STOCK PURCHASE AGREEMENT BY AND AMONG COUNTRY ROAD COMMUNICATIONS LLC AS SELLER AND OTELCO INC. AS BUYER DATED AS OF August 7, 2008
Execution
Copy
BY
AND AMONG
COUNTRY
ROAD COMMUNICATIONS LLC
AS
SELLER
AND
AS
BUYER
DATED
AS OF August 7, 2008
Purchase
of All the Outstanding Capital Stock of
PINE
TREE HOLDINGS, INC.,
GRANBY
HOLDINGS, INC.
and
WAR
HOLDINGS, INC.
TABLE
OF
CONTENTS
Page
|
||
Article
I DEFINITIONS
|
1
|
|
1.1
|
Definitions
|
1
|
1.2
|
Use
of Words and Phrases
|
6
|
Article
II PURCHASE AND SALE
|
7
|
|
2.1
|
Purchase
and Sale of the Shares
|
7
|
2.2
|
Purchase
Price
|
7
|
2.3
|
Closing
Statement; Revised Closing Statement
|
7
|
2.5
|
Certain
Definitions
|
8
|
2.6
|
Closing
|
9
|
2.7
|
Actions
Prior to or at Closing
|
9
|
Article
III REPRESENTATIONS AND WARRANTIES OF SELLER
|
10
|
|
3.1
|
Capacity
of Seller
|
10
|
3.2
|
Organization,
Qualification, and Power
|
10
|
3.3
|
Capitalization;
Constituent Documents
|
11
|
3.4
|
Noncontravention
|
11
|
3.5
|
Financial
Statements
|
12
|
3.6
|
Absence
of Changes
|
12
|
3.7
|
No
Undisclosed Liabilities
|
13
|
3.8
|
Title
to Properties
|
13
|
3.9
|
Equipment,
Etc
|
13
|
3.10
|
Receivables
|
13
|
3.11
|
Inventory
|
13
|
3.12
|
Intellectual
Property
|
14
|
3.13
|
Communications
Regulatory Matters
|
15
|
3.14
|
Real
Property
|
16
|
3.15
|
Leases
|
16
|
3.16
|
Material
Contracts
|
17
|
3.17
|
Directors
and Officers
|
18
|
3.18
|
Bank
Accounts
|
18
|
3.19
|
Litigation
|
18
|
3.20
|
Labor
Relations
|
18
|
3.21
|
ERISA
|
20
|
3.22
|
Taxes
|
21
|
3.23
|
Compliance
with Applicable Laws
|
22
|
3.24
|
Environmental
Matters
|
22
|
3.25
|
Interest
in Customers, Suppliers and Competitors
|
24
|
3.26
|
Insurance
|
24
|
3.27
|
Bankruptcy
|
24
|
3.28
|
Brokers’
Fees
|
24
|
3.29
|
Absence
of Other Warranties
|
24
|
Article
IV REPRESENTATIONS AND WARRANTIES OF BUYER
|
25
|
|
4.1
|
Organization,
Qualification, and Corporate Power
|
25
|
4.2
|
Authorization
of Transaction
|
25
|
4.3
|
Noncontravention
|
26
|
4.4
|
Investment
|
26
|
4.5
|
Brokers’
Fee
|
26
|
TABLE
OF
CONTENTS
Page
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4.6
|
Financing
|
26
|
4.7
|
Evaluation
of Business
|
26
|
4.8
|
Regulatory
Approvals
|
27
|
Article
V DISCLOSURE SCHEDULE
|
27
|
|
Article
VI COVENANTS; ADDITIONAL AGREEMENTS
|
27
|
|
6.1
|
General
|
27
|
6.2
|
Notices
and Consents
|
27
|
6.3
|
Regulatory
Matters and Approvals
|
28
|
6.4
|
Operation
of Business
|
28
|
6.5
|
Access
|
30
|
6.6
|
Notice
of Developments
|
30
|
6.7
|
Exclusivity
|
30
|
6.8
|
Director
and Officer Insurance
|
30
|
6.9
|
Tax
Matters
|
31
|
6.10
|
Further
Assurances
|
33
|
6.11
|
Environmental
Matters
|
33
|
6.12
|
Financial
Statements
|
33
|
6.13
|
Books
and Records
|
33
|
6.14
|
Financing
Commitments
|
33
|
6.15
|
Company
Audits
|
33
|
6.16
|
Seller’s
Legal Existence
|
34
|
6.17
|
Employee
Plan Matters
|
34
|
Article
VII CONDITIONS TO OBLIGATION TO CLOSE
|
34
|
|
7.1
|
Conditions
to Obligation of the Buyer
|
34
|
7.2
|
Conditions
to Obligation of Seller
|
36
|
7.3
|
Deemed
Waiver
|
37
|
Article
VIII TERMINATION
|
37
|
|
8.1
|
Termination
of Agreement
|
37
|
8.2
|
Effect
of Termination
|
38
|
8.3
|
Fees
and Expenses
|
38
|
Article
IX SURVIVAL; INDEMNIFICATION
|
39
|
|
9.1
|
Survival
|
39
|
9.2
|
Indemnification
of the Buyer
|
39
|
9.3
|
Indemnification
of the Seller
|
40
|
9.4
|
Procedure
for Indemnification
|
40
|
9.5
|
Remedies
Exclusive
|
41
|
9.6
|
Treatment
of Indemnity Payments
|
42
|
Article
X MISCELLANEOUS
|
42
|
|
10.1
|
Press
Releases and Public Announcements
|
42
|
10.2
|
No
Third-Party Beneficiaries
|
42
|
10.3
|
Agreement
|
42
|
10.4
|
Succession
and Assignment
|
42
|
10.5
|
Counterparts
|
42
|
10.6
|
Headings
|
43
|
10.7
|
Notices
|
43
|
10.8
|
No
Recourse
|
44
|
TABLE
OF CONTENTS
Page
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||
10.9
|
Privilege
and Related Matters
|
45
|
10.10
|
Governing
Law
|
45
|
10.11
|
Amendments
and Waivers
|
45
|
10.12
|
Severability
|
45
|
10.13
|
Construction
|
45
|
10.14
|
Incorporation
of Exhibits and Disclosure Schedule
|
45
|
Execution
Copy
THIS
STOCK PURCHASE AGREEMENT
(the
“Agreement”)
is
made and entered into this 7th
day of
August, 2008 (the “Agreement
Date”),
by
and among Otelco Inc., a Delaware corporation (“Buyer”)
and
Country Road Communications LLC (the “Seller”).
The
Buyer and the Seller are hereinafter sometimes referred to collectively as
the
“Parties”
or
singly as a “Party.”
WHEREAS,
the
Seller owns all of the issued and outstanding capital stock (the “Shares”)
of
each of Pine Tree Holdings, Inc. (“Pine
Tree Holdings”),
Granby Holdings, Inc. (“Granby
Holdings”)
and
War Holdings, Inc. (“War
Holdings”
and,
together with Pine Tree Holdings and Granby Holdings, the “Companies”
and
each a “Company”);
and
WHEREAS,
the
Seller wishes to sell the Shares to the Buyer, and the Buyer wishes to purchase
the Shares from the Seller, upon the terms and subject to the conditions set
forth herein;
NOW,
THEREFORE,
in
consideration of the premises and the mutual promises herein made, and in
consideration of the representations, warranties and covenants herein contained,
the Parties agree as follows:
ARTICLE
I
DEFINITIONS
1.1 Definitions.
As used
in this Agreement, the following terms shall have the definitions set forth
below:
“Agreed
Closing Statement”
has
the
meaning set forth in Section 2.4(a).
“Agreement”
means
this Stock Purchase Agreement (including the Exhibits hereto and the Disclosure
Schedule) and all amendments hereto made in accordance with the provisions
of
Section 10.11.
“Agreement
Date”
has
the
meaning set forth in the preface above.
“Audited
Financial Statements”
has
the
meaning set forth in Section 3.5.
“Balance
Sheet Date”
has
the
meaning set forth in Section 3.5.
“Benefit
Plans”
has
the
meaning set forth in Section 3.21.
“Business”
means
the telecommunications businesses conducted by the Companies and the
Subsidiaries.
“Business
Day”
means
any day other than a Saturday, Sunday or a day on which banks are permitted
or
required to be closed in New York, New York.
“Buyer”
has
the
meaning set forth in the preface above.
“CALEA”
has the
meaning set forth in Section 3.13(d).
“Closing”
has
the
meaning set forth in Section 2.6.
“Closing
Date”
has
the
meaning set forth in Section 2.6.
“Closing
Purchase Price”
has
the
meaning set forth in Section 2.2.
“Closing
Statement”
has
the
meaning set forth in Section 2.3.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Communications
Act”
means
the Communications Act of 1934, as amended.
“Communication
Laws”
means
the Communications Act or the rules, regulations, orders and published policies
of the FCC and all laws, statutes, rules, regulations, ordinances, judgments,
orders, decrees, injunctions and writs of any State PUC or municipal Government
Entity that regulates telecommunications and has jurisdiction over the business
and operations of any Company or Subsidiary.
“Communications
Licenses”
has
the
meaning set forth in Section 3.13(a).
“Company”
and
“Companies”
have
the meanings set forth in the preface above.
“Company
Benefit Plans”
has
the
meaning set forth in Section 6.17.
“Confidentiality
Agreement”
means
that certain Confidentiality and Non-Disclosure Agreement, dated November 5,
2007 by and between the Seller and the Buyer.
“Contracts”
has
the
meaning set forth in Section 3.16.
“Current
Assets”
shall
be as set forth on Schedule
2.3.
“Current
Liabilities”
shall
be as set forth on Schedule
2.3.
“Current
Premium”
has
the
meaning set forth in Section 6.8.
“Cut-Off
Date”
has
the
meaning set forth in Section 9.1.
“Disclosure
Schedule”
has
the
meaning set forth in Article III.
“Environmental
Laws”
means
all applicable Laws, rules, regulations, orders, treaties, statutes, and codes
promulgated by any governmental entity which prohibit, regulate or control
any
environmental, health or safety activity or Hazardous Substance, including,
without limitation, the Comprehensive Environmental Response, Compensation,
and
Liability Act of 1980, the Resource Recovery and Conservation Act of 1976,
the
Federal Water Pollution Control Act, the Clean Air Act and the regulations
promulgated pursuant to any of the foregoing, and all amendments and
modifications of any of the foregoing.
2
“Equipment”
has
the
meaning set forth in Section 3.9.
“Escrow
Agent”
means
the escrow agent serving in such capacity under the Escrow Agreement and the
Special Escrow Agreement.
“Escrow
Agreement”
has
the
meaning set forth in Section 2.7(b).
“Escrow
Amount”
has
the
meaning set forth in Section 2.7(b).
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended.
“FCC”
means
the Federal Communications Commission.
“Final
Closing Statement”
has
the
meaning set forth in Section 2.4(c).
“Final
Purchase Price”
has
the
meaning set forth in Section 2.2.
“Financial
Statements”
has
the
meaning set forth in Section 3.5.
“Financing
Commitments”
has
the
meaning set forth in Section 4.6.
“Firms”
has
the
meaning set forth in Section 10.9.
“GAAP”
means
United States generally accepted accounting principles as in effect from time
to
time, subject to adjustments customary for the telecommunications industry
and,
with respect to Interim Financial Statements and the financial statements
provided in accordance with Section 6.12 hereof, year end and consolidating
adjustments and the omission of footnotes.
“Governmental
Entity”
means
any government or subdivision thereof, whether domestic or foreign, or any
administrative, governmental or regulatory authority, agency, department,
division, commission, court, tribunal or body, whether domestic, foreign or
multinational.
“Granby
Holdings”
has
the
meaning set forth in the preface.
“Hazardous
Substance”
means
any chemical, substance, waste, toxic or hazardous material, pollutant, or
contaminant, regardless of quantity, the use, storage, handling, Release,
disposal, treatment or transportation of which is regulated under Environmental
Laws, including but not limited to petroleum products, asbestos and
polychlorinated biphenyls.
“HSR Act”
means
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
“Independent
Accountants”
has
the
meaning set forth in Section 2.4(c).
“Insurance
Policies”
has
the
meaning set forth in Section 3.26.
“Intellectual
Property”
has
the
meaning set forth in Section 3.12(a).
3
“Interim
Financial Statements”
has
the
meaning set forth in Section 3.5.
“Inventory”
has
the
meaning set forth in Section 3.11.
“IRS”
has
the
meaning set forth in Section 3.21(a).
“Knowledge
of Buyer”
means
that one of the persons listed on Exhibit
1.1(a)
(i)
actually is aware of a particular fact or matter or (ii) the knowledge such
person would reasonably be expected to have as a result of the performance
of
his or her duties in his or her capacity as the person with the position listed
for him or her on Exhibit
1.1(a).
“Knowledge
of Seller”
means
that one of the persons listed on Exhibit
1.1(b)
(i)
actually is aware of a particular fact or matter or (ii) the knowledge such
person would reasonably be expected to have as a result of the performance
of
his or her duties in his or her capacity as the person with the position listed
for him or her on Exhibit
1.1(b).
“Law”
means
any federal, state, local or foreign law, statute, code, ordinance, rule,
regulation, judgment, order, injunction, decree, arbitration award, agency
requirement, license or permit of any Governmental Entity.
“Leases”
has
the
meaning set forth in Section 3.15.
“Liens”
means
mortgages, deeds of trust, pledges, liens, encumbrances, charges, or other
security interests, other than (i) purchase money Liens and Liens securing
rental payments under capital lease arrangements, and (ii) other Liens arising
in the Ordinary Course of Business and not incurred in connection with the
borrowing of money.
“Local
Authorizations”
has
the
meaning set forth in Section 3.13(a).
“Losses”
has
the
meaning set forth in Section 9.2(a).
“Material
Adverse Effect”
means
with respect to the Buyer or a Company or any of its Subsidiaries, as the case
may be, any event, development, state of facts, occurrence or change that would,
individually or in the aggregate, (i) result in a material adverse effect on
the
business, results of operations or condition (financial or otherwise) of such
party and its subsidiaries taken as a whole or (ii) prevent or delay the
consummation by the Companies of the transactions contemplated by this
Agreement, in each case, other than any such effect attributable to or resulting
from (A) any change in law or any change in the rules or regulations of or
interpretations of law by the FCC, the MPUC, the MDTC, the NHPUC, the PSCWVA
or
any other state public utility commission or other Governmental Entity; provided
that such change does not have a disproportionate effect on the Companies and
the Subsidiaries relative to private companies in the rural telecommunications
industry, (B) any action or omission of any of the Companies or the Buyer or
any
subsidiary of any Party taken with the express prior written consent of the
other Party hereto, (C) any expenses incurred by such party where such expenses
are contemplated by or reasonably incurred in connection with this Agreement
or
the transactions contemplated hereby, or (D) any change resulting from the
announcement or pending nature of the transactions contemplated by this
Agreement or the compliance by such Party with the terms of, or the taking
of
any such action by such Party required by, this Agreement.
4
“Material
Owned Real Property”
means
Real Property owned by a Company or Subsidiary, listed on Schedule
3.14
and
marked with an asterisk.
“MDTC”
means
the Massachusetts Department of Telecommunications and Cable.
“MPUC”
means
the Maine Public Utilities Commission.
“Net
Working Capital”
has
the
meaning set forth in Section 2.5.
“NHPUC”
means
the New Hampshire Public Utilities Commission.
“Notice
of Objection”
has
the
meaning set forth in Section 2.4(a).
“Ordinary
Course of Business”
means
the ordinary course of business materially consistent with past custom and
practice (including with respect to quantity and frequency) or with the business
plan, as the case may be, of a Company and its Subsidiaries.
“Party”
has
the
meaning set forth in the preface above.
“Permits”
has
the
meaning set forth in Section 3.23.
“Permitted
Liens”
means
(i) Liens for Taxes, assessments or other governmental charges or levies not
yet
due, (ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other liens imposed by Law and created in the
Ordinary Course of Business, (iii) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the Ordinary Course of Business in connection
with
workers’ compensation, unemployment insurance or other types of social security,
(iv) minor defects of title, easements, rights-of-way, restrictions and other
similar charges or encumbrances not materially detracting from the value of
the
Real Property or interfering with the ordinary conduct of the Business, (v)
Liens arising out of liabilities reflected on the Financial Statements, and
(vi)
those Liens, if any, listed on Schedule
3.8.
“Person”
means
an individual, partnership, corporation, limited liability company, association,
joint stock company, trust, joint venture, unincorporated organization or
Governmental Entity.
“Pine
Tree Holdings”
has
the
meaning set forth in the preface.
“PSCWVA”
means
the Public Services Commission of West Virginia.
“Real
Property”
means
any real property owned or leased by a Company or any Subsidiary.
“Regulatory
Permits”
has
the
meaning set forth in Section 3.13(a).
5
“Release”
shall
have the meaning assigned it at 42 U.S.C. Section 9601(22) without giving effect
to exception (A) therein.
“Revised
Closing Statement”
has
the
meaning set forth in Section 2.4(a).
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Securities
Exchange Act”
means
the Securities Exchange Act of 1934, as amended.
“Seller”
has
the
meaning set forth in the preface above.
“Shares”
has
the
meaning set forth in the preface above.
“Software”
means
all material computer software used by any of the Companies or any of the
Subsidiaries in the conduct of the Business.
“Special
Escrow Agreement”
has
the
meaning set forth in Section 2.7(b).
“Special
Escrow Amount”
has
the
meaning set forth in Section 2.7(b).
“State
Licenses”
has
the
meaning set forth in Section 3.13(a).
“State
PUCs”
means
collectively, the MPUC, the MDTC, the NHPUC and PSCWVA.
“Subsidiary”
means
any corporation, partnership, limited liability company or other business entity
with respect to which any of the Companies (or a Subsidiary thereof), directly
or indirectly, owns a majority of the ownership interests therein or has the
power to vote or direct the voting of sufficient securities thereof to elect
a
majority of its directors or other persons performing similar
functions.
“Tax”
or
“Taxes”
means
any and all federal, state, provincial, local, foreign and other taxes, levies,
fees, imposts, duties and similar governmental charges (including any interest,
fines, assessments, penalties or additions to tax imposed in connection
therewith or with respect thereto) including (A) taxes imposed on, or
measured by, income, franchise, profits or gross receipts, and (B) ad
valorem, value added, capital gains, sales, goods and services, use, real or
personal property, capital stock, license, branch, payroll, estimated
withholding, employment, social security (or similar), unemployment,
compensation, utility, severance, production, excise, stamp, occupation,
premium, windfall profits, transfer and gains taxes, and customs
duties.
“Tax
Returns”
means
all reports, estimates, declarations of estimated Tax, information statements
and returns relating to Taxes and any schedules attached to or amendments of
any
of the foregoing.
“Trademarks”
has
the
meaning set forth in Section 3.12(a).
“War
Holdings”
has
the
meaning set forth in the preface above.
1.2 Use
of Words and Phrases.
“Herein,” “hereby,” “hereunder,” “hereof,” “hereinabove,” “hereinafter” and
other equivalent words refer to this Agreement as a whole and not solely to
the
particular Section of this Agreement in which any such word is used. The
definitions set forth in Section 1.1 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders. All references to dollars
in
this Agreement shall mean U.S. dollars.
6
ARTICLE
II
PURCHASE
AND SALE
2.1 Purchase
and Sale of the Shares.
Upon
the terms and subject to the conditions of this Agreement, at the Closing,
the
Seller shall sell to the Buyer, and the Buyer shall purchase from the Seller,
the Shares.
2.2 Purchase
Price.
The
aggregate purchase price for the Shares shall be $101,329,000 in cash (the
“Closing
Purchase Price”
and,
after giving effect to any adjustment in accordance with Section 2.3, the
“Final
Purchase Price”).
2.3 Closing
Statement; Revised Closing Statement.
(a) As
soon
as practicable and in no event less than five (5) Business Days prior to the
Closing Date, after consultation with the Buyer, the Seller shall deliver to
the
Buyer a statement (the “Closing
Statement”)
prepared in accordance with the books and records of each Company
and its Subsidiaries setting forth the Net Working Capital as estimated as
of
the open of business on the Closing Date and as determined in accordance with
the format shown on Schedule
2.3
and
consistent in all respects with the definitions of Current Assets and Current
Liabilities contained in this Agreement. Based on the Closing Statement, at
Closing the Closing Purchase Price shall be subject to (i) reduction (on a
dollar for dollar basis) if the Net Working Capital as shown on the Closing
Statement is less than $2,500,000 or (ii) increase (on a dollar for dollar
basis) if the Net Working Capital as shown on the Closing Statement is greater
than $3,000,000. In the event that the Net Working Capital is equal to or
greater than $2,500,000 but equal to or less than $3,000,000, no adjustment
shall be made.
(b) Within
forty five (45) days after the Closing Date, the Buyer shall prepare, in and
after consultation with the Seller, and deliver to the Seller a statement (the
“Revised
Closing Statement”)
setting forth its determination of the Net Working Capital as of the open of
business on the Closing Date as determined in accordance with the format shown
on Schedule 2.3 and consistent in all respects with the definitions of Current
Assets and Current Liabilities in this Agreement. If
the
amount shown by the Buyer to be Net Working Capital on the Revised Closing
Statement is different than the amount shown on the Closing Statement, the
Final
Purchase Price shall be readjusted promptly (on a dollar for dollar basis)
in
accordance with Schedule 2.3 using the amount shown to be Net Working Capital
on
the Agreed Closing Statement or the Final Closing Statement, as applicable.
To
the extent any readjustment is made, then, within five (5) days after such
final
determination is made, either party will pay the other (in immediately available
funds) in accordance with the provision above.
7
2.4 Adjustment
Procedure.
(a) Revised
Closing Statement Review.
During
the thirty (30) days immediately following delivery of the Revised Closing
Statement, the Seller shall be entitled to review the Revised Closing Statement
and any working papers, financial records, trial balances and similar materials
relating to the Revised Closing Statement prepared by the Buyer or by Persons
retained by it, and the Buyer shall provide the Seller with access to the
principal office and the personnel, properties, books and records of each
Company and its Subsidiaries, during normal business hours. The Revised Closing
Statement prepared by the Buyer
shall become final and binding (the “Agreed
Closing Statement”)
upon
the
parties hereto
on
the thirty-first day following receipt thereof by the Seller, unless the Seller
gives written notice
to
the Buyer of its objection to the Revised Closing Statement (a “Notice
of Objection”) prior
to
such thirty-first day. Any Notice of Objection shall specify in reasonable
detail the nature of any objection so asserted.
(b) Closing
Statement Dispute Resolution.
During
the fifteen (15) days immediately following the delivery of any Notice of
Objection, the Buyer and the Seller shall seek in good faith to resolve in
writing any differences which they may have with respect to any matter specified
in such Notice of Objection. During such period, the Buyer and the Seller shall
each have access to the other party’s working papers, financial records, trial
balances and similar materials prepared (by such other party or Persons retained
by it) in connection with the other party’s preparation of the Revised Closing
Statement or the Notice of Objection, as the case may be. The matters set forth
in any such written resolution shall be final and binding on the parties hereto
on the date of such written resolution.
(c) If
the
Buyer and the Seller are unable to agree upon any of the items set forth on
the
Revised Closing Statement, within the fifteen day period referred to in Section
2.4(b), the parties shall mutually engage and submit any unresolved dispute
to,
and the same shall be finally and conclusively resolved in accordance with
the
provisions of this Agreement by Ernst & Young or Deloitte Touche, or such
other accounting firm of national reputation, in either case, as shall be
mutually acceptable to the Buyer and the Seller (the “Independent
Accountants”).
Each
party shall be afforded the opportunity to prepare and submit a written report
to the Independent Accountants. The Buyer and the Seller will instruct the
Independent Accountants to determine and report in writing to the Buyer and
the
Seller as to the resolution of all disputed matters submitted to the Independent
Accountants and the effect of such determinations on the Revised Closing
Statement within twenty (20) days after such submission or such longer period
as
the Independent Accountants may reasonably require, and such determinations
shall be final, binding and conclusive as to the Buyer and the Seller. The
statement setting forth such final and binding determination of the Net Working
Capital as of open of business on the Closing Date is hereinafter referred
to as
the “Final
Closing Statement.”
The
fees and disbursements of the Independent Accountants shall be payable one-half
by the Seller, on the one hand, and one-half by the Buyer, on the other
hand.
2.5 Certain
Definitions.
“Net
Working Capital” means
the
sum of the respective amounts of the consolidated Current Assets of
the
Companies and their respective Subsidiaries
minus
the sum of the respective amounts of the consolidated Current Liabilities of
the
Companies and their respective Subsidiaries as of the open of business on the
Closing Date, as determined in accordance
with the format shown on Schedule
2.3
and
consistent in all respects with the definitions of Current Assets and Current
liabilities contained in this Agreement.
8
2.6 Closing.
The
closing of the transactions contemplated by this Agreement (the “Closing”)
shall
take place at the offices of Xxxxxx & Xxxxxxx LLP, 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx, commencing at 9:00 a.m. local time on the
third (3rd)
Business Day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will
take
at the Closing itself) or such other place and date as the Parties may mutually
determine (the “Closing
Date”);
provided, however, that the Closing Date shall be no later than December 31,
2008, as such date may be extended by the mutual agreement of the
Parties.
2.7 Actions
Prior to or at Closing.
At
least two (2) Business Days prior to the Closing, the Seller shall provide
to
the Buyer (i) a payoff letter from each holder of indebtedness listed on
Schedule
2.7(b)(ii)
indicating the amount required to discharge such indebtedness, including wire
transfer instructions. At the Closing,
(a) the
Seller will deliver to the Buyer
(i) stock
certificates evidencing the Shares duly endorsed in blank, or accompanied by
stock powers duly executed in blank;
(ii) a
receipt
for the Closing Purchase Price; and
(iii) the
various certificates, instruments and documents referred to in Section 7.1,
and
(b) the
Buyer
will deliver
(i) to
the
Escrow Agent, $6,300,000 (the “Escrow
Amount”)
to be
held by the Escrow Agent in a separate account pursuant to the Escrow Agreement
in the form annexed hereto as Exhibit
2.7(b)
(the
“Escrow
Agreement”)
to
provide for a source of the satisfaction of Seller’s obligations, if any, under
Sections 2.4 and 9.2 of this Agreement, as well as any payments due to Buyer
under the Special Escrow Agreement in excess of the Special Escrow Amount;
(ii) to
any
holders of indebtedness listed on Schedule
2.7(b)(ii),
the
amount set forth in the payoff letters referenced in the first sentence of
this
Section 2.7;
(iii) to
the
Escrow Agent, $1,300,000 (the “Special
Escrow Amount”)
to be
held by the Escrow Agent in a separate account pursuant to the Special Escrow
Agreement in the form annexed hereto as Exhibit
2.7(b)(iii)
(the
“Special
Escrow Agreement”)
to be
released in accordance with the terms of the Special Escrow Agreement.
(iv) to
the
Seller, the remainder of the Closing Purchase Price, after giving effect to
clauses (i), (ii) and (iii) above, by wire transfer in immediately available
funds as directed by the Seller; and
(v) to
Seller, the various certificates, instruments and documents referred to in
Section 7.2.
9
The
amount held by the Escrow Agent under Section 2.7(b)(i) will bear interest
at
the rate provided for in the Escrow Agreement and, subject to the provisions
of
the Escrow Agreement, shall be paid to Seller on the first anniversary of the
Closing Date.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SELLER
The
Seller represents and warrants to the Buyer that the statements contained in
this Article III are correct and complete as of the Agreement Date and will
be
correct and complete as of the Closing Date, except as set forth in the
Disclosure Schedule identified in this Article III “Disclosure
Schedule”).
The
numbering of the Disclosure Schedule will correspond to the numbered Sections
contained in this Article III.
3.1 Capacity
of Seller.
The
Seller is a limited liability company duly formed and validly existing under
the
laws of the State of Delaware. The Seller has full limited liability company
power and authority to conduct its business as it is presently conducted, to
enter into this Agreement, to carry out the Seller’s obligations hereunder and
to consummate the transactions contemplated hereby. This Agreement has been
duly
executed and delivered by the Seller, and assuming due execution and delivery
by
the Buyer, this Agreement constitutes a legal, valid and binding obligation
of
the Seller, enforceable against the Seller in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting rights of creditors
generally or by general principles of equity.
3.2 Organization,
Qualification, and Power.
Each
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. Schedule
3.2
contains
a list of each Company’s Subsidiaries. Each Subsidiary is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its
organization. Each Company and its Subsidiaries are duly authorized to conduct
business and are in good standing under the laws of each jurisdiction in which
the character and location of their respective properties or the nature of
their
respective businesses require qualification, except where the lack of such
qualification would not have a Material Adverse Effect. Each Company and its
Subsidiaries have full legal power and authority to own their respective
properties and to carry on that portion of the Business they presently are
conducting.
The
Seller has previously delivered or made available to the Buyer complete and
correct copies of (i) the articles of incorporation and bylaws of each Company
and its Subsidiaries (or comparable organizational documents) and all amendments
thereto, (ii) the minutes of board of directors meetings and shareholder
meetings of each Company and each Subsidiary in the possession of the Seller
and
(iii) organizational documents, agreements of partnership, buy-sell agreements,
shareholder agreements, shareholder control agreements and other similar
documents and agreements applicable to each Company and its Subsidiaries and
in
the possession of the Seller. Such documents are in full force and
effect.
10
3.3 Capitalization;
Constituent Documents.
The
authorized capital of Pine Tree Holdings consists of 1,000 shares of common
stock, $0.01 par value per share, of which 1,000 shares are issued and
outstanding. The authorized capital of Granby Holdings consists of 1,000 shares
common stock, $0.01 par value per share, of which 100 shares are issued and
outstanding. No shares of the capital stock of any of the Companies are
preferred shares or held as treasury shares. The authorized capital of War
Holdings consists of 1,000 shares of common stock, $0.01 par value per share,
of
which 100 shares are issued and outstanding. The record owners of all of the
issued and outstanding capital stock or other equity interests of each of the
Subsidiaries are as listed on Schedule
3.3.
Except
as set forth on Schedule
3.3,
all of
the Shares have been duly authorized and are validly issued, fully paid and
nonassessable, free and clear of preemptive (or similar) rights and are held
free and clear of any Liens, other than Permitted Liens. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts or commitments
that could require any of the Companies or any of the Subsidiaries to issue,
sell or otherwise cause to become outstanding any of its capital stock. There
are no outstanding or authorized stock appreciation, phantom stock, or similar
rights with respect to any Company or its Subsidiaries.
Except
as set forth on Schedule
3.3,
there
are no voting trusts, proxies or other commitments, understandings, restrictions
or arrangements in favor of any Person with respect to the voting of, or right
to participate in dividends or other earnings, on any capital stock of any
Company or Subsidiary.
3.4 Noncontravention.
Except
as set forth on Schedule
3.4,
neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any Law to which any Company
or any Subsidiary is subject, or (ii) conflict with, result in a breach of,
constitute (with or without notice or lapse of time or both) a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice or consent under any
agreement, contract, lease, license, instrument or other arrangement to which
a
Company or a Subsidiary is a party, by which such Company or Subsidiary is
bound
or to which any of their assets are subject (or result in the imposition of
any
Lien upon any of their assets), except where the violation, conflict, breach,
default, acceleration, termination, modification, cancellation, failure to
give
notice or Lien would not have a Material Adverse Effect. Neither the execution
and delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will violate any provision of the articles of incorporation
or bylaws (or similar governing documents) of the Companies or the Subsidiaries.
Other than in connection with (i) the provisions of the HSR Act and state
securities laws, (ii) the necessary notices to and approvals or consents of
the
State PUCs and the FCC, and (iii) the necessary notices to and approvals and
consents, if any, of other state public utility commissions or similar state
regulatory bodies pursuant to applicable state laws regulating the telephone
or
other telecommunications business, none of the Seller, the Companies or the
Subsidiaries are required to give notice to, file with or obtain authorization,
consent or approval of any Governmental Entity in order for the Seller to
perform its obligations under this Agreement, except where the failure to give
such notice to file or to obtain such authorization, consent or approval would
not have a Material Adverse Effect.
11
3.5 Financial
Statements.
The
Seller has heretofore furnished the Buyer with true and complete copies of
(i)
the unaudited consolidated balance sheets and income statements of each of
the
Companies and its respective Subsidiaries for the fiscal years ended December
31, 2006 and December 31, 2007, and (ii) the unaudited consolidated balance
sheet and income statement of each of the Companies and its respective
Subsidiaries for the one month and four month periods ended April 30, 2008
((the
“Interim
Financial Statements”)
such
date, the “Balance
Sheet Date”).
The
financial statements referred to in clauses (i)-(ii) above are collectively
referred to herein as the “Financial
Statements”.
Except
as disclosed therein, the Financial Statements, insofar as they related to
any
of the Companies and its respective Subsidiaries, are complete and correct
in
all material respects, have been prepared on a consistent basis and present
fairly the financial position and operating results of the respective entity
as
of the dates, and during such periods, indicated therein, subject to the
disclosures set forth on Schedule
3.5.
Notwithstanding the foregoing, the occurrence of any event or action, or the
incurring of any claim or liability, that adversely affects the financial
position or operating results of the Companies or the Subsidiaries as of the
dates, and during the periods, covered by, and as presented in, the Financial
Statements shall not constitute a breach of or an inaccuracy in this Section
3.5
if said event, action, claim or liability is the subject of or is covered by
another Section within this Article III (e.g., litigation is the subject of
and
is covered by Section 3.19) and the occurrence or incurring thereof does not
constitute a breach of or inaccuracy in such other Section.
3.6 Absence
of Changes.
Except
as set forth on Schedule
3.6,
and as
contemplated hereby, since December 31, 2007 and through the Agreement Date,
(i)
none of the Companies nor any of the Subsidiaries has suffered any Material
Adverse Effect; (ii) none of the Companies nor any of the Subsidiaries has
entered into any transaction that was not in the Ordinary Course of Business;
(iii) except for sales of goods and services in the Ordinary Course of Business,
there has been no sale, assignment, transfer, mortgage, pledge, encumbrance
or
lease of any material asset or property including capital stock of a Company
or
any of its Subsidiaries; (iv) there has been no material change in Tax or
financial accounting methods or practices from those used in the preparation
of
the most recently filed Tax Returns or the Financial Statements, or revaluation
of any asset of any Company or any of its Subsidiaries (other than accounts
receivable written down in the Ordinary Course of Business); (v) there has
been
no material damage, destruction to or loss of, physical property adversely
affecting the Business; (vi) there has been no material loan by any Company
or
any of its Subsidiaries, or guaranty by any Company or any of its Subsidiaries
of any loan, to any employee of any Company or any of its Subsidiaries; (vii)
none of the Companies nor any of the Subsidiaries have ceased to transact
business with any customer that, as of the date of such cessation, represented
more than five percent (5%) of the annual gross revenues of the applicable
Company; (viii) none of the Companies nor any of the Subsidiaries have failed
to
satisfy any of its debts, obligations or liabilities related to the assets
of
the applicable Company as the same became due and payable (except for accounts
payable which are paid in accordance with past practices and in the Ordinary
Course of Business); (ix)
no
material Contract has been
accelerated, suspended, terminated, modified or cancelled;
(x)
none
of the Companies nor any of the
Subsidiaries has canceled any debts or waived any claims or rights with a value
greater than $25,000;
(xi) none of the Companies nor any of the Subsidiaries has disposed of or
permitted to
lapse
any rights to the use of any patent, trademark, trade name or copyright;
(xvi)
none of the Companies nor any of the Subsidiaries has entered, amended, modified
or terminated any employment, collective bargaining or noncompetition agreement
or Benefit Plan or made any changes in the terms of employment, compensation
or
benefits of any of its directors, officers or employees, except for entering
into, amending, modifying or terminating such agreements and making such changes
in the Ordinary Course of Business, (xvii) none of the Companies nor
any
of the Subsidiaries has failed to maintain in full force and effect all existing
policies of insurance
at least at such levels as were in effect prior to such date or canceled any
such insurance
or, to the Knowledge of Seller, taken or failed to take any action that would
enable the insurers under such policies to avoid liability to claims arising
our
of occurrences prior to the Closing; and (xviii) there
has
been no agreement or commitment by any Company or any of its Subsidiaries to
do
any of the foregoing.
12
3.7 No
Undisclosed Liabilities.
None of
the Companies nor any of the Subsidiaries has any liability or obligation of
the
type that would be required to be reflected on a balance sheet of such entity
prepared in accordance with GAAP except (i) as set forth on Schedule
3.7;
(ii)
debts, liabilities and obligations incurred in the Ordinary Course of Business
after the Balance Sheet Date, that would not have a Material Adverse Effect,
(iii) liabilities reflected on the Financial Statements, and (iv) those debts,
liabilities or obligations incurred as a result of the transactions contemplated
hereby. Notwithstanding the foregoing, no debt, liability or obligation shall
constitute a breach of or an inaccuracy in this Section 3.7 if said debt,
liability or obligation is the subject of or is covered by another Section
within this Article III (e.g., litigation is the subject of and is covered
by
Section 3.19) and the existence of said debt, liability or obligation does
not
constitute a breach or inaccuracy in such other Section.
3.8 Title
to Properties.
Except
as set forth on Schedule
3.8,
each
Company and each Subsidiary has good and marketable title to all its owned
Real
Property and tangible personal property and assets used in the Business, and
valid leasehold interests to all of its leased property used in the Business,
in
each case free and clear of any and all Liens other than Permitted Liens. The
existence of mortgages, security interests, encumbrances and other Liens, other
than those expressly set forth in this Agreement, shall not be objections to
title, provided that properly executed instruments, in recordable form,
necessary to satisfy the same are delivered to the Buyer at
Closing.
3.9 Equipment,
Etc.
Except
as set forth on Schedule
3.9,
all
items of tangible personal property (including computer hardware) used in the
operation of the Business (the “Equipment”),
in
the aggregate, are in satisfactory condition and repair, ordinary wear and
tear
excepted, so as to operate the Business in the manner in which it is now
operated by the Companies and the Subsidiaries.
3.10 Receivables.
Except
as set forth on Schedule
3.10,
all of
the trade receivables and notes receivable which are reflected on the Financial
Statements or which arose subsequent to December 31, 2007, arose out of bona
fide, arms-length transactions and, to the Knowledge of Seller, all such
receivables are good and collectible (or have been collected) in the Ordinary
Course of Business in accordance with their terms, and at the aggregate recorded
amounts thereof, using normal collection practices, less the amount of
applicable reserves for doubtful accounts and for allowances and discounts.
To
the Knowledge of Seller, all such reserves, allowances and discounts were and
are adequate.
3.11 Inventory.
To the
Knowledge of Seller, all inventory of the Companies and the Subsidiaries which
is held for use, sale or resale (the “Inventory”)
consists of items of a quantity and quality historically useable and/or saleable
in the Ordinary Course of Business, except for items of obsolete and slow-moving
material and materials which are below standard quality, all of which have
been
written down on the Financial Statements to estimated net realizable value
in
accordance with the Ordinary Course of Business.
13
3.12 Intellectual
Property.
(a) List
of Intellectual Property.
Schedule
3.12
sets
forth an accurate and complete list of all of the following which are used
in
the Business or in which any of the Companies or the Subsidiaries claim any
ownership rights: (i) all trademarks, service marks, trade names, trade dress,
domain names and other indicia of origin, and all registrations and pending
applications to register any of the foregoing (collectively, together with
the
associated good will of each, “Trademarks”);
(ii)
all patents and the pending patent applications (provisional or non-provisional)
and any division, continuation or continuation-in-part thereof; (iii) all
copyrights and all copyrightable works, and all registrations, applications
for
registration, extensions and renewals thereof; (iv) all licenses of rights
in
Trademarks, patents, copyrights and other intellectual property, whether to
or
by any Company or any Subsidiary (for this purpose, excluding so-called
“off-the-shelf” products and “shrink wrap” software licensed to any of the
Companies or Subsidiaries in the Ordinary Course of Business and easily
obtainable without material expense); and (v) all Software developed by any
Company or any Subsidiary. The rights required to be so identified, together
with all proprietary know how and trade secrets which are material to any
Company, any Subsidiary or the Business, are referred to herein collectively
as
the “Intellectual
Property.”
(b) Ownership
of Intellectual Property.
Either
a Company and/or a Subsidiary has the sole, exclusive and irrevocable title
to,
or is duly authorized to use, the Intellectual Property, and, except for as
set
forth on Schedule
3.12,
has not
granted any liens, mortgages or encumbrances thereon or thereto. The
Intellectual Property is valid and enforceable and has been maintained in good
standing, and no Company or Subsidiary has undertaken or omitted to undertake
any acts and, to the Knowledge of Seller, no circumstances or grounds exist,
that would invalidate, reduce or eliminate, in whole or in part, the
enforceability or scope of such Intellectual Property.
(c) Intellectual
Property Disputes. Except as set forth on Schedule
3.19,
there
are no pending or, to the Knowledge of Seller, threatened, claims (whether
orally or in writing), that any Company or Subsidiary has infringed,
misappropriated, diluted or violated any intellectual property rights of any
third party. The use of the Intellectual Property by any Company or Subsidiary
has not and does not infringe upon, misappropriate, dilute or violate the
intellectual property rights of any third party. To the Knowledge of Seller,
(i)
the Intellectual Property has not been and is not being infringed,
misappropriated, diluted or violated by any third party and, (ii) no
circumstances or grounds exist that would indicate that the Intellectual
Property is about to be so infringed, misappropriated, diluted or violated.
(d) Computer
Software.
The
Seller has heretofore furnished the Buyer with a list of all Software (for
this
purpose, excluding so-called “off-the-shelf” products and “shrink wrap” software
licensed to any of the Companies or Subsidiaries in the Ordinary Course of
Business and easily obtainable without material expense). Either a Company
and/or a Subsidiary currently owns or licenses, or otherwise have the legal
right to use, all of the Software (including any upgrade, alteration or
enhancement with respect thereto), and to the Knowledge of Seller, all of the
Software is being used in compliance with applicable licenses or other
agreements.
14
3.13 Communications
Regulatory Matters.
(a) Except
as
set forth in Schedule
3.13(a)(i),
each of
the Companies or their respective Subsidiaries has all permits, licenses,
variances, exemptions, waivers, orders, approvals, concessions, registrations
and other authorizations issued or provided by each Governmental Entity that
regulates telecommunications in each applicable jurisdiction (together with
any
renewals, extensions, or modifications thereof and any additions thereto made
as
of the Closing Date, “Communications
Licenses”),
including (i) the FCC; (ii) the State PUCs, as applicable (together with any
renewals, extensions, or modifications thereof and any additions thereto made
as
of the Closing Date, the “State
Licenses”);
and
(iii) all permits, licenses, franchises, approvals, rights-of-way or other
authorizations issued or provided by the appropriate municipal governmental
entities (together with any renewals, extensions, or modifications thereof
and
any additions thereto made as of the Closing Date, the “Local
Authorizations”
together with the Communications, Licenses and the State Licenses the
“Regulatory
Permits”);
in
each case that are required for the conduct of the Business and to the extent
that any failure to hold such Regulatory Permits would not have a Material
Adverse Effect. Schedule
3.13(a)(ii)
sets
forth a true, correct and complete list of all of the Communications Licenses
and correctly specifies the expiration date of each Communications License
in
effect as of the Agreement Date. No Company is required to obtain or hold in
its
own name any Communication Licenses in order for its Subsidiaries to conduct
business as presently conducted.
(b) Except
as
set forth in Schedule
3.13(b),
each of
the Communications Licenses was duly issued, is valid and in full force and
effect, has not been suspended, canceled, revoked or modified in any materially
adverse manner and is not subject to conditions or requirements that are not
generally imposed on such authorizations.
(c) Except
as
set forth in Schedule
3.13(c),
(i)
each holder of a Communications License is in material compliance with, and
the
conduct of its business has been and is in material compliance with, the terms
of the Communications Licenses, the Communications Act, and any applicable
Communications Laws; (ii) each such holder has timely filed all material
registrations and reports that were due to be filed in the three years prior
to
the execution of this Agreement, including any renewal applications, required
by
the Communications Act, or any other applicable Communications Laws, and all
such registrations and reports were true and correct in all material respects;
and (iii) each such holder has paid all amounts owed to the FCC, any State
PUC
or any municipal Governmental Entity in connection with the grant and
maintenance of the good standing of the Communications Licenses and no further
amounts are currently due to the FCC, any State PUC or any municipal
Governmental Entity. Except as set forth in Schedule
3.13(c),
(x)
there is no pending or, to the Knowledge of Seller, any threatened action by
or
before the FCC, any State PUC, or any municipal Governmental Entity to revoke,
cancel, suspend, modify or refuse to renew any material Communications License,
(y) there is not now issued, outstanding or, to the Knowledge of Seller,
threatened, any notice by the FCC, any State PUC, or any municipal Governmental
Entity, any material violation or complaint, or any application, complaint,
or
proceeding (other than applications, proceedings, or complaints that generally
affect the industry of the applicable Company or any of its Subsidiaries as
a
whole) relating to the Business or operations of the applicable Company and
its
Subsidiaries, and (z) to the Knowledge of Seller, no Person has asserted in
writing to a Governmental Entity that any material Communications License should
be modified or revoked, or that any Company or Subsidiary is not in material
compliance with any Communications License.
15
(d) Without
limiting the foregoing, each Subsidiary (i) complies in all material respects
with the requirements of the Communications Assistance for Law Enforcement
Act
(“CALEA”),
47
U.S.C. Sec. 1001 et seq. and the implementing rules of the FCC; (ii) is capable
of providing enhanced 911 service in material compliance with 47 U.S.C.
Sec.251(e)(3) and the implementing rules of the FCC and FCC policies thereunder;
and (iii) currently is a party to and is in material compliance with any and
all
necessary pole sharing, conduit occupancy or similar agreements and is currently
in material compliance with any and all Laws of the FCC, any State PUC, or
any
municipal Governmental Entity with regard to the placement and/or spacing of
telephone lines.
(e) The
regulatory tariffs applicable to the Company and each Subsidiary stand in full
force and effect in accordance with their terms, and there is no outstanding
notice of suspension, cancellation or termination or, to the Knowledge of
Seller, any threatened suspension, cancellation or termination in connection
therewith. None of the Companies nor any Subsidiary is subject to any
restrictions or conditions applicable to its regulatory tariffs that limit
or
would materially limit the operations of the Companies or the Subsidiaries
(other than restrictions or conditions generally applicable to tariffs of that
type). To the extent that regulatory approvals are required under the
Communications Laws, each such tariff has been duly and validly approved by
the
appropriate regulatory agency. None of the Companies nor any Subsidiary is
in
violation under the terms and conditions of any such tariff, and there is no
basis for any claim of violation by any Company or Subsidiary under any such
tariff.
3.14 Real
Property.
(a) Schedule
3.14
contains
a list of all Real Property.
(b) Except
as
set forth on Schedule
3.14
to the
Knowledge of Seller, there are no parties in possession of any portion of the
Real Property other than one of the Companies or one of the Subsidiaries,
whether as lessees, sublessees, tenants at will or trespassers, which materially
impair the use thereof in a manner which it is now operated by such Company
or
Subsidiary.
(c) To
the
Knowledge of Seller, there is no Law, that would require any material
expenditure by any Company or any Subsidiary to modify or improve any of the
Real Property to bring it into compliance therewith that would have a Material
Adverse Effect.
3.15 Leases.
Schedule
3.15
contains
a list of all material leases pursuant to which any of the Companies or any
of
the Subsidiaries leases from a Person other than a Company or a Subsidiary,
as
lessor or lessee, real or tangible personal property used in operating the
Business or otherwise (the “Leases”),
true
and complete copies of which have previously been made available to the Buyer.
All of the Leases are valid, binding and enforceable against the applicable
Company or Subsidiary and, to the Knowledge of Seller, against the other parties
thereto, in accordance to their respective terms, and there is not under any
such Lease any existing default by the applicable Company or Subsidiary, or
by
any other party thereto, or any condition or event that, with notice or lapse
of
time or both, would constitute a default. None of the Companies nor any of
the
Subsidiaries has received notice that the lessor of any of the Leases intends
to
cancel, suspend or terminate such Lease or to exercise or not exercise any
option thereunder. For purposes of inclusion on Schedule
3.15,
a Lease
shall be deemed material if it is a lease for real property or if it requires
the payment by, or to, a Company or its Subsidiaries of $25,000 or more during
any twelve (12) month period for tangible personal property.
16
3.16 Material
Contracts.
(a) Schedule
3.16
contains
a list of all material contracts, agreements and commitments (whether written
or
oral) to which any Company or any Subsidiary is, directly or indirectly, a
party
(in its own name or as a successor in interest), or by which it or any of its
properties or assets is otherwise bound, in each case that is in effect on
the
Agreement Date (collectively, the “Contracts”),
including the following: (i) all franchise, dealer, or other distribution
agreements pursuant to which any of them sells or otherwise distributes its
products or services; (ii) all supply contracts, construction contracts, or
other such agreements or understandings pursuant to which any of them purchased
in 2007, or expects to purchase in 2008, in excess of $50,000 in products or
services; (iii) any agreement involving the licensing of Intellectual Property
or the payment of royalties; (iv) any consulting agreement providing for total
remaining payments by any of them in excess of $50,000, (v) an agreement that
would restrict a Company’s or any Subsidiary’s ability to compete in any
business in any location, (vi) agreements concerning a partnership or joint
venture; (vii) any guaranty or undertaking to be liable for the debts of others;
(viii) any letters of credit; (ix) any agreement relating to ownership of or
investments in any Person (including investments in joint ventures and minority
equity investments); (x) any agreement relating to business acquisitions or
dispositions entered into since January 1, 2007, including any not yet
consummated; (xi) any resale or collocation agreements with any communications
carriers; (xii) contracts for the sales of any capital asset in excess of
$50,000; (xiii) contract for capital expenditures in excess of $100,000, outside
the Ordinary Course of Business; (xiv) any written warranties, guaranties or
similar undertakings with respect to contractual performance extended by a
Company or any Subsidiary other than in the Ordinary Course of Business; (xv)
contracts terminable by any other party upon a change of control of a Company
or
any Subsidiary or upon failure of a Company or any Subsidiary to satisfy
financial or performance criteria; (xvi) any employment agreement containing
provisions of severance, otherwise limiting any Company or Subsidiary to
terminate such agreement or the employment of the individual under such
agreement, or providing rights or benefits to the employee in the event of
a
change of control of any Company or any Subsidiary or (xvii) powers of attorney
that are currently in effect.
(b) True
and
complete copies of the Contracts (or a true and compete narrative description
of
any oral Contract) previously have been made available to the Buyer. Except
as
set forth on Schedule
3.16,
none of
the Companies, the Subsidiaries, nor, to the Knowledge of Seller, any other
party to any of the Contracts (i) is in default under (nor does there exist
any
condition that, with notice or lapse of time or both, would cause such a default
under) any of the Contracts, or (ii) has waived any right it may have under
any
of the Contracts. All of the Contracts constitute valid and binding obligations
of a Company and/or its Subsidiaries, enforceable in accordance with their
respective terms, and to the Knowledge of Seller, of the other parties thereto.
For purposes of inclusion on Schedule
3.16,
a
Contract shall be deemed material if it requires the payment by, or to, any
Company or its Subsidiary of $50,000 or more during any twelve (12) month
period.
17
3.17 Directors
and Officers.
Schedule
3.17
contains
a list, as of the Agreement Date, of the directors and officers of each Company
and its Subsidiaries.
3.18 Bank
Accounts.
Schedule
3.18
contains
a list, as of the Agreement Date, of each bank or other financial institution
in
which a Company or any Subsidiary has an account, safe deposit box or lock
box
arrangement, the name of the Company or Subsidiary in whose name such account,
box or arrangement is held, the identifying numbers or symbols of the account,
box or arrangement, and the name of each person authorized to draw thereon
or to
have access thereto.
3.19 Litigation.
Except
as set forth on Schedule
3.19,
there
is no suit, action, claim, investigation or proceeding pending, or, to the
Knowledge of Seller, threatened, against any of the Companies, any of the
Subsidiaries, or the Business, nor is there any judgment, decree, injunction
or
order of any applicable Governmental Entity or arbitrator outstanding against
a
Company or any of its Subsidiaries, which would have a Material Adverse
Effect.
3.20 Labor
Relations.
Except
as set forth on Schedule
3.20:
(a) None
of
the Companies nor any of the Subsidiaries is a party to any collective
bargaining agreement; no collective bargaining agent has been certified as
a
representative of any of the employees of any of the Companies or any of the
Subsidiaries; no representation campaign or election is now in progress with
respect to any employee of a Company or its Subsidiaries; and there are no
labor
disputes, grievances, controversies, work stoppages, strikes or requests for
union representation pending, or to the Knowledge of Seller, threatened,
relating to or affecting the Business.
(b) There
is
no pending, or to the Knowledge of Seller, threatened action, complaint,
arbitration, proceeding or investigation against the Companies or any of the
Subsidiaries by or before any court, governmental agency, administrative agency,
board, commission or arbitrator brought by or on behalf of any prospective,
current or former employees of the Company or any of its Subsidiaries. To the
Knowledge of Seller, none of the Companies nor any of their Subsidiaries is
currently under review, audit, investigation, or prosecution by or subject
to
any order, consent decree, or conciliation agreement from any federal, state,
or
local governmental agency with respect to any employment or labor practices,
including but not limited to the U.S. Department of Labor, the U.S. Department
of Homeland Security, the U. S. Office of Federal Contract Compliance, the
National Labor Relations Board, the U.S. Occupational Safety and Health
Administration, or the state or local counterparts. None of the Companies or
the
Subsidiaries has received written notice of the commencement of any action
asserting that any of the Companies or the Subsidiaries has engaged in any
unfair labor practice.
18
(c) The
Companies and each of the Subsidiaries have complied in good faith with all
applicable federal, state, and local labor and employment Laws, including laws
regulating wage and hour practices and Laws prohibiting discrimination in the
terms and conditions of employment, except where such noncompliance would not
reasonably be expected to have a Material Adverse Effect. For each employee
hired within the last ten (10) years and employed in the United States, the
employee has completed and the employing Company or Subsidiary has retained
an
Immigration and Naturalization Service Form I-9 in accordance with applicable
rules and regulations. No employee is a non-permanent resident employee whose
status would terminate or otherwise be affected by the business transaction
consummated by this Agreement.
(d) As
of the
Agreement Date, there are no workers’ compensation claims pending against the
Companies or the Subsidiaries, nor is the Seller aware of any facts, that will
or reasonably could give rise to such claims. No employee is on a leave of
absence or is otherwise not actively at work for any reason. Schedule
3.20(d)
includes
a complete list of all manager level or above employees and all employees of
each Company or any of its Subsidiaries who receives annualized salary of at
least Fifty Thousand Dollars ($50,000) as of the Agreement Date. No Company
or
Subsidiary has given notice of termination to or received notice of resignation
from any such employee listed on Schedule
3.20(d).
No
employee or former employee of any Company or any of its Subsidiaries has any
employment, change in control, severance, or similar agreement with any Company
or Subsidiary that would affect or be affected by the transactions contemplated
under this Agreement. Each employee is employed “at will.”
(e) True
and
correct copies of all current employee handbooks, summary plan descriptions,
policy manuals and/or written policies applicable to employees have been
provided to the Buyer. Other than current salary or wages (including
commissions, accrued vacation and sick-leave and non-discretionary bonuses),
no
amount is owing to any employee or former employee of any Company or its
Subsidiaries.
(f) To
the
Knowledge of Seller, no employee of any Company or Subsidiary is subject to
a
non-competition restriction limiting such employee’s ability to be employed by
Buyer in the same capacity as such employee is currently employed by such
Company or Subsidiary.
(g) Seller
has not engaged in any workforce reduction or other action related to any
employee or former employee of the Companies or the Subsidiaries that has
resulted or could result in liability under the Worker Adjustment and Retraining
Notification Act of 1988 or under any comparable law or regulation of a state
or
a foreign jurisdiction, and none of the Seller, the Companies nor the
Subsidiaries has issued any notice that any such action is to occur in the
future.
19
3.21 ERISA.
(a) Schedule
3.21
lists
all Benefit Plans of each Company and its Subsidiaries. With respect to each
Benefit Plan, Seller has furnished or made available to Buyer a current,
accurate and complete copy thereof and all amendments thereto and, to the extent
applicable: (i) any related trust agreement or other funding instrument, (ii)
the most recent determination letter of the Internal Revenue Service (the
“IRS”),
(iii)
any summary plan description and summaries of material modifications, (iv)
if
applicable, for the most recent year (A) the Form 5500 and attached schedules,
and (B) actuarial valuation reports and (v) all material correspondence with
the
IRS or Department of Labor. Except
as
set forth on Schedule 3.21, there are no written employee benefit plans,
agreements or arrangements maintained by any of the Companies or any of the
Subsidiaries, including (i) “employee benefit plans” within the meaning of
Section 3(3) of ERISA, (ii) current or deferred compensation, pension, profit
sharing, vacation or severance plans or programs, or (iii) medical, hospital,
accident, disability or death benefit plans (collectively, “Benefit
Plans”).
All
Benefit Plans that are subject to ERISA have been administered in accordance,
and are in compliance in all material respects with, the applicable provisions
of ERISA, the Code, other applicable law and their respective terms. Each of
the
Benefit Plans that is intended to meet the requirements of Section 401(a) of
the
Code, has been determined by the IRS to meet such requirements in a favorable
determination letter or opinion letter, and such determination or opinion letter
has not been revoked or withdrawn. No Benefit Plan is subject to Title IV of
ERISA or Section 412 of the Code. Each Company and its Subsidiaries has not
engaged in any nonexempt “prohibited transactions,” as such term is defined in
Section 4975 of the Code or Section 406 of ERISA, involving the Benefit Plans
that would subject such Company or its Subsidiaries to any material amount
of
penalty or tax imposed under Section 502(i) of ERISA or Section 4975 of the
Code. Each Company and its Subsidiaries have not engaged in any transaction
described in Section 4069 of ERISA within the last five (5) years.
(b) Except
as
set forth on Schedule
3.21
or
pursuant to the terms of the Benefit Plans, neither the execution and delivery
hereof nor the consummation of the transactions contemplated hereby will (i)
result in any payment (including severance, unemployment compensation or golden
parachute) becoming due to any director, officer of other employee of any
Company, or (ii) increase any benefit otherwise payable under any Benefit Plan
or result in the acceleration of the time of payment or vesting of any such
benefit, which would require such Company to make additional contributions
to
any Benefit Plan. Except
as
set forth on Schedule
3.21,
each
Benefit Plan covers only employees who are employed by Seller or a Company
or
Subsidiary.
Neither Seller nor any Company or Subsidiary, nor any other corporation or
organization controlled by in
common
control with the forgoing within the meaning of Section 4001 of ERISA has at
any
time contributed to any “multi-employer plan” as described in Section 413(c) of
the Code. No employer
securities, employer real property or other employer property is included in
the
assets of
any
Benefit Plan. Neither Seller, nor any Company or Subsidiary have any obligation
to contribute to or any liabilities
with respect to a “defined benefit plan” as defined in Section 3(35) of ERISA,
or a pension
plan subject to the funding standards of Section 302 of ERISA or Section 412
of
the Code.
There are no pending, or threatened, claims, actions or proceedings of any
kind
with respect
to any Benefit Plan, other than routine claims for benefits.
(c) Except
as
set forth on Schedule
3.21,
all
contributions required to be made by any Company or Subsidiary to any Benefit
Plan in accordance with its terms or by Law or regulation and all premiums
due
and payable from any Company or Subsidiary with respect to a Benefit Plan have
been timely made.
(d) The
Seller and each Company and its Subsidiaries do not have any liability in
respect of post-termination or post-retirement health, life, medical or other
welfare benefits to former or current employees thereof, except for benefits
required under Code Section 4980B or any similar state or local
law.
20
(e) Each
Benefit Plan that is a “nonqualified deferred compensation plan” within the
meaning of Section 409A(d)(1) of the Code subject to Section 409A of the Code
has been operated in good faith, reasonable compliance with Section 409A of
the
Code since January 1, 2005 and no Company stock option subject to Code Section
409A was granted at an exercise price less than the fair market value (within
the meaning of Code Section 409A) of a share on the date of grant.
(f) There
is
no action or audit by the Department of Labor, the Pension Benefit Guaranty
Corporation, the IRS or any other Governmental Entity or by any plan participant
or beneficiary pending, or to the Knowledge of Seller, threatened, relating
to
the Benefit Plans, any fiduciaries thereof with respect to their duties to
the
Benefit Plans or the assets of any of the trusts under any of the Benefit Plans
(other
than routine claims for benefits)
nor are
there facts or circumstances that exist that would reasonably be expected to
give rise to any such actions.
3.22 Taxes.
Except
as set forth on Schedule
3.22,
each of
the Companies,
any
Subsidiary, and any affiliated, combined or unitary group of which any Company
is or was a member, as the case may be (each, a “Tax
Affiliate”
and,
collectively, the “Tax
Affiliates”),
has
duly and
timely filed all Tax Returns, including extensions, required to be filed by
it
in respect of any Taxes. All of such Tax Returns are true, complete and accurate
in all material respects. The Companies and the Tax Affiliates have duly and
timely paid all Taxes and other governmental charges, and all interest and
penalties with respect thereto, whether or not shown on said Tax Returns
(whether by way of withholding or otherwise) to any federal, state, local or
other taxing authority (except to the extent the same are being contested in
good faith and adequate reserves therefor have been provided in the Financial
Statements).
No
deficiency for any Taxes has been proposed, asserted or assessed against the
Companies or Tax Affiliates that has not been resolved and paid in full (except
to the extent the same is
being
disputed in good faith by the
relevant Company or Tax Affiliate). No waiver, extension or comparable consent
given by any Company or Tax Affiliate regarding the application of the statute
of limitations with respect to any Taxes or Tax Returns is outstanding, nor
is
any request for any such waiver or consent pending. Since March 6, 2000 in
the
case of War Holdings and its Subsidiary, June 15, 2000 in the case of Pine
Tree
Holdings and its Subsidiaries and February 18, 2001 in the case of Granby
Holding and its Subsidiary, none of the Companies or Subsidiaries has been
a
member of an affiliated group filing a consolidated federal income Tax Return
other than a group the common parent of which is one of the
Companies
or the
Seller. No Company or Subsidiary
(i)
is a
party to, or bound by, or otherwise in any way obligated under, any Tax sharing
or similar agreement;
or (ii)
has any liability for the Taxes of any Person other than a group of which any
Company is the common parent and one or more Subsidiaries is a member, under
Section 1.1502-6 of the United States Treasury Regulations (or any similar
provision of state or local Law), as a transferee or successor, by contract,
or
otherwise.
No
Company or Subsidiary has consented to have the provisions of Section 341(f)(2)
of the Code (or comparable state law provisions) apply to it.
There
are no Liens for Taxes upon any assets of the Companies or the Subsidiaries,
except Liens for Taxes not yet due. No
Company
or Subsidiary has agreed or been requested to make any adjustment under Section
481
of the
Code by reason of a change in accounting method or otherwise.
No
Company or Subsidiary is a party to any Contract that would result, separately
or in the aggregate, in the payment of any “excess parachute payments” within
the meaning of Section 280G of the Code. No claim has been made by a taxing
authority in a jurisdiction where the Companies or the Subsidiaries do not
file
Tax Returns that they, individually or collectively, are or may be subject
to
taxation by that jurisdiction.
None of
the Companies nor any of the Subsidiaries has participated in any reportable
or
listed transaction as defined under Code Section 6011.
21
3.23 Compliance
with Applicable Laws.
To the
Knowledge of Seller, each Company and its Subsidiaries hold all material
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary to own, lease or operate all of the assets
and
properties of such Company and its Subsidiaries, as appropriate, and to carry
on
the Business as presently conducted other than the Regulatory Permits covered
under Section 3.13 hereof (the “Permits”).
Subject to Section 3.13 hereof, each Company and its Subsidiaries are in
material compliance with (i) all Laws applicable to the Business including
those
of the Occupational Safety and Health Administration, Equal Employment
Opportunity Commission, and National Labor Relations Board, and (ii) the terms
of the Permits. Except as set forth on Schedule
3.23,
to the
Knowledge of Seller, none of the Permits will be adversely impacted or affected
by or as a result of the transactions contemplated by this Agreement.
The
Seller has previously provided the Buyer with true and complete copies of a
Permits that are necessary for each Company and its Subsidiaries to operate
their respective Businesses as they are currently being operated. The Permits
are listed on Schedule
3.23.
Since
December 31, 2007, no Company or Subsidiary has received any written, or to
the
Knowledge of Seller, oral notice from and Person or entity alleging
noncompliance with any applicable Law or the terms of any Permit. None of the
Permits will lapse, terminate, expire or in any way be adversely impacted or
affected by or as a result of the performance of this Agreement or the
consummation of the transactions contemplated thereby.
3.24 Environmental
Matters.
(a) Each
Company and Subsidiary is, and since the date each such entity was acquired
directly or indirectly by the Seller has been, in compliance in all material
respects with Environmental Laws. To the Knowledge of Seller, there has been
no
exposure of any person or property to any Hazardous Substance in a manner which
has caused or would reasonably be expected to subject any Company or Subsidiary
to any material liability under applicable Environmental Laws.
(b) To
the
Knowledge of Seller, no Hazardous Substances in quantities or concentrations
which would require notification, investigation, remediation or monitoring
under
applicable Environmental Laws, have been Released or are present on, in, under
or migrating from any Real Property, or, were present on any other real property
at the time it ceased to be owned, operated, occupied, controlled or leased
by
any Company or Subsidiary. No Company or Subsidiary has generated, treated,
stored, Released or disposed of any Hazardous Substance at, on, under, to or
from any of the Real Property except in compliance with Environmental Laws
or in
a manner that would not reasonably be expected to subject any Company or
Subsidiary to material liability under applicable Environmental
Laws.
22
(c) No
Company or Subsidiary is a party to any litigation or administrative proceeding
nor, to the Knowledge of Seller, is any litigation or administrative proceeding
threatened against them, that, in either case, asserts or alleges that a Company
or Subsidiary (i) violated Environmental
Laws,
(ii) is
required to clean up, remove or take remedial or other responsive action due
to
the disposal, deposit, discharge, leak or other Release
of any
Hazardous Substance, or (iii) is required to pay all or a portion of the cost
of
any past, present or future cleanup, removal or remedial or other action that
arises out of or is related to the disposal, deposit, discharge, leak or other
Release
of any
Hazardous Substance.
(d) Each
Company and Subsidiary is in compliance in all material respects with all
covenants and conditions of any environmental permits issued to such Company
or
Subsidiary. To the Knowledge of Seller, no circumstances exist which would
reasonably be expected to cause any environmental permit issued to any Company
or Subsidiary to be revoked, modified, or rendered non-renewable upon payment
of
the permit fee. All environmental permits and all other consents and
clearances
required
pursuant to any applicable Environmental Laws,
or
any agreement to which any Company or Subsidiary is bound as a condition to
the
performance and enforcement of any such permit,
have
been obtained or will be obtained prior to the Closing, except where such
failure would not reasonably be expected to have a Material Adverse Effect.
All
such
environmental permits are listed on Schedule
3.24.
(e) Except
as
set forth on Schedule
3.24,
to
the
Knowledge of Seller, there are no underground storage tanks,
friable
asbestos, urea formaldehyde,
polychlorinated biphenyl-containing materials
or other
facilities or structures on, in,
under
or at any Real Property containing materials that, if known to be present in
soil or ground water, would require cleanup, removal or other remedial action
by
any Company or Subsidiary under any Environmental Laws.
(f) Except
as
set forth on Schedule
3.24,
no
Company or Subsidiary is subject to any judgment, order or
citation
related to or arising out of any Environmental Laws
or has
been named or listed as a potentially responsible party by any Governmental
Entity in a matter related to or arising out of any Environmental Laws.
To the
Knowledge of Seller, there is no fact or circumstance which could result in
any
environmental liability to the Company or any Subsidiary which
could
reasonably be expected to result in a Material Adverse Effect.
(g) To
the
Knowledge of Seller, no Company or Subsidiary has sent any Hazardous Substances
to a site that, pursuant to any applicable Environmental Law (i) has been placed
or proposed for placement on the National Priorities List or any similar state
list, or (ii) is subject to or the source of an order, demand or request from
a
Government Entity to take “response,” “corrective,” “removal,” or “remedial”
action, as defined in any applicable Environmental Law, or to pay for the costs
of any such action at any location.
(h) Seller
has delivered or made available for inspection all records in the possession
of
each Company and Subsidiary concerning any Hazardous Substances or compliance
with Environmental Laws relating to the business, including but not limited
to
all environmental audits, environmental assessments, and environmental
investigations of any Real Property.
23
3.25 Interest
in Customers, Suppliers and Competitors.
Except
as set forth on Schedule
3.25,
no
officer or director of any Company or its Subsidiaries, the Seller and, to
the
Knowledge of Seller, no spouse, parent, sibling or lineal descendent of any
of
the foregoing, has any direct or indirect material interest in any material
customer, supplier or competitor of any of the Companies or any of the
Subsidiaries, or in any Person from whom or to whom any of the Companies or
any
of the Subsidiaries lease any real or personal property, or in any other Person
with whom any of the Companies or any of the Subsidiaries are doing business,
directly or indirectly (including as a debtor or creditor), whether in existence
as of the Closing Date or proposed, other than the ownership of stock of
publicly traded corporations and other entities.
3.26 Insurance.
Each
Company or one of its Subsidiaries currently maintains, in full force and
effect, all insurance policies that are required or customarily maintained
for
the conduct of the Business or the ownership of such Company and its
Subsidiaries’ property (both real and personal), including, without limitation,
workers compensation, and property and casualty insurance (the “Insurance
Policies”).
The
Insurance Policies are listed on Schedule
3.26
and true
and complete copies of all Insurance Policies previously have been made
available to the Buyer. Each Company or its Subsidiaries has paid all premiums
due thereunder and, to the Knowledge of Seller, (i) are not in default regarding
any material provision of any Insurance Policy, and (ii) have not failed to
present any notice or material claim thereunder in a due and timely
fashion.
3.27 Bankruptcy.
None of
the Companies nor any of the Subsidiaries have filed a petition or request
for
reorganization or protection or relief under the bankruptcy laws of the United
States or any state or territory thereof, made any general assignment for the
benefit of creditors, or consented to the appointment of a receiver or trustee,
including a custodian under the United States bankruptcy laws, whether such
receiver or trustee was appointed in a voluntary or involuntary
proceeding.
3.28 Brokers’
Fees.
Other
than Xxxxxx Buckfire & Co., LLC, none of the Seller, the Companies nor any
of the Subsidiaries has any liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
3.29 Absence
of Other Warranties.
Except
as and to the extent expressly set forth in this Article III, the Seller does
not make any representation or warranty whatsoever, and the Seller expressly
disclaims any liability and responsibility for any statement or information
not
contained in this Agreement, any certificates delivered by or on behalf of
Seller pursuant to Article VII, or any other document contemplated hereby made
or communicated, by oversight or otherwise (orally or in writing), to the Buyer
(including, without limitation, any opinion, information, projection, statement
or advice provided by any employee, officer, director, agent, stockholder or
other representative of any of the Companies or any of the Subsidiaries in
connection with the transactions contemplated hereby). Without limiting the
foregoing, the Buyer acknowledges that any estimates of future profitability
of
the Business based upon any financial statements, business plans, projections
or
other financial information provided to the Buyer by or on behalf of the Seller
are inherently uncertain and subject to a variety of variables which are
difficult or impossible to predict.
24
3.30 Related
Party Transactions.
Except
as set forth in Schedule
3.30,
no
officer or director of a Company or any Subsidiary is a party to any transaction
or contract (other than for at-will employment) with a Company or any
Subsidiary.
3.31 Customers. Schedule
3.31
lists
the ten (10) largest customers of the Companies and the Subsidiaries on a
consolidated basis for the fiscal year ended December 31, 2007 and sets forth
opposite the name of each such customer the approximate aggregate amount of
net
sales by the Companies and the Subsidiaries attributable to such customer for
such period. No customer listed on Schedule
3.31
has
given the Seller, any Company or any Subsidiary written or, to the Knowledge
of
Seller, oral notice that it will stop or materially decrease the rate of
business done with such Company or Subsidiary.
3.32 Suppliers. Schedule
3.32
lists
the ten (10) largest suppliers of the Companies and the Subsidiaries on a
consolidated basis for the fiscal year ended December 31, 2007 and sets forth
opposite the name of each such supplier the approximate aggregate amount of
purchases by the Companies and the Subsidiaries attributable to such supplier
for such period. Except as set forth on Schedule
3.32,
no
supplier listed on Schedule
3.32
is a
sole source of supply for any Company. No supplier listed on Schedule
3.32
has
given the Seller, any Company or any Subsidiary written or, to the Knowledge
of
Seller, oral notice that it will stop or materially decrease the rate of
business done with such Company or Subsidiary.
3.33 Availability
of Documents.
The
Company has delivered or made available to Buyer correct and complete copies
of
the items referred to in the Disclosure Schedule or in this Agreement (and
in
the case of any items not in written form, a written description
thereof).
3.34 Indebtedness.
Schedule
3.34
sets
forth a listing of all indebtedness for borrowed money of each Company and
its
Subsidiaries on a consolidated basis as of a recent date.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
OF
BUYER
The
Buyer
represents and warrants to the Seller that the statements contained in this
Article IV are correct and complete as of the Agreement Date and will be correct
and complete as of the Closing Date.
4.1 Organization,
Qualification, and Corporate Power.
The
Buyer is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware.
4.2 Authorization
of Transaction.
The
execution, delivery and performance of this Agreement by the Buyer has been
duly
authorized and approved by the Buyer’s board of directors. The Buyer has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder. Assuming
due execution and delivery by the Seller, this Agreement constitutes the valid
and legally binding obligation of the Buyer, enforceable in accordance with
its
terms and conditions.
25
4.3 Noncontravention.
To the
Knowledge of Buyer, neither the execution and the delivery of this Agreement
nor
the consummation of the transactions contemplated hereby, will (i) violate
any
Law to which the Buyer is subject, or (ii) conflict with, result in a breach
of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
or
consent under any agreement, contract, lease, license, instrument or other
arraignment to which either the Buyer is a party or by which it is or will
be
bound or to which any of its assets are or will be subject (or result in the
imposition of any Lien upon any of its assets), except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice or Lien would not have a Material Adverse
Effect. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will violate any provision
of the charter or bylaws of the Buyer. To the Knowledge of Buyer, and other
than
in connection with (i) the provisions of the HSR Act, the Securities Act, the
Securities Exchange Act and the applicable state securities law, (ii) the
necessary notices to and consents and approvals, if any, of the FCC, and (iii)
the necessary notices to and consents and approvals, if any, of state public
utility commissions or similar state regulatory bodies pursuant to applicable
state laws regulating the telephone, or other telecommunications business,
the
Buyer is not required to give any notice to, file with or obtain authorization,
consent or approval of any Governmental Entity in order for the Buyer to perform
its obligations under this Agreement, except where the failure to give such
noticed to file or to obtain such authorization, consent or approval would
not
have a Material Adverse Effect.
4.4 Investment.
The
Shares are being acquired by the Buyer in a private transaction for its own
account and not with a view to, or for offer or resale in connection with,
any
distribution within the meaning of Section 2(11) of the Securities Act. The
Buyer hereby acknowledges that the Shares are unregistered and must be held
indefinitely unless they are subsequently registered under the Securities Act
or
an exemption from such registration is available. The Buyer acknowledges and
agrees that it will not make any disposition of the Shares which will or may
involve any of the Companies or the Seller in a violation of the Securities
Act,
the Securities Exchange Act or of any state securities laws.
4.5 Brokers’
Fee.
The
Buyer has no liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transaction contemplated by this
Agreement for which the Seller or any of the Companies or Subsidiaries could
become liable or obligated.
4.6 Financing.
The
Buyer possesses, and has furnished to the Seller, true and complete copies
of
binding written commitments from financially responsible providers (the
“Financing
Commitments”)
the
proceeds of which will be sufficient to permit the Buyer to consummate the
transactions contemplated by this Agreement. To
the
Knowledge of Buyer there are no facts or circumstances that would create a
reasonable basis for the Seller to believe the lenders would not be required
or
able to fund the transactions contemplated by this Agreement in accordance
with
the terms hereof.
4.7 Evaluation
of Business.
The
Buyer
acknowledges that Seller makes or has made only the representations and
warranties expressly set forth in Article III and any certificates delivered
by
or on behalf of Seller pursuant to Article VII. In particular, and without
limiting the generality of the foregoing, the Buyer acknowledges that no
representation or warranty is made with respect to any financial projections
or
in any management presentations and accompanying materials.
26
4.8 Regulatory
Approvals.
To
the
Knowledge of Buyer, (i) the Buyer is fully qualified under the Communications
Laws to be a transferee to the Communications Licenses, (ii) there is no fact
or
circumstance in relation to the Buyer or in relation to the combination of
the
assets of the Buyer and the Companies that could reasonably be expected to
result in the denial of the transfer of control to the Buyer of the
Communications Licenses by the FCC or the State PUCs (iii) applications for
FCC
consent to the transfer of control to the Buyer of the Communications Licenses
issued by the FCC should qualify for streamlined processing under Sections
63.03
and 63.12 of the rules of the FCC and (iv) no foreign entity holds a ten percent
(10%) or greater equity or voting interest in the Buyer, and the Buyer is not
controlled by a foreign entity or entities such that the FCC approval process
could reasonably be expected to include review by the Executive Branch agencies
with national security responsibilities (known as “Team Telecom”).
ARTICLE
V
DISCLOSURE
SCHEDULE
Notwithstanding
anything in this Agreement to the contrary, the mere inclusion of an item in
the
Disclosure Schedule as an exception to a representation or warranty shall not
be
deemed an admission by the Seller that such item represents a material exception
or material fact, event or circumstance or that such item has had or could
be
reasonably expected to have a Material Adverse Effect.
The
Disclosure Schedule shall be arranged in sections corresponding to the numbered
and lettered sections and subsections contained in Article III, and the
disclosures in any section or subsection of the Disclosure Schedule shall
qualify other sections and subsections in Article III to the extent it is
readily apparent from a reading of the disclosure that such disclosure is
applicable to such other sections and subsections.
ARTICLE
VI
COVENANTS;
ADDITIONAL AGREEMENTS
6.1 General.
Each of
the Parties will use its reasonable best efforts to take all action and to
do
all things necessary in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of
the
closing conditions set forth in Article VII).
6.2 Notices
and Consents.
The
Seller will cause each of the Companies and each of the Subsidiaries to give
any
notices to third parties, and will use their reasonable best efforts to cause
each of the Companies and each of the Subsidiaries to obtain any third party
consents that the Buyer reasonably may request in connection with the matters
referred to in Section 3.4. The Buyer will give any notices to third parties,
and will use its reasonable best efforts to obtain any third party consents,
that the Seller reasonably may request in connection with the matters referred
to in Section 4.3.
27
6.3 Regulatory
Matters and Approvals.
Each of
the Parties will (and the Seller will cause each of the Companies and each
of
the Subsidiaries to) give any notices to, make any filings with, and use its
reasonable best efforts to obtain any authorizations, consents and approvals
of
Governmental Entities in connection with the matters referred to in Section
3.4
and Section 4.3. Without limiting the generality of the foregoing:
(a) Xxxx-Xxxxx-Xxxxxx
Act.
In
furtherance of and not in limitation of the provisions of the Sections 6.1,
6.2
and 6.3(b), each of the Seller and the Buyer shall, as promptly as practicable,
but in no event later than fifteen (15) Business Days following the execution
and delivery of this Agreement, file, or cause to be filed with the United
States Federal Trade Commission and the United States Department of Justice
the
notification and report form, if applicable, required for the transactions
contemplated hereby and any supplemental information requested in connection
therewith pursuant to the HSR Act. Any such notification and report form and
supplemental information shall be in substantial compliance with the
requirements of the HSR Act. The
Buyer
and the Seller shall each pay one-half of the filing fee required by the HSR
Act.
(b) State
PUCs, FCC and Other State Public Utility Commissions.
Within
fifteen (15) days after the Agreement Date, the Parties will file such
individual or joint applications which may be required, with the applicable
State PUCs, the FCC and other state public utility commissions or similar state
regulatory bodies to reflect the change of control of various operating
certificates, permits or other licenses held by any of the Companies or any
of
the Subsidiaries. The Parties will respond as promptly as practicable to any
additional requests for information received from the FCC, any State PUC or
other Governmental Entity, and use commercially reasonable efforts to cure
not
later than the Closing Date any violation or defaults under any Communications
Law. The Parties shall also file any post-transaction notices as may be required
by such Governmental Entities within the time periods prescribed by Law. The
Buyer and the Seller shall each pay one-half of the filing fees for such
applications.
6.4 Operation
of Business.
Prior
to the Closing, the Seller will not cause or permit any of the Companies or
any
of the Subsidiaries to engage in any practice, take any action or enter into
any
transaction outside the Ordinary Course of Business except as may be required
in
order to comply with this Agreement. Without limiting the generality of the
foregoing, except as set forth on Schedule
6.4,
prior
to the Closing none of the Companies nor any of the Subsidiaries will, without
the prior written consent of the Buyer:
(a) authorize
or effect any change in its certificate of incorporation (or articles of
incorporation, as the case may be) or bylaws (or operating agreement, as the
case may be) in any manner that is adverse to the Buyer;
(b) (i)
split, combine, reclassify or take similar action with respect to any of its
capital shares or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for its capital shares,
(ii) adopt a plan of complete or partial liquidation or resolutions providing
for or authorizing such liquidation or a dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization or (iii) directly or
indirectly redeem, repurchase or otherwise acquire any capital
shares;
28
(c) grant
any
options, warrants or other rights to purchase or obtain any of its capital
stock
(or partnership or membership interests, as the case may be) or issue, transfer,
pledge, encumber, sell or otherwise dispose of or authorize or propose the
issuance, sale, transfer, pledge, encumbrance or other disposal of any of its
capital stock (or partnership or membership interests, as the case may
be);
(d) sell,
lease, sell and leaseback, pledge, grant any security interest in or otherwise
dispose of or encumber any of its assets or properties or any interests therein,
other than sales of inventory or dispositions of replaced or obsolete inventory
each in the Ordinary Course of Business consistent with past practice or enter
into, modify or amend any lease, except for any renewals of existing leases
in
the Ordinary Course of Business;
(e) issue
any
note, bond or other debt security or create, incur, assume or guarantee any
indebtedness for borrowed money or capitalized lease obligation or
guarantee any debt securities of another person, enter into any “keep well” or
other Contract to maintain the financial statement condition of another person
or enter into any arrangement having the economic effect of any of the forgoing
outside
the Ordinary Course of Business, except as issued, created, incurred, assumed
or
guaranteed (i) in a transaction provided for in such Company’s 2008 operating or
capital budget, or (ii) with respect to intercompany loans or transfers among
the Companies and the Subsidiaries;
(f) acquire
or agree to acquire (by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of, or
by
any other manner) (i) any business or any corporation, partnership, association
or other business organization or division thereof, or (ii) any assets other
than inventory, equipment and supplies to be purchased, sold or used in the
Ordinary Course of Business consistent with past practice;
(g) make
any
capital investment in, make any loan to or acquire the securities or assets
of
any other Person, except with respect to intercompany loans or transfers among
the Companies and the Subsidiaries;
(h) make
any
new capital expenditure which individually or in the aggregate is in excess
of
$250,000, other than pursuant to its budgeted capital expenditures for 2008.
(i) except
to
the extent required by applicable Law or Order, make or change any election,
change an annual accounting period, file any amended Tax Return, enter into
any
closing agreement, settle or compromise any Tax claim or assessment relating
to
any Company or Subsidiary, or take any other similar action, or omit to take
any
action relating to the filing of any Tax Return or the payment of any Tax with
respect to any Company or Subsidiary, or consent to any extension or waiver
of
the limitation period applicable to any Tax claim or assessment relating to
the
Companies and the Subsidiaries;
(j) sell,
transfer or license to any person or otherwise extend, amend or modify any
rights to the Intellectual Property of the Companies and the
Subsidiaries;
(k) make
any
change in the terms of any employment agreement, or Benefit Plan applicable
to
any of its directors, officers or employees or engage in any new agreement
or
transaction with any director, officer or employee, or change the terms of
employment, compensation or benefits of any director, officer or employee,
in
each case other than in the Ordinary Course of Business;
29
(l) settle
or
compromise any litigation or other claim or proceeding (whether or not commenced
prior to the date of this Agreement) other than settlements involving payments
that are not in excess of $50,000 in the aggregate over amounts fully
recoverable in insurance;
(m) enter
into any Contract containing any restriction on the ability of the Companies
and
the Subsidiaries to enter in to the transaction contemplated by this Agreement,
unless such restriction expressly excludes the consummation of the transactions
contemplated by this Agreement; or
(n) commit
to
any of the foregoing.
6.5 Access.
Until
the Closing, the Seller will cause each of the Companies and the Subsidiaries
to
permit representatives of the Buyer to have reasonable access, at all reasonable
times, upon reasonable advance notice, and in a manner so as not to interfere
with the normal business operations of the Companies and the Subsidiaries,
to
all premises, properties, personnel, books, records (including Tax records),
contracts and documents of or pertaining to the Companies and the Subsidiaries.
Until the Closing, the Buyer shall continue to be bound by the terms of the
Confidentiality Agreement.
6.6 Notice
of Developments.
From
the date of this Agreement until the earlier of the Closing or the date this
Agreement is properly terminated in accordance with Article VIII, each Party
shall promptly notify the other in writing of (i) any Material Adverse Effect
,
and (ii), any representation or warranty made by such Party contained in this
Agreement becoming untrue or inaccurate in any material respect. Notwithstanding
anything in this Agreement to the contrary, no such notification shall affect
the representations, warranties or covenants of the Parties or the conditions
to
their obligations hereunder, nor shall it limit or otherwise affect the remedies
available hereunder.
6.7 Exclusivity.
Until
the Closing, the Seller will not (and will not cause or permit any of the
Companies, any of the Subsidiaries or any of the respective agents, affiliates
or representatives to) initiate the submission of any proposal or offer from
any
Person relating to the acquisition of all or substantially all of the capital
stock or assets of any of the Companies or any of the Subsidiaries (including
any acquisition structured as a merger, consolidation or share
exchange).
6.8 Director
and Officer Insurance.
On and
after the Closing Date, the Buyer shall provide each individual serving as
a
director or officer of one or more Companies and/or Subsidiaries at any time
prior to the Closing Date with liability insurance for a period of sixty (60)
months after the Closing Date no less favorable in coverage and amount than
any
comparable insurance the Companies or the Subsidiaries maintained, or from
which
such Company or Subsidiary benefited, in effect immediately prior to the Closing
Date with
respect to acts or omissions occurring prior to the Closing Date which were
committed by such officers and directors in their capacity as such; provided
however that (i) the Buyer shall not be obligated to make annual premium
payments for such insurance to the extent such premiums exceed 150% of the
annual premiums paid as of the Agreement Date for such insurance (the
“Current
Premium”)
and
(ii) such policies may in the sole discretion of the Buyer be one or more tail
policies for all or a portion of such sixty (60) month period. If such premium
for such insurance required to be maintained pursuant to this Section 6.8 would
at any time exceed 150% of the Current Premium, then the Buyer shall cause
to be
maintained policies of insurance which, in the Buyer’s good faith determination,
provide the maximum dollar loss coverage available at an annual premium equal
to
150% of the Current Premium.
30
6.9 Tax
Matters.
(a) Liability
for Tax Matters.
Subject
and pursuant to Article IX, the Seller shall be liable for and pay all Taxes
of
the Companies and the Subsidiaries for any Tax period or portion thereof ending
on or before the Closing Date (whether assessed or unassessed) and shall
indemnify and hold harmless the Buyer (and, following the Closing, the Companies
and the Subsidiaries), from and against all Taxes of the Companies,
the
Subsidiaries
and/or
any
affiliated, combined or unitary group of which any Company or Subsidiary is
or
was a member for any Tax period or portion thereof ending on or before the
Closing Date (whether
assessed or unassessed).
The
Seller shall be entitled to any refund actually received by (or actually
credited against the Tax liabilities of) the Buyer, any Company or any
Subsidiary which is attributable to Taxes paid by the Companies or any
Subsidiary for the period prior to and including the Closing Date; provided,
however, that the Seller shall not be entitled to any such refund (or credit)
to
the extent that such refund (or credit) arises from or is attributable to a
Tax
attribute, Tax credit or Tax net operating loss of the Buyer for any taxable
period; provided further that if any such refund (or credit), or portion
thereof, is attributable to the carryback or utilization of a Tax net operating
loss, Tax credit or any other Tax attribute of any Company or a Subsidiary
existing on the Closing Date, the Seller shall be entitled only to such portion
of the refund (or credit) that is attributable to Taxes paid by any Company
or
Subsidiary on or prior to the Closing Date. The Buyer shall be entitled to
any
refund or credit in respect of any Taxes applicable to the business, assets,
or
results of operations of the Companies and Subsidiaries in each case
attributable to all periods of time following the Closing Date.
(b) For
purposes of this Section 6.9, in the case of any Taxes that are imposed on
a
periodic basis and are payable for a taxable period that includes (but does
not
end on) the Closing Date, the portion of such Tax attributable to periods of
time up to and including the Closing Date shall (i) in the case of any Taxes
other than Taxes based upon or related to income or receipts, be deemed to
be
the amount of such Tax for the entire taxable period multiplied by a fraction
the numerator of which is the number of days in the taxable period ending on
the
Closing Date and the denominator of which is the number of days in the entire
taxable period, and (ii) in the case of any Tax based upon or related to income
or receipts, be deemed equal to the amount which would be payable if the
relevant Taxable period ended on the Closing Date.
(c) Consistent
Tax Reporting.
The
Buyer shall file a consolidated federal income Tax Return that includes the
Companies and the Subsidiaries for the taxable period of the Companies starting
with the day following the Closing Date. Accordingly, the taxable year of each
of the Companies and the Subsidiaries will close for federal income Tax purposes
at the end of the day on the Closing Date. No election under Section 338 of
the
Code (relating to stock purchases treated as asset acquisitions) or under Reg.
Sec.1.1502-76(b)(2)(ii) (relating to ratable allocation elections) shall be
made. The Companies and the Subsidiaries shall not engage in any transactions
on
or prior to the Closing Date outside the ordinary course of business other
than
the transactions contemplated by this Agreement. The Seller, the Companies,
the
Subsidiaries, and the Buyer shall (i) treat and report the transactions
contemplated by this Agreement in all respects consistently with the provisions
of this Agreement for purposes of any federal, state, local or foreign Tax
and
(ii) not take any actions or positions inconsistent with the obligations of
the
parties set forth herein.
31
(d) Tax
Returns for Tax Periods Ending on or Before the Closing Date.
The
Seller shall prepare or cause to be prepared and file or cause to be filed
all
Tax Returns of the Companies and Subsidiaries for taxable periods ending on
or
before the Closing Date that have not been filed prior to the Closing Date.
The
Seller shall permit the Buyer to review and comment on each such Tax Return
described in the prior sentence at least ten (10) days prior to filing and
shall
make such revisions to such Tax Returns as are reasonably requested by the
Buyer. None of the Companies or any Subsidiary shall amend any Tax Return for
any Tax Period ending on or before the Closing Date without the written consent
of Seller, which shall not be unreasonably withheld or delayed. All Tax Returns
prepared by or for the Seller pursuant to this Section 6.9 shall be prepared
in
a manner consistent with the past practice of the applicable Company or
Subsidiary, except as otherwise reasonably necessary to comply with
Law.
(e) Tax
Returns for Tax Periods that Include but do not End on the Closing
Date.
The
Buyer shall prepare or cause to be prepared and file or cause to be filed in
a
timely manner all Tax Returns of the Companies and Subsidiaries for taxable
periods that include but do not end on the Closing Date. The Company shall
permit the Seller to review and comment on each such Tax Return described in
the
prior sentence at least ten (10) days prior to filing and shall make such
revisions to such Tax Returns as are reasonably requested by the Seller. None
of
the Companies or any Subsidiary shall amend any Tax Return for any such Tax
Period without the written consent of the Seller, which shall not be
unreasonably withheld. All Tax Returns to be prepared by or for a Company
pursuant to this Section 6.9 shall be prepared in a manner consistent with
the
past practice of the applicable Company or Subsidiary, except as otherwise
reasonably necessary to comply with Law.
(f) Reimbursement;
Notice.
Each
Party shall promptly pay the other for any Taxes for which such Party is liable
under this Section 6.9, but in no event later than five days prior to the due
date of the payment of such Taxes. The Parties agree to negotiate in good faith
to resolve any disputes regarding the payment of any Taxes pursuant to this
Section 6.9. Within a reasonable period of time prior to the payment of any
such
Tax, the Party paying such Tax shall give written notice to the other Party
of
the Tax payable and the portion that is the liability of such Party, although
failure to do so shall not relieve the other Party from its liability
hereunder.
(g) Assistance
and Cooperation.
After
the Closing Date, each Party shall (and shall cause its respective affiliates,
representatives, and agents to): (i) assist the other Party in preparing any
Tax
Returns that such other Party is responsible for preparing and filing in
accordance with this Section 6.9; (ii) cooperate fully in preparing for any
audits of, or disputes with taxing authorities regarding, any Tax Returns
described in this Section 6.9; and (iii) make available to the other Party
and
to any taxing authority as reasonably requested all information, records, and
documents relating to the Taxes described in this Section 6.9.
32
6.10 Further
Assurances.
Following the Closing, each Party agrees to cooperate fully with the other
Party
and to execute such further instruments, documents and agreements and to give
such further written assurances, as may be reasonably requested by any other
Party at that other Party's cost to give effect to the transactions described
herein and contemplated hereby.
6.11 Environmental
Matters.
The
Seller shall cooperate with the Buyer in making the environmental investigations
of the Real Property set forth on Schedule
6.11;
provided, however, that (i) the Buyer shall obtain the Seller’s written consent
prior to entering such Real Property in connection with conducting any
assessment or testing with respect thereto and (ii) Seller shall have entered
into an access or similar agreement reasonably satisfactory to it with each
contractor of the Buyer who will perform the testing. The Buyer shall pay all
fees and expenses in connection with such environmental investigations.
6.12 Financial
Statements.
During
the period from the Agreement Date to the Closing Date, the Seller shall not
later than thirty (30) days after the end of each month, cause the unaudited
consolidated balance sheets and income statements of each of the Companies
and
its respective Subsidiaries, prepared in accordance with GAAP (except for year
end and consolidating adjustments and the omission of footnotes), to be
delivered to the Buyer.
6.13 Books
and Records.
For a
period of two (2) years following the Closing, the Buyer will cause the
Companies and the Subsidiaries to maintain a reasonable records retention
policy. From and after the Closing until ninety (90) days after the expiration
of all applicable statute of limitations periods, Seller and its accountants,
lawyers and representatives shall be entitled, upon reasonable notice and during
normal business hours to have access to and to make copies, at Seller’s expense,
of relevant books and records of the any or all of the Companies and/or the
Subsidiaries with respect to periods or occurrences prior to Closing for
reasonable purposes relating to the Seller’s ownership of the Companies and
Subsidiaries prior to the Closing, including the preparation of Tax Returns.
In
the event of any litigation or threatened litigation between the Parties
relating to this Agreement or the transactions contemplated hereby, the
covenants contained in this Section 6.13 shall not be considered a waiver by
any
Party of any right to assert the attorney-client privilege. With respect to
pre-Closing communications between any or all of the Seller, the Companies
and/or the Subsidiaries and its or their attorney or attorneys, only the Seller
shall be able to waive the attorney-client privilege.
6.14 Financing
Commitments.
Buyer
covenants to use its commercially reasonable efforts to
cause
all conditions to the funding under the Financing Commitments to be satisfied
and to
cause
the funding to occur as contemplated by the Financing Commitments.
6.15 Company
Audits.
The
Seller will retain an independent auditor (Xxxxx Xxxx XxXxxx & Xxxxxx) and
facilitate an audit of the Companies and Subsidiaries on an combined basis
to
allow for the creation of audited balance sheets, income statements and
statements of cash flows for the years ending December 31, 2005, December 31,
2006 and December 31, 2007, as well as a review (but not an audit) of such
statements for the interim period of January 1, 2008 through the Closing (the
“Combined
Company Financials”).
The
Buyer
and
the Seller shall each pay one-half of all fees and expenses of such independent
auditor retained in connection with the Combined Company
Financials.
33
6.16 Seller’s
Legal Existence.
The
Seller will maintain its legal existence and maintain sufficient capital to
make
any and all payments required to be made by it under Section 2.4
hereof.
6.17 Employee
Plan Matters.
The
Seller shall cause each Benefit Plan in which employees of any Company
participate (the “Company
Benefit Plans”),
to be
transferred and assumed by Pine Tree Holdings prior to the Closing. Pursuant
to
Section 7.1(l), the Seller shall provide Buyer with evidence of the transfer
and
assumption of the Company Benefit Plans.
ARTICLE
VII
CONDITIONS
TO OBLIGATION TO CLOSE
7.1 Conditions
to Obligation of the Buyer.
The
obligation of the Buyer to consummate the transactions to be performed by it
in
connection with the Closing is subject to the satisfaction of the following
conditions:
(a) Subject
to the provisions of Section 6.6, (i) the representations and warranties of
the
Seller set forth in Article III (other than those that address matters as of
a
particular date) shall be true and correct in all material respects at and
as of
the Closing Date (without giving effect to any limitations as to materiality
or
“Material Adverse Effect” set forth therein) and (ii) the representations and
warranties of the Seller set forth in Article III that address matters as of
a
particular date shall be true and correct as of such dates (without giving
effect to any limitations as to materiality or “Material Adverse Effect” set
forth therein), with such exceptions in the case of all of the representations
and warranties described in clauses (i) and (ii), taken together, as have not
had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(b) the
Seller shall have performed and complied with all of its covenants hereunder
in
all material respects through the Closing;
(c) the
Buyer
shall have received a certificate signed by an officer of the Seller certifying
as to the matters set forth in Section 7.1(a) and Section 7.1(b);
(d) there
shall not be any judgment, order, decree, stipulation, injunction or charge
in
effect preventing consummation of any of the transactions contemplated by this
Agreement;
(e) since
the
Agreement Date, no event or events shall have occurred that constitute(s) a
Material Adverse Effect.
(f) the
Seller shall have delivered to the Buyer a Certificate of Good Standing (or
comparative certificate) of each of the Companies and each of the Subsidiaries
issued by the appropriate governmental entity of the jurisdiction of such
Company’s or Subsidiary’s incorporation;
34
(g) no
litigation shall be pending (i) challenging or seeking to delay the consummation
of any of the transactions contemplated by this Agreement, (ii) asserting the
illegality of or seeking to render unenforceable any material provision of
this
Agreement, or (iii) which has or could reasonably give rise to a Material
Adverse Effect;
(h) all
applicable waiting periods (and any extensions thereof) under the HSR Act,
if
applicable, shall have expired or otherwise been terminated and the Parties
shall have received all State PUCs, FCC and other authorizations, consents
and
approvals of Governmental Entities referred to in Section 3.4 and Section 4.3
above;
(i) the
Buyer
shall have received from counsel to the Seller the opinions in form and
substance as set forth in Exhibit
7.1(i)
attached
hereto, addressed to the Buyer and dated as of the Closing Date;
(j) the
Buyer
shall have received the resignations, effective as of the Closing, or evidence
of removal as of the Closing, of all the directors and officers of the Companies
and their Subsidiaries, except for such persons as are designated on
Exhibit
7.1(j)
hereto;
(k) the
Buyer
shall have received a noncompetition agreement in the form of Exhibit
7.1(k),
executed by each person listed on Schedule 7.1(k);
(l) the
Buyer
shall have received evidence of the transfer and assumption of the Company
Benefit Plans by Pine Tree Holdings;
(m) Title
to
all Material Owned Real Property shall be insurable for the benefit of the
current fee owner of each such property as of the date of Closing, on the
current ALTA form of owner’s policy of title insurance, subject to the
terms, conditions and exclusions set forth in the preprinted jacket to such
policy, the standard exceptions set forth in Schedule B to such policy and
all
material conditions and stipulations disclosed in the title insurance policies
listed on Schedule
7.1(m)(ii)
attached
hereto and incorporated herein by reference (copies of which have been provided
to the Buyer), together with such other easements, restrictions, covenants
or
other matters which do not prohibit or materially interfere with the current
use
of any Material Owned Real Property, except that: (a) Seller shall deliver
or
cause to be delivered such documents and instruments required by the applicable
title insurance company in order to delete any exceptions for mechanic’s liens
and/or parties-in-possession and to issue a non-imputation endorsements to
such
policy; and (b) Seller shall discharge the mortgages set forth in Schedule
7.1(m)(i)(ii)
to this
Agreement.
Notwithstanding
any of the foregoing, it is expressly agreed that Buyer shall be solely
responsible for any and all costs and expenses in connection with obtaining
title insurance, including, without limitation, any title examination fees,
copying fees, commitment preparation fees, premiums, survey expenses, and all
other fees and expenses of any kind or nature.
(n) the
Buyer
shall have received an affidavit sworn under penalty of perjury and
in a
form and substance required by Section 1445(b)(3) of the Code and Section
1.1445- 2(c)(3)
of the Treasury Regulations, certifying that each Company and Subsidiary is
not
and has not
been
a “United States real property holding corporation” (as defined in Section
897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code;
35
(o) the
conditions set forth in the Financing Commitments shall have been satisfied
or waived and the funding referred to therein shall be available to the Buyer
on
terms not materially less
favorable to the Buyer than are set forth in the Financing Commitments, provided
that the failure to
obtain
such satisfaction or waiver is not a result of the failure of the Buyer to
carry
out its obligations to the financial institutions as set out in such letters
and
such failure by the Buyer has not been primarily caused by a breach by the
Buyer
of its obligations under this Agreement; and
(p) the
Buyer
shall have received the Combined Company Financials.
(q) all
actions to be taken by the Seller in connection with the consummation of the
transactions contemplated hereby and all certificates, opinions, instruments
and
other documents required to effect the transactions contemplated hereby will
be
reasonably satisfactory in form and substance to the Buyer.
Except
for the conditions contained in paragraph (h) of this Section 7.1, the Buyer
may
waive any condition specified in this Section 7.1 by a writing so stating
delivered to the Seller at or prior to the Closing.
7.2 Conditions
to Obligation of Seller.
The
obligation of the Seller to consummate the transactions to be performed by
it in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) Subject
to the provisions of Section 6.6, (i) the representations and warranties of
the
Buyer set forth in Article IV (other than those that address matters as of
a
particular date) shall be true and correct in all material respects at and
as of
the Closing Date (without giving effect to any limitations as to materiality
or
“Material Adverse Effect” set forth therein) and (ii) the representations and
warranties of the Buyer set forth in Article IV that address matters as of
a
particular date shall be true and correct as of such dates (without giving
effect to any limitations as to materiality or “Material Adverse Effect” set
forth therein), with such exceptions in the case of all of the representations
and warranties described in clauses (i) and (ii), taken together, as have not
had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(b) the
Buyer
shall have performed and complied with all of its covenants hereunder in all
material respects through the Closing;
(c) the
Seller shall have received a certificate signed by an officer of the Buyer
certifying as to the matters set forth in Section 7.2(a) and Section 7.2(b)
above;
(d) there
shall not be any judgment, order, decree, stipulation, injunction or charge
in
effect preventing consummation of any of the transactions contemplated by this
Agreement;
(e) the
Buyer
shall have delivered to the Seller the Closing Purchase Price as contemplated
by
Section 2.7(b);
36
(f) all
applicable waiting periods (and any extensions thereof) under the HSR Act,
if
applicable, shall have expired or otherwise been terminated and the Parties
shall have received all State PUC’s, FCC and other authorizations, consents and
approvals of Governmental Entities referred to in Section 3.4 and Section
4.3;
(g) the
Seller shall have received a certificate of the Secretary or Assistant Secretary
of the Buyer certifying the names and signatures of the officers of the Buyers
authorized to sign this Agreement, and the other documents contemplated
hereunder; and
(h) all
actions to be taken by the Buyer in connection with the consummation of the
transactions contemplated hereby and all certificates, opinions, instruments
and
other documents required to effect the transactions contemplated hereby will
be
reasonable satisfactory in form and substance to the Seller.
Except
for the conditions contained in paragraph (f) of this Section 7.2, the Seller
may waive any condition specified in this Section 7.2 by a writing so stating
delivered to the Buyer at or prior to the Closing.
7.3 Deemed
Waiver.
If
either Party is not obligated to consummate the Closing pursuant to this
Agreement, but nevertheless elects to consummate the Closing, and the other
Party is obligated to consummate the Closing, the Parties shall proceed with
the
consummation of the Closing as if all Parties were obligated to do so, and
the
Party who is not obligated to proceed but elects to do so shall be deemed to
have specifically waived in writing, as provided in Section 7.1 and Section
7.2,
as the case may be, the fulfillment of the condition or conditions, the
nonfulfillment of which excused the obligation of said Party to perform pursuant
to this Agreement as contemplated by Section 7.1 and Section 7.2, as the case
may be.
ARTICLE
VIII
TERMINATION
8.1 Termination
of Agreement.
The
Parties may terminate this Agreement as provided below:
(a) the
Parties may terminate this Agreement by mutual written consent at any time
prior
to the Closing Date;
(b) the
Buyer
(if the Buyer is not then in breach of this Agreement) may terminate this
Agreement by giving written notice to the Seller at any time prior to Closing
(i) (1) in the event the representations and warranties of the Seller set forth
in Article III (other than those that address matters of a particular date)
shall not be true and correct in all material respects (without giving effect
to
any limitations as to materiality or “Material Adverse Effect” set forth
therein) and (2) the representations and warranties of the Seller set forth
in
Article III that address matters as of a particular date shall not be true
and
correct as of such date(s) (without giving effect to any limitations as to
materiality or “Material Adverse Effect” set forth therein), with such
exceptions in the case of all of the representations and warranties described
in
clauses (1) and (2), taken together, as have not had and would not reasonably
be
expected to have as of the Closing Date, individually or in the aggregate,
a
Material Adverse Effect, the Buyer has notified the Seller of the breach, and,
if of a type which can be cured, the breach has continued without cure for
a
period of ten (10) days after the notice of breach, or (ii) if the Closing
shall
not have occurred on or before December 31, 2008, by reason of the failure
of
any condition precedent under Section 7.1 or 7.2;
37
(c) the
Seller (if the Seller is not then in breach of this Agreement) may terminate
this Agreement by giving written notice to the Seller at any time prior to
Closing (i) (1) in the event the representations and warranties of the Buyer
set
forth in Article IV (other than those that address matters of a particular
date)
shall not be true and correct in all material respects (without giving effect
to
any limitations as to materiality or “Material Adverse Effect” set forth
therein) and (2) the representations and warranties of the Buyer set forth
in
Article IV that address matters as of a particular date shall not be true and
correct as of such date(s) (without giving effect to any limitations as to
materiality or “Material Adverse Effect” set forth therein), with such
exceptions in the case of all of the representations and warranties described
in
clauses (1) and (2), taken together, as have not had and would not reasonably
be
expected to have as of the Closing Date, individually or in the aggregate,
a
Material Adverse Effect, the Seller has notified the Buyer of the breach, and,
if of a type which can be cured, the breach has continued without cure for
a
period of ten (10) days after the notice of breach, or (ii) if the Closing
shall
not have occurred on or before December 31, 2008, by reason of the failure
of
any condition precedent under Section 7.1 or 7.2;
(d) Either
of
the Parties may terminate this Agreement if any court or Governmental Entity
has
issued a final and non-appealable order, decree or ruling permanently
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement.
8.2 Effect
of Termination.
(a) Except
as
hereinafter provided in this Section 8.2, if either Party terminates this
Agreement pursuant to Section 8.1, all rights and obligations of the Parties
hereunder shall terminate without any liability of either Party; provided,
however, that the Confidentiality Agreement referred to in Section 6.5 shall
survive any such termination.
(b) In
the
event the Buyer terminates this Agreement pursuant to Section 8.1(b)(i), the
Buyer shall be entitled to pursue all legal and equitable remedies against
the
Seller for such breach or failure to perform.
(c) In
the
event the Seller terminates this Agreement pursuant to Section 8.1(c)(i)
(whether or not the Seller is then also entitled to terminate this Agreement
pursuant to Section 8.1(c)(ii)), the Seller shall be entitled to pursue all
legal and equitable remedies against the Buyer for such breach or failure to
perform, including, but not limited to, specific performance.
(d) All
costs, fees and expenses (including reasonable attorneys’ fees and expenses)
incurred by the nonbreaching Party in connection with enforcing its rights
hereunder with respect to a breach shall be paid by the breaching
Party.
8.3 Fees
and Expenses.
Except
as otherwise provided herein, the reasonable costs, fees and expenses incurred
in connection with the negotiation, drafting and execution of this Agreement
and
the consummation of the transactions contemplated hereby (including the
reasonable fees and expenses of counsel, accountants and appraisers) shall
be
paid by the Party incurring such fees or expenses.
38
ARTICLE
IX
SURVIVAL;
INDEMNIFICATION
9.1 Survival.
The
Parties agree that the representations, warranties, covenants and agreements
contained in this Agreement and in any certificate delivered at the Closing
pursuant to this Agreement shall survive the Closing until the first anniversary
of the Closing Date (the “Cut-Off
Date”);
except for the representations and warranties contained in each of Section
3.1,
Section 3.2, Section 3.3, Section 3.8 and Section 3.34, which shall survive
for
the applicable statute of limitations; provided that
the
covenants and agreements in each of Section 6.8, Section 6.9, Section 6.10
and
Section 6.13 shall survive the Closing in accordance with its terms. No claim
for breach of any representation, warranty, covenant or agreement contained
in
this Agreement may be brought after the Cut-Off Date, except for claims (a)
of
which the Seller has been notified in writing with reasonable specificity by
the
Buyer prior to the Cut-Off Date, (b) of which the Buyer has been notified in
writing with reasonable specificity by the Seller prior to the Cut-Off Date,
or
(c) for breach of Section 6.8, Section 6.9, Section 6.10 or Section
6.13.
9.2 Indemnification
of the Buyer.
Subject
to the other terms of this Article
IX,
from
and after the Closing:
(a) The
Seller agrees to indemnify the Buyer and hold it harmless against and in respect
of any and all damages, losses, expenses, costs, obligations and liabilities,
including reasonable attorneys’ fees (collectively, “Losses”),
incurred by the Buyer that arise or result from (as determined in each case
by
an order of a court of competent jurisdiction or by written agreement of the
Seller and the Buyer) (i) any breach of any of the representations or warranties
contained in Article
III
or
contained in any certificate delivered at the Closing by the Seller pursuant
to
this Agreement; or (ii) the failure of the Seller to perform any of its
covenants or agreements contained herein.
(b) Notwithstanding
the foregoing, the Buyer’s right to make claims against the Seller under this
Section 9.2 shall be subject to the following limitations and
conditions:
(i) no
claim
shall be made unless, and only to the extent that, the cumulative amount of
Losses incurred by the Buyer exceeds $250,000;
(ii) indemnification
payments by Seller hereunder shall not exceed in the aggregate $6,300,000;
(iii) no
claim
shall be made with respect to Losses arising out of any breach (or facts
constituting a breach) of this Agreement that, to the Knowledge of Buyer, exist
prior to the Agreement Date;
(iv) no
claim
shall be made with respect to Losses arising out of any breach of
representations or warranties in Article
III
or the
covenants in Article
VI
to the
extent that a corresponding reserve for such Losses has been made on the Balance
Sheet or to the extent such amount is reflected in the Current Liabilities
that
are used to compute the Net Working Capital; and
39
(v) no
claim
shall be made for consequential damages, punitive or exemplary damages, special
damages, lost profits, incidental damages, indirect damages, unrealized
expectations or other similar items.
In
determining the foregoing thresholds and in otherwise determining the amount
of
any Losses for which the Buyer is entitled to assert a claim for indemnification
hereunder, the amount of any such Losses shall be determined after deducting
therefrom the amount of (a) any insurance proceeds that may be received by
the
Buyer or any Company or Subsidiary upon the timely submission of claims in
respect thereof and after giving effect to any applicable deductible or
retention (which recoveries the Buyer agrees to use, or to cause such Company
or
such Subsidiary to use, diligent efforts to obtain) and (b) any other third
party recoveries received by the Buyer, a Company or a Subsidiary in respect
of
such Losses (which recoveries the Buyer agrees to use, or to cause such Company
or such Subsidiary to use, diligent efforts to obtain). If an indemnification
payment is received by the Buyer, and the Buyer, a Company or a Subsidiary
later
receives insurance proceeds and other third party recoveries in respect of
the
related Losses, the Buyer shall immediately pay to the Seller a sum equal to
the
lesser of (y) the actual amount of such insurance proceeds and other third
party
recoveries or (z) the actual amount of the indemnification payment previously
paid by the Seller with respect to such Losses.
9.3 Indemnification
of the Seller.
Subject
to the other terms of this Article
IX,
from
and after the Closing, the Buyer agrees to indemnify the Seller and hold the
Seller harmless against and in respect of any and all Losses which arise or
result from: (a) any breach of any of the representations or warranties of
the
Buyer contained in this Agreement or in any certificate delivered pursuant
to
this Agreement or (b) the failure of the Buyer to perform any of its covenants
or agreements set forth herein.
9.4 Procedure
for Indemnification.
(a) Any
Party
entitled to make a claim for indemnification hereunder shall promptly notify
the
indemnifying Party of the claim in writing upon learning of such claim or the
facts constituting such claim, describing the claim in reasonable detail, the
amount thereof, and the basis therefor. The indemnifying Party will be relieved
of its indemnification obligations hereunder to the extent that it is prejudiced
by the indemnified party’s failure to give such prompt notice. The Party from
whom indemnification is sought shall respond to each such claim within thirty
(30) days of receipt of such notice. No action shall be taken pursuant to the
provisions of this Agreement or otherwise by the Party seeking indemnification
(unless reasonably necessary to protect the rights of the Party seeking
indemnification) until the later of (i) the expiration of the thirty (30) day
response period or (ii) thirty (30) days following the expiration of the thirty
(30) day response period if a response, received within such thirty (30) day
period by the Party seeking indemnification, requests an opportunity to cure
the
matter giving rise to indemnification (and, in such event, the amount of such
claim for indemnification shall be reduced to the extent so cured).
40
(b) If
a
claim for indemnification hereunder is based on a claim by a third party, the
indemnifying Party shall have the right to assume the entire control of the
defense thereof, including at its own expense, employment of counsel reasonably
satisfactory to the indemnified Party, and, in connection therewith, the Party
claiming indemnification shall cooperate fully with the indemnifying Party
and
make available to the indemnifying Party all pertinent information under its
control; provided,
that
the indemnified Party may participate in any proceeding with counsel of its
choice at its expense. In such event, the indemnifying Party shall have the
right to settle or resolve any such claim by a third party; provided,
that
any such settlement or resolution contemplated by the Seller, as the
indemnifying Party, that involves any action by the Buyer other than compliance
with customary obligations to limit disclosure of the terms thereof and the
payment of money (which is paid in full by the Seller, subject to the applicable
conditions and limits contained in this Article
IX)
shall
not be concluded without the prior written approval of the Buyer, which approval
shall not be unreasonably withheld, delayed or conditioned; and provided
further,
that
any such settlement or resolution contemplated by the Buyer, as the indemnifying
Party, that involves any action other than compliance with customary obligations
to limit disclosure of the terms thereof and the payment of money (which is
to
be paid in full by the Buyer) shall not be concluded without the prior written
approval of the Seller, which approval shall not be unreasonably withheld,
delayed or conditioned.
(c) Without
limiting the generality of the foregoing, the Buyer will, and will cause
employees of the Buyer, the Companies and the Subsidiaries to, cooperate fully
with the Seller in connection with any matter for which the Seller is the
indemnifying Party. Such cooperation shall include (i) assisting in the
collection and preparation of discovery materials, (ii) meeting with (and making
employees available to meet with) the Seller and/or its counsel to prepare
for
and/or appear as witnesses at depositions, court proceedings and/or trial,
and
(iii) providing to the Seller and/or its counsel all information under the
control of the Buyer, any Company or any Subsidiary that is deemed necessary
by
the Seller and/or its counsel for the defense or prosecution of such
matter.
9.5 Remedies
Exclusive.
The
remedies provided in this Article
IX
shall be
the exclusive remedies of the Parties hereto and their heirs, successors and
assigns after the Closing in connection with the transactions contemplated
by
this Agreement, including any breach or non-performance of any representation,
warranty, covenant or agreement contained herein, except (i) in the case of
actual fraud, in which case the defrauded Party shall have all rights and
remedies available under this Agreement and available under the law against
the
Party that committed such actual fraud and (ii) specific performance of
post-Closing covenants. Without limiting the foregoing, the sole source of
payment for any indemnification obligations of the Seller shall be the Escrow
Amount held by the Escrow Agent; provided that claims based on actual fraud
shall not be limited to the Escrow Amount. No Party may commence any suit,
action or proceeding against any other Party hereto with respect to the subject
matter of this Agreement or the transactions contemplated hereby, whether in
contract, tort or otherwise, except to bring a claim (a) to enforce such Party’s
express rights under Section 6.9 or this Article
IX,
(b) for
actual fraud against the Party that committed such actual fraud or (c) specific
performance of post-Closing covenants. The provisions of this Article
IX
constitute an integral part of the consideration given pursuant to this
Agreement and were specifically bargained for and reflected in the total amount
of the Final Purchase Price payable to the Seller.
41
9.6 Treatment
of Indemnity Payments.
To the
maximum extent permitted by Law, it is the intention of the Parties to treat
any
indemnity payment made under this Agreement as an adjustment to the Final
Purchase Price for all purposes, and the Parties agree to file their Tax Returns
accordingly.
ARTICLE
X
MISCELLANEOUS
10.1 Press
Releases and Public Announcements.
Neither
Party shall issue any press release or make any public announcement relating
to
the subject matter of this Agreement without the prior written approval of
the
other Party; provided, however, that either Party may make any public disclosure
it believes in good faith is required by applicable law or any listing or
trading agreement concerning its publicly-traded securities (in which case
the
disclosing Party will use its best efforts to advise the other Party prior
to
making the disclosure).
10.2 No
Third-Party Beneficiaries.
This
Agreement shall not confer any rights or remedies upon any Person other than
the
Parties and their respective successors and permitted assigns; provided,
however, that the provisions in Section 6.8 concerning insurance are intended
for the benefit of the individuals specified therein and their respective legal
representatives.
10.3 Agreement.
This
Agreement (including the Disclosure Schedule, the Exhibits hereto and the
documents referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements or representations by or
among the Parties, written or oral, to the extent they relate in any way to
the
subject matter hereof (other than the Confidentiality Agreement).
10.4 Succession
and Assignment.
This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns.
No Party
may assign either this Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of the other Party. Notwithstanding
anything to the contrary set forth herein, after the Closing, the Buyer may
assign and transfer to any entity providing the financing to the Buyer for
the
transactions contemplated by this Agreement (or any refinancing of such
financing) as collateral security for such financing all of the Buyer’s
interest, rights and remedies of such parties in, to and with respect to this
Agreement. Each party to this Agreement and their assigns expressly consent
to
such assignment after the Closing. Any such assignment shall be made for
collateral security purposes only and will not release or discharge any party
from any obligations it may have pursuant to this Agreement, nor increase or
expand in any way Seller’s obligations hereunder. The Buyer may (a) authorize
such financing sources to assert, either directly or on behalf of the Buyer,
any
claims such party may have against Seller under this Agreement and (b) make,
constitute and appoint one agent bank in respect of such financing (and all
officers, employees and agents designated by such agent) as the true and lawful
attorney and agent-in-fact of such party for the purpose of enabling the
financing sources to assert and collect any such claims.
10.5 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together will constitute one and the same
instrument. For purposes hereof, facsimile copies hereof and facsimile
signatures hereof shall be authorized and deemed effective.
42
10.6 Headings.
The
Section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
10.7 Notices.
All
notices, requests, demands, claims, and other communications hereunder will
be
in writing. Any notice, request, demand, claim or other communication hereunder
shall be deemed duly given upon receipt if it is sent by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If
to
Seller:
Country
Road Communications LLC
00
Xxxxxx
Xxxxx
Xxx
Xxxxxxxxxx, Xxxxx 00000
Attn:
Xxxxxx Xxxx, Chief Financial Officer
Fax:
(000) 000-0000
E-mail:
xxxxxx@xxx.xxx
and
ABRY
Partners LLC
000
Xxxxxxxxxx Xxxxxx
Xxxxxx,
XX 00000
Attn:
Xxx
Xxxxxxxx
Fax:
(000) 000-0000
E-mail:
xxxxxxxxx@xxxx.xxx
With
copies (which shall not constitute notice) to:
Xxxxxx,
Xxxx & Xxxxxxx LLP
Xxx
Xxxxxxxxxxxxx Xxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attn:
Xxxxxxxx Xxxxxxx
Fax:
(000) 000-0000
E-mail:
xxxxxxxx@xxxxxx.xxx
43
and
Xxxxxxxx
& Xxxxx LLP
Citigroup
Center
000
Xxxx
00xx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Attn:
Xxxx X. Xxxxx
Fax:
(000) 000-0000
E-mail:
xxxxxx@xxxxxxxx.xxx
If
to
Buyer:
000
Xxxxx
Xxxxxx Xxxx
Xxxxxxx,
Xxxxxxx 00000
Attn:
Xxxxxxx Xxxxxx
Fax:
(000) 000-0000
Email:
xxxx@xxxxxxxxx.xxx
With
a
copy (which shall not constitute notice) to:
Xxxxxx
& Whitney LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx Xxxxxxx
Fax:
(000) 000-0000
E-mail:
xxxxxxx.xxxxxx@xxxxxx.xxx
Either
Party may also send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Either
Party
may change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Party notice
in
the manner herein set forth.
10.8 No
Recourse.
Notwithstanding
anything that may be expressed or implied in this Agreement, Buyer agrees and
acknowledges that no recourse under this Agreement or any documents or
instruments delivered in connection with this Agreement shall be had against
any
current or future direct or indirect director, officer, employee, general or
limited partner or member of the Seller or of any Affiliate or assignee thereof,
as such, whether by the enforcement of any assessment or by an legal or
equitable proceeding, or by virtue of any statute, regulation or other
applicable Law, it being expressly agreed and acknowledged that no personal
liability whatsoever shall attached to, be imposed on or otherwise be incurred
by any current or future officer, agent or employee of the Seller or any current
or future member of the Seller or any current or future director, officer,
employee, partner or member of the Seller or of any Affiliate or assignee
thereof, as such, for any obligation of the Seller under this Agreement or
any
documents or instruments delivered in connection with this Agreement or any
claim based on, in respect of or by reason of such obligations or their
creation.
44
10.9 Privilege
and Related Matters.
Buyer
acknowledges that the Companies and the Subsidiaries have been represented
by
the law firms of Xxxxxx, Hall & Xxxxxxx LLP and Xxxxxxxx & Xxxxx LLP
(collectively, the “Firms”)
in
connection with the transactions contemplated by this Agreement. The Parties
agree that, although the representation by the Firms in such transactions has,
in part, nominally been of the Seller, the Companies and the Subsidiaries,
the
true clients have been certain of the Seller’s members. As a consequence, the
Parties agree that: (i) the holder of the privilege with respect to any
discussions with any client of either Firm relative to such transactions on
or
prior to the Closing Date will be the Seller and such members and no Company
or
Subsidiary shall have the rights thereto; and (ii) that none of the Parties
hereto shall take any action to attempt to disqualify either Firm from
representing the Seller (or its members) in connection with any dispute relating
to this Agreement, any related agreement or any such transactions based on
the
representation by such Firm of any Company or Subsidiary in connection therewith
on or prior to the Closing Date.
10.10 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware without giving effect to any choice or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than
the
State of Delaware.
10.11 Amendments
and Waivers.
The
Parties may mutually amend any provision of this Agreement at any time prior
to
the Closing. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by each of the Parties. No waiver
by either Party of any default, misrepresentation or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to
any
prior or subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent occurrence.
10.12 Severability.
Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of
the remaining terms and provisions hereof or the validity or enforceability
of
the offending term or provision in any other situation or in any other
jurisdiction.
10.13 Construction.
The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring either
Party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local or foreign statute or law shall
be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context otherwise requires. The word “including” shall mean including
without limitation.
10.14 Incorporation
of Exhibits and Disclosure Schedule.
The
Exhibits and Disclosure Schedule identified in this Agreement are incorporated
herein by reference and made a part hereof.
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IN
WITNESS WHEREOF,
the
Parties hereto have executed this Agreement on the date first above
written.
OTELCO INC. | ||
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By: | /s/ Xxxxxxx X. Xxxxxx | |
Name: | Xxxxxxx X. Xxxxxx | |
Title: | Chief Executive Officer |
COUNTRY ROAD COMMUNICATIONS LLC | ||
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By: | /s/ Xxxxx X. Xxxxxxx | |
Name: | Xxxxx X. Xxxxxxx | |
Title: | Chief Executive Officer |