ASSET PURCHASE AGREEMENT
Between
GTE NORTH INCORPORATED
as Seller,
and
CENTURYTEL, INC.,
as Buyer
October 11, 1999
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS................................................. 1
1.1 Terms....................................................... 1
1.2 Interpretation..............................................11
ARTICLE 2 PURCHASE AND SALE OF ASSETS.................................11
2.1 Purchase and Sale of Assets.................................11
2.2 Purchased Property..........................................11
2.3 Excluded Property...........................................12
2.4 Assumption of Liabilities...................................13
2.4.1 Assumed Liabilities................................13
2.4.2 Retained Liabilities...............................14
2.5 No Assignment Without Consent...............................15
ARTICLE 3 ARTICLE 3. PURCHASE PRICE...................................16
3.1 Purchase Price..............................................16
3.2 Closing Date Estimate.......................................16
3.3 Closing Date Statement......................................16
3.4 Performance Deposit.........................................18
ARTICLE 4 REQUIRED APPROVALS, CONSENTS AND NOTIFICATIONS..............19
4.1 State Regulatory Approval...................................19
4.2 Bondholder Consents.........................................19
4.3 Material Consents...........................................19
4.4 FCC Consents................................................19
4.5 HSR Act Review..............................................19
4.6 Notification................................................20
4.7 GTE/Xxxx Atlantic Merger....................................20
ARTICLE 5 PRE-CLOSING COVENANTS.......................................20
5.1 Investigation by Buyer......................................20
5.2 Operation of the Business in the Ordinary Course............21
5.2.1 Preservation of Business...........................21
5.2.2 No Material Changes................................21
5.3 Satisfaction of Conditions..................................22
5.4 Approvals...................................................22
5.5 Financial Statements........................................22
5.6 Capital Expenditures........................................23
5.7 Delivery of Interim Information.............................23
5.8 Cooperation with Respect to Like-Kind Exchange..............23
ARTICLE 6 CONDITIONS PRECEDENT TO THE CLOSING.........................24
6.1 Conditions Precedent to Obligations of Buyer................24
6.1.1 No Misrepresentation or Breach of
Covenants and Warranties...........................24
6.1.2 Documents..........................................24
6.1.3 HSR................................................24
6.1.4 No Legal Obstruction...............................24
6.1.5 No Material Adverse Effect.........................25
6.2 Conditions Precedent to Obligations of Seller...............25
6.2.1 No Misrepresentation or Breach of
Covenants and Warranties...........................25
6.2.2 Documents..........................................25
6.2.3 Delivery of Closing Date Amount....................25
6.2.4 HSR................................................25
6.2.5 No Legal Obstruction...............................25
ARTICLE 7 THE CLOSING.................................................26
7.1 The Closing.................................................26
7.2 Seller's Obligations at Closing.............................26
7.3 Buyer's Obligations at Closing..............................27
ARTICLE 8 REPRESENTATIONS AND WARRANTIES..............................27
8.1 Representations and Warranties of Seller....................27
8.1.1 Authorization and Effect of Agreement..............27
8.1.2 No Restrictions Against Sale or Assignment
of the Purchased Property..........................27
8.1.3 Consents, Approvals and Permits of
Governmental Authorities...........................28
8.1.4 No Violation of Law................................28
8.1.5 Corporate Organization.............................28
8.1.6 Brokers............................................28
8.1.7 Title to Owned Real Property.......................28
8.1.8 Real Property Leases...............................29
8.1.9 Tangible Assets....................................29
8.1.10 No Material Adverse Change.........................29
8.1.11 Material Contracts.................................30
8.1.12 Insurance..........................................30
8.1.13 Taxes..............................................31
8.1.14 No Material Claims or Suits........................31
8.1.15 Tariffs; FCC Licenses..............................31
8.1.16 Employee Matters...................................32
8.1.17 Schedules of Telephone Plant.......................34
8.1.18 Schedule of Real Property Interests................34
8.1.19 Environmental Matters..............................34
8.1.20 Schedule of Joint Construction Projects............35
8.1.21 Financial Statements...............................35
8.1.22 Year 2000 Compliance...............................35
8.1.23 Access Line Count..................................36
8.2 Representations and Warranties of Buyer.....................36
8.2.1 Corporate Organization.............................36
8.2.2 Authorization and Effect of Agreement..............36
8.2.3 No Restrictions Against Purchase of the
Purchased Properties...............................37
8.2.4 No Violation of Law................................37
8.2.5 Financial Capacity.................................37
8.2.6 Brokers............................................37
8.2.7 Consents and Approvals of Governmental Authority...38
ARTICLE 9 CONTINUING BUSINESS RELATIONSHIPS...........................38
9.1 Transition Services Agreement...............................38
9.2 Optional Services Agreement.................................38
9.3 Directory Publishing........................................38
9.3.1 Assumption of Certain Directory Publishing
Agreement Rights and Obligations...................38
9.3.2 Co-Bound Directories Acknowledgement...............38
9.3.3 Meeting to Discuss Directory Publication...........39
ARTICLE 10 ADDITIONAL COVENANTS OF THE PARTIES.........................39
10.1 Intellectual Property.......................................39
10.1.1 No License.........................................39
10.1.2 Infringement.......................................39
10.1.3 Trademark Phaseout.................................39
10.1.4 Third Party Software...............................40
10.2 Effect of Due Diligence and Related Matters.................41
10.3 Confidentiality.............................................42
10.4 Further Assurances..........................................42
10.5 Prorations..................................................42
10.6 Cost Studies/NECA Matters...................................43
10.6.1 Prior to Closing...................................43
10.6.2 From and After Closing.............................43
10.7 Customer Deposits and Construction Advances.................44
10.8 Access to Books and Records.................................44
10.9 Purchase Price Allocation...................................44
10.10 Owned Real Property Transfers...............................45
10.11 Transaction Taxes...........................................46
10.12 Bulk Sales Laws.............................................46
10.13 Prepaid Non-regulated Maintenance Agreements................46
10.14 Vehicle Registration........................................46
10.15 Carrier Access Billing and Accounts
Receivable Transition.......................................47
10.16 End-User Billing and Accounts Receivable Transition.........47
10.17 Cooperation.................................................47
ARTICLE 11 EMPLOYEES AND EMPLOYEE MATTERS..............................48
11.1 Employment of Transferred Employees.........................48
11.1.1 Assumption of Collective Bargaining
Agreement Obligations..............................48
11.1.2 Assumption of Employment and Other Agreements......49
11.1.3 Recognition of Transferred Employee Service........49
11.1.4 Assumption of Obligation to Pay Bonuses............49
11.1.5 No Duplicate Benefits; Dependents and
Beneficiaries......................................50
11.1.6 Affiliate Employees................................50
11.1.7 Term of Assumed Obligations........................50
11.2 Transferred Employee Benefit Matters........................50
11.2.1 Defined Benefit Plans..............................50
11.2.2 Savings Plans......................................56
11.2.3 Welfare Plans......................................58
11.3 Miscellaneous Benefits......................................61
11.3.1 Loans..............................................61
11.3.2 Vacation...........................................61
11.4 Employee Rights.............................................62
11.5 WARN Act Requirements.......................................62
11.6 Indemnification.............................................63
11.6.1 Indemnification of Seller..........................63
11.6.2 Indemnification of Buyer...........................63
11.7 Special Provisions For Certain Employees....................63
ARTICLE 12 INDEMNIFICATION.............................................64
12.1 Survival of Representations, Warranties and Covenants.......64
12.2 Indemnification.............................................65
12.3 Limitations on Liability....................................65
12.4 Defense of Claims...........................................68
ARTICLE 13 TERMINATION.................................................69
13.1 Termination Rights..........................................69
13.2 Good Faith Performance......................................70
13.3 Effect of Termination.......................................70
ARTICLE 14 MISCELLANEOUS...............................................71
14.1 Notices.....................................................71
14.2 Information Releases........................................72
14.3 Expenses....................................................72
14.4 Successors and Assigns......................................72
14.5 Amendments..................................................72
14.6 Captions....................................................72
14.7 Entire Agreement............................................73
14.8 Waiver......................................................73
14.9 Third Parties...............................................73
14.10 Counterparts................................................73
14.11 Governing Law...............................................73
14.12 Further Assurances..........................................73
14.13 Severability................................................74
14.14 Representation by Counsel; Interpretation...................74
INDEX OF SCHEDULES
Schedules* Title
1.1-A Assigned Contracts
1.1-B Excluded Contracts
1.1-C Purchased Exchanges
1.1-D License Agreement
1.1-E National Account Agreement Customers
2.3(g) Other Excluded Property
4.3 Material Consents
4.4 FCC Consents/Waivers
5.2.1 Operation of the Business
5.2.2(c) Increase in Transferred Employee Benefits
5.2.2(d) Dispositions
6.1.1 Seller's Closing Certificate
6.2.1 Buyer's Closing Certificate
7.2(a) Xxxx of Sale and Assignment and Assumption Agreement
7.2(b) Legal Opinion of Seller's Counsel
7.2(g) Affidavit as to Status of Foreign Person
7.3(c) Legal Opinion of Buyer's Counsel
8.1.3 Consents, Approvals and Permits of Governmental Authorities
8.1.4 Violation of Law
8.1.7(a) Owned Real Property
8.1.7(b) Bondholders Liens
8.1.8 Real Property Leases
8.1.9 Title Exceptions for Tangible Purchased Property
8.1.10 Material Adverse Changes
8.1.11(a) Material Contracts - Limitations on Competition
8.1.11(b) Material Contracts - Liens
8.1.11(c) Material Contracts - Sale of Purchased Property
8.1.11(d) Material Contracts - Ordinary Course
8.1.13 Exceptions to Tax Return Filings
8.1.14 State and Federal Claims/Suits
8.1.15(a) Tariff Proceedings
8.1.15(b) FCC Licenses
8.1.16(a) Employee Matters - Seller's Employee Benefit Plans
8.1.16(b) Employee Matters - Seller's Material Liabilities under ERISA
8.1.16(c) Employee Matters - Seller's ERISA Plans - Compliance
8.1.16(d) Employee Matters - Seller's Multiemployer Plans
8.1.16(e) Employee Matters - Seller's Union Representation
8.1.17 Telephone Plant
8.1.18 Real Property Interests List
8.1.19 Environmental Matters
8.1.20 Joint Construction Projects
8.1.21(a) Financial Statement - Estimated Income Statement
8.1.21(b) Financial Statement - Estimated Balance Sheet
8.1.21(c) Financial Statement - Estimated Statement of Cash Flows
9.1 Transition Services Agreement
9.2 Optional Services Agreement
9.3.1 Directory Publishing Agreements
9.3.2 Co-Bound Directory Agreements
11.1 Employees and Employee Matters - Transferred Employees
and LTD Recipients
11.1.1 Employees and Employee Matters - Collective
Bargaining Agreements
11.1.2 Employees and Employee Matters - Employment Agreement
Obligations and Exceptions
11.1.4 Employees and Employee Matters - Seller's Bonus Plans
11.3.1 Employees and Employee Matters - Employment Loans
* The Schedule numbers refer to the appropriate Section within the Agreement.
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 7th day of October, 1999, by and between CenturyTel, Inc., a
Louisiana corporation ("Buyer"), and GTE North Incorporated, a Wisconsin
corporation ( "Seller").
RECITALS
WHEREAS, Seller is in the business of providing regulated local
exchange telephone service in certain areas of the state of Wisconsin; and
WHEREAS, Seller desires to sell, convey, assign, transfer and deliver
to Buyer, and Buyer desires to purchase and accept from Seller, certain of its
telephone properties and related assets used in the provision of such service,
upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Terms. For purposes of this Agreement and any amendment hereto, the
following terms are defined as set out below or in the Section referenced below:
"Accounts Receivable Settlement Statements" is defined in Section
10.16(b).
"Acquired Local Loop" means a "Local Loop" as defined in 47 C.F.R.
Section 51.319(a) of the FCC's rules, which Local Loop is part of the Purchased
Exchanges.
"Active Employees" is defined in Section 11.1.
"Advanced Xxxxxxxx" means amounts arising primarily from the operation
of the Business that have been billed by Seller as of the Closing Date but that
are unearned because they relate to provision of service after the Closing Date.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person.
"Allocation" is defined in Section 10.9.
"Ancillary Documents" means the Transition Services Agreement, the
Optional Services Agreement, the License Agreement and the Xxxx of Sale and
Assignment and Assumption Agreement.
"Assigned Contracts" means Contracts to which Seller is a party (i)
which relate primarily to the operation of the Business, other than the Excluded
Contracts, Real Property Interests, Real Property Leases and Third Party
Intellectual Property Contracts, and (ii) any other Contract to which Seller or
its Affiliates are a party and is listed on Schedule 1.1-A.
"Assigned Permits" means, to the extent assignable, all permits,
licenses, franchises, approvals and authorizations of Seller issued or granted
by any Governmental Authority that relate primarily to the operation of the
Business, other than the FCC Licenses and the Excluded Permits.
"Assumed Liabilities" is defined in Section 2.4.1
"Automated Assets" is defined in Section 8.1.22.
"Bargained Welfare Plans" is defined in Section 11.2.3(a).
"Base Purchase Price" is defined in Section 3.1.
"Xxxx of Sale and Assignment and Assumption Agreement" is defined in
Section 7.2(a).
"Bondholder Consents" is defined in Section 4.2.
"Bondholders" means the Persons listed on Schedule 8.1.7(b).
"Business" means the business of providing in the geographic area
serviced by the Purchased Exchanges (i) local exchange (including extended
community calling and extended area service), exchange access, switched,
dedicated, special access, tandem, end office switching service and intra-LATA
toll telecommunications services to end users, (ii) exchange access
telecommunications services to interexchange carriers and other local exchange
carriers, (iii) retail sales, leasing and maintenance of telephone equipment and
products (including customer premises equipment), (iv) non-tariffed public
communications (pay telephones) and commercial telecommunications services
facilities leasing, and (v) provision of subscriber listing information
(including directory services).
"Buyer Pension" is defined in Section 11.2.1(c)(iii)(B).
"Buyer Pension Plan" and "Buyer Pension Plans" are defined in Section
11.2.1(b).
"Buyer Savings Plan" and "Buyer Savings Plans" are defined in Section
11.2.2(b).
"Buyer Welfare Plans" is defined in Section 11.2.3(a).
"Buyer's Actuary" is defined in Section 11.2.1(d)(ii).
"Buyer's Closing Certificate" is defined in Section 6.2.1.
"Calendar-Related" is defined in Section 8.1.22.
"Capital Expenditure Amount" is defined in Section 5.6.
"Capital Expenditure Deficiency" is defined in Section 5.6.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"Closing" is defined in Section 7.1.
"Closing Date" is defined in Section 7.1.
"Closing Date Amount" is defined in Section 3.2(b).
"Closing Date Statement" is defined in Section 3.3.
"CLTA" is defined in Section 10.10.
"Co-Bound Directories" is defined in Section 9.3.2.
"Confidentiality Agreement" means the Confidentiality Agreement dated
as of August 24, 1998, between Buyer, Seller and certain Affiliates of Seller.
"Construction Advances" means advances collected by Seller for the
future performance of non-regulated construction in the Purchased Exchanges.
"Contracts" means all contracts, leases, indentures, agreements, and
other legally binding arrangements.
"Customer Advances" means amounts arising from the operation of the
Business that have been billed and collected by Seller as of the Closing Date
but that are unearned because they relate to the provision of service after the
Closing Date.
"Customer Deposits" is defined in Section 10.7.
"Date Data" is defined in Section 8.1.22.
"Deposit" is defined in Section 3.4.
"Deposit L/C" is defined in Section 3.4.
"Direct Claim" is defined in Section 12.4(b).
"DOJ" is defined in Section 4.5.
"Due Diligence Materials" means all materials contained in the ___
volumes delivered to Buyer on ________, 1999.
"Earned End-User Accounts Receivable" means accounts receivable
arising primarily from the operation of the Business that have been earned by
Seller's provision of service on or before the Closing Date excluding amounts
billed through the carrier access billing system to interexchange carriers.
"Earned End-User Accounts Receivable Amount" means the aggregate
amount of all Earned End-User Accounts Receivable as of the Closing Date, less a
discount for anticipated uncollectible Earned End-User Accounts Receivable in an
amount equal to the Uncollectible Factor multiplied by the Earned End-User
Accounts Receivable as of the Closing Date.
"Employment Agreements" is defined in Section 8.1.16(a).
"Environmental Requirements" means all federal, state, interstate and
local government or agency Laws relating to pollution or protection of human
health and safety or the environment (including, without limitation, air,
surface water, ground water, land surface and subsurface strata), including,
without limitation, Laws relating to emissions, discharges, releases or
threatened releases of Regulated Materials; or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation or handling of Regulated Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Plans" is defined in Section 8.1.16(a).
"Estimated Non-Regulated Construction Work in Process Amount" is
defined in Section 3.2(a).
"Estimated Regulatory Obligation Amount" is defined in Section 3.2(a).
"Evaluation Material" is defined in the first paragraph of the
Confidentiality Agreement.
"Excluded Contracts" means all billing and collection agreements,
interconnection agreements, National Account Agreements, billing media
agreements, vehicle leasing agreements, except to the extent expressly listed on
Schedule 1.1-A, and (ii) such other agreements as are listed on Schedule 1.1-B.
"Excluded Marks" means all trademarks, applications for trademark
registration, service marks, applications for service xxxx registration, trade
names, domain names and related registrations owned by Seller or an Affiliate of
Seller, or licensed to Seller or an Affiliate of Seller by any Person, and any
derivations of the foregoing.
"Excluded Permits" means the permits, licenses, franchises, approvals
and authorizations of Seller by Governmental Authorities that relate to the
Excluded Property.
"Excluded Property" is defined in Section 2.3.
"Executive Officers" of Seller means the regional president of the
region that includes the Purchased Exchanges, the general manager and the
director of infrastructure provisioning for the Purchased Exchanges and the
general manager of customer operations for the Purchased Exchanges.
"Expiration Date" is defined in Section 12.1(a).
"FCC" means the Federal Communications Commission.
"FCC Consents" is defined in Section 4.4.
"FCC Licenses" means all licenses, certificates, permits or other
authorizations granted to Seller by the FCC that are used primarily in the
operation of the Business.
"Final Order" is defined in Section 6.1.4.
"Financial Statements" is defined in Section 8.1.21.
"FRP" is defined in Section 11.2.3(e).
"FTC" is defined in Section 4.5.
"Future Capital Expenditure Obligations" is defined in Section
2.4.1(h).
"Future Regulatory Obligations" is defined in Section 2.4.1(g).
"GAAP" means United States generally accepted accounting principles.
"GATT Grandfathered Participant" is defined in Section
11.2.1(c)(ii)(C).
"Governmental Authority" means any court or any federal, state or
foreign governmental, legislative, administrative or regulatory body, agency,
department, authority or other instrumentality.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnifiable Losses" is defined in Section 12.3(a).
"Indemnification Payment" is defined in Section 12.3(a).
"Indemnifying Party" is defined in Section 12.3(a).
"Indemnitee" is defined in Section 12.3(a).
"Intellectual Property" means all inventions (whether patentable or
not and whether or not such inventions are described or claimed in any patent or
patent application), designs (useful or ornamental), and works subject to
copyright protection, invention disclosures, specifications, manuals, drawings,
functional or system block diagrams, flow charts, circuit diagrams, design or
user documentation, engineering notebooks, schematics, test programs, documented
procedures, documented processes, documented flows, devices, software (in any
form), or firmware, and all intellectual property rights therein or based
thereon, including patents, patent applications (including continuations,
continuations-in-part, divisions, reissues), reexamined patents and extensions
thereof, copyrights (whether registered or unregistered), and trade secrets.
"IRC" means the Internal Revenue Code of 1986, as amended.
"IRS" means the Internal Revenue Service.
"Joint Construction Projects" is defined in Section 2.4.1(d).
"LTD Recipient" is defined in Section 11.7.
"Law" or "Laws" means any statute, rule, regulation, mandate, decree,
decision, order or ordinance of any Governmental Authority.
"Leased Real Property" means the real property leased to Seller under
the Real Property Leases.
"License Agreement" means the license agreement attached hereto as
Schedule 1.1-D pursuant to which Seller grants to Buyer certain rights and
licenses under Licensed Intellectual Property.
"Licensed Intellectual Property" means Intellectual Property owned by
Seller, and Third Party Intellectual Property licensed to Seller which Seller
has the right to sublicense to Buyer and its Affiliates without the payment of
compensation or other consideration to any Person, and which Intellectual
Property and Third Party Intellectual Property (i) are required for the use or
maintenance (to the extent not provided by the owner or licensor of the Third
Party Intellectual Property) of the Purchased Exchanges, (ii) are located in the
geographic area of the Purchased Exchanges, and (iii) are used in the operation
of the Business as of the Closing; provided that Licensed Intellectual Property
shall at all times be Excluded Property.
"Lien" means any lien, charge, pledge, option, mortgage, security
interest, right of first refusal or other encumbrance.
"Material Adverse Effect" means a materially adverse effect on the
Business or the Purchased Property, taken as a whole, other than effects
relating to or arising from (i) the execution of this Agreement, (ii) the United
States economy generally or Wisconsin in particular, or (iii) events or
circumstances that affect the Business in the same manner and to the same extent
as other businesses in the industry generally.
"Material and Supply Inventory" is defined in the FCC's Part 32
Uniform System of Accounts.
"Material Consents" is defined in Section 4.3.
"Material Contracts" is defined in Section 8.1.11.
"Merger" means the proposed merger involving GTE Corporation and Xxxx
Atlantic Corporation and their respective Subsidiaries.
"National Account Agreements" means agreements between Seller or its
Affiliates with those customers listed on Schedule 1.1-E.
"NECA" is defined in Section 10.6.1.
"Non-Regulated Construction" means all construction related to
non-tariffed activities, including PBX, CPE and related construction activities.
"Non-Regulated Construction Work in Process Amount" means amounts
expended by Seller for non-regulated construction work not completed as of
Closing Date, net of Construction Advances related to such construction work.
Non-Regulated Construction Work in Process Amount is billable by Buyer to third
parties after Closing Date.
"Non-Union Welfare Plans" is defined in Section 11.2.3(a).
"Optional Services Agreement" is defined in Section 9.2.
"Owned Real Property" means the real property (i) owned in fee by
Seller, (ii) located in the geographic area of the Purchased Exchanges and (iii)
used primarily in the operation of the Business, including all land, buildings,
structures, appurtenances and improvements located thereon.
"Participant Loans" is defined in Section 11.2.2(c)(i).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Assets" is defined in Section 11.2.1(d)(i).
"Periodic Taxes" is defined in Section 10.5.
"Permitted Encumbrances" means (i) Liens for current Taxes and
assessments not yet delinquent, or the amount or validity of which is being
contested in good faith by appropriate proceedings during which collection or
enforcement against the relevant property is stayed, (ii) standard utility
easements, covenants and restrictions of record that do not individually or in
the aggregate materially interfere with the operation of the Business as
currently conducted on the Owned Real Property affected thereby, (iii)
mechanics', carriers', workers', repairers' and other statutory Liens,
satisfaction of which has not come due in the ordinary course of business, (iv)
existing zoning or similar Laws or ordinances that do not interfere with the
operation of the Business, (v) leases otherwise disclosed herein, and (vi) any
other Liens that do not materially interfere with the operations of the
Purchased Property in a manner consistent with the current use by Seller.
"Person" means an individual, corporation, partnership, trust,
association, limited liability company or similar entity or organization.
"Plans" is defined in Section 8.1.16(a).
"Price-Cap Regulation Entity" means an entity subject to price-cap
regulation within the meaning of 47 C.F.R Section 61.41(c)(2) (the
"all-or-nothing" rule).
"Proration Periods" is defined in Section 10.5.
"PSCW" shall mean the Public Service Commission of Wisconsin.
"Publisher" is defined in Section 9.3.1.
"Publishing Agreement" is defined in Section 9.3.1.
"Purchase Price" is defined in Section 3.3(c).
"Purchased Exchanges" means the telephone exchanges listed in Schedule
1.1-C.
"Purchased Property" is defined in Section 2.2.
"Rate-of-Return Regulation Entity" means an entity not subject to
price-cap regulation within the meaning of 47 C.F.R. Section 61.41(c)(2) (the
"all-or-nothing" rule).
"Real Property Interests" means all easements, rights of way, licenses
or other interests in real property of Seller that are used primarily in the
operation of the Business, and are located in the geographic area of the
Purchased Exchanges, other than Owned Real Property or Leased Real Property.
"Real Property Leases" means the Leases set forth on Schedule 8.1.8.
"Regulated Material" means (i) any "hazardous substance" as defined in
CERCLA, (ii) any petroleum or petroleum substance, and (iii) any other
pollutant, waste, contaminant, or other substance regulated under Environmental
Requirements.
"Regulatory Approvals" is defined in Section 4.1.
"Regulatory Obligation Amount" is defined in Section 3.1.
"Retained Books and Records" means, collectively, all corporate
records and stock books of Seller and its Affiliates, the general ledger, all
records required by Law to be retained by Seller and all books and records
relating to (i) Tax Returns and Tax records, (ii) Excluded Property, (iii)
attorney work product, and (iv) the Retained Liabilities; provided that where
reasonably necessary or prudent, "Retained Books and Records" shall also include
copies of the Transferred Books and Records.
"Retained Future Capital Expenditure Obligations" is defined in
Section 2.4.1(h).
"Retained Future Regulatory Obligations" is defined in Section
2.4.1(g).
"Retained Liabilities" is defined in Section 2.4.2.
"Retired Non-Union Transferred Employee" is defined in Section
11.2.3(b)(ii).
"Seller's Actuary" is defined in Section 11.2.1(d)(ii).
"Seller's Bonus Plans" is defined in Section 11.1.4.
"Seller's Closing Certificate" is defined in Section 6.1.1.
"Seller's Hourly Pension Plan" is defined in Section 11.2.1(a)(ii).
"Seller's LTD Plan" is defined in Section 11.7.
"Seller's Pension" is defined in Section 11.2.1(c)(iii)(B).
"Seller's Pension Plan" and "Seller's Pension Plans" are defined in
Section 11.2.1(a)(ii).
"Seller's Salaried Pension Plan" is defined in Section 11.2.1(a)(i).
"Seller's Savings Plans" is defined in Section 11.2.2(a).
"Seller's Welfare Plans" is defined in Section 11.2.3(a).
"Switch Software" means any telephone switch software licensed to
Seller which software is necessary to Seller's current operation and use of any
telephone switching equipment in the Purchased Exchanges and which equipment is
included in Telephone Plant.
System Date" is defined in Section 8.1.22.
"Tax Returns" means a report, return or other information statement
required to be supplied to or filed with a Governmental Authority with respect
to Taxes.
"Tax(es)" means any foreign, federal, state, county or local income,
sales, use, transfer, excise, franchise, stamp duty, custom duty, real and
personal property, gross receipt, capital stock, business and occupation,
disability, employment, payroll, recording, ad valorem, unemployment
compensation, profits, registration, social security, estimated, add-on,
minimum, or withholding tax relating to the Business or the Purchased Exchanges
and any interest and penalties and additions to such taxes (civil or criminal)
related thereto or to the nonpayment thereof and related notarial fees.
"Telephone Plant" means (i) Owned Real Property, (ii) Real Property
Interests, and (iii) the machinery, equipment, inventory, vehicles (whether
currently owned or leased by Seller) and all other assets and properties used
primarily in the operation of the Business, including all plant, systems,
structures, construction work in progress, telephone cable (whether in service
or under construction), microwave facilities (including frequency spectrum
assignment), telephone line facilities, machinery, furniture, fixtures, tools,
implements, conduits, stations, substations, equipment (including central office
equipment, subscriber station equipment, network connection equipment and other
equipment in general), instruments, house wiring connections and other personal
property used primarily in the operation of the Business and located in the
Purchased Exchanges, other than Excluded Property. Without limiting the
generality of the foregoing, Telephone Plant includes the assets that would be
properly included in the fixed assets referenced in Part 32 of the FCC Rules and
Regulations (47 CFR, Part 32), as such accounts are reflected in Schedule
8.1.17.
"Third Party Claim" is defined in Section 12.4(a).
"Third Party Intellectual Property" means Intellectual Property owned
by any Person, other than Seller, without regard as to whether Seller has any
rights therein or the right to assign such rights to Buyer.
"Third Party Intellectual Property Contracts" is defined in Section
10.1.4.
"Total Service Pension" is defined in Section 11.2.1(c)(iii)(B).
"Transaction Taxes" is defined in Section 10.11.
"Transferred Books and Records" means all of Seller's customer or
subscriber lists and records, accounts and billing records, plant and continuing
property records, plans, blueprints, specifications, drawings, surveys,
engineering reports, personnel records of Transferred Employees (where
applicable), tariffs, orders or other material correspondence or records
relating to regulation of the Business by any Governmental Authority, and all
other documents, computer data and records, in each case relating primarily to
the operation of the Business, except for the Retained Books and Records.
"Transferred Employees" is defined in Section 11.1.
"Transition Services Agreement" is defined in Section 9.1.
"Transitional Year" means any calendar year (beginning with the
calendar year in which the Closing occurs) in which USF distributions are based
upon the costs, whether historic costs or forward-looking economic costs,
reported for a calendar year in which Seller owned the Acquired Local Loop for
any part of such calendar year.
"Uncollectible Factor" is defined in Section 10.16.
"USAC" is defined in Section 10.6.1.
"USF" is defined in Section 10.6.1.
"Vacation Proration Amount" is defined in Section 11.3.2.
"Year 2000 Compliant" is defined in Section 8.1.22.
1.2 Interpretation.
(a) 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) each accounting term not otherwise defined in this
Agreement has the meaning assigned to it in accordance with GAAP, (iii) all
references to the "knowledge of Seller" are deemed to refer to the actual
knowledge of the Executive Officers of Seller, (iv) the term "primarily" means
primarily or exclusively, and (v) the term "including" means including without
limitation.
(b) No provision of this Agreement will be interpreted in favor
of or against either of the parties by reason of the extent to which any such
party or its counsel participated in the drafting thereof or by reason of the
extent to which any such provision is inconsistent with any prior draft of such
provision or of this Agreement.
(c) Except as otherwise provided in this Agreement, in the event
of any dispute concerning the "knowledge" of a party to this Agreement, the
burden of proof shall be on the party asserting that another party had such
knowledge.
ARTICLE 2.
PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale of Assets. Upon the terms and subject to the
conditions of this Agreement, Seller hereby agrees to sell, convey, transfer,
assign and deliver to Buyer and Buyer hereby agrees to purchase, acquire and
accept from Seller, in each case effective as of the Closing, all of Seller's
right, title and interest in and to the Purchased Property.
2.2 Purchased Property. The term "Purchased Property" means all the
following business, properties, assets and rights of Seller on the Closing Date,
other than the Excluded Property:
(i) Telephone Plant;
(ii) Earned End-User Accounts Receivable;
(iii) Material and Supply Inventory
(iv) Non-Regulated Construction Work In Process
(v) FCC Licenses and Assigned Permits;
(vi) Assigned Contracts;
(vii) Transferred Books and Records;
(viii) Real Property Leases;
(ix) Advance Xxxxxxxx;
(x) Insurance proceeds of Seller arising from
any loss, damage or destruction of Purchased
Property between the date hereof and the
Closing Date, to the extent that (1) such
Purchased Property has not been replaced by
Seller, and (2) such insurance proceeds do
not exceed the replacement cost of such
Purchased Property; and
(xi) All other business, property, assets and
rights of Seller on the Closing Date not
described above that relate primarily to the
Purchased Exchanges.
2.3 Excluded Property. For purposes of this Agreement, "Excluded
Property" means the following:
(a) Cash, cash equivalents and investments;
(b) All rights of Seller and its Affiliates under this
Agreement, the Ancillary Documents and the certificates and other documents
delivered to Seller by Buyer in connection with this Agreement;
(c) All records prepared in connection with the sale of the
Business, including bids received from third parties and analysis relating to
the Business;
(d) All rights and obligations related to the Retained
Liabilities;
(e) The Retained Books and Records;
(f) Seller's interests in any business other than the Business,
including the provision of wireless service (cellular and PCS), inter-LATA long
distance and internet service or internet related services, air-to-ground
communications (air phone service), and any Excluded Permits related thereto,
and all assets of Seller and its Affiliates used in connection with any such
business or related thereto, and all assets used by Seller and its Affiliates in
rendering corporate services to Seller or the Business that are located outside
the geographic area serviced by the Purchased Exchanges;
(g) Such other assets (i.e., encryption decoder devices, AWAS
terminals, SODA, etc.), if any, as set forth on Schedule 2.3(g);
(h) The Excluded Contracts;
(i) The Excluded Marks;
(j) All Intellectual Property, including the Licensed
Intellectual Property and Third Party Intellectual Property (except for such
rights to possess and use Third Party Intellectual Property as may be assigned
in accordance with Section 10.1.4); and
(k) All of Seller's insurance proceeds arising in connection
with the operation of the Business or the Purchased Property prior to the
Closing, except as described in Section 2.2(x).
2.4 Assumption of Liabilities.
2.4.1 Assumed Liabilities. Upon the terms and subject to the
conditions of this Agreement, Buyer hereby agrees to assume, as of the Closing
Date, and agrees, beginning on the day following the Closing Date, to pay,
perform and discharge when due the following (the "Assumed Liabilities"):
(a) Ordinary Course. All liabilities, responsibilities and
obligations (including Taxes), arising out of or accruing or resulting from the
use or ownership of the Purchased Property in the ordinary course after the
Closing Date;
(b) Employment Matters. All liabilities, responsibilities and
obligations of Buyer as provided in Article 11 with respect to Transferred
Employees;
(c) Assigned Contracts, Real Property Interests and Real
Property Leases. All liabilities, responsibilities and obligations that arise
after the Closing Date in connection with the performance of the Assigned
Contracts, Real Property Interests and the Real Property Leases;
(d) Joint Construction Projects. All liabilities,
responsibilities and obligations to third parties that relate to arrangements
and commitments between Seller and a third party related to post-Closing
engineering and construction required to complete scheduled construction of
mutual transmission facilities between various switching points included in the
Purchased Exchanges ("Joint Construction Projects");
(e) Construction in Progress. All liabilities, responsibilities
and obligations relating to post-Closing engineering and construction required
to complete scheduled construction and other capital expenditure projects for
the Purchased Exchanges;
(f) Customer Advances, Advance Xxxxxxxx, Customer Deposits and
Construction Advances. All liabilities, responsibilities and obligations
relating to Customer Advances, Advance Xxxxxxxx, Customer Deposits and
Construction Advances;
(g) Future Regulatory Obligations. All liabilities,
responsibilities and obligations, other than Future Capital Expenditure
Obligations, related to the Purchased Exchanges arising out of any Law
promulgated or issued by a Governmental Authority after the Closing Date or
other action taken by a Governmental Authority after the Closing Date,
regardless of whether such Law or action is or purports to be based on conduct
or actions that occurred at any time prior to the Closing Date ("Future
Regulatory Obligations"), except that Buyer shall not be liable for any such
Future Regulatory Obligation arising directly out of any intentional misconduct
by Seller or conduct by Seller that was not reasonably prudent based on the
circumstances prevailing at the time that occurred prior to the Closing Date
("Retained Future Regulatory Obligations"); provided that (i) Seller's reliance
on reasonable interpretation of existing Law or practice shall be deemed
reasonably prudent, and (ii) Seller shall not retain any liability for Future
Regulatory Obligations to the extent that the costs associated with such
obligations are included in Buyer's rate base for the Purchased Exchanges;
(h) Future Capital Expenditure Obligations. All liabilities,
responsibilities and obligations related to the Purchased Exchanges arising out
of any Law promulgated or issued by a Governmental Authority or other action
taken by a Governmental Authority requiring any capital expenditure (other than
a Future Regulatory Obligation) after the date of this Agreement, regardless of
whether such Law or action is or purports to be based on conduct, facts or
actions that occurred at any time prior to the date of this Agreement ("Future
Capital Expenditure Obligations"), except that Buyer shall not be liable for any
such Future Capital Expenditure Obligation arising directly out of any
intentional misconduct by Seller or conduct by Seller that was not reasonably
prudent based on the circumstances prevailing at the time ("Retained Future
Capital Expenditure Obligations"); provided that (i) Seller's reliance on
reasonable interpretation of existing Law or practice shall be deemed reasonably
prudent, and (ii) Seller shall not retain any liability for Future Capital
Expenditure Obligations to the extent that the costs associated with such
obligations are included in Buyer's rate base for the Purchased Exchanges. Prior
to the Closing Date, Seller shall notify Buyer of all material Future Capital
Expenditure Obligations within a reasonable time after publication of said
obligations by a Governmental Authority; and
(i) Litigation and Claims. All liabilities and obligations
arising out of (i) litigation and claims that arise out of an occurrence after
the Closing Date, (ii) litigation and claims in respect of Future Regulatory
Obligations (other than Retained Future Regulatory Obligations) regardless of
when filed, and (iii) claims of a Governmental Authority arising from or related
to a Future Regulatory Obligation (other than Retained Future Regulatory
Obligations).
Notwithstanding anything in this Section 2.4.1 to the contrary,
"Assumed Liabilities" shall not include any liabilities, responsibilities or
obligations expressly included in Retained Liabilities pursuant to Section
2.4.2.
2.4.2 Retained Liabilities. Seller shall retain and shall pay,
perform and discharge when due, the following liabilities, responsibilities and
obligations of Seller (the "Retained Liabilities"); provided that Retained
Liabilities shall not include any liability, responsibility or obligation with
respect to any matter that is the subject of a representation, warranty or
covenant by Seller (breaches of which shall be handled in accordance with
Article 12):
(a) Subject to Section 10.5, all trade payables and other
accrued payment obligations of Seller as of the Closing Date; (b) All debt of
Seller (including indebtedness to the Bondholders) and debt of Seller owed to
any one or more of its Affiliates;
(c) Subject to Section 10.5, all federal, state and local
income, franchise, gross receipts and similar Taxes of Seller or its
consolidated or combined group and all federal, state and local income,
franchise, gross receipts and sales, use, property or other Taxes relating to
the operation of the Business on or before the Closing Date or the use,
ownership or operation of the Purchased Property on or before the Closing Date;
(d) Except to the extent otherwise provided in Article 11, all
liabilities and obligations arising on or before the Closing Date with respect
to the Transferred Employees, including (i) all liabilities responsibilities and
obligations arising on or before the Closing Date relating to collective
bargaining agreements or other union Contracts, and (ii) any such liabilities or
obligations that arise after the Closing Date to the extent that such
liabilities and obligations relate to facts, circumstances or conditions arising
or occurring on or before the Closing Date, but excluding any Future Regulatory
Obligations with respect to the Transferred Employees;
(e) All liabilities, responsibilities and obligations resulting
from (i) litigation and claims that arise out of an occurrence prior to the
Closing Date, (ii) litigation and claims in respect of Retained Future
Regulatory Obligations and (iii) litigation and claims in respect of Retained
Future Capital Expenditure Obligations;
(f) Any Retained Future Regulatory Obligations and any Retained
Future Capital Expenditure Obligations; and
(g) All liabilities, responsibilities and obligations with
respect to the Excluded Property and Excluded Contracts.
2.5 No Assignment Without Consent. Notwithstanding anything to the
contrary contained in this Agreement, to the extent that the sale, conveyance,
transfer, assignment or delivery or attempted sale, conveyance, transfer,
assignment or delivery to Buyer of any Purchased Property (including any
Contract) is prohibited by any applicable Law or would require any governmental
or third-party authorizations, approvals, consents or waivers and such
authorizations, approvals, consents or waivers shall not have been obtained
prior to the Closing, this Agreement shall not constitute a sale, conveyance,
transfer, assignment or delivery, or an attempted sale, conveyance, transfer,
assignment or delivery thereof, if any of the foregoing would constitute a
breach of applicable Law or the rights of any third party; provided, however,
that, except to the extent that a condition to Closing set forth in Article 6
relating to the foregoing shall not be satisfied, the Closing shall occur
notwithstanding the foregoing without any adjustment to the Purchase Price on
account of such required authorization. Following the Closing, the parties shall
use their commercially reasonable efforts, and shall cooperate with each other,
to obtain promptly such authorizations, approvals, consents or waivers;
provided, however, that neither Seller nor Buyer nor any of their respective
Affiliates shall be required to pay any consideration therefor, other than
filing, recordation or similar fees payable to any Governmental Authority, which
fees shall be shared equally by Seller and Buyer. Pending or in the absence of
such authorization, approval, consent or waiver, the parties shall cooperate
with each other in any reasonable and lawful arrangements to provide to Buyer
the benefits and liabilities of use of such Purchased Property including, if
permitted by the terms of any applicable Real Property Lease or applicable
Material Contract, through a sublease or subcontract in accordance with Article
4. If such authorization, approval, consent or waiver for the sale, conveyance,
transfer, assignment or delivery of any such Purchased Property is obtained,
Seller shall promptly convey, transfer, assign and deliver, or cause to be
conveyed, transferred, assigned and delivered, such Purchased Property to Buyer.
ARTICLE 3.
PURCHASE PRICE
3.1 Purchase Price. The purchase price for the Purchased Property
shall be the sum of (i) One Hundred Ninety-Five Million Dollars ($195,000,000)
(the "Base Purchase Price"), (ii) amounts expended by Seller to comply with
Future Capital Expenditure Obligations between the date of this Agreement and
the Closing Date (the "Regulatory Obligation Amount"), and (iii) the
Non-Regulated Construction Work in Process Amount, minus (iv) any Capital
Expenditure Deficiency and (v) any Vacation Proration Amount (assuming that
Buyer receives a credit under Section 11.3.2, but if Seller receives a credit,
the Vacation Proration Amount shall be added to the Purchase Price).
3.2 Closing Date Estimate.
(a) Not less than three (3) business days prior to the Closing
Date, Seller will give to Buyer a notice, setting forth Seller's good faith
estimate as of the Closing Date of (i) the Regulatory Obligation Amount (the
"Estimated Regulatory Obligation Amount"), (ii) the Non-Regulated Construction
Work in Process Amount (the "Estimated Non-Regulated Construction Work in
Process Amount"), (iii) any Capital Expenditure Deficiency and (v) any Vacation
Proration Amount.
(b) On the Closing Date, Buyer shall pay to Seller an amount
equal to the sum of (i) the Base Purchase Price, (ii) the Estimated Regulatory
Obligation Amount, and (iii) the Estimated Non-Regulated Construction Work in
Process Amount, minus (iv) any Capital Expenditure Deficiency and (v) any
Vacation Proration Amount (assuming that Buyer receives a credit under Section
11.3.2, but if Seller receives a credit, the Vacation Proration Amount shall be
added to the Purchase Price) (the "Closing Date Amount"). The Closing Date
Amount shall be paid by delivery on the Closing Date of immediately available
funds in U.S. dollars by wire transfer to an account that Seller shall designate
to Buyer at least two (2) business days prior to the Closing Date. Payments from
Buyer to Seller for Earned End-User Accounts Receivable and from Seller to Buyer
for Customer Advances and Customer Deposits will occur subsequent to Closing in
accordance with Article 10.
3.3 Closing Date Statement.
(a) Within sixty (60) days after Closing Date, Seller shall
prepare and deliver to Buyer a written statement (with appropriate supporting
documentation) of the Base Purchase Price, Regulatory Obligation Amount,
Non-Regulated Construction Work in Process Amount, any Capital Expenditure
Deficiency and any Vacation Proration Amount ("Closing Date Statement").
(b) Within thirty (30) days after receipt of the Closing Date
Statement, Buyer shall, in a written notice to Seller, either accept the Closing
Date Statement or describe in reasonable detail any proposed adjustments to the
Closing Date Statement and the reasons therefore. If Seller shall not have
received a notice of proposed adjustments within such thirty (30) day period,
Buyer will be deemed irrevocably to have accepted such Closing Date Statement.
(c) Upon the acceptance of any Closing Date Statement by Buyer,
the parties shall, based thereupon, calculate the Base Purchase Price,
Regulatory Obligation Amount and Non-Regulated Construction Work in Process
Amount (collectively, the "Purchase Price"). If the Purchase Price as finally
determined above is greater than the Closing Date Amount, Buyer shall promptly,
but no later than three (3) business days after such acceptance, pay to Seller
the amount of such difference. If the Purchase Price as determined above is less
than the Closing Date Amount, Seller shall promptly, but no later than three (3)
business days after such acceptance, pay to Buyer the amount of such difference.
(d) Seller and Buyer shall negotiate in good faith to resolve
any disputes over any proposed adjustments to the Closing Date Statement,
provided that if any such dispute is not resolved within thirty (30) days
following Seller's receipt of any proposed adjustments delivered by Buyer
pursuant to Section 3.3(b) , Buyer and Seller jointly shall select an
independent public accounting firm that is nationally recognized in the United
States to resolve such disputes in accordance with the standards set forth in
this Section 3.3, which resolution shall be final and binding. The fees and
expenses of such accounting firm shall be shared by Buyer and Seller in inverse
proportion to the relative amounts of the disputed amount determined to be for
the account of Buyer and Seller, respectively.
(e) If Buyer disputes any portion of the Closing Date Statement,
the parties shall calculate the portion of the Closing Date Statement that is
not the subject of any dispute or proposed adjustment. If the undisputed portion
of the Closing Date Statement (i) is greater than the respective estimated
amounts paid on the Closing Date, Buyer shall promptly pay Seller the amount of
such difference, or (ii) is less than the respective estimated amounts paid on
the Closing Date, Seller shall promptly pay Buyer the amount of such difference.
Payments with respect to any undisputed portions of these adjustments shall be
made no later than three (3) business days after delivery of the notice of the
proposed adjustments. Upon resolution of any dispute over any proposed
adjustments as described above in Section 3.3(d), a party which is determined to
owe the other party an amount shall pay that amount promptly, but no later than
three (3) business days after resolution.
(f) Any amount payable pursuant to this Section 3.3 after the
date which is ninety (90) days following the Closing Date shall bear interest
from such ninetieth day through but excluding the date of payment, at a rate of
eight percent (8%) per annum. Such interest shall accrue daily on the basis of a
year of three hundred sixty-five (365) days and the actual number of days for
which interest is due and shall be payable together with the amount payable
pursuant to this Section 3.3. All amounts payable pursuant to this Section 3.3
shall be paid by delivery of immediately available funds in U.S. dollars by wire
transfer to, in the case of amounts payable by Buyer, the account identified by
Seller as described in 3.2 above or to an alternate account that Seller may
designate on the Closing Date Statement and, in the case of amounts payable by
Seller, to such account of Buyer as Buyer shall designate in writing to Seller.
3.4 Performance Deposit.
(a) Concurrently with the execution and delivery hereof, Buyer
shall pay to Seller by wire transfer of immediately available funds the sum of
Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000), an amount equal
to five percent (5%) of the Base Purchase Price (the "Deposit"), to be held by
Seller against payment of the Purchase Price and as security for the performance
by Buyer of its obligations under this Agreement.
(b) Buyer may elect to deliver the Deposit to Seller in cash or
in the form of an irrevocable, clean, standby letter of credit for the same
amount (the "Deposit L/C"). The Deposit L/C shall (i) be in a form reasonably
acceptable to Seller, (ii) be issued in favor of Seller under this Agreement and
(iii) be issued by a bank that has a long-term unsecured debt rating of at least
A+ by Standard & Poor's Rating Services and that is otherwise reasonably
satisfactory to Seller. The Deposit L/C (and any replacement thereof furnished
in accordance with this Section 3.4(b) shall have an expiration date no earlier
than the first anniversary of the date of issuance thereof and shall be
automatically renewed from year to year unless stated not to be so renewed by
the issuer thereof in a written notice given to the Seller not less than 30 days
prior to the expiration thereof. In the event of the termination of the Deposit
L/C (and any replacement thereof furnished in accordance with the provisions of
this Section 3.4(b)), Buyer shall deliver to Seller a replacement letter or
letters of credit in lieu thereof no later than 30 days prior to the expiration
of the preceding letter of credit. If Buyer shall fail to obtain any replacement
of the Deposit L/C (and/or any replacement thereof furnished in accordance with
the provisions of this Section 3.4(b)), then Seller shall draw down the full
amount of the existing letter of credit and retain the same as security for the
covenants, agreements and obligations of Buyer under this Agreement. Any
replacement of any Deposit L/C shall be in a form reasonably acceptable to
Seller. Buyer acknowledges that Seller has agreed to accept the Deposit L/C in
lieu of a cash down payment against the Purchase Price solely as an
accommodation to Buyer.
(c) If the transfer of the Purchased Property as contemplated
hereunder is consummated, then the Deposit shall be paid to Seller at the
Closing and credited against the Base Purchase Price. If Buyer elects to deliver
the Deposit L/C in lieu of cash, Seller shall draw down the full amount of the
Deposit L/C at the Closing and pay such proceeds to Seller as a credit against
the Base Purchase Price.
(d) Seller acknowledges that, upon two (2) business days prior
written notice to Seller, Buyer shall have the right to deliver to Seller a cash
payment of $9,750,000, and upon receipt of such payment, Seller shall return to
Buyer the Deposit L/C.
(e) The parties hereto acknowledge and agree that their
respective rights and obligations related to the Deposit are described in
Section 13.3.
ARTICLE 4.
REQUIRED APPROVALS, CONSENTS AND NOTIFICATIONS
4.1 State Regulatory Approval. Promptly after the date of this
Agreement, Buyer and Seller shall file the appropriate applications and notices
with the PSCW, seeking orders permitting the transfer of service in the
Purchased Exchanges to Buyer (collectively, the "Regulatory Approvals"). Buyer
will be responsible for establishing the tariff for its post-Closing operations
in the Purchased Exchanges. Buyer agrees to use its commercially reasonable
efforts to obtain the Regulatory Approvals and Seller agrees to cooperate fully
with Buyer and with the applicable regulatory agency to obtain the Regulatory
Approvals at the earliest practicable date.
4.2 Bondholder Consents.Seller shall use its commercially reasonable
efforts to obtain from its Bondholders the termination or release, at Closing,
of all security agreements, mortgages, financing statements or other Liens
running in favor of the Bondholders and relating to the Purchased Property (such
termination or release being hereinafter referred to as the "Bondholder
Consents"). Buyer agrees to cooperate in good faith with Seller in obtaining the
required Bondholder Consents.
4.3 Material Consents. Promptly after the date hereof, the parties
shall use their commercially reasonable efforts to mutually seek the consent of
the lessor under any Real Property Lease with respect to a central office or any
license with respect to Switch Software which lease or license requires consent
as a condition to an assignment, and which is identified on Schedule 4.3 or
Schedule 8.1.8 (the "Material Consents"). If a lessor or licensor refuses to
consent to an assignment, and if the applicable lease or license permits a
sublease or sublicense without the consent of the lessor or licensor, the
parties hereto shall, effective as of the Closing, enter into a sublease or
sublicense upon terms and conditions as similar and comparable to an assignment
of the lease or license as is reasonably feasible.
4.4 FCC Consents. Promptly after the date of this Agreement, the
parties shall use their commercially reasonable efforts to obtain (i) the FCC's
consent to the transfer of the FCC Licenses from Seller to Buyer, (ii) the FCC
consents and waivers set forth on Schedule 4.4 and (iii) the FCC Final Orders
(all such consents, waivers or orders are collectively referred to as the "FCC
Consents").
4.5 HSR Act Review. Within thirty (30) business days after the date
of this Agreement, the parties will make such filings as may be required by the
HSR Act with respect to the transactions contemplated by this Agreement.
Thereafter, the parties will file as promptly as practicable all reports or
other documents required or requested by the U.S. Federal Trade Commission
("FTC") or the U.S. Department of Justice ("DOJ") pursuant to the HSR Act or
otherwise and will comply promptly with any requests by the FTC or the DOJ for
additional information concerning such transactions, so that the waiting period
specified in the HSR Act will expire as soon as reasonably possible after the
execution and delivery of this Agreement. Without limiting the foregoing, Seller
and Buyer agree to use their commercially reasonable efforts to cooperate and
oppose any preliminary injunction sought by any Governmental Authority
preventing the consummation of the transactions contemplated by this Agreement.
Buyer agrees to pay all application fees required in connection with any filings
under the HSR
Act.
Seller and Buyer shall cause their respective counsel to furnish each
other such necessary information and reasonable assistance as the other may
reasonably request in connection with the preparation of necessary filings or
submissions under the provisions of the HSR Act. Seller and Buyer will cause
their respective counsel to supply to each other copies of all correspondence,
filings or written communications by such party or its Affiliates with any
Governmental Authority or staff members thereof, with respect to the
transactions contemplated by this Agreement and any related or contemplated
transactions, except for documents filed pursuant to Item 4(c) of the
Xxxx-Xxxxx-Xxxxxx Notification and Report Form or communications regarding the
same documents or information submitted in response to any request for
additional information or documents pursuant to the HSR Act which reveal
Seller's or Buyer's negotiating objectives or strategies or purchase price
expectations.
4.6 Notification. Each of the parties agrees to notify the others
promptly upon learning of any fact or set of circumstances that would be
reasonably likely to delay or prevent receipt of a Regulatory Approval,
Bondholder Consent, FCC Consent, HSR clearance or other consent or approval
referred to in Article 4.
4.7 GTE/Xxxx Atlantic Merger. Notwithstanding anything else con-
tained in this Agreement, Seller and its Affiliates shall not be obligated to
take any action that would violate the terms of their agreements regarding the
Merger, or that would interfere with, delay or prevent the consummation of the
Merger; provided that Buyer shall not be obligated to proceed with the Closing
if the Merger has resulted in a Material Adverse Effect.
ARTICLE 5.
PRE-CLOSING COVENANTS
5.1 Investigation by Buyer. Prior to the Closing, upon reasonable
notice from Buyer to Seller given in accordance with this Agreement and subject
to approval by Seller's appointed representative (which shall not be
unreasonably withheld), Seller will afford to the authorized representatives of
Buyer reasonable access during normal business hours to the Transferred Books
and Records, the Owned Real Property and the Leased Real Property, so as to
afford Buyer the opportunity to make such review, examination and investigation
of the Business and the Purchased Property as Buyer may reasonably request;
provided, however, that no environmental sampling or other testing shall be
performed without Seller's prior written consent, which consent may be given or
withheld in Seller's sole discretion. Buyer will not contact any employee,
customer or supplier of Seller with respect to this Agreement, the matters
involved herein or the Purchased Property without the prior written consent of
Seller. Nothing herein will obligate Seller to take actions that would
unreasonably disrupt the normal course of the business of Seller or violate the
terms of any applicable Law or any Contract to which Seller or any of its
Affiliates is a party or to which any of their assets is subject. Any
information or documentation provided to Buyer or acquired by Buyer during this
investigation shall be deemed "Evaluation Material" as that term is defined in
the Confidentiality Agreement and shall be subject in all cases to the terms of
the Confidentiality Agreement.
5.2 Operation of the Business in the Ordinary Course.
5.2.1 Preservation of Business. Except as contemplated on
Schedule 5.2.1 or in connection with or relating to the Merger (and disclosed to
Buyer) or as otherwise consented to by Buyer prior to the Closing, from the date
of this Agreement until the Closing, Seller shall:
(a) Conduct the Business in the ordinary course consistent with
past practice and shall keep available to the Business its services and the
services of its Affiliates to the same extent generally available on the date
hereof;
(b) Operate the Business in substantially the same manner as it
is presently being conducted, and, with respect to the Business, refrain from
entering into any Contract that would be a Material Contract without the prior
consent of Buyer (which shall not be unreasonably withheld);
(c) Not institute or participate in any proceeding with respect
to, or otherwise change, amend or supplement any of its tariffs or make any
other filings (other than periodic reports) with the PSCW without the prior
consent of Buyer (which shall not be unreasonably withheld) except as disclosed
on Schedule 8.1.15(a);
(d) Maintain the Purchased Property in good repair, order and
condition, reasonable wear and use excepted;
(e) Maintain insurance with respect to the Purchased Property
consistent with past practice;
(f) Make capital expenditures in accordance with Section 5.6;
and
(g) Maintain the books and records of the Business substantially
in accordance with prior practice, except as changes are mandated by
Governmental Authorities or required by GAAP, in which event Seller shall
promptly notify Buyer.
5.2.2 No Material Changes. Except as contemplated by this
Agreement or in connection with or relating to Merger (and disclosed to Buyer)
or as otherwise consented to by Buyer prior to the Closing, from the date of
this Agreement until the Closing, Seller will not:
(a) Make any material change in the general nature of the
Business;
(b) Sell, lease or dispose of, or make any Contract for the
sale, lease or disposition of any Purchased Property, other than in the ordinary
course of business consistent with past practice;
(c) Increase the number of Active Employees other than in a
manner consistent with past practice, or increase the benefit provided under any
plans concerning employee benefits or increase the general rates of compensation
of its Transferred Employees, except (i) as required by Law, (ii) pursuant to
any Contract to which Seller is a party existing on the date hereof, (iii) in
the ordinary course of business of Seller consistent with past practice, or (iv)
as listed or described on Schedule 5.2.2(c);
(d) (i) Enter, amend, modify or terminate any Material Contract
or permit any of the foregoing to occur other than in the ordinary course of
business; or (ii) sell, transfer or otherwise dispose of any Purchased Property
other than in the ordinary course of business or as listed or described on
Schedule 5.2.2(d), or encumber any Purchased Property, except for Permitted
Encumbrances;
(e) Enter into any new written employment agreement, or union
agreement with, or commitment to, the Transferred Employees (including any new
commitment to pay retirement or other benefits or other amendments to Seller's
retirement plans), provided that Seller may enter into new union agreements to
the extent the new union agreements succeed any union agreement that expires
prior to the Closing; or
(f) Except as contemplated by this Agreement or the Ancillary
Agreements, enter into any transaction with any of its Affiliates that
contemplates (i) the transfer of any Purchased Property; or (ii) any other
contractual arrangement that will survive the Closing and not be terminable at
will by, and with no cost to, Buyer subsequent to the Closing.
5.3 Satisfaction of Conditions. Without limiting the generality or
effect of any provision of Article 6, the parties will use their commercially
reasonable efforts to satisfy promptly all the conditions required to be
satisfied prior to the Closing.
5.4 Approvals.
(a) Between the date of this Agreement and the Closing Date,
Buyer and Seller will (i) cooperate with one another and take all reasonable
steps to obtain, as promptly as practicable, all consents, approvals,
authorizations, waivers and permits of any Governmental Authorities required of
either party to consummate the transactions contemplated by this Agreement and
(ii) provide such other information and communications to any Governmental
Authority as may be reasonably requested.
(b) To the extent that any consents, approvals, authorization or
waiver of a third party with respect to any Assigned Contract is required in
connection with the transactions contemplated by this Agreement, Seller shall
use its commercially reasonable efforts to obtain such authorization, consent,
approval or waiver prior to the Closing Date.
5.5 Financial Statements. Seller will cooperate with the independent
auditors chosen by Buyer to audit the Financial Statements delivered to Buyer in
accordance with Section 8.1.21. Seller's cooperation will include access to
workpapers and other supporting documents used in the preparation of the
Financial Statements as may be reasonably required by such auditors to render an
opinion, and cooperation with respect to such other financial statements as
Buyer may require with respect to the Business in order to comply with the
reporting requirements of the Securities and Exchange Commission under
Regulations S-K and S-X. Seller will bear the cost of preparation of the
Financial Statements. Buyer will bear the cost of the audit and the cost of
preparation of any financial statements other than the Financial Statements.
Buyer acknowledges that the Financial Statements and any supporting documents
have been made available as an indication of the historical financial
performance and condition of the Business. Except to the extent that the
Financial Statements reflect intentional misrepresentation or fraud, or to the
extent that Seller has breached its representations and warranties under Section
8.1.21, Buyer agrees not to make any claims related to the performance of the
Business after the date of the Financial Statements on the basis of a comparison
to the Financial Statements.
5.6 Capital Expenditures. Seller shall be obligated to make capital
expenditures with respect to the Telephone Plant required to support normal
maintenance and customer growth in a manner consistent with established
regulatory performance objectives, which expenditures (exclusive of any Future
Capital Expenditure Obligations or Future Regulatory Obligations) shall not be
less than Three Million One Hundred Thousand dollars ($3,100,000) during
calendar year 1999, and which amount shall be discounted on a pro rata daily
basis to the extent that the Closing Date occurs prior to December 31, 1999 (the
"Capital Expenditure Amount"). The Purchase Price shall be adjusted down, on a
dollar-for-dollar basis, to the extent that Seller's actual capital expenditures
are less than the Capital Expenditure Amount (a "Capital Expenditure
Deficiency"). In the event the Closing does not occur prior to January 1, 2000,
the Capital Expenditure Amount shall be increased on a pro rata daily basis and
Seller shall be obligated to make capital expenditures during fiscal year 2000
in the same relative amount, and the Purchase Price shall be adjusted in the
same manner described above for any Capital Expenditure Deficiency occurring
during the period after January 1, 2000. Between the date of this Agreement and
the Closing Date, Seller will notify Buyer of any project involving
Non-Regulated Construction Work in Process in excess of $100,000.
5.7 Delivery of Interim Information. From the date of this Agreement
until the Closing, Seller shall furnish Buyer monthly reports concerning the
operating performance of the Business. Such reports shall contain such data as
typically reported to GTE management with respect to the Purchased Exchanges,
including revenue, access line counts, trouble indices, total year-to-date
capital expenditure actuals (on a quarterly basis only) indices and other
service measures. All information provided in accordance with this Section 5.7
shall be subject to compliance with the Confidentiality Agreement and to
compliance with applicable antitrust Laws.
5.8 Cooperation with Respect to Like-Kind Exchange. Buyer agrees
that Seller's transfer of the Purchased Property may, at Seller's election, be
accomplished in a manner enabling such transfer to qualify as part of a
like-kind exchange of property covered by Section 1031 of the IRC. If Seller so
elects, Buyer shall cooperate with Seller (but without being required to incur
any out-of-pocket costs in the course thereof) in connection with Seller's
efforts to effect such like-kind exchange, which cooperation shall include,
without limitation, taking such actions as Seller requests in order to enable
Seller to qualify such transfer as part of a like-kind exchange of property
covered by Section 1031 of the IRC (including any actions required to facilitate
the use of a "qualified intermediary" within the meaning of the United States
Treasury Regulations), and Buyer agrees that Seller may assign all or part of
its rights (but no obligations) under this Agreement to a person or entity
acting as a qualified intermediary to qualify the transfer of the Purchased
Property as part of a like-kind exchange of property covered by Section 1031 of
the IRC. Buyer and Seller agree in good faith to use reasonable efforts to
coordinate the transactions contemplated by this Agreement with any other
transactions engaged in by either Buyer or Seller; provided that such efforts
are not required to include an unreasonable delay in the consummation of the
transactions contemplated by this Agreement.
ARTICLE 6.
CONDITIONS PRECEDENT TO THE CLOSING
6.1 Conditions Precedent to Obligations of Buyer. The obligations of
Buyer to consummate the Closing shall be subject to the satisfaction or waiver
by Buyer, at or prior to the Closing, of each of the following conditions, any
one or more of which may be waived at the option of Buyer:
6.1.1 No Misrepresentation or Breach of Covenants and
Warranties. Seller shall have complied in all material respects with its
covenants to be performed in whole or in part prior to the Closing, and the
representations and warranties of Seller in Section 8.1 shall be true and
correct as of the Closing, except for (i) such representations or warranties
that are made expressly as of and only as of an earlier date, which shall have
been true and correct as of such earlier date except as would not have a
Material Adverse Effect, and (ii) to the extent that any breach of such
representations and warranties has not had and is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect; and Seller shall
have delivered to Buyer a certificate ("Seller's Closing Certificate") in the
form attached as Schedule 6.1.1, dated the Closing Date and signed by an
Executive Officer of Seller, certifying each of the foregoing, or specifying
those respects in which such covenants have not been performed or such
representations and warranties are not true and correct.
6.1.2 Documents. Seller shall have delivered to Buyer all
documents required by Section 7.2.
6.1.3 HSR. All required waiting periods under the HSR Act
shall have expired or been terminated.
6.1.4 No Legal Obstruction. Each of the required Bondholder
Consents shall have been obtained, each consent required under Section 4.3 shall
have been obtained and each of the required Regulatory Approvals and FCC
Consents shall have been obtained, free of any special terms, conditions or
restrictions that are materially adverse to Buyer (other than any such approvals
or consents which, if not obtained, would not have a Material Adverse Effect);
provided that any Regulatory Approval that would have the effect of converting
Buyer from a Rate-of-Return Regulation Entity to a Price-Cap Regulation Entity
shall be deemed to have a Material Adverse Effect. For purposes of this
Agreement, all such approvals and consents shall be deemed to have been obtained
upon the granting thereof, and the expiration of any appeals period (a "Final
Order"). In addition, there shall not have been entered a preliminary or
permanent injunction, temporary restraining order or other judicial or
administrative order or decree in any jurisdiction, the effect of which
prohibits the Closing.
6.1.5 No Material Adverse Effect.There shall not have occurred
any event or condition, which individually or in the aggregate has resulted, or
could reasonably be expected to result, in a Material Adverse Effect.
6.2 Conditions Precedent to Obligations of Seller. The obligations of
Seller to consummate the Closing shall be subject to the satisfaction or waiver
by Seller, at or prior to the Closing, of each of the following conditions:
6.2.1 No Misrepresentation or Breach of Covenants and
Warranties. Buyer shall have complied in all material respects with its
covenants to be performed in whole or in part prior to the Closing, and the
representations and warranties of Buyer in Section 8.2 shall be true and correct
in all material respects as of the Closing, except for (i) representations or
warranties made expressly as of and only as of an earlier date, which shall have
been true and correct as of such earlier date except as would not have a
Material Adverse Effect, and (ii) to the extent that any breach of such
representations and warranties has not, individually or in the aggregate, had a
Material Adverse Effect, and Buyer shall have delivered to Seller a certificate
("Buyer's Closing Certificate") in the form attached as Schedule 6.2.1, dated
the Closing Date and signed by an Executive Officer of Buyer, certifying each of
the foregoing or specifying those respects in which such covenants have not been
performed or such representations and warranties are not true and correct.
6.2.2 Documents. Buyer shall have delivered to Seller all
documents required by Section 7.3.
6.2.3 Delivery of Closing Date Amount. Buyer shall have
delivered to Seller, in the manner specified in Section 3.2, the Closing Date
Amount.
6.2.4 HSR. All required waiting periods under the HSR Act
shall have expired or been terminated.
6.2.5 No Legal Obstruction. Each of the required Bondholder
Consents shall have been obtained, and each of the required Regulatory Approvals
and FCC Consents shall have been obtained free of any special terms, conditions
or restrictions that are materially adverse to Seller based upon good faith
business concerns that are not commercially unreasonable (other than any such
approvals or consents which, if not obtained, would not have a Material Adverse
Effect). For purposes of this Agreement, all such approvals and consents shall
be deemed to have been obtained upon the granting of a Final Order. In addition,
there shall not have been entered a preliminary or permanent injunction,
temporary restraining order or other judicial or administrative order or decree
in any jurisdiction, the effect of which prohibits the Closing.
ARTICLE 7.
THE CLOSING
7.1 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the purchase and sale of the Purchased Property and
the assumption of the Assumed Liabilities (the "Closing") shall be held at 9
A.M. local time at the offices of GTE Network Services at 000 Xxxxxx Xxxxx,
Xxxxxx, Xxxxx 00000, on the date agreed upon by the parties, provided such date
shall be (i) the last business day of the month, and (ii) at least five (5)
business days, but not more than ninety (90) days, after the date either party
notifies the other in writing of its determination that all required Regulatory
Approvals, Bondholder Consents, the Material Consents and FCC Consents have been
obtained, or at such other time and place as the parties may agree (the "Closing
Date"). Such Closing shall be deemed to have occurred as of 11:59 P.M., local
time, on the Closing Date. Seller's ownership and operation of the Purchased
Property shall be deemed to cease immediately prior to the Closing.
7.2 Seller's Obligations at Closing. At the Closing, Seller shall
deliver to Buyer the following documents:
(a) (i) The Xxxx of Sale and Assignment and Assumption
Agreement, (ii) subject to Permitted Encumbrances, special warranty deeds in
respect of the Owned Real Property, and (iii) subject to Section 2.5,
assignments of the Assigned Contracts or to the extent set forth in Section 4.3,
sublicenses of certain Assigned Contracts. For purposes of this Agreement, the
term "Xxxx of Sale and Assignment and Assumption Agreement" means the form
attached hereto as Schedule 7.2(a) executed by Seller;
(b) A legal opinion from Xxxxxxx Xxxxx, general counsel for
GTE Network Services, as counsel for Seller, dated as of the Closing Date and
in the form of Schedule 7.2(b);
(c) Seller's Closing Certificate;
(d) Instruments of assignment of the Real Property Leases and
Real Property Interests or, to the extent set forth in Section 4.3, subleases
for the Leased Real Property;
(e) Mortgage satisfactions, UCC Form 3 Termination Statements
and other instruments necessary to remove, release and terminate all Liens held
by any party on the Purchased Property (except for Permitted Encumbrances);
(f) All of the documents and papers required of Seller as
conditions to Closing pursuant to Section 6.1, including the Regulatory
Approvals, Bondholder Consents and FCC Consents;
(g) A certificate substantially in the form of Schedule 7.2(g)
certifying that Seller is not a "foreign person" within the meaning of Section
1445(b)(2) of the IRC;
(h) The License Agreement;
(i) All documentation and information required to be delivered
by Seller prior to Closing pursuant to Article 11; and
(j) Such other documents as Buyer may reasonably request.
7.3 Buyer's Obligations at Closing. At the Closing, Buyer shall
deliver to Seller the following:
(a) The Closing Date Amount in the manner specified in Section
3.2;
(b) The Xxxx of Sale and Assignment and Assumption Agreement and
the Ancillary Agreements executed by Buyer;
(c) A legal opinion from Xxxxx, Xxxxx & Xxxx, counsel to Buyer
dated as of the Closing Date and in the form of Schedule 7.3(c);
(d) Buyer's Closing Certificate;
(e) All other documents and papers required of Buyer as
conditions of Closing pursuant to Section 6.2, including the Regulatory
Approvals; and
(f) Such other documents as Seller may reasonably request.
ARTICLE 8.
REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties of Seller. Seller represents and
warrants to Buyer as follows:
8.1.1 Authorization and Effect of Agreement. Seller has the
requisite corporate power and authority to execute and deliver this Agreement
and the Ancillary Agreements and to perform its obligations hereunder and
thereunder. The execution and delivery by Seller of this Agreement and the
Ancillary Agreements and the fulfillment of its obligations under this Agreement
and the Ancillary Agreements have been duly authorized by all necessary
corporate action on the part of Seller and, to the extent required by Law, any
entity that controls the Seller. This Agreement and the Ancillary Agreements
have been or will be duly executed and delivered by Seller and, assuming the due
execution and delivery of this Agreement and the Ancillary Agreements by Buyer,
constitute valid and binding obligations of Seller enforceable in accordance
with their terms subject to bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting the rights of creditors generally and subject
to the exercise of judicial discretion in accordance with principles of equity
8.1.2 No Restrictions Against Sale or Assignment of the
Purchased Property. The execution and delivery of this Agreement and the
Ancillary Agreements by Seller do not, and prior to Closing will not, and the
fulfillment by Seller of its obligations under this Agreement and the Ancillary
Agreements will not (i) conflict with or violate any provision of its
certificates of incorporation or bylaws, (ii) subject to obtaining the approvals
and or consents referred to in Section 2.5, Article 4 and Schedule 8.1.11(a-d),
conflict with, violate or result in the breach of any provision of any Material
Contract, or (iii) result in the creation of any Lien (other than Permitted
Encumbrances) upon any of the Purchased Property under (a) any Material Contract
or (b) any Law applicable to any of the Purchased Property, except in the case
of clauses (ii) or (iii) for any such conflict, violation, breach or Lien that
would not have a Material Adverse Effect.
8.1.3 Consents, Approvals and Permits of Governmental
Authorities. Except as set forth in Schedule 8.1.3:
(a) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority is required
to be obtained or made by or with respect to Seller or in connection with the
execution and delivery of this Agreement and the Ancillary Agreements by Seller
or the fulfillment by Seller of its obligations under this Agreement and the
Ancillary Agreements, except (i) FCC Consents and HSR Act clearance, (ii) the
Regulatory Approvals, and (iii) any consent approval, order or authorization or
registration declaration or filing, which if not obtained or made would not have
a Material Adverse Effect.
(b) Seller holds valid permits, licenses, franchises, approvals
and authorizations issued or granted by any Governmental Authority and adequate
for the operation of the Business as currently conducted, except to the extent
absence of any such permit, license, franchise, approval or authorization would
not have an Material Adverse Effect.
8.1.4 No Violation of Law. Except as indicated in Schedule
8.1.4, the execution and delivery of this Agreement and the Ancillary Agreements
and the fulfillment by Seller of its obligations under this Agreement and the
Ancillary Agreements will not violate any applicable Law, except where such
violation would not reasonably be expected to have a Material Adverse Effect.
8.1.5 Corporate Organization. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Wisconsin, and is duly qualified to conduct business in Wisconsin. Seller has
full power and authority to own its properties and to carry on the Business as
it is now being conducted and to own, or hold under lease or Contract the
Purchased Property.
8.1.6 Brokers. Seller has not paid or become obligated to pay
any fee or commission to any broker, finder, investment banker or other
intermediary in connection with the transactions contemplated by this Agreement
in such a manner as to give rise to a valid claim against Buyer or any of the
Purchased Property for any broker's or finder's fees or similar fees or
expenses.
8.1.7 Title to Owned Real Property. As of the date hereof, the
address and a general description of each item of Owned Real Property are set
forth on Schedule 8.1.7(a). Seller has good fee simple title to all of the Owned
Real Property, free and clear of any Lien other than Permitted Encumbrances and
Liens of the Bondholders identified on Schedule 8.1.7(b). Seller represents that
the only creditors that have a Lien (other than any Permitted Encumbrances) on
any of the Owned Real Property are the Bondholders identified on Schedule
8.1.7(b). The Owned Real Property set forth on Schedule 8.1.7(a) constitutes
substantially all of the Owned Real Property used in the Business during
calendar year 1998 and located in the Purchased Exchanges, except as such (i)
has been disposed of since January 1, 1998 in the ordinary course of business,
or (ii) would not have a Material Adverse Effect.
8.1.8 Real Property Leases. Schedule 8.1.8 sets forth (i) a
list of all Real Property Leases as of the date hereof and, except for such Real
Property Leases as may have been executed or terminated in accordance with
Section 5.2, as of the Closing Date, and (ii) all Real Property Leases used in
the Business and with respect to property located in the Purchased Exchanges
during calendar year 1998 except such as (1) have been executed or terminated
since January 1, 1998 in the ordinary course of business, or (2) would not have
a Material Adverse Effect. Each of the leases for the Leased Real Property is
enforceable in accordance with its terms, subject to bankruptcy, insolvency and
other similar laws affecting the rights of creditors generally and subject to
the exercise of judicial discretion in accordance with the principles of equity,
and except as otherwise disclosed in Schedule 8.1.8, there is not under any
lease any material default or a material breach of covenant by Seller.
8.1.9 Tangible Assets. All of the tangible Purchased Property
is in substantially good operating condition and repair, normal wear and tear
excepted. Except as set forth on Schedule 8.1.9 or elsewhere in this Agreement,
Seller has, or as of Closing will have, good title to each item of tangible
Purchased Property (other than Real Property Interests, representations with
respect to which are included in Section 8.1.7 and 8.1.8 hereof, and office
equipment or vehicles subject to leases) with a fair market value in excess of
$10,000, free and clear of any Lien (other than Permitted Encumbrances). Seller
has not received any written notice within the past twelve(12) months of a
violation of any ordinances, regulations or building, zoning or other Laws with
respect to such assets that would have a Material Adverse Effect. EXCEPT AS
EXPRESSLY PROVIDED IN THIS SECTION 8.1.9, SELLER MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, AS TO THE CONDITION OR FITNESS OF THE TANGIBLE
PURCHASED PROPERTY AND HEREBY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY AGAINST INFRINGEMENT.
8.1.10 No Material Adverse Change. Except as disclosed in
Schedule 8.1.10 or as may be related to the Merger (and disclosed to Buyer),
between December 31, 1997 and the date of this Agreement there has not occurred
(i) any event or condition that would have a Material Adverse Effect; (ii) any
increase in compensation payable or to become payable by Seller to any of its
Transferred Employees or agents, other than normal merit or promotional
increases made in the ordinary course of business consistent with past practice,
other than Seller's obligation to make payments for service prior to Closing
under the retention pay program announced in connection with the network
business repositioning of Seller and its Affiliates; or (iii) any amendment or
termination by Seller of any Material Contract, except any amendment or
termination in the ordinary course of business.
8.1.11 Material Contracts. Except for the agreements set forth
on Schedule 8.1.11 subparts (a) through (d) (all such contracts being referred
to herein as the "Material Contracts"), there is no Assigned Contract (other
than the Assigned Contracts entered into after the date of this Agreement in the
ordinary course of business) that is:
(a) an agreement containing a non-compete agreement or other
covenant that in either case would by its terms limit the freedom of Buyer
following the Closing to compete in any material respect with respect to the
Business with any third party, other than any such agreement or covenant which
does not materially impair the continued operation of the Business as it is
currently conducted;
(b) an agreement granting a Lien with respect to any of the
Purchased Property (other than a Permitted Encumbrance or Lien of a Bondholder);
(c) an agreement for the sale, lease or encumbrance (other than
a Permitted Encumbrance or Lien of a Bondholder) of any material Purchased
Property (including any interconnection agreements) or grant of any preferential
rights to purchase any material Purchased Property in each case outside the
ordinary course of business; or
(d) an agreement other than as set forth above with respect to
which the aggregate amount to be received or paid thereunder with respect to
calendar year 1999 is expected to exceed $100,000 based on the payments which
have been made under such agreement with respect to calendar year 1998, to the
extent applicable.
Except as set forth on Schedule 8.1.11, to the knowledge of
Seller, each of the Material Contracts is valid, binding and in full force and
effect and is enforceable by Seller or Seller's Affiliates, as applicable, in
accordance with its terms, except for any such failure to be valid, binding, in
full force and effect or enforceable that is not reasonably likely to have a
Material Adverse Effect. Except as set forth on Schedule 8.1.11, to the
knowledge of Seller, Seller and Seller's Affiliates have performed all material
obligations required to be performed by them to date under the Material
Contracts, and they are not (with or without the lapse of time or the giving of
notice, or both) in breach or default thereunder and, to the knowledge of
Seller, no other party to any Material Contract is (with or without the lapse of
time or the giving of notice, or both) in breach or default in any respect
thereunder, in each case except for such noncompliance, breaches and defaults
that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect. As of the date hereof, neither Seller nor any Seller's
Affiliate has, except as disclosed on Schedule 8.1.11, received any written
notice of the intention of any party to terminate any Material Contract. Except
as set forth in Schedule 8.1.11, no consents or approvals are required from
third parties with respect to the assignment of any Material Contract. Complete
and correct copies of all the Material Contracts, together with all
modifications and amendments thereto to the date of this Agreement, have been
made available to Buyer or its representatives.
8.1.12 Insurance. The Purchased Property of an insurable nature
and of a character usually insured by companies carrying on similar businesses
is insured under insurance policies or self insured in such amounts and against
such losses or casualties as is usual in Seller's industry. Effective at 11:59
P.M. on the Closing Date, the coverage under the insurance policies and programs
applicable to the Purchased Property will be terminated. Thereafter, Buyer will
be responsible for providing all insurance coverage for the Purchased Property.
8.1.13 Taxes. Except as disclosed on Schedule 8.1.13, (i) all
Tax Returns required to be filed by Seller on or before the Closing Date have or
will have been filed, and all Taxes shown as due and payable on such Tax Returns
have been or will be paid by Seller when required by law; (ii) no deficiencies
or assessments for any Taxes have been asserted in writing or assessed against
Seller that remain unpaid and that individually or in the aggregate are material
to the Business; (iii) Seller has withheld all required federal, state and local
payroll Taxes relating to the Business and have remitted or will remit all
amounts required to be remitted to the appropriate Taxing authorities; (iv)
there are no Tax Liens upon any of the Purchased Property except for statutory
liens covering Taxes not yet due and payable; (v) Seller is not a "foreign
persons" within the meaning of Section 1445(b)(2) of the IRC and shall provide
an appropriate certificate for purposes of Section 1445(b)(2) of the IRC; and
(vi) there are no material, current audits or material audits for which written
notice has been received or, to the knowledge of Seller, for which verbal notice
has been received (in either case, specifically with respect to the Business).
8.1.14 No Material Claims or Suits. Except as disclosed in
Schedule 8.1.13 or Schedule 8.1.14, there are no claims, actions, lawsuits or
legal proceedings pending before any Governmental Authority, or, to the
knowledge of Seller threatened, against or affecting the Business or Purchased
Property that in Seller's opinion, if determined adversely to Seller, would
reasonably be expected to have a Material Adverse Effect on the Business or
materially adversely affect ability of Seller to consummate the transactions
contemplated hereby.
8.1.15 Tariffs; FCC Licenses.
(a) Schedule 8.1.15(a) sets forth a list of all regulatory
tariffs applicable to the Business. Such tariffs stand in full force and effect
on the date of this Agreement in accordance with all terms, and there is no
outstanding notice of cancellation or termination or, to Seller's knowledge, any
threatened cancellation or termination in connection therewith, nor is Seller
subject to any restrictions or conditions applicable to its regulatory tariffs
that limit or would limit the operation of the Business (other than restrictions
or conditions generally applicable to tariffs of that type). Each such tariff
has been duly and validly approved by Seller's regulatory agency. Seller is not
in material default under the terms and conditions of any such tariff and there
is no basis for any claim of default by Seller in any material respect under any
such tariff. Except as disclosed on Schedule 8.1.15(a), there are no
applications by Seller or complaints (other than end-user complaints), or
petitions by others or proceedings pending or threatened before the PSCW
relating to the Business or its operations or the regulatory tariffs. To the
knowledge of Seller, there are no material violations by subscribers or others
under any such tariff. A true and correct copy of each tariff set forth on
Schedule 8.1.15(a) has been delivered or made available to Buyer.
(b) Schedule 8.1.15(b) sets forth a list of all FCC Licenses
held by Seller and used in the operation of the Business. Except as set forth on
Schedule 8.1.15(b), (i) each such FCC License is in full force and effect on the
date of this Agreement in accordance with its terms, (ii) there is no
outstanding notice of cancellation or termination or, to Seller's knowledge, any
threatened cancellation or termination in connection therewith, nor (iii) are
any of such FCC Licenses subject to any restrictions or conditions that limit
the operation of the Business (other than restrictions or conditions generally
applicable to licenses of that type). Subject to the Communications Act of 1934,
as amended, and the regulations thereunder, the FCC Licenses are free from all
security interests, liens, claims, or encumbrances of any nature whatsoever.
There are no applications by Seller or complaints (other than individual
end-user complaints that would not cause a Material Adverse Effect) or petitions
by others or proceedings pending or threatened before the FCC relating to the
Business or the FCC Licenses that, in Seller's opinion, would reasonably be
expected to have a Material Adverse Effect on the Business.
8.1.16 Employee Matters.
(a) Seller has provided by letter of even date herewith the
name, annual compensation, incentive compensation target, job title, job
location and collective bargaining unit status as of September 30, 1999 of each
person employed by Seller at a location in the Purchased Exchanges who is
expected to be a Transferred Employee. Schedule 8.1.16(a) lists (and identifies
the sponsor of) each material "Employee Pension Benefit Plan," as that term is
defined in Section 3(2) of ERISA, each material "Employee Welfare Benefit Plan,"
as that term is defined in Section 3(1) of ERISA (such plans being hereinafter
referred to collectively as the "ERISA Plans"), and each 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, or arrangement maintained or contributed to by Seller or its
Affiliates in respect of or for the benefit of any Transferred Employee or
former employee of Seller, excluding any such plan, program, agreement, or
arrangement maintained or contributed to solely in respect of or for the benefit
of Transferred Employees or former employees employed or formerly employed by
Seller outside of the United States, as of the date hereof (collectively,
together with the ERISA Plans, referred to hereinafter as the "Plans"). Schedule
8.1.16(a) also includes a list of each material written employment, severance,
termination or similar-type agreement between Seller and its Affiliates and any
Transferred Employee (the "Employment Agreements"). Except for retention bonuses
paid in connection with the closing of the transactions contemplated by this
Agreement and except as otherwise disclosed on Schedule 8.1.16(a), the execution
and delivery of this Agreement by Seller and the performance of this Agreement
by Seller will not directly result now or at any time in the future in the
payment to any Transferred Employee of any severance, termination, or
similar-type payments or benefits being paid to any Transferred Employee.
(b) Except as set forth on Schedule 8.1.16(b):
(i) Neither Seller nor any of its Affiliates, any of
the ERISA Plans, any trust created thereunder, or any trustee or administrator
thereof, has engaged in any transaction as a result of which Seller, any of its
Affiliates or the Business could be subject to any material liability pursuant
to Section 409 of ERISA or to either a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed pursuant to Section 4975 of the IRC;
and
(ii) Since the effective date of ERISA, no material
liability under Title IV of ERISA has been incurred or is reasonably expected to
be incurred by Seller, any of its Affiliates or the Business (other than
liability for premiums due to the PBGC), unless such liability has been, or
prior to the Closing Date will be, satisfied in full.
(c) Except as set forth on Schedule 8.1.16(c), with respect to
the Plans other than those Plans identified on Schedule 8.1.16(d) as
"multiemployer plans":
(i) the PBGC has not instituted proceedings to
terminate any Plan that is subject to Title IV of ERISA (the "Retirement
Plans");
(ii) none of the ERISA Plans has incurred an "accu-
mulated funding deficiency" (as defined in Section 302 of ERISA and Section 412
of the IRC), whether or not waived, as of the last day of the most recent fiscal
year of each of the ERISA Plans ended prior to the date of this Agreement;
(iii) each of the Plans has been operated and
administered in all material respects in accordance with its provisions and with
all applicable laws;
(iv) each of the ERISA Plans that is intended to be
"qualified" within the meaning of Section 401(a) of the IRC and, to the extent
applicable, Section 401(k) of the IRC, has been determined by the IRS to be so
qualified, and nothing has occurred since the date of the most recent such
determination (other than the effective date of certain amendments to the IRC,
the remedial amendment period for which has not yet expired) that would
adversely affect the qualified status of any of such ERISA Plans; and
(v) there are no pending material claims by or on
behalf of any of the Plans, by any employee or beneficiary covered under any
such Plan, or otherwise involving any such Plan (other than routine claims for
benefits and routine expenses).
(d) Except as set forth on Schedule 8.1.16(d), none of the ERISA
Plans is a "multiemployer plan," as that term is defined in Section 3(37) of
ERISA, and with respect to any such multiemployer plans (as so defined) listed
in Schedule 8.1.16(d), neither Seller nor any of its Affiliates have not made or
incurred a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203 and 4205 of ERISA that would result in the
incurrence of a material liability by Seller, any of its Affiliates or the
Business, and the transactions contemplated herein shall not constitute a
"complete withdrawal" or a "partial withdrawal" as such terms are defined in
Sections 4203 and 4205 of ERISA, respectively.
(e) Except as set forth on Schedule 8.1.16(e), (i) none of the
Transferred Employees are represented by a labor union or labor organization,
and (ii) Seller is not subject to any collective bargaining agreement covering
any Transferred Employee. There are currently no strikes, slowdowns, work
stoppages or lockouts by or with respect to any Transferred Employee covered by
collective bargaining agreements. Except as set forth on Schedule 8.1.16(e), to
the best knowledge of Seller, during the twelve (12) months preceding the date
of this Agreement, there have not been any union organizational campaigns by or
directed at Transferred Employees.
(f) Seller will make available to Buyer, prior to the Closing
Date, a list of those Transferred Employees that Seller believes to have
participated in the health or dependent care reimbursement accounts of Seller,
together with the elections made prior to the Closing Date with respect to such
accounts through the Closing Date.
8.1.17 Schedules of Telephone Plant.Schedule 8.1.17 sets forth,
as of December 31, 1998 and, except for such changes as may occur pursuant to
Section 5.2, as of the Closing Date, a materially accurate summary of the book
value of the Telephone Plant (except for Real Property Interests and Real
Property Leases) and Material and Supply Inventory as reflected in Seller's
continuing property records. Schedule 8.1.17 summarizes substantially all
Telephone Plant used in the Business (other than Excluded Property) during
calendar year 1998 and located in the Purchased Exchanges, except such as (i)
has been disposed of in the ordinary course of business since January 1, 1998,
or (ii) would not have a Material Adverse Effect.
8.1.18 Schedule of Real Property Interests. To the knowledge of
Seller and as of the date of this Agreement, Schedule 8.1.18 sets forth a true
and accurate list of all its Real Property Interests.
8.1.19 Environmental Matters. Except as set forth in Schedule
8.1.19 (which Seller may supplement within 30 days of the date hereof with
respect to Leased Real Property):
(a) Seller's current use of the Owned Real Property or Leased
Real Property materially complies with Environmental Requirements;
(b) No Liens under any Environmental Requirement have been or
are imposed on any of the Owned Real Property, except for such Liens as would
not have a Material Adverse Effect;
(c) No action, proceeding, revocation proceeding, procedure,
writ, injunction or claim is pending, or to Seller's knowledge threatened,
concerning any Environmental Requirement and relating to any of the Owned Real
Property, except as would not have a Material Adverse Effect;
(d) Seller has obtained or filed for all permits, licenses,
registrations, and other approvals and has made all reports and notifications
required under any Environmental Requirements in connection with the Owned Real
Property, except as would not have a Material Adverse Effect; and
(e) There are no present actions, activities, circumstances,
conditions, events, or incidents relating to Seller's use of any of the Owned
Real Property or Leased Real Property that would reasonably be expected to
involve Seller in any material litigation under the Environmental Requirements,
or impose upon Seller any material liability related to any Environmental
Requirements.
8.1.20 Schedule of Joint Construction Projects. Schedule
8.1.20 sets forth a list of all Joint Construction Projects for which Buyer is
to assume liability as of the Closing.
8.1.21 Financial Statements. Schedules 8.1.21(a), 8.1.21(b)
and 8.1.21(c) present the estimated income statement, estimated balance sheet
and estimated statement of cash flows, respectively for the Business for the
years ended December 31, 1997 and December 31, 1998 (collectively, the
"Financial Statements"). The Financial Statements have been prepared based on
the books and records of Seller. Such books and records have been maintained in
accordance with GAAP. However, because the Business represents only a portion of
Seller, the Financial Statements are based on the extensive use of estimates and
allocations. Seller believes these estimates and allocations have been performed
on a reasonable basis and such Financial Statements materially reflect the
results of operations for the periods set forth therein. However, Buyer
acknowledges that (i) the Financial Statements themselves may not be consistent
with the applicable regulations of the FCC or state regulatory authorities, and
(ii) because the Business represents only a portion of Seller, the Buyer is not
acquiring significant support elements located outside the Purchased Exchanges,
and Buyer will operate under new tariffs, carrier contracts and other conditions
that may significantly impact the future revenue of the Business, the Financial
Statements may not be representative of the financial performance of the
Business during future periods.
8.1.22 Year 2000 Compliance.
(a) As of the Closing Date, Seller shall have caused the
modification or remediation of the Automated Assets in accordance with
applicable manufacturer or vendor recommendations such that the Automated Assets
are Year 2000 Compliant; provided that any and all Buyer or third-party supplied
computer software, computer firmware and computer hardware that directly
interfaces with the Automated Assets, co-exists with the Automated Assets, or
indirectly influences the operation of the Automated Assets are also
demonstrated to be Year 2000 Compliant.
(b) Seller shall be deemed to be in satisfaction of the
requirements of subsection (a) of this Section 8.1.22 to the extent that Seller
has (i) performed on or before the Closing Date any modification or remediation
in accordance with applicable manufacturer or vendor recommendations for
achieving Year 2000 compliance or Year 2000 readiness, or (ii) received on or
before the Closing Date reasonable assurances from the applicable manufacturer
or vendor that an Automated Asset, without modification or remediation, is Year
2000 Compliant or Year 2000 ready.
(c) When used in this Section 8.1.22, the following terms shall
have the respective meanings given below:
"Automated Assets" means the computer software, computer
firmware, computer hardware (whether general or special purpose), documentation,
data, and other similar or related items of the automated, computerized, and/or
software system(s) that are provided by Seller to Buyer as part of the Purchased
Exchanges pursuant to this Agreement.
"Calendar-Related" refers to the date values based on the
Gregorian calendar, as defined in Encyclopedia Britannica, 15th edition, 1982,
page 602, and to all uses in any manner of those date values, including without
limitation manipulations, calculations, conversions, comparisons and
presentations.
"Date Data" means any Calendar-Related data in the inclusive
range January 1, 1900 through December 31, 2050, which the Automated Assets use
in any manner.
"System Date" means any Calendar-Related data value in the
inclusive range January 1, 1985 through December 31, 2035 (including the natural
transition between such values) which the Automated Assets shall be able to use
as their current date while operating.
"Year 2000 Compliant" means:
(i) As of the Closing Date, in connection with
Calendar-Related data and Calendar-Related processing of Date Data or of any
System Date, the Automated Assets will not malfunction, will not cease to
function and will not produce incorrect results; and
(ii) As of the Closing Date, the Automated Assets will
represent dates without ambiguity as to century when providing Calendar-Related
data to and accepting Calendar-Related data from other automated, computerized
and/or software systems and users by way of user interfaces, electronic
interfaces and data storage.
8.1.23 Access Line Count. As of December 31, 1998, the
Purchased Exchanges served a total of 64,798 access lines.
8.2 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
8.2.1 Corporate Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Louisiana, and is duly qualified to conduct business in Wisconsin and has the
requisite corporate power and authority to own, lease or otherwise hold the
assets owned, leased or held by it.
8.2.2 Authorization and Effect of Agreement. Buyer has the
requisite corporate power and authority to execute and deliver this Agreement
and the Ancillary Agreements, to carry on the Business as presently conducted
and to fulfill all other obligations of Buyer under this Agreement and the
Ancillary Agreements. The execution and delivery by Buyer of this Agreement and
the Ancillary Agreements, and the fulfillment by it of its obligations under
this Agreement and the Ancillary Agreements have been duly authorized by all
necessary corporate action on the part of Buyer. Buyer has the requisite legal
capacity to purchase, own and hold the Purchased Property upon the consummation
of the sale of the Purchased Property. This Agreement and the Ancillary
Agreements have been duly executed and delivered by Buyer and, assuming the due
execution and delivery of this Agreement and the Ancillary Agreements by Seller,
constitute valid and binding obligations of Buyer enforceable in accordance with
their terms subject to bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the rights of creditors generally and subject to
the exercise of judicial discretion in accordance with principles of equity.
8.2.3 No Restrictions Against Purchase of the Purchased
Properties. The execution and delivery of this Agreement and the Ancillary
Agreements by Buyer do not, and the fulfillment by Buyer of its obligations
under this Agreement and the Ancillary Agreements will not, conflict with,
violate or result in the breach of any provision of the certificate of
incorporation or bylaws of Buyer or, conflict with, violate or result in the
breach of any contract to which Buyer is a party. No material consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Authority is required to be obtained or made by or with respect to
Buyer in connection with the execution and delivery of this Agreement by Buyer
or the fulfillment by Buyer of its obligations under this Agreement, except the
filings and approvals described in Article 4.
8.2.4 No Violation of Law. The execution and delivery of this
Agreement and the Ancillary Agreements and the fulfillment by Buyer of its
obligations under this Agreement and the Ancillary Agreements will not violate
any Law except to the extent any such violation would not have a material
adverse effect on the ability of Buyer to fulfill its obligations hereunder and
thereunder.
8.2.5 Financial Capacity.
(a) Buyer has sufficient cash or other sources of funds to pay
the Purchase Price in the manner specified in Section 3.1 and all related fees
and expenses.
(b) Buyer has sufficient financial resources to operate the
Business after the Closing Date. Without limiting the generality of the
foregoing, Buyer has sufficient financial resources to satisfy any applicable
requirement relating to financial capacity or capital imposed by any
Governmental Authority in any state in which the Business is conducted. Buyer is
solvent, is able to pay its debts as they become due, and owns property that has
both a fair value and a fair saleable value in excess of the amount required to
pay its debts as they become due.
8.2.6 Brokers. Buyer has not paid or become obligated to pay
any fee or commission to any broker, finder, investment banker or other
intermediary in connection with the transactions contemplated by this Agreement
in such a manner as to give rise to a valid claim against Seller for any
broker's or finder's fees or similar fees or expenses.
8.2.7 Consents and Approvals of Governmental Authority.
Subject to Article 4 with respect to Regulatory Approvals and FCC Consents, no
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Authority or regulatory authority is required in
connection with the execution, delivery and performance of this Agreement by
Buyer or the consummation by Buyer of the transactions contemplated herein,
except for filings with the FTC and DOJ pursuant to the HSR Act, if required.
ARTICLE 9.
CONTINUING BUSINESS RELATIONSHIPS
9.1 Transition Services Agreement. The parties agree to cooperate
with each other to ensure that the transition of the ownership of the Purchased
Property proceeds with minimal disruption to the services being provided to
subscribers. The parties agree that it may be necessary for Seller to assist
Buyer in converting Seller's systems and processes with respect to the Purchased
Property to Buyer's systems and processes. Seller and Buyer agree to execute a
separate "Transition Services Agreement" substantially in the form attached
hereto as Schedule 9.1 for the provision of such services.
9.2 Optional Services Agreement. It is understood and agreed that
Buyer may not have for a period of time after Closing Date, certain systems or
processes necessary to provide some basic customer services. Seller will at
Buyer's request and for the fees described in Schedule 9.2 provide any or all of
the services described in a separate "Optional Services Agreement" signed by the
parties substantially in the form attached hereto as Schedule 9.2.
9.3 Directory Publishing.
9.3.1 Assumption of Certain Directory Publishing Agreement
Rights and Obligations. Seller is party to a directories publishing agreement
with GTE Directories Service Corporation n/k/a GTE Directories Corporation
herein "Publisher." These agreements are identified in Schedule 9.3.1 attached
hereto ("Publishing Agreements"). Pursuant to these agreements Publisher has the
exclusive right and obligation to sell advertising, and to publish, print and
distribute directories containing telephone numbers relating to the Purchased
Exchanges.
At Seller's option, Buyer agrees to execute an agreement
effective as of the Closing to assume and appropriately amend the Publishing
Agreements as they relate to the Purchased Exchanges, which agreement will
extend the length of the term of the Publishing Agreements to expire not earlier
than December 31, 2001. Buyer agrees to allow Publisher to participate in any
process for negotiating future directory publishing agreements on terms no less
favorable than any other participant.
9.3.2 Co-Bound Directories Acknowledgement. Buyer acknowledges
that Publisher may have a pre-existing obligation (which Publisher may choose to
continue) to sell advertising, publish, print and distribute the telephone
numbers of third party local exchange telephone companies in the same directory
as the Purchased Exchanges ("Co-Bound" directory). Co-Bound directory agreements
of which Seller is aware, if any, are identified on Schedule 9.3.2.
9.3.3 Meeting to Discuss Directory Publication. Within ninety
(90) days following the date of this Agreement, Buyer agrees to meet with Seller
and Publisher for the purpose of having an initial discussion about the first
directory publication after the Closing Date. This meeting will be held at
Publisher's address unless otherwise agreed between the parties and Publisher.
All parties shall employ their respective commercially reasonable efforts to
ensure that directory publication is not interrupted following the Closing Date.
ARTICLE 10.
ADDITIONAL COVENANTS OF THE PARTIES
10.1 Intellectual Property.
10.1.1 No License. Buyer and Seller agree and understand that
except as expressly set forth in writing in the License Agreement and Section
10.1.3, Seller has not granted any rights or licenses, express or implied, of,
and nothing shall constitute or be construed as a license of Seller under any
Intellectual Property now or hereafter owned, obtained or licensable by Seller
or under any Third Party Intellectual Property.
10.1.2 Infringement.
(a) Notwithstanding anything in this Agreement to the contrary,
Seller shall have no obligation to defend, indemnify or hold harmless Buyer or
any of its Affiliates, from any damages, costs or expenses resulting from any
obligation, proceeding or suit based upon any claim that any activity subsequent
to the Closing Date engaged in by Buyer, a customer of Buyer's or anyone
claiming under Buyer, constitutes direct or contributory infringement, misuse
of, or misappropriation of, or inducement to infringe, any Third Party
Intellectual Property.
(b) Buyer shall defend, indemnify and hold harmless Seller and
its Affiliates from and against any and all Indemnifiable Losses resulting from
any obligation, proceeding or suit based upon any claim alleging or asserting
direct or contributory infringement, or misuse or misappropriation of or
inducement to infringe by Seller or any of its Affiliates of any Third Party
Intellectual Property, to the extent that such claim is based on, or would not
have arisen but for, activity conducted or engaged in subsequent to the Closing
Date by Buyer, a customer of Buyer's, or anyone claiming under Buyer.
10.1.3 Trademark Phaseout.
(a) Buyer acknowledges that Seller or its Affiliates are the
owners of Excluded Marks that qualify as Excluded Property under Section 2.3.
Buyer understands and agrees that the Excluded Marks, or any right to or license
of the Excluded Marks, are not being transferred pursuant to this Agreement.
Buyer acknowledges the exclusive and proprietary rights of Seller and its
Affiliates in the use of the Excluded Marks, and Buyer agrees that it shall not
use the Excluded Marks (or any names, domain names, marks or indicia confusingly
similar to the Excluded Marks) except and to the extent expressly set forth in
this Section 10.1.3 or assert any rights or claims in such Excluded Marks (or in
any names, domain names, marks or when confusingly similar to the Excluded
Marks). After the Closing, all Excluded Marks of Seller and its Affiliates shall
be replaced by Buyer, at Buyer's expense, as soon as possible, but in no event
later than ninety (90) days after the Closing Date for items with Excluded Marks
affixed to them which Buyer has continued to use in Buyer's operation of the
Business, including buildings, vehicles, heavy equipment, hard hats, tools, tool
boxes, kits (safety and others), signs, public (pay) telephones, manual covers
and notebooks. After the Closing, Buyer will not use, and will destroy or
deliver to Seller, all such items with Excluded Marks affixed to them that have
no valid continuing use in Buyer's operation of the Business, including items
affecting customer or employee relations or items that do not reflect Buyer's
true identity. Specific items to be destroyed or returned include items with
Excluded Marks affixed to them including giveaways; order, purchase or materials
forms; requisitions; invoices; statements; time sheets/labor reports; xxxx
inserts; stationery; personalized note pads; maps; organization charts;
bulletins/releases; sales/price literature; manuals or catalogs; report
covers/folders; program materials; and materials such as media contact
lists/cards. The ninety (90) day time period for replacement of Excluded Marks
affixed to telephone directories that were already published or closed for
publication at the Closing Date shall be extended to the expiration date of such
directories.
(b) Buyer recognizes the great value of the goodwill associated
with the Excluded Marks, and acknowledges that the Excluded Marks and all rights
therein and the goodwill pertaining thereto belong exclusively to Seller and
that the Excluded Marks have a secondary meaning in the minds of the public.
Buyer further agrees that any and all permitted use of the Excluded Marks
pursuant to this Agreement shall inure to the sole and exclusive benefit of
Seller.
(c) Buyer agrees that any permitted use of the Excluded Marks in
the operation of the Business after the Closing shall be provided in accordance
with all applicable federal, state and local laws, and that the same shall not
reflect adversely upon the good name of Seller or its Affiliates, and that the
operation of the Business will be of a high standard and skill.
(d) Buyer acknowledges that its failure to cease use of the
Excluded Marks as provided in this Agreement, or its improper use of the
Excluded Marks, will result in immediate and irreparable harm to Seller and its
Affiliates. Buyer acknowledges and admits that there is no adequate remedy at
law for such failure to terminate use of the Excluded Marks, or for such
improper use of the Excluded Marks. Buyer agrees that in the event of such
failure or improper use, Seller and its Affiliates shall be entitled to
equitable relief by way of temporary restraining order, or preliminary or
permanent injunction, or any other relief available under this Agreement.
(e) Buyer will not contest the ownership or validity of any
rights of Seller or its Affiliates in the Excluded Marks.
10.1.4 Third Party Software. To the extent that the transfer
of Purchased Property by Seller to Buyer under this Agreement results in the
transfer of possession to Buyer of software that at the Closing Date is Third
Party Intellectual Property, which software was located in and rightfully used
by Seller in the geographical areas of the Purchased Exchanges prior to the
Closing Date in the normal and ordinary operation of the Business pursuant to
Contracts with the owners or licensors of such software ("Third Party
Intellectual Property Contracts"), then subject to Section 2.5 and the receipt
of any required consents from Switch Software vendors, effective as of the
Closing and provided that no payments to any Person other than a Switch Software
vendor are thereby required, Seller hereby assigns to Buyer, and Buyer hereby
accepts all rights and licenses, if any, to possess and use such software
pursuant to such Third Party Intellectual Property Contracts. Buyer agrees that
the acceptance by Buyer of such assignment of the Third Party Intellectual
Property Contracts includes the assumption by Buyer of obligations under such
Third Party Intellectual Property Contracts, including all obligations necessary
or incidental to the transfer of such rights and licenses. Buyer understands and
agrees that except as provided above in this Section 10.1.4, or as expressly
provided elsewhere in this Agreement or in another written agreement between
Buyer and Seller, no rights or licenses to use or possess such software or any
Third Party Intellectual Property are transferred to Buyer. Buyer shall properly
dispose of, and shall not use, any software of which Buyer acquires possession
in connection with Purchased Property and which, after the Closing Date, Buyer
knows, or reasonably should know, is not the subject of a Third Party
Intellectual Property Contract that has been rightfully transferred to Buyer.
Seller makes no warranty or representation that any Third Party Intellectual
Property Contract or any right therein is assignable in whole or in part to
Buyer.
10.2 Effect of Due Diligence and Related Matters.
(a) Buyer represents that it is a sophisticated entity that was
advised by knowledgeable counsel and financial advisors and, to the extent it
deemed necessary, other advisors in connection with this Agreement and has
conducted its own independent review and evaluation of the Purchased Property.
Accordingly, Buyer covenants and agrees that (i) except for the representations
and warranties set forth in this Agreement, Buyer has not relied and will not
rely upon any duty to disclose or any document or written or oral information
furnished to or discovered by it or its representatives, including any financial
data, (ii) there are no representations or warranties, express or implied,
statutory or otherwise, by or on behalf of Seller or its Affiliates or
representatives except for those expressly set forth in this Agreement, and
(iii) to the fullest extent permitted by law, Buyer's rights and obligations
with respect to all of the foregoing matters will be solely as set forth in this
Agreement. Buyer further acknowledges and agrees that Seller is not under any
duty to make any inquiry regarding any matter that may or may not be known to
Seller or any of its officers, directors, employees or representatives.
(b) Upon the Closing, Buyer shall be deemed to have waived any
claim with respect to a breach of any representation, warranty, covenant or
obligation of Seller, or any failure of a condition, hereunder of which Buyer
had actual knowledge on or prior to the date hereof; provided that Buyer shall
be deemed to have actual knowledge on or prior to the date hereof of the
information made available to Buyer and/or its representatives during Buyer's
due diligence review, and which information is contained in the Due Diligence
Materials.
(c) After the date of this Agreement and prior to the Closing
Date, Buyer shall promptly notify Seller if Buyer obtains actual knowledge of
any actual or prospective breach of any representation, warranty, covenant or
obligation of Seller, or any actual or prospective failure of a condition,
hereunder of which Buyer obtains actual knowledge. Failure to provide timely
notice of any such breach of which Buyer obtains actual knowledge after the date
hereof shall be deemed to constitute a waiver with respect to such breach.
10.3 Confidentiality. Whether or not the Closing occurs, the parties
hereto and their respective officers, directors, employees and representatives
will comply with the Confidentiality Agreement (to the extent not inconsistent
with this Agreement), the provisions of which are expressly incorporated herein
in their entirety by this reference.
10.4 Further Assurances. After the Closing, Seller will use its
commercially reasonable efforts to furnish to Buyer such other instruments and
information as Buyer may reasonably request in order to convey to Buyer title to
the Purchased Property, to be delivered from time to time upon Buyer's
reasonable request.
10.5 Prorations. The following liabilities that call for periodic
payments shall be prorated between Seller and Buyer: (i) utility charges (which
shall include water, sewer, electricity, gas and other utility charges) with
respect to the Owned Real Property, the property subject to the Real Property
Leases and customer owned equipment, (ii) rental charges (which shall include
rental charges and other lease payments under the Real Property Leases and Real
Property Interests), (iii) personal services (these services are charged for a
period which includes the Closing Date; this shall include contract labor), and
(iv) any Taxes that are imposed on a periodic basis and are payable for a
taxable period that includes (but does not end on) the Closing Date, including
but not limited to real and personal property Taxes, ad valorem Taxes, and
franchise fees or Taxes ("Periodic Taxes"). With respect to measurement periods
during which the Closing Date occurs (all such periods of time being hereinafter
called "Proration Periods"), the liabilities described in clauses (i), (ii) and
(iii) of the preceding sentence shall be apportioned between Seller and Buyer as
of the Closing Date, with Buyer bearing only the expense thereof in the
proportion that the number of days remaining in the applicable Proration Period
after the Closing Date bears to the total number of days covered by such
Proration Period. Real and personal property Taxes and ad valorem Taxes shall be
prorated between Buyer and Seller based on the relative periods the Purchased
Property was owned by each respective party during the fiscal period for which
Periodic Taxes were assessed by the Taxing jurisdiction (as such fiscal period
is reflected on the xxxx rendered by such taxing jurisdiction). Buyer and Seller
shall pay or be reimbursed for Periodic Taxes (including instances in which such
property Taxes have been paid before the Closing Date) on this prorated basis.
If a payment on a Periodic Tax xxxx is due after the Closing, the party that is
legally required to make such payment shall make such payment and promptly
forward an invoice to the other party for its pro rata share, if any. If the
other party does not pay the invoice within thirty (30) calendar days of
receipt, the amount of such payment shall bear interest at the rate of eight
percent (8%) per annum. Similarly, all prepayments made by Seller under Assigned
Contracts with respect to service or maintenance agreements requiring periodic
payments with third parties or license or other fees payable to third parties
shall be prorated on an appropriate basis between Seller and Buyer.
10.6 Cost Studies/NECA Matters.
10.6.1 Prior to Closing. Seller agrees that, with respect to
all toll revenues, settlements, pools, separations studies or similar
activities, Seller shall be responsible for (and shall receive the benefit or
suffer the burden of) any adjustments to contributions, or receipt of funds, by
Seller resulting from any such activities that are related to the operation of
the Business or the ownership or operation of the Purchased Property prior to
the Closing Date. Specifically, this paragraph shall apply, but shall not be
limited to, any matters related to the National Exchange Carrier Association
("NECA") or the Universal Service Administration Company ("USAC") including the
Universal Service Fund ("USF"), Long Term Support ("LTS"), and
Telecommunications Relay Services funds established by the FCC.
10.6.2 From and After Closing.
(a) In the case of Purchased Exchanges that comprise less than
an entire Study Area, the following shall apply:
(i) Rural and non-rural carriers currently receive USF
funds based on historic costs computed pursuant to Subpart F of Part 36 of the
FCC's rules. Beginning July 1, 1999 or a date thereafter determined by the FCC,
non-rural carriers shall not receive USF funds pursuant to Part 36, but will
receive support based on forward-looking economic costs pursuant to Part 54.
Seller will take all steps necessary to ensure that, for each Transitional Year,
Buyer receives a pro rata share of any USF funds distributed during each year.
Buyer's pro rata share of such USF funds for a given Transitional Year shall be
determined for each Acquired Local Loop by multiplying the USF funds
attributable to such loop for that year times the number of months of that year
that such loop is owned by the Buyer.
(ii) Buyer shall make all USF filings that are
required under FCC rules after the Closing Date, and Seller shall provide such
reasonable assistance as is required in order to make such filings.
(iii) Notwithstanding the foregoing, Buyer's right to
receive a pro rata share of USF is conditioned upon Buyer's payment, from and
after the Closing Date, of a pro rata share of the annual universal service
contribution liability assessed by the USAC based on end-user retail revenues
for the previous year generated by assets being sold. The resulting Buyer's
annual USF obligation for assets purchased shall be prorated in proportion to
the number of months in the year from and after the Closing Date.
(b) In the case of Purchased Exchanges that comprise an entire
Study Area, the following shall apply:
(i) Buyer shall receive all USF funds, from and after
the Closing Date, as determined by USAC from data submitted by Seller prior to
Closing Date pursuant to FCC Rules and Regulations as stated in Part 36.611 and
Part 36.612 for rural carriers and Part 54 for non-rural carriers. After Closing
Date Buyer shall make all submissions and filings for USF funds for all years
for which Seller had not made a submission prior to Closing Date in accordance
with FCC Rules and Regulations. Within a reasonable time after Buyer's written
request, Seller shall furnish to Buyer such necessary information regarding
Seller's ownership of the Purchased Property during any year for which Buyer
shall make a submission, and such reasonable assistance as required in
connection with Buyer's preparation of necessary filings or submissions.
(ii) Notwithstanding the foregoing, Buyer's right to
receive all USF revenue is conditioned upon Buyer's payment, from and after the
Closing Date, of all universal service contribution liability assessed by USAC
based on end-user retail revenues for the previous year generated by assets
being sold.
10.7 Customer Deposits and Construction Advances. Within thirty (30)
days after Closing, Seller agrees to transfer to Buyer the customer deposits
together with any interest accrued thereon (collectively "Customer Deposits")
and Construction Advances, together with all of Seller's obligations (exclusive
of pre-Closing disputes with respect thereto) and rights to hold the Customer
Deposits and Construction Advances of the Business, up to the Closing Date, and
Buyer agrees to hold, disburse and retain such deposits so delivered to it, and
to perform related construction, as the case may be, as if it were Seller.
10.8 Access to Books and Records.
(a) After the Closing, Seller will retain all Retained Books and
Records for a period of three (3) years from the date hereof, except for Tax
Returns and supporting documentation, which Seller shall retain until the later
to occur of (i) sixty (60) days subsequent to the expiration of the applicable
statute of limitations or any extensions thereof, or (ii) the expiration of
three (3) years from the date hereof.
(b) After the Closing, upon reasonable notice and subject to the
Confidentiality Agreement, the parties will give to the representatives,
employees, counsel and accountants of the other, access, during normal business
hours, to books and records relating to the Business and the Purchased Property,
and will permit such persons to examine and copy such records, in each case to
the extent reasonably requested by the other party in connection with Tax and
financial reporting matters (including any Tax Returns and related information,
but not attorney work product), audits, legal proceedings, governmental
investigations and other business purposes (including such financial information
and any receipts evidencing payment of Taxes as may be requested by Seller to
substantiate any claim for Tax credits or refunds); provided, however, that
nothing herein will obligate any party to take actions that would unreasonably
disrupt the normal course of its business or violate the terms of any Contract
to which it is a party or to which it or any of its assets is subject. Seller
and Buyer will cooperate with each other in the conduct of any Tax audit or
similar proceedings involving or otherwise relating to the Business (or the
income therefrom or assets thereof) with respect to any Tax and each will
execute and deliver such powers of attorney and other documents as are necessary
to carry out the intent of this Section 10.8(b).
10.9 Purchase Price Allocation. No later than ninety (90) days
subsequent to the Closing Date, Buyer and Seller shall use their good faith
efforts to agree to the allocation (the "Allocation") of the Purchase Price, the
Assumed Liabilities and other relevant items (including, for example,
adjustments to the Purchase Price) to the individual assets or classes of assets
within the meaning of Section 1060 of the IRC. If Buyer and Seller agree to such
Allocation prior to Closing, Buyer and Seller covenant and agree that (i) the
values assigned to the assets by the parties' mutual agreement shall be
conclusive and final for all purposes, and (ii) neither Buyer nor Seller will
take any position before any Governmental Authority or in any judicial
proceeding that is in any way inconsistent with such Allocation. Notwithstanding
the foregoing, if Buyer and Seller cannot agree to an Allocation, Buyer and
Seller covenants and agrees to file and to cause its respective Affiliates to
file, all Tax Returns and schedules thereto (including, for example, amended
returns, claims for refund, and those returns and forms required under Section
1060 of the IRC and any Treasury regulations promulgated thereunder) consistent
with each of Buyer and Seller's good faith Allocations, unless otherwise
required because of a change in applicable Law.
10.10 Owned Real Property Transfers. Within sixty (60) days of
the date of this Agreement, Seller shall deliver to Buyer copies of all existing
title insurance policies in Seller's possession covering the Owned Real
Property. Thereafter, no later than thirty (30) days before the Closing Date,
Seller shall deliver (at Seller's expense) to Buyer title commitments for
owners' policies of title insurance prepared by a title insurance company
reasonably acceptable to Buyer and a certified current survey, with respect to
all Owned Real Property included in the Purchased Property and in which Seller
purports to own fee title. Buyer acknowledges that such title commitments shall
be for California Land Title Association ("CLTA") owners' policies of title
insurance (or its equivalent) unless Buyer has requested in writing, prior to
the date hereof, that such commitments be issued for other forms of title
insurance (in which event, Buyer shall bear all costs and premiums for such
title insurance to the extent attributable to such coverage being in excess of
CLTA coverage or its equivalent). Such title commitments shall reflect that upon
the consummation of the sale to Buyer contemplated by this Agreement and the
payment of all premiums and charges due for such title insurance, Buyer will be
vested with good, fee simple title to such Owned Real Property, subject only to
the exceptions show thereon, the title company's standard exceptions and
exclusions, and such matters that arise after the date and time of such title
commitment. Except as provided in the following sentence, in the event that
Buyer requires endorsements to such title commitments or the applicable title
insurance policies, such endorsements shall be obtained at Buyer's sole cost and
expense and shall not be a condition to Closing. On the Closing Date, Seller
shall convey the Owned Real Property to be transferred to Buyer subject only to
Permitted Encumbrances, provided that Seller may transfer such property subject
to one or more exceptions that are not Permitted Encumbrances if Seller commits
in writing, in form and substance reasonably acceptable to Buyer, on or before
the Closing Date, to cause any such exception that is not a Permitted
Encumbrance to be removed, insured or bonded over to Buyer's reasonable
satisfaction, or if Seller indemnifies Buyer with respect to such exceptions to
Buyer's reasonable satisfaction on or before the Closing Date. With respect to
each parcel of Owned Real Property covered by a title commitment referenced
above, the amount of title insurance provided under the applicable title
insurance policy shall be the fair market value of the applicable property,
which shall be determined by Buyer at its sole cost and expense using
commercially reasonable methods of valuation, provided that all such valuations
shall be consistent with all allocations of the Purchase Price made hereunder or
pursuant to this Agreement, and shall be acceptable to the title insurance
company. The determination of fair market value shall be made in a timely manner
such that the title commitments can be issued in a timely manner prior to the
Closing Date. Seller agrees that prior to Closing it will provide the title
company with such instructions, authorizations, affidavits, and indemnities as
may be reasonably necessary for the title company to issue title policies to
Buyer, dated as of the Closing Date, for all of the Owned Real Property with
so-called non-imputation endorsements. By no later than forty-five (45) days
after the Closing Date, Seller shall deliver to Buyer a final title insurance
policy covering each parcel of the Owned Real Property covered by the title
commitments. Buyer will use its commercially reasonable efforts to work with the
title company between the date hereof and forty-five (45) days after Closing
Date to resolve any issues with respect to such title commitments. Seller shall
be responsible for the payment of all title insurance premiums attributable to
the CLTA portion of the coverage afforded by each such policy obtained, and
Buyer shall be responsible for the payment of all title insurance premiums in
excess of such amount and for the payment of all endorsement charges and other
fees and costs imposed by the title company.
10.11 Transaction Taxes. Buyer shall bear and be responsible
for paying any sales, use, transfer, documentary, registration, business and
occupation and other similar Taxes (including related penalties (civil or
criminal), additions to Tax and interest) imposed by any Governmental
Authorities with respect to the transfer of Purchased Property to Buyer
(including the Owned Real Property) ("Transaction Taxes"), regardless of whether
the Tax authority seeks to collect the such Taxes from Seller or Buyer. Buyer
shall also be responsible for (i) administering the payment of such Transaction
Taxes, (ii) defending or pursuing any proceedings related thereto, and (iii)
paying any expenses related thereto. Seller shall give prompt written notice to
Buyer of any proposed adjustment or assessment of any Transaction Taxes with
respect to the transaction, or of any examination of said transaction in a
sales, use, transfer or similar Tax audit. In any proceedings, whether formal or
informal, Seller shall permit Buyer to participate and control the defense of
such proceeding, and shall take all actions and execute all documents required
to allow such participation. Seller shall not negotiate a settlement or
compromise of any Transaction Taxes without the written consent of Buyer, which
consent shall not be unreasonably withheld.
10.12 Bulk Sales Laws. Seller and Buyer waive compliance with
applicable Laws under any version of Article 6 of the Uniform Commercial Code
adopted by any state or any similar Law relating to the sale of inventory,
equipment or other assets in bulk in connection with the sale of the Purchased
Property.
10.13 Prepaid Non-regulated Maintenance Agreements. Within
thirty (30) days following Closing, Seller shall pay to Buyer an amount equal to
the pro rata portion of all prepaid but unearned revenues from Seller's
customers for all non-regulated maintenance agreements as of the Closing Date.
10.14 Vehicle Registration. Buyer agrees to use its com-
mercially reasonable efforts to file promptly the appropriate vehicle title
applications and registrations to change the name of the titled owner on each
vehicle title certificate and change the motor vehicle registration (with
respect to license plate information) on each vehicle being transferred to Buyer
from Seller pursuant to this Agreement. Buyer agrees that it shall remove and
destroy Seller's existing license plates from all vehicles received promptly
upon the receipt of new license plates.
10.15 Carrier Access Billing and Accounts Receivable
Transition. Seller shall render its own final carrier access bills to its
interexchange carriers for minutes, messages and other applicable charges up to
the Closing Date. Seller shall be responsible for collecting and settling any
disputes associated with its final bills to the interexchange carriers.
10.16 End-User Billing and Accounts Receivable Transition.
Buyer agrees to purchase Seller's Earned End-user Accounts Receivable and make
payment to Seller for those accounts in the manner described below.
(a) Seller shall transfer to Buyer, as soon as reasonably
available after Closing, all open end-user customer account records as of the
end of business on the Closing Date. Following the Closing, Buyer will be
responsible for administering those records including the application of cash
receipts to customer accounts, whether related to services rendered before or
after the Closing. Seller will promptly forward to Buyer all customer payments
and related remittance documents received by Seller after the Closing for
processing by Buyer.
(b) Within twenty (20) days following the Closing, Seller will
provide an accounting to Buyer of the Earned End-User Accounts Receivable and
the Customer Advances, as well as the most recent twelve (12) month history of
Seller's uncollectible net writeoffs expressed as a percentage of xxxxxxxx for
the Business (the "Uncollectible Factor"). This data and the resulting
calculation of the Earned End-User Accounts Receivable Amount will be summarized
in an accounts receivable settlement statement (the "Accounts Receivable
Settlement Statement"). Within thirty (30) days following the Closing, Buyer
will remit to Seller an amount equal to 80% of the Earned End-User Accounts
Receivable Amount less 100% of the Customer Advances. Within sixty (60) days
following the Closing, Buyer will remit an additional 15% of the Earned End-User
Accounts Receivable Amount and within ninety (90) days will remit the xxxxx 0%.
(c) Not later than ten (10) days prior to the due dates for the
sixty (60) and ninety (90) day payments referred to in Section 10.16(b) above,
Seller will provide Buyer with an updated Accounts Receivable Settlement
Statement reflecting any adjustments based upon non-sufficient funds checks,
billing adjustments or other facts that have become known after the original
statement that relate to pre-closing activity.
(d) If at any time during the ninety (90) day period following
the Closing, Buyer or Seller discovers any material discrepancy in the Accounts
Receivable Settlement Statement, Seller and Buyer agree to use commercially
reasonable efforts to resolve any discrepancy in a timely manner, and also agree
to make payments related to any undisputed amounts as set forth above.
10.17 Cooperation. Subsequent to the Closing Date, Buyer and
Seller agree that they shall cooperate, each with the other, in order to
facilitate the orderly transfer of the operation of the Business from Seller to
Buyer; provided that except as may be otherwise required under that Agreement,
no party shall be required to pay any out-of-pocket costs associated with their
respective obligations hereunder.
ARTICLE 11.
EMPLOYEES AND EMPLOYEE MATTERS
11.1 Employment of Transferred Employees. All Active Employees of
Seller employed in the Business, and all Active Employees of Seller and its
Affiliates who are associated with the Business, on the Closing Date
(hereinafter collectively referred to as "Transferred Employees") shall be
employed by (or become the responsibility of, as applicable) Buyer as of the
Closing Date in the same or comparable positions, and at the same or comparable
total compensation (including base pay and bonus (exclusive of any retention
bonus)), as were in effect on the Closing Date, except as otherwise provided in
this Agreement. The term "Transferred Employees" shall include only those
individuals described in the preceding sentence who are identified as such on
Schedule 11.1. For purposes of the first sentence, the term "Active Employees"
shall include all full-time and part-time employees, employees on workers'
compensation, military leave, maternity leave, leave under the Family and
Medical Leave Act of 1993, short-term disability, non-occupational disability,
on layoff with recall rights, and employees on other approved leaves of absence
with a legal or contractual right to reinstatement. Buyer also shall employ any
employee of Seller or its Affiliates who on the Closing Date is an LTD Recipient
(as defined in Section 11.7) and who immediately before his active employment
with Seller or its Affiliates ceased was employed in or in association with the
Business and whose primary work location is within the areas serviced by the
Purchased Exchanges, provided such employee returns to active employment within
one (1) year of the Closing Date. For a period of six (6) months following the
Closing Date, Buyer shall not employ, and Buyer shall not permit any of its
Affiliates to employ, any person who retires or otherwise terminates from any
employment at or in association with the Business during the six-month period
beginning three (3) months before the Closing Date. All Transferred Employees
and LTD Recipients (as defined in Section 11.7) shall be identified on Schedule
11.1 to be prepared by Seller and submitted to Buyer at least fifteen (15) days
prior to the Closing Date; such Schedule 11.1 shall identify, as of the date of
such Schedule, the employees who have terminated employment as described in the
preceding sentence; and such Schedule 11.1 shall be updated as of the date that
is three months after the Closing to identify any employees who terminated
employment as described in the preceding sentence after the date of the original
Schedule 11.1.
11.1.1 Assumption of Collective Bargaining Agreement
Obligations. On and after the Closing Date, Buyer, as successor employer to
Seller (subject to Seller's Retained Liabilities in Section 2.4.2(d)), shall
assume all of the employer's obligations under, and be bound by the provisions
of, each collective bargaining agreement covering Transferred Employees. Each
such collective bargaining agreement relating to Transferred Employees shall be
identified on a Schedule 11.1.1 to be prepared by Seller and submitted to Buyer
at least fifteen (15) days prior to the Closing Date. Seller shall cooperate
with Buyer in Buyer's efforts to contact the unions representing Transferred
Employees. If a union representing Transferred Employees objects to Buyer's
assumption of, or refuses to allow Buyer to assume, the provisions of any
existing collective bargaining agreement that covers such Transferred Employees
immediately before the Closing Date, or objects to any change in or termination
of employee benefits on or after the Closing Date, Seller and its Affiliates
shall have no liability or obligation to Buyer by reason of such objection or
refusal. If, on or before the Closing Date, an employee objects, or refuses to
assent, to the consummation of the transactions contemplated by this Agreement
insofar as the Agreement affects the employee, Seller and its Affiliates shall
have no liability or obligation to the employee or any other party by reason of
the employee's objection or refusal to assent, and Buyer shall be responsible
for any liability or obligation that arises by reason of the employee's
objection or refusal to assent (other than any liability or obligation that
results from Seller's failure to comply with this Agreement and that does not
result from Buyer's failure to comply with this Agreement).
11.1.2 Assumption of Employment and Other Agreements. On and
after the Closing Date, except as otherwise provided in this Agreement or in
Schedule 11.1.2, Buyer, as successor employer to Seller (subject to Seller's
Retained Liabilities in Section 2.4.2(d)), shall assume all obligations under
and be bound by the provisions of each offer of employment by Seller relating to
the Business, each employment agreement or any other agreement by Seller
relating to conditions of employment, employment separation, severance, or
employee benefits in connection with the Business. All obligations described in
this Section 11.1.2 assumed by and binding Buyer shall be identified on a
Schedule 11.1.2 to be prepared by Seller and submitted to Buyer at least fifteen
(15) days prior to the Closing Date.
11.1.3 Recognition of Transferred Employee Service. On and
after the Closing Date, and subject to the provisions of any applicable
collective bargaining agreement, 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 IRC) determined
in accordance with the practices and procedures of Seller in effect on the
Closing Date, as if such service had been rendered to Buyer. Schedule 11.1 to be
prepared by Seller and submitted to Buyer no later than fifteen (15) days prior
to the Closing Date shall list the service of each Transferred Employee for the
employment-related purposes referred to in the preceding sentence.
11.1.4 Assumption of Obligation to Pay Bonuses. Except as
otherwise expressly provided in this Agreement, Transferred Employees shall not
accrue benefits under any employee benefit policies, plans, arrangements,
programs, practices, or agreements of Seller or any of its Affiliates after the
Closing Date. For the year in which the Closing Date occurs, the Transferred
Employees shall be paid any bonuses that would have been payable to the
Transferred Employees for that year had the Transferred Employees remained
employees of Seller or one of its Affiliates, in accordance with the provisions
of the policy, plan, arrangement, program, practice or agreement under which the
bonus would have been paid (the "Seller's Bonus Plans"). Seller shall pay to
Transferred Employees that portion of any such bonus that is attributable to
service during such year on or before the Closing Date, and Buyer shall pay to
Transferred Employees that portion of any such bonus that is attributable to
service during such year after the Closing Date. In determining the amount of
the bonus to be paid by Buyer in accordance with the preceding sentence, Buyer
shall apply criteria that are substantially comparable to the criteria
established as of the Closing Date under the Seller Bonus Plans under which the
bonus would have been paid had the Transferred Employees remained employees of
Seller or one of its Affiliates. Seller shall identify the Seller Bonus Plans on
a Schedule 11.1.4 to be delivered to Buyer no later than fifteen (15) days prior
to the Closing Date.
11.1.5 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. 11.1.6 Affiliate Employees. If any
employee identified in Schedule 11.1 is an employee of an Affiliate of Seller,
he or she shall be considered a Transferred Employee and shall be treated under
this Agreement in a manner that is comparable to the treatment given to the
Transferred Employees who are employed by Seller, except that his or her service
as of the Closing Date shall be determined in accordance with the practices and
procedures of his or her employer, as in effect on the Closing Date.
11.1.7 Term of Assumed Obligations. Except as otherwise
expressly provided in this Agreement, Buyer's obligations with respect to
Transferred Employees under this Article 11 shall continue for a period of not
less than one year after the Closing Date.
11.2 Transferred Employee Benefit Matters.
11.2.1 Defined Benefit Plans.
(a) Seller's Pension Plans. As of the date of this Agreement,
Seller participates in the following single-employer defined benefit pension
plans maintained in the United States:
(i) the GTE Service Corporation Plan for Employees'
Pensions (the "Seller's Salaried Pension Plan"); and
(ii) the GTE North Incorporated Pension Plan for Hourly
-Paid Employees' of Wisconsin (collectively, the "Seller's Hourly Pension
Plan").
The plans identified in this Section 11.2.1(a)
shall be referred to collectively in this Agreement as the "Seller's Pension
Plans," and each such plan shall be referred to individually as a "Seller's
Pension Plan."
(b) Buyer Obligations. Buyer shall take all actions necessary
and appropriate to ensure that, as soon as practicable after the Closing Date,
Buyer maintains or adopts one or more pension plans (hereinafter referred to in
the aggregate as the "Buyer Pension Plans" and individually as the "Buyer
Pension Plan") effective as of the Closing Date and to ensure that each Buyer
Pension Plan satisfies the following requirements as of the Closing Date: (i)
the Buyer Pension Plan is a qualified, single-employer defined benefit plan
under Section 401(a) of the IRC; (ii) any Buyer Pension Plan that was in effect
before the Closing Date shall not have any "accumulated funding deficiency," as
defined in Section 302 of ERISA and Section 412 of the IRC, whether or not
waived, immediately before the Closing Date; (iii) the Buyer Pension Plan is not
the subject of termination proceedings or a notice of termination under Title IV
of ERISA; (iv) the Buyer Pension Plan does not exclude Transferred Employees
from eligibility to participate therein; (v) the Buyer Pension Plan does not
violate the requirements of any applicable collective bargaining agreement; and
(vi) with respect to Transferred Employees who were participants in the Seller's
Hourly Pension Plan on the Closing Date, the terms of the Buyer Pension Plan are
substantially identical in all material respects to the terms of the Seller's
Hourly Pension Plan. Within the 30-day period immediately preceding any transfer
of assets and liabilities from a Seller's Pension Plan to a Buyer Pension Plan
pursuant to this Section 11.2.1(b), Buyer shall provide Seller with a written
certification, in a form acceptable to Seller, that the Buyer Pension Plan
satisfies each of the requirements set forth in this Section 11.2.1(b).
(c) Transfer of Liabilities.
(i) In accordance with the provisions of this Section
11.2.1, Buyer shall cause the Buyer Pension Plans to accept all liabilities for
benefits under the Seller Pension Plans, whether or not vested, that would have
been paid or payable (but for the transfer of assets and liabilities pursuant to
this Section 11.2.1) to or with respect to the Transferred Employees under the
terms of the Seller's Pension Plans, including, but not limited to, all
liabilities for "Section 411(d)(6) protected benefits" (as defined by Section
411(d)(6) of the IRC and the regulations thereunder) that have accrued under the
Seller's Pension Plans to or with respect to the Transferred Employees based on
accredited service and compensation under the Seller's Pension Plans as of the
Closing Date. Buyer shall not amend the Buyer Pension Plans, or permit the Buyer
Pension Plans to be amended, to eliminate any benefit, whether or not vested,
that is a "Section 411(d)(6) protected benefit" (as defined by Section 411(d)(6)
of the IRC and the regulations thereunder). Seller or an Affiliate thereof may,
in its sole discretion on or prior to the transfer of liabilities, take action
to fully vest Transferred Employees in its benefits (if any) under the Seller's
Pension Plans.
(ii) (A) For purposes of eligibility and vesting under
the Buyer Pension Plans, each Transferred Employee whose accrued benefit is
transferred from a Seller's Pension Plan to a Buyer Pension Plan shall be
credited with service and compensation as of the Closing Date as determined
under the terms of the Seller's Pension Plan. The benefit under the Buyer
Pension Plan for each Transferred Employee who, on the Closing Date,
participates in the Seller's Hourly Pension Plan, shall be calculated under
terms of the Buyer Pension Plan that are substantially identical in all material
respects to the terms of the Seller's Hourly Pension Plan. The benefit for each
Transferred Employee who, on the Closing Date, participates in the Seller's
Salaried Pension Plan, shall not be less than the greater of (x) the sum of the
Transferred Employee's "Seller's Pension" and "Buyer Pension," or (y) the
Transferred Employee's "Total Service Pension," each as determined under the
rules set forth in subsection (c)(iii)(B) of this Section 11.2.1.
(B) Each Transferred Employee who, as of the
Closing Date, participates or formerly participated in the Seller's Salaried
Pension Plan and who, under the terms of the Seller's Salaried Pension Plan, has
at least 15 years of accredited service and combined years of age and accredited
service of at least 74 as of June 1, 1999, shall be eligible, after the
Transferred Employee's employment with the Buyer and its Affiliates is
terminated and after the Transferred Employee's combined years of age and years
of accredited service equal or exceed 76, to receive his or her "Seller's
Pension" (as determined under the rules set forth in subsection (c)(iii) of this
Section 11.2.1) as an immediate early retirement pension under the applicable
Buyer Pension Plan in accordance with early retirement provisions that are no
less favorable to the Transferred Employee than the early retirement provisions
of the Seller's Salaried Pension Plan as of the Closing Date. For a period of at
least five (5) years following June 1, 1999, Buyer shall cause the Buyer Pension
Plan to retain early retirement provisions that are no less favorable to the
Transferred Employees than the early retirement provisions of the Seller's
Salaried Pension Plan to which they were subject as of the Closing Date;
provided, however, that a Transferred Employee shall be entitled to consent to
the provision to such Transferred Employee of a different and less favorable
early retirement benefit.
(C) Notwithstanding the foregoing provisions of
this subsection (c) (ii), if a lump-sum distribution is available under the
Buyer Pension Plan, the benefit under the Buyer Pension Plan of a GATT
Grandfathered Participant, when expressed in the form of a lump sum, shall not
be less than the benefit under the Buyer Pension Plan determined without regard
to the changes to Section 417 of the IRC made by the Uruguay Round Agreements
Act. The method used to convert a GATT Grandfathered Participant's accrued
benefit into a lump-sum amount under the Buyer Pension Plan after 1999 shall be
not less favorable to a GATT Grandfathered Participant than the method used for
similar purposes by the Seller Pension Plan. For purposes of this paragraph
(c)(ii)(C), "GATT Grandfathered Participant" shall mean a Transferred Employee
(x) with respect to whom liabilities are transferred pursuant to this subsection
(c) and (y) who, taking service from Buyer into account as service with Seller,
would have been eligible under the Seller's Pension Plan, but for the transfer
of liabilities pursuant to this subsection (c), to have his benefit under the
Seller's Pension Plan (when expressed in the form of a lump sum) determined
without regard to the changes to Section 417 of the IRC made by the Uruguay
Round Agreements Act.
(D) For a period of five (5) years following June
1, 1999, Buyer shall cause the Buyer Pension Plan to retain early retirement
provisions that are no less favorable to the Transferred Employees than the
early retirement provisions of the Seller's Hourly Pension Plan to which they
were subject as of the Closing Date; provided, however, that a Transferred
Employee shall be entitled to consent to the provision to such Transferred
Employee of a different and less favorable early retirement benefit.
(iii) (A) The Buyer Pension Plan benefit of a
Transferred Employee who, on the Closing Date, participates in the Seller's
Hourly Pension Plan, shall be calculated as set forth in paragraph (c)(ii)(a) of
this Section 11.2.1.
(B) The Buyer Pension Plan benefit of a
Transferred Employee who, on the Closing Date, participates in the Seller's
Salaried Pension Plan, shall be calculated by applying the benefit formula set
forth in paragraph (c)(ii)(A) of this Section 11.2.1, in accordance with the
rules described in the remainder of this paragraph (B). A Transferred Employee's
"Seller's Pension" shall be calculated by applying the benefit formula under the
Seller's Salaried Pension Plan (as in effect on the Closing Date) to the
Transferred Employee's service and compensation credited under the Seller's
Salaried Pension Plan as of the Closing Date. A Transferred Employee's "Buyer
Pension" shall be not less than an amount calculated by applying the benefit
formula under the Buyer Pension Plan to the Transferred Employee's total
accredited service and compensation under the Buyer Pension Plan (including
service and compensation credited under the Seller's Salaried Pension Plan as of
the Closing Date as if such service and compensation had been earned under the
Buyer Pension Plan and service and compensation credited under the Buyer Pension
Plan after the Closing Date), multiplied by the ratio of accredited service
earned after the Closing Date to such total accredited service; provided that
for a period of at least five (5) years following June 1, 1999, Buyer shall
cause the benefit formula used in determining such "Buyer Pension" to provide
benefits at least as valuable as were provided under the benefit formula
applicable to the Transferred Employee under the Seller's Salaried Pension Plan
on the Closing Date. A Transferred Employee's "Total Service Pension" shall be
calculated by applying the benefit formula under the Buyer Pension Plan to the
Transferred Employee's accredited service (including service and compensation
credited with the Seller under the Seller's Salaried Pension Plan as of the
Closing Date as if such service and compensation was earned under the Buyer
Pension Plan and service and compensation credited under the Buyer Pension Plan
on and after the Closing Date). Solely for purposes of computing a Transferred
Employee's "Total Service Pension," compensation received by such a Transferred
Employee from the Seller shall be treated as compensation received from the
Buyer. The Seller's Pension, the Buyer Pension, and the Total Service Pension
shall take into account the Transferred Employee's actual age and entire period
of service (including service credited under the Seller's Salaried Pension Plan
as of the Closing Date and service credited under the Buyer Pension Plan on and
after the Closing Date) for vesting and benefit eligibility purposes.
(C) Each Transferred Employee who is eligible to
receive a benefit under the Buyer Pension Plan may elect to receive the portion
of said benefit that is equal to the Seller's Pension in any form, and with any
early retirement or other actuarial subsidy, that was available under the
Seller's Pension Plan on the Closing Date, without regard to whether the
Transferred Employee is eligible to elect or receive, or does elect or receive,
the same form of payment or early retirement or actuarial subsidy for the
remainder of the pension under the Buyer Pension Plan.
(iv) As soon as practicable after the Closing Date,
Seller shall deliver to Buyer a list reflecting each Transferred Employee's
service and compensation under each of the Seller's Pension Plans and each
Transferred Employee's accrued benefit thereunder as of the Closing Date.
(d) Transfer of Assets.
(i) In accordance with the provisions of subsection
(d)(i) of this Section 11.2.1 and subject to the provisions of subsection
(d)(vi) of this Section 11.2.1, Seller shall direct the trustee of the Seller's
Pension Plans to transfer to the trustee or funding agent of the applicable
Buyer Pension Plan an amount in cash determined as provided in the following
sentence (the "Pension Assets") with respect to the Transferred Employees whose
accrued benefits are transferred to a Buyer Pension Plan pursuant to Section (c)
of this Section 11.2.1. The value of the Pension Assets to be transferred by the
Seller's Pension Plans shall be equal in value to the projected benefit
obligation, as defined in paragraph 17 of Statement of Financial Accounting
Standards No. 87 ("FAS 87"), under the Seller's Pension Plans for the
Transferred Employees whose accrued benefits are transferred to a Buyer Pension
Plan pursuant to Section (c) of this Section 11.2.1, determined in each case on
an on-going plan basis as of the Closing Date, and on the basis of the
assumptions used for the fiscal year which includes the Closing Date in Seller's
determination of pension expense for the Seller's Pension Plans in accordance
with FAS 87; provided, however, that in no event shall the value of the Pension
Assets be less than the amount required to be transferred by Section 414(l) of
the Code and the regulations thereunder determined using the assumptions used by
the PBGC with respect to a plan termination occurring on the Closing Date. The
Pension Assets shall be in the form of cash or marketable obligations. Under no
circumstances shall Seller or the Seller's Pension Plans be liable to transfer
any additional amount to Buyer or a Buyer Pension Plan or any other person in
respect of the accrued benefits transferred to a Buyer Pension Plan pursuant to
Section (c) of this Section 11.2.1, including but not limited to any
circumstance under which any person (including a governmental agency) states a
claim to some portion or all of the Pension Assets.
(ii) Seller shall appoint an actuary ("Seller's
Actuary") to determine the amount to be transferred pursuant to subsection
(d)(i) of this Section 11.2.1 and shall provide such determination to Buyer.
Buyer shall appoint an actuary ("Buyer's Actuary") who shall have the right to
audit and review the determination made by Seller's Actuary. Within thirty (30)
days of the date Seller informs Buyer of the amount of the Pension Assets,
Seller's Actuary shall provide Buyer's Actuary with a computer file containing
all the employee data used by Seller's Actuary to calculate the Pension Assets.
If Buyer's Actuary is unable to agree with Seller's Actuary on the amount of the
transfer within sixty (60) days after Seller informs Buyer of the amount to be
transferred, Seller and Buyer shall jointly select a third actuary, whose
determination shall be binding on Seller and Buyer. Each of Seller and Buyer
shall bear the fees, costs and expenses of their respective actuaries, and the
fees, costs, and expenses of the third actuary shall be borne one-half by Seller
and one-half by Buyer.
(iii) The Pension Assets shall be credited with interest
from the Closing Date to the actual date of transfer at the assumed discount
rate used in accordance with paragraph (i) of this Section (d); provided that
any Pension Assets that are distributed from the Seller's Pension Plans before
the date of transfer pursuant to subsection (d)(vi) of this Section 11.2.1 shall
be credited with interest (such interest to be credited to the Buyer Pension
Plans) only from the Closing Date to the date of distribution.
(iv) Under the terms of each Buyer Pension Plan, the
accrued benefit of each Transferred Employee immediately after the transfer of
assets and liabilities pursuant to this Section 11.2.1 shall not be less than
the sum of each Transferred Employee's accrued benefits under the Seller's
Pension Plan and the Buyer Pension Plan immediately before the transfer of
assets and liabilities. Neither Seller nor its Affiliates nor the Seller's
Pension Plans nor any trustee thereof shall retain any liability for benefits
under the Seller's Pension Plans for any Transferred Employee with respect to
whom cash or marketable obligations have been transferred to a Buyer Pension
Plan pursuant to this Section 11.2.1 or distributed pursuant to subsection
(d)(vi) of this Section 11.2.1 (other than any additional liability that results
from Seller's (or its Affiliates') failure to comply with this Agreement, the
Seller's Pension Plan or applicable Law and that does not result from any
failure of Buyer or its Affiliates to comply with this Agreement, the Buyer
Pension Plan or applicable Law).
(v) In connection with the transfer of assets and
liabilities pursuant to this Section 11.2.1, Seller and Buyer shall cooperate
with each other in making all appropriate filings required by the IRC or ERISA
and the regulations thereunder, and the transfer of assets and liabilities
pursuant to this Section 11.2.1 shall not take place until as soon as
practicable after the latest of (i) the expiration of the 30-day period
following the filing of any required notices with the IRS pursuant to Section
6058(b) of the IRC, or (ii) the date Buyer has delivered to Seller (xx) a copy
of the Buyer Pension Plan and a copy of the most recent determination letter
from the IRS to the effect that the Buyer Pension Plan is qualified under
Section 401(a) of the IRC, together with documentation reasonably satisfactory
to Seller of the due adoption of any amendments to the Buyer Pension Plan
required by the IRS as a condition to such qualification and a certification
from Buyer that no events have occurred that adversely affect the continued
validity of such determination letter (apart from the enactment of any Federal
law for which the remedial amendment period under Section 401(b) of the IRC has
not yet expired), and (yy) information enabling the enrolled actuary for the
Buyer Pension Plan to issue the certification required by Section 6058(b) of the
IRC.
(vi) (A) If, after the Closing Date and before the
date of transfer of assets and liabilities from the Seller's Pension Plans
pursuant to this Section 11.2.1, the accrued benefit as of the Closing Date
becomes payable under a Seller's Pension Plan to or with respect to a
Transferred Employee, Buyer shall (xx) furnish GTE Service Corporation with a
copy of a properly completed application for such benefits, and (yy) direct GTE
Service Corporation to instruct the trustee of the Seller's Pension Plan to make
benefit payments in the form and amount determined by GTE Service Corporation in
accordance with the properly completed application for benefits. Seller shall
cause GTE Service Corporation to comply with any such direction.
(B) To the extent that any reasonable custodial,
trustee, asset management, or other plan administration expenses attributable to
the Pension Assets and to the period ending on the date of the transfer of
assets and liabilities from the Seller's Pension Plans pursuant to this Section
11.2.1 are allocable to the assets and liabilities to be so transferred, Buyer
shall reimburse the trustee of the Seller's Pension Plans in the amount of such
allocable expense if the expense is to be paid from assets then held by the
trustee of the Seller's Pension Plans or, if the expense is not to be paid from
assets then held by the trustee of the Seller's Pension Plans, Buyer shall
reimburse GTE Service Corporation in the amount of the expense, in each case
within fifteen (15) days of the date on which Buyer receives a statement
therefor from GTE Service Corporation.
(C) Notwithstanding anything herein to the
contrary, the assets and liabilities to be transferred from the trustee of the
Seller's Pension Plans to the trustee or funding agent of the Buyer Pension Plan
pursuant to this Section 11.2.1 shall be reduced, as provided in this subsection
(vi), to reflect any benefit payments made pursuant to this subsection (vi)
regardless of the form in which paid and any expenses described in paragraph (B)
of this subsection (vi) that have not otherwise been paid pursuant to this
subsection (vi).
11.2.2 Savings Plans.
(a) As of the date of this Agreement, Seller participates in the
GTE Savings Plan and the GTE Hourly Savings Plan (collectively referred to as
the "Seller's Savings Plans"). Except as provided in Section (g) of this Section
11.2.2, Transferred Employees shall not be entitled to make contributions to or
to benefit from matching or other contributions under the Seller's Savings Plans
on and after the Closing Date.
(b) Buyer shall take all action necessary and appropriate to
ensure that, as soon as practicable after the Closing Date, Buyer maintains or
adopts one or more savings plans (hereinafter referred to in the aggregate as
the "Buyer Savings Plans" and individually as the "Buyer Savings Plan")
effective as of the Closing Date and to ensure that the Buyer Savings Plans
satisfy the following requirements as of the Closing Date: (i) each Buyer
Savings Plan is a qualified, single-employer individual account plan under
Section 401(a) of the IRC; (ii) at least one (1) Buyer Savings Plan does not
exclude Transferred Employees from eligibility to participate therein; (iii) at
least one (1) Buyer Savings Plan permits Transferred Employees to make
before-tax contributions (under Section 401(k) of the IRC) and provides for
matching contributions by the Buyer at a rate of match determined solely in the
discretion of Buyer; and (iv) the Buyer Savings Plan does not violate the
requirements of any applicable collective bargaining agreement to which it is
subject. Within the thirty (30) day period immediately preceding any transfer of
assets and liabilities from a Seller's Savings Plan to a Buyer Savings Plan
pursuant to this Section 11.2.2, Buyer shall provide Seller with a written
certification, in a form acceptable to Seller, that the Buyer Savings Plan
satisfies each of the requirements set forth in this Section (b).
(c) (i) Seller shall direct the trustee of the Seller's
Savings Plans to transfer to the trustee or funding agent of the Buyer Savings
Plan designated by Buyer an amount in cash equal in value to the account
balances of the Transferred Employees covered by the Seller's Savings Plans as
of the date of the transfer; provided that to the extent the account balances to
be transferred consist in whole or in part of outstanding participant loans
which comply with the provisions of the IRC and ERISA (the "Participant Loans"),
Seller shall direct the trustee of the Seller's Savings Plans to transfer to the
trustee or funding agent of the Buyer Savings Plans, in lieu of cash, the
promissory notes and related documents evidencing such Participant Loans. Buyer
and Seller shall take such actions as may be required to effect the assignment
of such loans by the trustee of the Seller's Savings Plan to the trustee or
funding agent of the Buyer Savings Plan, and Buyer shall cause the trustee or
funding agent of the Buyer Savings Plan to accept the assignment of such
Participant Loans.
(ii) After the date of the transfer of assets and
liabilities pursuant to this Section 11.2.2, Buyer shall assume all liabilities
for the benefits payable to or with respect to such Transferred Employees under
the Seller's Savings Plans, and Seller and the Seller's Savings Plans and its
implementing trust shall retain no liability for such benefits (other than any
additional liability that results from Seller's (or its Affiliate's) failure to
comply with this Agreement, the Seller's Savings Plan or applicable Law and that
does not result from any failure of Buyer or its Affiliates to comply with this
Agreement, the Buyer Savings Plan or applicable Law.
(d) For purposes of eligibility and vesting under the Buyer
Savings Plans, each Transferred Employee shall be credited with service as of
the Closing Date as determined under the terms of the Seller's Savings Plans. As
soon as practicable after the Closing Date, Seller shall cause GTE Service
Corporation to deliver to Buyer a list of the Transferred Employees covered by
the Seller's Savings Plans, together with each Transferred Employee's service
under each of the Seller's Savings Plans as of the Closing Date.
(e) In connection with the transfer of assets and liabilities
pursuant to this Section 11.2.2, Seller and Buyer shall cooperate with each
other in making all appropriate filings required by the IRC or ERISA and the
regulations thereunder, and the transfer of assets and liabilities pursuant to
this Section 11.2.2 shall not take place until as soon as practicable after the
latest of (i) the expiration of the thirty (30) day period following the filing
of any required notices with the IRS pursuant to Section 6058(b) of the IRC, and
(ii) the date Buyer has delivered to Seller (xx) a copy of the Buyer Savings
Plan and a copy of the most recent determination letter from the IRS to the
effect that the Buyer Savings Plan is qualified under Sections 401(a) and 401(k)
of the IRC, together with documentation reasonably satisfactory to Seller of the
due adoption of any amendments to the Buyer Savings Plan required by the IRS as
a condition to such qualification and a certification from Buyer that no events
have occurred that adversely affect the continued validity of such determination
letter (apart from the enactment of any Federal law for which the remedial
amendment period under Section 401(b) of the IRC has not yet expired).
(f) As soon as practicable after the Closing Date, Seller shall
cause GTE Service Corporation to deliver to Buyer a list of the Transferred
Employees who have outstanding Participant Loans under the Seller's Savings
Plans, together with copies of said Transferred Employees' notes, disclosure
statements, and security agreements under the Seller's Savings Plans. Subject to
obtaining the consent of the applicable Transferred Employee if required by law,
from the Closing Date until the earliest of (i) the actual date of transfer of
assets and liabilities pursuant to this Section 11.2.2; (ii) the full
amortization of the Transferred Employee's indebtedness; (iii) the distribution
of the entire balance of the Transferred Employee's accounts; or (iv) the last
date on which Buyer or one of its Affiliates pays remuneration to the
Transferred Employee, Buyer or its Affiliate shall (x) continue the payroll
deductions pursuant to which each such Transferred Employee is discharging
indebtedness to a Seller's Savings Plan and (y) remit the deducted funds to
Fidelity Management Trust Company, the trustee of the Seller's Savings Plans, as
soon as practicable, but in no event more than thirty (30) days, after the date
of deduction, together with an accounting that identifies the Transferred
Employees with respect to whom the funds were deducted and the amount deducted
for each Transferred Employee. All such remitted funds shall be transferred to
the appropriate Seller's Savings Plan and applied to reduce the appropriate
Transferred Employee's outstanding indebtedness. Buyer's obligations under this
Section (f) are limited to payroll deductions of Participant Loans repayments by
the Transferred Employees and remittance of those funds, and nothing herein
shall be construed to obligate Buyer to repay to Seller any portion of the
outstanding indebtedness of the Transferred Employees that are not otherwise
discharged by the Transferred Employees themselves.
(g) Seller shall make all required matching contributions with
respect to the Transferred Employees' contributions to the Seller's Savings
Plans that are (i) eligible for matching and (ii) made before, or relate to a
period ending on or prior to, the Closing Date. Such matching contributions
shall be made not later than the date on which all other matching contributions
are made to the Seller's Savings Plans with respect to contributions made at the
same time as the Transferred Employees' contributions.
11.2.3 Welfare Plans.
(a) Buyer shall take all action necessary and appropriate to
ensure that, as soon as practicable after the Closing Date, Buyer maintains or
adopts, as of the Closing Date, 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 (including retiree medical and life) for the benefit of (i) the
non-bargained Transferred Employees (the "Non-Union Welfare Plans") and (ii) the
union-represented Transferred Employees in accordance with the provisions of
applicable collective bargaining agreements (the "Bargained Welfare Plans"). The
Non-Union Welfare Plans and the Bargained Welfare Plans are hereinafter referred
to collectively as the "Buyer Welfare Plans." The Buyer Welfare Plans shall
provide as of the Closing Date pre-retirement benefits to Transferred Employees
(and their dependents and beneficiaries) that, in the aggregate, are comparable
to the pre-retirement benefits to which they were entitled under the
corresponding employee welfare benefit plans maintained by Seller on the Closing
Date. For purposes of determining eligibility to participate in each Buyer
Welfare Plan, each Transferred Employee shall be credited with service,
determined under the terms of the corresponding welfare plans maintained by
Seller on the Closing Date (hereinafter referred to collectively as the
"Seller's Welfare Plans"). 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, and Transferred Employees shall
receive credit under the Buyer Welfare Plans for co-payments and payments under
a deductible limit made by them and for out-of-pocket maximums applicable to
them during the plan year of the Seller's Welfare Plan in accordance with the
corresponding Seller's Welfare Plans. As soon as practicable after the Closing
Date, Seller shall deliver to Buyer a list of the Transferred Employees who had
credited service under a Seller's' Welfare Plan, together with each such
Transferred Employee's service, co-payment amounts, and deductible and
out-of-pocket limits under such plan.
(b) (i) Except as otherwise provided in subsection (b)(ii)
of this Section (b) or in an applicable collective bargaining agreement, 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 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.
(ii) Subject to Section 11.4 below, following the
retirement from Buyer and its Affiliates or any successor thereof of a
Transferred Employee who is not subject to a collective bargaining agreement as
of the Closing Date, who has combined age and years of accredited service
(within the meaning of the Seller's Pension Plan) as of June 1, 1999, equal to
at least 66, and who as of his or her retirement has combined age and years of
accredited service (within the meaning of the Seller Pension Plan) equal to at
least 76 and at least 15 years of accredited service (within the meaning of the
Seller's Pension Plan) (a "Retired Non-Union Transferred Employee"), Seller
shall provide or cause to be provided to each such Retired Nonunion Transferred
Employee (and/or his or her dependents and beneficiaries) retiree medical,
health, and life benefits under terms and conditions that are substantially
identical to the terms and conditions under the corresponding programs offered
by Seller to its similarly situated noncollectively bargained employees retiring
as of the Closing Date; provided that nothing in this subsection (b)(ii) shall
be construed to prevent any Retired Non-Union Transferred Employee (or his or
her dependents or beneficiaries) from voluntarily relinquishing such benefits.
Buyer shall reimburse Seller, in accordance with this subsection (b)(ii), for
the cost of the retiree medical, health, and life coverage for which Seller is
responsible and that Seller actually provides pursuant to this subsection
(b)(ii). For each year for which Buyer is required to reimburse Seller under
this subsection (b)(ii), Buyer shall pay Seller annually in arrears, within 30
days after Seller provides a statement therefor to Buyer, (A) $4,500 with
respect to each Retired Non-Union Transferred Employee who has not yet attained
age 65 during the year for which the payment is made and $4,500 with respect to
each spouse who is covered with respect to a Retired Non-Union Transferred
Employee and who has not yet attained age 65 during the year for which the
payment is made, and (B) $2,000 with respect to each Retired Non-Union
Transferred Employee who has attained at least age 65 during the year for which
the payment is made and $2,000 with respect to each spouse who is covered with
respect to a Retired Non-Union Transferred Employee and who has attained at
least age 65 during the year for which the payment is made. No reimbursement
shall be due with respect to any dependent, other than a spouse, covered with
respect to a Retired Non-Union Transferred Employee. The reimbursement
obligation for partial years shall be prorated based on the portion of the year
covered by the obligation. Each Retired Non-Union Transferred Employee (or his
or her dependent or beneficiary, as the case may be) who is provided benefits by
Seller under this subsection (b)(ii) shall be required to pay to Seller any
premium, contribution or other payment required under, and shall be subject to
any co-payment or deductible required under, the terms of Seller's applicable
retiree medical, health, or life benefit plan; to the extent that any amount
constituting such a payment is deducted from any plan, program, or arrangement
maintained by Buyer or one of its Affiliates or is otherwise paid to Buyer or
one of its Affiliates by such person, Buyer shall cause such amount to be paid
to Seller as soon as administratively practicable.
(iii) Benefits provided pursuant to subsection (b)(ii)
of this Section (b) shall take into account service with and compensation
increases from Buyer on and after the Closing Date in the same manner as if such
post-Closing Date service was performed with, or such compensation was provided
by, Seller. Buyer shall provide Seller with such information as shall be
required to implement the immediately preceding sentence.
(c) Buyer shall refer to GTE Service Corporation and GTE Service
Corporation shall assume responsibility for any valid claim under a Seller's
Welfare Plan for disability, medical, dental or other benefits made by a
Transferred Employee on or after the Closing Date arising from a loss incurred
on or before the Closing Date. Nothing in this Section 11.2.3 shall require
Seller, any Affiliate of Seller, or the Seller's Welfare Plans to make any
payment or to provide any benefit not otherwise provided by the terms of the
Seller's Welfare Plans.
(d) Seller, Buyer, their respective Affiliates, and the Seller's
Welfare Plans and the Buyer Welfare Plans shall assist and cooperate with each
other in the disposition of claims made under the Seller's Welfare Plans
pursuant to subsection (c) of this Section 11.2.3, and in providing each other
with any records, documents, or other information within its control or to which
it has access that is reasonably requested by any other as necessary or
appropriate to the disposition, settlement, or defense of such claims.
(e) Except for GTE Flexible Reimbursement Plan (the "FRP")
account balances described in Section 11.2.3(f), nothing in this Agreement shall
require Seller or its Affiliates to transfer assets or reserves with respect to
the Seller's Welfare Plans to Buyer or the Buyer Welfare Plans.
(f) As of the Closing Date, Seller shall cause the portion of
the FRP applicable to Transferred Employees to be segregated into a separate
component and all account balances of the Transferred Employees in the FRP shall
be transferred to a flexible reimbursement plan that Buyer shall cause to be
maintained for the duration of the calendar year in which the Closing Date
occurs.
(g) On and for a period of at least three (3) years after the
Closing Date, Transferred Employees not subject to a collective bargaining
agreement shall be eligible for benefits under a Buyer severance or separation
pay policy or plans that are the same as or comparable to the severance or
separation pay policy benefits that are provided by Seller (or the applicable
Affiliate, if the Transferred Employee is employed by an employer other than the
Selles) or a Seller's Pension Plan as of the Closing Date. Buyer shall recognize
the service of each such Transferred Employee with Seller and its Affiliates for
eligibility, vesting, and benefit determinations under the Buyer severance or
separation pay policy or plan. Transferred Employees subject to a collective
bargaining agreement shall be eligible for severance or separation pay benefits
in accordance with the terms of the applicable collective bargaining agreement.
11.3 Miscellaneous Benefits.
11.3.1 Loans.
Buyer shall (i) obtain at its own expense newly executed
payroll deduction authorization forms from all Transferred Employees to whom
Seller has made outstanding education loans, mortgage loans, and relocation
loans (excluding any Participant Loans under the Seller's Savings Plans), (ii)
subject to obtaining the consent of the applicable Transferred Employee if
required by law, continue the payroll deductions pursuant to which such
Transferred Employees are discharging such indebtedness, and (iii) as soon as
practicable, but in no event more than thirty (30) days, after the date of
deduction, remit such funds (together with an accounting that identifies the
Transferred Employees with respect to whom the funds were deducted and the
amount deducted for each Transferred Employee) to Seller for application by
Seller to the Transferred Employees' outstanding indebtedness. Buyer's
obligation with respect to each respective Transferred Employee pursuant to the
preceding sentence shall commence as of the Closing Date and continue until the
earlier of the full amortization of the Transferred Employee's indebtedness or
the last date on which Buyer or one of its Affiliates pays remuneration to the
Transferred Employee. Seller shall not seek to accelerate, cancel or otherwise
change the terms of any education loans, mortgage loans, or relocation loans
made by Seller to such Transferred Employees, except in the case of a default by
a Transferred Employee. Buyer's obligations under this Section 11.3.1 are
limited to payroll deductions of loan repayments by the Transferred Employees
and remittance of those funds and the related accounting, and nothing herein
shall be construed to obligate Buyer to repay to Seller any portion of the
outstanding indebtedness of the Transferred Employees that are not otherwise
discharged by the Transferred Employees themselves; provided that,
notwithstanding anything to the contrary in Article 12 of this Agreement or
Section 11.6 of this Agreement, Seller shall indemnify and hold harmless Buyer
for all claims, demands, actions, proceedings, causes of action, liability,
loss, cost, damage, and expense (including reasonable attorney's fees) in any
way arising from or incurred as a result of Buyer's administration of the
outstanding indebtedness or the payroll deduction authorization process as
described above. All Transferred Employees with outstanding indebtedness as
described in this Section 11.3.1 and the amount and nature of this indebtedness
shall be identified on a Schedule 11.3.1 to be prepared by Seller and submitted
to Buyer before the Closing Date.
11.3.2 Vacation.
(a) On or after the Closing Date, Buyer shall allow Transferred
Employees to receive paid time off in the calendar year of the Closing for any
unused vacation time accrued, with respect to the calendar year of the Closing,
prior to the Closing Date. Except as provided in the following sentence, Seller
and its Affiliates shall have no liability to Transferred Employees for the
vacation payments described in this Section 11.3.2. Seller shall pay Transferred
Employees any banked vacation on or before the Closing Date. Schedule 11.1 to be
prepared by Seller and submitted to Buyer on or before the Closing Date shall
list the accrued but unused vacation pay, as of the Closing Date, of each
Transferred Employee for the calendar year in which the Closing Date occurs.
(b) For purposes of determining a Transferred Employee's
eligibility for vacation under Buyer's vacation plan, a Transferred Employee
shall be credited, as of the first day of the first calendar year that begins
after the calendar year in which the Closing Date occurs, with service for the
calendar year in which the Closing Date occurs in an amount equal to the
aggregate of the Transferred Employee's service with both Seller and Buyer
during the calendar year in which the Closing Date occurs.
(c) At the time of Closing, all vacation for Transferred
Employees for the calendar year of Closing shall be prorated and the net
liability related thereto shall be an adjustment to the Purchase Price (the
"Vacation Proration Amount"). The adjustment shall be determined by crediting
the Buyer with an amount equal to the accrued and unused vacation for
Transferred Employees. In determining said net liability, Seller shall receive a
credit against the total liability for any vacation used in excess of the
accrued vacation for Transferred Employees as of the Closing Date.
11.4 Employee Rights.
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,
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.
Nothing in this Agreement shall be deemed to confer upon any
person (nor any beneficiary thereof) any rights under or with respect to any
plan, program, or arrangement described in or contemplated by this Agreement,
and each person (and any beneficiary thereof) shall be entitled to look only to
the express terms of any such plan, program, or arrangement for his or her
rights thereunder.
Nothing in this Agreement shall cause Buyer or its Affiliates,
nor 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 11.1.2 with respect to employment agreements,
to continue to employ any Transferred Employee for any period of time following
the Closing Date.
11.5 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 Law, including any requirement to provide for and discharge any and
all notifications, benefits, and liabilities to Transferred Employees and
government agencies that might be imposed as a result of the consummation of the
transactions contemplated by this Agreement or otherwise.
11.6 Indemnification.
11.6.1 Indemnification of Seller. Notwithstanding anything to
the contrary in Article 12 of this Agreement, Buyer shall indemnify and hold
harmless Seller, its Affiliates, and their respective directors, officers,
employees, agents, and assigns, and each employee benefit plan or arrangement
maintained or contributed to by Seller or an Affiliate thereof (whether or not
such plan or arrangement is an "employee benefit plan" within the meaning of
Section 3(3) of ERISA) and its administrators, fiduciaries, and agents, from and
against any and all claims, demands, actions, administrative or other
proceedings, causes of action, liability, loss, cost, damage, and expense
(including reasonable attorneys' fees) (i) in any way arising out of or incurred
as a result of any action by Buyer, its Affiliates, their respective directors,
officers, employees, or agents, the administrators or fiduciaries of any
employee benefit plan maintained or contributed to by Buyer or an Affiliate
thereof (whether or not such plan or arrangement is an "employee benefit plan"
within the meaning of Section 3(3) of ERISA), or any of their successors, to
change, reduce contributions to, terminate, fail to continue, fail to pay
benefits under, or fail to manage or administer properly any employee benefit
plan or arrangement (whether or not such plan or arrangement is an "employee
benefit plan" within the meaning of Section 3(3) of ERISA) on or after the
Closing Date, or (ii) in any way arising out of or incurred as a result of any
action that is a breach of any the covenants, representations, warranties, or
obligations of any such person under this Agreement.
11.6.2 Indemnification of Buyer. Notwithstanding anything to
the contrary in Article 12 of the Agreement, Seller shall indemnify and hold
harmless Buyer, its Affiliates, and their respective directors, officers,
employees, agents, and assigns, and each employee benefit plan or arrangement
maintained or contributed to by Buyer or an Affiliate thereof (whether or not
such plan or arrangement is an "employee benefit plan" within the meaning of
Section 3(3) of ERISA) and its administrators, fiduciaries, and agents, from and
against any and all claims, demands, actions, administrative or other
proceedings, causes of action, liability, loss, cost, damage, and expense
(including reasonable attorneys' fees) (i) in any way arising out of or incurred
as a result of any action by Seller, its Affiliates, their respective directors,
officers, employees, or agents, the administrators or fiduciaries of any
employee benefit plan maintained or contributed to by Seller or an Affiliate
thereof (whether or not such plan or arrangement is an "employee benefit plan"
within the meaning of Section 3(3) of ERISA), or any of their successors, to
change, reduce contributions to, terminate, fail to continue, fail to pay
benefits under, or fail to manage or administer properly any employee benefit
plan or arrangement (whether or not such plan or arrangement is an "employee
benefit plan" within the meaning of Section 3(3) of ERISA) before, or relating
to a period before, the Closing Date, or (ii) in any way arising out of or
incurred as a result of any action that is a breach of any the covenants,
representations, warranties, or obligations of any such person under this
Agreement.
11.7 Special Provisions For Certain Employees.
Any individual employed in or in association with the Business
and whose primary work location is within the areas serviced by the Purchased
Exchanges who as of the Closing Date either (i) is currently receiving long-term
disability benefits under a long-term disability plan of the Seller or one of
its Affiliates (the "Seller's' LTD Plan"), (ii) has been approved for receipt of
long-term disability benefits under the Seller's LTD Plan, or (iii) is receiving
a disability pension under a Seller's Pension Plan (collectively, an "LTD
Recipient") shall be treated as a Transferred Employee if and when the LTD
Recipient recovers from his or her disabling condition and returns to active
service with the Buyer. The term "LTD Recipients" shall include only those
individuals described in the preceding sentence who are identified on Schedule
11.1.
Any Transferred Employee described in the preceding paragraph
(whether or not identified on Schedule 11.1 as an "LTD Recipient") shall
continue to receive benefits under Seller's LTD Plan (or, if applicable, a
disability pension under a Seller's Pension Plan) after the Closing Date to the
extent provided under Seller's LTD Plan (or the applicable Seller's Pension
Plan). As long as such individual remains eligible to receive benefits under
Seller's LTD Plan (or the applicable Seller's Pension Plan), the Buyer shall not
be required to provide coverage or benefits to the individual under the employee
benefit plans or programs maintained by the Buyer.
If any LTD Recipient recovers from his or her disabling
condition, Seller shall have no obligation to offer or provide any employment to
such LTD Recipient, and absent a legal or contractual right to reemployment and
except as otherwise provided in Section 11.1, Buyer shall have no obligation to
offer or provide any employment to such LTD Recipient. If an LTD Recipient who
received disability benefits under the Seller's LTD Plan (or the applicable
Seller's Pension Plan, as the case may be) returns to active service with the
Buyer or one of its Affiliates, the LTD Recipient's period of disability covered
under the Seller's LTD Plan (or the applicable Seller's Pension Plan, as the
case may be) shall be treated as a period of service under the employee benefit
plans and programs of the Buyer and its Affiliates to the same extent that the
period of disability is treated as a period of service under the employee
benefit plans and programs of Seller and its Affiliates.
ARTICLE 12.
INDEMNIFICATION
12.1 Survival of Representations, Warranties and Covenants.
(a) The representations and warranties contained in Sections
8.1.6 and 8.2.6 will survive the Closing and remain in full force and effect
indefinitely. The representations and warranties contained in Section 8.1.13
will terminate upon the expiration of the applicable statute of limitations.
Each of the other representations and warranties contained in Article 8 will
terminate, without further action, on the date which is (i) the later of one (1)
year following the Closing Date, or (ii) the completion of Buyer's first audit
cycle following the Closing Date, however, that such cycle is completed within
fifteen (15) months following the Closing Date (in each case, the applicable
date of expiration of such representations and warranties is referred to herein
as an "Expiration Date").
(b) This Article 12 shall survive any termination of this
Agreement and the Ancillary Agreements and the indemnification contained in this
Article 12 shall survive the Closing and shall remain in effect (i)
indefinitely, with respect to any Indemnifiable Claim related to the breach of
any representation or warranty which pursuant to Section 12.1(a) survives
indefinitely, (ii) indefinitely, with respect to any Indemnifiable Claim arising
under Section 12.2(a)(iii) (Retained Liabilities) or 12.2(b)(iii) (Assumed
Liabilities) and (iii) until the date Expiration Date for any Indemnifiable
Claims that are not specified in any of the preceding clauses. Unless a claim
for indemnification with respect to any alleged breach of any representation or
warranty is asserted by notice given as herein provided that specifically
identifies a particular breach and the underlying facts relating thereto, which
notice is given within the applicable period of survival for such representation
or warranty, such claim may not be pursued and is irrevocably waived after such
time. Without limiting the generality or effect of the foregoing, no claim for
indemnification with respect to any representation or warranty will be deemed to
have been properly made except (i) to the extent it is based upon a Third Party
Claim made or brought prior to the expiration of the survival period for such
representation or warranty, or (ii) to the extent based on Indemnifiable Losses
actually incurred, or after due inquiry, reasonably expected to be incurred, by
an Indemnitee prior to the expiration of the survival period for such
representation or warranty.
12.2 Indemnification.
(a) Following the Closing and subject to the other sections of
this Article 12, Seller will indemnify, defend and hold harmless Buyer and its
Affiliates and their respective directors, officers, and agents from and against
all Indemnifiable Losses relating to, resulting from or arising out of (i) any
inaccuracy in any of the representations and warranties made by Seller in
Section 8.1 of this Agreement, (ii) a breach by Seller of any covenant or
agreement of Seller contained in this Agreement, and (iii) any of the Retained
Liabilities.
(b) Following the Closing and subject to the other sections of
this Article 12, Buyer will indemnify, defend and hold harmless Seller and its
Affiliates and their respective directors, officers, and agents from and against
all Indemnifiable Losses relating to, resulting from or arising out of (i) any
inaccuracy in any of the representations or warranties made by Buyer in Section
8.2 of this Agreement, (ii) a breach by Buyer of any covenant or agreement of
Buyer contained in this Agreement, and (iii) any of the Assumed Liabilities.
(c) Payments made under this Section 12.2 shall be treated by
Buyer and Seller as purchase price adjustments and Buyer and Seller shall file
all Tax Returns consistent with such treatment. 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.
12.3 Limitations on Liability.
(a) For purposes of this Agreement, (i) "Indemnification
Payment" means any amount of Indemnifiable Losses required to be paid pursuant
to this Agreement, (ii) "Indemnitee" means any person or entity entitled to
indemnification under this Agreement, (iii) "Indemnifying Party" means any
person or entity required to provide indemnification under this Agreement, and
(iv) "Indemnifiable Losses" means any losses, liabilities, damages, costs and
expenses (including reasonable attorneys' fees and expenses and reasonable costs
of investigation) actually incurred in connection with any actions, suits,
demands, assessments, judgments and settlements, in any such case (x) reduced by
(i) the amount of insurance proceeds recovered from any person or entity with
respect thereto, and (ii) any Tax benefits to the Indemnitee as a result of the
Indemnifiable Losses involved and (y) excluding any such losses, liabilities,
damages, costs and expenses to the extent that the underlying liability or
obligation is the result of any action taken or omitted to be taken by any
Indemnitee. For purposes of this 12.3(a), the amount of any Tax benefits to the
Indemnitee shall be deemed to be equal to the net present value amount of the
reduction in federal, state and local income or franchise Taxes or the increase
of a Tax loss or credit determined on the basis of the maximum marginal Tax
rates in effect for the Taxable period when payment is made by the Indemnifying
Party (regardless of whether the Indemnitee realizes or will realize an actual
reduction in federal, state or local income or franchise Taxes).
(b) Notwithstanding anything to the contrary contained in this
Agreement, if the Closing occurs, (i) no claim for indemnification may be
asserted under Section 12.2(a)(i) or Section 12.2(a)(ii) with respect to any
matter (x) known to Buyer on or before the date of this Agreement, or (y) after
the date of this Agreement and on or before the Closing Date to the extent that
such matter became known to Buyer prior to Closing and Buyer did not provide
timely notice to Seller of the existence of such claim or condition in
accordance with Section 10.2(c), and (ii) no claim for indemnification may be
asserted under Section 12.2(b)(i) or Section 12.2(b)(ii) with respect to any
matter discovered by or known to Seller on or before the date of this Agreement.
(c) As between Seller and any Affiliate of Seller, on the one
hand, and Buyer and any Affiliate of Buyer, on the other hand, the remedies,
rights and obligations set forth in this Article 12, Sections 10.1.2, 11.2.2,
11.7, 13.3 and the Ancillary Agreements will be the exclusive remedies, rights
and obligations with respect to the liabilities and obligations referred to in
Section 12.2 and any breach of the representations, warranties or covenants set
forth in this Agreement. Without limiting the foregoing, as a material
inducement to entering into this Agreement, to the fullest extent permitted by
law, each of the parties waives any claim or cause of action that it otherwise
might assert, and any breach of the representations, warranties or covenants set
forth in this Agreement, except for claims or causes of action brought under and
subject to the terms and conditions of this Article 12 and Sections 10.1.2, 11.7
and 13.3, and claims based on common law fraud.
(d) Notwithstanding any other provision of this Agreement or of
any applicable Law, no Indemnitee will be entitled to make a claim against an
Indemnifying Party under Sections 11.2.2, 11.7, 12.2(a)(i), 12.2(a)(ii),
12.2(b)(i) or 12.2(b)(ii) until:
(i) the aggregate amount of Indemnifiable Losses
incurred by the Indemnitee for any individual occurrence giving rise to such
Indemnifiable Losses exceeds $25,000, and
(ii) the aggregate amount of claims that may be asserted
for such Indemnifiable Losses pursuant to Section 12.3(d)(i) exceeds an amount
equal to two percent (2%) of the Purchase Price, but only to the extent such
amount, if any, (a) exceeds an amount equal to two percent (2%) of the Purchase
Price, or in the case of claims for breaches of Section 8.1.19 only, exceeds an
amount equal to $2,000,000 (provided that Indemnifiable Losses with respect to
breaches of Section 8.1.19 shall be payable as Indemnifiable Losses in excess of
the $2,000,000 basket or the two percent (2%) basket, but not both), and (b) is
less than the amount set forth in Section 12.3(e).
(e) Notwithstanding any other provision of this Agreement, the
indemnification obligations of Seller under Section 12.2(a) (except with respect
to indemnification for inaccuracies of the representations contained in Sections
8.1.1 through 8.1.6) or the indemnification obligation of Buyer under Section
12.2(b) will not exceed the amount of an amount equal to ten percent (10%) of
the Purchase Price respectively, after subtracting the floor amount specified in
Section 12.3(d)(ii).
(f) No Indemnifying Party shall be liable to or obligated to
indemnify any Indemnitee hereunder for any consequential, special, multiple,
punitive or exemplary damages including, but not limited to, damages arising
from loss or interruption of business, profits, business opportunities or
goodwill, loss of use of facilities, loss of capital, claims of customers, or
any cost or expense related thereto, except to the extent such damages have been
recovered by the Indemnifying Party under its insurance or have been received by
a third person and are the subject of a Third Party Claim for which
indemnification is available under the express terms of this Section 12.
(g) Notwithstanding anything in this Agreement to the contrary,
Seller shall not be liable to or obligated to indemnify Buyer or any other
Indemnitee hereunder for any claim that any of Seller's representations or
warranties in Section 8.1 is inaccurate, or that any covenant has been breached,
if such claim is predicated on any action by a Governmental Authority (other
than a Tax authority) undertaken after Closing or any action a Governmental
Authority (other than a Tax authority) requires Seller to undertake after
Closing.
(h) From the date hereof through the Expiration Date, Buyer
shall not be eligible to seek indemnification from Seller with respect to any
resulting Indemnifiable Losses, and shall indemnify Seller from any losses,
liabilities, damages, costs and expenses (including reasonable attorneys' fees
and expenses and reasonable costs of investigation) actually incurred in
connection with any resulting actions, suits, demands, assessments, judgments
and settlements in the event that Buyer, without the prior written consent of
Seller: (i) undertakes any environmental remediation activity with respect to
any Owned Real Property; or (ii) contacts, or causes or permits any of its
subsidiaries, affiliates, agents, employees, officers or directors to contact on
its behalf, any Governmental Authority for the purpose of initiating any
investigation or inquiry as to the compliance by Seller with Environmental
Requirements with respect to the Owned Real Property, except in each case as is
required to comply with applicable Environmental Requirements.
(i) Seller and Buyer shall cooperate with each other with
respect to resolving any claim or liability with respect to which one party is
obligated to indemnify the other party hereunder, including by making
commercially reasonable efforts to mitigate or resolve any such claim or
liability.
12.4 Defense of Claims.
(a) If any Indemnitee receives notice of the assertion of any
claim or of the commencement of any action or proceeding by any entity that is
not a party to this Agreement or an Affiliate of such a party (a "Third Party
Claim") against such Indemnitee, with respect to which an Indemnifying Party is
obligated to provide indemnification under this Agreement, the Indemnitee will
give such Indemnifying Party reasonably prompt written notice thereof, but in
any event not later than ten (10) calendar days after receipt of notice of such
Third Party Claim; provided, however, that the failure of the Indemnitee to
notify the Indemnifying Party shall only relieve the Indemnifying Party from its
obligation to indemnify the Indemnitee pursuant to this Article 12 to the extent
that the Indemnifying Party is materially prejudiced by such failure (whether as
a result of the forfeiture of substantive rights or defenses or otherwise). Upon
receipt of notification of a Third Party Claim, the Indemnifying Party shall be
entitled, upon written notice to the Indemnitee, to assume the investigation and
defense thereof with counsel reasonably satisfactory to the Indemnitee. Whether
or not the Indemnifying Party elects to assume the investigation and defense of
any Third Party Claim, the Indemnitee shall have the right to employ separate
counsel and to participate in the investigation and defense thereof; provided,
however, that the Indemnitee shall pay the fees and disbursements of such
separate counsel unless (i) the employment of such separate counsel has been
specifically authorized in writing by the Indemnifying Party, (ii) the
Indemnifying Party has failed to assume the defense of such Third Party Claim
within reasonable time after receipt of notice thereof with counsel reasonably
satisfactory to such Indemnitee, or (iii) the named parties to the proceeding in
which such claim, demand, action or cause of action has been asserted include
both the Indemnifying Party and such Indemnitee and, in the reasonable judgment
of counsel to such Indemnitee, there exists one or more defenses that may be
available to the Indemnitee that are in conflict with those available to the
Indemnifying Party. Notwithstanding the foregoing, the Indemnifying Party shall
not be liable for the fees and disbursements of more than one counsel for all
Indemnified Parties in connection with any one proceeding or any similar or
related proceedings arising from the same general allegations or circumstances.
Without the prior written consent of the Indemnitee, the Indemnifying Party will
not enter into any settlement of any Third Party Claim that would lead to
liability or create any financial or other obligation on the part of the
Indemnitee unless such settlement includes as an unconditional term thereof the
release of the Indemnitee from all liability in respect of such Third Party
Claim. If a settlement offer solely for money damages is made by the applicable
third party claimant, and the Indemnifying Party notifies the Indemnitee in
writing of the Indemnifying Party's willing-ness to accept the settlement offer
and pay the amount called for by such offer without reservation of any rights or
defenses against the Indemnitee, the Indemnitee may continue to contest such
claim, free of any participation by the Indemnifying Party, and the amount of
any ultimate liability with respect to such Third Party Claim that the
Indemnifying Party has an obligation to pay hereunder shall be limited to the
lesser of (A) the amount of the settlement offer that the Indemnitee declined to
accept plus the Losses of the Indemnitee relating to such Third Party Claim
through the date of its rejection of the settlement offer or (B) the aggregate
Losses of the Indemnitee with respect to such claim.
(b) Any claim by an Indemnitee on account of an Indemnifiable
Loss that does not result from a Third Party Claim (a "Direct Claim") will be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than thirty (30) calendar days after the
receipt of notice thereof, and the Indemnifying Party will have a period of
thirty (30) calendar days within which to respond in writing to such Direct
Claim. If the Indemnifying Party does not so respond within such thirty (30)
calendar day period, the Indemnifying Party will be deemed to have rejected such
claim, in which event the Indemnitee will be free to pursue such remedies as may
be available to the Indemnitee on the terms and subject to the provisions of
this Article 12.
(c) If after the making of any Indemnification Payment the
amount of the Indemnifiable Loss to which such payment relates is reduced by
recovery, settlement or otherwise under any insurance coverage, or pursuant to
any claim, recovery, settlement or payment by or against any other entity, the
amount of such reduction (less any costs, expenses, premiums or taxes incurred
in connection therewith) will promptly be repaid by the Indemnitee to the
Indemnifying Party. Upon making any Indemnification Payment, the Indemnifying
Party will, to the extent of such Indemnification Payment, be subrogated to all
rights of the Indemnitee against any third party that is not an Affiliate of the
Indemnitee in respect of the Indemnifiable Loss to which the Indemnification
Payment relates; provided that (i) the Indemnifying Party shall then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss, and (ii) until the Indemnitee recovers full payment of its
Indemnifiable Loss, all claims of the Indemnifying Party against any such third
party on account of said Indemnification Payment will be subrogated and
subordinated in right of payment to the Indemnitee's rights against such third
party. Without limiting the generality or effect of any other provision of this
Article 12, each such Indemnitee and Indemnifying Party will duly execute upon
request all instruments reasonably necessary to evidence and perfect the
above-described subrogation and subordination rights.
ARTICLE 13.
TERMINATION
13.1 Termination Rights. This Agreement may be terminated at any
time prior to the Closing Date:
(a) at any time by mutual written consent of the parties;
(b) by Buyer if any of the conditions provided in Section 6.1 of
this Agreement have not been met within eighteen (18) months after execution of
this Agreement and have not been waived by Buyer;
(c) by Seller if any of the conditions provided in Section 6.2
of this Agreement have not been met within eighteen (18) months after execution
of this Agreement and have not been waived by Seller; or
(d) by Seller if any obligations of Buyer provided in Article 3
become incapable of being fulfilled.
13.2 Good Faith Performance. Neither party shall be entitled to
exercise any right of termination pursuant to subsection 13.1(b), (c) or (d)
above if such party shall not have performed diligently and in good faith the
obligations required to be performed by such party hereunder prior to the date
of termination.
13.3 Effect of Termination.
(a) If this Agreement is terminated as a result of a Material
Adverse Effect or Section 13.1(a), this Agreement shall be of no further force
and effect and there shall be no further liability hereunder (except the
obligations under the Confidentiality Agreement and the liability for breach of
such obligations) on the part of either party or their respective Affiliates,
directors, officers, shareholders, agents or other representatives.
(b) If this Agreement is terminated by Buyer pursuant to Section
13.1(b), this Agreement shall be of no further force and effect and there shall
be no further obligations or liability hereunder (except the obligations under
the Confidentiality Agreement and the liability for breach of such obligations)
on the part of either party or their respective Affiliates, directors, officers,
shareholders, agents or other representatives; provided, however, that (i) in
the event that such termination is the result of one or more Seller's willful or
negligent failure to fulfill its conditions to Closing under Section 6.1 and
Buyer has fulfilled its conditions to Closing under Section 6.2, and Seller has
failed to cure such non-performance within a reasonable period after notice from
Buyer, then Seller shall pay Buyer liquidated damages in an amount equal to the
Deposit, and (ii) Seller shall promptly refund the Deposit following such
termination. Payment of the amount of the Deposit by Seller as liquidated
damages and return of the Deposit to Buyer shall be Buyer's sole and exclusive
remedy. Seller shall promptly pay such amount to Buyer in immediately available
funds following such termination. Notwithstanding anything herein to the
contrary, in no event shall any act or omission of Seller in connection with the
Merger be deemed to be a breach of the terms and conditions of this Agreement
for purposes of this Section 13.3(b).
(c) If this Agreement is terminated by Seller pursuant to
Section 13.1(c) or (d), this Agreement shall be of no further force and effect
and there shall be no further obligations or liability hereunder (except the
obligations under the Confidentiality Agreement and the liability for breach of
such obligations) on the part of either party or their respective Affiliates,
directors, officers, shareholders, agents or other representatives; provided,
however, that Seller shall be entitled to retain the Deposit as liquidated
damages as Seller's sole and exclusive remedy if such termination is (i) the
result of Buyer's willful or negligent failure to fulfill its conditions to
Closing under Section 6.2 and Seller has fulfilled its conditions to Closing
under Section 6.1, and Buyer has failed to cure such non-performance within a
reasonable period after notice from Seller; or (ii) the result of Buyer's
incapacity to fulfill its obligations under Article 3.
(d) Upon any termination of the Agreement, each of the parties
shall promptly comply with the obligations of the Confidentiality Agreement
regarding return or destruction of Evaluation Material of the other party.
(e) Notwithstanding anything to the contrary contained herein,
the provisions of this Section 13.3 and of Sections 14.1, 14.2, 14.3, 14.8,
14.11, 14.13 and 14.14, shall survive any termination of this Agreement.
ARTICLE 14
MISCELLANEOUS
14.1 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:
(a) If to Buyer, to:
CenturyTel, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attention: R. Xxxxxxx Xxxxx, Xx.
Executive Vice President and
Chief Financial Officer
Xxxxxx X. Xxxx
General Counsel's Office
With a copy to:
Xxxxxxx X. Xxxxx, Xx.
Xxxxx, Xxxxx & Xxxx
0000 Xxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile No.: 000-000-0000
(b) If to Seller, to:
Xxxxxxx X. Xxxxxxx, III
Vice President - Property Repositioning
000 Xxxxxx Xxxxx, XXX00X00
Xxxxxx, XX 00000
Facsimile No. (000) 000-0000
With a copy to:
Xxxx X. Xxxxxxxxxxx
Legal Counsel - Property Repositioning
000 Xxxxxx Xxxxx, XXX00X00
Xxxxxx, XX 00000
Facsimile No. (000) 000-0000
or to such other address or addresses as any such party may from time to time
designate for itself by like notice.
14.2 Information Releases. The parties shall consult with each other
(and allow the other party notice, and a reasonable time to comment) in
preparing any employee announcement, 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 the employees generally, 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 either 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 Law or the rules of any national stock exchange
applicable to such party or its Affiliates.
14.3 Expenses. Whether or not the transactions contemplated hereby
are consummated and except as otherwise expressly provided herein, each party
will pay any expenses (including attorneys' fees) incurred by it incidental to
this Agreement and in consummating the transactions provided for herein.
14.4 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, but is not assignable or delegable by any party without the
prior written consent of the other party; provided, that (i) Seller may assign
this Agreement to an Affiliate of Seller without the consent of Buyer including,
on and after the closing of the Merger, the ultimate parent entity of the
successor corporation to such merger or any entity controlled thereby and (ii)
Buyer may assign its rights under this Agreement to one or more wholly-owned
subsidiaries, provided that Buyer shall remain responsible for all of its
obligations under this Agreement.
14.5 Amendments. This Agreement may be amended or modified only by a
subsequent writing signed by authorized representatives of both parties.
14.6 Captions. The captions set forth in this Agreement are for
convenience only and shall not be considered as part of this Agreement, nor as
in any way limiting or amplifying the terms and provisions hereof.
14.7 Entire Agreement. The term " Agreement" shall mean collectively
this document, the Schedules hereto and any agreements expressly incorporated
herein. This Agreement supersedes and revokes any prior discussions and
representations, other agreements, commitments, arrangements or understandings
of any sort whatsoever, whether oral or written, that may have been made or
entered into by the parties relating to the matters contemplated hereby, except
the Confidentiality Agreement. This Agreement, the Confidentiality Agreement and
the Ancillary Documents constitute the entire agreement by and among the parties
with respect to the subject matter hereof, and there are no representations,
warranties, agreements, commitments, arrangements or understandings except as
expressly set forth herein.
14.8 Waiver. Except as otherwise expressly provided in this
Agreement, neither the failure nor any delay on the part of any party to
exercise any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise or waiver of any such right,
power or privilege preclude any other or further exercise thereof, or the
exercise of any other right, power or privilege available to each party at law
or in equity.
14.9 Third Parties. Except as expressly provided herein, nothing
contained in this Agreement is intended to confer upon any Person, other than
the parties hereto and their successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
14.10 Counterparts. This Agreement may be executed in two or more
counterparts, any or all of which shall constitute one and the same instrument.
14.11 Governing Law. This Agreement and the Ancillary Agreements
shall in all respects be governed by and construed in accordance with the laws
of the State of New York (except that no effect shall be given to any conflicts
of law principles of the State of New York that would require the application of
the laws of any other jurisdiction). The parties irrevocably submit to the
exclusive jurisdiction of any Wisconsin District Court or any Federal Court
located in Wisconsin for purposes of any suit, action or other proceeding
arising out of this Agreement, the Ancillary Agreements or any transaction
contemplated hereby or thereby. The parties agree that service of process,
summons or notice or document by U.S. registered mail to such party's respective
address set forth in Section 14.1 shall be effective service of process for any
action, suit or proceeding in Wisconsin with respect to any matters to which it
has submitted to jurisdiction as set forth above in the immediately preceding
sentence. The parties hereto irrevocably and unconditionally waive trial by jury
in any legal action or proceeding relating to this Agreement or any other
agreement entered into in connection therewith and for any counterclaim with
respect thereto. In the event of any breach of the provisions of this Agreement
or any other agreement entered into in connection therewith, 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.
14.12 Further Assurances. From time to time, as and when requested by
one of the parties, the other party will use its commercially reasonable efforts
to execute and deliver, or cause to be executed and delivered, all such
documents and instruments as may be reasonably necessary or appropriate, in the
reasonable opinion of counsel for Seller and Buyer, to consummate and make
effective the transactions contemplated by this Agreement.
14.13 Severability. If any provision of this Agreement is determined
to be invalid, illegal or unenforceable by any Governmental Authority, the
remaining provisions of this Agreement to the extent permitted by Law shall
remain in full force and effect provided that the essential terms and conditions
of this Agreement for both parties remain valid, binding and enforceable and
provided that the economic and legal substance of the transactions contemplated
is not affected in any manner materially adverse to any party. In the event of
any such determination, the parties agree to negotiate in good faith to modify
this Agreement to fulfill as closely as possible the original intents and
purposes hereof. To the extent permitted by Law, the parties hereby to the same
extent waive any provision of Law that renders any provision hereof prohibited
or unenforceable in any respect.
14.14 Representation by Counsel; Interpretation. Seller and Buyer
each acknowledge that each party to this Agreement has been represented by
counsel in connection with this Agreement and the transactions contemplated by
this Agreement. Accordingly, any rule of Law or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against the
party that drafted it has no application and is expressly waived. The provisions
of this Agreement shall be interpreted in a reasonable manner to effect the
intent of Buyer and Seller.
IN WITNESS WHEREOF, the parties, acting through their duly
authorized agents, have caused this Agreement to be duly executed and delivered
as of the date first above written.
GTE NORTH INCORPORATED CENTURYTEL, INC.
By: /s/ By: /s/
------------------------------- ---------------------------
Name: Xxxxxxx X. Xxxxxxx, III Name:
----------------------------- -------------------------
Title: Vice President-
Property Repositioning Title:
