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EXHIBIT 10.56
PURCHASE AGREEMENT BY AND AMONG
WESTERN WIRELESS CORPORATION,
AND
TRIAD CELLULAR L.P.
DATED: APRIL 24, 1997
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PURCHASE AGREEMENT
TEXAS 1
AGREEMENT, dated April 24, 1997 (the "Agreement"), by and between
WESTERN WIRELESS CORPORATION, a Washington corporation ("Buyer") and TRIAD
CELLULAR L.P., a Delaware limited partnership ("Seller").
W I T N E S S E T H:
WHEREAS, Seller is the owner of (i) the Authorizations (as hereinafter
defined) listed on Exhibit 5.01(h) annexed hereto to operate a wireless
telephone communications business in the Texas 1 RSA, the geographic area
covered by such Authorizations (the "Business"), and (ii) the Business and the
assets used in the operations of the Business; and
WHEREAS, subject to the terms and conditions hereinafter provided,
Buyer desires to purchase from Seller, and Seller desires to sell and transfer
to Buyer, the Authorizations and substantially all of the assets of Seller
relating to the wireless telephone operations covered by the Authorizations.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, conditions and promises hereinafter set forth, the parties hereby
agree as follows:
ARTICLE 1
PURCHASE OF ASSETS
1.01 Purchase of Assets. Subject to the terms and conditions
hereof and in reliance upon the representations, warranties, covenants and
agreements herein contained, on the Closing Date (as defined in Article 2
hereof), Seller agrees to sell, transfer, convey, assign and deliver to Buyer,
and Buyer agrees to purchase, acquire and accept from Seller, the Business of
Seller as a going concern including all the assets, properties, claims and
rights of Seller used in or pertaining to the Business, of every type and
description, wherever located, tangible and intangible, vested or unvested,
contingent or otherwise, as the same shall exist on the Closing Date, whether
or not recorded on the books and records of Seller and whether or not described
herein or in any of the exhibits or schedules delivered or to be delivered to
Buyer hereunder (collectively the "Purchased Assets"), other than those assets
expressly excluded pursuant to the provisions of Section 1.02 hereof. Such
sale and transfer to Buyer shall be free and clear of all Liens (as hereinafter
defined).
Without in any way limiting the generality of the foregoing,
the Purchased Assets include the following:
(a) All fixed assets of Seller, including real property,
buildings and improvements to real property, furniture, furnishings, fixtures,
leasehold improvements, office or other equipment, vehicles, all machinery and
equipment of Seller, including those items referred to on Exhibit 1.01(a)
annexed hereto.
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(b) All inventory and supplies of Seller, including goods
in transit.
(c) The leasehold interests of Seller described on
Exhibit 1.01(c) annexed hereto.
(d) All prepaid property taxes, prepaid rent, prepaid
freight, prepaid insurance and other prepaid expenses, deposits and deferred
charges of Seller and any and all advances by Seller to its employees.
(e) All rights and benefits under all contracts to which
Seller is a party, including contracts of purchase or sale of goods or
services, purchase orders, warranty rights with respect to all machinery,
equipment or other personal property, patent, software and other licenses,
leases of personal property, contracts with agents, and including all Contracts
(as hereinafter defined) referred to on Exhibit 5.01(p) annexed hereto but
excluding those Contracts designated on Exhibit 5.01(p) annexed hereto and not
being assumed.
(f) All Authorizations.
(g) All patents, trademarks, trade names, service marks
and copyrights and applications for any thereof, operating data, records and
other intangible assets, including all books, records, customer and subscriber
lists and credit information, mailing lists and all other customer or
subscriber or potential customer or subscriber data, personnel records of
employees of Seller and such accounting records as Buyer may reasonably
require, slogans, processes, trade secrets, formulae, job rights, rights to
inventions, engineering data, drawings, art work, photographs and advertising
and promotional materials, suppliers' lists, goodwill and other similar
property and rights, and all claims and interests arising therefrom or relating
thereto, (other than the right, title and interests of Seller in and to its
partnership name and any and all logos related thereto) including the items
referred to or described on Exhibit 1.01(g) annexed hereto. Seller may make
and retain, or Buyer will furnish to Seller at Seller's expense copies of such
records as reasonably required by Seller.
(h) All trade accounts receivable, miscellaneous accounts
receivable, claims receivable and notes receivable of Seller.
(i) All rights and benefits under the insurance policies
described on Exhibit 1.01(i) annexed hereto, as such rights and benefits relate
to claims arising out of events occurring prior to the Closing Date.
1.02 Assets Not Purchased. Notwithstanding anything to the
contrary herein contained, there is hereby expressly excluded from the assets
of Seller which are being sold, transferred or purchased hereunder the
following:
(a) All cash on hand or in banks;
(b) The ownership interests of Seller in and to CoBank
Capital Plan;
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(c) The ownership interests of Seller in Triad Texas,
L.P., Triad Oklahoma, L.P., Triad Minnesota, L.P. and Triad Utah, L.P., each a
Delaware limited partnership;
(d) Accounts receivable of Seller from any of Triad
Texas, L.P., Triad Oklahoma, L.P., Triad Utah, L.P., Triad Minnesota, L.P. and
any limited partner of Seller as of the date hereof (including Triad Investment
Minnesota, Inc.) and any stockholder of any such limited partner (including
Xxxxx Xxxxx, Xxxxx Xxxxxxx and Xxxxx Xxxxxx); and
(e) All furniture, equipment and leasehold improvements
located in Seller's Menlo Park, California offices.
1.03 Buyer's Designee. Buyer shall have the right to assign to one
or more Affiliates of Buyer any and all rights and obligations of Buyer under
this Agreement; provided, however, that, no such assignment shall delay the
Closing beyond October 31, 1997 or relieve Buyer of its obligations hereunder,
and Buyer and its assignee shall be jointly and severally liable for Buyer's
obligations hereunder. "Affiliate" shall mean, with respect to any party
hereto, any corporation, limited partnership or other business entity which
directly or indirectly through stock ownership, partnership interests or
through any other arrangement either controls, is controlled by or is under
common control with, such party. The term "control" shall mean the power to
direct the affairs of such person by reason of ownership of voting stock or
other equity interests, by contract or otherwise.
ARTICLE 2
CLOSING AND CLOSING DATE
The consummation of the transactions provided for herein (the
"Closing") shall take place at the offices of Xxxxx Xxxx Xxxxx Constant &
Xxxxxxxx, 00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx or at such other
mutually agreeable location, at 11:00 A.M. local time, on the latest to occur
of (a) the last Business Day (as hereinafter defined) of the month in which all
FCC and state regulatory approvals (if any) necessary in order to consummate
lawfully the transactions contemplated hereby have been received, (b) the last
Business Day of the month in which all applicable waiting periods under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), shall have expired or been terminated without objection by the Federal
Trade Commission (the events described in clauses (a) and (b) above being
hereinafter referred to as the "Regulatory Approvals" and the later of the
dates described in clauses (a) and (b) above being referred to as the
"Regulatory Approval Date"), and (c) October 31, 1997, or at such other time or
date to which the parties hereto mutually agree. The day on which the Closing
occurs is herein referred to as the "Closing Date." As used herein the term
"Business Day" shall mean any day other than a Saturday, Sunday or a legal
holiday in New York, New York or in Seattle, Washington or any other day on
which commercial banks are authorized by law or governmental decree to close.
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ARTICLE 3
PURCHASE PRICE AND LIABILITIES
3.01 Calculation of Purchase Price. In consideration of the sale,
transfer, conveyance, assignment and delivery of the Purchased Assets at the
Closing, Buyer shall pay or deliver to Seller the following (the "Purchase
Price"):
(a) Nine Million ($9,000,000) Dollars in immediately
available funds; provided, however, if the Closing Date shall occur on or prior
to December 31, 1997, an aggregate amount of Two Million ($2,000,000) Dollars
of such payment shall be deferred until, and be due and payable on, January 5,
1998 (the "Deferred Payment"). Buyer shall pay to Sellers the Deferred Payment
by delivery at the Closing of Buyer's non-negotiable, non-transferable
promissory note, in the aggregate principal amount of the Deferred Payment,
which promissory note shall bear interest at the rate of five (5%) percent per
annum and shall be secured by an irrevocable letter of credit issued by The
Toronto- Dominion Bank or its affiliates or a national bank with capital and
surplus in excess of $100,000,000 in an amount equal to the principal amount of
the Deferred Payment, such promissory note and such letter of credit to be in
form and substance reasonably satisfactory to Sellers; plus or minus (as the
case may be)
(b) the aggregate Working Capital of Seller as of the
Closing Date. As used herein "Working Capital" means the total of the current
assets (in determining Working Capital (i) the amount of the accounts
receivable of Seller shall be computed in accordance with the provisions of
Exhibit 3.03(b) annexed hereto and (ii) any assets listed in Section 1.02
hereof which are not being purchased by Buyer shall be excluded) of Seller
minus the total of the current liabilities of Seller (other than current
maturities of long-term indebtedness and all liabilities of Seller which are
not being assumed by Buyer as set forth in Section 3.05 hereof), as such terms
are used in accordance with generally accepted principles of accounting. If
the aggregate Working Capital of Seller as of the Closing Date (A) is a
positive number, the Purchase Price shall be increased by such amount, or (B)
is a negative number, the Purchase Price shall be reduced by such amount; and
plus
(c) an amount equal to the out-of-pocket capital
expenditures (excluding any capitalized labor) actually made by Seller, which
Buyer consents to in writing and agrees in writing to reimburse to Seller in
full in cash at the Closing (collectively the "Reimbursable Capital
Expenditures").
The Purchase Price shall be allocated among the Purchased Assets as
set forth in Exhibit 3.01 annexed hereto.
3.02 Delivery of Instruments of Transfer. At the Closing, Seller
shall deliver to Buyer such deeds, bills of sale, assignments and other good
and sufficient instruments of conveyance, transfer and assignment as shall be
necessary to vest in Buyer title in and to the Purchased Assets of the quality
described in Section 5.01(i) hereof.
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3.03 Payment of Purchase Price.
(a) (i) At the Closing Buyer shall pay to Seller the
portion of the Purchase Price set forth in Section 3.01 hereof.
(ii) On or prior to the Closing Date Seller shall
pay or cause to be paid all liabilities other than current liabilities
reflected in the Closing Date Balance Sheets (as hereinafter defined) of Seller
as at the Closing Date, including any and all accrued but unpaid interest,
current and long-term maturities of long-term indebtedness, prepayment
penalties and fees and expenses relating thereto (and Seller may direct Buyer
to pay all or a portion of the Purchase Price payable under Section 3.03(a)
hereof to pay such liabilities). Seller shall provide to Buyer on the Closing
Date evidence reasonably satisfactory to Buyer of Seller's payment of such
liabilities and of the release or termination of all Liens on any of the
Purchased Assets of Seller which secured such liabilities.
(b) (i) At least five (5) Business Days prior to the
Closing Date, Sellers shall deliver to Buyer (A) Sellers' bona fide written
estimate of the Working Capital of Seller and the Reimbursable Capital
Expenditures of Seller, certified by the chief financial officer of Seller,
which estimate, unless otherwise agreed in writing by Buyer, shall be, in the
case of Working Capital, the Working Capital of Seller as shown on the then
most recently prepared and available monthly balance sheet of Seller (such
balance sheet to be prepared by Seller on a basis consistent with prior
periods), and in the case of Reimbursable Capital Expenditures, the actual
amount thereof, such actual amount to be certified by Seller's chief financial
officer as of the Closing Date and such certification to be accompanied by
evidence reasonably satisfactory to Buyer as to the accuracy and completeness
of the amounts so certified, and (B) the unaudited financial statements of
Seller as of, and for such portion, as requested by Buyer, of the fiscal year
ended through, the end of the month immediately preceding the Closing Date,
certified by the Chief Financial Officer of Seller, which financial statements
shall have been prepared in accordance with generally accepted accounting
principles consistently applied. On the Closing Date (1) in the event the
aggregate of estimated Working Capital and the Reimbursable Capital
Expenditures is a positive number, the Purchase Price payable pursuant to
Section 3.01 hereof shall be the sum of the amount payable pursuant to Section
3.01(a)(i) plus an amount equal to such bona fide written estimate of the
Working Capital and the Reimbursable Capital Expenditures and shall be paid by
Buyer to Sellers in immediately available funds on the Closing Date, or (2) in
the event the aggregate of the estimated Working Capital and the Reimbursable
Capital Expenditures is a negative number, the Purchase Price payable pursuant
to Section 3.01 hereof shall be the sum of the amount payable pursuant to
Section 3.01(a)(i) minus an amount equal to such bona fide written estimate of
the Working Capital and the Reimbursable Capital Expenditures.
(ii) Seller shall deliver to Buyer within
forty-five (45) days after the end of the month in which the Closing shall have
occurred a balance sheet of Seller as of the Closing Date (the "Closing Date
Balance Sheets") prepared by Seller on a basis consistent with prior periods.
In calculating revenues and expenses for the period between the first day of
the month in which the Closing occurs and the Closing Date, items of revenue
and expense shall be calculated by multiplying the aggregate amount of each
such item realized or incurred during the month in which
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the Closing occurs by a fraction, the numerator of which shall be the day of
the month on which the Closing occurs and the denominator of which shall be the
number of days in the month in which the Closing occurs. Buyer and Seller
shall, as promptly as practicable but in no event later than ninety (90) days
following the Closing Date, determine the amount of the Working Capital and the
Reimbursable Capital Expenditures as of the close of business on the Closing
Date. Buyer and Seller shall, and shall cause their respective independent
certified public accountants to, give each other and their respective
representatives full access to each other's books and records (which relate to
or are necessary for the determination of the Working Capital and the
Reimbursable Capital Expenditures) and representatives during regular business
hours upon reasonable notice for the purpose of determining the Working Capital
and the Reimbursable Capital Expenditures. The parties shall in good faith
attempt to resolve any dispute concerning the Working Capital and the
Reimbursable Capital Expenditures. If the parties do not reach agreement
concerning the Working Capital and the Reimbursable Capital Expenditures within
ninety (90) days following the Closing Date, then the parties shall submit the
matter for resolution to a nationally recognized firm of independent certified
public accountants which has not had a material relationship with either Buyer
and its Affiliates or Seller and its Affiliates within the preceding two years
(the "Arbiter") and which is mutually agreeable to the parties. If the parties
cannot agree on the selection of the Arbiter, the Arbiter shall be selected by
mutual agreement of the parties' respective independent certified public
accountants, or, if they cannot agree, the parties shall request the American
Arbitration Association (the "AAA") to appoint the Arbiter, and such
appointment by the parties' respective independent certified public accountants
or the AAA, as the case may be, shall be conclusive and binding on the parties.
Promptly, but no later than twenty (20) days after its acceptance of its
appointment as Arbiter, the Arbiter shall determine, based solely on
presentations by Buyer and Seller, and not by independent review, only those
issues concerning the Working Capital and the Reimbursable Capital Expenditures
which are in dispute and shall render a report as to the dispute and the
resulting computation of the Working Capital and the Reimbursable Capital
Expenditures, which shall be conclusive and binding upon the parties. The
fees, costs and expenses of the Arbiter shall be paid one-half by Buyer and
one-half by Seller; provided, however, that the Arbiter shall have the right
(but not the obligation) to reapportion the fees, costs and expenses of the
Arbiter between Buyer and Seller in accordance with the Arbiter's determination
of the relative merit of the parties' respective positions on the matters in
dispute. Within five (5) Business Days of the determination of the Working
Capital and the Reimbursable Capital Expenditures, whether by mutual agreement
of the parties or by the Arbiter, and provided there is a difference between
such aggregate amount and the estimated aggregate of the Working Capital and
the Reimbursable Capital Expenditures, (A) if the aggregate of the estimated
Working Capital and the Reimbursable Capital Expenditures is greater than the
aggregate of the Working Capital and the Reimbursable Capital Expenditures,
then Seller shall pay to Buyer, or, in Buyer's discretion, to Buyer's designee,
in cash such difference, or (B) if the aggregate of the Working Capital and the
Reimbursable Capital Expenditures is greater than the aggregate of the
estimated Working Capital and the Reimbursable Capital Expenditures, Buyer
shall pay to Seller in cash such difference. Notwithstanding anything to the
contrary contained in this Agreement, Buyer and Seller agree that in
determining the Working Capital pursuant to this Section 3.03(b), the amounts
of the accounts receivable of Seller at the Closing Date shall be computed in
accordance with the provisions of Exhibit 3.03(b) annexed hereto.
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(c) Seller shall pay at the Closing or, if due
thereafter, promptly when due, all gross receipts taxes, transfer taxes, sales
taxes, stamp taxes and any other taxes (collectively, "Transfer Taxes") payable
in connection with the transfer of the Purchased Assets and the Business from
Seller to Buyer hereunder. Seller shall prepare and file any tax return with
respect to such Transfer Taxes; provided, however, that Buyer shall have the
right of reasonable review and comment prior to such filing (such right to be
exercised by Buyer within five (5) Business Days after delivery of such returns
to Buyer, and if such right is not so exercised within such five (5) day
period, Buyer shall be deemed to have waived such right).
3.04 Assumed Liabilities. Subject to the terms and conditions
hereof and in reliance upon the representations, warranties, covenants and
agreements herein contained, at the Closing Buyer agrees to assume and perform,
according to their respective terms, the following obligations of Seller as the
same shall exist at the Closing Date:
(a) obligations under the leases listed on Exhibit
1.01(c) annexed hereto, including obligations arising under leases entered into
after the date hereof as permitted by Section 4.01(c) hereof;
(b) obligations under the Contracts listed on Exhibit
5.01(p) annexed hereto, including obligations arising under Contracts entered
into after the date hereof as permitted by Section 4.01(c) hereof; and
(c) liabilities reflected on the Closing Date Balance
Sheets (other than liabilities which are not being assumed by Buyer as set
forth in Section 3.05 hereof), including obligations arising under Contracts
and leases entered into after the date hereof as permitted by Section 4.01(c)
hereof and including sales or similar taxes which are reflected on the Closing
Date Balance Sheet and which were deducted in computing Working Capital;
provided, however, that Buyer shall not assume any such liabilities or
obligations resulting from breaches of or defaults by Seller under any of such
leases or Contracts attributable to any period ending prior to or on the
Closing Date unless reflected on the Closing Date Balance Sheets and unless
such liabilities are not excluded liabilities pursuant to Section 3.05 hereof.
3.05 Excluded Liabilities. Notwithstanding anything to the
contrary herein contained, Buyer shall not assume any liabilities of any Seller
other than as expressly set forth in Section 3.04 hereof. Any liabilities or
obligations of any Seller not specifically assumed by Buyer hereunder shall
continue to be the liabilities and obligations of Seller and Seller shall
indemnify and hold harmless Buyer from and against all such liabilities and
obligations. The liabilities and obligations of Seller not assumed by Buyer
hereunder include the following:
(a) Liabilities or obligations of Seller arising out of
the indemnification agreements contained in Article 7 hereof;
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(b) Any claim, liability or obligation, known or unknown,
whether absolute, contingent or otherwise, the existence of which is a breach
of any representation, warranty or covenant of Seller set forth in this
Agreement;
(c) Liabilities or obligations of Seller arising on or
after the Closing;
(d) Liabilities or obligations of Seller arising out of
this Agreement or the transactions contemplated hereby or incurred in respect
of any transaction occurring after the Closing;
(e) Liabilities for all taxes (other than taxes which are
reflected on the Closing Date Balance Sheet and which were deducted in
computing Working Capital) whatsoever, whether income, gross receipts,
property, sales, use, franchise or any other taxes whatsoever, including taxes,
if any, attributable to the sale of the Business and Purchased Assets
hereunder, any liquidation and dissolution of Seller or the distribution of its
assets to its equity holders;
(f) Liabilities for breach of representations or
warranties to any person and liabilities arising out of product liability,
negligence or willful misconduct claims; and
(g) Liabilities, claims, obligations, judgments, orders,
duties or responsibilities of any kind or nature whatsoever, whether arising
before, on or after the Closing Date, relating to amounts payable to Employees
(as hereinafter defined) as salary, bonus, severance or other compensation or
benefits and with respect to any Employee Plans (as hereinafter defined) which
are now or ever have been maintained, contributed to or required to be
contributed to for the benefit of any Employee.
Seller covenants and agrees to pay all liabilities and to
fulfill all obligations of Seller not assumed by Buyer hereunder as and when
the same become due, except those being contested in good faith by appropriate
proceedings and for which adequate reserves have been established.
ARTICLE 4
COVENANTS AND AGREEMENTS
4.01 Covenants of Seller. Seller covenants and agrees from and
after the execution and delivery of this Agreement to and including the Closing
Date as follows:
(a) Consummate Transactions. Seller shall use all
commercially reasonable efforts to cause the transactions contemplated by this
Agreement to be consummated in accordance with the terms hereof, and, without
limiting the generality of the foregoing, use all commercially reasonable
efforts to obtain all necessary approvals, consents, permits, licenses and
other Authorizations required in connection with this Agreement and the
transactions contemplated hereby of third parties including all governmental
authorities and agencies such as the FCC, and any state public utilities or
public service commission, and to make all filings with and to give all notices
to third parties which may be necessary or reasonably required of Seller, in
order to
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consummate the transactions contemplated hereby, including the transfer and
delivery from Seller to Buyer of the Business and the Purchased Assets.
(b) Full Access. Seller shall give to Buyer and its
agents and representatives (including its independent auditors and attorneys)
reasonable access (such access not to interfere unreasonably with Seller's
Business) during normal business hours and upon reasonable notice as described
below to all of Seller's personnel, premises, properties, assets, financial
statements and records, books, contracts, documents and commitments of or
relating to the Business or the Purchased Assets, and shall furnish Buyer and
its agents and representatives with all such information concerning the affairs
of Seller as Buyer may reasonably request. In addition, Seller shall permit
Buyer's accountants to conduct an audit (at Buyer's expense) of the books and
records of Seller in such detail as Buyer may reasonably require. Buyer shall
contact either Xxxxx X. Xxxxx, Xxxxx X. Xxxxxxx or any other person(s)
designated by Seller, on behalf of Seller, to arrange for Buyer's personnel,
agents and representatives visiting any of Seller's premises or personnel,
agents or representatives, such visits to be arranged for by Seller not later
than three (3) Business Days of Buyer's request therefor.
(c) Ordinary Course. Seller shall conduct its Business
only in the ordinary course and consistent with past practices. Without
limiting the foregoing, Seller shall continue to expend funds for sales
promotion and marketing and to pay its bills and other obligations, all in the
ordinary course of business consistent with past practices. Without limiting
the foregoing, Seller shall not, without the prior written consent of Buyer,
such consent not to be unreasonably withheld, (A) incur any material liability,
absolute or contingent, other than current liabilities arising in the ordinary
course of business or pursuant to Contracts in existence on the date hereof and
set forth or described in Exhibit 5.01(p) annexed hereto or hereafter entered
into as permitted pursuant to this Agreement and other than additional draws
under the Loan Agreement referenced in item 2 of Schedule 5.01(m) hereto; (B)
assume, guarantee, change any existing guarantee, endorse or otherwise as an
accommodation become responsible for obligations of any other individual or
entity (except by endorsement for collection or deposit of negotiable
instruments received in the ordinary course of business and except pursuant to
agreements or binding commitments in existence on the date hereof and set forth
or described in Exhibit 5.01(p) annexed hereto); (C) other than in the ordinary
course of business and in amounts not exceeding $25,000 in the aggregate and,
other than making loans to certain of its Affiliates with the proceeds of draws
made under the Loan Agreement referenced in item 2 of Schedule 5.01(m) hereto,
make any loans or advances to any individual or entity; (D) sell, transfer,
convey, mortgage, pledge, hypothecate or subject to any lien, claim, security
interest, charge, encumbrance, restriction, title retention agreement or any
liability or claim of any nature (all of the foregoing, collectively "Liens")
any of the Purchased Assets or the Business except for sales of subscriber
equipment or retirements of old or obsolete equipment (such retired equipment
to be replaced with equipment of equivalent cost and utility) in the ordinary
course of business or pursuant to agreements or binding commitments in
existence on the date hereof and set forth or described in Exhibit 5.01(p)
annexed hereto or Liens which in the aggregate are not material and have been
incurred in the ordinary course of business and which Liens will be released on
or prior to the Closing Date; (E) intentionally waive or compromise any right
or claim for any amount in excess of $25,000; (F) cancel, without fair
consideration, any note, loan or other material obligation owing to it; (G)
enter into or extend or renew any Contract with (1) except for
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Contracts having an annual cost of less than $5,000 for any single Contract and
$50,000 for all such Contracts, any Person (as hereinafter defined) which is
not assignable to Buyer and terminable at will on not more than thirty (30)
days notice and without material liability, or (2) Affiliates, partners,
employees, agents or assigns of Seller or of Seller's Affiliates; (H) make any
increase in the compensation payable or to become payable by Seller to any of
its officers, employees, agents or consultants except for routine increases
made in the ordinary course of business consistent with past practices, which
in any event shall not exceed five (5%) percent; (I) make any arrangement for
any new or additional, or amend or extend any existing, profit-sharing plan,
retirement plan, bonus plan, severance arrangement, employee benefit plan, or
any similar plan, or make or agree to make any change to any such plan if the
result thereof increases any benefits paid or payable thereunder to any Person;
(J) except as required by law, enter into any collective bargaining agreement,
or make any commitment whatsoever to any union or other representative or party
which intends to represent any employees; (K) extend the maturity date of or
renew any (1) indebtedness for borrowed money or for the deferred purchase
price of property or services or evidenced by notes, bonds or other
instruments, (2) lease obligations which would normally be capitalized under
generally accepted accounting principles, or (3) obligations under direct or
indirect guarantees of (including obligations (contingent or otherwise) to
assure a creditor against loss in respect of) indebtedness or obligations of
others of types referred to in subclauses (1) and (2) above (the obligations
specified in this clause (K) are collectively referred to herein as
"Indebtedness"), if such Indebtedness will survive the Closing; (L) prepay,
other than as contemplated by the provisions of Section 3.03(a)(ii) hereof,
prior to its stated maturity any Indebtedness or any lease or rental or any
other amounts; or (M) enter into any reseller agreements or any agent
agreements other than in the ordinary course of business consistent with past
practice and only so long as such agreements are assignable to Buyer and
terminable at will, without penalty, by Seller or Buyer upon not more than
thirty (30) days' notice. As used herein the term "Person" means any general
or limited partnership, corporation, joint venture, trust, business trust,
governmental agency, cooperative, association, individual or other entity, and
heirs, executors, administrators, legal representatives, successors and assigns
of such person.
(d) Preserve Goodwill. Seller shall use its diligent
efforts to preserve the Business of Seller and the goodwill of suppliers,
subscribers and others dealing with Seller, and to retain the services of the
employees of Seller and to maintain the goodwill of such employees.
(e) Compliance with Law. Seller shall comply in all
material respects with all applicable laws, rules, ordinances, regulations,
codes, orders, decrees, licenses and permits of all applicable jurisdictions
and governmental authorities or agencies relating to it, to its properties
(including the Business and the Purchased Assets) or to the conduct of its
Business.
(f) Approvals, Consents. Seller shall obtain and
maintain in full force and effect all approvals, consents, permits, licenses
and other Authorizations, from all appropriate Federal, state and local
governmental agencies or authorities necessary or required for the operation of
Seller's Business as presently conducted, as and when such approvals, consents,
permits, licenses or other Authorizations are necessary or required except, in
the case of non-material approvals, consents, permits, licenses or other
Authorizations of state and local governmental agencies and authorities, where
such failure would not have a material adverse effect on Seller, its
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financial condition, prospects, the Purchased Assets or the Business. The
parties shall consult with one another as to the general approach to be taken
with any governmental authority or agency with respect to obtaining any
necessary consent of such governmental agency or authority to the transactions
contemplated hereby, and each of the parties shall keep each other party
reasonably informed as to the status of any such communications with any
governmental authority or agency. Seller shall not with respect to the
Authorizations, the Business or the Purchased Assets, make any material
commitments (other than those typical in the wireless telephone industry)
relating to any approval, consent, permit or license to any governmental
authority or agency without the prior written consent of Buyer.
(g) No Transfer. Seller shall not (i) sell, transfer,
assign or dispose of, or offer to, or enter into an agreement to, sell,
transfer, assign or dispose of any of the Purchased Assets or the Business or
negotiate therefor, other than sales of such of the Purchased Assets that are
immaterial or that are no longer useable in the Business or which are being
replaced with assets of comparable quality and utility in the ordinary course
of business consistent with past practice or (ii) create, incur or suffer to
exist any Lien of any nature whatsoever or enter into any restriction on
transfer or grant any right of first refusal relating to the Purchased Assets
or the Business, other than Liens not in the aggregate material to the business
or financial condition of such entity and which Liens will be terminated on or
prior to the Closing Date.
(h) Insurance. From the date hereof through the Closing
Date, Seller shall maintain in full force and effect (including necessary
renewals thereof) all of the insurance policies relating to Seller set forth on
Exhibit 5.01(j) annexed hereto existing on the date hereof. From and after the
Closing Date, Seller shall take all action that may be necessary to cause the
coverage under such policies to continue in full force and effect after the
Closing Date with respect to occurrences prior to the Closing Date and shall
take all actions necessary to preserve or protect rights under any such
policies with respect to any claim against Seller arising out of the Purchased
Assets or Business of Seller prior to the Closing Date. Seller shall provide
Buyer with information and records regarding all claims pending with respect to
the Purchased Assets or Business of Seller and agrees to provide to Buyer any
additional information and records Buyer may reasonably require regarding such
claims.
(i) No Amendments or Issuance of Additional Shares.
Seller shall not amend its charter, by-laws or other constituent documents of
Seller, which amendment would have a material adverse effect on the Purchased
Assets, the Business or the transactions contemplated by this Agreement or
which would require any additional consents or approvals of the transactions
contemplated by this Agreement. Seller shall not issue or sell any shares of
its capital stock, or other securities, or issue options, warrants or rights of
any kind to acquire, or any securities convertible into, exchangeable for or
representing a right to purchase or receive, or enter into any contract, plan,
understanding or arrangement with respect to the issuance of, any stock-based
or stock-related awards or other equity-based awards, shares of its capital
stock or other equity or other securities, or enter into any arrangement or
contract with respect to the purchase or voting of shares of its capital stock
or other equity, or adjust, split, combine or reclassify any of its securities,
or make any other changes in its capital structure, if any such issuance, sale,
contract, plan, understanding, arrangement, adjustment, split, combination,
reclassification or changes would
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require any additional approvals of the transactions contemplated by this
Agreement or would otherwise adversely affect the transactions contemplated by
this Agreement.
(j) Condition of Assets. Seller shall use its diligent
efforts to preserve its assets intact and, from time to time, to make all
necessary repairs thereto, so that the Business carried on by it may be
conducted in the ordinary course of business and consistent with past
practices.
(k) Books and Records. Seller shall maintain its books,
accounts and records in the usual manner, on a basis consistent with prior
years and in accordance with generally accepted accounting principles.
(l) Notice of Claims. Seller shall give written notice
to Buyer promptly upon the commencement of any action, investigation,
arbitration or proceeding (including any proceeding before any governmental
agency), or promptly upon obtaining knowledge of any facts giving rise to a
threat of any such action, investigation, arbitration or proceeding (i) which
would, if adversely determined, materially and adversely affect (A) Seller's
ability to consummate the transactions contemplated hereby or (B) the business
or financial condition of Seller or any Business or the Purchased Assets or
(ii) where the amount involved exceeds $25,000.
(m) Certain Actions. Seller shall not take any action or
refrain from taking any action which would materially interfere with or
preclude the consummation of the transactions contemplated by this Agreement,
result in any of the representations and warranties of Seller contained herein
being incorrect or incomplete in any material respect, or result in any of the
conditions to Buyer's obligation to consummate the transactions contemplated by
this Agreement as set forth in Section 6.01 hereof being unsatisfied in
accordance with the terms hereof.
(n) Dividends, Distributions and Other Payments. Seller
shall not declare or make any dividends, distributions or other payments
(whether of loans or otherwise) to any partner of Seller or to any Affiliate of
any partner of Seller.
(o) Notice of Breaches. Seller shall promptly after
obtaining knowledge of the occurrence of, or the impending or threatened
occurrence of, any event which would cause or constitute a breach of any
warranties, representations, covenants or agreements of Seller contained in
this Agreement, give notice in writing of such event or occurrence or impending
or threatened event or occurrence, to Buyer and use its diligent efforts to
prevent or promptly to remedy such breach.
(p) Material Contracts. Seller shall not default in any
material respect under, or breach any term or provision of, or suffer or permit
to exist any condition or event which, after notice or lapse of time, or both,
would constitute a material default by Seller under, any Contract listed on
Exhibit 5.01(p) annexed hereto or which are entered into after the date hereof
and prior to the Closing as permitted by Section 4.01(c) and which would have
been listed on such Exhibit if they were in effect on the date hereof.
(q) Intentionally Omitted.
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(r) Notification of Change. Seller shall advise Buyer
promptly in writing of (i) any event, condition or state of facts, including
any action, suit or proceeding, which has had or would have a material adverse
effect on the business or financial condition of Seller, on the Business or the
Purchased Assets or on the transactions contemplated by this Agreement or (ii)
the commencement of any action, suit or proceeding which seeks to enjoin the
consummation of the transactions contemplated hereby.
(s) Retention of Records. On the Closing Date, Seller
shall deliver to Buyer all books, contracts and records of Seller relating to
the Business or to the Purchased Assets, other than Seller's minute and stock
records books, provided, however, Seller shall be entitled to retain a copy of
all books, accounting and other records following the Closing for purposes of
winding up its affairs and other proper purposes incidental to the transactions
contemplated hereby. Buyer agrees that after the Closing Date all books,
contracts and records relating to the Purchased Assets and the Business prior
to the Closing Date, shall for a period of five (5) years following the Closing
Date or, if later, up to the termination of the statute of limitations for any
matter with respect to which Seller is indemnifying Buyer and its Affiliates
hereunder, be available at the written request of and at the expense of Seller
during regular business hours to Seller and its authorized representatives,
accountants and attorneys for any reasonable business purpose. All information
so made available to Seller or retained by Seller after the Closing Date shall
be held in confidence by Seller in accordance with Section 9.11 hereof. In
addition, for a period of five (5) years after the Closing Date, at the written
request and expense of Buyer, Seller shall make available to Buyer copies of
any documents not theretofore delivered to Buyer relating to any potential or
actual tax liabilities of Seller for any periods ending on or prior to the
Closing Date.
(t) Interim Financial Statements and Statistical
Summaries. Between the date of this Agreement and the Closing Date, Seller
shall deliver to Buyer (i) as soon as practicable but no later than forty-five
(45) days after the end of each calendar month with respect to Seller unaudited
financial statements ("Interim Financial Statements") for the most recent month
and the interim period then ended and (ii) within ten (10) Business Days after
the end of each calendar month with respect to Seller interim statistical
summaries (the "Interim Statistical Summaries") for the most recent month and
interim period then ended, which summaries will be in scope and format
substantially identical to the Statistical Summaries (as hereinafter defined).
(u) No Termination or Settlement. Without the prior
written consent of Buyer, which consent shall not be unreasonably withheld,
Seller shall not terminate any agent or settle any dispute with any agent if
such termination or settlement would cause Buyer to have any continuing
obligation after the Closing with respect thereto.
(v) Training. At the request of Buyer, Seller shall
train Buyer's employees and agents in the use of Seller's billing system, such
training to be provided at Seller's premises at mutually convenient times so as
not to disrupt Seller's Business and at no cost to Buyer. In addition Seller
shall, at the request of Buyer, use all commercially reasonable efforts to
assist, and shall cause its employees, agents, officers and subcontractors to
assist, Buyer in converting and transferring Seller's subscribers to Buyer's
billing system so that at the Closing Date or as soon
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thereafter as is reasonably practicable all of Seller's subscriber information
shall have been transferred and converted to Buyer's billing system.
4.02 Covenants of Buyer. Buyer covenants and agrees that from and
after the execution and delivery of this Agreement to and including the Closing
Date:
(a) Consummate Transaction. Buyer shall use all
commercially reasonable efforts to cause the transactions contemplated by this
Agreement to be consummated in accordance with the terms hereof, and, without
limiting the generality of the foregoing, to obtain all necessary consents and
Authorizations of third parties, including the approval of this Agreement and
the transactions contemplated hereby by all governmental authorities and
agencies, including the FCC and any state public utilities or public service
commission, and to make all filings with and to give all notices to third
parties which may be necessary or reasonably required of Buyer in order to
consummate the transactions contemplated hereby.
(b) Buyer Not to Control. Notwithstanding any provision
of this Agreement that may be construed to the contrary, pending the Closing,
Seller shall maintain actual (de facto) and legal (de jure) control over its
Business. Specifically, the responsibility for the operation of Seller's
Business shall, pending the Closing, reside with its general partners,
including responsibility for the following matters: (i) access to and the use
of the facilities of and equipment owned by Seller; (ii) control of the daily
operation of Seller; (iii) creation and implementation of policy decisions;
(iv) employment and supervision of employees; (v) payment of financing
obligations and expenses incurred in the operation of Seller; (vi) receipt and
distribution of monies and profits derived from the operation of Seller; and
(vii) execution and approval of all contracts and applications prepared and
filed before regulatory agencies.
4.03 Governmental Filings. Seller and Buyer covenant and agree
from and after the execution and delivery of this Agreement to and including
the Closing Date as follows:
(a) It is understood that the Closing of this transaction
is subject to prior approval of the FCC and may be subject to the prior
approval of one or more state regulatory commissions. The parties shall use
their best efforts to file with the FCC and any relevant state agency or
agencies, as soon as practicable following the date hereof and in no event
later than ten (10) Business Days from the date hereof, a joint application
requesting the approval of the transfer of the Authorizations, Business and
Purchased Assets to Buyer, or its designee. Each of the parties hereto shall
diligently take or cooperate in the taking of all steps which are necessary or
appropriate to expedite the prosecution and favorable consideration of such
applications. The parties covenant and agree to undertake all actions
reasonably requested by the FCC or other regulatory authority and to file such
material as shall be necessary or required to obtain any necessary waivers or
other authority from the FCC or such state agency or agencies in connection
with the foregoing applications.
(b) Within fifteen (15) Business Days of the date of
execution hereof, Buyer and Seller shall file, or cause to be filed, with the
Federal Trade Commission and the Antitrust Division of the Department of
Justice any and all reports or notifications which are required to be filed
under the HSR Act or other Federal law or administrative regulations.
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4.04 Cooperation. (a) Seller and Buyer agree to cooperate with and
to take all actions reasonably requested by the other so as to minimize, to the
extent possible, any disruption to any of Seller's operations upon the Closing
and, in connection therewith, Seller shall provide, subject to the last
sentence of Section 4.01(b) hereof, Buyer with reasonable access to its
employees and facilities prior to the Closing Date, and shall cause Seller's
employees, agents, advisors, subcontractors and representatives to work with
Buyer and its employees, agents, advisors, subcontractors and representatives
for purposes of planning for and implementing the transfer of control of the
Business and Purchased Assets to Buyer on the Closing Date.
(b) If transactions contemplated by the Purchase Agreement (as
hereafter defined) and the Merger Agreement (as hereafter defined) are
consummated prior to the consummation of the transactions contemplated hereby,
then the parties shall negotiate in good faith to enter into a switching
services agreement and a management agreement as of the date the transactions
contemplated by the Purchase Agreement and the Merger Agreement are
consummated, pursuant to which Buyer or its Affiliates shall undertake to
provide switching services and to manage on commercially reasonable terms the
Purchased Assets and the Business on behalf of Seller through the Closing Date
or the date this Agreement shall be terminated, in accordance with applicable
law and the rules and regulations of the FCC; such agreements, among other
things to allow for subscribers of the Business to continue to roam in the
cellular RSA markets being acquired by Buyer in accordance with the Purchase
Agreement or to roam in the other Cellular RSA Markets owned by Buyer or its
Affiliates, in each case on the same relative terms and conditions as such
subscribers may roam in each of such markets on the date hereof.
Notwithstanding anything to the contrary herein or in the Purchase Agreement or
Merger Agreement Seller may, at its option, if the parties are unable to reach
a mutually acceptable switching services agreement and management agreement,
continue to employ any Triad Cellular L.P. employees whose primary
responsibilities relate to the Business.
4.01 Bulk Sales. Each of the parties hereto waives the obligation
of the other parties under the provisions of any "Bulk Sales" laws of the
uniform commercial code as in effect in any state having jurisdiction over
Seller or the transactions contemplated hereby.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.01 Seller's Representations and Warranties. Seller represents
and warrants to Buyer, which representations and warranties shall survive the
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated, as follows:
(a) Due Organization. Seller is a limited partnership,
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Seller has all requisite partnership power and authority to
own, operate and lease its property and to carry on its business as now
conducted. Seller is duly qualified to do business and is in good standing in
all states where the conduct of its business or the ownership of its properties
makes such qualification necessary, except where the failure to so qualify
would not have a material adverse effect on Seller, its financial condition or
business, or the transactions contemplated hereby. The partnership
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agreement of Seller to be delivered to Buyer pursuant to this Agreement will be
true, correct and complete as of the date of delivery thereof.
(b) Power and Authority; No Violation. Seller has full
power and authority to execute, deliver and perform its obligations under this
Agreement, and to consummate the transactions contemplated hereby. This
Agreement and all transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of Seller and this Agreement
constitutes a legal, valid and binding obligation of Seller enforceable in
accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally. Neither the execution, delivery
or performance of this Agreement by Seller nor the consummation of the
transactions contemplated hereby will, with or without the giving of notice or
the passage of time, or both (i) conflict with, result in a default or loss of
rights (or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of any Lien, pursuant to (A) any provision of
the partnership agreement or other constituent documents of Seller; (B) any
material note, bond, indenture, mortgage, deed of trust, contract, agreement,
lease or other instrument or obligation to which Seller is a party or by which
Seller or its properties may be bound or affected; or (C) any law, order,
judgment, ordinance, rule, regulation or decree to which Seller is a party or
by which its properties are bound or affected; or (ii) give rise to any right
of first refusal or similar right with respect to any interest, or any
properties or assets, of Seller. Except as described on Exhibit 5.01(b)
annexed hereto, no permit, consent, filing or approval of any third party is
required to be obtained or made by Seller in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby in order to (A) render this Agreement and the transactions contemplated
hereby valid and effective and (B) enable Seller to sell the Purchased Assets
and Business to Buyer and to consummate the transactions contemplated hereby.
Seller has not granted any powers of attorney granting to any Person the right
to bind Seller other than those to be released on or prior to the Closing Date
or those which do not relate to the Business, the Purchased Assets or the
transactions contemplated hereby.
(c) Financial Statements. Exhibit 5.01(c) annexed hereto
contains a list of audited and unaudited financial statements of Seller for the
periods indicated on such Exhibit 5.01(c) (the "Operating Financial
Statements") and a list of Key Statistical Summaries of Seller for the periods
indicated on such Exhibit 5.01(c) (the "Statistical Summaries"). True and
complete copies of each item listed thereon have previously been delivered to
Buyer. The Operating Financial Statements are, and the Interim Financial
Statements will be, true and correct in all material respects, have been or
will be prepared from the books and records of Seller and fairly present or
will fairly present the financial position of Seller in a manner consistent
with prior periods as of the dates of such statements and the results of its
operations and statements of cash flow for the year or interim period then
ended, in each case in conformity with generally accepted accounting principles
applied on a basis consistent with past practices. The Statistical Summaries
are, and the Interim Statistical Summaries will be, true and correct in all
material respects and have been or will be prepared from the books and records
of Seller in a manner consistent with prior periods. Seller has not incurred
nor is it subject to any liabilities or obligations, whether accrued, absolute
or contingent, which are in the aggregate material to the business or financial
condition of Seller, and which have not been (i) reflected or accrued against
in the Operating Financial
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Statements of Seller, (ii) incurred since the date of the latest Operating
Financial Statements as permitted by Section 4.01(c) hereof and will be
reflected on the Interim Financial Statements or the Closing Date Balance
Sheet, as the case may be, or (iii) reflected in the Exhibits annexed hereto.
(d) Legal Matters. Except as set forth on Exhibit
5.01(d) annexed hereto, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, writ, injunction, decree or judgment (collectively,
the "Legal Matters"), in progress or pending, or to the knowledge of Seller,
threatened, against or relating to Seller or its businesses or assets including
the Business and the Purchased Assets, nor does Seller know or have reason to
be aware of any basis for the same, which would individually or in the
aggregate have a material adverse effect on (i) Seller or Seller's ownership of
the Business or the Purchased Assets or Seller's ability to sell the Business
or the Purchased Assets as herein contemplated, (ii) the business or financial
condition of Seller, or (iii) the transactions contemplated by this Agreement.
(e) Accounts Receivable. The accounts receivable of
Seller shown on its Operating Financial Statements arose in the ordinary course
of business, are owned by it free and clear of any Lien (other than Liens to be
released on or prior to the Closing Date) and have been collected or are
collectible in the normal course at the aggregate recorded amounts thereof,
subject to no valid counter claims or set-offs, less a reserve for
uncollectible items as set forth on Exhibit 5.01(e) annexed hereto. The
accounts receivable acquired by Seller and shown on the Interim Financial
Statements or the Closing Date Balance Sheets, as the case may be, will have
arisen in the ordinary course of business, are or will be owned by it free and
clear of any Lien (other than Liens to be released on or prior to the Closing
Date) and have been collected or will be collectible in the normal course of
business at the aggregate recorded amounts thereof, less a reserve for
uncollectible items as set forth on Exhibit 5.01(e) annexed hereto. Such
percentage is based upon the historical collectibility of the accounts
receivable of Seller and represents Seller's good faith estimate of the
percentage of Seller's accounts receivable which will not be collectible in the
ordinary course of business.
(f) Compliance with Laws. Seller is in compliance with
all applicable laws, regulations and administrative orders of the United States
and the states in which Seller transacts business (including all applicable
rules and regulations of the FCC, any state public utilities or public service
commission, or any other Federal or state governmental agency or
instrumentality exercising jurisdiction over Seller or its properties or
businesses), and of each municipality, county or subdivision of any thereof, to
which any of its businesses or any of its properties may be subject, the
non-compliance with which would have a material adverse effect upon (i)
Seller's ownership of the Business or the Purchased Assets or ability to sell
the Business or the Purchased Assets as herein contemplated, or (ii) Seller,
its financial condition or business, or the transactions contemplated hereby.
(g) Environmental Matters. There has been no
manufacture, refining, storage, disposal or treatment of Hazardous Substances
(as hereinafter defined) by Seller (or, to the knowledge of Seller, its
predecessors in interest) at any real property currently or in the past owned,
operated, used, leased or contracted for by Seller or otherwise in violation of
any Environmental
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Laws (as hereinafter defined) or which would require remedial action under any
Environmental Law; to the knowledge of Seller, none of the soil, ground water,
or surface water of such real property is contaminated by any Hazardous
Substance. During the past five years Seller has not received any (i) notice
of any such violation with respect to any Hazardous Substance at or by any of
such real property, (ii) notice from any governmental agency that it, or any
present or former owner, lessee or operator of such real property is a
potentially responsible party for cleanup liability with respect to the
emission, discharge or release of any Hazardous Substance or for any other
matter arising under the Environmental Laws or in any litigation,
administrative proceeding, finding, order, citation, notice, investigation or
complaint under any Environmental Law, or (iii) notice of violation, citation,
complaint, request for information, order, directive, compliance schedule,
notice of claim, proceeding or litigation from any party concerning the
compliance of Seller with any Environmental Law. To the knowledge of Seller,
there are no incinerators, septic tanks or cesspools located on such real
property, all sewage is discharged into a public sanitary sewer system (except
that at certain switch sites Seller contracts with third party providers for
the siting and servicing of portable sanitary toilet facilities) and no
Hazardous Substances are emitted, discharged or released, directly or
indirectly, by Seller into the atmosphere or any body of water. No permits,
licenses or other Authorizations issued pursuant to the Environmental Laws are
required for Buyer's ownership, use or occupancy of, or Seller's present
ownership, use or occupancy of, such real property. As used herein
"Environmental Laws" means the Resource Conservation Recovery Act, the
Comprehensive Environmental Responsibility Compensation and Liability Act, the
Superfund Amendments and ReAuthorizations Act, the Toxic Substances Control
Act, the Hazardous Materials Transportation Act, the Clean Air Act, the Clean
Water Act, and other similar Federal and state laws, as amended, together with
all regulations issued or promulgated thereunder, relating to pollution, the
protection of the environment or the health and safety of workers or the
general public. As used herein "Hazardous Substance" means any hazardous
substance, hazardous or toxic waste, hazardous material, pollutant or
contaminant, as those or similar terms are used in the Environmental Laws,
including asbestos and asbestos-related products, chlorofluorocarbons, oils or
petroleum-derived compounds, polychlorinated biphenyls, pesticides and radon.
As used in this Section 5.01(g), the term "knowledge" refers to actual and not
constructive knowledge and is not intended to impose upon Seller any duty to
investigate the condition of any real property other than in the ordinary
course of business and consistent with past practices.
(h) Authorizations.
(i) Seller has (A) all requisite franchises,
licenses, Authorizations, consents, permits and approvals of the FCC and of all
state public utility or public service commissions and (B) all other material
franchises, licenses, Authorizations, consents, permits and approvals of
governmental agencies exercising jurisdiction over Seller or its businesses or
assets (all such franchises, licenses, Authorizations, consents, permits and
approvals, as amended to the date hereof, are collectively referred to as the
"Authorizations"), required to carry on the Business of Seller as now conducted
or as contemplated to be conducted. All such Authorizations are listed on
Exhibit 5.01(h) annexed hereto.
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(ii) The Authorizations are in full force and
effect and have not been suspended, modified in any material adverse respect,
canceled or revoked, and Seller has operated in compliance with all terms
thereof or any renewals thereof applicable to it except where failure to so
comply would not have a material adverse effect on Seller, its financial
condition or Business or the Purchased Assets. No event has occurred with
respect to any of the Authorizations which permits, or after notice or lapse of
time or both would permit, revocation or termination thereof or would result in
any other material impairment of the rights of the holder of any such
Authorizations. Except as set forth on Exhibit 5.01(h) annexed hereto, there
is not pending as of the date hereof any application, petition, objection or
other pleading with the FCC or any public service commission or similar body
having jurisdiction or authority over the communications operations of Seller
which questions the validity of or contests any Authorizations or which
presents a substantial risk that, if accepted or granted, would result in the
revocation, cancellation, suspension or any materially adverse modification of
any Authorizations.
(iii) Except as set forth on Exhibit 5.01(h)
annexed hereto, no permit, consent, approval, Authorizations, qualification or
registration of, or declaration to or filing with, any governmental or
regulatory authority or agency is required to be obtained or made by Seller in
connection with the execution and delivery of this Agreement or with the
consummation of the transactions contemplated hereby in order to (A) render
this Agreement and the transactions contemplated hereby valid and effective and
(B) enable Seller to sell the Business and Purchased Assets to Buyer as herein
contemplated.
(i) Title of Seller to Purchased Assets.
(i) Except as disclosed in Exhibit 5.01(i)
annexed hereto, Seller has good and marketable title to all property owned
(including all property and assets, real and personal, included in the
Operating Financial Statements) and a good and valid leasehold interest in all
property leased by Seller, free and clear of all Liens except for Liens for
taxes, assessments, governmental charges or levies which shall not at this time
be due and delinquent or which hereafter can be paid without penalty or with
respect to which Seller is currently contesting the validity thereof in good
faith by appropriate proceedings and with respect to which it has established
adequate reserves, and except for warehousemen's, mechanics', carriers',
landlords', repairmen's, or other similar Liens arising in the ordinary course
of business, (none of which, either singly or in the aggregate, is material).
Exhibit 5.01(i) annexed hereto correctly identifies (A) each parcel of real
property owned by Seller, (B) each lease by Seller of any real property and
each space allocation arrangement with Seller covering any real or other
material property used in Seller's businesses and(C) each guaranty by Seller of
any such lease. Exhibit 5.01(i) annexed hereto contains, with respect to
Seller, a list setting forth (1) the location of all cell and switch sites and
(2) the number of voice channels installed and operational at each site.
(ii) All of the buildings and other material
tangible personal property owned or leased by Seller are in good working
condition (normal wear and tear excepted), and are adequate and suitable for
the purposes for which they are presently being used. All such property is
being operated in conformity with applicable statutes, regulations, and
ordinances, the failure of which to so conform would have a material adverse
effect on Seller, its financial condition or
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business or the transactions contemplated hereby. All such assets are, in the
aggregate, sufficient in all material respects to continue operating the
business of Seller as has been heretofore conducted.
(iii) Neither the whole nor any material portion of
any real property owned or leased by Seller has been condemned, requisitioned
or otherwise taken by any public authority, and Seller has no actual knowledge
that any such condemnation, requisition or taking is threatened or
contemplated. None of the real or personal properties owned, leased or
operated by Seller, or the ownership, occupancy or operation thereof, is in
violation in any material respect of any law or any building, zoning or other
ordinance, code, rule, regulation or requirement, and no notice from any
governmental body or other Person has been served upon Seller claiming any
violation of any such law, ordinance, code, rule or regulation or requiring, or
calling attention to the need for, any work, repairs, construction, alterations
or installation on or in connection with said property which has not been
complied with.
(j) Insurance. Exhibit 5.01(j) annexed hereto sets forth
a list and brief description of all policies of fire, liability and other forms
of insurance and material fidelity bonds held by Seller. Seller's assets,
business, equipment, property and operations are adequately insured against
loss or damage and all other hazards or risks of the character usually insured
against by companies in the same or similar business and such insurance shall
be continued in full force and effect through 11:59 p.m. on the Closing Date.
Each such policy and fidelity bond referenced in such Exhibit 5.01(j) annexed
hereto is in full force and effect, all premiums due and payable under such
policies and fidelity bonds have been and on the Closing Date will be paid in
full, and there are no disputed claims arising under such policies or fidelity
bonds.
(k) Employees. Exhibit 5.01(k) annexed hereto contains a
list setting forth the name and current annual salary and other compensation
payable by Seller to each Employee (as hereinafter defined), and the profit
sharing, bonus or other form of additional compensation paid or payable by
Seller to or for the benefit of each Employee for the current fiscal year.
Except as set forth on Exhibit 5.01(k) annexed hereto or under the employment,
consulting or other agreements listed thereon, there are no oral or written
contracts, agreements or arrangements obligating Seller to increase the
compensation or benefits presently being paid or hereafter payable to any of
its Employees. Exhibit 5.01(k) annexed hereto sets forth summaries of all oral
employment or consulting or similar arrangements between Seller and any Person
which are not terminable without liability on thirty (30) days' or less prior
notice and lists all written employment and consulting agreements between
Seller and any Employees, true and complete copies of which have been provided
to Buyer. Except for severance obligations to Employees of Seller set forth on
Exhibit 5.01(k) annexed hereto, there is not due or owing and there will not be
due and owing at the Closing to any of Seller's Employees, any sick pay,
severance pay (whether arising out of the termination of Employees of Seller
prior to, on, or subsequent to the Closing), compensable time or pay, including
salary, commission and bonuses, personal time or pay or vacation time or
vacation pay attributable to service rendered on or prior to the Closing Date.
Except as disclosed in the Exhibits annexed hereto, there is not now, and there
will not be as of the Closing Date, any liability of Seller arising out of
claims made or suits brought (including workers' compensation claims and claims
or suits for contribution to, or indemnification of, third parties,
occupational health and safety, environmental, consumer protection or equal
employment matters) for injury, sickness,
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disease, discrimination, death or termination of employment of any Employee or
other employment matter to the extent attributable to an event occurring or a
state of facts existing on or prior to the Closing.
(l) Intellectual Property Rights. All of the patents,
trademarks, service marks, tradenames, trade secrets, copyrights, licenses and
other intellectual property rights material to the operation of any of the
Business or owned or held by Seller are described on Exhibit 5.01(l) annexed
hereto. Except as set forth on Exhibit 5.01(l) annexed hereto, the conduct by
Seller of its businesses does not to the knowledge of Seller infringe upon or
violate any patents, trademarks, service marks, trade names, trade secrets,
copyrights, licenses or rights of anyone, and, except as set forth on Exhibit
5.01(l) annexed hereto, no claim is pending or threatened to the effect that
the conduct by Seller of its businesses infringes upon or violates any patents,
trademarks, service marks, trade names, trade secrets, copyrights, licenses or
rights of anyone.
(m) Indebtedness. Exhibit 5.01(m) annexed hereto lists
generally all indentures, trust deeds, loan agreements, or other instruments
pursuant to which Seller has incurred Indebtedness or has guaranteed the
Indebtedness of any Person all of which shall be terminated and released with
respect to Seller on or prior to the Closing Date. Other than as set forth in
Exhibit 5.01(m) annexed hereto, Seller is not indebted to any Affiliate,
shareholder, partner, director, officer, employee, agent of Seller or of any
Affiliate of Seller and no Affiliate, shareholder, partner, director, officer,
employee, agent of Seller or of any Affiliate of Seller is indebted to Seller.
(n) Tax Matters. Seller has timely filed all Federal,
state and local Tax (as defined in Section 7.03(a)) returns and all information
returns and reports required to be filed by or with respect to it under the
laws of the United States or any state or other jurisdiction on or prior to the
date hereof and will timely file all such returns and reports required to be
filed from the date hereof through the Closing Date. True and complete copies
of such reports and returns filed on or before the date hereof have been or
will be furnished or made available to Buyer within thirty (30) days after the
date hereof and true and complete copies of all such returns and reports filed
after the date hereof and on or before the Closing Date will be furnished to
Buyer within five (5) days after they are filed. All such reports and returns
were or will be accurately prepared in accordance with all applicable statutes,
rules and regulations and are or will be correct as filed. Seller is not, nor
has ever been, an association taxable as a corporation for Federal, state or
local tax purposes. Seller has paid all Taxes (including Taxes for which
Seller is a collection agent, e.g., withholding, excise, sales, use, Social
Security and similar Taxes) which have become due and payable (and will pay
prior to the Closing Date all Taxes which shall have become due and payable on
or prior to the Closing Date) with respect to Seller for all taxable periods
ending on or prior to the Closing Date or will have set aside and reflected on
the Closing Date Balance Sheets adequate reserves therefor. Seller has never
been included in a consolidated Federal income tax return or combined or
unitary state tax return. Seller is not a party to nor has Seller been
notified that it is the subject of any pending, proposed or threatened action,
investigation, proceeding, audit, claim or assessment by or before the Internal
Revenue Service or any other governmental authority and no claim for
assessment, deficiency or collection of Taxes, or proposed assessment,
deficiency or collection, for which Seller may be liable, has been asserted or
threatened against it. Seller has not received any notice of deficiency,
assessment or collection or proposed deficiency, assessment or collection from
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the Internal Revenue Service or any other governmental authority which has not
been satisfied, nor, except as set forth on Exhibit 5.01(n) annexed hereto,
does Seller have any reason to believe that any such notice will be received in
the future. The Internal Revenue Service has never audited any Federal income
tax return of Seller. The charges, accruals and reserves shown in the
Operating Financial Statements of Seller in respect of Taxes for all fiscal
periods to date are adequate. There are no material unpaid assessments or
proposals for additional Taxes for which Seller does not have adequate
reserves, nor does Seller know of any basis therefor for any such period.
There are no Tax rulings, requests for rulings or closing agreements relating
to Seller which could affect its liability for Taxes for any period after the
Closing Date. Except as set forth on Exhibit 5.01(n) annexed hereto (i) no
power of attorney has been granted by Seller or any of its Affiliates with
respect to any matter relating to Taxes of Seller which is currently in force,
(ii) Seller has not filed any agreement with the Internal Revenue Service
described in Section 1.1503-2A(c)(3) of the Treasury Regulations, (iii) Seller
has not filed a consent or made any agreement with the Internal Revenue Service
under Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"Code"), or any comparable provision of state revenue statutes, and (iv) Seller
is not a "foreign person" within the meaning of Section 1445(f)(3) of the Code.
Seller has not executed or filed with the Internal Revenue Service or any other
governmental authority any agreement which is still in effect waiving or
extending the period for assessment or collection of any Taxes. Seller, and
not Buyer, shall be liable for any Taxes, payable by Buyer or Seller by reason
of the ownership of the Business or the Purchased Assets on or prior to the
Closing Date, the conduct of Seller's Business with respect to all periods
ending on or prior to the Closing Date or payable by Seller by reason of the
sale of the Business and the Purchased Assets.
(o) Employee Benefit Plans.
(i) Generally. Exhibit 5.01(o) annexed hereto
contains a true and complete list of each plan, program, policy, practice,
contract, agreement or other arrangement providing for compensation, severance,
termination pay, performance awards, stock or stock-related awards or other
equity based awards, fringe benefits or other employee benefits of any kind,
whether formal or informal, proposed or final, funded or unfunded and whether
or not legally binding, including each "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") which is now, or ever has been, maintained, contributed
to, or required to be contributed to, for the benefit of any current or former
employee, independent contractor, agent or consultant of Seller or engaged in
the Business ("Employee"), or any current or former employee, independent
contractor, agent or consultant of any entity required to be aggregated with
Seller pursuant to Section 414(b), (c), (m) or (o) of the Code and each
management, employment, severance or consulting agreement or contract between
Seller or any of its Affiliates and any Employee for which Seller may have
liability or between Seller and any Employee ("Employee Plan"). Seller will
provide to Buyer prior to the Closing true and complete copies of all
documents, if any, embodying each Employee Plan, including all amendments
thereto and written interpretations thereof; the three most recent annual
reports filed (Form 5500 Series with applicable schedules) with respect to each
Employee Plan required under ERISA; and the most recent summary plan
description, if any, with respect to each Employee Plan required under ERISA
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(ii) Compliance. Seller has performed in all
material respects all obligations required to be performed by it under each
Employee Plan and each Employee Plan has been established and maintained in all
material respects in accordance with its terms and in compliance with all
applicable laws, statutes, orders, rules and regulations, including ERISA or
the Code. No Employee Plan that is an employee pension benefit plan within the
meaning of Section 3(2) of ERISA is subject to Title IV of ERISA or is a
multiemployer plan within the meaning of Section 3(37) of ERISA, and Seller has
no liability with respect to any such plan as a result of having been part of a
"controlled group" within the meaning of Section 414(b), (c), (m) and (o) of
the Code, nor is there any basis for such liability being imposed. There are
no investigations, proceedings, actions, suits or claims pending, or, to the
best knowledge of Seller, threatened or anticipated (other than routine claims
for benefits) against any Employee Plan or the assets of any Employee Plan;
each Employee Plan can be amended, terminated, or otherwise discontinued on or
after the Closing in accordance with its terms, without liability to Seller,
Buyer or any of Buyer's Affiliates; all premiums required by any Employee Plan
have been paid thereunder; all outstanding indebtedness for services performed
for Seller or accrued vacation, holiday pay, earned commissions, accrued
bonuses or other benefits owed to any Employee has been paid when due or
accrued on the books of Seller; all contributions due to and payments from, the
Employee Plans that may have been required to be made have been made; no
"prohibited transaction" within the meaning of Section 4975 of the Code or
Section 406 of ERISA for which a statutory, administrative or regulatory
exemption is not available has occurred with respect to any Employee Plan; and
no action or failure to act with respect to any Employee Plan will subject
Seller, Buyer or any of Buyer's Affiliates to any tax or penalty or other
liability.
Except as listed on Exhibit 5.01(o) annexed hereto, each
Employee Plan that is intended to be qualified under the Code has received a
determination letter from the Internal Revenue Service to the effect that such
Employee Plan and related trust are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively; such determination letter
includes any new or modified requirements under the Tax Reform Act of 1986 and
subsequent legislation enacted thereafter; and no such determination letter has
been revoked, nor to the knowledge of Seller, has revocation been threatened.
To Seller's knowledge, nothing has occurred or is expected to occur that would
adversely affect the qualified status of any Plan or any related trust
subsequent to the issuance of such determination letter.
(iii) No Post-Employment Obligations. Seller does
not maintain or contribute to any Employee Plan which provides, or has any
liability to provide, life insurance, medical or other employee welfare
benefits (other than severance and accrued vacation and holiday pay) to any
Employee upon his retirement or termination of employment, except as may be
required by Federal or state statute and Seller has ever represented, promised,
or contracted (orally or in writing) to any Employee (individually or as a
group) that life insurance, medical or other employee welfare benefits (other
than severance and accrued vacation and holiday pay) would be provided upon
their retirement or termination of employment, except to the extent required by
Federal or state statute.
(iv) COBRA. Each "group health plan" within the
meaning of Section 4980B(g)(2) of the Code maintained by Seller or any entity
with which it is considered a "single
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employer" within the meaning of Section 414(b), (c), (m) and (o) of the Code,
has been administered in good faith in compliance with the continuation
coverage requirements contained in the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), as set forth at Section 4980B
of the Code and any regulations promulgated or proposed (if such proposed
regulations constitute substantial authority within the meaning of Section 6662
of the Code and any regulations promulgated thereunder) thereunder.
(v) Effect of Transaction. Except as set forth
on Exhibit 5.01(o)(v) annexed hereto, the execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
when taken together with any additional or subsequent events) constitute an
event under any Employee Plan that will or may result in any payment, upon a
change in control or otherwise, whether of severance, accrued vacations or
otherwise, acceleration, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee. No payment or
benefit which will or may be made by Seller with respect to any Employee as a
result of the transactions contemplated hereby will be characterized as an
"excess parachute payment" within the meaning of Section 280G(b)(1) of the
Code.
(vi) Employment Matters. Seller (A) is in
compliance with all applicable Federal and state laws, rules and regulations
respecting employment, employment practices, terms and conditions of employment
and wages and hours, in each case, with respect to Employees, except where the
failure to be in compliance would not, singly or in the aggregate, have a
material adverse effect on Seller, its financial condition or business; (B) has
withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to Employees; (C) is not liable for any
arrears of wages or any taxes or any penalty for failure to comply with any of
the foregoing, except as would not have a material adverse effect on Seller,
its financial condition or business; and (D) (other than routine payments to be
made in the normal course of business and consistent with past practice) is not
liable for any payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
Social Security or other benefits for Employees.
(vii) Labor. No work stoppage or labor strike with
respect to Employees or against Seller is pending or, to the best knowledge of
Seller, threatened. Except as set forth on Exhibit 5.01(o)(vii) annexed
hereto, Seller is not involved in or, to the best knowledge of Seller,
threatened with, any labor dispute, grievance or litigation relating to labor,
safety or discrimination matters involving any Employee including charges of
unfair labor practices or discrimination complaints, which, if adversely
determined, would, individually or in the aggregate, have a material adverse
effect on Seller, its financial condition or business. Seller has not engaged
in any unfair labor practices within the meaning of the National Labor
Relations Act which would, individually or in the aggregate, have a material
adverse effect on Seller, its financial condition or business.
(viii) Seller is neither presently nor has been in
the past a party to, or bound by, any collective bargaining agreement or union
contract with respect to Employees and no collective bargaining agreement is at
the date hereof being negotiated by or on behalf of Seller.
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(p) Contracts.
(i) Exhibit 5.01(p) annexed hereto contains a
list of all Contracts (other than subscriber agreements and agreements having
an annual cost of less than $5,000 for any single agreement and $50,000 for all
such agreements) to which Seller is a party and which in any way relate to the
operations or properties of Seller or which will be binding upon Buyer, its
operations or properties (including the Business or the Purchased Assets) after
the Closing Date. As used herein "Contracts" means all leases, rental
agreements, insurance policies, collective bargaining agreements, union
contracts, licenses, agreements, permits, purchase orders, sales orders,
agreements with suppliers, reseller agreements, agreements with agents,
agreements with customers, commitments and any and all other contracts,
consents or binding arrangements or understandings (including capital
commitments and arrangements with respect to construction in progress), whether
written or oral, express or implied, to which Seller is a party and which in
any way relate to the operations of the Business or the Purchased Assets of
Seller or which will be binding upon Buyer, its operations or properties
(including the Business or the Purchased Assets) after the Closing Date.
Except for (i) the Contracts listed on Exhibit 5.01(p) annexed hereto (true and
complete copies of which agreements have been previously delivered to Buyer or,
in the case of oral agreements, descriptions of which are set forth on said
Exhibit 5.01(p)), (ii) subscriber agreements and agreements having an annual
cost of less than $5,000 for any single agreement and $50,000 for all such
agreements and (iii) Contracts entered into between the date hereof and the
Closing Date as permitted by Section 4.01(c) hereof, Seller is not a party to
nor is it or any of its property bound by any Contract.
(ii) Seller has performed and will perform in all
material respects all obligations required to be performed by it under all
Contracts, and will in all material respects perform all obligations required
to be performed by it under Contracts entered into after the date hereof as
permitted by Section 4.01(c) hereof; neither Seller nor, to the best of
Seller's knowledge, any party with whom Seller has an agreement is in material
default under any Contract, and no event exists which with the giving of notice
or the passage of time, or both, would create such a default; and Seller knows
of no meritorious basis for any claim of any such default.
(iii) Each of the Contracts has been, and each
Contract entered into after the date hereof as permitted by Section 4.01(c)
hereof will be, lawfully entered into and is or will be valid and in full force
and effect and is or will be enforceable in accordance with its terms for the
period stated in such Contract. There are no currently threatened
cancellations of, nor are there any outstanding disputes under, any Contracts.
Seller will not modify, amend or waive any provisions of any Contract in a
manner that would materially adversely affect the Business, the Purchased
Assets or, financial condition of Buyer after the Closing Date, or terminate
any Contract prior to the Closing without the prior written consent of Buyer,
which consent will not be unreasonably withheld.
(iv) Except as set forth on Exhibit 5.01(b)
annexed hereto, the consummation of the transactions contemplated by this
Agreement does not require any consent under any Contract listed on Exhibit
5.01(p) annexed hereto, and the consummation of the transactions contemplated
by this Agreement will not require any consent under any Contract
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(which will survive the Closing) entered into after the date hereof as
permitted by Section 4.01(c) hereof, in each case which will not have been
obtained by the Closing (and copies of such consents will be given to Buyer on
or prior to the Closing Date), and such consummation will not result in the
termination of any right or privilege under any Contract listed on Exhibit
5.01(p) annexed hereto or any other Contract (which will survive the Closing)
entered into after the date hereof as permitted by Section 4.01(c) hereof;
provided, however, that Seller shall not be deemed to be in default of any of
its obligations under this Agreement by reason of the failure to obtain any
such individual consent so long as the failure to obtain any such consent would
not individually or together with all such other failures to obtain consents
have a material adverse effect on the Business, the Purchased Assets or their
ownership or operation by Buyer or the consummation of the transactions
contemplated hereby. Seller has not received notice that any party to any
Contract listed on Exhibit 5.01(p) annexed hereto intends to cancel such
Contract nor has any party given Seller notice of any alleged breach of any
Contract or of its intent to take any legal action in order to enforce its
rights thereunder. All liabilities and obligations of Seller which are due and
payable or which are to be performed on or before the Closing Date under such
Contracts have been, or will have been on the Closing Date, duly paid in full
or performed in all material respects.
(v) Exhibit 5.01(p) annexed hereto contains true
and complete copies of all forms of subscriber agreements used by Seller.
(vi) Seller has no Contracts with any Person (or
group of Affiliated Persons) which cover more than 2% of Seller's wireless
telephone subscribers.
(vii) Each of the agreements between Seller and
its agents or dealers, including those entered into between the date hereof and
the Closing Date as permitted by Section 4.01(c) hereof, contains or will at
the Closing Date contain a provision permitting Seller, in its sole discretion,
to change the amount and rate of the fees or other consideration to be paid to
such agent or dealer upon ninety (90) days or less written notice by Seller to
such agent or dealer.
(q) No Sale. Seller has not entered into any contract to
sell, mortgage or encumber any of its material assets.
(r) No Material Adverse Change. Since the date of the
most recent Operating Financial Statements, there has not been
(i) any material adverse change in the rate of
Seller's generation of cash flow from operations, as opposed to cash flow from
financing operations and investment activities, after giving effect to
customary seasonal fluctuations of cash flow generation and after giving effect
to agents' commissions and other marketing expenses incurred in the ordinary
course of business consistent with past practices;
(ii) any incurrence, assumption or guarantee by
Seller of Indebtedness other than pursuant to Contracts in existence on the
date hereof and set forth or described in Exhibit 5.01(p) annexed hereto or as
permitted pursuant to Section 4.01(c) hereof;
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(iii) any creation by Seller of any Lien on any of
the Purchased Assets other than pursuant to Contracts in existence on the date
hereof and set forth or described in Exhibit 5.01(p) annexed hereto or as
permitted pursuant to Section 4.01(c) hereof, each of which Liens will be
terminated and released on or prior to the Closing Date;
(iv) any making of any loan, advance or capital
contribution to or investment in any Person by Seller other than as permitted
pursuant to Section 4.01(c) hereof;
(v) any damage, destruction or other casualty
loss affecting the Business or the Purchased Assets of Seller which, after
giving effect to payments to Seller under applicable insurance policies, has
had or is likely to have a material adverse effect on Seller, its financial
condition or business;
(vi) any repurchase, redemption or other
acquisition by Seller of any outstanding interest in Seller;
(vii) any change by Seller in accounting principles
or methods; or
(viii) any other action taken by Seller which,
without the prior written consent of Buyer, would not be permitted pursuant to
Section 4.01(c) hereof.
(s) Equipment. Substantially all of Seller's (i)
wireless telephone equipment, including system equipment, switch, cell site and
test equipment, (ii) mobile telephone equipment in inventory, and (iii)
equipment and software relating to any of Seller's billing systems are in good
working condition and are suitable for the use for which they are intended.
(t) Transactions with Affiliates. Neither Seller nor any
Affiliate of Seller, nor any shareholder, officer, director, partner, member,
consultant or employee of any thereof, is at the date hereof a party to any
transaction with Seller which would survive the Closing Date, including any
contract or arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property (including intellectual
property) to or from, or otherwise requiring payments to or from, any Seller or
Affiliate.
(u) No Other Business; No Subsidiaries. Seller has not
conducted any business other than the business of owning and operating
wireless telephone companies. Seller has no subsidiaries nor is Seller a
partner in any partnership or joint venture, nor does Seller own any equity
interest in any other entity.
(v) Investment Company Act. Seller is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(w) Truth and Correctness. No representation or warranty
by Seller herein, nor any written statement or certificate or other instrument
furnished to Buyer by Seller pursuant hereto or in connection with the
transactions contemplated hereby, including the Exhibits annexed hereto,
contains any untrue statement of a material fact or omits or will omit to state
a material fact
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29
necessary to make the statements contained herein or therein, in light of the
circumstances under which such statements are made, not misleading.
5.02 Buyer's Representations and Warranties. Buyer represents and
warrants to Seller as follows:
(a) Due Incorporation. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Washington and has all requisite partnership power and authority to enter into
this Agreement and to perform its obligations hereunder.
(b) Authority. This Agreement and all transactions
contemplated hereby have been duly and validly authorized by all necessary
partnership action on the part of Buyer and this Agreement constitutes a legal,
valid and binding obligation of Buyer enforceable in accordance with its terms
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally. Neither the execution, delivery or performance of
this Agreement nor the consummation of the transactions contemplated hereby by
Buyer will, with or without the giving of notice or the passage of time, or
both, conflict with, result in a default or loss of rights (or give rise to any
right of termination, cancellation or acceleration) under, or result in the
creation of any Lien, pursuant to (i) any provision of the certificate of
incorporation or by-laws of Buyer; (ii) any material note, bond, indenture,
mortgage, deed of trust, contract, agreement, lease or other instrument or
obligation to which Buyer is a party or by which it or its property is bound or
affected; or (iii) any law, order, judgment, ordinance, rule, regulation or
decree to which Buyer is a party or by which it or its property is bound or
affected. Except as described on Exhibit 5.02(b) annexed hereto, no permit,
consent, approval, Authorizations, qualification or registration of, or
declaration to or filing with any governmental or regulatory authority or
agency or third party is required to be obtained or made by Buyer in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby in order to (A) render this Agreement or the
transactions contemplated hereby valid and effective and (B) enable Buyer to
purchase the Business and the Purchased Assets as herein contemplated.
(c) Legal Matters. There is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation or other legal,
administrative or tax proceeding, nor any order, decree or judgment, in
progress or pending, or to the knowledge of Buyer threatened, against or
relating to Buyer's right to perform its obligations under this Agreement, nor
does Buyer know or have reason to be aware of any basis for the same. There is
outstanding no order, writ, injunction, judgment or decree of any court,
governmental agency or arbitration tribunal which would individually or in the
aggregate have a material adverse effect on Buyer's obligations hereunder or
the transactions contemplated by this Agreement other than orders or decrees
involving the wireless telephone industry in general.
(d) Truth and Correctness. No representation or warranty
by Buyer, or any written statement or certificate or other instrument furnished
to Seller by Buyer pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the
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30
statements contained herein or therein, in light of the circumstances under
which such statements are made, not misleading.
5.03 No Brokers. Buyer represents and warrants to Seller that no
agent, broker, investment banker, Person or firm is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly in connection with the transactions contemplated by this Agreement
based in any way on any arrangements, agreements or understandings made by or
on behalf of Buyer, and Buyer hereby agrees to indemnify Seller and agrees to
hold harmless Seller against and in respect of any claims for brokerage and
other commissions relating to such transactions based in any way on any
arrangements, agreements or understandings made by or on behalf of Buyer.
Seller represents and warrants to Buyer that, except for Columbia Capital
Corporation, no agent, broker, investment banker, Person or firm is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
directly or indirectly in connection with the transactions contemplated by this
Agreement based in any way on any arrangements, agreements or understandings
made by or on behalf of Seller and Seller hereby agrees to indemnify Buyer and
agrees to hold harmless Buyer against and in respect of any claims for
brokerage and other commissions relating to such transactions based in any way
on any arrangements, agreements or understandings made by or on behalf of
Seller, including those with Columbia Capital Corporation.
ARTICLE 6
CONDITIONS TO OBLIGATIONS
6.01 Conditions to Buyer's Obligation. The obligation of Buyer to
perform, fulfill or carry out its agreements, undertakings and obligations
herein made or expressed to be performed, fulfilled or carried out on the
Closing Date is and shall be subject to fulfillment of or compliance with, on
or prior to the Closing Date, the following conditions precedent, any of which
may be waived by Buyer, in its sole discretion, in whole or in part:
(a) Each of the representations and warranties of Seller
contained in this Agreement shall be deemed to have been made again at and as
of the time of the Closing and shall then be true in all material respects
except for changes contemplated by this Agreement. Seller shall have performed
and complied in all material respects, with all agreements, covenants and
conditions required by this Agreement to be performed or complied with by each
of them prior to or at the Closing. Buyer shall have been furnished with a
certificate of Seller signed by its Chairman, President or Vice Chairman dated
the Closing Date, certifying to the fulfillment of the foregoing conditions by
Seller and to the truth and correctness in all material respects, except for
changes contemplated by this Agreement, as of the Closing Date, of the
representations and warranties of Seller contained herein.
(b) Buyer shall have been furnished with an opinion of
Xxxxxxx & Xxxxxx, counsel for Seller, dated the Closing Date, substantially in
the form of Exhibit 6.01(c) annexed hereto.
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(c) Buyer shall have been furnished with an opinion of
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, FCC counsel for Seller, dated the
Closing Date, substantially in the form of Exhibit 6.01(d) annexed hereto.
(d) The waiting periods, if applicable, of the HSR Act
shall have expired or been terminated.
(e) All consents, approvals and actions of third parties
including all approvals from Federal, state and local authorities (including
the FCC and all public service commissions and public utility commissions or
comparable bodies exercising jurisdiction over Seller) as may be required for
the valid assignment and transfer to Buyer, as of the Closing Date, of all
right, title and interest in and to the Business and the Purchased Assets,
shall have been obtained or made, which consents and approvals shall not
contain any conditions or restrictions which, in the case of FCC approvals, are
not customary in transactions of this nature (other than a condition imposed by
the FCC making the assignment of the Authorizations subject or without
prejudice to the outcome of the ongoing proceedings before the FCC arising out
of or relating to the Memorandum Opinion and Xxxxx, XX00-000, released February
24, 1994, 9 FCC 986 (1994)), and which in the case of third party consents and
approvals, materially adversely affect Seller or its business or financial
condition, or the value of the Business or the Purchased Assets, or the
consummation of the transactions contemplated hereby. Notwithstanding anything
to the contrary herein contained, it shall not be a condition to Buyer's
obligations under this Agreement for Seller to obtain each individual required
consent (other than any consents of the FCC, any public utility or public
service commission (or comparable bodies exercising jurisdiction over Seller or
the Business)) so long as the failure to obtain any such individual consent
would not individually or together with all such other failures to obtain
consents have a material adverse effect on the Business, the Purchased Assets
or their ownership or operation by Buyer or the consummation of the
transactions contemplated hereby.
(f) Seller shall have delivered to Buyer such deeds,
bills of sale and other good and sufficient instruments of conveyance, transfer
and assignment, all in form and substance reasonably satisfactory to Buyer's
counsel, as shall be effective to vest in Buyer good and marketable title in
and to the Business and the Purchased Assets, free and clear of any Liens,
restrictions on transfer and rights of first refusal.
(g) Seller shall deliver to Buyer (i) if Seller is a
corporation (A) copies of its certificate of incorporation certified by the
Secretary of State of the jurisdiction of its incorporation, (B) copies of its
by-laws certified by its secretary, and (C) certificates of good standing of
recent date from the jurisdiction of its incorporation and all jurisdictions in
which it is qualified to do business; (ii) if Seller is a partnership, (A) a
copy of its partnership agreement certified by its general partner (other than
portions thereof which disclose the relative economic interests of the partners
thereof) and (B) certificates of good standing from the jurisdiction of its
organization and all jurisdictions in which it is qualified to do business; and
(iii) a lien and judgment search in the offices of the Secretaries of State of
the states of Colorado, Kansas, Minnesota, New Mexico, Oklahoma, Texas and Utah
and in the office of the county clerk of the appropriate counties therein,
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dated not earlier than fifteen (15) Business Days prior to the Closing Date,
the results of which are consistent with the representations of Seller
contained herein.
(h) Seller, for itself and its Affiliates, officers,
directors and partners shall have delivered to Buyer documentation (including a
general release) in form reasonably satisfactory to Buyer evidencing the
release and discharge of any and all claims which it or its Affiliates,
partners, officers, directors and shareholders may have against the Business or
the Purchased Assets.
(i) Seller shall have delivered to Buyer a certified copy
of the resolution or resolutions duly adopted by its partners authorizing the
execution, delivery and performance of this Agreement.
(j) No statute, rule or regulation shall have been
enacted by any state or Federal government or governmental agency in the United
States which would render the consummation of this Agreement unlawful.
(k) Seller shall have delivered to Buyer an affidavit
certifying as to Seller's non-foreign status in accordance with Section
1445(b)(2) of the Code.
(l) The transactions contemplated by each of (i) the
Purchase Agreement, of even date herewith, among Buyer, Seller, Triad Texas,
L.P., Triad Utah, L.P., Triad Oklahoma, L.P., Triad Cellular, L.P. and Triad
Cellular Corporation (the "Purchase Agreement"), and (ii) the Agreement and
Plan of Merger, of even date herewith, among Buyer, Seller, Minnesota Cellular
Corporation, Triad Investment Minnesota, Inc., Xxxxx X. Xxxxx, Xxxxx Xxxxxxx,
Xxxxx X. Xxxxxx, , Triad Cellular Corporation ("TCC") and Triad Minnesota L.P.
(the "Merger Agreement") shall have been consummated, or shall be consummated
concurrently herewith, in accordance with the terms of such agreements;
provided, however, if such Agreement and Plan of Merger shall have been
terminated by reason of a Stockholder's Failure (as defined in such Agreement
and Plan of Merger), the consummation of the Agreement and Plan of Merger shall
not be a condition to the consummation of the transactions contemplated hereby.
6.02 Conditions to Seller's Obligation. The obligation of Seller
to perform, fulfill or carry out its agreements, undertakings and obligations
herein made or expressed to be performed, fulfilled or carried out on the
Closing Date is and shall be subject to fulfillment of or compliance with, on
or prior to the Closing Date, the following conditions precedent, any of which
may be waived by Seller, in its sole discretion, in whole or in part:
(a) Each of Buyer's representations and warranties
contained in this Agreement shall be deemed to have been made again at and as
of the time of the Closing and shall then be true in all material respects,
except for changes contemplated by this Agreement. Buyer shall have performed
and complied in all material respects with all agreements, covenants and
conditions required by this Agreement to be performed or complied with by Buyer
prior to or at the Closing. Seller shall have been furnished with a
certificate of Buyer's Chief Executive Officer, Vice Chairman or Senior Vice
President, dated the Closing Date, certifying to the fulfillment of the
foregoing conditions by Buyer and to the truth and correctness in all material
respects, except for
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changes contemplated by this Agreement, as of the Closing Date of the
representations and warranties of Buyer contained herein.
(b) Buyer shall have delivered to Seller on the Closing
Date the Purchase Price as provided in Section 3.01(a) hereof.
(c) All consents, approvals and actions of third parties,
including all approvals from Federal, state and local authorities (including
the FCC and all public service commission and public utilities commission or
comparable bodies exercising jurisdiction over Seller) as may be required for
the valid assignment and transfer by Seller to Buyer of the Business and the
Purchased Assets shall have been obtained.
(d) Seller shall have been furnished with an opinion of
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx, counsel for Buyer, dated the Closing
Date, substantially in the form of Exhibit 6.02(e) annexed hereto.
(e) Seller shall have been furnished with a certified
copy of the resolution or resolutions duly adopted by the board of directors of
Buyer authorizing the execution, delivery and performance of this Agreement.
(f) No statute, rule or regulation shall have been
enacted by any state or Federal government or governmental agency in the United
States which would render the consummation of this Agreement unlawful.
(g) The waiting periods, if applicable, of the HSR Act
shall have expired or been terminated.
(h) The transactions contemplated by each of the Purchase
Agreement and the Merger Agreement shall have been consummated, or shall be
consummated concurrently herewith, in accordance with the terms of such
agreement; provided, however, if such Agreement and Plan of Merger shall have
been terminated by reason of a Stockholder's Failure (as defined in such
Agreement and Plan of Merger), the consummation of the Agreement and Plan of
Merger shall not be a condition to the consummation of the transactions
contemplated hereby.
ARTICLE 7
SURVIVAL; INDEMNITY
7.01 Survival of Representations and Warranties. Notwithstanding
any investigation or review made at any time by or on behalf of any party
hereto, all representations and warranties contained in this Agreement or in
the Exhibits annexed hereto or in any of the agreements, certificates or
instruments delivered in connection herewith (other than the representations
and warranties contained in Section 5.01(i) (the "Title Representations"),
Section 5.01(h) and the first two sentences of Section 5.01(b) and the first
sentence of Section 5.02(b) (the "Authorizations Representations"), Section
5.01(n) (the "Tax Representations"), in Sections 5.01(o) and 5.01(k) (the
"Employee Representations") and in Section 5.01(g) (the "Environmental
Representations")) shall
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survive the Closing for a period of one year and one hundred and eighty days
after the Closing Date (the "Indemnification Period") and shall thereupon
expire together with any right to indemnification (except with respect to any
claim for breach of any such representation or warranty for which written
notice shall have been given prior to the termination of the Indemnification
Period to the party which made such representation or warranty). The
Environmental Representations shall survive the Closing for a period of three
(3) years after the Closing Date and the Title Representations, the
Authorizations Representations, the Tax Representations and the Employee
Representations and the liabilities and obligations of Seller under Sections
3.05, 7.02(a)(vi) and 7.03 hereof and under Article 8 hereof shall survive the
Closing until the expiration of any applicable statutes of limitation (such
three (3) year period being the Indemnification Period with respect to the
Environmental Representation and such statutes of limitations period being the
Indemnification Period with respect to the Title Representations, the
Authorizations Representations, the Tax Representations and the Employee
Representations and the liabilities and obligations of Seller under Sections
3.05, 7.02(a)(vi) and 7.03 hereof and under Article 8 hereof).
7.02 Seller's Indemnity.
(a) During the Indemnification Period (or thereafter
solely with respect to any claim for indemnification for which notice has been
given prior to the expiration of the Indemnification Period), in addition to
any other indemnification provided for under this Agreement, Seller shall
indemnify and hold harmless Buyer and its Affiliates from and against any and
all demands, claims, losses, liabilities, actions or causes of action,
assessments, actual damages (but excluding consequential damages), fines, Taxes
(including excise and penalty taxes), penalties, costs and expenses (including
interest, expenses of investigation, reasonable fees and disbursements of
counsel, accountants and other experts (whether such reasonable fees and
disbursements of counsel, accountants and other experts relate to claims,
actions or causes of action asserted by Buyer against Seller or asserted by
third parties)) (collectively "Losses") incurred or suffered by Buyer and its
Affiliates and their respective partners, officers, directors, employees,
shareholders, agents and representatives arising out of, resulting from, or
relating to:
(i) any breach of any of the representations or
warranties made by Seller in this Agreement or in any agreement, certificate,
Exhibit or other instrument delivered by Seller pursuant to this Agreement;
(ii) any failure by Seller to perform any of its
covenants or agreements contained in this Agreement or in any agreement,
certificate, Exhibit or other instrument delivered by Seller pursuant to this
Agreement;
(iii) any and all liabilities of Seller other than
those expressly assumed by Buyer pursuant to Section 3.04 hereof;
(iv) any liabilities arising out of, resulting
from or relating to the liabilities of Seller, or any other member of any
affiliated group or "controlled group," within the meaning of Section 414(b),
(c), (m) and (o) of the Code, of which Seller was a member on or prior to the
Closing Date which liability exists by reason of Seller having been a member of
such affiliated or controlled group, including liabilities relating to (A) the
funding, operation,
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maintenance, administration, amendment or termination of, or the withdrawal or
partial withdrawal from, any employee plan relating to any period on or prior
to the Closing and including, losses arising under Title IV of ERISA, Section
302 of ERISA, Section 412 or 4971 of the Code, (B) compliance with COBRA under
Section 4980B of the Code, and (C) environmental matters with respect to any
operations of, or properties owned, occupied or operated or formerly owned,
leased or operated by, Seller or any other member of an affiliated group or
"controlled group" of which Seller was a member prior to the Closing Date;
(v) any failure by Buyer or Seller to comply with
the provisions of any applicable Bulk Sales laws of the uniform commercial code
in effect in any state having jurisdiction over Seller or the transactions
contemplated hereby; or
(vi) any action, suit or proceeding (whether
pending at the Closing Date or thereafter commenced) to restrain or invalidate
in whole or in part this Agreement or the transactions contemplated hereby; it
being understood and agreed that if any such action, suit or proceeding is
ultimately successful, then Seller, its partners and such partners' partners,
stockholders and such stockholder's partners shall be required to pay and
reimburse Buyer's Losses arising as a result thereof.
(b) Notwithstanding anything to the contrary contained in
Section 7.02(a), Seller shall not be required to pay or reimburse Buyer or its
Affiliates for Losses pursuant to Seller's indemnification obligation pursuant
to Section 7.02 which (when aggregated with any Losses paid to Buyer, or
Buyer's Affiliates, by Seller or Seller's Affiliates pursuant to Article 7 of
(i) the Merger Agreement, (ii) the Purchase Agreement and (iii) the agreement,
of even date herewith, between Buyer and TCC with respect to the acquisition by
Buyer of certain PCS licenses for which TCC was the high bidder (the "PCS
Agreement"); the Merger Agreement, the Purchase Agreement and the PCS Agreement
being referred to as the "Concurrent Agreements") are in excess of One Hundred
Million ($100,000,000) Dollars.
(c) Notwithstanding anything to the contrary contained in
this Section 7.02, neither Buyer nor its Affiliates shall be entitled to seek
indemnification under Section 7.02(a) for any Losses unless the aggregate
amount of Buyer's or its Affiliates' Losses in respect of all such matters,
when aggregated, with the aggregate amount of Buyer's or its Affiliate's Losses
(as such terms are defined in the Concurrent Agreements) arising under the
Concurrent Agreements (as more particularly set forth in Article 7 of the
Concurrent Agreements), exceeds $375,000 in which event Buyer and its
Affiliates shall be entitled to seek indemnification under this Section 7.02
for the amount of such Losses in excess of $375,000; provided, however, that
the limitations set forth in this Section 7.02(c) shall not be taken into
account in determining the amount of the Working Capital and the Reimbursable
Capital Expenditures determined in accordance with the procedure set forth in
Section 3.03(b) (which determination shall be made without any exclusions
whatsoever by reason of the foregoing); provided further, however, that the
foregoing limitation with respect to Buyer's or its Affiliates' right to
indemnification shall not be applicable to Losses arising from or relating to
(and Buyer and its Affiliates shall be entitled to indemnification for all such
Losses commencing with the first dollar of such Losses) (i) any breach of the
Title Representations, the Authorizations Representations, the Tax
Representations, the Employee Representations and the
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liabilities and obligations of Seller under Sections 3.05, 7.02(a)(vi) and 7.03
hereof and under Article 8 hereof; (ii) any Losses arising by reason of or
relating to any inaccuracy or omission relating to current assets or current
liabilities included on the Closing Date Balance Sheets, which affected in any
way the determination of Working Capital or Reimbursable Capital Expenditures
pursuant to Section 3.03 hereof and which were known to, or should have been
reasonably foreseeable by, Seller at the time of preparation of the Closing
Date Balance Sheets; or (iii) any Losses arising by reason of or relating to
any litigation listed on Exhibit 5.01(d) annexed hereto.
(d) As collateral security for Seller's indemnification
obligations under this Agreement and its indemnification obligations under the
Concurrent Agreements, Seller, or its Affiliates shall deliver, or cause to be
delivered, to a national bank to be mutually agreed upon (the "Escrow Agent")
to be held in escrow pursuant to the terms of an Escrow Agreement, in
substantially the form of Exhibit 7.02(d) annexed hereto (the "Escrow
Agreement"), to be entered into on the Closing Date, at Seller's option either
Six Million ($6,000,000) Dollars in cash or Four Hundred Eighty Thousand
(480,000) shares of Buyer's Class A Common Stock, no par value ("Shares"),
issued in accordance with the Merger Agreement (such cash or shares being
referred to herein as the "Escrow Fund"). The Escrow Fund shall be held by the
Escrow Agent pursuant to the Escrow Agreement for a period of one (1) year and
one hundred eighty (180) days after the Closing Date; provided, however, that,
on the first anniversary of the Closing Date, the Escrow Fund shall be reduced
to an amount equal to the lesser of the balance of the Escrow Fund on such
first anniversary or 75% (if the Escrow Fund is originally funded with Shares,
as measured by Shares) of the original Escrow Fund (except to the extent any
claims in excess of such reduced amount have been asserted prior to such first
anniversary). The Escrow Agreement shall set forth the procedures for Buyer to
make any claims against the Escrow Fund, the circumstances under which such
Escrow Fund shall be distributed either to Buyer or to Seller and procedures
for the Seller to substitute cash in lieu of stock. Nothing contained in this
Section 7.02(d) or in the Escrow Agreement shall limit in any way Seller's
indemnification obligations under this Agreement or the indemnification
obligations of Seller or its Affiliates, as applicable, under the Concurrent
Agreements; it being understood that, if the Escrow Fund is not sufficient to
satisfy such indemnification obligations, then Seller and its Affiliates, as
applicable, shall (subject to Section 7.02(b) hereof) remain liable for such
indemnification obligations as set forth in this Agreement or in the Concurrent
Agreements.
7.03 Tax Indemnification.
(a) During the Indemnification Period (or thereafter
solely with respect to any claim for indemnification for which notice has been
given prior to the expiration of the Indemnification Period), Seller hereby
agrees to indemnify and hold harmless Buyer and its Affiliates from and against
(i) all liability for Taxes of Seller (including any liability for Taxes by
reason of Seller being included in a Federal or state consolidated, combined or
unitary return and including any Tax liabilities resulting from the
transactions contemplated by this Agreement), and amounts with respect to
liability for Taxes pursuant to any written or unwritten agreement for the
allocation or payment of or with respect to Tax liabilities or benefits ("Tax
Sharing Arrangements"; such amounts being included in the definition of "Taxes"
for purposes of this Section 7.03), to the extent such Taxes, in the aggregate,
exceed the reserve therefor on the Closing Date Balance Sheets
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and (ii) any liability for out-of-pocket fees, costs and expenses (including
reasonable attorney's fees) arising out of or incident to any Tax indemnified
hereunder. If any amount for which Seller is to indemnify Buyer and its
Affiliates pursuant to the immediately preceding sentence is, subject to
Seller's rights under Section 7.03(b), determined to be payable (whether as a
payment of estimated tax or otherwise) after the Closing Date, Seller shall pay
or cause to be paid to Buyer such amount no later than the later of (A) five
(5) Business Days after Buyer gives notice to Seller of both the amount due and
the date such amount is due and payable (the "Due Date") and (B) three (3)
Business Days before the Due Date. Amounts described in clause (ii) shall be
reimbursed as incurred. Any payment required to be made hereunder and not made
at the time specified in the preceding two sentences shall bear interest at the
prime rate of the Toronto Dominion Bank as in effect from time to time or such
higher rate actually payable by the indemnified party on the delayed payment of
the Taxes being indemnified, calculated from the date such payment was required
to be made hereunder to the date such payment is actually received by the
indemnified party. "Taxes" shall mean all taxes of any kind, including those
on, or measured by or referred to as income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property or windfall profits taxes,
customs duties or similar fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority, domestic or foreign.
(b) If any claim or demand is asserted by any taxing
authority in writing with respect to a Tax indemnified hereunder, Buyer shall
notify Seller of such claim or demand within fifteen (15) days of receipt
thereof; provided, however, that failure to give such notification shall not
affect the indemnified party's entitlement to indemnification hereunder except
to the extent the indemnifying party shall have been actually prejudiced as a
result of such failure. The indemnifying party shall have the right to control
the defense, compromise or settlement thereof; provided, however, that the
indemnifying party shall not be permitted to take any action with respect to an
issue that could adversely affect the Tax liability of the indemnified party
(with respect to liabilities not indemnified hereunder) unless the indemnified
party consents to such action. Without limiting the indemnifying party's
rights under the preceding sentence, the indemnified party shall be permitted
to participate in the defense of any such claim or demand, at its own expense.
The indemnified party shall cooperate fully in such defense as and to the
extent reasonably requested by the indemnifying party. Such cooperation shall
include the retention and (upon the indemnifying party's request) the provision
to the indemnifying party of records and information which are reasonably
relevant to such claims or demand and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder.
7.04 Buyer's Indemnity.
(a) During the Indemnification Period (or thereafter
solely with respect to any claim for indemnification for which notice has been
given prior to expiration of the Indemnification Period), in addition to any
other indemnification provided for under this Agreement, from and after the
Closing, Buyer shall indemnify and hold harmless Seller and its respective
Affiliates from and against any and all Losses (as defined in Section 7.02,
except that reasonable fees and
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disbursements of counsel, accountants and other experts shall be included
whether they relate to claims, actions or causes of action asserted by Seller
against Buyer or asserted by third parties) incurred or suffered by Seller and
its Affiliates and their respective officers, directors, partners, employees,
agents and representatives arising out of, resulting from, or relating to:
(i) any breach of any of the representations or
warranties made by Buyer in this Agreement or in any agreement, certificate or
other instrument delivered by Buyer pursuant to this Agreement; and
(ii) any failure by Buyer to perform any of its
covenants or agreements contained in this Agreement or in any agreement,
certificate or other instrument delivered by Buyer pursuant to this Agreement.
(b) Notwithstanding anything to the contrary contained in
this Section 7.04, neither Seller nor its Affiliates shall be entitled to seek
indemnification under this Section 7.04 for any Losses unless the aggregate
amount of Seller's Losses and its Affiliates' Losses in respect of all such
matters, when aggregated with the aggregate amount of Seller's or its
Affiliates' Losses (as such terms are defined in the Concurrent Agreements)
arising under the Concurrent Agreements (as more particularly set forth in
Article 7 of the Concurrent Agreements), exceeds $375,000, in which event
Seller and its Affiliates shall be entitled to seek indemnification under this
Section 7.04 for the amount of such Losses in excess of $375,000; provided,
however, that the limitations set forth in this Section 7.04(b) shall not be
taken into account in determining the amount of the Working Capital and
Reimbursable Capital Expenditures determined in accordance with the procedure
set forth in Section 3.03(b) (which determination shall be made without any
exclusions whatsoever by reason of the foregoing); provided further, however,
that the foregoing limitation with respect to Seller's right to indemnification
shall not be applicable to Losses arising from or relating to (and Seller shall
be entitled to indemnification for all such Losses commencing with the first
dollar of such Losses) any breach of the representation and warranty set forth
in the first sentence of Section 5.02(b) hereof.
7.05 Procedure.
(a) In the event that any party hereto shall sustain or
incur any Losses in respect of which indemnification may be sought by such
party pursuant to this Article 7, the party seeking such indemnification (the
"Indemnitee") shall assert a claim for indemnification by giving prompt (in the
event of claims arising by reason of the commencement of litigation against an
Indemnitee by third parties, in no event later than ten (10) days after service
of process, which process expressly indicates a claim for which Indemnitor (as
hereinafter defined) may be liable) written notice thereof (the "Notice"),
which shall describe in reasonable detail the facts and circumstances upon
which the asserted claim for indemnification is based, to the party providing
indemnification (the "Indemnitor") and shall thereafter keep the Indemnitor
reasonably informed with respect thereto; provided that failure of the
Indemnitee to give the Indemnitor prompt notice as provided herein shall not
relieve the Indemnitor of any of its obligations hereunder, except to the
extent that the Indemnitor is materially prejudiced by such failure. In case
any third party claim, action or proceeding (a "Claim") is brought against any
Indemnitee, the Indemnitor shall have the right to
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assume, conduct and control the defense, compromise or settlement thereof, by
written notice to the Indemnitee of its intention to do so within thirty (30)
days after receipt of the Notice, with counsel reasonably satisfactory to the
Indemnitee, at the Indemnitor's own expense, and thereupon to prosecute in the
name and on behalf of the Indemnitee any available cross-claims, counter-claims
or third-party claims arising with respect to the Claim. If the Indemnitor
shall assume the defense of such Claim, it shall not settle such Claim unless
such settlement includes as an unconditional term thereof the giving by the
claimant or the plaintiff of a release of the Indemnitee, reasonably
satisfactory to the Indemnitee, from all liability with respect to such Claim.
As long as the Indemnitor is contesting any such Claim in good faith and on a
timely basis, the Indemnitee shall not pay or settle any such Claim.
Notwithstanding the assumption by the Indemnitor of the defense of any Claim as
provided in this Section 7.05 and without limiting the Indemnitor's right to
assume, conduct and control the defense, compromise or settlement thereof, the
Indemnitee shall be permitted to join in the defense of such Claim and to
employ counsel at its own expense.
(b) If the Indemnitor shall fail to notify the Indemnitee
of its desire to assume the defense of any such Claim within the prescribed
30-day period set forth in Section 7.05(a), or shall notify the Indemnitee that
it will not assume the defense of any such Claim, then the Indemnitee may
assume the defense of any such Claim, in which event it may do so in such
manner as it may deem appropriate, and the Indemnitor shall be bound by any
determinations made in any litigation with respect to such Claim or any
settlement thereof effected by the Indemnitee, provided that any such
determinations or settlement shall not affect the right of the Indemnitor to
dispute the Indemnitee's claim for indemnification. The failure of the
Indemnitor to assume the defense of any Claim shall not be deemed a concession
by Indemnitor that it is required to indemnify the Indemnitee for the subject
matter of such Claim.
(c) Amounts payable by the Indemnitor to the Indemnitee
in respect of any Losses for which any party is entitled to indemnification
hereunder shall be payable by the Indemnitor as incurred by the Indemnitee.
Any payments by any Indemnitor in indemnification hereunder shall be treated as
adjustments to the Purchase Price.
(d) The provisions of this Section 7.05 shall be subject
to the provisions of Section 7.03(b).
7.06 Indemnification Payments in Cash. All payments by Seller to
Buyer or its Affiliates in respect of any indemnification obligation to Buyer
or its Affiliates shall be made by Seller in cash or, at Seller's option, if
the Escrow Fund contains shares of Buyer's Class A Common Stock, by the
delivery to Buyer of shares of Class A Common Stock from the Escrow Fund,
(valuing such shares so delivered at the average closing price on NASDAQ of
such shares for the six (6) Business Days immediately preceding the date of
delivery of such shares).
7.07 Investigations; Waivers. The survival periods and rights to
indemnification provided for in this Article 7 shall remain in effect
notwithstanding any investigation at any time by or on behalf of any party
hereto or any waiver by any party hereto of any condition to such party's
obligations to consummate the transactions contemplated hereby.
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7.08 Indemnity Sole Remedy. In the absence of fraud or of a suit
seeking specific performance as contemplated by this Agreement, the remedies
provided to Seller and to Buyer by the foregoing provisions of this Article 7
shall after the Closing Date be in lieu of any other remedies to which the
respective party is entitled at law or in equity for any breach or
noncompliance by a party with the provisions of this Agreement.
ARTICLE 8
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
8.01 Employees.
(a) On or before thirty (30) days prior to the Closing
Date, Buyer will provide written notice to Seller setting forth the identity of
the Employees it desires to employ after the Closing Date. Seller agrees to
use all reasonable efforts to assist Buyer in employing such Employees and, in
this regard, to terminate such Employees on or prior to the Closing Date.
(b) Upon reasonable notice, Seller shall provide Buyer
with access to the Employees during normal business hours throughout the period
on and before the Closing Date in accordance with the procedure established in
Section 4.0 1(b). Such access shall be for the purpose of interviewing the
Employees and providing transition training for those Employees continuing in
employment after the Closing Date.
(c) Buyer and Seller shall consult regarding
communications with the Employees whom Buyer does not intend to retain after
the Closing so as to minimize any adverse impact on the Business. Upon the
reasonable request of Buyer, Seller shall use all commercially reasonable
efforts to minimize such impact, including enforcing Seller's rights under any
confidential or non-compete agreement with such Employees (other than the
non-compete agreements of Xxxxx X. Xxxxx or Xxxxx X. Xxxxxxx).
(d) Nothing contained in this Agreement shall confer upon
any Employee any right with respect to continued employment with Buyer. No
provision of this Agreement shall create any third-party rights in any
Employee, or beneficiary or dependent thereof, with respect to the
compensation, terms and conditions of employment and benefits that may be
provided to such Employee by the Buyer after the Closing Date.
8.02 Employee Benefit Plans.
(a) All medical, dental, vision, travel accident,
accidental death and dismemberment, and life insurance expenses incurred by
Employees and their dependents on or before the Closing Date, pursuant to
Employee Plans, irrespective of the time at which claims are presented, are the
responsibility of Seller and shall be paid directly by Seller or its medical,
dental or life insurance carrier to such Employees and dependents.
(b) Seller shall be responsible for any medical, dental
or life insurance coverage due to any Employees and their dependents who
retired on or before the Closing Date.
Execution - 39 -
41
(c) Seller agrees to fulfill its obligations under
continuation coverage rules of COBRA with respect to a "qualifying event,"
within the meaning of Section 4980B(f) of the Code or Section 603 of ERISA,
occurring on or before the Closing Date with respect to any Employees and their
dependents.
(d) All short-term, long-term and extended disability
benefits payable to Employees and their dependents who became disabled on or
before the Closing Date are the responsibility of Seller and shall be paid
directly by Seller or its insurance carriers to such Employees and their
dependents.
(e) If any Employees are terminated from employment by
Seller as a result of the transactions contemplated by this Agreement or
otherwise, any obligations arising out of such termination of employment,
including severance, accrued vacation pay, COBRA obligations, notices or
compensation required under the Worker Adjustment and Retraining Notification
("WARN") Act, employment discrimination complaints, unfair labor practice
charges, grievance under any collective bargaining agreement, breach of
contract claims, and wrongful termination and related tort claims shall be the
sole responsibility of Seller.
(f) Seller hereby agrees, until expiration of all
applicable statutes of limitations, to indemnify, hold harmless and defend
Buyer and its Affiliates from and against any and all claims, damages,
liabilities and expenses including reasonable attorney's fees and disbursements
of counsel, incurred by Buyer or any of its Affiliates arising from or in
connection with any failure of Seller or its Affiliates to discharge their
responsibilities to pay benefits under paragraphs (a) - (e) of this Section
8.01.
ARTICLE 9
MISCELLANEOUS
9.01 Expenses. Each party shall bear its own expenses incident to
the negotiation, preparation, authorization and consummation of this Agreement
and the transactions contemplated hereby, including all fees and expenses of
its counsel and accountants, whether or not such transactions are consummated.
9.02 Equitable Remedies. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with the specific terms of the provisions or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity. Each party agrees
that it will not assert, as a defense against a claim for specific performance,
that the party seeking specific performance has an adequate remedy at law.
9.03 Notices. All notices, claims and other communications
hereunder shall be in writing and shall be made by hand delivery, registered or
certified mail (postage prepaid, return receipt requested), facsimile, or
overnight air courier guaranteeing next day delivery (a) if to Buyer,
Execution - 40 -
42
to it at Western Wireless Corporation, 0000 XX Xxxxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxxxx, Esq. (Fax No. 206-313- 5547),
with a copy (which shall not constitute notice) to Xxxxx Xxxx Xxxxx Constant &
Xxxxxxxx, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X.
Xxxxxxx, Esq. (Fax No. 000-000-0000) or (b) if to Seller , to it at 0000 Xxxx
Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, Attention: Xxxxx Xxxxx (Fax No.
000-000-0000), with a copy (which shall not constitute notice) to Xxxxxxx &
Xxxxxx, 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxxx X.
Xxxxxxxx, Esq. (Fax No. 000-000-0000), or at such other address as any party
may from time to time furnish to the other parties by a notice given in
accordance with the provisions of this Section 9.03. All such notices and
communications shall be deemed to have been duly given at the time delivered by
hand, if personally delivered; five (5) Business Days after being deposited in
the mail, first class postage prepaid, return receipt requested, if mailed;
when receipt confirmed, if sent by facsimile; and the next Business Day after
timely delivery to the courier, if sent by an overnight air courier service
guaranteeing next day delivery.
9.04 Entire Agreement. This Agreement, together with the Exhibits
annexed hereto, contains the entire understanding among the parties hereto
concerning the subject matter hereof and may not be changed, modified, altered
or terminated except by an agreement in writing executed by the parties hereto.
Any waiver by any party of any of its rights under this Agreement or of any
breach of this Agreement shall not constitute a waiver of any other rights or
of any other or future breach.
9.05 Remedies Cumulative. Except as otherwise provided herein,
each and all of the rights and remedies in this Agreement provided, and each
and all of the rights and remedies allowed at law and in equity in like case,
shall be cumulative, and the exercise of one right or remedy shall not be
exclusive of the right to exercise or resort to any and all other rights or
remedies provided in this Agreement or at law or in equity.
9.06 Governing Law. This Agreement shall be construed in
accordance with and subject to the laws and decisions of the State of
Washington applicable to contracts made and to be performed entirely therein.
9.07 Counterparts. This Agreement may be executed in several
counterparts hereof, and by the different parties hereto on separate
counterparts hereof, each of which shall be an original; but such counterparts
shall together constitute one and the same instrument.
9.08 Waivers. No provision in this Agreement shall be deemed
waived by course of conduct, including the act of Closing, unless such waiver
is in writing signed by the parties and stating specifically that it was
intended to modify this Agreement.
9.09 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and to their respective
successors and assigns. Seller shall not have the right to assign this
Agreement or any of its rights or obligations hereunder to any Person;
provided, however, that Buyer shall have the right to assign this Agreement and
its rights and obligations hereunder in accordance with Section 1.03 hereof.
Execution - 41 -
43
9.10 Further Assurances. Buyer shall, at the request of Seller,
and Seller shall, at the request of Buyer, from time to time, execute and
deliver such other assignments, transfers, conveyances and other instruments
and documents and do and perform such other acts and things as may be
reasonably necessary or desirable for effecting complete consummation of this
Agreement and the transactions herein contemplated.
9.11 Disclosures.
(a) Each of Buyer and Seller acknowledges and confirms in
connection with the negotiation of this Agreement and the execution hereof,
during the period from the date hereof through the Closing Date, the parties
hereto will have furnished to one another certain materials, information, data
and other documentation ("Disclosures") concerning their business, financial
condition and operations which are proprietary and confidential. Each party
acknowledges the party disclosing such Disclosures considers them secret and
confidential and asserts a proprietary interest therein. Accordingly, each of
Buyer and Seller covenants and agrees that it shall maintain all Disclosures
made by another party in strict confidence and shall not use such Disclosures
for its own benefit or disclose them to third parties, except to its agents,
representatives, bankers, investment bankers, counsel and employees involved in
evaluating the transactions contemplated by this Agreement, its partners (and
the partners or other securityholders thereof) or as otherwise required by law
(including the requirement of Buyer to disclose such terms under any Federal or
state securities laws); provided, however, that in no event shall Seller be
permitted to disclose the Purchase Price or any information concerning the
calculation of the Purchase Price to any other Person (including its employees)
unless and until such time as such information otherwise becomes public.
(b) No public announcement by any party hereto with
regard to the transactions contemplated hereby or the material terms hereof
(including the Purchase Price) shall be issued by any party without the mutual
prior consent of the other parties, except in the event the parties are unable
to agree on a press release and legal counsel for one party is of the opinion
that such press release is required by law and such party furnishes the other
parties a written opinion of outside legal counsel, or other counsel reasonably
acceptable to the party being furnished such opinion, to that effect, then such
party may issue the legally required press release.
(c) This Agreement shall not restrict any party hereto
from using information already known to it, to which it is entitled under
existing agreements, or information generally in the public domain or any
information coming into its possession after it becomes public knowledge unless
it became public knowledge through a breach of this Agreement.
9.12 Termination.
(a) This Agreement may be terminated and the transactions
contemplated hereby may be abandoned, without further obligation of either
Seller or Buyer, at any time prior to the Closing Date as follows:
(i) by mutual written consent duly authorized by
the board of directors of Buyer and the partners of Seller;
Execution - 42 -
44
(ii) by Seller or by Buyer if the Closing shall
not have occurred on or before the fourth anniversary of the date hereof, or
such later date, if any, as Seller and Buyer shall agree in writing; provided,
that the party exercising such right is not in default of its obligations under
this Agreement in a manner which results in the failure to satisfy the
conditions to Closing of the other parties; or
(iii) by Seller or by Buyer if the consummation of
the transactions contemplated hereby shall be prohibited by a final,
non-appealable order, decree or injunction of a court of competent jurisdiction
or of the FCC.
In the event of a termination of this Agreement, no
party hereto shall have any liability or further obligation to any other party
to this Agreement except that nothing herein will relieve any party from
liability for any breach of this Agreement.
9.13 Definitions; etc.
Unless the context otherwise requires, the terms defined in
any Section of this Agreement shall have the meanings therein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. When a reference is made in this Agreement to
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation". The use of a gender herein shall be deemed to include
the neuter, masculine and feminine genders wherever necessary or appropriate.
Whenever the word "herein" or "hereof" is used in this Agreement, it shall be
deemed to refer to the Agreement and not to a particular Section of the
Agreement unless expressly stated otherwise.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
WESTERN WIRELESS CORPORATION
By: /s/ XXXX X. XXXXXXX
----------------------------------
Title: Chief Executive Officer
TRIAD CELLULAR L.P.
By: Triad Cellular Corporation, its
general partner
By: /s/ XXXXX X. XXXXX
---------------------------------
Title: President
Execution - 43 -
