CELLULAR INTEREST TRANSFER AGREEMENT
BY AND BETWEEN
TELEPHONE AND DATA SYSTEMS, INC.
AND
UNITED STATES CELLULAR CORPORATION
DATED AS OF JUNE 20, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II TRANSFER
2.1 Transfer of Cellular Interests. . . . . . . . . . . . . . . . . . .6
2.2 Payment of Assigned Values. . . . . . . . . . . . . . . . . . . . .6
2.3 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE III CLOSING
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.2 Partial Closings . . . . . . . . . . . . . . . . . . . . . . . . .7
3.3 Delivery of Assigned Values . . . . . . . . . . . . . . . . . . . .8
ARTICLE IV CONDITIONAL PAYMENT BY TDS
4.1 Determination of Aggregate Realized Value . . . . . . . . . . . . .8
4.2 Conditional Payment . . . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE V REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of TDS . . . . . . . . . . . . . . .9
5.2 Representations and Warranties of USCC. . . . . . . . . . . . . . 15
ARTICLE VI COVENANTS AND AGREEMENTS
6.1 Covenants of TDS. . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2 Covenants of USCC . . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 Mutual Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 19
6.4 Assumption of Liabilities and Obligations . . . . . . . . . . . . 20
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF TDS
7.1 Representations and Warranties True . . . . . . . . . . . . . . . 21
7.2 Performance of Obligations and Agreements;
No Breach of Covenants. . . . . . . . . . . . . . . . . . . . . . 21
7.3 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.4 Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF USCC
8.1 Representations and Warranties True . . . . . . . . . . . . . . . 22
8.2 Performance of Obligations and Agreements . . . . . . . . . . . . 22
8.3 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.4 Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . 22
8.5 Legal Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IX RECIPROCAL CONDITIONS PRECEDENT
9.1 Governmental and Other Approvals. . . . . . . . . . . . . . . . . 23
9.2 No Injunctions or Restraints. . . . . . . . . . . . . . . . . . . 23
ARTICLE X TERMINATION AND INDEMNIFICATION
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.2 Written Notice. . . . . . . . . . . . . . . . . . . . . . . . . . 25
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10.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . 25
10.4 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.5 Termination Ineffective as to Prior Transfers . . . . . . . . . . 25
10.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XI MISCELLANEOUS
11.1 Non-survival of Representations, Warranties and Covenants;
Liability of the Parties. . . . . . . . . . . . . . . . . . . . . 27
11.2 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.4 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . 29
11.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.6 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.7 Brokers; Investment Banking Fees. . . . . . . . . . . . . . . . . 30
11.8 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.9 Modifications, Amendments and Waivers . . . . . . . . . . . . . . 30
11.10 Prior Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.11 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . 31
The Exhibit and Schedules to this Agreement, listed below, are not being
filed herewith. The Registrant agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the Commission upon request.
Exhibit A - Description of Cellular Interests
Schedule 2.2 - Category A Markets
Schedule 4.2 - Assigned Values of Cellular Interests in
Category B Markets
Schedule 5.1(g) - Contigent Liabilities
Schedule 5.1(h) - Investigation and Litigation
Schedule 5.1(j) - Identification of Financial Statements of
Each Licensee
Schedule 6.4 - Liability of TDS
Schedule 8.5(a-1) - Form of Opinion of Sidley & Austin
Schedule 8.5(a-2) - Form of Opinion of Iowa Counsel
Schedule 8.5(b) - Form of Opinion of FCC Counsel
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CELLULAR INTEREST TRANSFER AGREEMENT
THIS CELLULAR INTEREST TRANSFER AGREEMENT (the "Agreement"), dated
as of June 20, 1996, is between TELEPHONE AND DATA SYSTEMS, INC., an Iowa
corporation ("TDS"), and UNITED STATES CELLULAR CORPORATION, a Delaware
corporation ("USCC").
RECITALS:
WHEREAS, TDS and USCC are parties to the Exchange Agreement;
WHEREAS, pursuant to Article V of the Exchange Agreement, USCC has
the first right to negotiate for the purchase of TDS's right, title and
interest to cellular interests in certain MSAs and RSAs;
WHEREAS, TDS is the owner, directly or indirectly, of certain
Cellular Interests in Licensees which hold Licenses awarded by the FCC to
construct and operate Cellular Systems in certain MSAs and RSAs,
specifically, (i) the General Partnership Interests, (ii) the Limited
Partnership Interests and (iii) the Cellular Subsidiary Stock as described in
EXHIBIT A attached hereto ("EXHIBIT A");
WHEREAS, USCC is the owner of 85.714% of the issued and outstanding
shares of WCC, which owns a 51% general partnership interest in WCCCLP, which
owns a 36.500% limited partnership interest in the CO3 Partnership;
WHEREAS, Delta, a second-tier subsidiary of TDS, is the owner of
14.286% of the issued and outstanding shares of WCC;
WHEREAS, TDS has offered USCC the opportunity to negotiate the
purchase of all of TDS's Cellular Interests described in Exhibit A in a
single transaction;
WHEREAS, the Board of Directors of USCC appointed the USCC Special
Committee to, among other things, consider TDS's offer and report to the
Board of Directors as a whole;
WHEREAS, the USCC Special Committee has recommended that the Board
of Directors of USCC approve this Agreement, and the Board of Directors of
USCC deems it advisable and for the benefit of the shareholders of USCC that
USCC acquire all of such Cellular Interests under the terms and conditions
set forth herein; and
WHEREAS, the Board of Directors of TDS has approved this Agreement
and deems it advisable and for the benefit of the
shareholders of TDS that TDS transfer all of such Cellular Interests to USCC
under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the respective representations,
warranties and covenants herein set forth, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings set forth below:
"ACCRETED VALUE" means the Assigned Value of a Cellular Interest
adjusted, in the case of a Sold Category B Interest, from its Transfer Date
to the Date of Sale of such Interest or, in the case of a Retained Category
B Interest, from its Transfer Date to the Fifth Anniversary, (i) to reflect
changes in the Consumer Price Index determined in accordance with Section
4.2 hereof, (ii) by adding the amount of any capital contribution made,
directly or indirectly, by USCC with respect to such Interest from its
Transfer Date to its Date of Sale or the Fifth Anniversary, as applicable,
and (iii) by subtracting the amount of any distribution received, directly
or indirectly, by USCC with respect to such Interest from its Transfer Date
to its Date of Sale or the Fifth Anniversary, as applicable.
"ADDITIONAL CELLULAR INTEREST" shall have the meaning specified in
Section 6.1(d)(ii) hereof.
"AGGREGATE ACCRETED VALUE" means the sum of the Accreted Values of all
Sold Category B Interests and all Retained Category B Interests.
"AGGREGATE REALIZED VALUE" means the sum of the Realized Values of all
Sold Category B Interests and all Retained Category B Interests.
"AMEX" means the American Stock Exchange.
"ASSIGNED VALUE" means the value of each Cellular Interest as set
forth in Schedule 4.2.
"CATEGORY A INTEREST" means a Cellular Interest listed in Exhibit A as
a "Category A Interest."
"CATEGORY B INTEREST" means a Cellular Interest listed in Exhibit A as
a "Category B Interest."
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"CELLULAR COMPANY" means a corporation listed in Exhibit A that owns a
General Partnership Interest and/or a Limited Partnership Interest in a
Licensee.
"CELLULAR INTEREST" means a General Partnership Interest, a Limited
Partnership Interest or Cellular Subsidiary Stock that is to be transferred
directly by TDS to USCC or its designee pursuant to the terms of this
Agreement.
"CELLULAR PARTNERSHIP" means a General Partnership or Limited
Partnership listed in Exhibit A that is a Licensee or that owns a General
Partnership Interest or a Limited Partnership Interest in another
partnership that is a Licensee.
"CELLULAR SUBSIDIARY STOCK" means shares of stock in a Cellular
Company.
"CELLULAR SYSTEM" means the cellular telephone service operations
conducted by a Cellular Partnership.
"CLOSING" and "CLOSING DATE" have the meanings specified in Section
3.1 hereof.
"CLOSING CONDITIONS" has the meaning specified in Section 3.1 hereof.
"CO3 PARTNERSHIP" means Colorado RSA No. 3 Limited Partnership, a
Colorado limited partnership.
"CONSUMER PRICE INDEX" means the index compiled by the
United States Department of Labor's Bureau of Labor Statistics, Consumer
Price Index for All Urban consumers having a base of 100 in 1982-84, using
that portion of the index which appears under the caption "Other Goods and
Services."
"CONTROLLED RSA ENTITY" means an entity listed in
Exhibit A as a "Controlled RSA Entity."
"DATE OF SALE" means the date upon which USCC closes
the sale of a Sold Category B Interest.
"DELTA" means Delta County Tele-Comm., Inc., a Colorado corporation.
"EXCHANGE" means a transaction intended to qualify in whole or in part
as an exchange of like-kind property under Section 1031 of the Internal
Revenue Code of 1986, as amended,
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in which cellular interests owned, directly or indirectly, by USCC will
be transferred, separately or in conjunction with other consideration,
including the transfer of other cellular interests owned by TDS, to a
third party, in exchange for cellular interests of such third party,
separately or in conjunction with other consideration from such third
party, and in which the number of population equivalents represented by
the cellular interests to be transferred by such third party to USCC
and/or TDS, directly or indirectly, is not less than fifty percent
(50%) of the number of population equivalents represented by the
cellular interests to be transferred to such third party by USCC and/or
TDS, directly or indirectly.
"EXCHANGE AGREEMENT" means the Exchange Agreement by and between TDS
and USCC dated as of July 1, 1987, and as amended as of April 7, 1988.
"FIFTH ANNIVERSARY" means the earlier of the fifth
anniversary of the Final Closing Date or September 30, 2001.
"FINAL CLOSING" has the meaning specified in Section 3.2 hereof.
"FINAL CLOSING DATE" means the date as of which all of
the Cellular Interests have been transferred by TDS to USCC pursuant to
this Agreement.
"GENERAL PARTNERSHIP" means a general partnership listed in Exhibit A.
"GENERAL PARTNERSHIP INTEREST" means an interest of a general partner
in a General Partnership or a Limited Partnership.
"LICENSE" means, with respect to a Cellular System, the license,
certificate, consent, authorization and approval from the FCC, public
utility commissions, public service commissions and any other governmental
or regulatory agencies, if any, issued to the owner of such System solely
in connection with such System or employed by such System on or before the
Closing Date.
"LICENSEE" means an entity which holds a License or Licenses to own,
construct and operate a Cellular System.
"LIMITED PARTNERSHIP" means a limited partnership listed in Exhibit A.
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"LIMITED PARTNERSHIP INTEREST" means an interest of a limited partner
in a Limited Partnership.
"MSA" means Metropolitan Statistical Area.
"MINORITY MSA ENTITY" means an entity listed in Exhibit A as a
"Minority MSA Entity."
"MINORITY RSA ENTITY" means an entity listed in Exhibit A as "Minority
RSA Entity."
"OTHER TDS CONSIDERATION" has the meaning specified in Section 6.1(d)
hereof.
"PARTNERSHIP" means a General Partnership or a Limited Partnership.
"PARTNERSHIP INTEREST" means a General Partnership Interest or a
Limited Partnership Interest.
"RSA" means Rural Service Area.
"REALIZED VALUE" means (A) in the case of a Sold Category B Interest,
the aggregate amount of cash or other consideration (other than ownership
interests in other cellular markets received in an Exchange) received by
USCC and/or a subsidiary of USCC for such interest, reduced by one-half of
any out-of-pocket expenses incurred by TDS and USCC in connection with any
third-party transaction involving the sale of such interest (of which TDS
shall be responsible for payment of the remaining one-half of such
expenses), or (B) in the case of a Retained Category B Interest, the fair
market value thereof on the Fifth Anniversary determined in accordance with
Sections 4.1 and 4.2.
"RETAINED CATEGORY B INTEREST" means a Category B Interest that is
owned by USCC, directly or indirectly, on the Fifth Anniversary.
"SEC" means the Securities and Exchange Commission.
"SEVENTY-FIVE PERCENT CLOSING" has the meaning specified in Section
3.2 hereof.
"SOLD CATEGORY B INTEREST" means a Category B Interest that is sold by
USCC or a subsidiary of USCC prior to the Fifth Anniversary in a
transaction other than an Exchange.
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"TERMINATION DATE" has the meaning specified in Section 6.1 hereof.
"THIRD PARTY CONSIDERATION" has the meaning specified in Section
6.1(d) hereof.
"THIRD PARTY NEGOTIATIONS" has the meaning specified in Section 6.1(d)
hereof.
"THIRD PARTY TRANSACTION" has the meaning specified in Section 6.1(d)
hereof.
"TRANSFER" means the assignment by TDS of a Cellular Interest to USCC
or its designated subsidiary in accordance with the terms and conditions of
this Agreement.
"TRANSFER DATE" means the Closing Date upon which a Cellular Interest
is transferred by TDS to USCC or its designated subsidiary.
"TRANSFERABLE INTEREST" has the meaning specified in Section 6.1(d)
hereof.
"USCC SPECIAL COMMITTEE" means the special committee appointed by the
Board of Directors of USCC with respect to the transactions described in
this Agreement.
"WCC" means Western Colorado Cellular, Inc., a Colorado corporation.
"WCCCLP" means Western Colorado Cellular of Colorado Limited
Partnership, a Colorado limited partnership.
ARTICLE II
TRANSFER
2.1 TRANSFER OF CELLULAR INTERESTS. Upon the satisfaction or
waiver of the conditions set forth herein to the obligations of the parties
hereto, TDS agrees to sell, assign, transfer and deliver all of its right,
title and interest in and to each Cellular Interest listed in Exhibit A, and
all of the tangible and intangible assets owned by TDS relating to such
interest, to USCC, or to such subsidiary of USCC as shall be designated by
USCC.
2.2 PAYMENT OF ASSIGNED VALUE. Upon the satisfaction or waiver of
the conditions set forth herein to the obligations of the parties hereto and
the transfer of each Cellular Interest to USCC or its designated subsidiary,
USCC agrees to pay to TDS, or
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its designee, the assigned value for such Cellular Interest set forth in
Schedule 2.2 hereof, and to assume all of TDS's rights, liabilities and
obligations in and to each Cellular Interest in the manner and to the extent
provided for herein.
2.3 FURTHER ASSURANCES. From time to time, as and when requested
by USCC, or by its successors or assigns, the officers and directors of TDS
then in office shall execute and deliver such assignments and other
instruments of transfer and shall take or cause to be taken any such further
or other actions as shall be necessary or advisable in order to vest or
perfect in USCC, or its successors or assigns, or to confirm of record or
otherwise to USCC, or its successors or assigns, title to and possession of
all of the Cellular Interests.
ARTICLE III
CLOSING
3.1 CLOSING. The closing of the transactions contemplated hereby
shall take place as promptly as practicable following the date on which the
last of all of the conditions set forth in ARTICLES VII , VIII and IX hereof
(the "Closing Conditions") is satisfied or waived. The Closing may be
consummated by a single closing or by two partial closings, as provided for
in Section 3.2 hereof. Unless otherwise agreed by TDS and USCC, each such
closing shall take place at the offices of Sidley & Austin, Xxx Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx. The date on which each such closing takes
place is herein referred to as a "Closing Date."
3.2 PARTIAL CLOSINGS.
(a) SEVENTY-FIVE PERCENT CLOSING. At such time as all of the
Closing Conditions have been satisfied or waived with respect to those
Cellular Interests to which USCC is obligated hereunder to deliver at least
seventy-five percent (75%) of the aggregate assigned values to be paid for
all Cellular Interests, TDS shall notify USCC that TDS is prepared to
consummate the Transfer with respect to all of the Cellular Interests as to
which all of the Closing Conditions have been satisfied as of the date of
such notice. The parties shall conduct a partial closing with respect to
such Cellular Interests not less than 30 days after the date of such notice
(the "Seventy-five Percent Closing").
(b) FINAL CLOSING. At such time as all of the Closing Conditions
have been satisfied or waived with respect to the remaining Cellular
Interests not closed in accordance with Section 3.2(a) hereof, TDS shall
notify USCC that TDS is prepared to consummate the Transfer with respect to
such remaining Cellular
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Interests. The parties shall conduct a final closing with respect to such
Cellular Interests not less than 30 days after the date of such notice (the
"Final Closing").
3.3 DELIVERY OF ASSIGNED VALUES. On each Closing Date, USCC shall
deliver to TDS or its designee the agreed upon assigned value as reflected in
Schedule 2.2 hereof in consideration for each Cellular Interest transferred
on such Closing Date.
ARTICLE IV
CONDITIONAL PAYMENT BY TDS
4.1 DETERMINATION OF AGGREGATE REALIZED VALUE.
(a) SELECTION OF APPRAISER. Promptly after the Fifth Anniversary,
TDS and the independent directors of USCC shall choose an independent
appraiser to determine the Realized Value of the Retained Category B
Interests. If TDS and USCC are unable to reach agreement as to the identity
of an appraiser within thirty (30) days of the Fifth Anniversary, each party
shall designate an appraiser within ten (10) days thereafter. The
agreed-upon appraiser, or each of the two appraisers, as the case may be,
shall submit its determination of the Realized Value of the Retained Category
B Interests to TDS and USCC within sixty (60) days of the date of its
selection (or the selection of the second appraiser to be designated, as the
case may be).
(b) FINAL DETERMINATION. If there are two appraisers and their
respective determinations of the Realized Value of the Retained Category B
Interests vary by an amount equal to ten percent (10%) of the higher
determination or less, then the Realized Value of the Retained Category B
Interests shall be the average of the two determinations. If such
determinations vary by an amount equal to more than ten percent (10%) of the
higher determination, then the two appraisers shall promptly designate a
third, independent appraiser. Neither party shall provide, and the two
appraisers first designated shall be instructed not to provide, any
information to the third appraiser as to the determinations of the first two
appraisers, or otherwise to influence such third appraiser's determination in
any way. The third appraiser shall submit its determination of the Realized
Value of the Retained Category B Interests to TDS and USCC within sixty (60)
days of the date of its selection. The Realized Value of the Retained
Category B Interests shall be equal to the average of the two closest of the
three determinations, provided that, if the difference between the highest
and middle determinations is no more than one hundred and five percent (105%)
and no less than ninety-five percent (95%) of the difference between the
middle and lowest determinations, then the Realized Value of the Retained
Category B Interests shall be
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equal to the middle determination. The determination of the Realized Value
of the Retained Category B Interests in accordance with this Section 4.1
shall be final and binding on each of the parties hereto. If any appraiser
is only able to provide a range in which the Realized Value of the Retained
Category B Interests would exist, the average of the highest and lowest value
in such range shall be deemed to be such appraiser's determination of such
Realized Value. Each appraiser selected pursuant to the provisions of this
Section 4.1 shall be an investment banking firm or other qualified person or
entity with prior experience in appraising assets comparable to the Retained
Category B Interests and unaffiliated with any party to this Agreement.
4.2 CONDITIONAL PAYMENT. Promptly after the final determination of
the Realized Value of the Retained Category B Interests pursuant to Section
4.1 hereof, USCC shall certify by written notice to TDS the amount of the
excess, if any, of (a) the Aggregate Accreted Value over (b) the Aggregate
Realized Value. For purposes of calculating adjustments to the Aggregate
Accreted Value of a Cellular Interest based on changes in the Consumer Price
Index, such adjustment shall be computed by applying to the Assigned Value an
adjustment amount, expressed as a percentage, which shall be equal to the
percentage by which the Consumer Price Index for the most recent calendar
month ending at least 90 days prior to the Fifth Anniversary exceeds the
Consumer Price Index for the most recent calendar month ending at least 90
days prior to the Final Closing Date. Within five (5) business days of its
receipt of such notice, TDS shall (i) pay to USCC the amount of such excess
in cash, by wire transfer or by certified check, or (ii) deliver to USCC that
number of Common Shares, par value $1.00 per share, of USCC having an
aggregate fair market value (as hereinafter defined) equal to the amount of
such excess, or (iii) pay a portion of such amount in cash and a portion by
delivering Common Shares of USCC. The fair market value of any USCC Common
Shares delivered by TDS in accordance with the preceding sentence shall be
the average of the closing prices for such shares on the AMEX (or the
principal exchange on which such shares trade) for the twenty (20) trading
days preceding the date on which such shares are delivered.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF TDS. TDS represents and
warrants to USCC as follows:
(a) DUE ORGANIZATION. TDS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Iowa, has full
corporate power and authority to own its properties and to carry on its
business as it is now being
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conducted, is duly qualified to do business and is in good standing in all
jurisdictions in which it is required to be so qualified, except where the
failure to so qualify would not be material, and has received all necessary
authorizations, consents and approvals of governmental authorities material
to the ownership of its properties and to the conduct of its business other
than such which, if not received, would not be material.
(b) POWER AND AUTHORITY; CONFLICT. TDS has full corporate power
and authority to enter into and carry out the terms of this Agreement. The
execution and delivery of this Agreement do not and, subject to any requisite
governmental or other consents or approvals, the consummation of the
transactions contemplated hereby will not, violate any provision of the
articles of incorporation or by-laws of TDS, in each case as amended, and
will not violate any provision of, result in the breach or acceleration of or
default under, or require any consent or approval of a third party under any
material mortgage, indenture, security agreement, lease, contract,
instrument, order, arbitration award, judgment or decree to which TDS is a
party or by which TDS is bound. Except as provided in Exhibit A, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will conflict with or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation, or to the loss of a material benefit under (i) any
provision of any organizational or governing agreement of any Licensee, (ii)
any mortgage, indenture, lease or other agreement or instrument to which TDS,
a Controlled RSA Entity or a Cellular Company is a party, (iii) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to TDS,
a Controlled RSA Entity or a Cellular Company or its property other than any
such conflict, violation, default, right of termination, cancellation,
acceleration or loss that would not have a material adverse effect on such
entity, (iv) to the best of TDS's knowledge, having made no inquiry, (A) any
mortgage, indenture, lease, or other agreement or instrument to which any of
the Minority MSA Entities or the Minority RSA Entities is a party, or (B) any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to any of the Minority MSA Entities and the Minority RSA Entities
or its property, other than any such conflict, violation, default, right of
termination, cancellation, acceleration or loss that would not have a
material adverse effect on the Minority MSA Entities and the Minority RSA
Entities taken as a whole.
(c) COMPLETE AND CORRECT DOCUMENTATION. TDS has made and will make
available to USCC and its counsel, accountants and other representatives,
complete and correct copies of all documentation in TDS' possession relating to
the Cellular
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Interests, including, but not limited to, complete and correct copies of any
books, records, contracts, organizational or governing agreements and other
documents of each Controlled RSA Entity, Cellular Company, Minority MSA
Entity and Minority RSA Entity.
(d) REQUIRED CONSENTS; FAIRNESS OPINION. There have been or will
be timely filed, given, obtained or taken, all applications, notices,
consents, approvals, orders, registrations, qualifications, waivers or other
actions of any kind required by virtue of the execution and delivery of this
Agreement by TDS or by virtue of the consummation by TDS of any of the
transactions contemplated hereby to enable USCC or its designated subsidiary
to continue in all material respects to hold the Cellular Interests and, as
applicable to each of the respective Cellular Interests, to operate the
businesses of the Cellular Partnerships and the Cellular Companies as
conducted prior to and as of the Closing Date that each such Cellular
Interest is transferred in accordance with this Agreement. TDS has received
from Duff & Xxxxxx Capital Markets Co., an opinion stating that the assigned
values to be paid to TDS in the Transfer is fair to TDS.
(e) CELLULAR INTERESTS. Exhibit A contains complete and correct
descriptions which set forth the name and jurisdiction of each entity in
which TDS, directly or indirectly, owns a General Partnership Interest, a
Limited Partnership Interest or Cellular Subsidiary Stock and the ownership
interests of TDS (expressed as percentages) in each entity. Except as
otherwise set forth therein: (i) TDS owns each Partnership Interest and the
Cellular Subsidiary Stock free and clear of any lien, security interest,
charge, option or encumbrance; (ii) each Controlled RSA Entity and Cellular
Company and, to the best of TDS's knowledge, having made no inquiry, each
Partnership that is a Minority MSA Entity or a Minority RSA Entity, is duly
established under the laws of the jurisdiction of its establishment and is
duly qualified to do business in all jurisdictions in which the failure to so
qualify would be material, has full partnership power and authority to own
its properties and carry on its business as it is now being conducted, and
has received all necessary authorizations, consents and approvals of
governmental authorities to own its properties and to conduct the business
which it now owns and conducts other than any such authorization, consent or
approval which, if not received, would not have a material adverse effect on
such Controlled RSA Entity or Cellular Company, or such Minority MSA Entities
and Minority RSA Entities taken as a whole; and (iii) there is no outstanding
option, convertible security or other right providing for the issuance or
delivery of any Partnership Interest or other security in any Controlled RSA
Entity, Cellular Company or, to the best of TDS's knowledge, having made no
inquiry, in any Minority MSA Entity or Minority RSA Entity.
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(f) DUE AUTHORIZATION. The Board of Directors of TDS has duly
authorized this Agreement and the transactions contemplated hereby. This
Agreement has been duly executed and delivered by TDS and constitutes the
valid and binding obligation of TDS, enforceable against TDS in accordance
with its terms, except to the extent that its enforceability may be limited
by applicable bankruptcy, insolvency, reorganization or other laws affecting
the enforcement of creditors' rights generally or by general equitable
principles.
(g) CONTINGENT LIABILITIES. Except as disclosed on Schedule 5.1(g)
hereto and in the most recent financial statements of each Licensee as
referred to in Section 5.1(j) hereof, (i) TDS has no contingent liabilities
(A) arising out of its ownership in any Controlled RSA Entity or Cellular
Company that would be material to that entity, or (B) to the best of TDS's
knowledge, having made no inquiry, arising out of its ownership in any
Minority MSA Entities or Minority RSA Entities that would be material to such
entities taken as a whole, (ii) no Controlled RSA Entity or Cellular Company
has any indebtedness or contingent liabilities that would be material to it;
and (iii) to the best of TDS's knowledge, having made no inquiry, no Minority
MSA Entity or Minority RSA Entity has any indebtedness or contingent
liabilities that would be material to such entity, except in each case for
liabilities incurred in connection with the development, construction and
operation of a Cellular System related to such entity.
(h) INVESTIGATION OR LITIGATION. Except as disclosed on Schedule
5.1(h) hereto, (i) there is no material investigation or review by any
governmental entity pending or, to the best of TDS's knowledge, threatened,
with respect to any Controlled RSA Entity or Cellular Company or, to the best
of TDS's knowledge, having made no inquiry, with respect to any Minority MSA
Entity or Minority RSA Entity, including without limitation, any
investigation or review relating to hazardous substances, pollution or the
environment, nor, with respect to any Controlled RSA Entity or Cellular
Company or, to the best of TDS's knowledge having made no inquiry, with
respect to any Minority MSA Entity or Minority RSA Entity, has any
governmental entity indicated in writing to TDS or any such entity an
intention to conduct any such investigation or review; and (ii) there is no
action, suit or proceeding pending or, to the best of TDS's knowledge,
threatened against or affecting any Controlled RSA Entity or Cellular Company
or, to the best of TDS's knowledge, having made no inquiry, with respect to
or affecting any Minority MSA Entity or Minority RSA Entity, at law or in
equity, or before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, including
without limitation, actions, suits or proceedings relating to hazardous
substances, pollution or the environment
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which, if adversely determined, would have a material adverse effect on any
Controlled RSA Entity or Cellular Company, or on the Minority MSA Entities
and Minority RSA Entities taken as a whole.
(i) TAX MATTERS. Each Controlled RSA Entity and Cellular Company
and, to the best of TDS's knowledge, having made no inquiry, each Minority
MSA Entity and Minority RSA Entity, has duly filed all federal tax returns,
and has duly filed all state, county, local and foreign income, excise,
sales, customs, property, withholding, social security and other tax and
information returns and reports reasonably believed to be required to have
been filed by it on or prior to the date hereof, or, in the alternative, has
obtained extensions for filing in accordance with established procedures, and
has paid or made provision for payment of all taxes (including interest and
penalties) shown as due on the returns and reports, with respect to all
periods ending on or prior to December 31, 1995. No Controlled RSA Entity or
Cellular Company and, to the best of TDS's knowledge, having made no inquiry,
no Minority MSA Entity or Minority RSA Entity, has any material liability for
any taxes of any nature whatsoever for the period ended December 31, 1995, or
any year or period prior thereto.
(j) ABSENCE OF CERTAIN CHANGES. Since the date of the most recent
financial statements of each Licensee, copies of which have been provided by
TDS to USCC and are identified in Schedule 5.1(j), (i) with respect to each
Controlled RSA Entity and Cellular Company, TDS has conducted its business
only in, and has not engaged in any material transaction other than according
to, the ordinary and usual course of such business, and there has not been
any material adverse change in the financial condition, earnings or business
of any such entity, or any development or combination of developments of
which management of TDS has knowledge that is reasonably likely to result in
any such change, other than any such change resulting from changes in general
economic or business conditions; and (ii) to the best of TDS's knowledge,
having made no inquiry, each Minority MSA Entity and Minority RSA Entity has
conducted its business only in the ordinary and usual course of such
business, and there has not been any change in the financial condition,
earnings or business of any such entity that is materially adverse to such
entities taken as a whole, or any development or combination of developments
that is reasonably likely to result in any such change, other than any such
change resulting from changes in general economic or business conditions.
(k) ABSENCE OF MATERIAL CHANGE IN BUSINESS. Except as disclosed to
USCC in writing, and other than in the ordinary course of business and in a
manner consistent with past practices, no Controlled RSA Entity or Cellular
Company and, to the best of TDS's knowledge, having made no inquiry, no
Minority MSA Entity or Minority RSA Entity, has: (i) authorized the creation
or issuance
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of or issued, sold or disposed of or created any obligation to issue, sell or
dispose of any capital stock, equity interest, note, bond or other security,
or obligation convertible into or exchangeable for any stock, equity
interest, note, bond or other security, or any option to purchase any of the
foregoing; (ii) declared, set aside or made any dividend payment or other
distribution on its capital stock or equity interests, or directly or
indirectly redeemed, purchased or otherwise acquired any shares or portion
thereof or entered into any agreement in respect of the foregoing or effected
any stock split or other reclassification; (iii) amended its articles or
certificate of incorporation, by-laws or partnership agreement; (iv) merged
or consolidated with or into any entity or enterprise or sold, leased,
abandoned or otherwise disposed of all or substantially all of its assets or
acquired the stock, equity interest or assets of any entity or enterprise; or
(v) entered into any commitment, written or oral, to do any of the things
described in this subsection (k).
(l) LEGAL COMPLIANCE. Each Controlled RSA Entity and Cellular
Company and, to the best of TDS's knowledge, having made no inquiry, each
Minority MSA Entity and Minority RSA Entity, has complied in all respects
with all applicable laws, rules, regulations and ordinances, including,
without limitation, the rules and regulations of the FCC, commissions or
agencies of applicable states and municipalities and any government or
governmental agency having jurisdiction, other than such which, if not
complied with, would not have a material adverse effect on any Controlled RSA
Entity or Cellular Company, or on the Minority MSA Entities and Minority RSA
Entities taken as a whole. No Controlled RSA Entity or Cellular Company and,
to the best of TDS's knowledge, having made no inquiry, no Minority MSA
Entity or Minority RSA Entity, is in violation of, or in default under, any
term or provision of any mortgage, indenture, security agreement, lease,
license, contract, agreement, instrument, order, arbitration award, judgment
or decree other than such violations or defaults which are not material to
any Controlled RSA Entity or Cellular Company, or to the Minority MSA
Entities and Minority RSA Entities taken as a whole.
(m) REPRESENTATIONS AND WARRANTIES TRUE AS OF THE FINAL CLOSING
DATE. All the representations and warranties of TDS contained herein with
respect to any Cellular Interest will be true in all material respects on and
as of the Final Closing Date.
(n) SUFFICIENCY OF CONVEYANCES. On each Closing Date, TDS will
execute and deliver to USCC instruments of assignment, transfer and
conveyance that will be sufficient to transfer all of TDS's right, title and
interest in and to the Cellular Interests transferred on such date to USCC or
its designee, all free and
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clear of any lien, security interest, charge, option or encumbrance not
described in Exhibit A.
5.2 REPRESENTATIONS AND WARRANTIES OF USCC. USCC represents and
warrants to TDS as follows:
(a) DUE ORGANIZATION. USCC is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, has full corporate power and authority to own its properties and
carry on its business as it is now being conducted, is duly qualified to do
business and is in good standing in all jurisdictions in which it is required
to be so qualified, except where the failure to so qualify would not be
material, and has received all necessary authorizations, consents and
approvals of governmental authorities material to the ownership of its
properties and to the conduct of its business other than such which, if not
received, would not be material.
(b) POWER AND AUTHORITY; CONFLICT. USCC has full corporate power
and authority to enter into and carry out the terms of this Agreement. The
execution and delivery of this Agreement do not and, subject to obtaining any
requisite governmental or other consents, the consummation of the
transactions contemplated hereby will not, violate any provision of the
certificate of incorporation or the by-laws of USCC, in each case as amended,
and will not violate any provision of, result in the breach or acceleration
of or default under, or require any consent or approval of a third party,
under any material mortgage, indenture, security agreement, lease, contract,
instrument, order, arbitration award, judgment or decree to which USCC is a
party or by which USCC is bound.
(c) REQUIRED CONSENTS; FAIRNESS OPINION. There have been or will
be timely filed, given, obtained or taken, all applications, notices,
consents, approvals, orders, registrations, qualifications, waivers or other
actions of any kind required to be obtained by USCC by virtue of the
execution and delivery of this Agreement by USCC or by virtue of the
consummation by USCC of any transactions contemplated hereby to enable USCC
or its designated subsidiary to continue in all material respects to hold the
Cellular Interests and to operate the businesses of each Controlled RSA
Entity and Cellular Company as conducted prior to and as of the Closing Date
each such Cellular Interest is transferred in accordance with this Agreement.
The Board of Directors of USCC has received from Lazard Freres & Co., LLC,
an opinion dated as of the date hereof stating that the assigned values to be
paid to TDS by USCC in connection with the Transfer is fair from a financial
point of view to USCC.
(d) DUE AUTHORIZATION. The Board of Directors of USCC has duly
authorized this Agreement and the transactions
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contemplated hereby. This Agreement has been duly executed and delivered by
USCC and constitutes the valid and binding obligation of USCC, enforceable
against USCC in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally or by general equitable principles.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 COVENANTS OF TDS. From the date of this Agreement until the
Final Closing Date or the date on which this Agreement is terminated in
accordance with Section 10.1 or 10.2 hereof (the "Termination Date"), except
with the prior written consent of USCC (which shall not be unreasonably
withheld), TDS agrees that:
(a) ACCESS. Subject to Section 6.3 hereof, USCC and its counsel,
accountants and other representatives shall have full access during normal
business hours to all information in TDS's possession relating to the
Cellular Interests, including, but not limited to, complete and correct
copies of any books, records, contracts, organizational or governing
agreements and other documents of each Controlled RSA Entity, Cellular
Company, Minority MSA Entity and Minority RSA Entity.
(b) CONDUCT OF BUSINESS. TDS will conduct its business, insofar as
it relates to or involves the Cellular Interests, in the ordinary course and
consistent with past practices, use its reasonable best efforts to preserve
the Cellular Interests, and use its reasonable best efforts to cause each
Controlled RSA Entity and Cellular Company to perform all of its obligations
under its License and all contracts relating to or affecting the Cellular
Interest owned by such entity.
(c) NEGATIVE COVENANTS. Without limiting the generality of the
foregoing and to the extent that TDS has the power and/or authority, TDS will
not take any action to sell or otherwise dispose of any Cellular Interest and
will not take any action to:
(i) cause or permit any Controlled RSA Entity, Cellular Company,
Minority MSA Entity or Minority RSA Entity (A) to sell or otherwise dispose
or transfer control of its License, (B) except as provided for herein, to
issue, redeem, sell or dispose of, dilute, or create any obligation to
issue, redeem, dilute, sell or dispose of, any Partnership Interests,
(C) except as provided for herein, to effect any merger or other
combination or (D) to withdraw from any Partnership or
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other entity, or create an obligation to withdraw from any Partnership
or other entity; or
(ii) cause or permit any Controlled RSA Entity, Cellular Company,
Minority MSA Entity or Minority RSA Entity, (A) to incur, assume, guarantee
or otherwise become obligated or liable for any indebtedness other than in
the ordinary course of business to finance the operations and capital
expenditures of its cellular system in a manner consistent with past
practices, or to pledge, hypothecate or otherwise encumber any of its
assets or, except as provided for herein, enter into any material
transaction or contract, or make any material commitment relating to its
assets or business, other than in the ordinary course of business and in a
manner consistent with past practices, or (B) to take or omit any action
that, in TDS's reasonable business judgment, could be anticipated to have a
material adverse effect upon the business, operations, financial condition,
operating results or assets of such entity.
(d) THIRD PARTY TRANSACTIONS.
(i) Notwithstanding subsection (c), USCC acknowledges that certain
negotiations with third parties (the "Third Party Negotiations") are being
carried on in its behalf by representatives of TDS and USCC, which
contemplate that certain of TDS's other cellular interests will be
transferred to such third parties, separately or in conjunction with the
transfer of other cellular interests owned by TDS or USCC, in settlement of
pending litigation or in exchange for interests in other MSAs and/or RSAs
(which may include interests in MSAs and/or RSAs in which TDS or USCC
already owns an interest) or other consideration. TDS and USCC hereby
agree that, in the event they agree to enter into any transaction (a "Third
Party Transaction") pursuant to which any Cellular Interest (a
"Transferable Interest") is to be transferred to a third party in exchange
for the transfer by such third party of any consideration ("Third Party
Consideration"):
(A) TDS shall assign the Transferable Interest to USCC subject to the
terms of this Agreement;
(B) if any Third Party Transaction contemplates that TDS would
transfer to any third party any other property (collectively
"Other TDS Consideration"), TDS shall transfer such Other TDS
Consideration to USCC and shall be entitled to receive additional
consideration from USCC in return therefor, in an amount equal to
the fair market value of such Other TDS Consideration (plus
reasonable carrying
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costs from the date such Other TDS Consideration is
transferred by TDS to USCC in furtherance of such Third Party
Transaction until TDS receives payment therefor), such amount
to be determined by agreement of the parties;
(C) USCC shall transfer the Transferable Interest and any Other TDS
Consideration to such third party, together with any cash or
other consideration which may be required of USCC; and
(D) all consideration, including any Third Party Consideration,
delivered in connection with such Third Party Transaction shall
be transferred directly to and retained by USCC.
TDS agrees that any Third Party Transaction shall be subject to the
consent of the Special Committee consistent with its fiduciary duty, which
consent shall not be unreasonably withheld.
(ii) In the event that an opportunity arises before a particular
Cellular Interest is transferred pursuant to this Agreement for TDS,
directly or through one of its subsidiaries, to acquire an additional
partnership or other ownership interest in the Controlled RSA Entity,
Minority MSA Entity or Minority RSA Entity with respect to such Cellular
Interest and TDS does acquire such additional partnership or other
ownership interest (an "Additional Cellular Interest"), USCC agrees to
acquire such Additional Cellular Interest from TDS, and TDS agrees to sell
such Additional Cellular Interest to USCC, pursuant to this Agreement
provided the purchase price of any such Additional Cellular Interest shall
be the lesser of (i) the Assigned Value (consistently applied on a unit of
population basis) for such Cellular Interest as set forth in Schedule 2.2
hereto, and (ii) such price paid by TDS for such Additional Cellular
Interest, it being understood that (x) TDS shall not be obligated to sell
to USCC any such Additional Cellular Interest, and USCC shall not be
obligated to purchase any such Additional Cellular Interest, if the
purchase price for such Additional Cellular Interest is greater than the
Assigned Value (consistently applied on a unit of population basis) for
such Cellular Interest as set forth in Schedule 2.2 hereto and (y) such
Additional Cellular Interest which neither party is obligated to purchase
shall be subject to the right of first negotiation under the terms of the
Exchange Agreement. In the event of any such acquisition by TDS, the term
"Cellular Interest" with respect to such Controlled RSA Entity, Minority
MSA Entity or Minority RSA
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Entity shall be deemed to refer to such Additional Cellular Interest.
(e) SECTION 754 UNDERTAKING. TDS agrees to cause each Controlled
RSA Entity to make an election pursuant to Section 754 of the Internal
Revenue Code of 1986, as amended, with respect to the adjustment of the tax
bases in the respective assets of such Controlled RSA Entity, and to request
of, and to use its reasonable best efforts to cause, each Minority MSA Entity
and Minority RSA Entity and each intermediary Partnership to make a similar
election, if advantageous to USCC.
6.2 COVENANTS OF USCC. From the date of this Agreement until the
earlier of the Final Closing Date or the Termination Date, except with the
prior written consent of TDS (which shall not be unreasonably withheld), USCC
agrees that:
(a) CONDUCT OF BUSINESS. USCC will conduct its business in the
ordinary course and consistent with past practices, use its reasonable best
efforts to preserve intact its business organization and goodwill, keep
available the services of its present officers and perform all of its
obligations under all contracts relating to or affecting its assets or its
business where the failure to comply with this provision would have a
material adverse effect on its ability to consummate the transactions
hereunder.
(b) RECEIPT OF DISTRIBUTIONS. If the CO3 Partnership declares and
makes a distribution to its partners prior to the Transfer of the shares of
WCC by TDS to USCC pursuant to this Agreement, then USCC agrees, on behalf of
itself and any of its affiliates, to cause WCCCLP to declare and make a
distribution to its partners in the full amount of the distribution received
from the CO3 Partnership, and, thereafter to cause WCC to declare and pay a
dividend to its shareholders in the full amount of the distribution received
from WCCCLP.
6.3 MUTUAL COVENANTS. From the date of this Agreement until the
earlier of the Final Closing Date or the Termination Date:
(a) CONFIDENTIALITY. TDS and USCC each shall provide the other
with such information as the other may from time to time reasonably request;
PROVIDED, HOWEVER, that all such information shall be treated as and kept
confidential unless it is available from public sources or required by law to
be disclosed. If the transactions contemplated by this Agreement are not
consummated, all documents received by TDS and USCC shall be returned to the
party furnishing them upon the written request of the furnishing party.
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(b) BEST EFFORTS. TDS and USCC each shall take all necessary
corporate and other actions and each shall use its reasonable best efforts to
obtain all necessary consents, authorizations and approvals and to make all
necessary filings required to carry out the transactions contemplated by this
Agreement, to satisfy the conditions specified in Articles VII, VIII and IX
hereof at the earliest practicable date and otherwise to perform its
obligations under this Agreement.
(c) PAYMENT OF CERTAIN OUT-OF-POCKET EXPENSES. TDS and USCC each
will pay one-half of any out-of-pocket expenses incurred collectively by TDS
and USCC in connection with any third party transaction involving the sale of
a Category B Interest.
(d) PUBLICITY. TDS and USCC shall consult with each other prior to
issuing any press releases or otherwise making public statements with respect
to the transactions contemplated hereby and prior to making any filings with
any federal or state governmental or regulatory agency or with any securities
exchange with respect thereto.
(e) USCC COMMON SHARES. TDS and USCC agree not to take any action
the principal purpose of which is to affect a change in the price of such
USCC Common Shares during the period described in the last sentence of
Section 4.2.
6.4 ASSUMPTION OF LIABILITIES AND OBLIGATIONS. To the extent
disclosed to USCC on Schedule 6.4, USCC agrees to assume any and all of TDS's
liabilities and obligations with regard to the Cellular Interests to the
extent that such liabilities and obligations were incurred in connection with
the development, construction and operation of the respective Cellular
Systems and would not be discharged by TDS prior to the respective Transfer
Date in the ordinary course of business consistent with past practices, such
assumption to be effective with respect to each Cellular Interest as of its
respective Transfer Date. In the event any such liability or obligation
cannot be assumed, USCC further agrees (a) to assume such commitment to the
extent legally possible, (b) to indemnify, hold harmless and defend TDS from
and against any and all costs, including, without limitation, TDS's
reasonable carrying costs and attorney's fees, if any, incurred in connection
therewith from and after the Closing Date on which the Cellular Interest
relating to any such liability or obligation is transferred in accordance
with this Agreement, and (c) to continue to use its reasonable best efforts
to effectuate such assumption as promptly as practicable after the date of
such transfer.
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ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF TDS
The obligations of TDS under this Agreement are subject to and shall
be conditioned upon the satisfaction or waiver (in whole or in part in
writing by TDS), of each of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of USCC contained in Section 5.2 hereof shall have been true and
correct in all material respects on and as of the date of this Agreement, and
shall be true and correct in all material respects on and as of each Closing
Date as though those representations and warranties were made on and as of
such date, except for changes permitted by the terms of this Agreement or to
the extent affected by the transactions contemplated hereby and except
insofar as any of those representations and warranties related solely to a
particular date or period. In the latter case, the representations and
warranties of USCC shall be true and correct in all material respects on and
as of each Closing Date with respect to such date or period.
7.2 PERFORMANCE OF OBLIGATIONS AND AGREEMENTS; NO BREACH OF
COVENANTS. USCC shall have performed in all material respects all of its
obligations and agreements and fulfilled in all material respects all
conditions contained in this Agreement to be performed or complied with by it
on or before each Closing Date. USCC shall not be in breach in any material
respect of any covenant contained in this Agreement.
7.3 RESOLUTIONS. USCC shall have delivered to TDS copies of the
resolutions of its Board of Directors authorizing and approving the execution
of this Agreement and the consummation of the transactions contemplated
hereby, certified as true and correct on each Closing Date by its Secretary
or an Assistant Secretary.
7.4 OFFICERS' CERTIFICATE. USCC shall have delivered to TDS a
certificate dated on and as of each Closing Date and signed by its Chief
Executive Officer to the effect that (a) USCC has performed, in all material
respects, all of its obligations and agreements and fulfilled, in all
material respects, all of the conditions to TDS's obligations contained in
this Agreement to be performed or complied with on or before such Closing
Date; (b) USCC is not in breach, in any material respect, of any covenant
contained in this Agreement; and (c) the representations and warranties of
USCC contained in this Agreement were true and correct in all material
respects on and as of the date of this Agreement and are true and correct in
all material respects on and as of such Closing Date, with the same force and
effect as though made on and as of such Closing Date.
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ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF USCC
The obligations of USCC under this Agreement are subject to and
shall be conditioned upon the satisfaction or waiver (in whole or in part in
writing by USCC), of each of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of TDS contained in Section 5.1 hereof shall have been true and
correct in all material respects on and as of the date of this Agreement, and
shall be true and correct in all material respects on and as of each Closing
Date as though those representations and warranties were made on and as of
such date, except for changes permitted by the terms of this Agreement or to
the extent affected by the transactions contemplated hereby and except
insofar as any of those representations and warranties relate solely to a
particular date or period. In the latter case, the representations and
warranties of TDS shall be true and correct in all material respects on and
as of each Closing Date with respect to such date or period.
8.2 PERFORMANCE OF OBLIGATIONS AND AGREEMENTS; NO BREACH OF
COVENANTS. TDS shall have performed in all material respects all of its
obligations and agreements and fulfilled in all material respects all
conditions contained in this Agreement to be performed or complied with by it
on or before each Closing Date, to the extent that the performance of such
obligations and agreements and the fulfillment of such conditions relate to a
Cellular Interest to be transferred on such Closing Date. TDS shall not be
in breach, in any material respect, of any of its covenants contained in this
Agreement, to the extent that the compliance with such covenants relate to a
Cellular Interest to be transferred on such Closing Date.
8.3 RESOLUTIONS. TDS shall have delivered to USCC copies of the
resolutions of its Board of Directors, authorizing and approving the
execution of this Agreement and the consummation of the transactions
contemplated hereby, certified as true and correct on each Closing Date by
its Secretary or an Assistant Secretary.
8.4 OFFICERS' CERTIFICATE. TDS shall have delivered to USCC a
certificate dated on and as of each Closing Date and signed by its Chief
Executive Officer to the effect that (a) TDS has performed, in all material
respects, all of its obligations and agreements and fulfilled in all material
respects all of the conditions to USCC's obligations contained in this
Agreement to be performed or complied with on or before such Closing Date, to
the
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extent that the performance of such obligations and agreements and the
fulfillment of such conditions relate to the Cellular Interests to be
transferred on such Closing Date; (b) TDS is not in breach, in any material
respect, of any of its covenants contained in this Agreement, to the extent
that the compliance with such covenants relate to the Cellular Interests to
be transferred on such Closing Date; and (c) the representations and
warranties of TDS contained in this Agreement were true and correct in all
material respects on and as of the date of this Agreement and are true and
correct in all material respects as of such Closing Date, with the same force
and effect as though made on and as of such Closing Date.
8.5 LEGAL OPINIONS. TDS shall have delivered to USCC an opinion of
its counsel dated on and as of each Closing Date substantially in the form
attached hereto as Schedule 8.5(a-1), with the related opinion from
Nyemaster, Goode, McLaughlin, Voigts, West, Xxxxxxx & X'Xxxxx, in the form
attached hereto as Schedule 8.5 (a-2). Xxxxxx & Naftalin, FCC counsel to TDS
and USCC, shall have delivered to TDS and USCC an opinion dated on and as of
each Closing Date substantially in the form attached hereto as Schedule
8.5(b).
ARTICLE IX
RECIPROCAL CONDITIONS PRECEDENT
The obligations of each of TDS and USCC under this Agreement are
subject to and shall be conditioned upon the satisfaction, or waiver (in
whole or in part) in writing by each, of each of the following conditions
prior to each Closing Date.
9.1 GOVERNMENTAL AND OTHER APPROVALS. TDS, each Controlled RSA
Entity, each Cellular Company, each TDS subsidiary which owns an interest in
any Minority MSA Entity or Minority RSA Entity, and USCC and its subsidiaries
shall have made all filings with, given all notices to and obtained all
necessary consents, authorizations and approvals from all governmental and
regulatory bodies and agencies and from its partners which are required to
consummate the portion of the Transfer to be consummated on such Closing Date
and all time for appeal, rehearing or reconsideration thereof shall have
expired.
9.2 NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order of any court of competent
jurisdiction preventing the consummation of the portion of the Transfer to be
consummated on such Closing Date shall have been entered and not set aside or
lifted (each party agreeing to use its reasonable best efforts, including
appeals to higher courts, to have any such order or injunction set aside or
lifted), and no action shall have been
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taken and no statute, rule or regulation shall have been enacted, by any
state or federal government or governmental agency or regulatory body that
would prevent the consummation of the portion of the Transfer to be
consummated on such Closing Date.
ARTICLE X
TERMINATION AND INDEMNIFICATION
10.1 TERMINATION. Notwithstanding anything herein to the contrary,
this Agreement may be terminated and the Transfer abandoned with respect to
any Cellular Interest as to which no Closing has occurred:
(a) by mutual consent of the Board of Directors of TDS and of the
Board of Directors of USCC upon the direction of the Special Committee;
(b) (i) on or after June 30, 1997, by the Board of Directors of
USCC upon the direction of the Special Committee with respect to any Cellular
Interest not previously transferred in accordance with this Agreement, (ii)
on or after June 30, 1997, by the Board of Directors of TDS with respect to
any Cellular Interest not previously transferred in accordance with this
Agreement, or (iii) by the Board of Directors of USCC upon the direction of
the Special Committee or by the Board of Directors of TDS with respect to any
Cellular Interest not previously transferred in accordance with this
Agreement, if any court of competent jurisdiction in the United States or
other United States governmental body shall have issued an order, decree or
ruling, or taken any other action restraining, enjoining or otherwise
prohibiting the Transfer, but only with respect to that portion of the
Transfer restrained, enjoined or prohibited, and such order, decree, ruling
or other action shall have become final and nonappealable; PROVIDED, that, in
each of (i) and (ii), the right to terminate this Agreement shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of the failure of any Cellular Interest to be
transferred in accordance with this Agreement on or before such date;
(c) by the Board of Directors of TDS if:
(i) a material condition to the performance of TDS under this
Agreement or a material covenant of USCC contained in this Agreement shall
not be fulfilled on or before June 30, 1997, or on such earlier date
specified for the fulfillment of such covenant or condition; or
(ii) a material default or breach of this Agreement shall be made by
USCC; PROVIDED, that TDS has not caused USCC
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to fail to fulfill such covenant or condition or to make such default or
breach; or
(d) by the Board of Directors of USCC upon the direction of the
Special Committee if:
(i) a material condition to the performance of USCC under this
Agreement or a material covenant of TDS contained in this Agreement shall
not be fulfilled on or before June 30, 1997, or on such earlier date
specified for the fulfillment of such covenant or condition; or
(ii) a material default or breach of this Agreement shall be made by
TDS.
10.2 WRITTEN NOTICE. In order to terminate this Agreement in
accordance with Section 10.1 hereof, the terminating party shall give written
notice thereof to the other party hereto, specifying the grounds therefor.
10.3 EFFECT OF TERMINATION. In the event of termination of this
Agreement in accordance with Sections 10.1 and 10.2, this Agreement shall
become void and have no further force or effect, and there shall be no
liability on the part of either TDS or USCC (or their respective officers,
directors, shareholders, agents or representatives), except to the extent set
forth in Section 10.4.
10.4 DAMAGES. In the event this Agreement is terminated in
accordance with Subsection 10.1(c) or 10.1(d), then TDS or USCC, as the case
may be, shall be entitled to seek any and all legal and equitable rights and
remedies available to them as a result of such failure of performance,
default or breach without limitation by this Article X or otherwise.
10.5 TERMINATION INEFFECTIVE AS TO PRIOR TRANSFERS. Notwithstanding
anything in this Article X to the contrary, in the event the parties have
elected to effect the Transfer with respect to some but not all of the
Cellular Interests, then any termination of this Agreement pursuant to the
provisions of this Article X shall be effective only with respect to any
Cellular Interest that has not been transferred to USCC.
10.6 INDEMNIFICATION.
(a) Subject to the provisions of Section 11.1 hereof, TDS agrees to
indemnify and defend USCC, and any person who is or was an officer, director,
employee, or agent of USCC, from and against any loss, cost, liability, or
expense (including, but not limited to, costs and expenses of litigation and,
to the extent permitted by law, attorneys' fees) incurred by USCC or such
other
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person by reason of the incorrectness or breach of any of the
representations, warranties, covenants, or agreements of TDS contained in
this Agreement or given on any Closing Date.
(b) Subject to the provisions of Section 11.1 hereof, USCC agrees
to indemnify and defend TDS, and any person who is or was an officer,
director, employee, or agent of TDS, from and against any loss, cost,
liability, or expense (including but not limited to costs and expenses of
litigation and, to the extent permitted by law, attorneys' fees) incurred by
TDS or such other person by reason of the incorrectness or breach of any of
the representations, warranties, covenants, or agreements of USCC contained
in this Agreement or given on any Closing Date.
(c) Each party indemnified under Subsection (a) or (b) above shall,
promptly after receipt of notice of the commencement of any action against
such indemnified party in respect of which indemnity may be sought, notify
the indemnifying party in writing of the commencement thereof. The omission
of any indemnified party so to notify an indemnifying party of any such
action shall not relieve the indemnifying party from any liability in respect
of such action which it may have to such indemnified party on account of the
indemnity agreement contained in such subsections, unless the indemnifying
party was prejudiced by such omission, and in no event shall relieve the
indemnifying party from any other liability which it may have to such
indemnified party. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it may wish, to assume the defense thereof.
If the indemnifying party so assumes the defense thereof, it may not agree to
any settlement of such action as the result of which any remedy or relief,
other than monetary damages for which the indemnifying party shall be
responsible hereunder, shall be applied to or against the indemnified party,
without the prior written consent of the indemnified party. If the
indemnifying party does not assume the defense thereof, it shall be bound by
any settlement to which the indemnified party agrees, irrespective of whether
the indemnifying party consents thereto. If any settlement of any claim is
effected by the indemnified party prior to the commencement of any action
relating thereto, the indemnifying party shall be bound thereby only if it
has consented in writing thereto. In any action hereunder, the indemnified
party shall continue to be entitled to participate in the defense thereof
even if the indemnifying party has assumed the defense thereof, but the
indemnifying party shall not be required to reimburse the indemnified party
for the costs of such participation.
(d) Subject to the provisions of Section 11.1, TDS shall indemnify
USCC for and against any tax liability incurred by
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USCC in connection with the disposition of the partnership interests owned by
Metroplex Olympia Cellular Corp., in the Olympia Cellular Limited
Partnership, and the 14.286% partnership interest owned by WCC in the CO3
Partnership.
ARTICLE XI
MISCELLANEOUS
11.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the parties, insofar as
they apply to each Cellular Interest transferred pursuant to the provisions
of this Agreement, shall survive for a period of two years from the Closing
Date on which such interest is transferred, and the parties hereto shall
thereafter have no continuing obligations or liabilities with respect
thereto, except that TDS's representations contained in Subsections 5.1(b),
5.1(e)(i) and 5.1(n) and USCC's representations contained in Subsection
5.2(b) shall survive and shall not terminate. The provisions of this
Subsection shall apply notwithstanding any investigation made by either party
with respect to this Agreement or the Transfer.
(b) Upon termination of this Agreement pursuant to the provisions
of Subsection 10.1(a) or 10.1(b), the representations, warranties, covenants
and agreements of the parties shall terminate as to the portion of the
Transfer not closed prior to such termination (except for the agreement as to
confidentiality contained in Section 6.3, and the agreement as to expenses
contained in Section 11.2, both of which shall survive), and the parties
hereto shall have no continuing obligations or liabilities with respect
thereto as to that portion of the Transfer not closed prior to such
termination.
(c) If either TDS or USCC shall have the right to terminate this
Agreement pursuant to the provisions of Subsection 10.1(c) or 10.1(d), then
the party which does not have the right to terminate this Agreement will use
its reasonable best efforts to cure the condition giving rise to such right.
If such party is unable to cure within 30 days after written notice of the
condition giving rise to such right was given by the other party, the party
giving such notice (i) may exercise its right under Subsection 10.1(c) or
10.1(d) to terminate this Agreement, (ii) may waive such right and proceed to
consummate this Agreement and the transactions contemplated hereby, or (iii)
may terminate this Agreement and take such action as is otherwise permitted
by law. In the event this Agreement is so terminated and abandoned, in whole
or in part, the representations, warranties, covenants and agreements of the
parties shall terminate with respect to that portion of the
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Agreement not yet closed (except for the agreement as to confidentiality
described in Section 6.3, the agreement as to damages described in Section
10.4 and the agreement as to expenses described in Section 11.2, all of which
shall survive), and the parties hereto shall have no continuing obligations
or liabilities with respect thereto, except as set forth in this Subsection
11.1(c) and except to the extent that such termination results from the
willful breach by any party hereto of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
11.2 EXPENSES. Each party shall be responsible for the payment of
all of the expenses incurred by it in connection with the negotiation of this
Agreement and the consummation of the transactions contemplated hereby.
11.3 NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly delivered when delivered personally or mailed by certified or registered
mail, postage prepaid, addressed as follows:
If to USCC, to:
United States Cellular Corporation
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Mr. H. Xxxxxx Xxxxxx
President
with copies to:
Xx. Xxxx-Xxxxx Xxxxxx
Special Committee of Board of Directors of
United States Cellular Corporation
Coditel Xxxxxxx X.X.
Xxx xxx Xxxx Xxxxxxx 00
0000 Xxxxxxxx, Xxxxxxx
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and
Xx. Xxxxx X. Xxxxx
Special Committee of Board of Directors of
United States Cellular Corporation
c/o American Express Travel Related
Service Company, Inc.
World Wide Communications
American Express Tower
Three World Financial Center
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
and
Squire, Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
If to TDS, to:
Telephone and Data Systems, Inc.
00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xx. XxXxx X. Xxxxxxx, Xx.
President
with a copy to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
11.4 PARTIES IN INTEREST. This Agreement shall inure to the benefit
of, and be binding upon, the parties hereto and their respective successors.
Nothing in this Agreement is intended to confer any right or remedy, expressly
or by implication, upon any person who is not a party hereto.
11.5 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Illinois.
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11.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one document.
11.7 BROKERS; INVESTMENT BANKING FEES. Each of TDS and USCC hereby
represents that no broker or finder is entitled to any commission or finder's
fee in connection with any transaction contemplated hereby. USCC has agreed
to pay a fee to Lazard Freres & Co., LLC, and TDS has agreed to pay a fee to
Duff & Xxxxxx Capital Markets Co., for services rendered in connection with
the negotiation of this Agreement and the transactions contemplated hereby.
11.8 HEADINGS. Each of the Article and Section headings herein are
provided for convenience of reference only and do not constitute a part of
this Agreement.
11.9 MODIFICATIONS, AMENDMENTS AND WAIVERS. At any time prior to
each Closing Date, the parties hereto may, by written agreement, (a) extend
the time for the performance of any of the obligations of the parties hereto,
(b) waive any inaccuracies in the representations and warranties contained in
this Agreement or in any document delivered pursuant hereto, or (c) waive
compliance with any of the covenants or agreements contained in this
Agreement; PROVIDED, HOWEVER, that any such action may be taken by USCC only
at the direction of the Special Committee. At any time prior to each Closing
Date, if authorized by their respective boards of directors, the parties
hereto may, by written agreement, amend or supplement any of the provisions
of this Agreement; PROVIDED, HOWEVER, that any such action may be taken by
USCC only at the direction of the Special Committee. Any written instrument
or agreement referred to in this Section shall be validly and sufficiently
authorized for the purposes of this Agreement if signed on behalf of each of
the parties hereto by a person authorized to sign this Agreement.
11.10 PRIOR AGREEMENT. This Agreement sets forth the entire
understanding of the parties with respect to the Cellular Interests, and
supersedes all prior negotiations with respect thereto. In the event this
Agreement is terminated, pursuant to Section 10.1, other than by TDS pursuant
to Subsection 10.1(c), USCC's right of first negotiation with respect to any
Cellular Interests not transferred pursuant to the provisions hereof shall
continue to be subject to all applicable provisions of the Exchange
Agreement. Any cellular interest which TDS proposed to transfer to USCC in
its letter dated January 9, 1996, but which is not included in this Agreement
is intended to be and shall remain subject to USCC's right of first
negotiation under the terms of the Exchange Agreement.
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11.11 ASSIGNABILITY. This Agreement shall not be assignable by
either of the parties hereto without the prior written consent of the other
party.
* * * * *
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IN WITNESS WHEREOF, TDS and USCC have caused this Agreement to be
executed by their duly authorized officers, respectively, as of the date
first above written.
TELEPHONE AND DATA SYSTEMS, INC.
By: /S/ XXXXX X. XXXXXXX
--------------------------------------
XxXxx X. Xxxxxxx
Chairman
UNITED STATES CELLULAR CORPORATION
By: /S/ H. XXXXXX XXXXXX
--------------------------------------
H. Xxxxxx Xxxxxx
President
Signature Page of Cellular Interest Transfer Agreement
dated as of June 20, 1996.
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