ASSET PURCHASE AGREEMENT
between
TEXAS 16 CELLULAR TELEPHONE COMPANY
and
XXXXXX CELLULAR OF TEXAS, INC.
DATED AS OF October 9, 1997
TABLE OF CONTENTS
PAGE
ARTICLE I PURCHASE AND SALE
ARTICLE II DESCRIPTION OF ASSETS; EXCLUDED ASSETS
Section 2.01 Assets
Section 2.02 Excluded Assets
ARTICLE III ASSUMPTION OF LIABILITIES
ARTICLE IV INSTRUMENTS OF TRANSFER
Section 4.01 Transfer Documents
Section 4.02 Assumption Documents
ARTICLE V PURCHASE PRICE; ALLOCATION
Section 5.01 Purchase Price
Section 5.02 Deposit
Section 5.03 Payment of Purchase Price
Section 5.04 Allocation of Purchase Price
Section 5.05 Purchase Price Adjustment
ARTICLE VI CLOSING
ARTICLE VII SELLER'S REPRESENTATIONS
Section 7.01 Organization; Qualification
Section 7.02 Consents; Authorization; Execution and
Delivery of Agreement
Section 7.03 Subsidiaries and Interests in Other Companies
Section 7.04 Title to Assets; Condition of Assets
Section 7.05 Real Property-Owned
Section 7.06 Real and Personal Property-Leased
Section 7.07 Existing Contracts
Section 7.08 Governmental Licenses
Section 7.09 Compliance with Law
Section 7.10 No Violation of Existing Agreements
Section 7.11 Litigation and Legal Proceedings
Section 7.12 Environmental Compliance
Section 7.13 Employees
Section 7.14 Employee Benefits
Section 7.15 Tax Matters
Section 7.16 Financial Statements
Section 7.17 Subscribers; Agents
Section 7.18 Insurance
Section 7.19 Brokers
Section 7.20 Undisclosed Liabilities
Section 7.21 Pricing of Services
Section 7.22 Proprietary Rights
Section 7.23 Accounts Receivable and Bad Debts
Section 7.24 Product Information
Section 7.25 Certain Business Relationships with Seller
ARTICLE VIII PURCHASER'S REPRESENTATIONS
Section 8.01 Organization; Qualification
Section 8.02 Consents; Authorization; Execution
and Delivery of Agreement
Section 8.03 Litigation and Legal Proceedings
Section 8.04 Brokers
Section 8.05 Compliance with Law
Section 8.06 FCC Matters
Section 8.07 No Violation of Existing Agreements
Section 8.08 Availability of Funds
ARTICLE IX SELLER'S AND PURCHASER'S COVENANTS
Section 9.01 Financial Statements and Cellular System Information
Section 9.02 Governmental Approvals
Section 9.03 Third Party Consents; Closing Conditions
Section 9.04 Access
Section 9.05 Conduct of Business
Section 9.06 No Shopping
Section 9.07 Employees
Section 9.08 Supplemental Disclosure
Section 9.09 Disputed Roaming Receivables
ARTICLE X CONDITIONS PRECEDENT TO PURCHASER'S
OBLIGATION TO CLOSE
Section 10.01 Accuracy of Representations and Warranties;
Performance of this Agreement
Section 10.02 Corporate Resolutions
Section 10.03 Incumbency Certificate
Section 10.04 Third Party Consents; FCC; Xxxx-Xxxxx Act
Section 10.05 No Material Adverse Change
Section 10.06 Opinion of Counsel to Seller
Section 10.07 Opinion of FCC Counsel to Seller
Section 10.08 Subscribers
Section 10.09 Escrow Agreement
Section 10.10 El Campo Office
ARTICLE XI CONDITIONS PRECEDENT TO SELLER'S
OBLIGATION TO CLOSE
Section 11.01 Accuracy of Representations and Warranties;
Performance of this Agreement
Section 11.02 Directors' Resolutions
Section 11.03 Incumbency Certificate
Section 11.04 FCC; Xxxx-Xxxxx Act
Section 11.05 Opinion of Counsel to Purchaser
Section 11.06 Escrow Agreement
Section 11.07 No Litigation
ARTICLE XII CASUALTY LOSSES
ARTICLE XIII INDEMNIFICATION
Section 13.01 Indemnification by Seller
Section 13.02 Indemnification by Purchaser
Section 13.03 Notice of Claims; Defense of Third Party Claims
Section 13.04 Limited Recourse to Seller
Section 13.05 Limitations
ARTICLE XIV CONFIDENTIALITY AND PRESS RELEASES
Section 14.01 Confidentiality
Section 14.02 Press Releases
Section 14.03 Disclosures Required By Law
ARTICLE XV TERMINATION
Section 15.01 Breaches and Defaults; Opportunity to Cure
Section 15.02 Termination
ARTICLE XVI BROKERS' FEES
ARTICLE XVII MISCELLANEOUS
Section 17.01 Additional Instruments of Transfer
Section 17.02 Notices
Section 17.03 Expenses
Section 17.04 Transfer Taxes
Section 17.05 Collection Procedures
Section 17.06 Specific Performance
Section 17.07 Governing Law
Section 17.08 Assignment
Section 17.09 Successors and Assigns
Section 17.10 Amendments; Waivers
Section 17.11 Entire Agreement
Section 17.12 Counterparts
Section 17.13 Severability
Section 17.14 Section Headings
Section 17.15 Interpretation
Section 17.16 Further Assurances
Section 17.17 Third Parties
Section 17.18 Waiver of Jury Trial
DEFINED TERMS
TERM SECTION CITE
Adjustments 5.05(d)
Asserting Party 13.03
Assets 2.01
Assumed Contracts Article III
Assumption Agreement 4.02
Assumed Liabilities Article III
Audited Historical Financial Statements 7.16(a)(i)
Authorizations 7.08
Balance Sheet Date 7.16(a)(ii)
Base Price 5.01
Xxxxxxxx Cellsite 2.01(g)
Xxxxxxxx Lease 2.01(g)
Xxxx of Sale 4.01
Breaching Party 15.01
Business Recitals
Cellular Area Recitals
Cellular Authorizations 2.01(a)
Cellular System Recitals
CERCLA 7.12(b)
Claims Article XII
Closing Article VI
Closing Certificate 5.05(d)
Closing Date Article VI
Closing Escrow Agreement 5.03
Code 7.14
Controlled Group Member 7.14
Current Assets 5.05(a)
Current Financial Statements 7.16(a)(ii)
Current Liabilities 5.05(a)
DCC 5.02
Deductible 13.05(a)
Defending Party 13.03
Defined Benefit Pension Plan 7.14
Deposit 5.02
Deposit Escrow Agent 5.02
Deposit Escrow Agreement 5.02
Disclosing Party 14.01
Disputed Roaming Receivables 5.05(a)
DOJ 10.04
Employee Benefit Plans 7.14
Environmental Laws 7.12(c)
ERISA 7.14
ERISA Affiliate 7.14
Escrow Agent 5.03
Escrow Payment 5.03
Excluded Assets 2.02(a)
Existing Contracts 7.07
FCC Recitals
FCC Authorizations 2.01(a)
Final Order 10.04
Finality Waiver Notice 10.04
FTC 10.04
GAAP 5.05(a)
Xxxx-Xxxxx Act 9.02(b)
Hazardous Substances 7.12(b)
Historical Financial Statements 7.16(a)(ii)
Indemnified Purchaser Parties 13.01(a)
Interest 9.03
Interim Financial Statements 9.01
Inventory 5.05(a)
June Balance Sheet 7.16(a)(ii)
Xxxxx 9.04(a)
Liquidated Damages Amount 5.02
Liens Article I
Losses 13.01(a)
Material Adverse Effect 10.01
Material Loss 10.01
Microwave Authorizations 2.01(a)
Multiemployer Plan 7.14
Non-Assumed Liabilities Article III
Non-Breaching Party 15.01
Outcollect Rate 7.07
Outside Date 15.02(e)
Permitted Liens Article I
Person 7.04
Phase I Assessment 9.05(b)
Phase II Assessment 9.05(b)
Purchase Price 5.01
Purchaser Introduction
Purchaser's Estimate 5.05(d)
Purchase Orders 7.07
RCLA 7.12(b)
RCRA 7.12(b)
Real Party in Interest 7.15
Recipient Party 14.01
Response Period 5.05(d)
RSA Recitals
Seller Introduction
Seller's Estimate 5.05(d)
Six Month Income Statement 7.16(a)(ii)
Special Temporary Authority 10.04
Subscriber 5.05(a)
Subscriber Adjustment 5.05(c)
Target Number of Subscribers 5.05(a)
Tax 7.15
Tentative Subscriber 5.05(a)
Third Party Claim 13.03
Working Capital Adjustment 5.05(b)
SCHEDULES
1 Permitted Liens
2.01(a) Contracts and Authorizations
2.01(c) Tangible Asset List
2.01(d) Interests in Real Property and Towers
2.01(f) Intangible Personal Property
2.02 Excluded Assets
5.04 Purchase Price Allocation
5.05(a)(i) Disputed Roaming Receivables
5.05(a)(ii) Marketing Programs
7.04 Liens
7.08 Missing Authorizations
7.09 Compliance with Laws
7.10 Consents
7.11 Litigation
7.12 Environmental Compliance
7.13 Employees
7.14 Employee Benefits
7.15 Tax Matters
7.16(a)(i) Historical Financial Statements
7.16(a)(ii) Current Financial Statements
7.16(c) Certain Transactions Since Balance Sheet Date
7.17 Agents
7.18 Insurance
7.21 Seller's Rate Plans
7.24 Product Information
7.25 Certain Business Relationships
9.01 Monthly Reports
9.03 Form of Consent Letter
9.05 Conduct of Business; Repairs
EXHIBITS
A. Xxxx of Sale and Assignment Agreement
B. Assumption Agreement
C. Deposit Escrow Agreement
D. Closing Escrow Agreement
E Opinion of Counsel for Seller
F. Opinion of FCC Counsel for Seller
G. Opinion of Counsel for Purchaser
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of October 9, 1997 by and
between TEXAS 16 CELLULAR TELEPHONE COMPANY, a Texas corporation
("Seller"), and XXXXXX CELLULAR OF TEXAS, INC., an Oklahoma corporation
("Purchaser").
R E C I T A L S
WHEREAS, Seller owns all right, title and interest in those certain
licenses listed on Schedule 2.01(a) granted by the Federal Communications
Commission ("FCC") to provide cellular radio telephone service in the
FCC's rural service area ("RSA") #16 in the State of Texas (the "Cellular
Area") and owns and operates the non-wireline cellular telephone system
in the Cellular Area (the "Cellular System"); and
WHEREAS, Purchaser desires to purchase from Seller, and Seller
desires to sell to Purchaser, substantially all of the assets and rights
of Seller relating to the ownership and operation of the cellular radio
telephone business in the Cellular Area (the "Business"), all subject to
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements herein set forth and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
Subject to the terms and conditions set forth in this Agreement,
Seller agrees to sell, convey, assign, transfer and deliver to Purchaser,
and Purchaser agrees to purchase from Seller at the Closing, all of
Seller's right, title and interest in and to the Assets (as defined in
Section 2.01 hereof), free and clear of all debts, liabilities,
obligations, and taxes other than Assumed Liabilities, and free and clear
of all security interests, liens, pledges, charges, rights of third
parties and encumbrances of every kind (collectively, "Liens") other than
Permitted Liens. As used herein, the term "Permitted Liens" means (i)
any Lien for taxes and assessments not yet past due or otherwise being
contested in good faith and for which appropriate reserves have been
established and are taken into account in the Working Capital Adjustment,
(ii) any Lien arising out of deposits made to secure leases or other
obligations of a like nature arising in the ordinary course of business,
(iii) any Lien provided for in any contract or lease listed on the
disclosure schedules hereto and not related to any indebtedness for
borrowed money, (iv) any Lien that does not materially interfere with the
use by Seller of the property subject thereto or affected thereby
(including any easements, rights of way, restrictions, installations or
public utilities, title imperfections and restrictions, reservations in
land patents, zoning ordinances or other similar Liens), (v) as to
leaseholds, interests of the lessors thereof and Liens affecting the
interests of such lessors and (vi) any Lien set forth on SCHEDULE 1
attached hereto.
ARTICLE II
DESCRIPTION OF ASSETS; EXCLUDED ASSETS
SECTION 2.01. ASSETS. The assets to be conveyed to Purchaser shall
include all real and personal tangible and intangible assets, properties
and rights owned by Seller of whatever description which relate in any
way to the ownership, use or operation of the Business, except assets
excluded pursuant to Section 2.02 hereof, but including all property and
rights acquired or obtained by Seller from the date hereof through the
date of Closing (collectively, the "Assets"). Such Assets shall be free
and clear of all Liens other than Permitted Liens as of the Closing.
Such Assets shall include, without limitation:
(a) Seller's FCC authorizations to operate a cellular radio
telephone system in the Cellular Area (the "Cellular Authorizations") and
microwave paths used in connection with such cellular operations (the
"Microwave Authorizations" and together with the Cellular Authorizations,
the "FCC Authorizations"); all leases, agreements, licenses and permits
(to the extent transferable), consents, revenue sharing agreements,
agreements for the reception or transmission of signals by microwave to
which Seller is a party; all easements, appurtenances, rights-of-way and
construction permits, if any, related to the Business; all right, title
and interest, if any, in and to all streets, roads and public places,
open or proposed; all agreements between Seller and any suppliers,
cellular telephone service companies and subscribers, and all other
similar rights and agreements (including so-called roaming agreements),
including all applications therefor, which in any way may relate to or
concern the operation by Seller of the Business, all of which items
(other than those not required to be listed pursuant to Sections 7.06 and
7.07 of this Agreement) are more particularly set forth on
SCHEDULE 2.01(A) OR 2.01(D) attached hereto.
(b) Originals or copies (at Seller's option) of all of
Seller's files of correspondence, lists, records and reports concerning
(i) customers and prospective customers of the Business and (ii) all
dealings with Federal, state and local regulatory agencies with respect
to the Business, including, but not limited to, all reports filed by or
on behalf of Seller with the FCC.
(c) All of Seller's right, title and interest in and to
towers, tower equipment, antennas, switching and cell site equipment and
buildings, construction in progress, microwave equipment, machinery,
testing equipment, motor vehicles, office equipment, computers and
related software, furniture and fixtures, supplies, inventory, spare
parts, and other physical assets, if any, used in or relating to the
Business, and all modifications, additions, restorations or replacements
of the whole or any part thereof, substantially all of which tangible
assets as of the date hereof are described on SCHEDULE 2.01(C) attached
hereto, but excluding the items set forth on Schedule 2.02.
(d) All real property, leaseholds and other interests in real
property (including leases and licenses of towers and tower space) of
Seller used in or relating to the Business, as described on
SCHEDULE 2.01(D) attached hereto, but excluding the leaseholds described
on Schedule 2.02.
(e) All of Seller's right, title and interest to engineering
records, files, data, drawings, blueprints, schematics, maps, reports,
lists and plans and processes intended for use in connection with the
Business provided that Seller may retain a copy thereof.
(f) All of the following, along with all related income,
royalties, damages and payments, if any, due or payable as of the Closing
Date or thereafter: inventions, trademarks, service marks, trade dress,
trade names, logos and registrations and applications for a registration
thereof together with all of the goodwill associated therewith,
copyrights and copyrightable works and registrations and applications for
the registration thereof, computer software, data, data bases,
documentation thereof, trade secrets and other confidential information,
other intellectual property rights and intangible embodiments thereof (in
whatever form or medium); together with all books, records, drawings and
other indicia, however evidenced; in each case including, without
limitation, the items set forth on Schedule 2.01(f) attached hereto, but
excluding the items set forth on Schedule 2.02.
(g) All communications towers, buildings, fixtures and other
improvements including, without limitation, all electrical, mechanical,
plumbing and other building systems, security and surveillance systems
and wiring and cable installations owned by Seller and located on the
property leased by Seller, including, without limitation, located at or
on (x) the ten (10) acre parcel of land leased by Seller from L-Square
Land Company ("L-Square") located in Xxxxxxx County, Texas (the "El Campo
MTSO Site") under the Lease Agreement between Seller and L-Square dated
August 15, 1991 (the "MTSO Lease") and (y) the 6.26 acre parcel of land
leased by Seller from L-Square located in Colorado County, Texas (the
"Xxxxxxxx Cell Site") under the Lease Agreement dated August 15, 1991
(the "Xxxxxxxx Lease").
(h) All prepayments and prepaid expenses.
(i) All claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind, except to the extent
described in Section 2.02(b) or on Schedule 2.02.
(j) The right to receive and retain mail, accounts receivable
payments and other communications.
(k) The right to xxxx and receive payment for products shipped
or delivered and/or services performed but unbilled or unpaid as of the
Closing.
(l) All advertising, marketing and promotional materials and
all other related printing or written materials.
(m) All subscriber notes receivable (if any) and accounts
receivable (including subscriber receivables and roaming revenue
receivables).
(n) All goodwill as a going concern.
(o) Any assets of the type-described above which are acquired
after the date hereof but prior to the Closing.
SECTION 2.02. EXCLUDED ASSETS. (a) The Disputed Roaming
Receivables and the other properties and assets described in
SCHEDULE 2.02 attached hereto and in Section 2.02(b) of this Agreement
which relate to the Business shall not be included in the Assets, shall
be retained by Seller and shall not be sold, assigned or transferred to
Purchaser (the "Excluded Assets").
(b) Anything in this Agreement to the contrary
notwithstanding, the Assets sold to the Purchaser pursuant to the terms
of this Agreement shall not include the Seller's corporate records, books
of account, cash, bank deposits and cash equivalents at the time of the
Closing, insurance policies and rights and claims thereunder, bonds,
letters of credit, surety instruments and other similar items, and all
claims, rights and interests in and to any refunds of taxes or fees of
any nature, or other claims against third parties (including collection
claims involving delinquent subscribers who are not active subscribers of
the Cellular System (i.e. Persons who are not receiving service) as of
the Closing Date and no portion of whose account receivable is included
in the Current Assets (as defined in Section 5.05(a)(i)) as of the
Closing Date; but excluding claims in respect of notes and accounts
receivable included in Current Assets), relating to the ownership of the
Assets or the operation of the Cellular System on or before the Closing
Date.
ARTICLE III
ASSUMPTION OF LIABILITIES
At Closing, Purchaser shall assume and agree to perform and
discharge the following to the extent not previously performed or
discharged as of the Closing: (i) all obligations of Seller which accrue
and are to be performed from and after the Closing under those permits,
authorizations, licenses, leases, rights of way, easements and other
agreements either set forth on SCHEDULES 2.01(A) AND (D) attached hereto
or those agreements of a non-material nature which are not required by
this Agreement to be disclosed on SCHEDULES 2.01(A) AND (D) and (ii) all
other obligations of Seller entered into during the period from the date
hereof to the Closing by Seller in the ordinary course of its business in
accordance with the provisions of Section 9.05 below or that were
identified to and consented by Purchaser (all of such permits,
authorizations, licenses, leases, rights of way, easements and other
agreements referred to in items (i) and (ii) being referred to
hereinafter as the "Assumed Contracts"); and (iii) all "Current
Liabilities" (as defined in Section 5.05(a) hereof) but only if and to
the extent that Purchaser receives a credit against the Purchase Price at
the Closing (such items (i) through (iii) are collectively referred to
herein as the "Assumed Liabilities"). Purchaser shall not be liable for
any liabilities, debts, contracts, agreements, including without
limitation any contracts or agreements set forth on SCHEDULE 2.02, or
other obligations of Seller of any nature whatsoever other than the
Assumed Liabilities (such other liabilities, debts, contracts, agreements
or obligations of Seller other than the Assumed Liabilities being
referred to as "the Non-Assumed Liabilities").
ARTICLE IV
INSTRUMENTS OF TRANSFER
AND ASSUMPTION
SECTION 4.01. TRANSFER DOCUMENTS. At the Closing, Seller will
deliver to Purchaser (a) one or more Bills of Sale in substantially the
form attached hereto as EXHIBIT A (a "Xxxx of Sale"), (b) all such other
good and sufficient instruments of sale, transfer and conveyance,
including, without limitation, assignments of leases, in such form and
including such matters as Purchaser shall reasonably request and as shall
be reasonably acceptable to Seller, as shall be effective to vest in
Purchaser all of Seller's right and title to, and interest in, the
Assets; and (c) all contracts and commitments, instruments, books and
records (except as otherwise provided in Section 2.02 hereof) and other
data included in the Assets.
SECTION 4.02. ASSUMPTION DOCUMENTS. At the Closing, Purchaser and
Seller will execute and deliver (a) an Assumption Agreement in
substantially the form attached hereto as EXHIBIT B (the "Assumption
Agreement") and (b) all such other good and sufficient instruments of
assumption in such form and including such matters as Seller shall
reasonably request and as shall be reasonably acceptable to Purchaser in
order to effect the assumption of the Assumed Liabilities by Purchaser.
ARTICLE V
PURCHASE PRICE; ALLOCATION
SECTION 5.01. PURCHASE PRICE. The total purchase price for the
Assets shall be Fifty-three Million Seven Hundred Seventy-five Thousand
Dollars ($53,775,000) (the "Base Price"), as adjusted in accordance with
the provisions of Section 5.05 hereof (as adjusted, the "Purchase
Price").
SECTION 5.02. DEPOSIT. Simultaneously with the execution of this
Agreement, Purchaser is depositing as a good faith deposit $2.70 million
(the "Deposit") with CoreStates Bank, N.A. (the "Deposit Escrow Agent"),
to be held, invested and disbursed pursuant to the terms of the Deposit
Escrow Agreement in the form of EXHIBIT C attached hereto (the "Deposit
Escrow Agreement"). If the Closing occurs, then the Deposit and all
earnings on the Deposit shall be paid to Purchaser pursuant to the
Deposit Escrow Agreement. If Seller terminates this Agreement in
accordance with the provisions of Section 15.02(d), at the time of such
termination Seller is not then in breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement to such
an extent that Seller's breaches, in the aggregate, have caused or would
reasonably be expected to cause Purchaser to suffer a Material Loss (as
defined in Section 10.01) or otherwise result in a Material Adverse
Effect (as defined in Section 10.01) and the conditions set forth in
Sections 10.05 and 10.08 would have been satisfied had Closing occurred
on the date Seller terminates this Agreement, then Seller shall be
entitled to the Deposit plus all earnings thereon as liquidated damages
(the "Liquidated Damages Amount"), which Liquidated Damages Amount the
parties agree is a fair and reasonable measure of the damages that Seller
would sustain as a result of such termination. Notwithstanding anything
else set forth in this Section 5.02, if this Agreement is terminated
before Closing has occurred, then Seller's sole and exclusive recourse
against Purchaser, Xxxxxx Communications Corporation ("DCC"), as
guarantor, or any of their subsidiaries or affiliates for any breach by
Purchaser and/or DCC of their representations or obligations hereunder
(including in the event Seller terminates this Agreement in accordance
with the provisions of Section 15.02(d)) shall be to receive the
Liquidated Damages Amount. In any other case if the Closing does not
occur, then, pursuant to the Deposit Escrow Agreement, the Deposit and
all earnings thereon shall be paid to Purchaser. All payments by the
Deposit Escrow Agent shall be made in accordance with the procedures and
other provisions set forth in the Deposit Escrow Agreement.
SECTION 5.03. PAYMENT OF PURCHASE PRICE. The Purchase Price less
an amount equal to $4.0 million (the "Escrow Payment"), shall be payable
by wire transfer of immediately available funds to Seller at Closing.
The Escrow Payment shall be paid by the Purchaser at Closing to
CoreStates Bank, N.A., as escrow agent (the "Escrow Agent") to be held,
invested and disbursed pursuant to the terms of the Closing Escrow
Agreement in the form of EXHIBIT D attached hereto (the "Closing Escrow
Agreement"). Purchaser will use commercially reasonable efforts to cause
the wire transfer of such amounts to be made to Seller and the Escrow
Agent by noon of the Closing Date.
SECTION 5.04. ALLOCATION OF PURCHASE PRICE. The Purchase Price
and the Assumed Liabilities shall be allocated among the Assets being
purchased as set forth on Schedule 5.04. Purchaser and Seller each agree
to file their income tax returns and their other tax returns and IRS Form
8594 reflecting the allocation set forth on such Schedule unless
otherwise required by applicable legal requirements.
SECTION 5.05. PURCHASE PRICE ADJUSTMENT.
(a) As used in this Section 5.05, the following terms shall have
the meaning set forth below:
"CURRENT ASSETS" means the Cellular System's (i) subscriber accounts
receivable, excluding outcollect roaming revenue receivables, that are
current to less than 91 days past due, net of a reserve for bad debts,
which reserve shall equal the sum of the following amounts: zero percent
(0%) of such accounts receivable that are not past due or that are thirty
(30) or fewer days past due, ten percent (10%) of such accounts
receivable that are more than thirty (30) but less than sixty-one (61)
days past due and fifty percent (50%) of such accounts receivable that
are more than sixty (60) but less than ninety-one (91) days past due;
(ii) outcollect roaming revenue receivables excluding those outcollect
roaming revenue receivables which are in dispute or considered
uncollectable in the normal course and are identified on Schedule
5.05(a)(i) (the "Disputed Roaming Receivables"); (iii) inventory of
cellular telephone handsets, pagers, calling cards, accessories and
ancillary equipment (excluding the car stereo and speaker inventory
comprising a portion of the Excluded Assets) held for sale to subscribers
and which is not obsolete reflected at net book value (the "Inventory");
provided in no event shall the net book value of the Inventory used to
determine Current Assets exceed $100,000, (iv) earned but unbilled
outcollect roaming revenue and (v) prepaid items which Purchaser will
receive the benefit of after the Closing such as prepaid rent, property
taxes, utility charges, fees and deposits paid, all determined as of
12:01 a.m. on the Closing Date in accordance with GAAP.
"CURRENT LIABILITIES" means the Cellular System's (i) subscriber
deposits received, (ii) deferred revenue (i.e. unearned income), (iii)
accrued employee vacation expense, (iv) salaries, bonuses, fringe
benefits and other remuneration payable to employees to be hired by
Purchaser to the extent not paid (or provided for by Seller on the
Closing Date), (v) expenses for goods and services received in the normal
course of business including taxes, utility charges, special assessments,
commissions, fees and (vi) other trade payables and accrued expenses
incurred in the normal course of business, all determined as of 12:01
a.m. on the Closing Date in accordance with GAAP.
"GAAP" means generally accepted accounting principles consistently
applied.
"SUBSCRIBER" means a person or entity subscribing for cellular
telephone service on the Cellular System for at least the 30 consecutive
day billing cycle of the Cellular System ("Billing Cycle") ending on or
prior to the Closing Date (i) who pays for service under the Cellular
System's normal rate plan for that category of subscriber, (ii) who has
paid for at least one full Billing Cycle's service and whose account is
active within the normal practices and procedures of the Cellular System
and in no case is more than 90 days past due, (iii) who was obtained as a
subscriber in the normal course of business of the Cellular System
consistent with past practice and not as a result of (A) marketing
efforts that are not customary in the cellular telephone industry
generally or which are not described on Schedule 5.05(a)(ii) or (B) any
other plans for which the Seller failed to obtain Purchaser's prior
written consent. SCHEDULE 5.05(A)(II) attached hereto sets forth all
marketing and promotional plans Seller has used, is using or proposes to
use, from September 30, 1996 to the Closing to acquire subscribers.
"TENTATIVE SUBSCRIBER" means a person or entity which as of the
Closing Date meets all of the requirements for being a "Subscriber" (as
defined in this Section 5.05(a)) except for the failure to have been a
cellular telephone service customer for the full Billing Cycle
immediately prior to the Closing Date.
"TARGET NUMBER OF SUBSCRIBERS" means 3,570 plus the product of 100
times the number of 30 day periods elapsed from July 9, 1997 to the
Closing (pro rated for any partial periods of less than 30 days).
(b) The Base Price shall be increased (or decreased) by the amount
by which Current Assets exceeds (or is less than) Current Liabilities as
of the Closing Date (the "Working Capital Adjustment").
(c) The Base Price shall be (i) decreased by an amount equal to the
product of (A) $300.00 and (B) the difference between 3,470 and the
number of Subscribers as of the Closing Date if less than 3,470, or (ii)
increased by an amount equal to the product of (A) $300.00 and (B) the
excess of the number of Subscribers as of the Closing Date over the
Target Number of Subscribers (such decrease or increase in the Base Price
being referred to herein as the "Subscriber Adjustment"); provided,
however, for purposes of determining the Subscriber Adjustment, a
Tentative Subscriber shall be counted as a Subscriber as of the Closing
Date if as of the end of the System's normal Billing Cycle which
commences after the Closing Date such Tentative Subscriber is still an
active cellular telephone service customer of the Cellular System and has
paid all charges for service when due.
(d) Seller shall prepare and submit to Purchaser, not later than 5
business days prior to the Closing Date, a written good faith estimate of
the amount of the Working Capital Adjustment and Subscriber Adjustment
(collectively, the "Adjustments") and the number of Tentative Subscribers
in accordance with this Section 5.05 and Seller's estimate of the
Purchase Price resulting from the Adjustments ("Seller's Estimate").
Seller's Estimate shall be accompanied by detailed supporting documents,
work papers, subscriber records, an update (if any) of Disputed Roaming
Receivables to be added to Schedule 5.05(a)(i), the most current EDS
report that can be practically obtained with respect to Seller's earned
but unbilled outcollect roaming revenue (the "EDS Report") and other data
supporting each Adjustment and Seller's Estimate. The Seller's Estimate
shall be based upon the books and records of the Cellular System. The
Seller's Estimate shall be accompanied by a certificate signed by the
President or Chief Financial Officer of Seller certifying that Seller's
Estimate was calculated in good faith and in accordance with the
provisions of this Section 5.05. After the delivery of Seller's Estimate
and prior to the Closing, Purchaser and Seller shall attempt to resolve
any disputes between Seller and Purchaser with respect to Seller's
proposed Adjustments and to the extent possible shall update the
Adjustments to reflect Seller's actual earned but unbilled outcollect
roaming revenue based upon an EDS Report prepared as close to the Closing
Date as practical. In connection therewith, Purchaser shall have full
access to all Seller's records related to Seller's proposed Adjustments.
Prior to Closing, Purchaser shall advise Seller in writing as to any
dispute Purchaser has with Seller's Estimate and provide Seller with
Purchaser's calculation of the Adjustments and the Purchase Price,
accompanied by a certificate signed by the President or Chief Financial
Officer of Purchaser certifying that Purchaser's calculation was made in
good faith and shall be accompanied by supporting documents and
information, to the extent the same is available to Purchaser
("Purchaser's Estimate"). In the event Purchaser's Estimate of the
Purchase Price is less than $25,000 less than Seller's Estimate, the
Closing shall proceed with the Purchase Price based upon Seller's
Estimate. In the event the Purchaser's Estimate of the Purchase Price is
more than $25,000 less than Seller's Estimate, then the mid-point between
Seller's Estimate and Purchaser's Estimate shall be used as the Purchase
Price for purposes of Closing.
Within 90 days after the Closing Date, Purchaser shall deliver to
Seller a certificate (the "Closing Certificate") signed by the President
or Chief Financial Officer of Purchaser providing a compilation of the
Adjustments to be made pursuant to this Section 5.05 including additions
to Schedule 5.05(a)(i) for additional Disputed Roaming Receivables
Purchaser believes in good faith should be Excluded Assets and any other
changes in the Adjustments used to determine the Purchase Price at
Closing, together with a copy of any supporting documents, work papers,
subscriber records and other data relating to such Closing Certificate
and such other supporting evidence as Seller may reasonably request
either prior to or after delivery thereof. If Seller shall conclude that
the Closing Certificate does not accurately reflect the Adjustments to be
made to the Base Price in accordance with this Section 5.05, Seller
shall, within 30 days after their receipt of the Closing Certificate
(such 30 day period being referred to as the "Response Period"), deliver
to Purchaser a written statement of any discrepancies believed to exist.
If Seller fails to so notify Purchaser of any discrepancies, then the
calculation of the Purchase Price set forth in the Purchaser's Closing
Certificate shall be controlling for all purposes hereof and Purchaser or
Seller, as the case may be, shall on or before the fifth business day
following the expiration of the Response Period pay to the other the
amount which it is obligated to pay in accordance with the Closing
Certificate. On or before the fifth business day following the earlier
to occur of the expiration of the Response Period and the date Purchaser
receives Seller's statement of discrepancies, Purchaser or Seller, as the
case may be, shall pay the other the amount, if any, as to which there is
no discrepancy. Purchaser and Seller shall use good faith efforts to
jointly resolve their discrepancies within 15 days of Purchaser's receipt
of Seller's written statement of discrepancies, which resolution, if
achieved, shall be binding upon the parties and not subject to further
dispute or review. In the event Purchaser and Seller are unable to
resolve their differences within such fifteen (15) day period, then
either party may request that the matter be resolved by Price Waterhouse
(the "Independent Accountants"). In submitting a dispute to the
Independent Accountants, each of the parties shall furnish, at its own
expense, the Independent Accountants and the other party with such
documents and information as the Independent Accountants may reasonably
request. Each party may also furnish to the Independent Accountants such
other information and documents as it deems relevant with the appropriate
copies and notification being given to the other party. The Independent
Accountants may conduct a conference concerning the disagreements between
Seller and Purchaser at which conference each party shall have the right
to present additional documents, material and other evidence and to have
present its advisors, accountants and counsel. The Independent
Accountants shall promptly render a decision on the issues presented, and
such decision shall be final and binding on the parties. The fees and
expenses of the Independent Accountants shall be divided equally between
Purchaser and Seller. Within 5 days of receipt of the Independent
Accountants' decision with respect to such dispute, if Purchaser is
determined to owe an amount to Seller, Purchaser shall pay such amount
thereof to Seller, and if Seller is determined to owe an amount to
Purchaser, Seller shall pay such amount thereof to Purchaser. All
amounts owed by Purchaser or Seller to the other in accordance with this
Section 5.05(d) shall be paid by wire transfer of immediately available
funds and shall not bear any interest. Any amount due Purchaser from
Seller under this Section 5.05 and not paid when due may also be paid
from the funds held pursuant to the Escrow Agreement.
ARTICLE VI
CLOSING
Subject to the terms and conditions hereof, the closing (the
"Closing") shall take place at the offices of Xxxxxxx & Xxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the date (the "Closing
Date") which is the latest of (a) the tenth (10th) day after the date
that (i) the FCC granted its consent to the assignment of the Cellular
Authorizations from Seller to the Purchaser by a Final Order (as defined
in Section 10.04) or (ii) if applicable, Seller receives from Purchaser
the Finality Waiver Notice (as defined in Section 10.4), (b) the fifth
(5th) day after the expiration or early termination of the waiting period
under the Xxxx-Xxxxx Act; (c) the tenth (10th) day after the date that
the FCC granted a Special Temporary Authority (as defined in Section
10.04) for Purchaser to operate the microwave facilities that are the
subject of the Microwave Authorizations on a temporary basis; or (d)
January 2, 1998; provided if such latest date is not a business day, the
Closing Date shall be the next following business day. The Closing shall
be effective as of 12:01 a.m. on the Closing Date. At Closing, each
party shall deliver or cause to be delivered to the other party the
instruments of transfer and assumption referenced in Article IV of this
Agreement and the other deliveries required by Article X (for Seller) and
Article XI (for Purchaser) of this Agreement, and Purchaser shall deliver
to Seller, by wire transfer of immediately available funds to one or more
bank accounts as specified by Seller in wire transfer instructions to be
delivered to Purchaser at least two business days prior to the Closing
Date, the Purchase Price as required pursuant to Section 5.03.
ARTICLE VII
SELLER'S REPRESENTATIONS
Seller hereby represents and warrants that:
SECTION 7.01. ORGANIZATION, QUALIFICATION. (a) Seller is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Texas and has all necessary power and authority
to own and operate its properties and to carry on its Business as now
being conducted or proposed to be conducted and to carry out the
transactions contemplated by this Agreement. Seller has the full power
and authority to execute and deliver and, subject to obtaining the FCC's
approval to assign the FCC Authorizations and the other governmental and
third-party consents referred to in Section 10.04, perform its
obligations under this Agreement and to undertake the transactions
contemplated hereby.
SECTION 7.02. CONSENTS, AUTHORIZATION, EXECUTION AND
DELIVERY OF AGREEMENT. All necessary consents and approvals have been
obtained by Seller for the execution and delivery of this Agreement. The
execution, delivery and performance of this Agreement by Seller and the
transfer of the Assets to Purchaser have been duly and validly authorized
and approved by all necessary corporate and stockholder action of Seller.
This Agreement is a valid and binding obligation of Seller, enforceable
against it in accordance with its terms.
SECTION 7.03. SUBSIDIARIES AND INTERESTS IN OTHER COMPANIES.
Seller has no subsidiaries, and does not own or control any shares or
other securities of, or have any other proprietary interest in, any
corporation, partnership, limited liability company, joint venture,
business association or other person.
SECTION 7.04. TITLE TO ASSETS; CONDITION OF ASSETS. Seller has,
and will convey to Purchaser at Closing, good title to the Assets, free
and clear of all Liens other than Permitted Liens. All Liens in effect
on the date hereof which are to be discharged at Closing are listed on
SCHEDULE 7.04 hereto. The tangible property included among the Assets
(other than spare equipment and parts, all of which will be conveyed "as
is, where is") is in good working order and repair, reasonable wear and
tear excepted. The Assets constitute all of the assets which are
necessary, used or useful in the operation of the Business as it is
currently being conducted by Seller other than the Excluded Assets.
Except as disclosed on Schedule 7.25, no officer, director, stockholder
or employee of Seller, or any other individual, partnership, corporation,
person or entity (a "Person") (other than Seller) controlling, controlled
by or affiliated with or family member of any such officer, director,
stockholder or employee, owns, leases or has any rights in any property,
license or other assets related to the Business other than the Excluded
Assets. Except for factors typically affecting propagation and reception
in the cellular telephone industry generally, the tangible property
included in the Assets are technically sufficient and capable of
providing cellular telephone service in the Cellular Area in accordance
with applicable FCC regulations except as set forth on SCHEDULE 7.08.
All of the buildings, towers, antenna, fixtures and improvements owned by
Seller, and all heating and air conditioning equipment, plumbing,
electrical and other mechanical facilities and the roof, walls and other
structural components of the real property which are part of, or located
in such buildings, towers, antenna or improvements and are owned by
Seller (or in the case of such buildings, towers, antenna, fixtures,
improvements, equipment, facilities and structural components which are
leased by Seller, to Seller's knowledge) comply with applicable zoning
laws and the building, health, fire and environmental protection codes of
all applicable governmental jurisdictions, have no structural defects and
do not require any repair other than maintenance as is customary in the
cellular telephone industry generally and the repair of ordinary wear and
tear.
SECTION 7.05. REAL PROPERTY - OWNED. Seller owns no real property
and the real property leased by Seller related to the Business has never
been owned by Seller.
SECTION 7.06. REAL AND PERSONAL PROPERTY - LEASED. Set forth on
SCHEDULE 2.01(D) (in the case of real property) and SCHEDULE 2.01(A) (in
the case of personal property), are true and accurate listings of all
real and personal property leases to which Seller is a party (other than
personal property leases with annual payments of less than $2,000 and
which leases, together with the other contracts and agreements not
required to be disclosed on SCHEDULES 2.01(A) AND (D), in the aggregate
have annual payments of less than $25,000 or which are terminable without
penalty on one month or less notice) setting forth (i) the name of the
lessor and (ii) with respect to the real property leases, a description
of the property leased. Except as set forth on SCHEDULE 2.01(D) (in the
case of leased real property) and SCHEDULE 2.01(A) (in the case of leased
personal property), all of the leases set forth on Schedule 2.01(d) (i)
are in full force and effect and are valid, binding and enforceable in
accordance with their respective terms, (ii) all accrued and currently
payable rents and other payments required by such leases have been paid,
(iii) Seller and, to Seller's knowledge, each other party thereto have
complied with all respective covenants and provisions of such leases,
(iv) neither Seller nor, to Seller's knowledge, any other party is in
default in any respect under any such leases, (v) no party has asserted
any defense, set off, or counter claim thereunder, (vi) no waiver,
indulgence or postponement of any obligations thereunder has been granted
by any party, and (vii) the validity or enforceability of any such lease
will be in no way affected by the sale of the Assets to Purchaser
provided all required consents have been obtained from the other parties
to such lease.
SECTION 7.07. EXISTING CONTRACTS. SCHEDULES 2.01(A) AND (D) hereto
set forth all contracts, commitments and agreements in effect on the date
hereof with Seller's subscribers (other than standard subscriber
agreements for cellular service), all leases (other than personal
property leases with annual payments of less than $2,000 and which
leases, together with the other contracts and agreements not required to
be disclosed on SCHEDULES 2.01(A) AND (D), in the aggregate have annual
payments of less than $25,000 or which are terminable without penalty on
one month or less notice) to which Seller is a party, and all other
contracts, commitments and agreements (other than agreements with annual
payments of less than $2,000 and which agreements, together with the
other leases and contracts not required to be disclosed on SCHEDULES
2.01(A) AND (D), in the aggregate have annual payments of less than
$25,000 or which are terminable without penalty on one month or less
notice) or commitments (written or oral) to which Seller is a party which
relate to the ownership of the Assets or the operation of the Business
(the "Existing Contracts") except for standard roaming agreements (i.e.
those containing no unique or burdensome provisions) with other carriers
(other than the roaming agreements with the five carriers disclosed on
Schedule 2.01(a) hereto which Seller represents accounted for at least
85% of Seller's total roaming revenue for the period January 1, 1997
through August 31, 1997) and the contracts, leases, commitments and
agreements included among the Non-Assumed Liabilities (the "Excluded
Contracts"). Except as set forth on Schedule 2.01(a), Seller has not
received notice from any of the five carriers disclosed on Schedule
2.01(a) that such carrier will reduce the rate it now pays Seller for its
customers' use of service when roaming in the Cellular System (the
"Outcollect Rate"). Except as disclosed on Schedule 7.25, no officer,
director or employee of Seller or any Person (other than Seller)
controlling, controlled by or affiliated with or family member of any
such officer, director or employee has any contractual relationship
relating to the ownership or operation of the Business. Seller has
heretofore delivered to Purchaser true and correct copies of the Existing
Contracts. Except as disclosed on SCHEDULES 2.01(A) AND (D), Seller has
no knowledge of any breach or anticipated breach by the other parties to
any Existing Contracts. The Existing Contracts are in full force and
effect and Seller is in compliance with its obligations under such
Existing Contracts. Except for the Existing Contracts, standard
subscription and standard roaming agreements and the Excluded Contracts,
Seller has not entered into any other contract, commitment or agreement
(other than agreements with annual payments of less than $2,000 and which
agreements, together with the other leases and contracts not required to
be disclosed on SCHEDULES 2.01(A) AND (D), in the aggregate have annual
payments of less than $25,000 or which are terminable without penalty on
one month or less notice) relating to the ownership of the Assets or the
operation of the Business, including, but not limited to, rights-of-way,
rights of entry, licenses, easements, leases, or guaranty agreements.
Seller has received no notice of any claims by third parties that Seller
is required to enter into other agreements to enable it to continue to
own the Assets and operate of the Business as it is presently being
operated.
SECTION 7.08. GOVERNMENTAL LICENSES. Except as set forth on
SCHEDULE 7.08, Seller holds all licenses, consents, permits, approvals
and authorizations of public and governmental bodies including, without
limitation, the FCC and the state, counties and municipalities served by
the Business, which are required for the operation of the Cellular System
as it is currently being operated and in connection with the ownership of
the Assets (collectively referred to as the "Authorizations"). All
Authorizations are in full force and effect. Except as set forth on
Schedule 7.08, Seller is in compliance with the terms of the
Authorizations which it holds and there are no pending modifications,
amendments or revocations of the Authorizations which would adversely
affect the ownership of the Assets or the operation of the Business.
Except as set forth on Schedule 7.08, all fees due and payable from
Seller to governmental authorities pursuant to the Authorizations have
been paid. Except as set forth on Schedule 7.08, all reports required of
Seller to be filed in connection with the Authorizations have been timely
filed and are accurate and complete. True and correct copies of the
Authorizations, and all amendments thereto to the date hereof, have been
delivered by Seller to Purchaser and are identified on SCHEDULE 2.01(A)
hereto. The ownership of the Assets and the operation of the Business by
Seller are not subject to regulation or supervision by any applicable
state public utilities commission or other similar state governmental
instrumentality.
SECTION 7.09. COMPLIANCE WITH LAWS. Except as set forth on
SCHEDULE 7.08, 7.09 OR 7.15, Seller is in compliance with, and is not in
default under or in violation of, and neither the Business nor any of the
Assets nor the operation or maintenance thereof, contravenes any statute,
law (including environmental or employment laws), ordinance, decree,
order, rule, regulation of any governmental body applicable to the Assets
or the Business, including, without limitation, the rules and regulations
of the FCC.
SECTION 7.10. NO VIOLATION OF EXISTING AGREEMENTS. Subject to
obtaining the consents for the Existing Contracts identified in SCHEDULE
7.10 and to the receipt of all necessary consents and approvals from the
FCC and under the Xxxx-Xxxxx Act, the execution, delivery and performance
of this Agreement by Seller and Seller's transfer of the Assets to
Purchaser (i) will not violate any provisions of any law, (ii) will not,
with or without the giving of notice or the passage of time, or both,
conflict with or result in any breach of any of the terms or conditions
of, or constitute a default under any Existing Contracts, and (iii) will
not result in the creation of any Lien upon the Assets or the Business
other than Permitted Liens.
SECTION 7.11. LITIGATION AND LEGAL PROCEEDINGS. Except as set
forth on SCHEDULE 7.11, there is no outstanding judgment against Seller
or any director, officer or stockholder of Seller affecting the Business
or the Assets or which question the validity of any action taken or to be
taken by Seller pursuant to or in connection with the provisions of this
Agreement and there is no litigation, proceeding or investigation
pending, or, to Seller's knowledge, threatened, against Seller or any
director, officer or stockholder of Seller affecting the Business or the
Assets or which questions the validity of any action taken or to be taken
by Seller pursuant to or in connection with the provisions of this
Agreement. Except as set forth on SCHEDULE 7.11, there are no
proceedings pending to which Seller or any director, officer or
stockholder of Seller is a party or, to Seller's knowledge, threatened,
nor has Seller received written notice of any demands by any governmental
agency, utility or other party, to terminate, modify or adversely change
the terms and conditions of Seller's rights with respect to the
Authorizations or Existing Contracts.
SECTION 7.12. ENVIRONMENTAL COMPLIANCE. (a) Except as set forth
on SCHEDULE 7.12 hereto, (i) Seller has not generated, used, transported,
treated, stored, released or disposed of, or suffered or permitted anyone
else to generate, use, transport, treat, store, release or dispose of any
Hazardous Substance (as hereinafter defined) with respect to the Assets
or the Business in violation of any Environmental Laws (as hereinafter
defined); (ii) there has not been any generation, use, transportation,
treatment, storage, release or disposal of any Hazardous Substance in
connection with Seller's ownership or use of the Assets or Seller's
conduct of the Business on, in or under any property or facility used,
owned or leased by Seller or any adjacent properties or facilities, which
has created or might reasonably be expected to create any liability under
any Environmental Laws or which would require reporting to or
notification of any governmental entity; (iii) no asbestos that has been
rendered friable, no polychlorinated biphenyl, and no underground storage
tank, is contained in or located on or under any property or facility
owned, used or leased by Seller; and (iv) any Hazardous Substance handled
or dealt with in any way by Seller during Seller's ownership or use of
the Assets or the Business has been and is being handled or dealt with in
compliance with all Environmental Laws.
(b) For purposes of this Agreement, the term "Hazardous
Substance" shall mean any substance which, as of the date of this
Agreement, is listed as hazardous or toxic in the regulations
implementing the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Response Compensation
and Liability Act ("RCLA"), the Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), or listed as a hazardous substance under any
applicable state environmental laws, or any substance which has been
determined by regulation, ruling or otherwise by any agency or court to
be a hazardous or toxic substance regulated under federal or state law,
and shall include petroleum and petroleum products.
(c) For purposes of this Agreement, the term "Environmental
Laws" shall mean CERCLA, RCRA, RCLA and any applicable statutes,
regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises and similar
items of all governmental authorities and all applicable judicial,
administrative and regulatory decrees, judgments and orders, any of which
relate to the protection of human health or the environment from the
effects of Hazardous Substances, including but not limited to those
pertaining to reporting, licensing, permitting, investigating and
remediating emissions, discharges, releases or threatened releases of
Hazardous Substances into the air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances.
SECTION 7.13. EMPLOYEES. SCHEDULE 7.13 sets forth a true and
complete list of the names and current salaries of all employees of the
Seller involved in the operation of the Business. Such employees are
employees at will. Seller has withheld all amounts required by law or
agreement to be withheld by it from the wages, salaries and other
payments to its employees and is not liable for any arrears of wages or
any taxes for failure to comply with any of the foregoing. There are no
collective bargaining agreements covering any of the employees of Seller.
The Seller has not breached or otherwise failed to comply with any
provision of any collective bargaining agreement or other labor union
contract applicable to any of its employees. No consent of any union (or
similar group or organization) is required in connection with the
consummation of the transactions contemplated hereby. There are no
pending, or, to Seller's knowledge threatened, and there is no factual
basis for any (a) employment discrimination (including age, sex, racial
or handicap discrimination) charges or complaints against or involving
Seller, before any federal, state, or local board, department, commission
or agency or (b) unfair labor practice charges or complaints, disputes or
grievances affecting Seller. There are no pending, or, to Seller's
knowledge threatened (a) union representation petitions respecting the
employees of Seller, (b) efforts being made to organize any of the
employees of Seller, or (c) strikes, slow downs, work stoppages, or
lockouts or threats affecting Seller.
SECTION 7.14. EMPLOYEE BENEFITS. Except as set forth on SCHEDULE
7.14 attached hereto, Seller has no pension plan, profit sharing plan,
deferred compensation plan, stock option or stock bonus plan, saving
plan, or other benefit plan, policy, practice, or procedure or contract
concerning employee benefits or fringe benefits of any kind
(collectively, "Employee Benefit Plans"), whether or not governed by the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Seller is not a party to any employment contract. No officer, director
or employee of Seller participates or is eligible to participate in a
"defined benefit pension plan" as defined in Section 3(35) of ERISA,
maintained or made available by Seller. Neither Seller nor any
Controlled Group Member maintains or contributes to, or ever maintained
or contributed to, a plan under which any employee of Seller participates
or is eligible to participate subject to Section 412 of the Internal
Revenue Code of 1986, as amended (the "Code"). The term "Controlled
Group Member" means any trade or business (whether or not incorporated)
which is, or was at any relevant time, aggregated with the Seller
pursuant to Section 414(b), (c), (m) or (o) of the Code. Neither Seller
nor any ERISA Affiliate has participated in or made contributions to any
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA. The term
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which is, or was at any relevant time, treated as a single
employer with Seller pursuant to Section 4001(b)(1) of ERISA.
Each of the Employee Benefit Plans is in compliance in all material
respects with all applicable requirements of ERISA, the Code, and other
applicable law. Each of the Employee Benefit Plans has been administered
in all material respects in accordance with its terms and with applicable
legal requirements. All "employee pension plans" (within the meaning of
Section 3(2) of ERISA) have been determined by the Internal Revenue
Service ("IRS") to be qualified under Section 401(a) of the Code, and no
action or proceeding has been instituted or threatened which would affect
the qualification of any pension plan of Seller. No unfunded
liabilities, based upon the Pension Benefit Guarantee Corporation (the
"PBGC") rates currently in effect for plan terminations, exist with
respect to any Employee Benefit Plan which is a "defined benefit plan"
(within the meaning of Section 3(35) of ERISA). There has not been any
reportable event with respect to any pension plan of Seller. Seller has
not engaged in a "prohibited transaction" or breach of fiduciary
responsibility with respect to any Employee Benefit Plan which could
subject Purchaser or any affiliate of Purchaser to a penalty tax or other
liability under ERISA or the Code. Neither Seller nor any Affiliate of
Seller has ever incurred any liability under Title IV of ERISA to the
PBGC or to a multi-employer pension plan.
SECTION 7.15. TAX MATTERS. Except as set forth on SCHEDULE 7.15
attached hereto, (a) Seller has timely filed all Tax (as defined below)
returns and statements which it is required to file; (b) all such returns
are complete and accurate in all material respects and disclose all Taxes
required to be paid for the periods covered thereby; (c) Seller has not
waived any statute of limitations in respect of Taxes or agreed to an
extension of time with respect to a Tax assessment or deficiency; (d) no
assessment of any additional Taxes for periods for which returns have
been filed has been asserted and no basis exists therefor; (e) to
Seller's knowledge, there are no unresolved questions or claims raised by
any Taxing authority concerning the Tax liability of Seller, (f) all
Taxes which Seller is required by law to withhold or to collect for
payment have been duly withheld and collected, and have been paid and (g)
Seller has paid all Taxes due prior to the date hereof and will pay when
due (or contest in good faith by appropriate proceedings) all Taxes which
may become due on or before the Closing Date. For purposes of this
Section 7.15, the term "Tax" or "Taxes" means all taxes, charges, fees,
levies, imposts and other assessments including all income, sales, use,
goods and services, value added, capital, capital gains, alternative net
worth, transfer, profits, withholding, payroll, employer health, excise,
real property and personal property taxes, and any other taxes, customs
duties, stamp duties, fees, assessments or similar charges in the nature
of a tax, together with any interest, fines and penalties imposed by any
governmental authority (including federal, state, provincial, municipal
and foreign governmental authorities), and whether disputed or not.
SECTION 7.16. FINANCIAL STATEMENTS.
(a) The Purchaser has heretofore been furnished with the following:
(i) true and complete copies of the audited balance sheet
of Seller as of December 31, 1994, December 31, 1995 and
December 31, 1996 and the related audited statements of income
and retained earnings and cash flows for the years then ended,
each of such balance sheet and income statement being attached
hereto as SCHEDULE 7.16(A)(I) (collectively, the "Historical
Financial Statements"); and
(ii) true and complete copies of the unaudited balance
sheet (the "June Balance Sheet") of Seller at June 30, l997
(the "Balance Sheet Date") and the related unaudited statement
of income for the six-month period then ended (the "Six Month
Income Statement" and together with the June Balance Sheet, the
"Current Financial Statements"), such balance sheet and income
statement being attached hereto as SCHEDULE 7.16(A)(II).
(b) Except as described below, each of the Historical and Current
Financial Statements delivered under Section 7.16 (a)(i) and (ii) hereof
was prepared in accordance with GAAP applied on a basis consistent with
prior periods and past practices and, with respect to the Current
Financial Statements, subject to usual and customary year-end adjustments
and except for the omission of certain footnotes and other presentation
items required by GAAP with respect to audited financial statements. In
1996, Seller changed its accounting policies and practices relating to
(x) its writeoff of aged accounts receivable to defer writeoff
irrespective of the age of the receivable pending completion of Seller's
collection efforts and (y) its estimation of the related bad debt reserve
to reflect continued inclusion in the accounts receivable balance of such
aged receivables. Subject to the following proviso, each of the balance
sheets included in such Historical and Current Financial Statements
fairly presents in all material respects the financial condition of
Seller, as at the close of business on the date thereof; and, subject to
the following proviso, each of the statements of income included in such
Historical and Current Financial Statements fairly presents in all
material respects the results of operations of Seller, for the fiscal
period then ended; PROVIDED that references to the Historical Financial
Statements relating to fiscal year 1995 shall be deemed to refer only to
such Historical Financial Statements as restated to correct certain
errors discovered by management of Seller during a subsequent year.
(c) Except as set forth on SCHEDULE 7.16(C) attached hereto, since
the Balance Sheet Date, Seller has not:
(i) sold, assigned or transferred any of its Assets
(except for the Excluded Assets and except pursuant to existing
contracts or commitments disclosed on any Schedule to this
Agreement or inventory in the ordinary course of business
consistent with past practice or for assets sold or disposed of
and replaced by other assets of comparable use and value); or
canceled any material debts or material claims;
(ii) waived any material rights, whether or not in the
ordinary course of business;
(iii) entered into any other transaction, except in the
ordinary course of business, or entered into any transaction
with any officer, director or shareholder of Seller, or any
affiliate or family member of any such Person;
(iv) suffered any material damage, destruction or casualty
loss with respect to the Assets, whether or not covered by
insurance;
(v) made any distribution of any of the Assets to any
officer, director or shareholder of Seller or any affiliate or
family member of such officer, director or shareholder;
(vi) except as disclosed in writing by Seller to
Purchaser, obligated itself or the Business to give free or
reduced price service to customers with respect to the Business
other than promotions offered in the ordinary course of
business and set forth on SCHEDULE 5.05(A) or occasionally free
and temporary price reductions, entered into any agreement with
any governmental or regulatory authority granting the
authorization to freeze fees charged to customers of the
Business; or
(vii) entered into any agreement or understanding to do
any of the foregoing.
SECTION 7.17. SUBSCRIBERS/AGENTS. The number of subscribers
receiving service from the Cellular System as of September 16, 1997 was
at least 3,457. Schedule 7.17 attached hereto sets forth a list of all
agents who sell cellular telephone equipment and/or service on behalf of
Seller as of the date hereof, together with such agent's address and the
number of gross activations produced by each agent from December 1, 1996
to June 30, 1997.
SECTION 7.18. INSURANCE. Seller maintains insurance policies for
the Cellular System with the insurance carriers, in such amounts and for
such losses or casualties as are described on Schedule 7.18.
SECTION 7.19. BROKERS. Except for Xxxxxxxxxx Capital Corp., Seller
has not engaged any agent, broker or other person acting pursuant to the
express or implied authority of Seller which is or may be entitled to a
commission or broker or finder's fee in connection with the transactions
contemplated by this Agreement or otherwise with respect to the sale of
the Assets or the Business.
SECTION 7.20. UNDISCLOSED LIABILITIES. Seller has no liabilities
or obligations of any nature, whether absolute, accrued, contingent or
otherwise, which are not reflected or reserved against in the June
Balance Sheet except for liabilities and obligations that have arisen in
the ordinary and usual course of business and consistent with past
practice (none of which results from, arises out of, relates to, is in
the nature of, or caused by any breach of contract, breach of warranty,
tort, infringement or violation of law) and except for liabilities and
obligations directly related to the transactions contemplated hereby.
SECTION 7.21. PRICING OF SERVICES. SCHEDULE 7.21 sets forth a
description of all rate plans currently offered to subscribers of the
Cellular System.
SECTION 7.22. PROPRIETARY RIGHTS. Seller lawfully possess, and
except for the intellectual property rights listed on Schedule 2.02, the
Assets will include, all intellectual property rights that are necessary
to the conduct of the Business.
SECTION 7.23. ACCOUNTS RECEIVABLE AND BAD DEBTS. All notes and
accounts receivable of Seller shown on the June Balance Sheet or
thereafter acquired were or (to the extent not heretofore collected) are
valid and genuine, were acquired in the ordinary course of business and
are subject to no asserted counterclaims, defenses or setoffs (subject to
reserves therefor as will be taken into account in the determination of
Current Assets at Closing in accordance with Section 5.05). Seller has
furnished Purchaser with a true, complete and accurate copy of an
Accounts Status Aging Report relating to the Invoice Date August 19,
1997, as generated by Seller on August 22, 1997 utilizing the ITDS
billing system.
SECTION 7.24. PRODUCT INFORMATION. Except as disclosed on Schedule
7.24, Seller has not sold and does not have in its inventory any
refurbished telephone handsets. SCHEDULE 7.24 sets forth a list of
manufacturers of telephone handsets presently in Seller's inventory.
SECTION 7.25. CERTAIN BUSINESS RELATIONSHIPS WITH SELLER. Except
as set forth in SCHEDULE 7.25 attached hereto, none of the officers,
directors or stockholders of the Seller and its affiliates or family
members have been involved in any business arrangement or relationship
with Seller within the past 12 months.
ARTICLE VIII
PURCHASER'S REPRESENTATIONS
Purchaser hereby represents, warrants, covenants and agrees that:
SECTION 8.01. ORGANIZATION; QUALIFICATION. Purchaser is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Oklahoma. Purchaser has all power and authority
to (i) own and operate its properties, (ii) carry on its business as it
is now being conducted, and (iii) carry out the transactions contemplated
by this Agreement and to own and operate the Assets and the Business,
subject to obtaining all necessary consents required for the transfer by
Seller of the Assets.
SECTION 8.02. CONSENTS; AUTHORIZATION; EXECUTION AND
DELIVERY OF AGREEMENT. All necessary consents and approvals have been
obtained by Purchaser for the execution and delivery of this Agreement.
The execution and delivery of this Agreement by Purchaser has been duly
and validly authorized and approved by all necessary corporate action.
Purchaser has full power and authority to execute and deliver and perform
its obligations under this Agreement. This Agreement is a valid and
binding obligation of Purchaser, enforceable against it in accordance
with its terms.
SECTION 8.03. LITIGATION AND LEGAL PROCEEDINGS. There is no
outstanding judgment against Purchaser and there is no litigation,
proceeding or investigation pending, or, to Purchaser's knowledge,
threatened, against Purchaser or its assets which individually or in the
aggregate would, if adversely determined, result in a material adverse
change in the business condition (financial or otherwise), properties or
assets of Purchaser or which questions the validity of any action taken
or to be taken pursuant to or in connection with the provisions of this
Agreement or the consummation of the transactions contemplated hereby by
the Purchaser or which could have an adverse effect on Purchaser's
ability to perform its obligations hereunder.
SECTION 8.04. BROKERS. Purchaser has not engaged any agent, broker
or other person acting pursuant to the express or implied authority of
Purchaser which is or may be entitled to a commission or broker or
finder's fee in connection with the transactions contemplated by this
Agreement or otherwise with respect to the sale of the Assets or the
Business.
SECTION 8.05. COMPLIANCE WITH LAWS. Purchaser is currently
complying with and has so complied with, and is not in default under or
in violation of, and neither its business nor any of its assets nor the
operation or maintenance thereof, contravenes in any respect any statute,
law (including environmental or employment laws), ordinance, decree,
order, rule, regulation of any governmental body applicable to its assets
or its business, including, without limitation, rules and regulations of
the FCC.
SECTION 8.06. FCC MATTERS. Purchaser is, and on the Closing Date
will be, fully qualified under the Communications Act of 1934, as
amended, to be an FCC licensee, and to be approved as the assignee of the
FCC Authorizations. Purchaser knows of no reason why the FCC will not
grant its consent to the assignment of the FCC Authorizations from Seller
to Purchaser. Neither Purchaser, nor any "real party in interest" (as
defined by Section 22.13 of the FCC's rules) (i) has had the FCC deny an
application for an authorization, (ii) has had the FCC revoke an
authorization granted to it, or (iii) has been the subject of an
investigation by the FCC.
SECTION 8.07. NO VIOLATION OF EXISTING AGREEMENTS. Subject to the
receipt of all necessary consents and approvals from the FCC and under
the Xxxx-Xxxxx Act, the execution, delivery and performance of this
Agreement by Purchaser will not violate any provisions of any law and
will not, with or without the giving of notice or the passage of time, or
both, conflict with or result in any breach of any of the terms or
conditions of, or constitute a default under any contract or agreement to
which Purchaser or an affiliate of Purchaser is a party.
SECTION 8.08. AVAILABILITY OF FUNDS. Purchaser's ultimate parent
(DCC) has available to it, and Purchaser will have available on the
Closing Date, sufficient funds to enable it to consummate the
transactions contemplated by this Agreement.
ARTICLE IX
SELLER'S AND PURCHASER'S COVENANTS
SECTION 9.01. FINANCIAL STATEMENTS AND CELLULAR SYSTEM INFORMATION.
Seller covenants and agrees that during the period after the execution of
this Agreement and prior to the Closing, Seller shall provide Purchaser,
within 45 days of the end of each calendar quarter, Seller's unaudited
balance sheet and income statement for such quarter ("Interim Financial
Statements"). The Interim Financial Statements will be true and correct
in all material respects, will be prepared using the same accounting
methods and procedures as used in the preparation of the Current
Financial Statements except for the absence of footnotes, subject to
usual and customary adjustments, and will present fairly in all material
respects the financial position of Seller at the date indicated and the
results of Seller's operations for such period. Seller also shall
provide Purchaser within 10 days of the end of each monthly billing cycle
the number of subscribers receiving service from the Cellular System at
the beginning and end of such billing cycle. Seller further covenants
and agrees to provide Purchaser within 5 days of Seller's preparation or
receipt thereof (i) an accounts status aging report for the Cellular
System utilizing the ITDS billing system and relating to each invoice
date arising after the date hereof, (ii) copies of those reports set
forth on Schedule 9.01, and (iii) copies of any other reports reasonably
requested by Purchaser provided that such reports are normally generated
by or for Seller on a monthly basis.
SECTION 9.02. GOVERNMENTAL APPROVALS. (a) Purchaser covenants and
agrees that it will cooperate with Seller, and do all things reasonably
necessary to assist Seller, to obtain all consents and approvals
necessary for assignment to Purchaser of the FCC Authorizations,
including the furnishing of financial and other information specifically
with respect to Purchaser reasonably required by the Person whose consent
or approval is being sought. Seller shall use all reasonable efforts to
provide adequate prior written notice to Purchaser of any meeting with
governmental authorities the purpose of which is to seek a consent or
approval to the transactions contemplated hereby, and Purchaser shall use
all reasonable efforts to furnish a representative to attend meetings
with appropriate government authorities for the purpose of obtaining such
consents or approvals. Each of Purchaser and Seller hereby agrees to
file the necessary Form(s) 490 and 702 with the FCC transferring or
assigning control of the FCC Authorization for the Business to Purchaser
and diligently pursue the processing of the assignment of the FCC
Authorization to Purchaser and to file for all other necessary regulatory
approvals for the consummation of the transactions contemplated by this
Agreement within five business days of the date of execution of this
Agreement to the extent any such filings have not been made prior to the
date of execution of this Agreement. Seller and Purchaser shall share
equally all filing fees in connection with any filings pursuant to this
Section 9.02(a).
(b) Seller and Purchaser shall each cooperate and use their
reasonable best efforts to prepare and file with the Federal Trade
Commission and the Department of Justice as promptly as possible all
requisite applications and amendments thereto together with related
information, data and exhibits necessary to satisfy the requirements of
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act ("Xxxx-Xxxxx Act").
Seller and Purchaser shall share equally all filing fees in connection
with any filings pursuant to this Section 9.02(b).
(c) (i) Seller shall, at its sole expense, undertake to obtain
(or modify, if appropriate) licenses, permits or authorizations for the
microwave facilities listed on SCHEDULE 7.08; (ii) if licenses, permits
or authorizations are obtained (or modified, as appropriate) for the
microwave facilities listed on SCHEDULE 7.08, Purchaser and Seller shall
cooperate in the preparation and submission of any filings necessary to
obtain FCC consent to assign such licenses, permits or authorizations to
Purchaser (including, if requested by the FCC, any amendments to such
filings to have such licenses, permits or authorizations issued directly
in the name of Purchaser); (iii) in the event that Seller has not
obtained, or the FCC has not granted its consent to the assignment of,
such licenses, permits or authorizations to Purchaser before Closing,
Purchaser and Seller shall cooperate to obtain a Special Temporary
Authority permitting Purchaser to operate the microwave facilities listed
on SCHEDULE 7.08 on a temporary basis; and (iv) in the event that the
Special Temporary Authority is obtained, Purchaser and Seller shall
cooperate after the Closing in obtaining FCC consent to the assignment to
Purchaser of such licenses, permits or authorizations on a permanent
basis. Seller shall not enter into any agreements or understandings with
any party relating to the microwave facilities listed on SCHEDULE 7.08
without the prior written consent of the Purchaser, which consent shall
not be unreasonably withheld.
SECTION 9.03. THIRD PARTY CONSENTS; CLOSING CONDITIONS. (a) Seller
covenants and agrees to use its commercially reasonable efforts (best
efforts in the case of leases for the El Campo MTSO Site and the Xxxxxxxx
Cell Site) to obtain all consents and approvals necessary for the
transfer or assignment to Purchaser of the Assumed Contracts. In
addition, with respect to each real property lease identified on SCHEDULE
2.01(D), Seller agrees that the instrument whereby Seller requests the
consent of the lessor thereunder to the assignment of such lease to such
Purchaser shall be substantially in the form of the letter attached
hereto as SCHEDULE 9.03 and that Seller shall use its commercially
reasonable efforts (best efforts in the case of leases for the El Campo
MTSO Site and the Xxxxxxxx Cell Site) to obtain each such lessor's
consent to such assignment by having each such lessor countersign such
letter in the space provided. Purchaser covenants and agrees to
cooperate with Seller and assist Seller in obtaining such consents and
approvals including the furnishing of financial and other information,
reasonably required by the Person whose consent or approval is being
sought. Notwithstanding the foregoing, to the extent that any Assumed
Contracts listed on SCHEDULE 2.01(A) OR 2.01(D) to be sold, assigned,
transferred or conveyed to Purchaser, or any claim, right or benefit
arising thereunder or resulting therefrom (individually, an "Interest"
and collectively, the "Interests"), is not capable of being sold,
assigned, transferred or conveyed without the approval, consent or waiver
of the issuer thereof or the other party thereto, or any third Person
(including a government or governmental unit), and such approval, consent
or waiver has not been obtained, or if such sale, assignment, transfer or
conveyance or attempted assignment, transfer or conveyance would
constitute a breach thereof, and such approval, consent or waiver has not
been obtained, this Agreement shall not constitute a sale, assignment,
transfer or conveyance thereof, or an attempted assignment, transfer or
conveyance thereof; provided Seller shall use its commercially reasonable
efforts to provide Purchaser the benefits of any such Interest as
provided in Section 17.01(b).
(b) Purchaser and Seller hereby covenant and agree to use all
reasonable efforts to satisfy, or assist the other party in satisfying,
the closing conditions applicable to the Purchaser in Article X hereof
and the Seller in Article XI hereof prior to the Closing Date. Purchaser
further covenants and agrees to perform all of its obligations under the
Purchase and Sale Agreement between Seller and Xxxxx in accordance with
and subject to the terms and conditions thereof.
SECTION 9.04. ACCESS. (a) Purchaser shall have the right, itself
or through its representatives, during normal business hours, after
reasonable notice (which may be oral) to an officer of Seller and without
undue disruption to Seller's normal business activities, to inspect the
Assets and properties of Seller and to inspect and make abstracts and
reproductions of all books and records of Seller including, without
limitation, applications and reports to the FCC, all financial
information relevant to the Business, employee records, and engineering
and environmental reports and Seller shall furnish Purchaser with such
information respecting the Assets and Business and financial records as
Purchaser may, from time to time, reasonably request.
(b) Seller acknowledges and agrees, subject to any
restrictions placed thereon by an owner or lessor of any real property
involved (other than property owned by Xxxxx, L-Square or their
affiliates), that Purchaser may commission, at Purchaser's cost and
expense, a so-called "Phase I" environmental site assessment of the
Assets (the "Phase I Assessment"). If the Phase I Assessment indicates
that a so-called "Phase II" assessment (the "Phase II Assessment") or
other additional testing or analysis of the Assets is advisable, the
Purchaser may elect to cause its agents to conduct such testing and
analysis. Seller will use its commercially reasonable efforts to comply
with any reasonable request for information made by Purchaser or its
agents in connection with any such investigation. Seller covenants that
any response to any such request for information will be complete and
correct in all material respects. Seller will afford Purchaser and its
agents access to all operations of the Seller at all reasonable times and
in a reasonable manner in connection with any such investigation subject
to any required approval of Seller's landlords, which approval Seller
will use its commercially reasonable efforts to obtain. Should Purchaser
commission such an investigation, such investigation will have no effect
upon the representations and warranties made by Seller to Purchaser under
this Agreement except that if any Phase I Assessment or Phase II
Assessment uncovers an environmental condition which then comprises a
breach of Seller's representations or warranties herein, Seller shall not
have breached such representation or warranty if Seller cures such breach
in accordance with the provisions of this Agreement.
(c) All information collected and generated as a result of the
environmental due diligence authorized by Section 9.04(b) will be subject
to the terms and conditions of Section 14.01 of this Agreement.
Purchaser shall provide to Seller copies of all draft and final reports,
assessments and other information composed or compiled by Purchaser's
environmental consultants within five (5) business days of Purchaser's
receipt of copies thereof.
(d) Seller shall allow Purchaser the opportunity to conduct an
engineering review of the Assets to confirm that the Assets comply with
the FCC Authorizations and the regulations of the FCC and are otherwise
in good condition and repair, reasonable wear and tear excepted.
Purchaser shall provide to Seller copies of all draft and final reports,
assessments and other information composed or compiled by Purchaser's
engineers or engineering consultants within five (5) business days of
Purchaser's receipt of copies thereof.
SECTION 9.05. CONDUCT OF BUSINESS. From and after the date hereof
through the Closing Seller shall:
(a) operate the Cellular System in accordance with the FCC
Authorizations, and comply in all material respect with all
laws, rules and regulations applicable to Seller, including the
regulations of the FCC;
(b) except for inventory (other than Excluded Assets) sold
in the ordinary course of business, refrain from making any
sale, lease, transfer or other disposition of any of the Assets
other than in connection with replacements with assets of like
use and value, or with the prior written approval of Purchaser;
(c) refrain from modifying, amending or altering in any
material respect, or terminating any of the Assumed Contracts,
and from waiving or canceling any default or breach (other than
the waiver of late fees) or modifying, altering or terminating
any right or asset relating to or included in the Assets
without Purchaser's prior written approval, which approval will
not be unreasonably withheld;
(d) maintain insurance on the Assets comparable to that
maintained prior to the date hereof, and subject to Article
XII, use the proceeds of any claims for loss under such
policies, together with such other funds as may be required, to
repair, replace, or restore to their former condition any
Assets which may be damaged by fire or other casualty, all as
soon as reasonably possible;
(e) maintain its books and records in accordance with
prior practice; maintain all of its property and assets in
their present condition, ordinary wear and tear excepted,
provided, however, Seller shall promptly repair the items of
equipment set forth on SCHEDULE 9.05 so that they are in good
working order or replace such equipment with like equipment
which is in good working order; maintain supplies of inventory
(other than car stereo and speaker inventory) and spare parts
consistent with past practice; and otherwise operate the
Business in the ordinary course in accordance with past
practices;
(f) refrain from changing the Cellular System's agents'
commission rate, sales practices (including the quality of the
credit of subscribers contracting for cellular telephone
service) or marketing practices without Purchaser's approval,
which approval will not be unreasonably withheld;
(g) except for customary increases consistent with past
practices or policies, and in any case not exceeding five
percent (5%) of base salary and Seller's payment of stay
bonuses and other compensation contingent upon Closing, refrain
from increasing the compensation payable or to become payable
to any employee or agent without Purchaser's approval, which
approval will not be unreasonably withheld;
(h) refrain from entering into any contract or renewal of
any existing contract for the employment of any employee or
agent of Seller other than "at-will" employees and agents;
(i) use its commercially reasonable efforts to (x) keep
its business organization intact, (y) retain the services of
the key employees of the Cellular System, and (z) maintain good
relationships with its employees, suppliers, advertisers,
subscribers, agents and others having business relations with
it, in each case in accordance with past practices;
(j) refrain from changing its Charter or by-laws in any
way which would materially adversely affect its power or
authority to enter into and perform this Agreement, or which
would otherwise materially adversely affect its performance of
this Agreement;
(k) continue to advertise, promote and market the Cellular
System and its services in a manner consistent with past
practice, and in any event from the date hereof through the
Closing, (x) during the fourth quarter of 1997 spend on
advertising, promotion and marketing (which expenditures shall
not include expenditures for salaries, commissions payable to
employees, agents or other third parties or losses on the sale
of handsets or other equipment) at least the sum of (A) $24,500
and (B) the amount, if any, by which such spending for
September 1997 advertising, promotion and marketing was less
than $9,000; and (y) implement a holiday season advertising and
sales promotion to be developed by Purchaser in consultation
with Seller, the allocation between Seller and Purchaser of the
cost of which (in excess of Seller's advertising expense
obligation referred to above) to be mutually acceptable to
Seller and Purchaser;
(l) refrain from subjecting any of the Assets to any new
Lien other than Permitted Liens;
(m) refrain from doing or omitting to do any act which
will cause a material breach of, or material default under, or
termination of (except in accordance with its terms), any
Assumed Contract;
(n) provide to the Purchaser, concurrently with filing
thereof, copies of all reports to and other filings with the
FCC;
(o) not permit any of the FCC Authorizations to expire or
to be surrendered or voluntarily modified in a manner adverse
to the Business, or take any action which would reasonably be
expected to cause the FCC Authorizations or any other
governmental authority to institute proceedings for the
suspension, revocation or limitation of rights under any of the
FCC Authorizations; or fail to prosecute with due diligence any
pending applications to any governmental authority;
(p) notify Purchaser in writing promptly after learning of
the institution or threat of any material action against Seller
in any court, or any action against Seller before the FCC or
any other governmental agency, and notify Purchaser in writing
promptly upon receipt of any administrative or court order
relating to the Assets or the Business;
(q) if Seller deems it to be prudent, promptly replace any
employee who leaves the employ of the Cellular System; notify
Purchaser of the hiring of any new employee, any material
change in job function of an employee, and the termination of
any employee;
(r) pay or cause to be paid or provide for all Taxes of or
relating to Seller, the Assets and the employees required to be
paid to city, county, state, Federal and other governmental
units up to the Closing Date;
(s) refrain from taking any action not in Seller's usual
course of business regarding the Cellular System or the Assets
without Purchaser's prior approval, which approval will not be
unreasonably withheld, it being expressly understood and agreed
that, without Purchaser's approval, Seller may (w) use its
efforts to collect all subscriber accounts receivable and
roaming accounts receivable, which efforts may include the
institution of litigation, employment of counsel or any other
extraordinary means of collection, (x) threaten to disconnect
and may disconnect subscribers whose accounts are more than
sixty (60) days past due, (y) writeoff any account receivable
of any account debtor who is not an active subscriber to the
Cellular System, and (z) compromise, settle or adjust the
amounts of any of such accounts receivable;
(t) cooperate with Purchaser in connection with (i)
Purchaser's efforts to identify the current employees of Seller
that Purchaser would like to hire following the Closing
consistent with all applicable federal, state and/or local
employment laws, rules and regulations, and (ii) the prompt and
efficient transition of billing services (including the
services provided by EDS Personnel Communications Corporation)
(at Purchaser's cost) after Closing to Purchaser's billing
system and (iii) Purchaser's efforts to upgrade equipment (at
Purchaser's cost) after Closing; and
(u) refrain from initiating a change in Outcollect Rates,
and if requested to do so by a cellular roaming partner, obtain
Purchaser's consent to such change (which consent will not be
unreasonably withheld); and
(v) pay, prior to Closing, Seller's employees all amounts
due them in respect of accrued sick leave time.
(w) make the following payments and filings with the FCC,
and provide evidence of each to Purchaser: (i) payment of all
TRS (Telecommunications Relay Services) fees, (ii) filing of
the Universal Service Worksheet, (iii) filing of an Equal
Employment Opportunity report, and (iv) filing of Form 489 to
make the modifications relating to the Swiss Alp and Columbus
cell sites described on Schedule 7.08 hereto.
SECTION 9.06. NO SHOPPING. Prior to December 31, 1997 neither
Seller nor any of its affiliates, advisors or representatives shall,
directly or indirectly, solicit, encourage or initiate any contact with,
negotiate with, or provide any information to, endorse or enter into any
agreement with respect to, or take any other action to facilitate any
person or group, other than Purchaser and its representatives, concerning
any inquiries or the making of any proposals concerning any merger, sale
of all or substantially all of the Assets, acquisition of a substantial
equity interest in Seller or any similar transaction involving Seller.
SECTION 9.07. EMPLOYEES. Nothing contained in this Agreement shall
confer upon any employee of Seller any right with respect to continued
employment by Seller or Purchaser. Except as specifically provided in
this Section 9.07, no provision of this Agreement shall create any third-
party rights in any such employee, or any beneficiary or dependent
thereof, with respect to the compensation, terms and conditions of
employment and benefits that may be provided to such employee by
Purchaser or under any benefit plan that Purchaser may maintain. Not
later than November 21, 1997 Purchaser will deliver to Seller a
preliminary list of the names of those employees of Seller (x) to whom
Purchaser expects to offer employment, the delivery of which shall not
obligate Purchaser in any way to offer such employees employment and (y)
whom Purchaser believes should continue in Seller's employ through the
Closing to facilitate a smooth transition of the Business. Not later
than 21 days prior to Closing the Purchaser will deliver Seller a list of
names of those employees of Seller to whom Purchaser will not offer
employment. Purchaser and Seller recognize that a smooth transition of
the Business to Purchaser is in each party's interest and in the best
interest of the current employees of Seller, particularly in view of the
importance of the holiday season in building the subscriber base of the
Business. Purchaser and Seller agree to use their commercially
reasonable efforts to work together, including holding joint meetings and
having open communications with each other, to identify as promptly as
possible under the circumstances the employees to whom continued
employment will be offered, taking into account the need for employee
cooperation in order to have a strong marketing effort during the holiday
season, Seller's need to provide fair notice to employees whose
employment will be terminated, the possible need to provide financial
incentives to retain employees' services until the Closing and all other
relevant factors. As soon as practical prior to Closing but in any event
not later than 14 days prior to Closing, Purchaser shall notify those
employees whom Purchaser intends to hire on the Closing Date either as a
regular employee of, or as a temporary consultant to, Purchaser. At
least 15 days prior to Closing Purchaser shall provide Seller a list of
the Seller's employees to whom Purchaser intends to hire and the form of
notice Purchaser intends to provide Seller's employees, which notice and
manner of delivery shall be reasonably satisfactory to, and approved in
advance by, Seller and shall specify the terms of employment, including
compensation and all material benefits relating thereto. Seller shall
not unreasonably withhold or delay its approval of such notice and manner
of delivery. Unless otherwise specified by Purchaser in writing, any
Person so hired by Purchaser shall be an "at will" employee of Purchaser.
Purchaser shall be permitted to conduct pre-employment physical
examinations and other appropriate pre-hire investigations of such named
employees and make any offer of employment to such employees subject to
those individuals receiving results of such examinations and other
appropriate pre-hire clearance satisfactory to Purchaser. If the terms
of DCC's benefit plans permit, DCC or Purchaser, as appropriate, shall
recognize the term of service with Seller of any former employee of
Seller hired by Purchaser in determining such employee's (i) accrued
vacation under Purchaser's vacation plan and (ii) eligibility and vesting
for purposes of participating in Purchaser's or DCC's 401k plan.
Purchaser also shall permit any former employee of Seller hired by
Purchaser to participate in Purchaser's group health plan without
imposing any pre-existing condition limitations or waiting periods so
long as such employee was covered by Seller's health plan immediately
prior to the Closing. To the extent of the amount of accrued vacation
pay included as a Current Liability at Closing, Purchaser will allow the
Seller's employees hired by Purchaser to take vacation time after the
Closing Date or provide such employees the economic benefit thereof.
Purchaser agrees to pay to each of the current employees of Seller who
continues to be employed by Seller through the Closing Date (other than
the senior management team comprised of Xxxxx, Xxx Xxxxx, Xxxx Xxxxxx,
Xxxxx Xxxxxxx and Xxxxx Xxxxx and any employee working principally in
Seller's California office or in Seller's car stereo/speaker business), a
special cash bonus equal to the "stay bonus" of up to ten percent (10%)
of his or her current salary that is paid by Seller on the Closing Date
to each such employee except that Purchaser will not be obligated to pay
such bonus to any employee of Seller who (a) declines to accept
Purchaser's offer of employment as either a regular employee of, or
temporary consultant to, Purchaser (an "Employment Offer") or (b) accepts
an Employment Offer and voluntarily resigns from Purchaser's employ
within 90 days after the Closing. Purchaser shall make such bonus
payment on the Closing Date to each such employee who is not given an
Employment Offer. Purchaser shall make such bonus payment to those
employees who accept Purchaser's Employment Offer on the date which is
the earliest of (a) the date that such employee or consultant has
fulfilled his or her commitment to Purchaser, (b) the date Purchaser
unilaterally terminates without just cause the employment of any such
employee or consultant, or (c) 90 days after Closing. In no event will
any current employee be entitled to more than one such stay bonus from
Purchaser.
SECTION 9.08. SUPPLEMENTAL DISCLOSURE. Seller shall promptly from
time to time prior to the Closing Date supplement in writing the
Schedules hereto with respect to any matter hereafter arising that, if
existing or known as of the date of this Agreement, would have been
required to be set forth or described in the Schedules hereto; provided,
however, that no such supplemental disclosure (other than changes in
Schedule 5.05(a)(i) related to Disputed Roaming Receivables, which may be
changed in Seller's discretion) shall be deemed to cure any breach of any
representation or warranty of Seller made in this Agreement unless
Purchaser fails to object in writing to Seller to any such supplemental
disclosure within ten (10) business days after Purchaser's receipt
thereof. Purchaser shall have the right to add to the list of Disputed
Roaming Receivables on Schedule 5.05(a)(i) in accordance with Section
5.05(d).
SECTION 9.09. DISPUTED ROAMING RECEIVABLES. In the event that
Purchaser collects a Disputed Roaming Receivable after the Closing (which
did not constitute a Current Asset at Closing), Purchaser shall pay the
amount so collected to Seller, net of Purchaser's out-of-pocket costs, if
any, to collect same. For a period of 180 days following the Closing
Date, Seller may, but shall not be obligated to, use its efforts to
collect the Disputed Roaming Receivables and all payments received by
Seller or by Purchaser as a result of such collection efforts by Seller
shall be retained by or paid to Seller without any reduction whatsoever.
Purchaser shall have no obligation to attempt to collect Disputed Roaming
Receivables. Purchaser shall not have the right to compromise, settle,
or adjust the amounts of any of the Disputed Roaming Receivables without
Seller's prior written consent. To facilitate Seller's collection
efforts, Purchaser shall give Seller, upon request by Seller and during
normal working hours, access to the billing records relating to the
Disputed Roaming Receivables.
ARTICLE X
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
The obligation of Purchaser under this Agreement with respect to the
purchase and sale of the Assets shall be subject to the fulfillment on or
prior to the Closing of each of the following conditions, any of which
may be waived in writing by Purchaser:
SECTION 10.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES;
PERFORMANCE OF THIS AGREEMENT. All of the representations and warranties
made by Seller in this Agreement shall be true and correct at and as of
the Closing except for such breaches and inaccuracies therein which, in
the aggregate, have not caused and would not reasonably be expected to
cause Purchaser to suffer a Loss (as defined in Section 13.01) in excess
of $300,000 in the aggregate (a "Material Loss") or otherwise result in a
Material Adverse Effect. Seller shall have complied with and performed
all of the agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing except for
such noncompliances which, in the aggregate, have not caused and would
not reasonably be expected to cause a Material Loss or otherwise result
in a Material Adverse Effect. If the foregoing conditions cannot be
satisfied due to breaches or inaccuracies of the Seller's representations
and warranties or noncompliances with Seller's covenants that, in the
aggregate, have caused or are reasonably expected to cause a Material
Loss and such matters, in the aggregate, have not caused and are not
reasonably expected to cause a Material Adverse Effect, then if Seller
acknowledges in writing an obligation under Section 13.01 to indemnify
Purchaser for Losses arising therefrom (subject to the limitations set
forth in Section 13.05), then such conditions shall be deemed to be
satisfied notwithstanding any Material Loss. Purchaser shall have been
furnished with a certificate or certificates of Seller's President, dated
as of the Closing, certifying to the fulfillment of the foregoing
conditions. As used in this Agreement, the term "Material Adverse
Effect" means a material adverse effect on the Assets or the Business
taken as a whole, other than due to (x) changes affecting the cellular
telephone industry generally and (y) a reduction in the Outcollect Rate
payable by AT&T, Inc. or its affiliates to not less than $.35 per minute
so long as such reduction was not initiated by Seller (the "AT&T
Reduction").
SECTION 10.02. DIRECTORS RESOLUTIONS. Seller shall deliver to
Purchaser copies of the resolutions of the board of directors of Seller
authorizing the execution, delivery and performance of this Agreement and
all instruments and documents to be delivered in connection herewith and
the transactions contemplated hereby, duly certified by an officer of
Seller.
SECTION 10.03. INCUMBENCY CERTIFICATE. Purchaser shall have
received a certificate or certificates of an officer of Seller,
certifying as to the genuineness of the signatures of officers of Seller
authorized to take certain actions or execute any certificate, document,
instrument or agreement to be delivered pursuant to this Agreement, which
incumbency certificate shall include the true signatures of such
officers.
SECTION 10.04. THIRD PARTY CONSENTS; FCC; XXXX-XXXXX ACT. Seller
shall have delivered to Purchaser such instruments, consents and
approvals of third parties (the form and substance of which shall be
reasonably satisfactory to Purchaser, PROVIDED that such instruments,
consents and approvals shall not be deemed to be reasonably
unsatisfactory to Purchaser due solely to any omission of estoppel
provisions except in the case of the consents to assign the leases for
the El Campo MTSO Site and the Xxxxxxxx Cell Site, where the consents
shall include the estoppel provisions reflected on Schedule 9.03) as are
necessary to assign to Purchaser without modification thereof, as of the
Closing, the Assets and the Assumed Contracts and Purchaser shall have
obtained all FCC Authorizations necessary for the consummation of the
transactions contemplated by this Agreement. Prior to Closing Date, the
FCC's grant of its consent to the assignment of the Cellular
Authorizations to Purchaser shall have become a Final Order and (ii) the
FCC's grant of its consent to the assignment of the Microwave
Authorizations to Purchaser shall have become a Final Order or a Special
Temporary Authority granting FCC's consent to Purchaser to operate the
microwave facilities that are the subject of the Microwave
Authorizations, including authorizations for those facilities listed in
SCHEDULE 7.08, each without any material conditions, excepting conditions
applied on an industry-wide basis, which the Purchaser reasonably deems
to be adverse. Anything herein to the contrary notwithstanding, the
Purchaser shall have the right (in its sole discretion) to waive the
requirement set forth in the preceding sentence by delivery to Seller of
a written notice to such effect (the "Finality Waiver Notice"), it being
expressly understood and agreed by the parties that if Purchaser gives
the Finality Waiver Notice and Closing occurs prior to the receipt of
such Final Order, then Purchaser shall assume the entire risk of the
FCC's consent to the assignment of the FCC Authorizations being
subsequently rescinded or revoked and in no event shall Seller be
required to refund the Purchase Price to Purchaser if the parties become
legally obligated to reassign the FCC Authorizations to Seller. In
addition, all applicable waiting periods under the Xxxx-Xxxxx Act (if
applicable to the transactions contemplated by this Agreement) shall have
expired or been terminated and no objection shall have been made by the
Federal Trade Commission ("FTC") or the United States Department of
Justice ("DOJ"). For the purposes of this Agreement, the term "Final
Order" shall mean action by the FCC as to which (i) no request for stay
by the FCC, as applicable, of the action is pending, no such stay is in
effect, and, if any deadline for filing any such request is designated by
statute or regulation, such deadline has passed; (ii) no petition for
rehearing or reconsideration of the action is pending before the FCC, and
the time for filing any such petition has passed; (iii) the FCC, does not
have the action under reconsideration on its own motion and the time for
such reconsideration has passed; and (iv) no appeal to a court, or
request for stay by a court, of the FCC's action, as applicable, is
pending or in effect, and, if any deadline for filing any such appeal or
request is designated by statute or rule, it has passed. For purposes of
this Agreement, the term "Special Temporary Authority" shall mean the
applications assigning the Microwave Authorizations to Purchaser have
been filed, the public notice period for comments has expired, no
petitions to deny the assignment of the Microwave Authorizations to
Purchaser are on file and the FCC has either granted such applications or
the FCC has granted a special temporary authority permitting the
Purchaser to operate the microwave facilities that are the subject of the
Microwave Authorizations on a temporary basis.
SECTION 10.05. NO MATERIAL ADVERSE CHANGE. Other than changes
affecting the cellular telephone industry generally and an AT&T
Reduction, and subject to the provisions of Article XII, there shall not
have been any material adverse change in the financial condition, assets,
business or properties of the Cellular System or Assets, from June 30,
1997 to the Closing.
SECTION 10.06. OPINION OF COUNSEL TO SELLER. Purchaser shall have
been furnished with an opinion of Xxxxxxxxxx and Xxxxx, L.L.P., special
transaction counsel to Seller, dated as of the Closing and addressed to
Purchaser, and to any institution designated by Purchaser which has
provided financing in connection with the transactions contemplated by
this Agreement, in substantially the form of EXHIBIT E hereto.
SECTION 10.07. OPINIONS OF FCC COUNSEL TO SELLER. Purchaser shall
have been furnished with opinions of Xxxxxxxxxx and Xxxxx, L.L.P., FCC
counsel for Seller, dated as of the Closing and addressed to Purchaser,
and to any financial institution designated by Purchaser which has
provided the financing in connection with the transactions contemplated
by this Agreement, in substantially the form of EXHIBIT F attached
hereto.
SECTION 10.08. SUBSCRIBERS. The aggregate number of "Subscribers"
(as defined in Section 5.05(a)) on Seller's Cellular System as of Closing
shall be at least 2,500.
SECTION 10.09. ESCROW AGREEMENT. Seller shall have executed and
delivered the Escrow Agreement to Purchaser.
SECTION 10.10 EL CAMPO OFFICE. All of the conditions to
Purchaser's obligation to purchase the office building in El Campo, Texas
currently leased by the Company pursuant to that certain Purchase and
Sale Agreement of even date herewith between Seller and Xxxxx shall have
been satisfied and such property shall have been conveyed to Purchaser
pursuant to a Warranty Deed substantially in the form attached to such
Purchase and Sale Agreement.
ARTICLE XI
CONDITIONS PRECEDENT TO
SELLER'S OBLIGATION TO CLOSE.
The obligations of Seller under this Agreement with respect to the
sale of the Assets shall be subject to the fulfillment on or prior to the
Closing of each of the following conditions, any of which may be waived
in writing by Seller:
SECTION 11.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES;
PERFORMANCE OF THIS AGREEMENT. All of the representations and warranties
by Purchaser contained in this Agreement shall be true and correct in all
material respects at and as of the Closing. Purchaser shall have
complied with and performed in all material respects all of the
agreements and covenants required by this Agreement to be performed and
complied with by it on or prior to the Closing. Seller shall have been
furnished with a certificate of an officer of Purchaser, dated as of the
Closing, certifying to the fulfillment of the foregoing conditions.
SECTION 11.02. DIRECTORS' RESOLUTIONS. Purchaser shall deliver to
Seller copies of the resolutions of its Board of Directors authorizing
the execution, delivery and performance of this Agreement and all
instruments and documents to be delivered in connection herewith and the
transactions contemplated hereby, duly certified by an authorized officer
of Purchaser.
SECTION 11.03. INCUMBENCY CERTIFICATE. Seller shall have received
a certificate of a secretary of Purchaser, certifying as to the
genuineness of the signatures of representatives of Purchaser authorized
to take certain actions or execute any certificate, document, instrument
or agreement to be delivered pursuant to this Agreement, which incumbency
certificate shall include the true signatures of such representatives.
SECTION 11.04. FCC; XXXX-XXXXX ACT. The FCC's grant of its consent
to the assignment of the Cellular Authorizations to Purchaser shall have
become a Final Order and the FCC's grant of its consent to the assignment
of the Microwave Authorizations to Purchaser shall have become a Final
Order or a Special Temporary Authority granting the FCC's consent to the
operation by Purchaser of the microwave facilities that are the subject
of the Microwave Authorizations, including authorizations for those
facilities listed in SCHEDULE 7.08. In addition, all applicable waiting
periods under the Xxxx-Xxxxx Act (if applicable to the transactions
contemplated by this Agreement) shall have expired or been terminated and
no objection shall have been made by the FTC or DOJ.
SECTION 11.05. OPINION OF COUNSEL TO PURCHASER. Seller shall have
been furnished with an opinion of Xxxxxxx & Xxxxxx, counsel to Purchaser,
dated as of the Closing and addressed to Seller in substantially the form
of EXHIBIT G hereto.
SECTION 11.06. ESCROW AGREEMENT. Purchaser and the Escrow Agent
each shall have executed and delivered the Closing Escrow Agreement to
Seller.
SECTION 11.07. NO LITIGATION. On the Closing Date, (i) no
litigation, proceeding, investigation, or inquiry shall be pending that,
if sustained, would materially and adversely affect the value of the
Assets, Seller's right to retain or convey the Assets or to operate the
Cellular System, or Purchaser's right to acquire, retain and own the
Assets or to operate the Cellular System, and (ii) no judgment, decree,
injunction, rule or order of any court of competent jurisdiction or other
legal authority shall be outstanding against Purchaser, Seller or any
affiliate purporting to enjoin or otherwise prevent the Closing of the
transactions contemplated hereunder.
ARTICLE XII
CASUALTY LOSSES
In the event that there shall have been suffered between the date
hereof and the Closing any casualty loss relating to the Assets that
becomes known to Seller, Seller will promptly notify Purchaser of such
event. Seller shall, to the extent practicable, repair, rebuild or
replace the portion of the Assets damaged, destroyed or lost prior to the
Closing Date. To the extent the repair, rebuild or replacement of the
portion of the Assets damaged, destroyed or lost prior to the Closing
Date is not practicable, then the Purchase Price shall be reduced by the
amount, mutually acceptable to Purchaser and Seller, which is estimated
by the parties to equal the out-of-pocket costs and expenses that
Purchaser is reasonably likely to incur to repair, rebuild or replace, in
accordance with cellular telephone industry practices, such damaged,
destroyed or lost Assets after the Closing Date, and Seller shall retain
all insurance proceeds payable as a result of the occurrence of the event
resulting in such loss or damage.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. INDEMNIFICATION BY SELLER. (a) After the Closing,
and subject to the terms of this Article XIII, Seller agrees to indemnify
and to hold Purchaser, its shareholders, officers, directors, and
employees (the "Indemnified Purchaser Parties") harmless from and against
and in respect of any losses, damages (excluding punitive, exemplary or
special statutory damages), costs, expenses (including costs of
investigations and reasonable attorney fees), suits, demands, judgments
and diminutions in value suffered or incurred (each a "Loss" and
collectively "Losses") by Purchaser arising from or related to:
(i) Any Non-Assumed Liability, whether or not known or
asserted at or prior to Closing, relating to or arising from
the ownership, operation, control or sale of the Assets of the
Cellular System or the Business or any other state of facts
which existed at or prior to Closing, including fines or
forfeitures imposed or threatened to be imposed by the FCC for
the operation, at or prior to Closing, of the Cellular System
or the Business;
(ii) Any misrepresentation or breach of warranty in, or
omission from, any representation or warranty of Seller in this
Agreement, the Schedules or Exhibits hereto, the Closing Escrow
Agreement, the Xxxx of Sale, the Assumption Agreement or in any
closing certificate delivered by Seller to Purchaser pursuant
to Article X hereof;
(iii) Any breach or non-fulfillment of any covenant or
agreement on the part of Seller under this Agreement to be
performed on or following the Closing Date; and
(iv) All costs and expenses (including reasonable
attorneys' fees) incurred by Purchaser in connection with any
action, suit, proceeding, demand, assessment or judgment
incident to any of the matters Purchaser is indemnified against
by Seller in this Agreement.
(b) In addition and subject to the terms of this Article XIII,
Seller shall indemnify Purchaser against and hold it harmless from any
and all Losses which Purchaser may incur by reason of the failure (if
any) of Seller to comply with the Bulk Transfers Article of the Uniform
Commercial Code of any state.
SECTION 13.02. INDEMNIFICATION BY PURCHASER. After the Closing,
and subject to the terms of this Article XIII, Purchaser agrees to
indemnify and to hold Seller, and its directors, officers, stockholders,
employees, representatives and agents harmless from and against and in
respect of any Losses incurred by Seller from:
(i) All liabilities and obligations of Purchaser, and all
claims and demands made in respect thereof relating to or
arising from, Purchaser's ownership, operation or control of
the Assets or the Business after the Closing, including on
account of the Assumed Liabilities; and;
(ii) Any misrepresentation or breach of warranty in, or
omission from, any representation or warranty of Purchaser, in
this Agreement, the Schedules or Exhibits hereto, including the
Closing Escrow Agreement, the Assumption Agreement or in any
closing certificate delivered by Purchaser to Seller pursuant
to Article XI hereof;
(iii) Any breach or non-fulfillment of any covenant or
agreement on the part of Purchaser under this Agreement to be
performed on or following the Closing Date; and
(iv) All reasonable costs and expenses (including
reasonable attorneys' fees) incurred by Seller in connection
with any action, suit, proceeding, demand, assessment or
judgment incident to any of the matters Seller is indemnified
against by Purchaser in this Agreement.
SECTION 13.03. NOTICE OF CLAIMS; DEFENSE OF THIRD PARTY. A party
claiming indemnification under this Article XIII (the "Asserting Party")
must notify (in writing, in reasonable detail and within a reasonable
period of time after the Asserting Party becomes aware of such claim) the
party from which indemnification is sought (the "Defending Party") of the
nature and basis of such claim for indemnification. If such claim
relates to a claim, suit, litigation or other action by a third party
against the Asserting Party or any fixed or contingent liability to a
third party (a "Third Party Claim"), the Defending Party may elect to
assume and control the defense of the Third Party Claim at its own
expense with counsel selected by the Defending Party from and after such
time as the Defending Party unconditionally agrees in writing to accept,
as against the Asserting Party, all liabilities on account of such Third
Party Claim. Assumption of such liability, as against the Asserting
Party, shall not be deemed an admission of liability as against any such
third party. Notwithstanding the foregoing, the Defending Party may not
assume or control the defense if the named parties to the Third Party
Claim (including any impleaded parties) include both the Defending Party
and the Asserting Party and representation of both parties by the same
counsel (in such counsel's reasonable determination) would be
inappropriate due to actual or potential differing interests between
them, in which case the Asserting Party shall have the right to defend
the Third Party Claim and to employ counsel reasonably approved by the
Defending Party, and to the extent the matter is determined to be subject
to indemnification hereunder, the Defending Party shall reimburse the
Asserting Party for the reasonable costs of its counsel. If the
Defending Party assumes liability for the Third Party Claim as against
the Asserting Party and assumes the defense and control of the Third
Party Claim pursuant to this Section 13.03, the Defending Party shall not
be liable for any fees and expenses of counsel for the Asserting Party
incurred thereafter in connection with the Third Party Claim (except in
the case of actual or potential differing interests, as provided in the
preceding sentence), but shall not agree to any settlement of such Third
Party Claim which does not include an unconditional release of the
Asserting Party by the third party claimant on account thereof, PROVIDED
that such requirement shall be deemed waived to the extent that the
Asserting Party does not undertake to provide and promptly execute and,
concurrently with the delivery of any such release, deliver a
corresponding release of the third party claimant with respect to such
Third Party Claim. If the Defending Party does not assume liability for
and the defense of the Third Party Claim pursuant to this Section 13.03,
the Asserting Party shall have the right (i) to control the defense
thereof and (ii), if the Asserting Party shall have notified the
Defending Party of the Asserting Party's intention to negotiate a
settlement of the Third Party Claim (at the Defending Party's expense to
the extent the matter is determined to be subject to indemnification
hereunder), which notice shall include the material terms of any proposed
settlement in reasonable detail, to settle the Third Party Claim (at the
Defending Party's expense to the extent the matter is determined to be
subject to indemnification hereunder) on terms not materially
inconsistent with those set forth in such notice, unless the Defending
Party shall have notified the Asserting Party in writing of the Defending
Party's election to assume liability for and the defense of the Third
Party Claim pursuant to this Section 13.03 within ten days after receipt
of such notice, and the Defending Party promptly thereafter shall have
taken appropriate action to implement such defense. The Asserting Party
shall not be entitled to settle any such Third Party Claim pursuant to
the preceding sentence unless such settlement includes an unconditional
release of the Defending Party by the Third party claimant on account
thereof, PROVIDED that such requirement shall be deemed waived to the
extent that the Defending Party does not undertake to provide and
promptly execute and, concurrently with delivery of any such release,
deliver a corresponding release of the third party claimant with respect
to such Third Party Claim. The Asserting Party and the Defending Party
shall use all reasonable efforts to cooperate fully with respect to the
defense and settlement of any Third Party Claim covered by this Article
XIII.
SECTION 13.04. LIMITED RECOURSE TO SELLER. Except in the event of
fraud, the obligation of Seller to indemnify Purchaser for Losses arising
from or related to the matters described in Section 13.01(a)(ii) or in
Section 13.01(a)(iv) to the extent related to the matters described in
Section 13.01(a)(ii), shall be limited solely to the Escrow Fund held
pursuant to the Closing Escrow Agreement.
SECTION 13.05. LIMITATIONS. The Defending Party's obligations to
indemnify the Asserting Party pursuant to this Article XIII shall be
subject to the following limitations:
(a) No indemnification shall be required to be made by the
Defending Party until the aggregate amount of the Asserting Party's
Losses exceeds $300,000 (the "Deductible") and then indemnification shall
only be required to be made by the Defending Party to the extent of such
Losses that exceed the Deductible; provided, however, the Deductible
shall not be applicable to (i) Seller's obligation to indemnify Purchaser
for Non-Assumed Liabilities other than Non-Assumed Liabilities relating
to the failure to comply with Environmental Laws, (ii) Purchaser's
obligation to indemnify Seller for Losses arising from or related to the
matters described in Section 13.02(i), (iii) adjustments to the Purchase
Price provided for in Section 5.05, (iv) a breach by Seller of its
representations set forth in Section 7.02, the first sentence of Section
7.04, and Section 7.15 or (v) Losses resulting from fraud.
(b) All representations and warranties contained in this
Agreement shall survive the Closing until the second anniversary thereof;
provided, however, that notwithstanding the foregoing, (x) the
representations and warranties contained in Section 7.02, the first
sentence of Section 7.04, and Section 7.15 shall survive the Closing for
an unlimited duration and (y) the representations and warranties
contained in Sections 7.12 and 7.09 (as it may relate to Environmental
Laws) shall survive the Closing until the sixth anniversary thereof (the
applicable period of survival being referred to as the "Survival
Period"). To the extent a claim is made in respect of a representation
or warranty within the applicable Survival Period, such representation or
warranty shall survive after the Survival Period for purposes of such
claim until such claim is finally determined or settled. Each party
shall be precluded from asserting claims against the other party after
the applicable Survival Period.
(c) In addition, the liability of any indemnitor with respect
to any Losses shall be determined on a basis that is net of the amount
actually paid to the indemnified party in respect of any such Losses
pursuant to a policy of insurance maintained by such indemnified party.
ARTICLE XIV
CONFIDENTIALITY AND PRESS RELEASES
SECTION 14.01. CONFIDENTIALITY. Each party (in such capacity, a
"Recipient Party") shall hold in strict confidence all documents and
information concerning the other (in such capacity, a "Disclosing Party")
and its business and properties and, if the transaction contemplated
hereby should not be consummated, such confidence shall be maintained,
and all such documents and information (in written form) shall
immediately thereafter be returned to the Disclosing Party. In
furtherance of the foregoing, without the express prior written consent
of the Disclosing Party, the Recipient Party shall not, directly or
indirectly, disclose, disseminate, publish, reproduce, retain, use (for
its benefit or for the benefit of others) or otherwise make available in
any manner whatsoever, any such documents or information to anyone except
as provided in Section 14.03. If the Recipient Party breaches, or
threatens to commit a breach of, any of the provisions of this Article
XIV, the Disclosing Party shall have the right (in addition to any other
rights and remedies available at law or in equity) to equitable relief
(including injunctions) against such breach or threatened breach, it
being acknowledged and agreed that any such breach or threatened breach
will cause irreparable harm to the Disclosing Party and that money
damages would not be an adequate remedy.
SECTION 14.02. PRESS RELEASES. No press release or public
disclosure, either written or oral, of the existence or terms of this
Agreement shall be made by either Purchaser or Seller without the consent
of the other subject to the provisions of Section 14.03, and Purchaser
and Seller shall each furnish to the other advance copies of any release
which it proposes to make public concerning this Agreement or the
transactions contemplated hereby and the date upon which Purchaser or
Seller, as the case may be, proposes to make such press release.
SECTION 14.03. DISCLOSURES REQUIRED BY LAW. This Article XIV shall
not, however, be construed to prohibit any party from making any
disclosures to any governmental authority that it is required to make by
law or from filing this Agreement with, or disclosing the terms of this
Agreement to, any institutional lender to such party, or prohibit Seller,
Purchaser or any of their affiliates from disclosing to its investors,
partners, accountants, auditors, attorneys, parent company and
broker/dealers such terms of this transaction as are customarily
disclosed to them in connection with the sale or acquisition of a
cellular telephone system; PROVIDED, HOWEVER, that any such party shall
be informed of the confidential nature of such information and shall
agree to keep such information confidential; and PROVIDED, HOWEVER, that
each party shall provide to the other reasonable advance copies of any
public release except where the provision of such advance notice is not
permissible.
ARTICLE XV
TERMINATION
SECTION 15.01. BREACHES AND DEFAULTS; OPPORTUNITY TO CURE. Prior
to the exercise by a party of any termination rights afforded under this
Agreement, if either party (the "Non-Breaching Party") believes the other
(the "Breaching Party") to be in breach hereunder, the Non-Breaching
Party shall provide the Breaching Party with written notice specifying in
reasonable detail the nature of such breach (the "Cure Request"),
whereupon the Breaching Party shall have thirty (30) days from the
receipt of such Cure Request to cure such breach to the reasonable
satisfaction of the Non-Breaching Party; PROVIDED, HOWEVER, that if such
breach is curable but is not capable of being cured within such period
and if the Breaching Party shall have commenced action to cure such
breach within such period and is diligently attempting to cure such
breach, then the Breaching Party shall be afforded until the later of
December 31, 1997 or the ninetieth day after the receipt of the Cure
Request to cure such breach, PROVIDED, HOWEVER, that the cure period for
a breach shall in no event extend beyond the Outside Date. If the breach
is not cured within such time period and if the breach is by Seller and,
together will all uncured breaches, would reasonably be expected to cause
Purchaser to suffer a Material Loss or otherwise to result in a Material
Adverse Effect and, in the case of a Material Loss, Seller does not
acknowledge in writing an obligation under Section 13.01 to indemnify
Purchaser for such Losses (subject to the limitations set forth in
Section 13.05), then the Breaching Party shall be in default hereunder
and the Non-Breaching Party shall be entitled to terminate this Agreement
(as provided in Section 15.02). This right of termination shall be in
addition to, and not in lieu of, any legal or equitable remedies
available to the Non-Breaching Party.
SECTION 15.02. TERMINATION. This Agreement may be terminated and
the transactions contemplated herein may be abandoned, by written notice
given to the other party hereto, at any time prior to the Closing:
(a) by mutual written consent of Seller and Purchaser;
(b) by either Purchaser or Seller, if any court of
competent jurisdiction in the United States or other United
States governmental body shall have issued an order, decree or
ruling or taken any other action permanently restraining,
enjoining or otherwise permanently prohibiting the sale of the
Assets to Purchaser (which Seller and Purchaser shall have used
all reasonable efforts to have lifted or reversed) and such
order, decree, ruling or other action shall have become final
and nonappealable;
(c) subject to Section 15.01, by Purchaser, if Seller
shall have breached any of its representations herein or if
Seller shall have materially breached any of its covenants and
such breaches, in the aggregate, would reasonably be expected
to cause Purchaser to suffer a Material Loss or otherwise to
result in a Material Adverse Effect;
(d) subject to Section 15.01, by Seller, if Purchaser
shall have materially breached any of its representations or
covenants herein; or
(e) by either Seller or Purchaser if the Closing shall not
have occurred on or before June 30, 1998 (the "Outside Date"),
unless the failure to have the Closing shall be due to the
failure of the party seeking to terminate this Agreement to
perform in any material respect its obligations under this
Agreement required to be performed by it at or prior to the
Closing.
ARTICLE XVI
BROKERS' FEES
Each party represents and warrants to the other that it shall be
solely responsible for the payment of any fee or commission due to any
broker or finder it has engaged with respect to this transaction and the
other party hereto shall be indemnified for any liability with respect
thereto pursuant to Article XIII hereof.
ARTICLE XVII
MISCELLANEOUS
SECTION 17.01. ADDITIONAL INSTRUMENTS OF TRANSFER. (a) From time
to time after the Closing, each party shall, if requested by another
party, make, execute and deliver such additional assignments, bills of
sale, deeds and other instruments, as may be reasonably necessary or
proper to carry out the specific provisions of this Agreement, including
transfer to Purchaser all of Seller's right, title and interest in and to
the Assets. Such efforts and assistance shall be at the cost of the
requesting party.
(b) Anything in this Agreement to the contrary
notwithstanding, Seller is not obligated to sell, assign, transfer or
convey to Purchaser any of its rights and obligations in and to any
Interest without first obtaining all necessary approvals, consents or
waivers. To the extent any of the approvals, consents or waivers listed
on SCHEDULE 10.04 have not been obtained by Seller as of the Closing and
Purchaser elects to proceed with the Closing, Seller shall, for the
remaining term of such Interest, use its commercially reasonable efforts
to (i) obtain the consent of any such third party; (ii) cooperate with
Purchaser in any reasonable and lawful arrangements designed to provide
the benefits (including, without limitation, the payment to Purchaser of
any monies received by Seller in connection therewith) of such Interest
to Purchaser so long as Purchaser performs all obligations with respect
to the Interest (and the payment of all expenses in connection
therewith); and (iii) enforce, at the request of Purchaser and at the
expense and for the account of Purchaser, any rights of Seller arising
from such Interest against such issuer thereof or the other party or
parties thereto (including the right to elect to terminate any such
Interest in accordance with the terms thereof upon the request of
Purchaser); provided, however, that neither of Purchaser nor Seller shall
be obligated to pay any consideration or other sums therefor (except for
filing fees and other ordinary administrative charges and except as set
forth above) to the third party, or to commence any proceedings against
the third party, from whom such approval, consent or waiver is requested.
SECTION 17.02. NOTICES. All notices and other communications
required or permitted to be given hereunder shall be in writing and shall
be deemed to have been duly given if delivered, sent by telecopier,
recognized overnight delivery service or registered or certified mail,
return receipt requested, postage prepaid, to the following addresses:
(i) If to Purchaser:
00000 X. Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
with a required copy to:
Xxxxxxx & Xxxxxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
(ii) If to Seller:
Texas 16 Cellular Telephone Company
c/o Xxxxxx Xxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
with a required copy to:
Xxxxxxxxxx and Xxxxx, L.L.P.
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Notices delivered personally shall be effective upon delivery
against receipt. Notices transmitted by telecopy shall be effective when
received, provided that the burden of proving notice when notice is
transmitted by telecopy shall be the responsibility of the party
providing such notice. Notices delivered by overnight mail shall be
effective when received. Notices delivered by registered or certified
mail shall be effective on the date set forth on the receipt of
registered or certified mail, or 72 hours after mailing, whichever is
earlier.
SECTION 17.03. EXPENSES. Each party shall bear its own expenses
and costs, including the fees of any corporate or FCC attorney retained
by it, incurred in connection with the preparation of this Agreement and
the consummation of the transactions contemplated hereby; provided that
Seller and Purchaser shall bear equally FCC, Xxxx-Xxxxx Act and other
governmental filing fees.
SECTION 17.04. TRANSFER TAXES. Seller and Purchaser shall bear
equally all use, sales and transfer taxes, if any, imposed in connection
with the sale and delivery of the Assets acquired by Purchaser under this
Agreement. Notwithstanding anything else to the contrary set forth in
this Section 17.04, Purchaser shall in no event be responsible in any
manner for the payment of any Taxes on any income or gain which Seller
may realize as a result of the sale of the Assets or otherwise related to
the transactions contemplated by this Agreement.
SECTION 17.05. COLLECTION PROCEDURES. From and after the Closing,
Purchaser shall have the right and authority, at its expense, to collect
for its account all items to which it is entitled as provided in this
Agreement and to endorse with the name of the Seller any checks or drafts
received on account of any such items.
SECTION 17.06. SPECIFIC PERFORMANCE. The parties recognize and
acknowledge that in the event Seller shall fail to perform its
obligations under the terms of this Agreement, money damages alone will
not be adequate to compensate the Purchaser. The parties, therefore,
agree and acknowledge that in the event the Seller fails to perform its
obligations under this Agreement prior to Closing, the Purchaser shall be
entitled, in addition to any action for monetary damages, in addition to
any other rights and remedies on account of such failure, to specific
performance of the terms of this Agreement and of the covenants and
obligations hereunder.
SECTION 17.07. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas (without
application of principles of conflicts of law).
SECTION 17.08. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (by merger or other operation of law or otherwise)
without the prior written consent of the other party, which consent will
not be unreasonably withheld except that Purchaser shall have the right
to assign its rights under this Agreement after the Closing to any
institutional lender.
SECTION 17.09. SUCCESSORS AND ASSIGNS. All agreements made and
entered into in connection with this transaction shall be binding upon
and inure to the benefit of the parties hereto, their successors and
permitted assigns.
SECTION 17.10. AMENDMENTS; WAIVERS. No alteration, modification or
change of this Agreement shall be valid except by an agreement in writing
executed by the parties hereto. No failure or delay by any party hereto
in exercising any right, power or privilege hereunder (and no course of
dealing between or among any of the parties) shall operate as a waiver of
any such right, power or privilege. No waiver of any default on any one
occasion shall constitute a waiver of any subsequent or other default.
No single or partial exercise of any such right, power or privilege shall
preclude the further or full exercise thereof.
SECTION 17.11. ENTIRE AGREEMENT. This Agreement merges all
previous negotiations and agreements between the parties hereto, either
verbal or written, and constitutes the entire agreement and understanding
between the parties with respect to the subject matter of this Agreement.
SECTION 17.12. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which when so executed shall be an
original, but all of which together shall constitute one agreement.
Facsimile signatures shall be deemed original signatures.
SECTION 17.13. SEVERABILITY. If any provision of this Agreement or
the application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not
be affected thereby and shall be enforced to the greatest extent
permitted by law, but only as long as the continued validity, legality
and enforceability of such provision or application does not materially
(a) alter the terms of this Agreement, (b) diminish the benefits of this
Agreement or (c) increase the burdens of this Agreement, for any person.
SECTION 17.14. SECTION HEADINGS. The section headings contained in
this Agreement are solely for the purpose of reference, are not part of
the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement.
SECTION 17.15. INTERPRETATION. As both parties have participated
in the drafting of this Agreement, any ambiguity shall not be construed
against either party as the drafter.
SECTION 17.16. FURTHER ASSURANCES. For a period of twelve (12)
months after Closing, Seller agrees to provide to Purchaser from time to
time any information that Seller possesses with respect to the operation
of the Business and Assets prior to the Closing which the Purchaser
reasonably requests in the future in connection with the Purchaser's
financing efforts now or in the future or in connection with any FCC or
other regulatory filing.
SECTION 17.17. THIRD PARTIES. Except for the corporate guarantee
of performance by Xxxxxx Communications Corporation set forth at the end
of this Agreement, nothing herein, expressed or implied, is intended to
or shall confer on any person other than the parties hereto any rights,
remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 17.18. WAIVER OF JURY TRIAL. THE PARTIES HERETO
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING,
CLAIM, COUNTERCLAIM, OR CROSS CLAIM ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT.
[THE REST OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized representative as of the
day and year first above written.
SELLER:
TEXAS 16 CELLULAR TELEPHONE COMPANY
XXXXXX X. XXXXX
By: Xxxxxx X. Xxxxx
Title: President
PURCHASER:
XXXXXX CELLULAR OF TEXAS, INC.
G. XXXXXX XXXXX
By: G. Xxxxxx Xxxxx
President
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
The undersigned ultimate parent corporation of Purchaser does hereby
covenant and guarantee, absolutely and unconditionally, to Seller that
Purchaser shall fully and faithfully perform its obligations under this
Agreement according to its terms or, if not so performed by Purchaser,
shall be so performed or caused to be performed by the undersigned
corporation, without any notice of default to Purchaser (except as
provided in this Agreement) or demand upon the undersigned, and without
Seller seeking to enforce this Agreement against Purchaser or pursuing
any remedies against Purchaser, and the undersigned corporation hereby
waives any such notice or demand or efforts to enforce this Agreement or
to pursue remedies against Purchaser. Notwithstanding the foregoing, the
undersigned shall have no further obligation hereunder following the
payment of the Purchase Price to Seller. Further, in the event Purchaser
and/or the undersigned breach any representation or obligation under the
foregoing Asset Purchase Agreement and/or this guaranty thereof
(including in the event Seller terminates said Agreement in accordance
with Section 15.02(d) thereof), and if Closing has not occurred, then
Seller's sole and exclusive recourse against Purchaser and the
undersigned shall be to receive the Liquidated Damages Amount as set
forth in Section 5.02 of said Agreement.
XXXXXX COMMUNICATIONS CORPORATION
By: XXXXXXX XXXXXX
Xxxxxxx Xxxxxx, Chairman of the Board,
President and Chief Executive Officer
SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
