not and will not (with or without the
giving of notice or the passage of time or both) violate, conflict with or
result in the breach of any term, condition or provision of, or require the
consent or approval of or notice to any other Person, or result in the
termination, modification or cancellation of, or accelerate the performance
required by, or result in the creation of any Lien, or otherwise adversely
affect the existing rights or obligations of the CenturyTel Entities under the
Cellular Agreements or any related Requirement of Law.
3.14 Employee Benefit Plans.
(a) Schedule 3.14(a) lists (and identifies the sponsor of) each
(i) Employee Pension Benefit Plan, (ii) Employee Welfare Benefit Plan and (iii)
other material retirement, pension, profit-sharing, money purchase, deferred
compensation, incentive compensation, bonus, stock option, stock purchase,
severance pay, unemployment benefit, vacation pay, savings, medical, dental,
post-retirement medical, accident, disability, weekly income, salary
continuation, health, life or other insurance, fringe benefit, or other employee
benefit plan, program, agreement, contract, commitment or arrangement, in each
case in the foregoing clauses (i) to (iii), maintained or contributed to by
Seller or any of its Affiliates in respect of or for the benefit of any Eligible
Employee or Leave Recipient, excluding any such plan, program, agreement, or
arrangement maintained or contributed to solely in respect of or for the benefit
of Eligible Employees, Leave Recipients or employees employed or formerly
employed by Seller or any of its Affiliates outside of the United States
(collectively, the "Plans"). Schedule 3.14(a) also lists each written
employment, severance, termination or similar-type agreement between Seller or
any of its Affiliates and any Eligible Employee or Leave Recipient (the
"Employment Agreement"), and each agreement, contract, commitment or arrangement
between Seller or any of its Affiliates and any collective bargaining or other
employee representative or labor union for any Eligible Employee or Leave
Recipient (the "Labor Contracts"). Except as disclosed on Schedule 3.14(a), the
execution and delivery of this Agreement by Seller and the performance of this
Agreement by Seller or any of its Affiliates will not result now or at any time
in the future in the payment to any employee who, upon the Closing, will be an
Eligible Employee or Leave Recipient of any severance, termination, or similar
payments or benefits.
(b) Each Plan (and each related trust, insurance contract, or fund)
has been maintained, funded and administered in all material respects in
accordance with the terms of such Plan and complies in all material respects in
form and in operation with the applicable requirements of ERISA and the Code.
(c) All contributions (including all employer contributions and
employee salary reduction contributions), which are due, have been made to each
Plan that is an Employee Pension Benefit Plan. All premiums or other payments
that are due have been paid with respect to each Plan that is an Employee
Welfare Benefit Plan.
(d) Each Plan which is intended to meet the requirements of a
"qualified plan" under Section 401(a) of the Code has received a determination
letter from the IRS to the effect that it meets the requirements of Section
401(a) of the Code.
(e) Since January 1, 1999, there has been no reportable event (as
such term is defined in Section 403(b) of ERISA) or prohibited transactions
(as such term is defined in Section 406 of ERISA) with respect to any Plan. No
withdrawal liability has been incurred by or asserted against any CenturyTel
Entity with respect to any "multiemployer plan" as defined in Section 3(37) of
ERISA (a "Multiemployer Plan"). No CenturyTel Entity contributes to any
Multiemployer
Plan.
(f) As of the last day of the most recent prior plan year, the
market value of assets under each Plan which is an Employee Pension Benefit
Plan (other than any Multiemployer Plan) equaled or exceeded the present value
of Liabilities thereunder (determined in accordance with then current funding
assumptions). No Plan has incurred an accumulated funding deficiency within the
meaning of Section 302 of ERISA or Section 412 of the Code.
3.15 Real Property.
(a) Schedule 3.15(a) lists all real property and interests in real
property owned, leased or operated by the CenturyTel Entities or used primarily
in the Business, including without limitation all real property reflected in the
Most Recent Fiscal Year End Company Financial Statements and the Operated
Cellular Entity Current Balance Sheets, and not sold, retired or otherwise
disposed of since the date thereof in the ordinary course of the Business
consistent with past practices (the "Real Property"). Schedule 3.15(a) specifies
the CenturyTel Entity owning, leasing, operating or using the Real Property, the
address, legal description or other description reasonably suitable to identify
the Real Property, a reasonable description (by category) of the use of such
Real Property, whether the Real Property is owned, leased, operated or used and
with respect to leased Real Property, the identity of the lessor.
(b) Each CenturyTel Entity purporting to own or lease Real Property
has good, valid and marketable title to, or a valid leasehold interest in, such
Real Property, free and clear of all Liens and other encumbrances and defects of
title of any nature whatsoever, except for Permitted Liens and Liens disclosed
on Schedule 3.15(b). No Person other than the CenturyTel Entity identified as
the owner on Schedule 3.15(a) owns any interest in any Real Property, except
with respect to the leased Real Property disclosed on Schedule 3.15(a), and all
Real Property is in the possession and subject to the control of a CenturyTel
Entity.
3.16 Assets; Condition of Assets.
(a) Asset Listings.
(i) Schedule 3.16(a)(i) contains a true, correct and complete
listing of all Assets that are vehicles, trailers or vehicle
attachments.
(ii) Schedule 3.16(a)(ii) contains a true, correct and complete
listing of substantially all Assets:
(A) of the Company or any wholly-owned
Subsidiary (that does not provide Cellular
Service) that are office equipment,
furniture or vehicles, including, without
limitation, desks, chairs, cabinetry,
leasehold improvements, personal computers
and other information technology equipment
and peripherals, copy machines, facsimile
machines, scanners and telecommunications
(voice or data) equipment and peripherals;
(B) of the Company or any wholly-owned subsidiary (that
provides Cellular Service), including, without
limitation, land, buildings and other land
improvements, Towers, switching equipment and
improvements (including, without limitation, base
stations), base station controllers, voice mail
platforms, enhanced service platforms and other
peripheral systems and improvements necessary for
the delivery or provision of products, services,
and back office systems, base station (analog
and digital) equipment and improvements, power
equipment and improvements, batteries, antennas,
microwave transport equipment and improvements,
radio frequency equipment and improvements,
line termination equipment and improvements and
microwave radio equipment and improvements;
(C) that are "plant under construction," including Assets
of the type described in Section 3.16(a)(ii)(B).
(iii) Each listing included as part of Schedule 3.16(a)(ii) may
omit certain Assets that are immaterial, individually and in the
aggregate, and that have been recently acquired and not yet recorded
on the books and records of the Business consistent the accounting
practices of the Business during the twelve months ended December 31,
2001. Each such listing also has been maintained in accordance
with GAAP (including, without limitation, Schedule 1.1(a)), except
that certain Assets reflected on such listing which are immaterial,
individually and in the aggregate, may be required to be removed from
the listing in accordance with GAAP due to the fact that such Assets
have been fully depreciated and have no book value or have been
retired.
(iv) Each of the Schedules referenced in this Section 3.16
specifies the CenturyTel Entity (by company number or cost-center
number, except for Schedule 3.16(a)(ii)(C) which has no such
identification) owning, leasing, licensing or otherwise using the
Asset listed thereon, the nature of the Asset, the current acquired
value, accumulated depreciation and book value (except that an Asset
on Schedule 3.16(a)(ii)(C) only has current acquired value), whether
the Asset is owned, leased, licensed or used, and with respect to
leased and licensed Assets, the identity of the lessor or licensor.
(v) Except as disclosed on Schedule 3.16(a)(v), there are no
material assets, properties or rights located on or situated on the
premises of any CenturyTel Entity other than the Assets.
(b) Each CenturyTel Entity purporting to own, lease or license any
Asset has good, valid and marketable title to, or a valid leasehold interest or
license in, such Asset, free and clear of all Liens, except for Permitted Liens
and Liens disclosed on Schedule 3.16(b). No Person other than the CenturyTel
Entity identified as the owner on Schedule 3.16(a) owns any interest in any
Asset, except with respect to the leased or licensed Assets disclosed on
Schedule 3.16(b), and all Assets are or at the Closing will be in the possession
and subject to the control of a CenturyTel Entity.
(c) All Assets (excluding Inventory), including without limitation
all buildings, structures, facilities, and equipment, are in good operating
condition and repair, subject to normal wear and maintenance, are useable in the
regular and ordinary course of the Business consistent with past practice and
are fit for their intended purpose, and conform in all material respects to all
applicable Requirements of Law relating to their construction, use and
operation. To the Knowledge of Seller, there are no facts or conditions
affecting the Assets which could, individually or in the aggregate, interfere in
any material respect with the use, occupancy or operation thereof as currently
used, occupied or operated, or their adequacy for such use.
(d) Except as disclosed on Schedule 3.16(d), neither Seller nor any
of its Affiliates who are not CenturyTel Entities has any license, lease,
options or ownership interests in, or other right to use, any of the Assets.
3.17 Sufficiency of Assets and Real Property. Except as disclosed on
Schedule 3.17, the Assets, Real Property, Company Intellectual Property,
Material Contracts and Company Authorizations comprise all the rights, assets
and properties used primarily in the operation of the Business in the manner
conducted by the Seller and its Affiliates during the 12 month period preceding
the date of this Agreement. Except as disclosed on Schedule 3.17, Seller has
conducted and presently conducts the Business only through the CenturyTel
Entities and not through any other divisions or any other Affiliate of Seller.
3.18 Environmental Matters. Except as disclosed on Schedule 3.18:
(a) All Environmental Permits required in accordance with any
Environmental Law for operation of the Business (i) have been obtained by the
appropriate CenturyTel Entity and (ii) are currently in full force and effect.
Each CenturyTel Entity is in compliance in all material respects with all
Environmental Permits required in accordance with any Environmental Law for
operation of the Business.
(b) Each CenturyTel Entity has complied and is in compliance with
all Environmental Laws in all material respects. To the Knowledge of Seller,
there are no events, conditions, circumstances, activities, practices,
incidents, actions or plans in any way related to any CenturyTel Entity which
will, or would reasonably be expected to, give rise to any Environmental Claim.
(c) There is no civil, criminal or administrative action, suit,
demand, Environmental Claim, hearing, notice or demand letter, notice of
violation, investigation or proceeding pending against any CenturyTel Entity, or
to the Knowledge of Seller, threatened against any CenturyTel Entity relating in
any way to any Environmental Permit or any applicable Environmental Law or any
plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder.
(d) None of the properties currently owned, leased, held or
operated by any CenturyTel Entity is contaminated with any Hazardous Material.
The properties formerly owned, leased, held or operated by any CenturyTel Entity
were not contaminated with Hazardous Materials prior to or during the period of
ownership or operation by them.
(e) Schedule 3.18(e) contains a true, correct and complete list of
each underground or above ground storage tank owned or operated by a CenturyTel
Entity or used in the Business. Any such underground or above ground storage
tank owned or operated by a CenturyTel Entity or used in the Business is in
compliance in all material respects with Environmental Law.
3.19 Labor Relations. Except as disclosed on Schedule 3.19, none
of the following is presently pending or, to Seller's Knowledge, threatened
against any CenturyTel Entity:
(a) any material unfair labor practice charges, complaints or
proceedings, or representation elections, petitions or demands;
(b) grievances or arbitration demands arising pursuant to any
collective bargaining agreement;
(c) any material claims, charges, complaints or other proceedings
alleging wrongful discharge, unlawful retaliation, or employment discrimination
of any nature; or
(d) work stoppages, strikes or other similar concerted action by
employees of any CenturyTel Entity.
None of the Eligible Employees or Leave Recipients are represented by a
labor union or labor organization and the CenturyTel Entities are not subject to
any collective bargaining agreement covering any Eligible Employee or Leave
Recipient.
3.20 Compliance with Law. Except as disclosed on Schedule 3.20,
each CenturyTel Entity has complied in all material respects with, and is not in
a material violation of, any Requirement of Law relating to the Assets, the
CenturyTel Entities, or the Business. Without limiting the generality of the
foregoing, neither Seller nor any of its Affiliates has committed any unfair
trade practice with respect to its distributors, dealers, resellers or agents in
connection with the operation of the Business.
3.21 Notes and Accounts Receivable. Except as set forth on Schedule
3.21, the notes and accounts receivable set forth on the Most Recent Fiscal Year
End Company Financial Statements, the Operated Cellular Entity Current Balance
Sheets or arising since the date thereof have been recorded in accordance with
GAAP and (a) have arisen only out of performance of Cellular Service or bona
fide sales and deliveries of Inventory, (b) are not subject to valid defenses,
recoupments, set-offs or counterclaims (other than such as are adequately
covered within reserves set forth on the face of the Most Recent Fiscal Year End
Company Financial Statements and the Operated Cellular Entity Current Balance
Sheets for complaints, returns or warranty claims consistent with the past
practices of the Business), (c) are collectible in full at the recorded amounts
thereof (without resort to litigation or assignment to a collection agency), net
of the allowance for doubtful or uncollectible accounts recorded in accordance
with GAAP, including, without limitation, Schedule 1.1(a), and (d) are not owed
to any other Person other than the CenturyTel Entities. To the Knowledge of
Seller, there exist no facts or circumstances (other than general economic
conditions) that are likely to result in any material increase in the
doubtfulness or uncollectibility of receivables. Schedule 3.21 also includes a
true, correct and complete listing as of January 31, 2002 of accounts and notes
receivable due to any CenturyTel Entity, which have been outstanding from the
applicable invoice date for (i) 30 days or less, (ii) more than 30 but less than
61 days, (iii) more than 60 days but less than 91 days, and (iv) more than 90
days.
3.22 Inventory. Schedule 3.22 lists the types, amounts and locations
of all Inventories as of January 31, 2002. All Inventories (a) have been
acquired and maintained in the ordinary course of Business consistent with past
practice, (b) do not include obsolete, discontinued, used, damaged or defective
items in excess of the allowance for obsolete inventory recorded in accordance
with GAAP, including, without limitation, Schedule 1.1(a), (c) are owned by the
CenturyTel Entities free and clear of all Liens, and (d) are recorded on the
books of the Business in accordance with GAAP.
3.23 Intellectual Property Matters.
(a) Schedule 3.23(a) contains a true, correct and complete list of
all Company Intellectual Property. The CenturyTel Entities own the entire right,
title and interest in, or are licensed or otherwise have the right (to the
extent of the CenturyTel Entity's interest therein) to use, sell, license and
dispose of, the Company Intellectual Property, free and clear of all Liens.
Except as set forth on Schedule 3.23(a), neither the Company Intellectual
Property nor the use or licensing thereof by any CenturyTel Entity infringes
upon or violates, or as a result of the execution and delivery of this Agreement
will infringe upon or violate, in any material respect, any Intellectual
Property rights of any Third Party. No claim with respect to the Company
Intellectual Property by or against any employee of any CenturyTel Entity who
has or has had access to any of the Company Intellectual Property has been made
or now exists. To the Knowledge of Seller, there is no breach of any
confidentiality agreement in favor of any CenturyTel Entity relating to the
Company Intellectual Property by employees or former employees of any CenturyTel
Entity, any other Affiliate of Seller or by
Third Parties.
(b) None of the Company Intellectual Property is subject to any
outstanding writ, order, injunction or decree, and no action, suit, proceeding,
hearing, investigation, or litigation is pending, or to the Knowledge of Seller
threatened, which challenges the validity, enforceability, use or ownership of
the item.
(c) Except as set forth on Schedule 3.23(c), no litigation is
pending and no written claim has been made against any CenturyTel Entity or, to
the Knowledge of any CenturyTel Entity or any other Affiliate of Seller, is
threatened, contesting the right of any CenturyTel Entity to use any Company
Intellectual Property or to sell or license to any Third Party any Company
Intellectual Property presently sold or licensed to such Person.
(d) None of the CenturyTel Entities or any other Affiliate of
Seller has received any notice from any Third Party indicating that any Third
Party is infringing upon or otherwise violating any of the rights of any
CenturyTel Entity to the Company Intellectual Property, and none of the
CenturyTel Entities has provided notice to any Third Party claiming that such
Person is infringing upon or otherwise violating any rights of any CenturyTel
Entity to the Company Intellectual Property.
3.24 Availability of Documents. Seller has delivered to Buyer copies
of all documents listed in the Schedules hereto as requested in writing by
Buyer. Such copies are true, correct and complete and include all amendments,
supplements and modifications thereto or waivers currently in effect thereunder.
3.25 Subscribers; Rate Plans; Form of Agreements. As of December 31,
2001, the aggregate number of Postpay Subscribers and Total Subscribers
(including within the category of Total Subscribers the active mobile telephone
numbers assigned pursuant to prepaid and reseller contracts or arrangements) was
not fewer than the corresponding amount disclosed for each such item on Schedule
3.25. Schedule 3.25 also sets forth a true, correct and complete (a) description
of the terms of each rate plan and promotion being offered by the CenturyTel
Entities in the Business since January 1, 2001, (b) description of the products
and services provided to subscribers of the Business in addition to basic voice
cellular; and (c) copy of each form of subscriber agreement used in the Business
during the 24 month period preceding the date hereof.
3.26 Absence of Undisclosed Liabilities. Except as set forth on
Schedule 3.26, no CenturyTel Entity has any Liabilities except those Liabilities
(a) set forth on the face of the Most Recent Fiscal Year End Company Financial
Statements or, if applicable, the Operated Cellular Entity Financial Statements
or the Operated Cellular Entity Current Balance Sheets or (b) incurred in or as
a result of the normal and ordinary course of the Business, consistent with past
practice, since the date of the Most Recent Fiscal Year End Company Financial
Statements.
3.27 First Refusal Rights. Except as set forth on Schedule 3.27,
neither the execution of this Agreement nor the performance of any of the
transactions contemplated hereby will create, result in or otherwise trigger any
First Refusal Right. Schedule 3.27 sets forth with respect to each First Refusal
Right:
(a) the Cellular Entity and Cellular Interests to which it relates;
(b) the sections of the applicable Cellular Agreement that govern
the terms and conditions of the First Refusal Right;
(c) the name of each First Refusal Right Holder or other Person
(including the Cellular Entity) entitled to receive notice of such First
Refusal Right and its applicable First Refusal Percentage;
(d) the address to which any notice of any First Refusal Right
must be sent;
(e) the Offer Price (prior to giving effect to any over-subscription
or similar rights in the event that any holder of a Third Party Interest fails
to exercise its First of Refusal Rights in full) payable by each First Refusal
Right Holder as a result of the First Refusal Right;
(f) any other material terms and conditions that must be contained
in an Offer Notice; and
(g) the time period, if any, by which an Offer Notice must be given
to any Person.
3.28 Brokers or Finders. Except as set forth on Schedule 3.28,
neither Seller nor any of its Affiliates has incurred an obligation or
liability, contingent or otherwise, for brokers' or finders' fees or agents
commissions or other similar payments in connection with this Agreement or the
transactions contemplated hereby.
3.29 Towers.
(a) Schedule 3.29(a) sets forth a list of all Towers, including for
each Tower the address and height and whether the Tower is located on Real
Property owned or leased by a CenturyTel Entity. Except as disclosed on Schedule
3.29(a), (i) each of the Towers has an engineered foundation and is a steel
structure and (ii) all improvements on the Real Property at the sites on which
the Towers are located (such Real Property and improvements thereon are referred
to collectively herein as the "Tower Sites") are in compliance in all material
respects with all applicable Requirements of Law, including, without limitation,
all rules, regulations and orders of the FCC and the United States Federal
Aviation Administration, and applicable title covenants, conditions,
restrictions and reservations necessary to conduct the Business.
(b) The utility services available to each Tower Site are adequate
for the present use of such Tower Site by the CenturyTel Entities and any Third
Party and who is a tenant using the Tower Sites, are being supplied by utility
companies or pursuant to valid and enforceable contracts or tariffs, and there
is no condition, individually or in the aggregate, which will result in the
termination of the present access from such Tower Site to such utility services.
(c) The CenturyTel Entities have obtained all easements and rights-
of-way that are reasonably necessary to provide vehicular and pedestrian ingress
and egress to and from each of the Tower Sites for the conduct of the Business.
No litigation, arbitration, investigation or other proceeding is pending or, to
Seller's Knowledge, threatened which, individually or in the aggregate, would
have the effect of terminating or materially limiting such access.
3.30 Roaming.
(a) Schedule 3.30(a) contains a true, correct and complete:
(i) list of the six Commercial Mobile Service providers
("Roaming Partners") for which the CenturyTel Entities recognized the
most Roaming Revenue during the calendar year ending December 31, 2001;
(ii) the calendar quarterly amount of Roaming Revenues by air
time, toll and other charges applicable thereto for each Roaming
Partner during the calendar years ending December 31, 2000 and 2001;
(iii) the calendar quarterly number of minutes of Cellular
Service provided by the CenturyTel Entities to subscribers of the
Roaming Partners by air time and toll for each Roaming Partner during
the calendar years ending December 31, 2000 and 2001;
(iv) the calendar quarterly amount of Roaming Expenses by air
time, toll and other charges applicable thereto for each Roaming
Partner during the calendar years ending December 31, 2000 and 2001;
(v) the calendar quarterly number of minutes of Commercial
Mobile Service provided by the Roaming Partners to subscribers of the
CenturyTel Entities by air time and toll for each Roaming Partner
during the calendar years ending December 31, 2000 and 2001;
(vi) the calendar quarterly amount of Roaming Revenues and
Roaming Expenses, in each case by air time, toll and other charges
applicable thereto for each Commercial Mobile Service provider (other
than the Roaming Partners) during the calendar years ending December
31, 2000 and 2001;
(vii) the calendar quarterly number of minutes of Cellular
Service provided by the CenturyTel Entities to subscribers of all
other Commercial Mobile Service providers (other than the Roaming
Partners), in each case, by air time and toll for each Commercial
Mobile Service provider during the calendar years ending December 31,
2000 and 2001;
(viii) the calendar quarterly amount of minutes of Commercial
Mobile Service provided by all other Commercial Mobile Service
providers (other than the Roaming Partners) to subscribers of the
CenturyTel Entities by air time and toll for each Commercial Mobile
Service provider during the calendar years ending December 31, 2000
and 2001; and
(ix) copies of each agreement, contract or commitment
(including, without limitation, all amendments, supplements and
modifications thereto and waivers in effect thereunder, in each case
whether written or oral) for roaming services with each Roaming
Partner.
(b) Other than as set forth on Schedule 3.30(b), the CenturyTel
Entities have no obligation, requirement or commitment of any kind or
description whatsoever (whether written or oral) to load any SID or BID of any
Commercial Mobile Service provider into any cellular handsets, including,
without limitation any cellular handsets possessing tri-mode capabilities, sold
or licensed, or that may be sold or licensed in the future, by the CenturyTel
Entities or to send or deliver any amount of roaming traffic or revenue to any
Person, including, without, limitation the Roaming Partners.
(c) Except as set forth on Schedule 3.30(c), there are no claims,
actions or disputes pending, or to the Knowledge of Seller, threatened, between
any of the CenturyTel Entities and any Person, including, without limitation,
the Roaming Partners, with regard to roaming charges, including, without
limitation, any claim of overcharging or undercharging.
3.31 Certain Relationships.
(a) In connection with the operation of the Business, neither
Seller, nor any of its Affiliates, nor any of their respective officers, agents
or employees has (i) made any unlawful contributions, gifts, entertainment or
other unlawful expenses, (ii) made any unlawful payment to any governmental
official, (iii) established or maintained any unrecorded fund or made any false
entry on the books and records of the Business or any CenturyTel Entity, or (iv)
made any bribe, rebate, kickback or similar unlawful payment or given a gift
that is not deductible for federal income tax purposes.
(b) Since December 31, 2000, except as set forth on Schedule
3.31(b) none of the CenturyTel Entities or to the Knowledge of Seller, the
Cellular Entities has made, entered into or performed any agreement,
understanding, commitment, arrangement or obligation (written or oral) with any
of the directors, officers or employees of Seller or any of its Affiliates
(other than in their capacities as directors, officers, or employees), any of
their spouses or relatives, or any Person in which any of the directors,
officers or employees of Seller or any of its Affiliates or any of their spouses
or relatives has more than a 5% ownership interest, individually or in the
aggregate.
3.32 Bundled Subscribers. Schedule 3.32 sets forth (a) the number
of subscribers of the CenturyTel Entities that are billed for communications
services (other than Cellular Services) provided by Seller and any of its
Affiliates (other than the CenturyTel Entities) on the same xxxx that such
subscribers are billed for Cellular Service provided by the CenturyTel Entities
and (b) the MSA or RSA, as the case may be, corresponding to the location where
the xxxx is delivered to such subscriber.
3.33 Business Relationships. Schedule 3.33 contains a true, correct
and complete description of each relationship, arrangement, agreement, contract
or commitment whether written or oral (including, without limitation, all
amendments, supplements and modifications thereto and waivers, in each case,
whether written or oral) with the Seller or its Affiliates relating to the
management, operation or financing of any Operated Cellular Entity. Without
limiting the generality of the foregoing, Schedule 3.33 sets forth with respect
to each such relationship, arrangement, agreement, contract or commitment a
true, correct and complete description, to the extent applicable, of the
following:
(a) any goods to be delivered or services to be provided to or for
the benefit of an Operated Cellular Entity, and any related service quality
standards, performance criteria, standards of liability, exculpatory provisions
and limitations of liability;
(b) the term, the expiration date, any renewal rights, and any
termination rights (whether for cause, without cause, for convenience or
otherwise) of any arrangements, understandings or practices for the delivery of
goods or performance of services;
(c) any fee, remuneration or other compensation payable in
connection with the delivery of goods or performance of services to or for the
benefit of an Operated Cellular Entity;
(d) any arrangements, understandings or practices regarding the
ability of an Affiliate to incur costs or expenses (direct or indirect) on
behalf of an Operated Cellular Entity or in connection with the delivery of
goods or performance of services for the benefit of an Operated Cellular Entity,
and any terms for the reimbursement or recoupment of such costs and expenses
(including, without limitation, any xxxx-up, premium or cost-plus provisions);
(e) any arrangements, understandings or practices regarding the
advancement, extension or borrowing of funds (including, without limitation,
cash management practices and procedures) between or among an Affiliate and the
Operated Cellular Entities, including, without limitation, all payment terms,
applicable interest rates and financing or other charges;
(f) any right of an Affiliate to enter into relationships,
arrangements, agreements, contracts or commitments for delivery of goods or the
performance of services to or from an Operated Cellular Entity.
3.34 Disclosure. No representation or warranty contained in this
Agreement (including the Schedules hereto) or in any certificate or Exhibit
attached to this Agreement or furnished by Seller, any of its Affiliates, or
their respective representatives, contains any untrue statement of a material
fact, or omits any material fact necessary in order to make the statements and
information contained herein or therein not misleading. Neither Seller nor any
of its Affiliates has any Knowledge of any facts, circumstances or conditions
pertaining to the CenturyTel Entities, the Cellular Interests or the Business
(other than those facts, circumstances or conditions disclosed in this Agreement
and the Schedules and Exhibits hereto) that would be reasonably expected to
cause any condition to Closing specified in Article 6 to not be satisfied.
3.35 No Other Representations or Warranties. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, NONE OF
SELLER, ANY CENTURYTEL ENTITY OR ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR
IMPLIED REPRESENTATION OR WARRANTY ON BEHALF OF SELLER OR ANY CENTURYTEL ENTITY
WITH RESPECT TO THE BUSINESS, THE CELLULAR INTERESTS OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, AT LAW OR IN EQUITY, INCLUDING, WITHOUT
LIMITATION, WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE, AND ANY SUCH REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY
DISCLAIMED.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization. Buyer is a corporation duly formed, validly
existing, and in good standing under the laws of Delaware.
4.2 Authority. Buyer has all necessary corporate power, authority
and legal right to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Buyer of this Agreement has been duly approved and authorized by all necessary
action on the part of Buyer. This Agreement has been duly executed and delivered
by Buyer and, assuming the due execution and delivery by the parties thereto
other than Buyer, this Agreement constitutes the legal, valid and binding
obligations of Buyer in accordance with its respective terms, except as such
enforceability may be limited by bankruptcy laws and other similar laws
affecting creditors' rights generally and general principles of equity.
4.3 No Conflict. Upon the receipt of the consents, approvals and
Authorizations from the FCC, the State Commissions and other Governmental
Authorities, compliance with any applicable requirement of the HSR Act and the
receipt of the consents set forth on Schedule 4.3, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by Buyer does not and will not violate, conflict with or
result in the breach of any term, condition or provision of, or require the
consent of any other Person under, (a) the charter and bylaws of Buyer, (b) any
existing Requirement of Law to which Buyer is subject, or (c) any judgment,
order, writ, injunction, decree or award of any Governmental Authority or any
other Governmental Order which is applicable to Buyer. Except as aforesaid, no
Authorization and no filing or notification with any Governmental Authority or
any other Person is required in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby by Buyer or any of its Affiliates, other than post-Closing
notifications required to be made with the FCC.
4.4 Brokers or Finders. Except as set forth on Schedule 4.4,
neither Buyer nor any of its Affiliates has incurred an obligation or liability,
contingent or otherwise, for brokers' or finders' fees or agents' commissions or
other similar payments in connection with this Agreement or the transactions
contemplated hereby.
4.5 Financial Resources. Buyer has sufficient financial resources
to pay the Purchase Price at Closing in the manner specified in Section 2.2
and all related fees and expenses. Buyer has sufficient financial resources
to operate the Business after the Closing Date.
4.6 No Other Representations or Warranties. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, NONE OF
BUYER, ANY AFFILIATE OF BUYER OR ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR
IMPLIED REPRESENTATION OR WARRANTY ON BEHALF OF BUYER WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AT LAW OR IN EQUITY, INCLUDING,
WITHOUT LIMITATION, WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE, AND ANY SUCH REPRESENTATIONS OR WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED.
ARTICLE 5
COVENANTS AND AGREEMENTS
5.1 Regulatory Approvals.
(a) The parties shall use their reasonable best efforts to file no
later than five Business Days after the date hereof (but in no event later than
ten Business Days after the date hereof) or such other time as the parties may
mutually agree (i) all necessary applications and notices (which applications
and notices will comply in all material respects with all Requirements of Law,
including, without limitation, the Communications Act and the rules, regulations
and orders of the FCC) with the FCC to obtain the consent, approval and
Authorization of the FCC to consummate the Stock Sale and the transactions
contemplated hereby, including, without limitation, transfer of Control of the
Company FCC Authorizations to Buyer and its Affiliates and (ii) except for any
applicable requirement of the HSR Act, shall file all necessary applications and
notices (which applications and notices will comply in all material respects
with all Requirements of Law, including, without limitation, the rules,
regulations and orders of the State Commissions and any other applicable
Governmental Authorities) with the State Commissions and other applicable
Governmental Authorities to obtain the consents, approvals and Authorizations of
the State Commissions and other applicable Governmental Authorities to
consummate the Stock Sale and the transactions contemplated hereby, including,
without limitation, the transfer of Control of the Company Authorizations to
Buyer and its Affiliates. No later than 10 Business Days after the date hereof,
Buyer shall file an amendment to its pending Petition for Waiver of Sections
20.18(e) and (g) of the FCC's Rules filed with the FCC on July 25, 2001 and
supplemented on November 30, 2001 (the "E-911 Waiver") to include Company
MSAs/RSAs related to the CenturyTel Entities in the E-911 Waiver and to permit
the CenturyTel Entities to utilize a handset based solution following the
Closing (the "Amended E-911 Waiver"). Seller and Buyer shall diligently and
jointly prosecute all such applications and take all such actions and give all
such notices as may be required or requested by the FCC, the State Commissions
or other applicable Governmental Authorities or as may be appropriate in an
effort to expedite the grant of such consents, approvals and Authorizations by
the FCC, the State Commissions or other applicable Governmental Authorities.
(b) The parties shall, as promptly as practicable after the date
hereof but in any event no later than 30 calendar days after the date hereof,
file all notification reports required under the HSR Act, and file, as promptly
as practicable after any request therefor, any additional information required
under or in connection with the HSR Act. Each of Seller and Buyer will be
responsible for preparing and filing any reports or information required to be
filed by it under or in connection with the HSR Act and for paying all their
respective costs and expenses incurred in connection with such preparation and
filing; except that Buyer and Seller shall each pay one-half of all filing fees
required under the HSR Act with respect to the Stock Sale and the transactions
contemplated hereby.
(c) Except to the extent prohibited by Requirements of Law, each
party hereto shall provide to the other party hereto copies of all applications,
filings and material correspondence with the FCC, State Commissions and other
Governmental Authorities with respect to the applications, notices, filings and
consents, approvals and Authorizations described in this Section 5.1. Seller
shall (and shall cause the CenturyTel Entities to) promptly provide Buyer with
copies of all applications, notices, filings and other correspondence to the
FCC, the State Commissions and other Governmental Authorities and any notices,
consents, approvals, Authorizations, orders or correspondence received from the
FCC, the State Commissions or other Governmental Authorities.
5.2 Third Party Consents.
(a) After the date hereof, Seller shall, and shall cause each of
its Affiliates to, use its reasonable best efforts to obtain as soon as
practicable those consents, approvals and Authorizations identified on Schedule
3.6. Buyer shall reasonably cooperate with Seller in obtaining such consents,
approvals and Authorizations, but in no event shall Buyer or any of its
Affiliates be required to pay any fee or other consideration in connection
therewith. Seller's obligations contained in this Section 5.2(a) shall continue
for a period of 180 calendar days following the Closing Date.
(b) Buyer shall, and shall cause each of its Affiliates to, use its
reasonable best efforts to obtain prior to the Closing Date those consents,
approvals and Authorizations identified on Schedule 4.3. Seller shall reasonably
cooperate with Buyer in obtaining the consents referred to in this Section
5.2(b), but in no event shall Seller or any of its Affiliates be required to pay
any fee or other consideration in connection therewith.
5.3 Interim Reports; Updated Information.
(a) Without limiting any obligations or requirements of Seller or
its Affiliates under the Transition Services Agreement, Seller shall provide to
Buyer copies of the reports and updated information described on Schedule 5.3 on
a monthly or other frequency contemplated by Schedule 5.3 for such report or
updated information, in each case in a form and medium reasonably acceptable to
Buyer.
(b) Within five Business Days of the date hereof, Seller shall
deliver to Buyer a certificate, executed by a duly authorized executive officer
of Seller, certifying that a true, correct, and complete copy of each Cellular
Agreement (including, without limitation, all amendments, supplements, and
modifications thereto and waivers in effect thereunder) is attached to such
certificate. The Buyer shall be entitled to rely on the accuracy and
completeness of such copies of the Cellular Agreements for all purposes under
this Agreement.
5.4 Conduct of the Business. Except as set forth on Schedule 5.4,
as expressly required or permitted by the terms and conditions of this Agreement
or as otherwise consented to by Buyer in writing, Seller shall (and shall cause
each of its Affiliates to, including, without limitation, the CenturyTel
Entities) conduct and operate the Business (i) in the ordinary course consistent
with past practice and in compliance in all material respects with all
Requirements of Law, including, without limitation the Communications Act and
the rules, regulations and orders of the FCC and the State Commissions and (ii)
in such a manner that at all times prior to and on the Closing Date, the
representations and warranties of Seller contained in this Agreement shall be
true and correct as though such representations and warranties were made at and
as of such times. Without limiting the generality of the foregoing or otherwise
with the prior written consent of Buyer, Seller shall (and shall cause each of
its Affiliates to, including, without limitation, the CenturyTel Entities)
observe and comply with the following covenants with respect to the Business:
(a) use its reasonable best efforts to preserve intact the
services of its employees, agents, dealers, distributors and resellers;
(b) not sell, lease, license, or otherwise dispose, in whole or in
part, any of its assets, properties or rights or any right, title or interest
therein or thereto, including, without limitation, the Assets, Real Property or
the Company Authorizations, other than the sale of Inventory in the ordinary
course of Business consistent with past practice or the lease of space on a
Tower to Third Parties on terms consistent with those imposed during the period
from January 1, 2001 through December 31, 2001 and consistent in frequency and
amount with the leasing activity of the Business that occurred during such
twelve month period;
(c) use its reasonable best efforts to preserve its relations and
goodwill with its suppliers, subscribers (including, without limitation, Postpay
Subscribers), partners and any other Person having a business relationship with
it;
(d) maintain (including, without limitation, through the making of
capital improvements) the Assets in good repair, working order and condition,
including, without limitation, preserving the equipment, systems and other fixed
assets as necessary to keep the existing functionality and reliability thereof
and to support Seller's anticipated growth and associated capacity requirements
and use its reasonable best efforts to maintain the reliability standards,
footprint coverage and network capacity;
(e) keep in full force and effect the insurance policies set forth
on Schedule 3.10;
(f) conduct and, as applicable, continue the rate plans and
promotions as disclosed on Schedule 3.25;
(g) not grant or otherwise commit to make any increase in the
compensation of the Eligible Employees or Leave Recipients or modify or amend
any benefits provided to any Eligible Employee or Leave Recipient, except (i) as
mandated by a Requirement of Law or (ii) to the extent required by any
agreement, plan, commitment or program existing on the date hereof and disclosed
in the Schedules;
(h) not enter into any employment or consulting agreement with any
Eligible Employee, Leave Recipient or any other Person other than any such
agreement that is terminable at will without Liability or that will not impose
any Liability upon the Buyer or its Affiliates (including, without limitation,
the CenturyTel Entities) subsequent to the Closing;
(i) use its reasonable best efforts to xxxx and collect its
receivables and pay its trade payables consistent with past practice;
(j) maintain customer service operations in the ordinary course
of Business consistent with past practice, and refrain from changing any
policies or practices relating to customer service in any material manner;
(k) not implement any change in (i) the terms and conditions of
forms of customer and subscriber agreements or (ii) the rate plans or products
and services being provided to subscribers (including, without limitation,
Postpay Subscribers) of the Business, including, without limitation, those
disclosed on Schedule 3.25;
(l) not incur any Indebtedness (other than trade payables for
which Buyer receives an adjustment to the Purchase Price in accordance with
Article 2), except for advances from Seller or its Affiliates;
(m) not redeem, repurchase or acquire any Shares or any capital
stock, limited partner interest, general partner interest, membership interest,
unit or other equity or similar interest in any Person, except pursuant to First
Refusal Rights in accordance with Section 5.5(f);
(n) not issue, sell or dispose of any capital stock, limited
partner interest, general partner interest, membership interest, unit or other
equity or similar interest in a CenturyTel Entity or Cellular Entity, or any
securities, options, warrants, obligations or other rights convertible or
exchangeable into or exercisable for, or give any Person a right to subscribe
for or acquire, any stock, limited partner interest, general partner interest,
membership interest, unit or other equity or similar interest in any CenturyTel
Entity or Cellular Entity, other than pursuant to First Refusal Rights in
accordance with Section 5.5;
(o) use its reasonable best efforts to ensure that all agreements,
understandings, arrangements, commitments or obligations entered into after the
date hereof and before the Closing Date do not require the consent of any other
Person who is a party thereto or bound thereby to consummate the Stock Sale or
the transactions contemplated hereby;
(p) not amend or modify the certificate of incorporation, bylaws,
general partnership agreement, limited partnership agreement, operating
agreement or other similar organizational or management documents (including,
without limitation, the Cellular Agreements) of a CenturyTel Entity or Cellular
Entity;
(q) not split, combine or reclassify the respective outstanding
shares of capital stock, limited partner interest, general partner interest,
membership interest, unit or other equity or similar interest of a CenturyTel
Entity or Cellular Entity;
(r) not terminate or amend, modify or waive any terms or conditions
of any Material Contract or fail to perform, enforce or exercise any material
rights or obligations under any Material Contract, except for terminations that
occur automatically in accordance with the provisions of any such contract and
terminations effected by a CenturyTel Entity upon a default by any other party
to any such contract;
(s) not enter into any new contract, agreement, understanding,
arrangement, commitment or obligation that would constitute a Material Contract
hereunder other than any contract, agreement, understanding, arrangement,
commitment or obligation, irrespective of the amounts payable thereunder, that
would constitute a Material Contract under Sections 3.9(vi), (x), (xii) or
(xiii) entered into in the ordinary course of Business consistent with past
practice;
(t) not declare, set aside or pay any noncash dividend or make any
noncash distribution with respect to the capital stock, limited partner
interests, general partner interests, membership interests, units or other
equity or similar interests of any CenturyTel Entity or Cellular Entity;
(u) use its reasonable best efforts to maintain all of its right,
title and interest in and to, and the validity of, the Company Authorizations,
and not engage in any transactions or take any action or omit to take any action
which will or would reasonably be likely to adversely affect any right, title or
interest in and to, or the validity of, any of the Company Authorizations;
(v) not materially change any policies or procedures with respect
to the classification or treatment of disconnects or the granting of
adjustments to subscriber accounts;
(w) maintain levels and types of Inventory in the ordinary course
of Business consistent with past practice, and shall not capitalize the costs of
cellular handsets or accessories or any marketing, advertising or similar costs
related to the acquisition of subscribers;
(x) not change any accounting policy, procedure or methodology with
respect to the Business, including, without limitation, those specified on
Schedule 1.1(a) and those relating to the recognition of revenue or the
deferral, classification or allocation of expenses or charges (including,
without limitation, Affiliated Charges);
(y) not terminate, amend, modify or waive any terms or conditions
of any agreement, contract or commitment for roaming services (including,
without limitation, the agreements, contracts or commitments with Roaming
Partners) or fail to perform, enforce, or exercise any material rights or
obligations thereunder; and
(z) not agree, orally or in writing, or grant any other Person, an
option to do any of the things specified in subparagraphs (a) through (y) above.
5.5 First Refusal Right.
(a) General. Between the date of this Agreement and for a period of
up to 180 calendar days following the Closing and subject to the terms and
conditions of this Section 5.5, Seller shall, and shall cause each of its
Affiliates to, at Seller's sole cost and expense, use its reasonable best
efforts to terminate each First Refusal Right listed on Schedule 3.27, or to
obtain an irrevocable waiver or release in the form attached hereto as Schedule
5.5(a) from any First Refusal Right Holder listed on Schedule 3.27, so as to be
able to transfer the Shares to Buyer free and clear of all Liens (including,
without limitation, any claims with respect to any First Refusal Right) and
without any recourse to, and without imposing any Liability upon, a CenturyTel
Entity from and after the Closing Date. Without limiting any provision of this
Section 5.5, Seller shall keep Buyer reasonably apprised as to the status of its
efforts and promptly furnish to Buyer copies of all notices and correspondence
related hereto. Buyer agrees to cooperate reasonably with Seller in connection
therewith. Seller shall not provide any notice to a Third Party under this
Section 5.5 unless it relates to a Cellular Interest listed on Schedule 3.27 or
Buyer agrees in writing or consents thereto in writing in its sole discretion.
(b) Notice to First Refusal Right Holders.
(i) Seller shall, and shall cause each of its Affiliates to,
provide notice to each First Refusal Right Holder (or other Person
entitled to notice) in the form of notice attached hereto as Schedule
5.5(b)(i) that applies to each particular First Refusal Right (the
"Offer Notice") in accordance with the terms and conditions of this
Section 5.5. The Seller shall deliver the Offer Notice to the First
Refusal Holders on the date specified in writing by Buyer, which date
Buyer agrees will be the earliest date, in its reasonable determina-
tion, on which the Offer Notice should be delivered to the applicable
First Refusal Right Holders so as to minimize the risk that any waiver
or termination obtained for any related First Refusal Right will lapse
or no longer be effective on the anticipated Closing Date. Unless
otherwise required by the terms of a First Refusal Right, Seller
shall not, and shall cause its Affiliate not to, deliver any Offer
Notice until Seller and Buyer have agreed upon the date at which such
Offer Notice should be delivered to the First Refusal Right Holder.
(ii) Each Offer Notice will be accompanied by the purchase
agreement that applies to each particular First Refusal Right in the
form attached hereto as Schedule 5.5(b)(ii) that provides the terms
and conditions on which any First Refusal Right Holder will be
entitled to purchase any portion or all of a Cellular Interest
pursuant to a First Refusal Right.
(iii) The Offer Price contained in each Offer Notice will be
determined by multiplying (A) times (B), where (A) is the First
Refusal Percentage of the applicable First Refusal Right Holder and
(B) is the Agreed Value of the applicable Cellular Interest.
(c) Responses from First Refusal Right Holders.
(i) Seller will immediately advise Buyer of any notices or
communications (whether written or oral) and provide any copies of
notices or communications received by Seller or any of its Affiliates
in response to an Offer Notice or otherwise related to a First Refusal
Right.
(ii) In the event that Seller or any of its Affiliates is
required to deliver any subsequent Offer Notices to First Refusal
Right Holders or other Persons in addition to the original Offer
Notice specified in Section 5.5(b), Seller agrees, and shall cause
each of its Affiliates to, provide such notice in the form of notice
attached hereto as Schedule 5.5(c) that applies to each particular
First Refusal Right.
(iii) In the event that Seller is required to recalculate the
Offer Price payable by any First Refusal Right Holder due to the
presence of over-subscription or similar rights that are triggered if
any other First Refusal Right Holder fails to purchase its propor-
tionate share of any Cellular Interests subject to a First Refusal
Right, then Seller will prepare a revised calculation of such Offer
Price and obtain Buyer's written approval, which will not be
unreasonably withheld, of such calculation prior to distributing any
notice containing such revised Offer Price in accordance with Section
5.5(c)(ii).
(d) First Refusal Exercises.
(i) As used in this Agreement, a "First Refusal Exercise"
shall have occurred with respect to a First Refusal Right if the
First RefusalRight Holder has exercised its First Refusal Right in
accordance with all terms and conditions of such First Refusal Right,
including, without limitation, any terms and conditions specified in
the Cellular Agreement that must be fulfilled or satisfied in order
for the First Refusal Right Holder to be entitled to all or any
portion of a Cellular Interest in accordance therewith. If there is
any question or uncertainty as to whether a First Refusal Exercise has
occurred, the Buyer's determination, in the exercise of its
reasonable judgment, of any such question or uncertainty shall
control for all purposes of this Agreement.
(ii) In the event of the occurrence of a First Refusal
Exercise, the following provisions will apply to the affected
Cellular Interests:
(A) any portion of a Cellular Interest subject
to a First Refusal Exercise shall not be
considered to be a Cellular Interest for the
purposes of this Agreement and shall be
deemed to be an "Excluded Cellular
Interest";
(B) if a portion but not all of the Cellular
Interests held by one or more CenturyTel
Entities (or other Affiliates) is subject to
the First Refusal Exercise, Buyer shall have
the right (but not the obligation), in its
sole discretion, to designate any or all of
the remaining portion of the Cellular
Interest to also be an Excluded Cellular
Interest.
(iii) With respect to any Excluded Cellular Interest,
Seller will be obligated as soon as practicable, but in any event
prior to Closing, to transfer the following assets, properties and
rights (which shall be deemed to be Excluded Assets for purposes of
this Agreement) to an Affiliate of Seller that is not a CenturyTel
Entity (which transfer will be without recourse to, and shall impose
no Liability upon, any CenturyTel Entity from and after the Closing
Date or upon Buyer and its Affiliates at any time):
(A) the Excluded Cellular Interest;
(B) any management, service or other agreements,
commitments or arrangements to which any
CenturyTel Entity is a party or bound
thereby related to the Excluded Cellular
Interest.
With respect to any agreement, commitment or arrangement described in
clause (B) immediately above for which the Seller and its Affiliates
will not be able to perform their obligations due to the Stock Sale
after the Closing Date without the benefit of certain assets,
properties or rights of the Business and to the extent the Buyer is
able to perform such obligations as a result of the Stock Sale, the
Buyer agrees to provide to Seller for a period of up to three months
after the Closing Date any services necessary for Seller to perform its
obligations on the same terms and conditions that would apply to such
services under the Transition Services Agreement (as if Buyer were the
"Providing Party" thereunder and Seller were the "Receiving Party"
thereunder).
(iv) With respect to each Excluded Cellular Interest, the Base
Purchase Price shall be reduced in accordance with Section 2.2 by an
amount equal to all Excluded Cellular Interest Amounts.
(v) Seller shall keep Buyer reasonably apprised of all
developments with respect to the disposition of any Excluded Cellular
Interest, and Seller shall not (and shall not allow any Affiliate to)
amend or modify the terms and conditions of any agreement, contract or
commitment to dispose of any Excluded Cellular Interest without the
prior written consent of Buyer, which consent may be withheld at
Buyer's sole discretion.
(vi) If a First Refusal Right Holder fails to consummate the
purchase of all (but not less than all) of the Excluded Cellular
Interest in a Cellular Entity within 120 days after the Closing Date,
Buyer shall have the obligation to purchase all of such Excluded
Cellular Interests in accordance with this Agreement. In all other
instances in which a First Refusal Right Holder fails to consummate
the purchase of an Excluded Cellular Interest, Buyer shall have the
right (but not the obligation), in Buyer's sole discretion, to
purchase all or any portion of any such Excluded Cellular Interest in
accordance with this Agreement.
(e) No Liability to Buyer; Indemnification. Subject to the last
sentence of this Section 5.5(e), Buyer shall have no Liability, before or after
Closing and without regard to any termination of this Agreement, with respect to
any First Refusal Right or Excluded Cellular Interest. Without limiting the
generality of the foregoing and in addition to the indemnification obligations
of Seller set forth elsewhere herein, Seller shall indemnify, defend and hold
harmless each Buyer Indemnitee against and in respect of any and all Losses or
Taxes incurred or suffered by any Buyer Indemnitee that result from, relate to
or arise out of (i) First Refusal Rights, (ii) Excluded Cellular Interests and
any related Excluded Assets, and (iii) any and all actions, suits, claims,
proceedings, investigations, demands, assessments, audits, fines, judgments,
costs and other expenses incident to any of the foregoing or to the enforcement
of this Section. The provisions of this Section 5.5 will survive indefinitely
the Closing or termination of this Agreement. Notwithstanding the foregoing
provisions of this Section 5.5(e), if the Closing occurs and Seller was deemed
at Closing to have waived the condition to Closing regarding First Refusal
Rights in accordance with the last sentence of Section 6.2(c), Seller shall have
no obligation to indemnify any Buyer Indemnitee with respect to any Losses or
Taxes that result from, relate to or arise out of the deemed waiver of such
condition in Section 6.2(c).
(f) Other Rights of First Refusal. If Seller or any of its
Affiliates receives a notice from any Person that provides Seller or any of its
Affiliates with notice of a right of first refusal or other similar right to
purchase or acquire any Third-Party Interest, Seller will immediately provide a
copy to Buyer of any such notice and any additional supporting documentation
that Buyer may reasonably request. Within ten Business Days of Buyer's receipt
of such notice, Buyer shall have the right (but not the obligation) in Buyer's
sole discretion to provide instructions to Seller as to whether or not to
exercise the right of first refusal or similar right, and Seller shall (and
shall cause its Affiliates to) respond to the holder of the Third-Party Interest
in accordance with Buyer's instructions and shall use any form of response
provided to Seller by Buyer for such purpose. Seller will immediately provide a
copy to Buyer of any written notices or communications received by Seller or any
of its Affiliates in connection with the Third-Party Interest or right of first
refusal or similar interest. If Buyer elects for Seller or its applicable
Affiliate to purchase such Third-Party Interest, Seller will provide Buyer with
reasonable opportunity to review and approve in advance in writing any notices
or communications to the holder of the Third-Party Interest, including, without
limitation, any proposed purchase agreement to govern the purchase of the
Third-Party Interest. If there is a purchase of a Third-Party Interest pursuant
to this Section 5.5(f) pending at the Closing, Seller will (and will cause its
Affiliates to) take all actions necessary to cause the right to purchase the
Third-Party Interest to be held by a CenturyTel Entity at the Closing. If a
purchase of a Third-Party Interest pursuant to this Section 5.5(f) has been
consummated at or prior to the Closing, the parties agree that the Base Purchase
Price and the Agreed Value shall be increased by the amount of any payments
approved by Buyer in writing and made by Seller or its Affiliates to the holder
of the Third-Party Interests, and the Third-Party Interests will thereafter be
considered Cellular Interests for which Buyer will assume Control at the
Closing.
5.6 Unbundling. Following the Closing, the parties shall unbundle
the subscribers set forth on Schedule 3.32 and the related subscriber agreements
in accordance with the provisions set forth on Schedule 5.6.
5.7 Notification of Certain Matters.
(a) Seller shall give prompt written notice to Buyer of (i) the
occurrence or nonoccurrence of any event or circumstance which would be
reasonably likely to cause any representation or warranty contained in Article 3
to be untrue or inaccurate on the Closing Date and (ii) any failure of Seller to
comply in any material respect with any covenant or agreement to be complied
with at or prior to Closing.
(b) Buyer shall give prompt written notice to Seller of (i) the
occurrence or nonoccurrence of any event or circumstance which would be
reasonably likely to cause any representation or warranty contained in Article 4
to be untrue or inaccurate on the Closing Date and (ii) any failure of Buyer to
comply in any material respect with any covenant or agreement to be complied
with at or prior to Closing.
(c) Buyer shall give prompt written notice to Seller if the Buyer
obtains Knowledge after the date of this Agreement of (i) the occurrence or
nonoccurrence of any event or circumstance which would cause any representation
or warranty contained in Article 3 to be untrue or inaccurate on the Closing
Date or (ii) any failure of Seller to comply in any material respect with any
covenant or agreement to be complied with at or prior to Closing, the effect of
which in each case under the preceding clauses (i) and (ii) would cause a
condition to Closing in Article 6 to not be satisfied. The Buyer shall not have
any obligation to provide notice under this Section 5.7(c) unless the
occurrence, nonoccurrence or failure in question (y) clearly and demonstrably,
without the requirement of any independent investigation, constitutes a breach
of an express term of this Agreement and (z) relates to or arises out of an act,
event or circumstance that occurs after the date of this Agreement. In no event
shall Buyer's obligation under this Section 5.7(c) include any obligation to
provide notice under this Section 5.7(c) related to the contents of the
Schedules to this Agreement.
(d) The delivery of any notice in accordance with this Section 5.7
shall not be deemed to (i) modify the representations or warranties hereunder
of either party, (ii) modify any condition to closing set forth in Article 6 or
(iii) limit or otherwise affect the remedies available hereunder to either
party.
5.8 Satisfaction of Conditions. Without limiting the generality or
effect of any provision of Article 5, the parties shall use reasonable best
efforts to satisfy promptly all the conditions required to be satisfied prior to
the Closing under Article 6.
5.9 Cooperation. Without limiting the terms and conditions of this
Agreement or the Transition Services Agreement, (a) Buyer and Seller shall, and
shall cause their respective Affiliates to, cooperate with the other in order to
facilitate the orderly transfer and transition of the ownership and operation of
the Business, (b) Seller shall, and shall cause each of its Affiliates to, (i)
give Buyer and its employees, agents and representatives reasonable access
during all reasonable times to the books and records, facilities and assets of
the CenturyTel Entities and Cellular Entities or used in the Business, (ii)
provide such financial and operating data and other information as Buyer may
reasonably request and (iii) make available, at and for reasonable locations and
times, each of the officers, employees, agents and representatives of Seller and
its Affiliates in order to facilitate transfer and transitional matters and (c)
Seller shall, and shall cause each of its Affiliates to, grant Buyer and its
employees, agents and representatives reasonable access to the respective
officers, employees, agents and representatives of Seller and its Affiliates who
can respond knowledgeably to questions related to the CenturyTel Entities and
Cellular Entities, the Business, and transfer and transitional matters.
5.10 CenturyTel Entities.
(a) Subject to the terms and conditions of the Transition
Services Agreement, Buyer and Seller agree that Seller shall, and shall cause
each of its Affiliates to, terminate effective as of the Closing Date without
Liability to the CenturyTel Entities, the Cellular Entities, Buyer or the
Business (other than to pay amounts due thereunder for services performed or
products delivered, in each case as performed or provided in accordance with the
terms and conditions of the applicable agreement, contract or arrangement prior
to the date of such termination), all of the rights and obligations of the
CenturyTel Entities and Cellular Entities under the agreements, contracts and
arrangements disclosed on Schedule 5.10(a).
(b) Seller shall, and shall cause each of its Affiliates to,
repay and discharge all outstanding Indebtedness of the CenturyTel Entities
(other than trade payables for which Buyer receives an adjustment to the
Purchase Price in accordance with Article 2), any Liabilities secured by any
Existing Liens (other than Permitted Liens), and any Intercompany Payables prior
to the Closing Date, other than Current Liabilities for which the Buyer receives
an adjustment to the Purchase Price in accordance with Article 2.
5.11 Capital Expenditures. Seller shall cause the CenturyTel
Entities to make (and pay in full prior to Closing) capital expenditures with
respect to the Business required to support normal maintenance and customer
growth in a manner consistent with the expenditure budgets attached hereto as
Schedule 5.11 (the "Capital Expenditure Budget"). Capital Expenditures incurred
by the CenturyTel Entities with respect to the Business from January 1, 2002
until the Closing Date in accordance with the Capital Expenditure Budget are
referred to as the "Capital Expenditure Amount."
5.12 Exclusivity. Except as contemplated by Section 5.5, neither
Seller nor any CenturyTel Entity shall (and Seller shall not cause or permit
any of its Affiliates or any CenturyTel Entity or Cellular Entity to) (i)
solicit, initiate or encourage the submission of any proposal or offer from any
Person relating to, or cause or allow to occur, any Acquisition with respect to
or involving a CenturyTel Entity, Cellular Entity or any Affiliate of Seller
that owns or Controls, directly or indirectly, any Shares, Affiliate Assets,
Cellular Interests or other assets, properties or rights of the Business, (ii)
cause or allow to occur any change of Control of any CenturyTel Entity, Cellular
Entity, or any Affiliate of Seller that owns or Controls, directly or
indirectly, any Shares, Affiliate Assets, Cellular Interests or other assets,
properties or rights of the Business, or (iii) continue or participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in or facilitate in any other manner any effort or attempt
by any Person to do or seek any of the foregoing. If any Person makes any
proposal, offer, inquiry or contact with respect to any of the foregoing, Seller
will immediately provide Buyer with a copy (or, if not in writing, a written
description of the terms and other details) of such proposal, offer, inquiry or
contact. Notwithstanding clause (ii) of this Section 5.12, a change of Control
of Seller by way of merger, consolidation or reorganization in which the Seller
is a constituent corporation or party to such transaction shall not be
prohibited by this Section if the successor corporation or entity (and, if the
successor corporation or entity is not the ultimate parent corporation or entity
as a result of such transaction, the ultimate parent corporation or entity)
expressly assumes in writing all of Seller's obligations under and agrees to
comply with this Agreement.
5.13 SEC Basis Financial Statements. Following a request by Buyer,
at any time prior to the Closing or within 75 calendar days after the Closing,
in connection with the preparation and/or audit of financial statements with
respect to the Business in order to comply with the reporting requirements of
the SEC under Regulations S-K and S-X or as required by any financing to be
incurred by Buyer to fund all or a part of the Purchase Price (the "SEC Basis
Financial Statements"), Seller will, upon Buyer's request, assist Buyer in the
preparation of the SEC Basis Financial Statements, and cooperate with any
independent auditors chosen by Buyer to prepare and/or audit the SEC Basis
Financial Statements. Seller's cooperation will include access to workpapers and
other supporting documents used in the preparation of the Company Financial
Statements or such documents as may be reasonably required by such auditors to
prepare such SEC Basis Financial Statements or to render an opinion and delivery
of one or more representation letters from Seller to such auditors as may be
reasonably required by such auditors to perform an audit in accordance with
generally accepted auditing standards or a review in accordance with standards
of the American Institute of Certified Public Accountants and to render an
opinion acceptable to the SEC with respect to the audit or review of the SEC
Basis Financial Statements, it being understood that such representation letters
shall acknowledge (i) Seller's use of estimates and allocations in the
preparation of the SEC Basis Financial Statements, and (ii) Seller's belief that
the SEC Basis Financial Statements represent the financial condition and results
of operations of the Business, in accordance with GAAP, and that such estimates
and allocations were made on a reasonable basis and in accordance with GAAP.
Buyer will bear the cost of preparation of the SEC Basis Financial Statements
and of any audit.
5.14 Network Access and Modifications. Without limiting the terms
and conditions of this Agreement or the Transition Services Agreement, after
the date hereof and prior to Closing:
(a) Seller shall, and shall cause each of its Affiliates to,
provide Buyer with reasonable access to, following a request by Buyer,
individuals with primary responsibility for the network operations of the
CenturyTel Entities and the Business ("Network Operations Personnel") at
reasonable times.
(b) Seller shall, and shall cause each of its Affiliates to, permit
and direct Network Operations Personnel to cooperate with Buyer, following a
request by Buyer, in creating plans and network standards for the purpose of
assisting Buyer and its Affiliates in preparing to develop the capability of
delivering Commercial Mobile Service in accordance with Buyer's technical and
business requirements, including, without limitation the deployment of Code
Division Multiple Access technology and equipment (the development of such plans
and standards the "Network Plan").
(c) Seller shall, and shall cause each of its Affiliates to, permit
Buyer and its Affiliates and each of their respective employees and
representatives to commence construction work on one or more Commercial Mobile
Service switches at the properties referenced on Schedule 5.14(c) in accordance
with the Network Plan (the "Network Construction"). Seller shall, and shall
cause each of its Affiliates to, permit Buyer and its Affiliates and each of
their respective employees and representatives to commence the Network
Construction as soon as reasonably practicable after a request by Buyer. Buyer
shall conduct all Network Construction in good faith and with due consideration
of the ongoing requirements of the Business.
(d) Seller shall, and shall cause each of its Affiliates to, use
its reasonable best efforts (i) to cause any vendor, supplier or sub-contractor
of Seller or any of its Affiliates to cooperate with and assist Buyer and its
Affiliates in connection with the Network Construction after a request by Buyer
and (ii) to obtain access to and consents from any Third Party, including,
without limitation, any lessors or licensors in each case required in connection
with the Network Construction.
(e) All costs and expenses of the Network Construction and the
Network Plan shall be paid by and be for the account of Buyer.
(f) In the event this Agreement shall terminate prior to Closing or
in the event the Buyer or its Affiliates has done Network Construction with
respect to a part of the Business for which the Buyer will not assume Control
because the related Cellular Interest has become an Excluded Cellular Interest
in accordance with this Agreement, then Seller shall, and shall cause each of
its Affiliates to, cooperate with Buyer, and each shall use its reasonable best
efforts in transferring ownership and possession to Buyer of equipment owned or
possessed by Seller or any of its Affiliates, but paid for by Buyer or its
Affiliates in connection with the Network Construction. Buyer agrees to pay all
reasonable costs and expenses of Seller and its Affiliates in connection with
transferring such ownership and possession and deinstalling, packaging and
shipping such equipment.
(g) Seller shall, and shall cause each of its Affiliates to,
complete the switch upgrades described in Schedule 5.14(g) in order to comply
with the FCC Mandates related to wireless number pooling and wireless number
portability.
(h) Prior to the Closing, Seller shall cause the CenturyTel
Entities to take all necessary actions when due or otherwise appropriate to
cause the Business and the CenturyTel Entities to be in compliance in all
material respects with the FCC Mandates at the Closing and to remain after the
Closing in compliance in all material respects with the FCC Mandates (based upon
the requirements of such FCC Mandates as they exist prior to and on the Closing
Date). Seller shall keep Buyer fully informed regarding the actions taken
pursuant to this Section 5.14(h) and promptly furnish to Buyer copies of all
notices and correspondence related thereto.
(i) Seller and the CenturyTel Entities shall continue to prosecute
before the FCC the CenturyTel E-911 Waiver and comply with the E-911 deployment
time frames and other undertakings set forth therein, or in the event the
CenturyTel E-911 Waiver is denied, the requirements of Section 20.18 of the
Rules and Regulations of the FCC.
(j) Seller shall deliver, within five Business Days from the date
hereof, true, correct and complete copies of any and all construction
notifications it has filed on or before the date hereof with the FCC for the
purpose of satisfying the FCC Construction Notification Requirement with respect
to the Company PCS Licenses. Within two Business Days of filing, Seller shall
deliver true, correct and complete copies of any and all construction
notifications it has filed between the date hereof and the Closing Date with the
FCC for the purpose of satisfying the FCC Construction Notification Requirement
with respect to the Company PCS Licenses.
5.15 Approvals and Disapprovals. Each party agrees to approve or
disapprove in writing any action that requires its consent under Article 5
within ten days following written notice to such party from the other party
requesting such consent, and each party agrees not to unreasonably withhold any
such consent. If a party fails to approve or disapprove of any such action in
writing within ten days after presentation by the other party, then such party
shall be deemed to have approved of such request for consent from the other
party.
5.16 Tower Documents. Prior to the Closing, the Seller shall, and
shall cause its Affiliates to, make available to Buyer any and all Tower
Documents for any Tower Site. If, after the Closing Date, Buyer determines that
any of the Tower Documents for any Tower Site are missing, inaccurate or
incomplete, at Buyer's sole discretion, Seller (at its sole cost and expense)
shall obtain and deliver, or cause to be obtained and delivered, to Buyer full,
correct and complete copies of such missing, inaccurate or incomplete Tower
Documents. Notwithstanding the foregoing provisions of this Section 5.16, the
Seller shall not be required to obtain, create or furnish any of the items
specified in clauses (ii), (iii), (iv), (v), (vi) or, unless required by any
Requirement of Law in effect prior to the Closing Date, (vii) of the definition
of Tower Documents if any of such items are not available.
5.17 Certain Distributions.
(a) Buyer agrees that all cash Distributions with respect to any
Minority Interests that are paid prior to the Effective Time shall be for the
account of Seller, and Seller may cause the Company, in one or more transactions
prior to the Closing involving the CenturyTel Entities and effected in
accordance with Section 2.6, to pay to Seller the full amount of any such
Distribution.
(b) Buyer shall cause Alltel Cellular Associates of Arkansas
Limited Partnership to continue to make Distributions to its partners in such
amounts and at such intervals as is consistent with its past practice.
5.18 Asset Listing.
(a) For the purpose of this Agreement, the Assets shall include
all assets, properties or rights reflected on the books and records of the
CenturyTel Entities at any time on or after January 1, 2001 (other than Assets
sold, retired or otherwise disposed of in the ordinary course of business
consistent with past practice and consistent with this Agreement since January
1, 2001), regardless of the use or location of such assets, properties and
rights.
(b) At least thirty (30) days prior to the Closing Date (or such
other date as the parties may mutually agree in writing), Seller shall deliver
to Buyer a list (the "Asset Listing"), current as of the date of delivery of
such list, of (i) substantially all of the Assets, (ii) all Affiliate Assets,
and (iii) any other assets, properties or rights that have been used in the
Business since January 1, 2001 but have been excluded from the categories of
Assets or Affiliate Assets because Seller believes such assets, properties and
rights fail to satisfy the criteria specified in Section 5.18(a) and are not
used primarily in the Business. Seller shall provide Buyer with reasonable
opportunity to review and approve the Asset Listing and to request that any item
classified as an excluded asset, property or right be reclassified as either an
Asset or an Affiliate Asset. In the case of any item that Buyer requests to be
reclassified, if the parties are unable to agree on the reclassification of any
such assets, properties or rights and the classification of such items are not
addressed by the provisions of Section 5.18(a), the excluded asset, property or
right in question shall be deemed to be an Affiliate Asset or Asset, as
applicable, if the employee or employees of Seller or its Affiliate who were the
predominant users of such asset, property or right during the period after
January 1, 2001 were Eligible Employees. At the Closing, the parties shall agree
in writing upon the final Asset Listing that has been updated in accordance with
this Section 5.18, and such final Asset Listing shall be binding upon the
parties as to the classifications of the assets, properties and rights thereon
as either Excluded Assets, Affiliate Assets or Assets, as applicable.
(c) If Seller or its Affiliates retain any Asset following the
Closing Date that the Buyer reasonably determines is necessary for the operation
of the Business and the Buyer submits a written request to Seller with respect
to such Asset on or before the six month anniversary of the Closing Date under
this Section 5.7(c), the Seller shall, and shall cause its applicable Affiliate
to, enter into an arrangement, reasonably satisfactory and with no additional
cost or expense to Buyer, designed to provide Buyer with the benefits of such
Asset so that the Buyer may conduct the Business following the Closing in a
manner consistent with the conduct of the Business during the twelve month
period ending December 31, 2001. The term of any arrangement under this
Agreement shall not exceed twelve months. The rights available to Buyer under
this Section 5.7(c) shall be in addition to any other rights and remedies
available to Buyer under this Agreement.
5.19 Acknowledgements.
(a) As soon as practicable after the date of this Agreement (but
in no event later than 60 days after the date hereof), Seller shall use its
reasonable best efforts to obtain a waiver in the form attached hereto as
Schedule 5.19 or such other form approved in writing by Buyer, which approval
shall not be unreasonably withheld (the "Acknowledgement") with respect to each
Cellular Interest listed on Schedule 5.19 from the holder of each Third Party
Interest in each related Cellular Entity.
(b) Seller will immediately advise Buyer of any notices or
communications (whether written or oral) and provide any copies of notices or
communications received by Seller or any of its Affiliates in response to
request for an Acknowledgement or otherwise related to an Acknowledgement.
(c) In the event the Seller fails to obtain any Acknowledgement
with respect to any portion of a Cellular Interest in accordance with Section
5.19(a), Buyer shall have the right (but not the obligation), in the exercise of
its sole discretion, to notify Seller in writing of the Buyer's election to
designate all of the Cellular Interests in the affected Cellular Entity as an
Excluded Cellular Interest for all purposes under this Agreement (including,
without limitation, Section 5.5(e)).
(d) With respect to any such Excluded Cellular Interest, Seller
will be obligated as soon as practicable, but in any event prior to Closing, to
transfer the following assets, properties and rights (which shall be deemed to
be Excluded Assets for purposes of this Agreement) to an Affiliate of Seller
that is not a CenturyTel Entity (which transfer will be without recourse to, and
shall impose no Liability upon, any CenturyTel Entity from and after the Closing
Date or Buyer and its Affiliates at any time):
(i) the Excluded Cellular Interest;
(ii) any management, service or other agreements, commitments
or arrangements to which any CenturyTel Entity is a party or bound
thereby related to the Excluded Cellular Interest.
With respect to any agreement, commitment or arrangement described in
clause (B) immediately above for which the Seller and its Affiliates
will not be able to perform their obligations due to the Stock Sale
after the Closing Date without the benefit of certain assets,
properties or rights of the Business and to the extent the Buyer is
able to perform such obligations as a result of the Stock Sale, the
Buyer agrees to provide to Seller for a period of up to three months
after the Closing Date any services necessary for Seller to perform its
obligations on the same terms and conditions that would apply to such
services under the Transition Services Agreement (as if Buyer were the
"Providing Party" thereunder and Seller were the "Receiving Party"
thereunder).
(e) With respect to each Excluded Cellular Interest, the Base
Purchase Price shall be reduced in accordance with Section 2.2 by an amount
equal to all Excluded Cellular Interest Amounts.
ARTICLE 6
CONDITIONS PRECEDENT TO THE CLOSING
6.1 Conditions Precedent to Obligations of Buyer. All obligations
of Buyer under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions precedent, which
may be waived in writing in whole or in part only by Buyer:
(a) No Misrepresentation or Breach of Covenants and Warranties.
(i) All of the representations and warranties of Seller
contained in this Agreement shall have been true and correct in all
respects (in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the case of
any representation or warranty without any materiality qualification)
as of the date hereof and as of the Closing Date with the same effect
as though all such representations and warranties had been made on and
as of the Closing Date, except that the accuracy of any representations
and warranties that by their terms speak as of a specified date will be
determined as of such date.
(ii) Seller shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing.
(b) Regulatory Approvals.
(i) All required consents, approvals and Authorizations from
the FCC specified in Section 5.1, and all consents, approvals and
Authorizations from all other Governmental Authorities disclosed on
Schedule 6.1(b), shall have been received, shall be Final Orders, and
shall have been obtained free from any terms, conditions and
restrictions that (A) would not be the sort that are customarily or
routinely imposed on such consents, approvals and Authorizations, (B)
would impose any term, condition or restriction on the Business, any
CenturyTel Entity or any Cellular Entity or result in the waiver of
rights asserted by any of the foregoing that is or is reasonably
likely to be materially adverse to the Business as a whole, or (C)
would impose any term, condition or restriction on the business or
operations of Buyer or its Affiliates (other than the Business, the
CenturyTel Entities or the Cellular Entities) or result in the waiver
of rights asserted by any of the foregoing that is or is reasonably
likely to be materially adverse to Buyer or its Affiliates.
(ii) the FCC shall not have denied or otherwise disapproved the
Amended E-911 Waiver, nor shall the FCC have imposed as a condition to
approval of the Amended E-911 Waiver any term, condition, restriction,
or waiver of rights with respect to (A) the Business, any CenturyTel
Entity or any Cellular Entity that is or is reasonably likely to be
materially adverse to the Business as a whole, or (B) the business or
operations of Buyer or its Affiliates (other than the Business, the
CenturyTel Entities or the Cellular Entities) that is or is reasonably
likely to be materially adverse to Buyer or its Affiliates.
(iii) Any applicable waiting period under the HSR Act relating
to the transactions contemplated by this Agreement shall have expired
or been terminated.
(c) No Legal Obstruction. There shall not be in effect a preliminary
or permanent injunction, temporary restraining order or other judicial or
administrative order or decree in any jurisdiction which enjoins, prohibits or
restrains the Stock Sale and the consummation of the transactions contemplated
hereby or requires a divestiture of a Cellular Interest (other than a Minority
Interest) or other material asset, property or right of the Business.
(d) No Catastrophe. There shall have not occurred any loss, damage
or destruction by catastrophe, act of God, terrorism, war or other tragedy or
cataclysm, and without regard to whether such loss, damage or destruction is
covered by insurance, that individually or in the aggregate has materially
diminished or impaired and continues to materially diminish or impair, or is
reasonably likely to materially diminish or impair, the ability of either (i)
the CenturyTel Entities to conduct or operate the Business in the ordinary
course consistent with past practice or (ii) the Seller or its Affiliates to
perform their respective agreements and obligations under the Transition
Services Agreement.
(e) Acknowledgements and First Refusal Rights.
(i) Seller shall have obtained all Material Acknowledgements
in accordance with Section 5.19, and to the extent any such other
Acknowledgement is not obtained, the Seller shall have complied with
and performed its agreements and obligations with respect to any
Excluded Cellular Interest in accordance with Section 5.19.
(ii) There shall have been no First Refusal Exercise Event,
and all First Refusal Rights listed on Schedule 3.27 shall have been
waived or terminated in accordance with Article 5 or, to the extent
any such waiver or termination is not obtained, the Seller shall have
complied with and performed its agreements and obligations with
respect to any Excluded Cellular Interest in accordance with Article 5.
(f) Required Consents. Seller shall have obtained all necessary
consents or shall have taken such other necessary action to ensure that the
CenturyTel Entities, the Cellular Entities or the Business has at the Closing
Date:
(i) Leases, subleases, licenses or similar agreements with
respect to 85% of the cell sites used in the Business;
(ii) Agreements with Persons who are agents, dealers,
distributors or resellers of the CenturyTel Entities or the Business
immediately prior to the Closing that were credited by CenturyTel
Entities or their Affiliates with generating 80% of the total
activations of mobile telephone numbers for the Business credited to
all such Persons during the twelve-month period ending the calendar
month-end preceding the Closing Date;
(iii) Leases, subleases, licenses or similar agreements with
respect to the call centers used in the Business;
(iv) Leases or similar agreements with respect to 90% of the
retail stores of the Business (excluding leases or similar agreements
for retail stores managed by Buyer or its Affiliates).
(g) Transition Services Agreement. The Transition Services Agreement
shall be in full force and effect in accordance with its terms (unless the
failure to be in full force and effect is a result of a breach or default by
Buyer or its Affiliate), and Seller and its Affiliates shall not be in breach or
default thereunder.
(h) Officer's Certificate. Buyer shall have received a certificate,
dated the Closing Date and executed by a duly authorized officer of Seller, to
the effect that the conditions specified in these Sections 6.1(a), (e) and (f)
have been fulfilled as of such date.
(i) Legal Opinion. Buyer shall have received a legal opinion from
Jones, Walker, Waechter, Poitevent, Carrere and Xxxxxxx, L.L.P., special
counsel to Seller, dated as of the Closing Date, in the form of Exhibit B.
(j) Regulatory Opinion. Buyer shall have received a legal opinion
from Xxxxxx & Xxxxxxx, regulatory counsel to Seller, dated as of the Closing
Date, with respect to the Company FCC Authorizations and related matters in the
form of Exhibit C.
(k) IRU Agreement. On or before the Closing Date, Seller or its
applicable Affiliate shall have entered into an indefeasible right to use
agreement with Buyer or its applicable Affiliate (i) relating to eight single
mode fiber strands on the 600 mile fiber ring of Seller or its Affiliates
existing on the date hereof or at the Closing Date in the state of Michigan,
(ii) for a term of not less than ten years, (iii) at no cost or charge to Buyer,
other than maintenance, utilities, taxes and other similar recurring charges and
customary non-recurring charges reasonably satisfactory to Buyer and (iv) on
such other terms and conditions reasonably satisfactory to Buyer, and such
agreement shall be in full force and effect in accordance with its terms (unless
the failure to be in full force and effect is a result of a breach or default by
Buyer or its Affiliate), and Seller and its Affiliates shall not be in breach or
default thereunder.
6.2 Conditions Precedent to Obligations of Seller. All obligations
of Seller under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions precedent, which
may be waived in writing in whole or in part only by Seller (unless deemed to
have been waived by Seller in accordance with the terms and conditions of this
Agreement):
(a) No Misrepresentation or Breach of Covenants and Warranties.
(i) All of the representations and warranties of Buyer
contained in this Agreement shall have been true and correct in all
respects (in the case of any representation or warranty containing
any materiality qualification) or in all material respects (in the
case of any representation or warranty without any materiality
qualification) as of the date hereof and as of the Closing Date with
the same effect as though all such representations and warranties had
been made on and as of the Closing Date.
(ii) Buyer shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing.
(b) Regulatory Approvals.
(i) All consents, approvals and Authorizations from the FCC
specified in Section 5.1, and all consents, approvals and
Authorizations from all other Governmental Authorities disclosed
on Schedule 6.2(b), shall have been received and shall be Final
Orders, and shall have been obtained free from any terms,
conditions and restrictions that would impose any term,
condition or restriction on the business or operations of Seller or
its Affiliates (other than the CenturyTel Entities or the Cellular
Entities) or result in the waiver of rights asserted by any of
the foregoing that is or is reasonably likely to be materially
adverse to Seller and its Affiliates, taken as a whole. Notwithstanding
anything herein to the contrary, if Buyer waives any condition to
Closing in Section 6.1(b)(i) requiring the consents, approvals and
Authorizations received from the FCC and other Governmental Authorities
to be Final Orders, Seller shall be deemed to have waived its
condition to Closing contained in this Section 6.2(b)(i) requiring
such consents, approvals and Authorizations received from the FCC and
other Governmental Authorities to be Final Orders.
(ii) Any applicable waiting period under the HSR Act relating
to the transactions contemplated by this Agreement shall have expired
or been terminated.
(c) First Refusal Rights. All First Refusal Rights disclosed on
Schedule 3.27 shall have been waived or terminated in accordance with Section
5.5. Notwithstanding anything herein to the contrary, if Buyer waives the
condition to Closing in Section 6.1(e), Seller shall be deemed to have waived
its condition to Closing contained in this Section 6.2(c).
(d) No Legal Obstruction. There shall not be in effect a
preliminary or permanent injunction, temporary restraining order or other
judicial or administrative order or decree in any jurisdiction which enjoins,
prohibits or restrains the Stock Sale and the consummation of the transactions
contemplated hereby.
(e) Closing Certificate. Seller shall have received a certificate
from an authorized officer of Buyer, dated the Closing Date, certifying that
the conditions specified in Section 6.2(a) have been fulfilled.
ARTICLE 7
EMPLOYEE RELATED COVENANTS
7.1 Employment of Transferred Employees.
(a) Eligible and Transition Employees.
(i) Schedule 7.1(a) contains a true and complete list of all
Active Employees, Transition Employees and Leave Recipients as of the
date of this Agreement.
(ii) All Active Employees immediately prior to the Closing who
are identified on Schedule 7.1(a) (the "Eligible Employees") shall
become the responsibility of Buyer and its Affiliates as of the
Effective Time in the same or comparable positions, and at the same or
comparable total compensation as described on Schedule 7.1(a).
(iii) All Transition Employees shall become the responsibility
of the Buyer and its Affiliates as of the termination date of the
services provided by such employees under the Transition Services
Agreement (the "Transition Employee Conversion Date") in the same or
comparable positions, and at the same or comparable total compensation
as described on Schedule 7.1(a).
(iv) Buyer or its Affiliates also shall employ any Leave
Recipient identified on Schedule 7.1(a), provided such Leave Recipient
returns to active employment within one year after the Closing Date
and in accordance with the other requirements of Section 7.1(c).
(v) Neither Seller nor any of its Affiliates shall, directly
or indirectly, solicit for employment, hire or retain, as an employee
or consultant, any of the Transferred Employees or Leave Recipients
for a period of twelve (12) months following the Closing Date unless
the employment of such Transferred Employee or Leave Recipient is
terminated by Buyer.
(b) For purposes hereof, (i) "Active Employee" means an individual
employed on a full-time or part-time basis by Seller or any of its Affiliates
and who provides substantially all of his or her services to or for the
Business, (ii) "Transition Employees" means an individual providing services to
Buyer or its Affiliates subsequent to the Closing Date that is designated as a
Transition Employee on Schedule 7.1(a), (iii) "Leave Recipient" means an
individual who is identified on Schedule 7.1(a) as an "LTD Recipient," "WC
Recipient," "Military Leave Recipient," "Maternity/Paternity Leave Recipient,"
"FMLA Recipient," "Approved Leave of Absence Recipient," or "Layoff with Recall
Rights Recipient" and who, immediately before his or her active employment with
an Affiliate of Seller ceased, was providing substantially all of his or her
services to or for the Business, (iv) "Transferred Employee" means any Eligible
Employee, Transition Employee or Leave Recipient employed by Buyer or its
Affiliates from and after the Effective Time (or, in the case of Transition
Employees, the Transition Employee Conversion Date) in accordance with Section
7.1 (a) and (v) each CenturyTel Entity shall be considered an Affiliate of Buyer
at the Effective Time.
(c) Special Provisions for Leave Recipients. Any Leave Recipient,
shall continue to receive benefits, if any, under and shall continue to be
subject to the terms of the applicable long term disability plan, workers'
compensation insurance, short term disability plan, military leave policy,
maternity/paternity leave policy, approved leave of absence policy, or
layoff/recall rights policy of Seller after the Closing Date. As long as the
Leave Recipient remains eligible to remain on leave under the applicable Seller
policy or receive benefits under the applicable Seller plan or insurance, the
following provisions shall apply: (i) the Leave Recipient shall be treated as an
individual who is not a Transferred Employee under Seller's other employee
benefit plans or programs; and (ii) neither Buyer nor any of its Affiliates
shall be required to provide coverage or benefits to the Leave Recipient under
any employee benefit plans or programs maintained by Buyer and its Affiliates.
If a Leave Recipient recovers from his or her condition, returns from leave, or
is recalled, as applicable, within twelve (12) months after Closing, Seller
shall have no obligation to offer or provide any employment to such Leave
Recipient, and Buyer or an Affiliate of Buyer shall offer employment to any such
Leave Recipient who is able to return to active work and who has a legal,
contractual, or other right to reemployment or reinstatement (with Buyer or
Seller). If the Leave Recipient commences active service with Buyer or an
Affiliate of Buyer, such Leave Recipient shall be considered a Transferred
Employee under this Agreement and the following provisions shall apply: (x) the
Leave Recipient shall cease to be eligible for coverage and benefits under any
employee benefit plans or programs maintained by Seller (except to the extent,
if any, that such coverage and benefits are required by this Agreement); (y) the
Leave Recipient shall become eligible for coverage and benefits under any
employee benefit plans or programs maintained by Buyer or its applicable
Affiliate under the same terms and conditions that apply to other Transferred
Employees; (z) the Leave Recipient's period of leave shall be treated as a
period of service under the employee benefit plans and programs of Buyer or its
applicable Affiliate to the same extent as if the Leave Recipient received
benefits under a similar plan or insurance or was subject to a similar policy of
Buyer or its applicable Affiliate; provided, however, that to the extent
permitted by applicable Requirements of Law, Buyer and its Affiliates shall not
be required to credit any Leave Recipient with such service for purposes of
benefit accrual or contributions under any pension plan, profit sharing plan,
savings plan, or other deferred compensation plan.
(d) All Eligible Employees, Transition Employees and Leave
Recipients are identified on Schedule 7.1(a) by name, annual compensation,
incentive compensation target, service date, employment status (conforming in
the case of Leave Recipients to the categories set forth in Section 7.1(b)(ii)),
job title, job location and collective bargaining unit status as of the date of
this Agreement. Seller shall deliver an updated Schedule 7.1(a) to Buyer at
least once every sixty (60) calendar days after the date of this Agreement, and
Seller shall deliver a final Schedule 7.1(a) to Buyer no later than five (5)
Business Days prior to the Closing Date, which shall reflect new employees,
terminated employees or other changes or corrections to the information
contained on Schedule 7.1(a) on the date of this Agreement. All updates to
Schedule 7.1(a) shall reflect only such changes that arise or result from the
Seller's operation of the Business in accordance with Section 5.4.
7.2 Assumption of Agreements; Severance.
(a) On and after the Closing Date, except as otherwise provided in
this Agreement or in Schedule 7.2(b), the CenturyTel Entities or Buyer and its
Affiliates, as successor employer to Affiliates of Seller (subject to Seller's
Retained Liabilities in Sections 7.4 and 7.7(b)(i)), shall continue to be bound
by or shall assume all obligations under and be bound by the provisions of each
Employment Agreement disclosed on Schedule 3.14(a).
(b) From the Closing Date (or, in the case of Transition Employees,
the Transition Employee Conversion Date) through the first anniversary of the
Closing Date (or, in the case of Transition Employees, the Transition Employee
Conversion Date), Transferred Employees shall be eligible for benefits under a
Buyer or an Affiliate severance or separation pay policy or plan comparable in
amount to the severance or separation pay benefits that are described on
Schedule 7.2(b), and such benefits may be provided in the manner and under the
plan or policy designated by Buyer in its sole discretion.
7.3 Recognition of Transferred Employee Service. On and after the
Closing Date (or, in the case of Transition Employees, the Transition Employee
Conversion Date), Buyer shall recognize the service of each Transferred Employee
for all employment-related purposes (other than an employee achievement award,
within the meaning of Section 274(j) of the Code) determined in accordance with
the employee benefit policies, plans, arrangements, programs, practices and
agreements of the Seller Group in effect on the Closing Date, as if such service
had been rendered to Buyer, unless any other provision of this Article provides
for an alternative method of determination. Schedule 7.1(a) may be conclusively
relied upon by Buyer in crediting prior service in accordance with this Section.
Buyer shall be required to credit Transferred Employees with prior service for
purposes of vesting and participation under the Buyer Pension Plan, the Buyer
Defined Contribution and Savings Plans, and other Buyer deferred compensation
plans, but shall not be required to credit Transferred Employees with prior
service for purposes of benefit accrual under any of such plans.
7.4 Payment of Bonuses. Seller shall retain or assume the
obligation to pay to the Transferred Employees bonuses with respect to the
calendar year in which the Closing occurs on a pro rata basis for the portion of
the calendar year on and prior to the Closing Date (or, in the case of
Transition Employees, the Transition Employee Conversion Date), such bonuses to
be paid in the ordinary course. Buyer shall not assume any obligation to pay any
bonuses to the Transferred Employees, except as required by Section 7.1(a). In
determining any bonuses payable to the Transferred Employees for services
rendered after the Closing Date (or, in the case of Transition Employees, the
Transition Employee Conversion Date), Buyer shall comply with the provisions of
Section 7.1.
7.5 No Duplicate Benefits; Dependents and Beneficiaries. Nothing
in this Agreement shall cause duplicate benefits to be paid or provided to or
with respect to a Transferred Employee under any employee benefit policies,
plans, arrangements, programs, practices, or agreements. References herein to a
benefit with respect to a Transferred Employee shall include, where applicable,
benefits with respect to any eligible dependents and beneficiaries of such
Transferred Employee under the same employee benefit policy, plan, arrangement,
program, practice or agreement.
7.6 Transferred Employee Benefit Matters.
(a) As of the date of this Agreement, Transferred Employees
participate in one or more of the following Employee Pension Benefit Plans
maintained by Seller in the United States:
(i) CenturyTel Retirement Plan;
(ii) CenturyTel, Inc. Dollars & Sense Plan; and
(iii) CenturyTel, Inc. Employee Stock Ownership Plan.
The plans identified in this Section 7.6(a) shall be referred to
collectively in this Agreement as the "Seller Pension Plans."
(b) Seller shall, to the extent necessary, take all appropriate
action to vest the Transferred Employees 100% in each Seller Pension Plan and to
treat each Transferred Employee as a terminated employee under the terms of each
such plan.
(c) Buyer agrees as follows:
(i) Defined Benefit Plan. Effective immediately after the
Closing Date (or, in the case of Transition Employees, the Transition
Employee Conversion Date), all Transferred Employees will be eligible
to participate under a tax-qualified defined benefit pension plan
established or maintained by ALLTEL (the "Buyer Pension Plan") to the
same extent (if any) as similarly situated Buyer employees.
(ii) Defined Contribution Savings Plan. Effective immediately
after the Closing Date (or, in the case of Transition Employees, the
Transition Employee Conversion Date), all Transferred Employees will
be eligible to participate in a tax-qualified defined contribution
savings plan maintained by ALLTEL (the "Buyer Defined Contribution
and Savings Plans") to the same extent (if any) as similarly situated
Buyer employees.
(iii) Amendments. The benefits for Transferred Employees under
(c)(i) and (c)(ii) above may not be amended or modified unless such
benefits are correspondingly amended or modified with respect to all
similarly situated employees of Buyer and its Affiliates.
(iv) No Transfer of Assets or Liabilities. No assets or
Liabilities of any of the Seller Pension Plans or any other Employee
Pension Benefit Plans maintained by Seller or any of its Affiliates
or otherwise applicable to any Transferred Employees will be
transferred to ALLTEL, Buyer, any Affiliates of Buyer, the Buyer
Pension Plan, or any other employee plan, arrangement, program,
practice or agreement of Buyer or any of its Affiliates.
7.7 Welfare Plans.
(a) Buyer shall take all action necessary and appropriate to
ensure that, as soon as practicable after the Closing Date (or, in the case of
Transition Employees, the Transition Employee Conversion Date), Buyer or an
Affiliate of Buyer maintains or adopts, as of the Effective Time, one or more
Employee Welfare Benefit Plans, including medical, health, dental, flexible
spending account, accident, life, short-term disability, and long-term
disability and other Employee Welfare Benefit Plans for the benefit of the
Transferred Employees (the "Buyer Welfare Plans") which are at least as
favorable as the welfare benefits provided to similarly situated employees of
Buyer.
(b) "Seamless" Transaction. The Buyer Welfare Plans shall provide
that each Transferred Employee shall be immediately eligible to participate in
and receive coverage under the Buyer Welfare Plans immediately after the Closing
Date (or, in the case of Transition Employees, the Transition Employee
Conversion Date). Any restrictions on coverage for pre-existing conditions or
requirements for evidence of insurability under the Buyer Welfare Plans shall be
waived for Transferred Employees to the extent that such restrictions have been
or would have been satisfied under the Seller Welfare Plan(s), and Transferred
Employees shall receive credit under each Buyer Welfare Plan for co-payments and
payments under a deductible limit made by them and for out-of-pocket maximums
and similar limits applicable to them during the plan year of the Seller Welfare
Plan in which the Closing occurs in accordance with the corresponding Employee
Welfare Benefit Plans maintained by Seller (the "Seller Welfare Plan(s)");
provided that Seller shall submit to the extent not restricted by any
Requirement of Law to Buyer within thirty (30) calendar days after the Closing
(or, in the case of Transition Employees, the Transition Employee Conversion
Date) a list of each Transferred Employees' copayment amounts, deductibles and
out-of-pocket maximums and indicating whether or not each has satisfied any
pre-existing condition limitation periods or evidence of insurability
requirements under the Seller Welfare Plans in order for Buyer to satisfy its
obligations under this Section.
(c) (i) Except as otherwise provided in subsection (c)(ii) below,
Buyer shall provide or cause to be provided retiree medical, health, and life
benefits to each Transferred Employee (or the dependents or beneficiaries of
such Transferred Employee, as the case may be) under substantially comparable
terms and conditions as apply to other comparable employees of Buyer and its
Affiliates, and Seller shall have no obligation to provide retiree medical,
health and life benefits in respect of any Transferred Employee on or after the
Closing Date (or, in the case of Transition Employees, the Transition Employee
Conversion Date).
(ii) Benefits provided pursuant to subsection (c)(i) above
shall take into account service with and compensation increases from
Buyer or its Affiliates after the Effective Time in the same manner as
if such post-Effective Time service was performed with, or such
compensation was provided by, Seller. Buyer shall provide Seller with
such information as shall be reasonably required to implement the
immediately preceding sentence.
(d) Nothing in this Section 7.7 shall require Seller, its
Affiliates or the Seller Welfare Plans to make any payment or to provide any
benefit not otherwise provided by the terms of the Seller Welfare Plans.
(e) Nothing in this Agreement shall require Seller or its
Affiliates to transfer assets or reserves with respect to the Seller Welfare
Plans to Buyer or its Affiliates or the Buyer Welfare Plans.
7.8 Paid Time Off. Seller shall pay Transferred Employees the
balances as of the Closing Date (or, in the case of Transition Employees, the
Transition Employee Conversion Date) in their PTO accounts under Seller's
paid-time off policy. Transferred Employees shall be entitled to holidays, sick
leave, pro-rated floating holidays and pro-rated vacation time, for the year in
which the Closing (or, in the case of Transition Employees, the Transition
Employee Conversion Date) occurs, as determined under Buyer's policies in effect
as of the date of the Closing for similarly-situated employees of Buyer, taking
into account under such policies all service of Transferred Employees with
Seller and its Affiliates.
7.9 Employee Rights.
(a) Nothing herein expressed or implied shall confer upon any
employee of Seller or its Affiliates, or Buyer or its Affiliates, or upon any
legal representative of such employee, or upon any collective bargaining agent
or group, any rights or remedies, including any right to employment or continued
employment for any specified period, of any nature or kind whatsoever under or
by reason of this Agreement.
(b) Nothing in this Agreement shall be deemed to confer upon any
Person (or any beneficiary thereof) any rights under or with respect to any
plan, arrangement, program, practice or agreement described in or contemplated
by this Agreement, and each Person (and any beneficiary thereof) shall be
entitled to rely only upon the express terms of any such plan, arrangement,
program, practice or agreement for his or her rights thereunder.
(c) Nothing in this Agreement shall cause Buyer or its Affiliates,
or Seller or its Affiliates, to have any obligation to provide employment or any
employee benefits to any individual who is not a Transferred Employee or, except
as otherwise provided in Section 7.2 with respect to Employment Agreements, to
continue to employ any Transferred Employee for any period of time following the
Closing Date.
7.10 WARN Act Requirements. On and after the Closing Date, Buyer
shall be responsible with respect to Transferred Employees and their
beneficiaries for compliance with the Worker Adjustment and Retraining
Notification Act of 1988 and any other applicable Requirements of Law, including
any requirement to provide for and discharge any and all notifications,
benefits, and Liabilities to Transferred Employees and Governmental Authorities
that might be imposed as a result of the consummation of the transactions
contemplated by this Agreement or otherwise.
7.11 Communications with Employees. On or prior to the date hereof,
Seller and Buyer have agreed upon a form of joint announcement to employees
concerning this Agreement and the transactions contemplated hereby and a
communication plan concerning the method and timing of the delivery of such
announcement. Contemporaneously with the execution and delivery of this
Agreement, the parties will deliver such announcement to employees in accordance
with such communication plan. With respect to all other announcements to
employees, neither Buyer, Seller nor their respective Affiliates shall
distribute communications to Seller's employees concerning this Agreement or the
transactions contemplated hereby without doing so in a form of writing that has
been approved in writing in advance by the counterparty hereto .
ARTICLE 8
TAX COVENANTS
8.1 Tax Sharing Agreements. Any Tax sharing agreement or policy
between any CenturyTel Entity and Seller or its Affiliates, or among any
CenturyTel Entities, shall be terminated as to any CenturyTel Entity as of the
Closing Date and will have no further effect as to any CenturyTel Entity for any
Taxable period after the Closing.
8.2 Liability for Taxes, Filing Returns.
(a) Taxable Periods Ending on or Before the Closing Date. Seller
shall cause to be prepared and duly filed all Tax Returns required to be filed
by or with respect to each CenturyTel Entity for all Taxable years and periods
ending on or before the Closing Date. Seller shall pay or cause to be paid all
Taxes due on such Tax Returns for all periods covered by such Tax Returns.
Seller will include, or cause to be included, the income of each CenturyTel
Entity (including any deferred income triggered into income by Treas. Reg.
Sections 1.1502-13 and 1.1502-14 and any excess loss accounts taken into income
under Treas. Reg. Section 1.1502-19) on the consolidated federal and
consolidated, unitary or combined state and local income Tax Returns of Seller
and the Seller Group for all periods through the Closing Date. Each CenturyTel
Entity will furnish Tax information to Seller for inclusion in the consolidated
federal and consolidated, unitary or combined state and local income Tax Returns
for Seller and the Seller Group for the period ending on the Closing Date in
accordance with the past custom and practice of each CenturyTel Entity. At least
15 Business Days before filing any such Tax Return (other than Seller's
consolidated group returns), Seller shall submit to Buyer copies of such returns
for Buyer's review and comment. Seller will consider any such comments in good
faith. The income of each CenturyTel Entity will be apportioned to the period up
to and including the Closing Date and to the period after the Closing Date by
closing the books of each CenturyTel Entity as of the Effective Time.
(b) Taxable Periods Commencing After the Closing Date. Buyer shall
pay or cause to be paid all Taxes of the CenturyTel Entities for all Taxable
years and periods commencing after the Closing Date. Buyer shall cause to be
prepared and duly filed all Tax Returns of the CenturyTel Entities for Taxable
periods commencing after the Closing Date.
(c) Taxable Periods Commencing Before and Ending After the Closing
Date. Buyer shall prepare or cause to be prepared and file or cause to be filed
any Tax Returns of each CenturyTel Entity for taxable periods that begin before
the Closing Date and end after the Closing Date (the "Straddle Period"). At
least 15 Business Days before filing any such Tax Returns, Buyer shall submit
copies of such returns to Seller together with a calculation of the Taxes due
for the portion of the Straddle Period ending on the Closing Date in excess of
Taxes for such period which were reserved in the Closing Date Statement (other
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) ("Seller Straddle Period Taxes") for Seller's
review and comment. Seller shall submit any such comments to Buyer no later than
five Business Days prior to the filing of any such Tax Returns. Buyer will
consider such comments in good faith. Buyer shall cause the CenturyTel Entities
to pay all Taxes due for or attributable to a Straddle Period. Upon notice from
Buyer, Seller shall pay to Buyer five (5) calendar days prior to the date any
payment for Taxes as described in this Section 8.2(c) is due, Seller's Straddle
Period Taxes. For purposes of this Section, in the case of any Taxes that are
imposed on a periodic basis and are payable for a Straddle Period, the portion
of such Tax which relates to the portion of such Taxable period ending on the
Closing Date shall (i) in the case of any Taxes not based upon or related to
income or receipts, be deemed to be the amount of such Tax for the entire
Taxable period multiplied by a fraction the numerator of which is the number of
days in the Taxable period ending on the Closing Date and the denominator of
which is the number of days in the entire Taxable period, and (ii) in the case
of any Tax based upon or related to income or receipts, be deemed to be the
amount which would be payable if the relevant Taxable period ended on the
Closing Date. Any credits relating to a Straddle Period shall be taken into
account as though the relevant taxable period ended on the Closing Date.
8.3 Audits. Seller shall keep Buyer reasonably informed of the
progress of any audits of the consolidated federal and consolidated unitary or
combined income Tax Returns of Seller and the Seller Group to the extent that
such audits relate to such CenturyTel Entity and shall allow Buyer's reasonable
participation therein. Seller will allow each CenturyTel Entity to participate
at its expense in any audits of the consolidated federal and consolidated,
unitary or combined income Tax Returns of Seller and the Seller Group to the
extent that such audits relate to such CenturyTel Entity. Seller will not
settle, or cause to be settled, any such audit in a manner which would
materially adversely affect a CenturyTel Entity after the Closing Date unless
Seller obtains the prior written consent of Buyer, which consent shall not
unreasonably be withheld.
8.4 Cooperation on Tax Matters.
(a) Buyer and Seller shall, and shall cause their respective
Affiliates to, cooperate fully, as and to the extent reasonably requested by the
other party, in connection with the filing of Tax Returns in accordance with
this Article and in connection with any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the retention, and (upon
the other party's request) the provision, of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Seller shall,
and Buyer shall cause the CenturyTel Entities to (i) retain all books and
records with respect to Tax matters pertinent to each CenturyTel Entity relating
to any Taxable period beginning before the Closing Date until the expiration of
the statute of limitations (and, to the extent notified by Buyer or Seller, any
extensions thereof) of the respective Taxable periods, and to abide by all
record retention agreements entered into with any Taxing authority, and (ii) to
give the other party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other party so requests,
shall reasonably allow the other party to take possession of such books and
records in such circumstances.
(b) Buyer and Seller further agree, upon request by the other party,
to use, or cause to be used, reasonable best efforts to obtain any certificate
or other document from any Governmental Authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including without limitation, with respect to the transactions contemplated
hereby).
(c) Buyer and Seller further agree, upon request by the other party,
to provide, or cause to be provided, to the other party all information that
either party may be required to report in accordance with Section 6043 of the
Code and all Treasury Regulations promulgated thereunder.
8.5 Defense of Tax Claim. In case any written claim, demand or
deficiency with respect to any Tax is asserted or any action is commenced or
written notice is given by any Taxing authority against any CenturyTel Entity or
Buyer, in respect to which indemnity may be sought against Seller in accordance
with Section 10.8 of this Agreement, Buyer shall give prompt written notice to
Seller. Seller shall promptly give written notice to Buyer of any written or
other notification received by Seller from a Taxing authority of a proposed
adjustment with respect to any Tax of any CenturyTel Entity which is
attributable to Tax periods ending on or before the Closing Date and shall also
promptly give written notice to Buyer if a Taxing authority threatens to assert
against any CenturyTel Entity or Buyer the Tax Liability of any others
(including, but not limited to Seller). Seller shall have the right to control,
contest, resolve, settle and defend, and Buyer and the CenturyTel Entities shall
reasonably cooperate in, the portion of any claim, action or proceeding with
respect to any Tax for which Seller is responsible at the sole cost and expense
of Seller. Seller agrees to pay to Buyer and the CenturyTel Entities all of
their reasonable expenses which they shall incur in connection with such
cooperation. Seller shall keep Buyer reasonably informed of the progress of any
such claim, action or proceeding and shall allow Buyer's reasonable
participation therein. Seller may not settle any such claim, action or
proceeding in a manner which would materially adversely affect a CenturyTel
Entity after the Closing Date unless Seller obtains the prior written consent of
Buyer, which consent shall not unreasonably be withheld. Buyer may request that
Seller decline to take any further action with respect to any claim, demand or
deficiency described herein, and Seller thereafter shall take no action provided
that Buyer has notified Seller in writing that it waives its right to
indemnification for any Liability resulting therefrom and agrees to reimburse
Seller for any Loss incurred in connection therewith. In the event Seller
requests the CenturyTel Entities to pay Taxes to a Governmental Authority prior
to contesting the assessment thereof and thereafter to file a claim or suit for
refund, Seller shall advance to the CenturyTel Entities, on an interest-free
basis, the amount of any such payment, after which such entity shall promptly
pay the amount to the Governmental Authority as directed by Seller.
8.6 Resolution of Disagreements Between Buyer and Seller. If Buyer
and Seller disagree as to the amount of Taxes for which each is liable under
this Agreement, Buyer and Seller shall promptly consult each other in an effort
to resolve such dispute. If any such point of disagreement cannot be resolved
within 60 calendar days of the initial date of consultation, Buyer and Seller
shall within 10 calendar days after such 60-day period jointly select a
nationally recognized independent public accounting firm which has not, except
in accordance with this Agreement, performed any services since January 1, 1999
for either Seller or Buyer or their respective affiliated groups, to act as an
arbitrator to resolve, within 60 calendar days after their selection, all points
of disagreement concerning Tax matters with respect to this Agreement and
presented to such accounting firm at the time of its selection. If no nationally
recognized independent public accounting firm meets the aforementioned standard,
Buyer and Seller nonetheless shall attempt to agree on an accounting or law firm
that is satisfactory to both parties. If the parties cannot agree on the
selection of an accounting or law firm within such 10-day period, within five
Business Days after such 10-day period, the parties shall select an eligible
nationally recognized accounting firm by lot.
8.7 Tax Elections. Except for elections described in Sections 8.10
and 8.12 and elections required by law or that Seller may make under Internal
Revenue Notice 2001-70 relating to mid-quarter convention rules for the year
ended December 31, 2001, no new elections with respect to Taxes or any changes
in current elections with respect to Taxes affecting Seller shall be made after
the date of this Agreement without the prior written consent of Buyer which
consent shall not be unreasonably withheld. The CenturyTel Entities will forward
any material Tax elections affecting such entities to the Buyer prior to
Closing.
8.8 Post-Closing Elections. At Seller's request, after the Closing
Date Buyer will cause the CenturyTel Entities to make or participate with Seller
in making any elections with respect to the Seller Group while they were
included in the Seller Group, which require the signature of all members of the
Seller Group during the tax year to which the election relates. At Seller's
request, Buyer will cause any CenturyTel Entity to make or join with Seller in
making any other election if the making of such election does not have a
material adverse impact on a CenturyTel Entity, Buyer or an Affiliate thereof
for any Tax period after the Closing Date.
8.9 Transfer Taxes. Seller shall pay any sales, use, transfer
and documentary taxes and recording and filing fees applicable to the
transfer of the Shares to Buyer at Closing.
8.10 Section 754 Elections. At Buyer's request, Seller shall cause
each CenturyTel Entity which is treated as a partnership for Tax purposes to
make an election under Section 754 of the Code for Taxable periods of such
entity ending on or including the Closing Date.
8.11 Allocation of Purchase Price. Within 60 days of the final
determination of the Purchase Price under Section 2.3, the parties agree that
the Purchase Price will be allocated among the CenturyTel Entities for all tax
purposes in accordance with Schedule 1.1(b) hereof. Buyer and Seller will file,
or cause to be filed, all Tax Returns in a manner consistent with such
allocation unless otherwise required by law. Notwithstanding the foregoing, in
all events, the Estimated Purchase Price as of the Closing Date will be
allocated 73.64 percent to the Section 338(h)(10) entities as set forth in
Schedule 8.12 and 26.36 percent to the other CenturyTel Entities. Any subsequent
Purchase Price adjustments will be allocated among the CenturyTel Entities in
the same proportion as their Agreed Value relates to the Base Purchase Price.
8.12 Section 338(h)(10) Election.
(a) Each of Buyer and Seller agree that they will cause their
respective Affiliates to make an election under Section 338(h)(10) of the Code
(and any corresponding elections under state, local, or foreign Tax law) in
accordance with, and with respect to those CenturyTel Entities identified in,
Schedule 8.12 hereof as being the subject of a 338(h)(10) election
(collectively, a "Section 338(h)(10) Election").
(b) The computation of the "aggregate deemed sale price" and
"adjusted grossed up basis" (as defined in the applicable regulations issued
under the Code) (the "ADSP" and "AGUB", respectively) of the assets of each
entity shall be reasonable and prepared in accordance with Code Section 338.
Buyer and Seller shall agree on the allocation of the ADSP and AGUB among the
assets of each entity designated on Schedule 8.12 as promptly as reasonably
practicable after the Closing Date (the "Allocation"). Buyer and Seller shall
execute and deliver to each other copies of the Allocation and shall prepare and
file such forms as may be required under the Code in a manner that is consistent
therewith.
(c) Seller and Buyer shall each provide to the other all necessary
information to permit the Section 338(h)(10) Election to be made. Buyer shall be
responsible for the preparation and filing of all forms or documents (including
without limitation IRS Form 8023) required to be filed with any Taxing authority
in connection with the Section 338(h)(10) Election (the "Section 338 Forms"). On
the Closing Date, Buyer and Seller shall execute IRS Form(s) 8023 and any forms
required to make any elections under state or local law that are analogous to a
Section 338(h)(10) Election. Seller shall execute and deliver to Buyer any other
documents or forms as Buyer reasonably requires to complete properly the Section
338 Forms. Seller authorizes Buyer to file the Section 338 Forms and any other
forms referred to in the preceding sentence with the appropriate Taxing
authorities, and Buyer shall provide Seller with copies of such Section 338
Forms after such Section 338 Forms have been filed with the appropriate Taxing
authorities. Buyer and Seller shall prepare and file all Tax Returns on a basis
consistent with any Section 338(h)(10) Election (or, if such election is not
available under any state or local income Tax law, on a basis that is consistent
with the election available under such law that is analogous to an election
under Code Section 338(g)) and with an allocation of the ADSP and AGUB that is
consistent with the Allocation of ADSP and AGUB provided for in paragraph (b) of
this Section 8.12.
(d) Seller and Buyer shall calculate the gain or loss, if any,
resulting from the Section 338(h)(10) Election in a manner that is consistent
with the determination of ADSP and the Allocation and shall not take any
position inconsistent with the Section 338(h)(10) Election, the ADSP or the
Allocation in connection with any Tax Return or otherwise unless otherwise
required by any Requirement of Law.
8.13 Tax Carryovers. Buyer shall elect, where permitted by law, to
carry forward any Tax Attribute (as defined below) of each CenturyTel Entity
arising in any taxable period that begins on or after the Closing Date that,
absent such election, would be carried back to a taxable period ending on or
before the Closing Date.
8.14 Refunds. Any refund of Taxes that is received by Buyer or its
Affiliates (including the CenturyTel Entities), and any amount credited against
Tax to which any of them become entitled, to the extent such Taxes or amount
credited relate to any Tax periods ending on or prior to the Closing Date, and
to the extent that such Taxes or such amount credited have not been reflected in
the reserve or reserves for Tax liability shown on the Closing Date Statement
(rather than any reserve for deferred Taxes established to reflect timing
differences between book and tax income), shall be for the account of Seller,
and Buyer and its Affiliates, as the case may be, shall pay over to Seller any
such refund or amount credited (net of Taxes, costs or expenses with respect
thereto) within 15 days after Buyer's or its Affiliates' receipt thereof or
entitlement thereto. In the event there is a final determination that Buyer or
its Affiliates were not entitled to any such amounts paid over to Seller, Seller
shall return such amounts within 15 days after Buyer's request therefor.
8.15 Post-Closing Transactions not in the Ordinary Course;
Indemnification. Buyer and Seller agree to report all transactions not in the
ordinary course of business occurring on the Closing Date but after the time the
Stock Sale is consummated on Buyer's federal income tax return to the extent
permitted by Treas. Reg. ss.1.1502-76(b)(1)(B).
ARTICLE 9
OTHER COVENANTS
9.1 Confidentiality.
(a) Notwithstanding any provision in the Confidentiality Agreement
to the contrary, the Confidentiality Agreement shall remain in full force and
effect until October 24, 2003; provided, however, that (i) Buyer's covenants
regarding Evaluation Material (as defined therein) that relates to the
CenturyTel Entities, the Cellular Interests or the Business shall terminate and
be of no further force and effect as of the Closing Date, (ii) any covenants
restricting disclosure of the discussions or negotiations of the Stock Sale or
the transactions contemplated by this Agreement shall terminate and be of no
further force and effect as of the date of this Agreement, (iii) any covenants
regarding the nonsolicitation of employees shall terminate and be of no further
force and effect as of the Closing Date and (iv) the last paragraph of such
Confidentiality Agreement shall terminate and be of no further force and effect
as of the date of this Agreement.
(b) For a period of five years from and after the Closing Date,
neither Seller nor any of its Affiliates shall use or take any action whatsoever
which would result in disclosure to any Third Party of any information about the
CenturyTel Entities, the Cellular Interests or the Business, provided that none
of such parties shall be required to maintain confidential any information which
(i) is or becomes generally available to the public other than as a result of a
disclosure by Seller or any of its Affiliates; (ii) is obtained from a Third
Party, provided that such Third Party is not bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to any other Person with respect to such information or (iii) is
required to be disclosed by Seller or any of its Affiliates under any
Requirement of Law, provided that Buyer shall be given prompt written notice of
the request for such information and Seller shall use its reasonable best
efforts to obtain assurances that confidential treatment will be accorded the
information.
9.2 Information Releases. The parties shall consult with each other
(and allow the other party notice, and a reasonable time and opportunity to
comment) in preparing any press release, public announcement, news media
response or other form of release of information concerning this Agreement or
the transactions contemplated hereby that is intended to provide such
information to their employees generally, the news media or the public. Neither
party shall issue or cause the publication of any press release, public
announcement or media response without the prior written consent of the other
party; provided, however, that, after allowing the other party notice and a
reasonable time to comment prior to issuance, nothing herein will prohibit a
party from making an employee announcement, or issuing or causing publication of
any press release, public announcement or media response, to the extent that
such action is required by applicable Requirements of Law or the rules of any
national stock exchange applicable to such party or its Affiliates.
9.3 Intellectual Property. Except as disclosed on Schedule 3.17
and subject to the terms and conditions of the Transition Services Agreement,
the Seller is not retaining any Company Intellectual Property with respect to
the Business or the CenturyTel Entities.
9.4 Insurance. In the event that any of the Assets (other than the
Excluded Assets) suffer any damage or destruction on or prior to the Closing
Date that is covered by insurance maintained by Seller or its Affiliates
("Damaged Assets"), Seller shall and shall cause its Affiliate to use reasonable
best efforts to collect any amounts due in respect of such Damaged Assets under
its insurance policies and, to the extent such proceeds have not been used to
replace such Damaged Assets at or prior to the Closing, Seller shall remit such
collected amounts to Buyer at the Closing. If Seller or its Affiliate receives
such proceeds after the Closing, Seller shall remit such proceeds to Buyer
promptly, but in any event no later than two (2) Business Days after the receipt
by Seller or its Affiliate. Seller or its Affiliates may, at their option,
terminate any or all insurance policies and programs applicable to the
CenturyTel Entities at any time on or after the Closing Date, provided that they
first provide written notice to Buyer describing the insurance to be cancelled
with particularity at least five Business Days prior to the termination date.
9.5 Further Assurances. Seller and Buyer shall from time to time
after the Closing Date, at the request of the other party, use its reasonable
best efforts to execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, to such other party such other instruments of
conveyance and transfer and will take such other actions and execute and deliver
such other documents, certifications and further assurances as such other party
may reasonably require in order to vest more effectively in Buyer, or to put
Buyer more fully in possession of, the Shares or Control of any Cellular
Interests to be transferred to it in accordance with the provisions of this
Agreement. Each of the parties hereto will cooperate with the other and execute
and deliver to the other party such other instruments and documents and take
such other actions as may be reasonably requested from time to time by such
other party as necessary to carry out, evidence and confirm the intended
purposes of this Agreement. Each of the parties will cause its respective
Affiliates to comply with this Section to the extent necessary or desirable to
fulfill the purposes thereof.
ARTICLE 10
INDEMNIFICATION
10.1 Survival of Representations, Warranties and Covenants.
(a) The representations and warranties contained in this Agreement
shall survive the Closing until one (1) year after the Closing Date; provided,
however, that:
(i) the representation and warranties contained in Sections
3.1, 3.2(a), 3.3, 3.4(c) and (e), 3.6 (i) and (iii), 3.13, 3.15(b),
3.16(b), 3.27 and 3.28 (the "Seller Transaction Representations"),
4.1, 4.2, 4.3 (a) and (c), and 4.4 shall survive without limitation;
(ii) the representations and warranties of Seller contained in
Section 3.11 shall survive the Closing until the expiration date of
the applicable statute of limitations period;
(iii) the representations and warranties of Seller contained in
Section 3.14 shall survive until the expiration of three (3) years
after the Closing Date; and
(iv) the representations and warranties of Seller contained
in Section 3.18 shall survive until the expiration of four (4) years
after the Closing Date.
The covenants and agreements of the parties contained in or made in
accordance with the Agreement shall survive Closing in accordance with the terms
of such covenant or agreement and shall remain operative and in full force and
effect until the expiration date of the statute of limitations period applicable
to contractual obligations.
(b) This Article 10 shall survive the Closing and shall remain in
effect indefinitely. Any claim by a party based upon breach of any
representation or warranty in this Agreement made in accordance with Article 10
must be submitted to the breaching party prior to or at the expiration of the
applicable survival period specified in Section 10.1(a) or such claim may not be
pursued and is irrevocably waived. Notwithstanding any investigation or audit
conducted before or after the Closing Date or the decision of any party to
complete the Closing, each party shall be entitled to rely upon the
representations and warranties set forth herein. The waiver of any condition
based on the accuracy of any representation or warranty or on the performance of
or compliance with any covenant or obligation, will not affect the right of
indemnification, or any other remedy based on such representations, warranties,
covenants or obligations. Notwithstanding anything herein to the contrary, any
representation, warranty, covenant and agreement that is the subject of a Claim
asserted in writing prior to the expiration of the applicable survival period
set forth in Section 10.1(a) shall survive with respect to such Claim or any
dispute with respect thereto until the final resolution thereof. No written
assertion described in the preceding sentence will extend the survival of any
Claim unless the assertion describes the matters with sufficient particularity
to reasonably apprise the receiving party of the specific subject matter of such
Claim.
10.2 Indemnification.
(a) Notwithstanding any investigation of the CenturyTel Entities,
the Cellular Interests, the Business or any Affiliate of the Company, and in
addition to the indemnification obligations of Seller set forth elsewhere
herein, from and after the Closing, Seller shall indemnify, defend and hold
harmless each Buyer Indemnitee, against and in respect of any and all Losses
incurred or suffered by any Buyer Indemnitee that result from, relate to or
arise out of:
(i) any inaccuracy in or breach of any representation or
warranty of Seller under this Agreement for the periods of time
specified in Section 10.1(a)(i);
(ii) any breach or nonfulfillment of any agreement or covenant
of Seller under this Agreement;
(iii) First Refusal Rights;
(iv) Retained Liabilities for the periods specified in
Section 10.3(e);
(v) the Transferred Employee bonuses described in Section 7.4;
(vi) any and all matters disclosed on Schedule 10.2(a) hereto
including, without limitation, any brokerage fees set forth on such
Schedule; and
(vii) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs
and other expenses incident to any of the foregoing or to the
enforcement of this Section.
(b) In addition to the indemnification obligations of Buyer set
forth elsewhere herein, from and after the Closing, Buyer shall indemnify,
defend and hold harmless each Seller Indemnitee, against and in respect of any
and all Losses incurred or suffered by any Seller Indemnitee that result from,
relate to or arise out of:
(i) any inaccuracy in or breach of any representation or
warranty of Buyer under this Agreement;
(ii) any breach or nonfulfillment of any agreement or covenant
of Buyer under this Agreement;
(iii) any and all matters disclosed on Schedule 10.2(b) hereto
including, without limitation, any brokerage fees set forth on such
Schedule;
(iv) any and all actions, suits, claims, proceedings or
investigations brought by any Third Party after the Effective Time
that relate to the CenturyTel Entities, the Cellular Interests or the
Business to the extent that the event giving rise thereto occurred
after the Effective Time or which result from or arise out of any
action or inaction after the Effective Time of Buyer or any of its
Affiliates; and
(v) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs
and other expenses incident to any of the foregoing or to the
enforcement of this Section.
10.3 Limitations on Claims for Losses. Following the Closing, claims
for Losses caused by or arising out of breach of warranty or representation
under Section 10.2(a)(i) or 10.2(b)(i) may be made only in accordance with
Article 10 hereof. Anything to the contrary contained herein notwithstanding:
(a) Seller shall not be liable for any Losses with respect to any
breach of warranty or representation under Section 10.2(a)(i) (other than the
Seller Transaction Representations, for which the limitations of this Section
10.3 shall not apply) unless and until the total of all claims for indemnity or
damages with respect thereto exceeds $10,000,000 (the "Seller Deductible"), and
then the Seller shall be liable for all such claims (but only to the extent the
amounts of such claims exceed the Seller Deductible). The aggregate liability of
the Seller for breaches of representations and warranties under Section
10.2(a)(i) (other than the Seller Transaction Representations, for which the
limitations of this Section 10.3 shall not apply) shall not exceed $340,000,000.
For the purpose of clarification, the limitations of liability contained in this
Section 10.3(a) shall apply only to the provisions of Section 10.2(a)(i)
specifically described herein and shall not apply to any other claims for Losses
under Section 10.2(a) including, without limitation, those related to Seller
Transaction Representations and Retained Liabilities.
(b) In the event any matter covered by Section 10.2 relates to
Taxes and is also covered by Section 10.8 or Article 8, the provisions of
Article 8 and Section 10.8 shall control.
(c) In no event shall either party hereto be liable for indirect,
special, consequential, punitive or exemplary damages resulting from, relating
to or arising out of a breach of or claim for indemnification under this
Agreement, even if advised at the time of breach of the possibility of such
damages, except to the extent such damages are the subject of a Third Party
Claim for which indemnification is available under this Agreement.
(d) If, after a party or its Affiliates receive any indemnification
payment hereunder, the amount of such party's Loss to which such payment relates
is reduced by recovery, settlement or otherwise under any insurance coverage (or
other source of indemnity or reimbursement), or pursuant to any claim, recovery,
settlement or payment by or against any Third Party, the amount of such
reduction (less any costs, expenses, or Taxes incurred in connection therewith)
will promptly be repaid by the party receiving such amount to the other party.
(e) No Claim may be made by Buyer with respect to a Retained
Liability in accordance with Section 10.2(a)(iv) after the fifth year
anniversary of the Closing Date, but any Retained Liability that is the subject
of a Claim asserted in writing prior to the expiration of such anniversary date
shall survive with respect to such Claim or any dispute with respect thereto
until the final resolution thereof. No written assertion described in the
preceding sentence will extend the survival of any Claim unless the assertion
describes the matters with sufficient particularity to reasonably apprise the
receiving party of the specific subject matter of such Claim.
10.4 Indemnification Procedure as to Third-Party Claims.
(a) Promptly after a Buyer Indemnitee or a Seller Indemnitee
(individually, an "Indemnitee") obtains knowledge of the commencement of any
claim, action, suit or proceeding by a Third Party or of the occurrence of any
event or the existence of any state of facts which may become the basis of a
claim by a Third Party (any such claim, action, suit or proceeding or event or
state of facts being hereinafter referred to in this Section 10.4 as a "Claim"),
in respect of which an Indemnitee is entitled to indemnification under this
Agreement, such Indemnitee shall promptly notify the indemnitor under this
Agreement (the "Indemnitor") of such Claim in writing setting forth in
reasonable detail the specific facts and circumstances relating to such Claim
and the amount of Losses subject to the Claim (or an estimate thereof if the
actual amount is not known or not capable of reasonable calculation); provided,
however, that any failure to give such notice will not waive any rights of the
Indemnitee except to the extent that the rights of the Indemnitor are actually
and materially prejudiced thereby. No written assertion described in the
preceding sentence will extend the survival of any Claim unless the assertion
describes the matters with sufficient particularity to reasonably apprise the
receiving party of the specific subject matter of such Claim. With respect to
any Claim as to which such notice is given by the Indemnitee to the Indemnitor,
the Indemnitor shall, subject to the provisions of Section 10.4(b) below, be
entitled to participate in and, if it desires, to assume the defense and
settlement of such Claim with counsel reasonably satisfactory to the Indemnitee
at the Indemnitor's sole risk and expense; provided, however, that the
Indemnitee (i) shall be permitted to join in the defense and settlement of such
Claim and to employ counsel at its own expense, (ii) shall reasonably cooperate
with the Indemnitor in the defense and any settlement of such Claim in any
manner reasonably requested by the Indemnitor and (iii) shall have the
unilateral right to pay or settle such Claim at any time in which event the
Indemnitee shall be deemed to have waived any right to indemnification therefor
by the Indemnitor. Following written notice from the Indemnitor to the
Indemnitee of its election to assume the defense of a Claim in accordance with
this Section 10.4(a), the Indemnitor will not be liable to the Indemnitee for
any other expenses subsequently incurred by the Indemnitee in connection with
the defense of the Claim, other than costs and expenses of the Indemnitee
incurred at the written request of the Indemnitor or incurred in accordance with
Section 10.4(b). The assumption of the defense of any Claim by the Indemnitor
will not be deemed to be an admission by the Indemnitor of liability for such
Claim.
(b) If the Indemnitor fails to assume the defense of such Claim or,
having assumed the defense and settlement of such Claim, fails reasonably to
contest such Claim in good faith, the Indemnitee, without waiving its right to
indemnification, may notify Indemnitor of Indemnitee's desire to assume the
defense and settlement of such Claim, and in the event such notice concerns the
failure of the Indemnitor to reasonably contest a Claim following an assumption
of such defense, if Indemnitor fails to re-assume the defense of such Claim and
commence to reasonably contest such Claim in good faith within 15 days after
such notice, Indemnitee may assume the defense and settlement of such Claim;
provided, however, that (i) the Indemnitor shall be permitted to join in the
defense and settlement of such Claim and to employ counsel at its own expense,
(ii) the Indemnitor shall cooperate with the Indemnitee in the defense and
settlement of such Claim in any manner reasonably requested by the Indemnitee,
(iii) the Indemnitor shall not be liable for the fees and disbursements of more
than one counsel for all Indemnitees in connection with any one proceeding or
any similar or related proceedings arising from the same general allegations or
circumstances and (iv) the Indemnitee shall not settle such Claim without
soliciting the views of the Indemnitor and giving them due consideration.
(c) If the remedy sought by the claimant with respect to such
Claim is not solely for money damages, and would affect the operation of the
Business after the Closing, the Indemnitor shall not settle such Claim without
the prior written consent of Buyer, which consent shall not be unreasonably
withheld. If Buyer provides the Indemnitor with written consent, Buyer agrees to
be bound by the settlement of a Claim.
(d) As used in this Section 10.4, the term Indemnitee shall be
deemed to include the plural thereof where the rights or obligations of more
than one Indemnitee may be involved.
10.5 Adjustment For Insurance and Tax Benefits. Any indemnification
payable in accordance with Section 10.2 shall be net of any amounts actually
recovered (after deducting related costs and expenses) by the Indemnitee for the
Losses for which such indemnification payment is made, under any insurance
policy, warranty or indemnity from any Third Party existing at the Closing Date,
provided that no Indemnitee shall be obligated to seek any recovery under any
such insurance policy, warranty, indemnity or any Tax benefits actually realized
and recognized by the Indemnitee in respect of any Losses for which
indemnification is made.
10.6 Payment.
(a) Upon a determination of liability in respect of Article 10 of
this Agreement, the appropriate party shall pay the Indemnitee the amount so
determined (subject to the limitations of Section 10.3) within 10 Business Days
after the date of determination (such tenth Business Day, the "Due Date"). If
there should be a dispute as to the amount or manner of determination of any
indemnity obligation owed under this Agreement, the Indemnitor shall
nevertheless pay when due such portion, if any, of the obligation as shall not
be subject to dispute. The difference, if any, between the amount of the
obligation ultimately determined as properly payable under this Agreement and
the portion, if any, theretofore paid shall bear interest as provided below in
Section 10.6(b). Upon the payment in full of any claim, either by setoff or
otherwise, the Indemnitor or other Person making payment shall be subrogated to
the rights of the Indemnitee against any Person with respect to the subject
matter of such claim.
(b) If all or part of any indemnification obligation under this
Agreement is not paid when due, then the Indemnitor shall pay the Indemnitee
interest on the unpaid amount of the obligation for each calendar day from the
Due Date until payment in full, payable on demand, at a rate per annum equal to
the Applicable Rate on the Due Date.
10.7 Other Rights and Remedies. Following the Closing, the sole
and exclusive remedy at law (other than with respect to claims involving fraud)
for Seller or Buyer for any claim (whether such claim is framed in tort,
contract or otherwise) arising out of a breach of any representation, warranty,
covenant or other agreement in this Agreement shall be a claim by Seller or
Buyer for indemnification in accordance with this Article 10, which claims are
independent of and in addition to any equitable rights or remedies.
10.8 Tax Indemnification.
(a) Seller shall indemnify, defend and hold harmless the Buyer
Indemnitees from and against (i) any Liability for Taxes of the CenturyTel
Entities due in respect of all Taxable periods ending on or before the Closing
Date and the portion of any Straddle Period ending on the Closing Date (other
than Taxes specifically reserved on the Closing Date Statement, but excluding
any reserve for deferred Taxes to reflect timing differences between book and
Tax income), (ii) any liability that may be imposed on the CenturyTel Entities
in accordance with Section 1.1502-6 of the Treasury Regulations promulgated
under the Code or in accordance with any analogous provision of state or local
law, as a result of the affiliation of the CenturyTel Entities with Seller or an
Affiliate of Seller or predecessor-in-interest, and (iii) any liability for
Taxes resulting from Section 338(h)(10) Elections with respect to the CenturyTel
Entities or Cellular Entities.
(b) Seller also agrees to indemnify, defend and hold harmless the
Buyer Indemnitees from and against any and all costs sustained in a Tax period
of a CenturyTel Entity ending after the Closing Date arising out of the
settlement or other resolution (without the written consent of Buyer) of a
proposed Tax adjustment which relates to a Tax period ending on or before the
Closing Date. For example, if Seller agrees in an income Tax audit to reduce the
depreciable basis of property acquired by a CenturyTel Entity before the Closing
Date, Seller shall be liable for any additional Taxes due from such CenturyTel
Entity by reason of reduced depreciation deductions.
(c) In the case of any representation, warranty and agreement of
Seller in Section 3.11 and any other representation or warranty relating to or
affecting the CenturyTel Entities' Liability for Taxes, whether the entity's own
Taxes or its liability, if any (for example, by reason of transferee liability
or application of Treas. Reg. Section 1.1502-6) for the Taxes of others
including, but not limited to Seller or any former or present Affiliate or
Subsidiary thereof, the same shall survive until the later of the final
resolution of any judicial or administrative proceeding involving any such Tax
or expiration of any statute of limitations (including any suspensions, tollings
or extensions thereof.)
10.9 Treatment of Indemnity Payments. Seller and Buyer agree that
any indemnity payments in accordance with this Article 10 will be treated by the
parties as an adjustment to the Purchase Price. Notwithstanding anything to the
contrary contained herein, Buyer shall not be indemnified or reimbursed for any
Tax consequences arising from the receipt or accrual of an indemnity payment
hereunder, including any Tax consequences arising from adjustments to the basis
of any asset resulting from an adjustment to the Purchase Price or any
additional or reduced Taxes resulting from any such basis adjustment.
ARTICLE 11
TERMINATION
11.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated at any time before the Closing
Date only as follows:
(a) by mutual consent in writing of Seller and Buyer;
(b) by Buyer upon written notice given to Seller, if Seller
commits a breach of any representation, warranty, covenant or agreement in this
Agreement or the Transition Services Agreement that has resulted or is
reasonably likely to result in the failure of any condition to Closing under
Article 6 of this Agreement to be satisfied, and such breach is not curable or,
if curable, is not cured within 30 calendar days after written notice of such
breach;
(c) by Seller upon written notice given to Buyer, if Buyer commits
a breach of any representation, warranty, covenant or agreement in this
Agreement or the Transition Services Agreement that has resulted or is
reasonably likely to result in the failure of any condition to Closing under
Article 6 of this Agreement to be satisfied, and such breach is not curable or,
if curable, is not cured within 30 calendar days after written notice of such
breach; (d) by Buyer or Seller upon written notice given to the other if the
Closing shall not have taken place on or before 11:59 p.m. Central time on
September 30, 2002;
(e) by Buyer upon written notice given to the Seller if any
Governmental Authority (i) shall have issued an order, decree or ruling or taken
any other action that permanently restrains, enjoins or otherwise prohibits the
Stock Sale and the transactions contemplated by this Agreement, and such order,
decree, ruling or other action shall have become a Final Order or (ii) shall
have failed to issue an order, decree or ruling or to take any other action, as
applicable, and such denial of a request to issue such order, decree, ruling or
take such other action shall have become a Final Order, in the case of each of
(i) and (ii) which is necessary to fulfill the conditions set forth in Article
6; and
(f) by Buyer upon written notice given to the Seller at any time
after (i) the occurrence of a First Refusal Exercise Event or (ii) all
conditions precedent set forth in Article 6 (other any condition precedent that
is not capable of being satisfied until the Closing) have been satisfied or
waived other than the condition set forth in Section 6.1(e)(i) due to the
failure of Seller to obtain a Material Acknowledgment in accordance with Section
5.19.
11.2 Limitation on Right of Termination. No party shall be entitled
to exercise any right of termination in accordance with Section 11.1(d) or (e)
if the events described therein have been caused by or resulted from such
party's failure to fulfill any of its obligations under this Agreement or the
Transition Services Agreement.
11.3 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 11.1, this Agreement shall become wholly void
and of no further force and effect, except that the provisions of this Section
11.3, and Sections 1.2, 5.5(e), 5.14(f), 5.19(d), 9.1(a), 10.3(c), and Article
12 shall survive any termination. Notwithstanding the foregoing, no termination
shall relieve any party from Liability for any breach by that party of its
representations, warranties, covenants or agreements set forth in this
Agreement, and the aggrieved party shall be entitled to all rights and remedies
at law or in equity with respect to any such breach.
ARTICLE 12
MISCELLANEOUS
12.1 Notices. All notices and other communications required or
permitted hereunder shall be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been given when delivered in person or
dispatched by electronic facsimile transfer (confirmed in writing by certified
mail, concurrently dispatched) or one Business Day after having been dispatched
for next-day delivery by a nationally recognized overnight courier service to
the appropriate party at the address specified below:
If to Buyer, to:
ALLTEL Communications, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx Xxxx, XX 00000
Attention: Executive Vice President and Secretary
Facsimile Number: 501/905-0962
If to Seller, to:
CenturyTel, Inc.
000 XxxxxxxXxx Xxxxx
Xxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attention: R. Xxxxxxx Xxxxx, Xx.,
Executive Vice President and
Chief Financial Officer, and
Xxxxxx X. Xxxx,
Assistant General Counsel
or to such other address or addresses as either party may from time to time
designate for itself by like notice.
12.2 Expenses. Except as otherwise provided in this Agreement,
Seller and Buyer shall pay any expenses (including attorneys' fees) incurred by
it incidental to the preparation of this Agreement, the carrying out of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby. For the purpose of clarification, no CenturyTel Entity or
Cellular Entity shall bear, incur or otherwise be charged with any expenses of
Seller in connection with this Agreement.
12.3 Successors and Assigns. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. This Agreement is not assignable or delegable prior to
the Closing by Seller or by Buyer without the prior written consent of the other
party, such consent not to be unreasonably withheld or delayed. Any purported
assignment in violation of this Section shall be void.
12.4 Amendments. This Agreement may be amended or modified only by
a subsequent writing duly executed by authorized representatives of each of the
parties hereto.
12.5 Captions. All captions set forth in this Agreement are for
convenience of reference only, do not form a part of this Agreement and shall
not affect in any way the meaning or interpretation of this Agreement.
12.6 Entire Agreement. This Agreement, including its Schedules and
Exhibits, which are specifically incorporated herein, and the Confidentiality
Agreement constitute the entire understanding of the parties hereto with respect
to the transactions contemplated hereby and supersede any and all previous
agreements and understandings, oral or written, between or among the parties or
their Affiliates regarding the transactions contemplated hereby.
12.7 Waiver. Either party may, by written instrument, (i) waive the
performance, or extend the time for performance, of any of the obligations or
other acts of the other party, (ii) waive any inaccuracies of the other party in
its representations and warranties, or (iii) waive compliance with any
conditions precedent specified in Article 6 to its obligations to consummate the
Stock Sale or the transactions contemplated by this Agreement; provided,
however, that neither party may grant any waiver, the effect of which would be
unlawful. No waiver of any term or provision of this Agreement shall be
effective unless in writing, signed by the party against whom enforcement of the
same is sought. The grant of a waiver in one instance does not constitute a
continuing waiver in all similar instances. No failure of a party to exercise,
and no delay in exercising, any right, remedy, power or privilege hereunder
shall operate as a waiver thereof.
12.8 Third Parties. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and their respective heirs, executors, administrators, legal
representatives, successors and assigns and, in the case of Article 10, the
Buyer Indemnitees and the Seller Indemnitees, and they shall not be construed as
conferring any rights or remedies on any other Persons.
12.9 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument.
12.10 Governing Law. Except as provided in Section 2.3(c) regarding
the application of the Commercial Arbitration Rules of the American Arbitration
Association, this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to such state's
laws and principles regarding the conflict of laws. Each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in connection with
any dispute that arises out of this Agreement or any of the transactions
contemplated hereby or thereby, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (c) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated hereby or thereby in any court
other than a Federal court sitting in the State of Delaware or a Delaware state
court unless venue would not be proper under rules applicable in such courts.
The parties hereto irrevocably and unconditionally waive trial by jury in any
legal action or proceeding relating to this Agreement or any transaction
contemplated hereby or thereby, and for any counterclaim with respect thereto.
In the event of any breach of the provisions of this Agreement, the
non-breaching party shall be entitled to equitable relief, including in the form
of injunctions and orders for specific performance, where the applicable legal
standards for such relief in such courts are met, in addition to all other
remedies available to the non-breaching party with respect thereto at law or in
equity.
12.11 Severability. Any provision of this Agreement which is
determined to be invalid, illegal or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity, illegality or unenforceability
without invalidating or rendering unenforceable the remaining provisions hereof,
and such invalidity, illegality or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provisions in any other
jurisdiction.
12.12 Specific Performance. Notwithstanding the provisions of Section
10.7, the parties acknowledge that their obligations hereunder are unique and
that, prior to Closing, remedies at law, including monetary damages, will be
inadequate in the event either party should default in the performance of its
obligations under this Agreement. Accordingly, in the event of any such breach
prior to Closing, the non-defaulting party shall be entitled to a decree of
specific performance pursuant to which the defaulting party is ordered to
affirmatively carry out its pre-closing obligations under this Agreement. The
foregoing shall not be deemed to be or construed as a waiver or election of
remedies by either party, both of whom expressly reserve any and all rights and
remedies available to it at law or in equity in the event of any breach or
default by the other party under this Agreement prior to Closing.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written above.
CENTURYTEL, INC.
By: /s/ R. Xxxxxxx Xxxxx
--------------------------------------
Name: R. Xxxxxxx Xxxxx
Title: Chief Financial Officer
ALLTEL COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Name: Xxxxx X. Xxxx
Title: President and Chief Operating Officer