Confidential & Proprietary ASSET PURCHASE AGREEMENT among SUREWEST WIRELESS, WEST COAST PCS LLC, SUREWEST COMMUNICATIONS and CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS
EXECUTION
COPY
Confidential
& Proprietary
among
SUREWEST
WIRELESS,
WEST
COAST PCS LLC,
and
CELLCO
PARTNERSHIP d/b/a VERIZON WIRELESS
TABLE
OF CONTENTS
PAGE
|
||
ARTICLE
I - THE TRANSACTION
|
1
|
|
1.1
|
Sale
and Purchase of Assets
|
1
|
1.2
|
Excluded
Assets
|
3
|
1.3
|
Related
Assets
|
4
|
1.4
|
Purchase
Price
|
5
|
1.5
|
Purchase
Price Adjustment
|
5
|
1.6
|
Payment
of Purchase Price
|
7
|
1.7
|
Allocation
of Purchase Price
|
7
|
1.8
|
Assumption
of Liabilities
|
8
|
1.9
|
Closing
|
8
|
1.10
|
Deliveries
and Proceedings at Closing
|
9
|
1.11
|
Regarding
Consents
|
10
|
1.12
|
Escrow
Amount
|
10
|
ARTICLE
II - REPRESENTATIONS AND WARRANTIES
|
11
|
|
2.1
|
Representations
and Warranties of Sellers
|
11
|
2.1.1
|
Organization
and Authority of Sellers
|
11
|
2.1.2
|
Compliance
with Law; Authorizations
|
11
|
2.1.3
|
Microwave
Clearing Liabilities
|
13
|
2.1.4
|
Litigation
|
13
|
2.1.5
|
Contracts
and Other Agreements
|
14
|
2.1.6
|
No
Conflicts; Consents
|
17
|
2.1.7
|
Taxes
|
18
|
2.1.8
|
Environmental
Matters
|
19
|
2.1.9
|
Title;
Real and Personal Property
|
21
|
2.1.10
|
Condition
and Sufficiency of Assets
|
23
|
2.1.11
|
Books
of Account; Financial Statements; CapEx Budget
|
23
|
2.1.12
|
Absence
of Undisclosed Liabilities Affecting the Assets or the
Business
|
24
|
2.1.13
|
Inventory
|
24
|
2.1.14
|
Accounts
Receivable
|
25
|
2.1.15
|
Accounts
Payable
|
25
|
2.1.16
|
Material
Changes
|
25
|
2.1.17
|
Labor
Relations
|
26
|
2.1.18
|
Compensation
Arrangements; Officers and Directors
|
27
|
2.1.19
|
Employee
Benefit Plans and Arrangements
|
27
|
2.1.20
|
Transactions
with Related Parties
|
28
|
2.1.21
|
Insolvency
|
28
|
2.1.22
|
Insurance
|
29
|
2.1.23
|
Intellectual
Property Matters
|
29
|
2.1.24
|
No
Interest in Other Entities
|
30
|
2.1.25
|
Availability
of Documents
|
30
|
2.1.26
|
Restrictions
|
30
|
2.1.27
|
Reserved
|
30
|
2.1.28
|
Brokers
or Finders
|
30
|
2.1.29
|
No
Foreign Storage of Information
|
30
|
2.1.30
|
No
Other Representations or Warranties
|
31
|
2.2
|
Representations
and Warranties of Buyer
|
31
|
2.2.1
|
Existence
and Authority
|
31
|
2.2.2
|
No
Conflicts; Consents
|
31
|
2.2.3
|
Litigation
|
31
|
2.2.4
|
Brokers
or Finders
|
32
|
2.2.5
|
FCC
Matters
|
32
|
2.2.6
|
No
Other Representations or Warranties
|
32
|
2.3
|
Survival
of Representations and Warranties
|
32
|
i
ARTICLE
III - COVENANTS AND AGREEMENTS
|
33
|
|
3.1
|
Covenants
of Sellers Pending the Closing
|
33
|
3.1.1
|
Conduct
of the Business in the Ordinary Course
|
33
|
3.1.2
|
Maintenance
of Assets and Insurance
|
34
|
3.1.3
|
Compliance
with Laws, Etc
|
34
|
3.1.4
|
Efforts;
Relationships; Cooperation
|
34
|
3.1.5
|
Access
|
34
|
3.1.6
|
Non-solicitation
|
34
|
3.1.7
|
Compliance
with Authorizations
|
35
|
3.1.8
|
Updates
|
35
|
3.1.9
|
Delivery
of Financial Statements
|
35
|
3.1.10
|
Tax
Exemption Certificates
|
35
|
3.1.11
|
Additional
Deliveries
|
35
|
3.2
|
Covenants
of Buyer Pending the Closing
|
36
|
3.2.1
|
Actions
of Buyer
|
36
|
3.2.2
|
Updates
|
36
|
3.3
|
Additional
Covenants
|
36
|
3.3.1
|
Certain
Filings and Consents
|
36
|
3.3.2
|
Non
Disclosure
|
37
|
3.3.3
|
Maintenance
of Books and Records
|
37
|
3.3.4
|
Cooperation
|
38
|
3.3.5
|
Other
Regulatory Requirements
|
38
|
3.3.6
|
Transition
Services Agreement
|
38
|
3.3.7
|
Removal
of LMDS Equipment
|
38
|
3.3.8
|
Delivery
of Tangible Assets
|
38
|
3.3.9
|
Use
of Sellers’ Names and Logos
|
39
|
3.4
|
Covenants
Regarding Employees and Employee Benefits
|
39
|
3.4.1
|
Employment
Termination and Related Benefits
|
39
|
3.4.2
|
Communications
With Employees
|
39
|
3.4.3
|
No
Third Party Rights
|
40
|
3.4.4
|
COBRA
|
40
|
3.4.5
|
Employee
Benefits
|
40
|
ARTICLE
IV - CONDITIONS PRECEDENT TO CLOSING
|
41
|
|
4.1
|
Conditions
Precedent to Obligations of Buyer
|
41
|
4.1.1
|
Representations
and Warranties True as of the Closing
|
41
|
4.1.2
|
Compliance
with this Agreement
|
42
|
4.1.3
|
Closing
Certificates
|
42
|
4.1.4
|
Opinions
of Counsel for Sellers
|
42
|
4.1.5
|
No
Threatened or Pending Litigation
|
42
|
4.1.6
|
Material
Adverse Changes
|
42
|
4.1.7
|
Payment
of Debt by Sellers; Release of Liens
|
42
|
4.1.8
|
Regulatory
Approvals
|
43
|
4.1.9
|
Expiration
of HSR Act Waiting Period
|
43
|
4.1.10
|
Required
Consents
|
43
|
4.1.11
|
Transition
Services Agreement
|
43
|
4.1.12
|
Master
Tower Lease Agreement
|
43
|
4.1.13
|
Exclusivity
Amendments
|
43
|
4.1.14
|
Removal
of FCC License Condition
|
43
|
4.2
|
Conditions
Precedent to the Obligations of Sellers
|
44
|
4.2.1
|
Representations
and Warranties True as of the Closing Date
|
44
|
4.2.2
|
Compliance
with this Agreement
|
44
|
4.2.3
|
Closing
Certificate
|
44
|
4.2.4
|
No
Threatened or Pending Litigation
|
44
|
4.2.5
|
Regulatory
Approvals
|
44
|
4.2.6
|
Expiration
of HSR Act Waiting Period
|
44
|
ii
ARTICLE
V - INDEMNIFICATION
|
45
|
|
5.1
|
General
Indemnification Obligation of Sellers and SWC
|
45
|
5.2
|
General
Indemnification Obligations of Buyer
|
46
|
5.3
|
Indemnification
Procedures
|
46
|
5.4
|
Payments
|
48
|
5.5
|
Limitations
|
49
|
5.6
|
Exclusive
Remedy
|
50
|
ARTICLE
VI - MISCELLANEOUS
|
50
|
|
6.1
|
Termination
|
50
|
6.2
|
Expenses
|
52
|
6.3
|
Sales,
Transfer and Documentary Taxes
|
52
|
6.4
|
Further
Assurances
|
52
|
6.5
|
Confidentiality
Undertaking by Sellers
|
52
|
6.6
|
Contents
of Agreement; Parties in Interest
|
53
|
6.7
|
Assignment
and Binding Effect
|
53
|
6.8
|
Waiver
|
53
|
6.9
|
Notices
|
53
|
6.10
|
Remedies
|
54
|
6.11
|
Discharge
of Obligations
|
54
|
6.12
|
Payments
Received
|
55
|
6.13
|
UCC
Matters
|
55
|
6.14
|
Schedules
and Exhibits
|
55
|
6.15
|
Governing
Law
|
55
|
6.16
|
No
Benefit to Others
|
55
|
6.17
|
Construction
and Certain Definitions
|
55
|
6.18
|
Severability
|
56
|
6.19
|
Counterparts
and Facsimile Signatures
|
56
|
6.20
|
Final
Tax Clearance Certificate
|
56
|
6.21
|
Agreements;
Representations and Warranties of SWC
|
56
|
6.22
|
Amendment
|
57
|
6.23
|
Waiver
of Jury Trail
|
57
|
iii
DEFINED
TERMS INDEX
Term
|
Location
|
Affiliate
|
2.1.2(c)
|
Agreement
|
Opening
paragraph
|
Annual
Financial Statements
|
2.1.11(b)
|
Assets
|
1.1
|
Assumed
Liabilities
|
1.8(a)
|
Auditor
Notice
|
1.5(c)
|
Authorizations
|
2.1.2(b)
|
Xxxx
of Sale
|
1.10(a)(ii)
|
Books
and Records
|
1.1(q)
|
Brokers
|
2.1.28
|
Business
|
Recitals
|
Business
Property
|
2.1.8(c)
|
Buyer
|
Opening
paragraph
|
Buyer’s
Documents
|
2.2.1
|
Buyer
Plans
|
3.4.5(d)
|
Buyer’s
Working Capital Schedule
|
1.5(b)
|
Bylaws
|
2.1.1(a)
|
CapEx
Budget
|
2.1.11(d)
|
Cell
Sites
|
2.1.9(c)
|
CERCLA
|
2.1.8(m)
|
Claim
Notice
|
5.3(a)
|
Closing
|
1.9
|
Closing
Date
|
1.9
|
Closing
Payment
|
1.6
|
CMRS
Services
|
3.3.9
|
COBRA
|
2.1.19(b)
|
Code
|
1.7
|
Construction
Permits
|
1.1(b)
|
Continuing
Employees
|
3.4.5(d)
|
Contracts
|
2.1.5(b)
|
CPUC
|
2.1.2(a)
|
Current
Assets
|
1.5(e)(i)
|
Current
Balance Sheet
|
2.1.11(b)
|
Current
Balance Sheet Date
|
2.1.11(b)
|
Current
Liabilities
|
1.5(e)(ii)
|
Dispute
Notice
|
1.5(b)
|
Employee
Benefit Plan
|
2.1.19(a)
|
Environmental
Claims
|
2.1.8(m)
|
Environmental
Laws
|
2.1.8(m)
|
Environmental
Permits
|
2.1.8(m)
|
Equipment
|
1.1(d)
|
ERISA
|
2.1.19(a)
|
ERISA
Affiliate
|
2.1.19(c)
|
Escrow
Agent
|
1.12
|
Escrow
Agreement
|
1.12
|
i
Term
|
Location
|
Escrow
Amount
|
1.12
|
Escrow
Fund
|
1.12
|
Excluded
Assets
|
1.2
|
Excluded
Contracts
|
1.8(a)
|
Existing
Liens
|
2.1.9(a)
|
FCC
|
Recitals
|
FCC
Authorizations
|
1.1(b)
|
FCC
Consent
|
2.1.6(a)
|
FCC
Licenses
|
1.1(a)
|
Final
Order
|
4.1.8
|
Financial
Statements
|
2.1.11(b)
|
GAAP
|
1.5(c)
|
Hazardous
Materials
|
2.1.8(m)
|
HSR
Act
|
2.1.6(a)
|
Incentive
Bonuses and Severance
|
3.4.5(c)
|
Including
|
6.17
|
Indemnification
Claim
|
5.5(a)
|
Indemnified
Buyer Party
|
5.1
|
Indemnified
Losses
|
5.5(b)
|
Indemnified
Party
|
5.5(a)
|
Indemnified
Seller Party
|
5.2
|
Indemnifying
Party
|
5.5(a)
|
Indemnifying
Seller Party
|
5.1
|
Indemnifying
Seller Parties
|
5.1
|
Independent
Accountant
|
1.5(c)
|
Initial
Adjustments Amount
|
1.5(a)
|
Intellectual
Properties
|
2.1.23(a)
|
Interim
Financial Statements
|
3.1.9
|
Know
|
6.17
|
Knowledge
|
6.17
|
Leased
Property
|
1.1(g)
|
Leasehold
Interests
|
1.1(f)
|
Liens
|
2.1.2(c)
|
Losses
|
5.1
|
Markets
|
Recitals
|
Master
Lease Agreement
|
4.1.12
|
Monthly
Financial Statements
|
2.1.11(b)
|
Nondisclosure
Agreement
|
6.6(a)
|
Notice
Period
|
5.3(a)
|
Operating
Agreement
|
2.1.1(b)
|
Outside
Date
|
6.1(a)(iv)
|
Owned
Towers
|
1.2(f)
|
Owned
Tower Collocation Leases
|
1.2(f)
|
Owned
Tower Land Leases
|
1.2(f)
|
Parties
|
6.17
|
Party
|
6.17
|
Pension
Plan
|
2.1.19(c)
|
Permitted
Liens
|
2.1.9(a)
|
ii
Term
|
Location
|
Person
|
6.17
|
Preliminary
Purchase Price
|
1.4
|
Preliminary
Working Capital Schedule
|
1.5(a)
|
Prime
Rate
|
5.4(c)
|
Purchase
Price
|
1.4
|
Purchase
Price Adjustment
|
1.5
|
Related
Party
|
2.1.20
|
Representation
Covenants
|
5.5(f)
|
Required
Consents
|
2.1.6(a)
|
Resolution
Period
|
1.5(c)
|
Required
Consents
|
2.1.6(a)
|
Roseville
Square Lease
|
1.3(b)
|
Seller
|
Opening
paragraph
|
Sellers
|
Opening
paragraph
|
Seller
Employee Benefit Plan
|
2.1.19(a)
|
Seller
Material Adverse Affect
|
6.17
|
Seller
Retirement Plan
|
3.4.5(e)
|
Sellers’
Working Capital Schedule
|
1.5(b)
|
Site
231 Lease
|
1.3(b)
|
Site
259 Lease
|
1.3(b)
|
Survival
Period
|
2.3
|
SWC
|
Opening
paragraph
|
SWC
Employees
|
3.1.4
|
SWC
Leases
|
1.3(b)
|
SWW
|
Opening
paragraph
|
System
|
Recitals
|
Tax
Returns
|
2.1.7
|
Taxes
|
2.1.7
|
Transfer
Taxes
|
6.3
|
Transaction
Documents
|
2.1.1(c)
|
Transition
Services Agreement
|
3.3.6
|
WARN
Act
|
3.4.5(b)
|
West
Coast
|
Opening
paragraph
|
Working
Capital Schedule
|
1.5(a)
|
iii
THIS
ASSET PURCHASE AGREEMENT (“Agreement”),
dated
as of January 18, 2008, is entered into by and among SureWest Wireless, a
California corporation (“SWW”),
West
Coast PCS LLC, a California limited liability company (“West
Coast,”
with
SWW and West Coast being referred to individually as a “Seller”
or
collectively as the “Sellers”),
and
Cellco Partnership, a Delaware general partnership doing business as Verizon
Wireless (“Buyer”).
Further, SureWest Communications, a California corporation (“SWC”)
is a
party to this Agreement solely for the purpose of making its representations
and
warranties set forth in, and agreeing to perform its obligations under,
Section
1.3(b),
Section
3.3.1(b),
Section
3.3.6,
Article
V,
Section
6.1(b),
Section
6.2,
Section
6.15
and
Section
6.21
of this
Agreement.
RECITALS
WHEREAS,
West Coast is the sole holder of personal communications services licenses
granted by the Federal Communications Commission (the “FCC”)
for
the following Basic Trading Areas located in the State of California:
Sacramento, Xxxxxxxx, Xxxxxxx and Yuba City-Marysville (the “Markets”);
WHEREAS,
West Coast is a wholly-owned direct subsidiary of SWW;
WHEREAS,
Sellers own and operate a wireless telecommunications system in the Markets (the
“System”)
and,
in connection therewith, are engaged in the business of marketing, selling
and
providing wireless telecommunications service in the Markets (the “Business”);
WHEREAS,
SWW is a wholly-owned direct subsidiary of SWC;
WHEREAS,
subject to the limitations and exclusions contained in this Agreement, Sellers
desire to sell, and Buyer desires to purchase, the Assets (as defined in
Section
1.1)
on the
terms and conditions set forth herein; and
NOW,
THEREFORE, in consideration of the premises and the mutual representations,
warranties, covenants, agreements and conditions herein contained, and intending
to be legally bound, the parties hereto agree as follows:
ARTICLE
I
THE
TRANSACTION
1.1 Sale
and Purchase of Assets.
At the
Closing (defined in Section
1.9),
except
as otherwise expressly set forth in Section
1.2,
each
Seller shall grant, sell, convey, assign, transfer and deliver to Buyer, and
Buyer shall purchase from each Seller, all of such Seller’s right, title and
interest in the following assets, properties and rights in existence as of
the
Closing Date (defined in Section
1.9),
wherever such assets, properties and rights are located, and whether real,
personal or mixed, tangible or intangible, and whether or not any of such
assets, properties or rights have any value for accounting purposes or are
carried or reflected on or specifically referred to in such Seller’s books or
financial statements, which assets, properties and rights are referred to herein
collectively as the “Assets”:
(a) the
licenses identified on Schedule
1.1(a)
and any
other licenses issued by the FCC to either Seller to construct, own and operate
the System (the “FCC
Licenses”);
(b) all
construction permits, if any, that have been issued by the FCC to either Seller
with respect to construction of a wireless telecommunications system in any
of
the Markets and are outstanding as of the Closing Date (defined in Section
1.9)
(the
“Construction
Permits”);
and
the FCC Licenses and the Construction Permits are referred to collectively
herein as the “FCC
Authorizations”);
(c) all
supplies and inventories (including wireless phones, accessories, spare parts
and supplies, if any), whether or not obsolete or carried on either Seller’s
books of account;
(d) all
furniture, fixtures, wireless systems and other equipment and machinery, cell
site equipment, electrical power units, antennas, transmission lines, test
equipment, tools, office equipment, improvements, parts and other tangible
personal property, whether or not obsolete, including all those items listed
on
Schedule
1.1(d)
(all
such tangible personal property, including the items listed on Schedule
1.1(d),
the
“Equipment”);
(e) all
leasehold and license interests created by all leases and licenses of personal
property under which either Seller is a lessee or licensee, including the
personal property leases and licenses described in Schedule
1.1(e);
(f) all
leasehold and license interests created by all leases and licenses of real
property under which either Seller is a lessee, licensee, lessor or licensor,
including the real estate leases described in Schedule
1.1(f)
but
excluding the Owned Tower Land Leases and the Owned Tower Collocation Leases
(all such interests, including those described on Schedule
1.1(f),
the
“Leasehold
Interests”);
(g) all
interests in all buildings, power panels, towers (other than the Owned Towers),
facilities and other structures and improvements located on any of the parcels
of real property that are the subjects of the Leasehold Interests (the
“Leased
Property”),
together with such Seller’s interest in all fixtures, furnishings,
installations, machinery, equipment and appliances used in connection with
the
operation, maintenance or occupancy of the Leased Property;
(h) all
interests in water lines, rights of way, uses, licenses, easements,
hereditaments, tenements and appurtenances;
(i) all
prepaid expenses, advance payments and deferred charges, and all security
deposits and other deposits deposited by either Seller with third
parties;
(j) all
licenses, certificates of occupancy, permits, franchises, registrations,
certificates of public convenience and necessity, approvals and operating rights
to the extent transferable under applicable law or with any required consent,
and all planning, zoning, building, environmental, occupancy and other permits
and licenses (other than the FCC Authorizations);
(k) except
for the Excluded Contracts (defined in Section
1.8)
and the
Employee Benefit Plans (defined in Section
2.1.19(a)),
all
rights of Sellers under any written or oral contract, agreement, lease, plan,
instrument, license, or other document, commitment, arrangement, undertaking,
practice or authorization, including all contracts to provide services to
customers of the Business, orders received which have not yet been filled,
and
the Authorizations (as defined in Section
2.1.2(d)),
and
specifically including all contracts listed on Schedule
1.1(k);
(l) all
rights under any patent, trademark, service xxxx, trade name or copyright,
whether registered or unregistered, and any applications therefor;
2
(m) all
technologies, methods, formulations, data bases, trade secrets, know how,
engineering inventions and other intellectual property, including any under
development, and all related documentation;
(n) all
of
Sellers’ rights in computer software (in object code form, and, to the extent
either Seller has transferable rights thereto, source code form) owned or
licensed by either Seller (including documentation);
(o) all
rights or choses in action of Sellers arising out of occurrences before the
Closing, including all rights under express or implied warranties relating
to
the Assets;
(p) all
notes
and other accounts receivable of Sellers whether billed or unbilled (including
all proceeds of such receivables existing as of the Closing other than cash
or
cash equivalents), including all negotiable instruments or other instruments
and
chattel paper and other evidences of indebtedness and rights to receive
payment;
(q) all
of
Sellers’ information, files, records, books of account, data, plans, drawings,
diagrams, contracts and recorded knowledge, including customer and supplier
lists and leads (“Books
and Records”);
provided that Sellers may retain copies of their respective books of account
and
any other items required by Sellers to comply with applicable law after the
Closing; and provided, further, that the Books and Records shall not include
personnel records of either Seller or SWC; and
(r) all
other
assets, properties and rights of each Seller in existence as of the Closing
Date, wherever such assets, properties and rights are located, and whether
real,
personal or mixed, tangible or intangible, and whether or not any of such
assets, properties or rights have any value for accounting purposes or are
carried or reflected on or specifically referred to in either Seller’s books or
financial statements.
1.2 Excluded
Assets.
Notwithstanding anything to the contrary in Section
1.1
or in
any other provision of this Agreement, the Assets shall not include any assets,
properties or rights under any Employee Benefit Plan or any of the following
assets, properties or rights of either Seller (collectively, the “Excluded
Assets”):
(a) all
cash
on hand and in financial institutions, cash equivalents, marketable securities
and bonds;
(b) all
claims for refunds and/or credits for Taxes (as defined in Section
2.1.7);
(c) the
minute books, stock record books and tax returns of each Seller;
(d) the
Excluded Contracts (which are listed in Schedule
1.8);
(e) the
rights which accrue or will accrue to Sellers under this Agreement;
(f) the
communications towers that are identified on Schedule
1.2(f)
(the
“Owned
Towers”),
all
leases under which SWW or West Coast has rights to the real property on which
the Owned Towers are located (the “Owned
Tower Land Leases”)
and
any collocation leases with respect to the Owned Towers under which SWW or
West
Coast is lessor or licensor (the “Owned
Tower Collocation Leases”);
3
(g) all
motor
vehicles used in the Business;
(h) all
rights or choses in action to the extent arising out of or relating to the
foregoing Excluded Assets;
(i) any
trademark that includes the name “SureWest”;
(j) LMDS
and
T-1 termination equipment located at the Leased Property;
(k)
furniture,
office equipment and fixtures other than furniture, office equipment and
fixtures located at any of Sellers’ retail wireless stores;
and
(l) the
other
assets listed in Schedule
1.2(l).
1.3 Related
Assets.
(a) If
any
Related Party (as defined in Section
2.1.20)
owns or
otherwise possesses any right, title or interest of any type or nature
whatsoever in any assets, properties, agreements or instruments that are
currently required by Seller for the operation of the System or the Business,
except in the case of Employee Benefit Plans, Excluded Assets and the assets,
properties, agreements or instruments set forth in Schedule
1.3,
Sellers
shall cause the Related Party to transfer such right, title or interest in
such
assets, properties, agreements or instruments to Buyer free and clear of all
Liens, at or prior to Closing at no cost to Buyer pursuant to instruments of
transfer in form and substance reasonably satisfactory to Buyer, and such assets
or properties, or the Related Party’s rights in such agreements or instruments,
shall become Assets, provided that in the case of any such right, title and
interest in any such asset, property, agreement or instrument that may not
be
assigned to Buyer without obtaining a Required Consent (defined in Section
2.1.6)
that
has not been obtained as of the Closing, the provisions of Section
1.11(a)
shall be
applicable and Sellers shall cause the Related Party to comply with such
provisions as if the Related Party were a “Seller” for purposes of such
provisions.
(b) At
the
Closing SWC will transfer its right, title and interest in the SWC Leases to
Buyer free and clear of all Liens pursuant to an instrument of transfer in
form
and substance reasonably satisfactory to and at no cost to Buyer. As a result
of
such transfer, SWC’s right, title and interest in the SWC Leases shall become an
Asset, provided that if the consent of the counterparty to any SWC Lease has
not
been obtained as of the Closing, the provisions of Section
1.11(a)
shall be
applicable with respect to such SWC Lease and SWC will comply with such
provisions as if SWC were a “Seller” for purposes of such
provisions. In
addition, prior to the Closing, SWC will terminate the letter agreement with
SureWest Telephone related to the Roseville Square Lease that is listed as
item
2 on Schedule
2.1.9(b).
As
used
herein, (i) the “Roseville
Square Lease”
means
that certain Lease dated as of October 23, 0000, xxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxx, LLC, and SWC, as amended by Addendum dated November 20, 2003, and
as
further amended by Second Addendum dated November 20, 2003, concerning space
within the Roseville Square Shopping Center located at 0000 Xxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxx, (ii) the “Site
231 Lease”
means
that certain License Agreement dated as of June 27, 2006, by and between Tower
Asset Sub, LLC, as licensor, and SWC, as licensee, concerning certain property
located at 0000 Xxxxxxxxxx Xxxx, Xxxxxx Xxxxxxx, Xxxxxxxxxx, (iii) the
“Site
259 Lease”
means
that certain License Agreement dated July 25, 2006, by and between American
Tower, L.P., as licensor, and SWC, as licensee, concerning certain property
located at 0000 00xx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx and
(iv)
the “SWC
Leases”
means
(A) the Roseville Square Lease, (B) unless the Site 231 Lease has been
transferred to either Seller prior to the Closing, the Site 231 Lease, and
(C)
unless the Site 259 Lease has been transferred to either Seller prior to the
Closing, the Site 259 Lease. If the Site 231 Lease and/or the Site 259 Lease
is
transferred to a Seller prior to Closing, Sellers shall give Buyer written
evidence of such transfer or transfers, in form and substance reasonably
satisfactory to Buyer, prior to Closing.
4
1.4 Purchase
Price.
The
aggregate purchase price to be paid by Buyer to Sellers for the Assets shall
be
$69 million (the “Preliminary
Purchase Price”),
subject to adjustment at and following Closing as provided in Section
1.5
below
(as so adjusted, the “Purchase
Price”),
which
shall be payable by Buyer to Sellers in accordance with Section
1.6
below.
1.5 Purchase
Price Adjustment.
The
Preliminary Purchase Price shall be increased or decreased on a
dollar-for-dollar basis for the adjustments described in and determined in
accordance with this Section
1.5
(the
“Purchase
Price Adjustment”).
The
Purchase Price Adjustment shall be initially calculated as of the Closing as
described in Section
1.5(a)
and
reflected in the Closing Payment made pursuant to Section
1.6,
and
then finally calculated as described in Section
1.5(b),
and
“trued-up” as provided in Section
1.5(f).
(a) Not
more
than five and not less than three business days prior to the Closing Date,
Sellers shall deliver to Buyer a working capital schedule dated as of the
opening of business on the Closing Date, showing an estimate of the Current
Assets and Current Liabilities prepared as set forth in Section
1.5(e)
(a
“Working
Capital Schedule”),
based
on information reasonably available to Sellers not more than five business
days
prior to the Closing Date (such Working Capital Schedule, the “Preliminary
Working Capital Schedule”).
The
adjustment to the Preliminary Purchase Price at Closing (the “Initial
Adjustments Amount”)
shall
equal Current Assets minus Current Liabilities, as shown on such
schedule.
(b) Not
more
than 60 days after the Closing Date, Sellers shall deliver to Buyer a Working
Capital Schedule, dated as of the opening of business on the Closing Date,
prepared based upon information available to Sellers after the Closing Date
(such Working Capital Schedule, “Sellers’
Working Capital Schedule”),
together with copies of the reconciliations supporting Sellers’ calculation of
the information in such schedule. As promptly as practicable after Buyer’s
receipt of such schedule (but in no event later than 60 days after Buyer’s
receipt of such schedule), Buyer shall prepare and deliver to Sellers for their
review and comment a Working Capital Schedule, dated as of the opening of
business on the Closing Date, prepared based on Buyer’s review of Sellers’
Working Capital Schedule, the account reconciliations furnished by Sellers
and
other information available to Buyer (such Working Capital Schedule,
“Buyer’s
Working Capital Schedule”).
If
Sellers object to any amounts reflected on such schedule, Sellers must, within
20 business days after Sellers’ receipt thereof, give written notice (the
“Dispute
Notice”)
to
Buyer specifying in reasonable detail Sellers’ objections. If Sellers have not
given a Dispute Notice with respect to such schedule by the end of the 20
business day period after Sellers’ receipt of such schedule, the Purchase Price
Adjustment shall be equal to Current Assets minus Current Liabilities, as shown
on such schedule, and, subject to the provisions of Section
5.1(a),
such
calculation of the Purchase Price Adjustment shall be final, binding and
conclusive on the parties. Any disputes with respect to the Buyer’s Working
Capital Schedule shall be resolved pursuant to the procedures of Section
1.5(c).
5
(c) With
respect to any disputed amounts concerning the Buyer’s Working Capital Schedule,
Buyer and Sellers shall meet in person at Buyer’s offices in Basking Ridge, New
Jersey, unless otherwise agreed to by the parties, and negotiate in good faith
during the 20 business day period (the “Resolution
Period”)
after
the date of Buyer’s receipt of the Dispute Notice to resolve any such disputes.
If the parties are unable to resolve all such disputes within the Resolution
Period, then at any time thereafter, either party may require that the
unresolved disputes be submitted to KPMG (the “Independent
Accountant”),
such
action to be triggered by the requesting party providing written notice to
the
other party (an “Auditor
Notice”).
In
the event an Auditor Notice is given, the Independent Accountant shall be
engaged to provide a final and conclusive resolution of all unresolved disputes
within 45 days after such engagement, which resolution shall be based on the
express provisions of this Agreement; provided,
however,
that if
the Independent Accountant finds the express terms of this Agreement are not
sufficient to resolve any issue or issues, the Independent Accountant shall
rely
upon generally accepted accounting principles (“GAAP”)
as
then in effect. Subject to the provisions of Section
5.1(a),
the
determination of the Independent Accountant shall be final, binding and
conclusive on the parties hereto, and the fees and expenses of the Independent
Accountant shall be borne by the party who is not the substantially prevailing
party, as determined by the Independent Accountant based on the Independent
Accountant’s resolution of the issues. If the Independent Accountant is unable
to make a determination of which party is the substantially prevailing party,
the parties shall share the expenses of the Independent Accountant equally.
When
this Section
1.5(c)
is
applicable, the Purchase Price Adjustment shall be equal to Current Assets
minus
Current Liabilities, as shown on Buyer’s Working Capital Schedule and then
adjusted to reflect the resolution of disputed amounts pursuant to this
Section
1.5(c).
(d) From
and
after the Closing Date, Buyer shall provide Sellers upon reasonable notice
with
free and full access to the books, records and personnel of Buyer reasonably
requested by Sellers to assist Sellers in their preparation of the Sellers’
Working Capital Schedule or their review of the Buyer’s Working Capital
Schedule.
(e) Each
Working Capital Schedule shall set forth the Current Assets and Current
Liabilities of Sellers existing as of the opening of business on the Closing
Date, as such terms are defined below in this Section
1.5(e).
For
clarification purposes, Schedule
1.5(e)
sets
forth an example of the Working Capital Schedule if it were to have been
prepared as of October 31, 2007.
(i) “Current
Assets”
shall
mean:
(A) all
Assets of a type determined in accordance with GAAP to be “trade accounts
receivable” (including customer and roaming accounts receivable), provided that
(1) Current Assets shall not include any accounts receivable owed by any Related
Party to either Seller, (2) Current Assets shall not include any customer
accounts receivable that relate to accounts that have been disconnected or
that
should have been disconnected pursuant to Sellers’ disconnect policy set forth
in Section
2.1.5(e),
and (3)
the allowance for uncollectible accounts receivable shall be 17% of the total
value of the customer accounts receivable (not including roaming accounts
receivable) of each Seller, plus any specific reserves that are required under
GAAP with respect to any of the customer accounts receivable (including roaming
accounts receivable) of either Seller;
6
(B) all
wireless phones and accessories directly related to such wireless phones of
each
Seller of a type determined in accordance with GAAP to be “inventory,” valued at
the lower of cost or market value in the Business (a physical audit of Sellers’
inventory will be taken by representatives of Sellers and Buyer during the
afternoon or evening prior to Closing, the results of which shall be final
and
binding upon the parties (i.e., the physical inventory count shall not be
reviewable by the Independent Accountant pursuant to Section
1.5(c)
above)
for purposes of determining the number and type of inventory items existing
as
of the Closing, which information shall be used to derive the value of the
inventory of Sellers included as Current Assets and reflected on Sellers’
Working Capital Schedule and Buyer’s Working Capital Schedule); and
(C) all
other
Assets of a type determined in accordance with GAAP to be current assets, and
to
be either “deposits” or “prepaid expenses”; provided that Current Assets shall
not include prepaid insurance.
(ii) “Current
Liabilities”
shall
mean all Assumed Liabilities (as defined in Section
1.8
below)
that are of a type determined to be “current liabilities” in accordance with
GAAP.
(f) Within
five business days after the final determination of the Purchase Price
Adjustment in accordance with the provisions set forth above, Buyer shall pay
to
Sellers, if the Purchase Price Adjustment minus the Initial Adjustments Amount
is a positive amount, or Sellers shall pay to Buyer, if such difference is
a
negative amount, an amount equal to the absolute value of such difference,
plus
interest on such amount from the Closing Date until date of payment at the
rate
of 5% per annum, in immediately available funds. The parties agree that Sellers
may not satisfy such payment by directing Buyer to deduct such amount from
the
Escrow Amount (defined in Section
1.12).
1.6 Payment
of Purchase Price.
On the
Closing Date Buyer shall pay, on account of the Purchase Price, to Sellers
an
amount equal to the Preliminary Purchase Price less the Escrow Amount, less
or
plus the amount of the Initial Adjustments Amount, and less any sales or use
taxes shown as due on the sales tax clearance certificate delivered by Sellers
pursuant to Section
1.10(a)(vii)
(the
“Closing
Payment”),
payable by wire transfer of immediately available funds to such account(s)
as
Sellers shall designate prior to the Closing Date.
1.7 Allocation
of Purchase Price.
Buyer
and Sellers shall use reasonable efforts to agree in writing before the Closing
as to the allocation of the Purchase Price among the Assets under the
methodology required by Section 1060 of the Internal Revenue Code of 1986,
as
amended (the “Code”).
Buyer
and Sellers acknowledge and agree that no portion of the Purchase Price or
net
proceeds received by Sellers from the sale of the Assets hereunder shall be
allocated to the Leasehold Interests. If Buyer and Sellers cannot agree before
the Closing as to such allocation, then no such agreement shall be required,
but
each party shall notify the other party within 90 days following the Closing
Date of the Purchase Price allocation which it will report on IRS Form 8594.
Each party shall file with its federal income tax return for the tax year in
which the Closing occurs IRS Form 8594 containing, if applicable, the
information agreed to by the parties before the Closing, or, absent such
agreement, the allocation of which such party provided notice to the other
party. If the parties agreed in writing before the Closing as to the allocation
of the Purchase Price, then they shall use reasonable efforts to agree in
writing as to any adjustment to such allocation which is required by reason
of a
Purchase Price Adjustment. If the parties did not agree before the Closing
as to
the allocation of the Purchase Price, or agreed to such initial allocation
but
fail to agree on the adjustment which is required by reason of a Purchase Price
Adjustment, then each party shall notify the other party within 90 days
following a Purchase Price Adjustment of the Purchase Price allocation which
it
will report on IRS Form 8594, after taking such adjustment into account.
7
1.8 Assumption
of Liabilities.
(a) On
the
Closing Date, Buyer shall assume and agree to discharge and perform, as and
when
due, only the following liabilities and obligations as they exist as of the
Closing Date: (i) all liabilities and obligations of each Seller that are
“accounts payable - trade” of such Seller as determined in accordance with GAAP,
(ii) each Seller’s accrued ad valorem, real and tangible personal property taxes
payable, and (iii) all obligations of each Seller pursuant to leases,
licenses, contracts or commitments that (A) are disclosed on Schedule
1.1(k)
or (B)
are entered into after the date of this Agreement in accordance with
Section
3.1,
but
only
to the extent such obligations relate to periods or goods or services provided
to Buyer on or after the Closing Date or are included within the obligations
assumed pursuant to clause (i) of this Section
1.8,
in all
cases excepting any liabilities or obligations of any nature whatsoever of
either Seller or any Related Party for any Employee Benefit Plans (as defined
in
Section
2.1.19(a))
(collectively the “Assumed
Liabilities”).
Notwithstanding the foregoing and anything else contained in this Agreement
to
the contrary, Buyer shall not assume any liabilities or obligations of either
Seller under any dealer agreement (including those listed on Schedule
1.8),
any
intercompany agreement (including those listed on Schedule
1.8)
or any
of the other contracts listed on Schedule
1.8
(collectively, the “Excluded
Contracts”)
or any
liabilities or obligations of either Seller to the other Seller or to any
Related Party, and “Assumed Liabilities” shall not include any such liabilities
or obligations.
(b) Notwithstanding
the foregoing, Buyer shall not assume or agree to pay, discharge or perform
any
liabilities or obligations to the extent arising out of any breach by either
Seller of any provision of any contract, including liabilities or obligations
to
the extent arising out of either Seller’s failure to perform any contract in
accordance with its terms prior to the Closing and any liability arising out
of
the assignment to Buyer of any contract in violation of the terms
thereof.
(c) This
is a
purchase of assets and Buyer shall not assume or be bound by or responsible
for
any obligations or liabilities of either Seller, or the predecessors,
shareholders or members of either Seller, of any kind or nature, known or
unknown, contingent or otherwise, other than those obligations and liabilities
expressly assumed by Buyer pursuant to this Section
1.8.
EXCEPT
AS SPECIFICALLY SET FORTH IN THIS SECTION
1.8,
BUYER
SHALL NOT ASSUME OR BE RESPONSIBLE FOR ANY DEBTS, LIABILITIES OR OBLIGATIONS
OF
EITHER SELLER, THE SHAREHOLDERS OR MEMBERS OF EITHER SELLER, OR ANY RELATED
PARTY, INCLUDING ANY LIABILITIES OR OBLIGATIONS OF ANY NATURE WHATSOEVER WITH
RESPECT TO TAXES AND LIABILITIES OR OBLIGATIONS OF ANY NATURE WHATSOEVER ARISING
WITH RESPECT TO ANY EMPLOYEE BENEFIT PLAN.
1.9 Closing.
Unless
this Agreement shall have been earlier terminated in accordance with the
provisions of this Agreement, the closing under this Agreement (the
“Closing”)
shall
take place at the offices of Buyer, Xxx Xxxxxxx Xxx, Xxxxxxx Xxxxx, XX 00000,
at
1:00 p.m. local time on the date that is three business days after the
satisfaction or waiver of the conditions set forth in Article
IV
(except
those conditions that by their nature will be satisfied at the Closing), or
at
such other time or place as may be mutually agreed upon in writing by Buyer
and
Sellers. The date of the Closing is referred to herein as the “Closing
Date.”
8
1.10 Deliveries
and Proceedings at Closing.
At or
before the Closing and subject to the terms and conditions herein
contained:
(a) Deliveries
by Sellers.
Sellers
shall deliver to Buyer the following:
(i) The
Preliminary Working Capital Schedule in accordance with Section
1.5(a)
above,
which shall be delivered not more than five and not less than three business
days prior to Closing notwithstanding the introductory clause to this
Section
1.10;
(ii) a
Xxxx of
Sale, Assignment and Assumption Agreement in a form reasonably satisfactory
to
both parties (the “Xxxx
of Sale”),
duly
executed by each Seller;
(iii) such
other good and sufficient instruments and documents of conveyance and transfer
as are identified by the parties prior to Closing, duly executed by the relevant
Seller or Sellers and in form reasonably satisfactory to Buyer, as shall be
reasonably requested by Buyer to transfer, convey and assign to, and vest in,
Buyer all of Sellers’ right, title and interest in and to the Assets, subject to
Section
1.11
below;
(iv) the
Required Consents (defined in Section
2.1.6)
in form
and substance reasonably satisfactory to Buyer;
(v) a
“FIRPTA
Certificate” as required pursuant to Section 1445 of the Code, in substantially
the form attached hereto as Exhibit
A;
(vi) the
Escrow Agreement, duly executed by SWC;
(vii) a
tax
clearance certificate received from the California State Board of Equalization,
dated on or prior to the Closing Date, pursuant to California Revenue and
Taxation Code Section 6812 with respect to sales or use Tax of
Sellers;
and
(viii) a
certificate of good standing or other documentation from the California
Franchise Tax Board to the effect that each Seller is not currently delinquent
in the payment of California income or franchise taxes.
(b) Deliveries
by Buyer.
Buyer
shall deliver to Sellers the following:
(i) the
Closing Payment in accordance with Section
1.6;
(ii) the
Escrow Agreement, duly executed by Buyer; and
(iii) the
Xxxx
of Sale, duly executed by Buyer.
(c) Other
Deliveries.
The
parties hereto shall also deliver to each other the agreements, closing
certificates, opinions of corporate and FCC counsel and other documents and
instruments required to be delivered pursuant to this Agreement.
9
1.11 Regarding
Consents.
(a) To
the
extent that either Seller’s rights under any contract, lease, agreement,
Authorization (defined in Section
2.1.2(b))
or
other Asset to be assigned to Buyer hereunder may not be assigned without the
consent of any Person which has not been obtained as of the Closing, this
Agreement shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof or be void or unlawful, and if
the
Closing takes place the relevant Seller, at its expense, shall use commercially
reasonable efforts to obtain any such required consent(s) as promptly as
possible after the Closing, whereupon such Assets shall be assigned or otherwise
transferred in accordance with such consent. If any consent shall not be
obtained (or until such time as it is obtained) or if any attempted assignment
would be ineffective or would impair Buyer’s rights under the Asset in question
so that Buyer would not in effect acquire the benefit of all such rights, the
relevant Seller, to the maximum extent practicable under the circumstances,
shall act after the Closing as Buyer’s agent in order to preserve and obtain for
it the benefits thereunder, at Buyer’s expense, and shall cooperate, to the
maximum extent practicable under the circumstances, with Buyer in any other
reasonable arrangement designed to provide such benefits to Buyer, at Buyer’s
expense.
(b) Nothing
in this Section
1.11
shall in
any way diminish the obligation of each Seller hereunder to use all commercially
reasonable efforts to obtain all consents and approvals and to take all such
other actions prior to or at Closing as are necessary to enable Sellers to
convey or assign valid title to all the Assets to Buyer. Buyer may, at its
option, elect to waive Sellers’ requirement to obtain any particular consent(s)
and/or approval(s) in order to proceed to Closing, and such waiver shall not
constitute a waiver of any remedies or a release from indemnification
obligations with respect to such consent(s) and/or approval(s).
1.12 Escrow
Amount.
(a) At
the
Closing, Buyer shall deposit with JPMorgan Chase, N.A. (the “Escrow
Agent”),
by
wire transfer of immediately available funds, an amount equal to
$3,450,000 (the
“Escrow
Amount”),
such
amount to constitute an escrow fund (the “Escrow
Fund”)
to be
governed in accordance with the terms of this Agreement and an escrow agreement
in substantially the form attached hereto as Exhibit
B
(the
“Escrow
Agreement”),
among
Buyer, the Escrow Agent and SWC. Except as provided in Section
1.5(f),
the
Escrow Fund shall be used to satisfy any amounts owed to the Buyer Indemnified
Parties from Sellers pursuant to this Agreement, including indemnification
amounts owed under Article
V.
(b) The
Escrow Fund shall be held as a trust fund and shall not be subject to any
encumbrance, attachment, trustee process or any other judicial process of any
creditor of any party, and shall be held and disbursed solely for the purposes
and in accordance with the terms of this Agreement and the Escrow
Agreement.
10
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES
2.1 Representations
and Warranties of Sellers.
Sellers
jointly and severally represent and warrant to Buyer as of the date of this
Agreement and as of the Closing Date as follows:
2.1.1 Organization
and Authority of Sellers.
(a) SWW
is a
corporation duly organized and validly existing under the laws of the State
of
California. SWW’s principal place of business is, and has been for at least the
past five years, located in the State of California, County of Placer. SWW’s
federal taxpayer identification number is 00-0000000. Attached hereto as
Schedule
2.1.1(a)
is a
true, correct and complete copy of the bylaws of SWW, as currently in effect
(the “Bylaws”).
Except as set forth in the Bylaws, there is no agreement, commitment or
understanding by or among shareholders of SWW with respect to the ownership,
operation or governance of SWW or the rights or obligations of the shareholders
of SWW. SWC directly owns all of the outstanding shares of SWW’s capital stock.
(b) West
Coast is a limited liability company duly organized and validly existing under
the laws of the State of California. West Coast’s principal place of business
is, and has been for at least the past five years, located in the State of
California, County of Placer. West Coast’s federal taxpayer identification
number is 00-0000000. Attached hereto as Schedule
2.1.1(b)
is a
true, correct and complete copy of the operating agreement of West Coast, as
currently in effect (the “Operating
Agreement”).
Except as set forth in the Operating Agreement, there is no agreement,
commitment or understanding by or among members of West Coast with respect
to
the ownership, operation or governance of West Coast or the rights or
obligations of the members of West Coast. SWW directly owns all of the
outstanding membership interests in West Coast.
(c) Each
Seller has the requisite power, authority and legal right to execute, deliver
and perform this Agreement. The execution, delivery and performance by each
Seller of this Agreement and all other Transaction Documents (defined below)
to
which such Seller is a party have been duly authorized by all necessary action
on the part of such Seller, including approval of this transaction by the
shareholders or members of such Seller, as the case may be. As used herein,
the
term “Transaction
Documents”
means
this Agreement and all other agreements, documents and instruments required
to
be executed and/or delivered by the parties or any one or more of them in
accordance with the provisions of this Agreement. This Agreement has been,
and
the other Transaction Documents to which a Seller is a party will be, duly
executed and delivered by such Seller, and this Agreement constitutes, and
such
Transaction Documents when executed and delivered will constitute, the legal,
valid and binding obligations of such Seller, enforceable against it in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy laws and other similar laws affecting creditors’ rights
generally, and except that the remedy of specific performance and injunctive
relief and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may
be
brought.
2.1.2 Compliance
with Law; Authorizations.
(a) Each
Seller has complied in all material respects with, and is not in violation
in
any material respect of, any federal, state or local law, ordinance, code,
order
or governmental rule or regulation to which such Seller, any of the Assets
or
the Business is subject, including rules, regulations or orders of the FCC
and
the California Public Utilities Commission (the “CPUC”),
and
has not failed to obtain or to adhere in any material respect to the
requirements of any license, permit or authorization necessary to the ownership
of its assets, including the Assets, or to the conduct of the Business.
11
(b) True
and
correct official copies of the FCC Licenses, as presently in effect, are
attached hereto as part of Schedule
2.1.2(b).
Also
included in Schedule
2.1.2(b)
is a
list of all of the FCC Authorizations (other than the FCC Licenses, which are
listed in Schedule
1.1(a)).
Sellers hold all
of the
FCC Authorizations, all of the Environmental Permits (as defined in Section
2.1.8(m)),
all
conditional use permits or other local permits that are currently required
for
Sellers to conduct the Business in the ordinary course, and all other licenses,
permits, approvals or other authorizations from any federal, state or local
governmental authority that are currently required for Sellers to conduct the
Business in the ordinary course (collectively (including the FCC Authorizations
and the Environmental Permits), the “Authorizations”).
(c) The
Authorizations are the only permits, franchises, easements, licenses, variances,
exemptions, rights, applications, filings, registrations, orders or other
authorizations and approvals from governmental authorities that are currently
required for Sellers to conduct the Business in the ordinary course. Each of
the
Authorizations is in full force and effect, is validly and exclusively held
by
one of the Sellers, is free and clear of any material legal disqualifications,
conditions or other restrictions (other than those routinely imposed in
conjunction with such Authorizations), is free and clear of all Liens (defined
below) except for Existing Liens (as defined in Section
2.1.9(a)),
as of
the date hereof, and Permitted Liens (as defined in Section
2.1.9(a)),
as of
the Closing Date. As used herein, the term “Liens”
means
any mortgage, lien, pledge, charge, security interest, encumbrance, easement,
conditional sales contract, reversionary interest (except for any reversionary
rights of landlords under leases included within the Assets), transfer
restriction, right of first refusal, voting trust agreement, preemptive right,
or other adverse claim, defect of title, limitation or restriction of any type
or nature whatsoever. No amounts (including installment payments consisting
of
principal and/or interest or late payment fees) are due to the FCC or the United
States Department of the Treasury in respect of the FCC Authorizations, nor
will
the consummation of the transactions contemplated hereby cause the FCC to
require West Coast or any of its Affiliates to refund to the FCC all or any
portion of any bidding credit which West Coast or any of its past or current
Affiliates may have received from the FCC in connection with the FCC
Authorizations. Except as set forth in Schedule
2.1.4(a),
there
are no existing applications, petitions to deny or complaints or proceedings
pending or, to Sellers’ Knowledge, threatened, before the FCC, the CPUC or any
other tribunal, governmental authority or regulatory agency relating to the
Authorizations or the Business (other than proceedings affecting the wireless
telecommunications industry generally). To Seller’s Knowledge no governmental
authority or regulatory agency has threatened to terminate or suspend any of
the
Authorizations. There are no disputes by Seller, or to Seller’s Knowledge by any
other Person, of any kind outstanding with respect to any of the Authorizations.
Neither Seller is in violation or default, nor has either Seller received any
notice of any claim of violation or default, with respect to any of the FCC
Licenses, any of the conditional use permits or any other material
Authorizations, and no event has occurred with respect to any of the FCC
Licenses, any of the conditional use permits or any other material
Authorizations which permits, or after notice or lapse of time or both would
permit, revocation or termination thereof or which will or could reasonably
be
expected to result in any violation, default, claim of violation or default
or
impairment of the rights of the holder of any of such Authorizations. Except
as
otherwise governed by laws, ordinances or governmental rules or regulations,
all
of the FCC Licenses, and all other material Authorizations that are renewable,
are renewable by their terms or in the ordinary course of the Business without
the need to comply with any special non-routine qualification procedures (it
being agreed that the need to be in compliance with the terms of the
Authorization shall not be considered to be a special non-routine qualification
procedure) or to pay any amounts other than routine filing and regulatory fees.
Assuming the Required Consents relating to the Authorizations are received,
none
of the Authorizations will be, or could be reasonably expected to be, adversely
affected by consummation of the transactions contemplated hereby. One of the
Sellers is the sole holder of each of the Authorizations. No shareholder,
member, officer, employee or former employee of either Seller or any Affiliate
of either Seller, or any other Person, firm or corporation, owns or has any
proprietary, financial or other interest (direct or indirect) in any
Authorization which either Seller owns, possesses or uses in the operation
of
the Business as now or previously conducted. For purposes of this agreement,
“Affiliate”
means,
as to any Person, any other Person, which, directly or indirectly, is in control
of, is controlled by, or is under common control with, such Person. The term
“control” (including, with correlative meanings, the terms “controlled by” and
“under common control with”), as applied to any Person, means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or other ownership interest, by contract or otherwise.
12
(d) Schedule
2.1.2(d)
lists
all E-911 Phase I or Phase II “deployment requests” pursuant to 47 C.F.R. §20.18
that have been received by either Seller and describes the status of each
“deployment request” listed thereon.
(e) Neither
Seller is in breach or otherwise in violation of any FCC build-out or
substantial service requirements relating to any of the FCC Licenses.
(f) Each
of
the FCC Licenses has been renewed for an additional 10-year term to expire
on
April 28, 2017.
2.1.3 Microwave
Clearing Liabilities.
Each
Seller has completed all relocation of incumbent point-to-point microwave
licensees required to be completed by such Seller in connection with the
build-out of the FCC Licenses as and to the extent conducted to date by such
Seller, and has entered into one or more appropriate microwave relocation
agreements in connection therewith. For each and every microwave relocation
agreement in respect of the FCC Licenses to which either Seller is a party,
(i)
such Seller has fully completed performance, and (ii) the incumbent microwave
licensee has, to Sellers’ Knowledge, fully complied with such agreement and has
filed with the FCC applications or notifications on FCC Form 601 to relinquish
its rights to the microwave path(s) that are the subject of such agreement.
Except as set forth on Schedule
2.1.3,
each
Seller has paid all microwave relocation cost-sharing obligations in respect
of
the FCC Licenses (within the meaning of 47 C.F.R. §§24.239 - 24.253) of which
such Seller has been notified by the Personal Communications Industry
Association microwave reimbursement clearinghouse.
2.1.4 Litigation.
(a) Except
as
set forth in Schedule
2.1.4(a),
no
litigation, arbitration, investigation or other proceeding of or before any
court, arbitrator or governmental or regulatory official, body or authority
is
pending or, to the Knowledge of Sellers, threatened against either Seller,
no
such litigation, arbitration, investigation or other proceeding that relates
to
the Business is pending or, to the Knowledge of Sellers, threatened against
SWC,
and neither Seller has Knowledge of any reasonably likely basis for any such
litigation, arbitration, investigation or proceeding that would reasonably
be
expected to have a Seller Material Adverse Effect. As of the date hereof, there
is no suit, action or other proceeding, or injunction or final judgment relating
thereto, pending or, to the Knowledge of Sellers, threatened against either
Seller or SWC, before any court or governmental or regulatory official, body
or
authority, including the FCC or the CPUC, in which it is sought to restrain,
prohibit, obtain damages or other relief in connection with, terminate or
modify, or which might otherwise affect, this Agreement or the consummation
of
the transactions contemplated hereby, and, to the Knowledge of Sellers, no
investigation that might result in any such suit, action or proceeding is
pending or threatened. As of the Closing Date, there is no suit, action or
other
proceeding, or injunction or final judgment relating thereto, pending or, to
the
Knowledge of Sellers, threatened against either Seller or SWC, before any court
or governmental or regulatory official, body or authority, including the FCC
or
the CPUC, in which it is sought to restrain, prohibit, obtain damages or other
relief in connection with, terminate or modify, or which might otherwise
materially and adversely affect, this Agreement or the consummation of the
transactions contemplated hereby, and, to the Knowledge of Sellers, no
investigation that might result in any such suit, action or proceeding is
pending or threatened. As of the date hereof, neither Seller is, nor is SWC,
a
party to or subject to the provisions of any judgment, order, writ, injunction,
decree or award of any court, arbitrator or governmental or regulatory official,
body or authority which will or could reasonably be expected to affect the
Assets, the Business or consummation of the transactions contemplated under
this
Agreement. As of the Closing, neither Seller is, nor is SWC, a party to or
subject to the provisions of any judgment, order, writ, injunction, decree
or
award of any court, arbitrator or governmental or regulatory official, body
or
authority (other than regulatory orders affecting the wireless
telecommunications industry generally) which could reasonably be expected to
materially and adversely affect the Assets, the Business or consummation of
the
transactions contemplated under this Agreement.
13
(b) There
have been no civil fines, penalties, orders, writs, judgments, injunctions,
decrees, determinations, or other awards of any courts, governmental agencies
or
other governmental authorities imposed or levied against either Seller, or
to
which either Seller or any of the Assets has become subject (other than
regulatory orders and determinations affecting the wireless telecommunications
industry generally), during the past three years, and there have been no
settlements by either Seller of any legal claims actually brought or threatened
against either Seller, or to which either Seller or any of the Assets has become
subject, during the past three years in which either Seller paid in excess
of
$5,000 under any such settlement.
2.1.5 Contracts
and Other Agreements.
(a) Except
as
listed and described in Schedule
1.1(k),
and
excluding Employee Benefit Plans and Excluded Contracts, neither Seller is
a
party to any written or oral, express or implied:
(i) agreement,
contract or commitment (other than at-will commitments that do not include
severance) with any present or former employee or consultant or for the
employment of any Person, including any consultant;
(ii) agreement,
contract, commitment or arrangement with any labor union or other representative
of employees;
(iii) agreement,
contract or commitment for the future purchase of, or payment for, supplies
or
products, or for the performance of services by a third party, other than any
such agreements, contracts and commitments with a value not in excess of $15,000
per year;
(iv) lease,
license or other agreement relating to any existing or proposed cell site or
retail store, or any agreement to purchase, lease or license any real property,
improvements or equipment relating to any existing or proposed cell site or
retail store with a value in excess of $15,000;
14
(v) agreement,
contract, lease or commitment continuing over a period of more than twelve
months from the date hereof or exceeding $25,000 in value that cannot be
terminated by the applicable Seller with 90 days or less notice without
penalty;
(vi) commission,
representative, distributorship or sales agency agreement, contract or
commitment (with any requirement that a Seller pay any residuals under any
such
arrangement noted on Schedule
1.1(k));
(vii) reseller
or wholesale agreement;
(viii) conditional
sale or lease under which a Seller is either purchaser or lessee relating to
any
tangible personal property included in the Assets;
(ix) note,
debenture, bond, trust agreement, letter of credit agreement, loan agreement
or
other contract or commitment for the borrowing or lending of money or agreement
or arrangement for a line of credit or guarantee, pledge or undertaking of
the
indebtedness of any other Person;
(x) agreement,
contract or commitment for any charitable or political
contribution;
(xi) agreement,
contract or commitment limiting or restraining either Seller, any owner of
the
Business or any successor thereto from engaging or competing in any manner
or in
any business, nor, to Sellers’ Knowledge, is any employee of either Seller
subject to any such agreement, contract or commitment;
(xii) license,
franchise, distributorship or other agreement which relates in whole or in
part
to any software, patent, trademark, trade name, service xxxx or copyright or
to
any ideas, technical assistance or other know-how of or used by either Seller
(other than any such license, franchise, distributorship or other agreement
which relates to off-the-shelf software);
(xiii) roaming
agreement, interconnection agreement or contour extension
agreement;
(xiv) agreement
or commitment for any capital expenditure or leasehold improvement other than
those in connection with the Owned Towers;
(xv) agreement
granting power of attorney to any other Person;
(xvi) confidentiality
or non-disclosure agreement pursuant to which either Seller has agreed to keep
confidential information obtained from any other Person or which is related
to
the Assets except such agreements as are prohibited from disclosure and would
not affect Seller’s ability to consummate the transaction contemplated by this
Agreement or Buyer’s ability to operate the Business after the
Closing;
(xvii) agreement,
contract, commitment or arrangement pursuant to which either Seller is obligated
to furnish wireless services to any Person in exchange for goods or services
or
any other non-cash consideration or at no charge;
15
(xviii) agreement,
contract, commitment or arrangement that
requires exclusive dealings with a particular party with respect to goods or
services;
or
(xix) other
material agreement, contract or commitment not made in the ordinary course
of
the Business consistent with past practice.
(b) Each
of
the agreements, contracts, commitments, leases, plans and other instruments,
documents and undertakings listed in Schedule
1.1(k),
required by this Section
2.1.5(a)
to be
listed in such Schedule
1.1(k),
or
required to be assigned by a Related Party to Buyer pursuant to Section
1.3
(collectively, the “Contracts”)
is
valid, in full force and effect, binding upon and enforceable against the
relevant Seller and, to Sellers’ Knowledge, against any other party thereto, in
accordance with its terms except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other similar laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether enforceability is considered in
a
proceeding in equity or at law). With respect to the Contracts, neither the
relevant Seller, a Related Party, nor, to Sellers’ Knowledge, any other party
thereto, is in default in the performance, observance or fulfillment of any
material obligation, covenant or condition contained therein, and no event
has
occurred which with or without the giving of notice or lapse of time, or both,
would constitute a default thereunder of any material obligation, covenant
or
condition contained therein by the relevant Seller, a Related Party or, to
Sellers’ Knowledge, by any other party thereto. Furthermore, no such Contract
contains any material contractual requirement with which there is a reasonable
likelihood the relevant Seller, Related Party or, to Sellers’ Knowledge, any
other party thereto will be unable to comply. Sellers have made available to
Buyer true and complete copies of all Contracts listed on Schedule
1.1(k)
and the
Roseville Square Lease.
(c) Set
forth
on Schedule
2.1.5(c)
are true
and complete copies of all forms of contract that govern Sellers’ provision of
wireless service to the current customers of the Business, together with a
statement of the period during which each such form was used by Sellers to
add
new customers. Except as disclosed on Schedule
2.1.5(c),
all
such contracts with such customers are valid, in full force and effect, binding
upon each Seller that is a party thereto and, to Sellers’ Knowledge, the other
parties thereto and enforceable in accordance with their respective terms
against such Seller and, to Sellers’ Knowledge, the other parties thereto,
subject to bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect affecting creditors’ rights generally. Except for
late payments by customers that are accurately reflected in the books of account
of Sellers, neither the relevant Seller, nor to the Knowledge of Sellers, any
other party thereto, is in default under any of such contracts, nor, to Sellers’
Knowledge, does any condition exist that, with notice or lapse of time or both,
would constitute such a default of any material obligation, covenant or
condition contained therein. No sales representative, agent or other Person
other than the relevant Seller (or any Affiliate of the relevant Seller) and
each such respective customer is a party to or has rights under any such
contract.
(d) To
Sellers’ Knowledge, no party to any agreement with either Seller intends to
cancel or otherwise modify, other than in the ordinary course of its
relationship with such Seller or the Business, or to decrease or limit
significantly, its purchases, services, supplies or materials from or to such
Seller or the Business.
16
(e) Schedule
2.1.5(e)
sets
forth a description of each of the rate plans presently covering the active
customers of the Business or presently in the process of being implemented,
together with, for each such rate plan, for each type of account on that plan
(including, if applicable, active, suspended, employee, demo phone, loaner
phone
and rental phone), the number of customers as of December 31, 2007 with that
type of account and, in the aggregate under all rate plans, the number of such
customers whose account balances were outstanding for more than 30 days as
of
that date. Sellers suspend service to customers when their balances are
outstanding for more than 45 days and disconnect their service when their
balances are outstanding for more than 75 days, for customers who have not
paid
a deposit on their account. Sellers suspend service to customers when their
balances are outstanding for more than 70 days and disconnect their service
when
their balances are outstanding for more than 100 days, for customers who have
paid a deposit on their account.
(f) Schedule
2.1.5(f)
sets
forth a list of all carriers to which either Seller has paid roaming charges
during the 12 months ended on October 31, 2007, in order based upon total amount
paid, showing the total amount paid to each such carrier during such period.
None of the roaming agreements between either Seller and any of such carriers
provides for transfer rates in excess of $0.05 per minute. Each such roaming
agreement contains provisions requiring each party thereto to validate or
authenticate the customer as a legitimate customer prior to rendering service
and providing that any call completed by the serving carrier under such roaming
agreement shall be the sole responsibility of such carrier if an authentication
request has determined that the roamer placing such call is not a valid customer
of the home carrier.
2.1.6 No
Conflicts; Consents.
(a) Except
for the items listed on Schedule
2.1.6(a)
(the
“Required
Consents”),
the
requisite consent from the FCC to permit the consummation of the transactions
contemplated hereby (the “FCC
Consent”),
compliance with the requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the “HSR
Act”),
any
required approvals
of or notices to the
CPUC,
any post-Closing notifications required by the FCC or any required approvals
of
or notices to Buyer, no authorization, approval or consent of, and no
registration or filing with or notice to, any governmental or regulatory
official, body or authority, any counter-party to any Contract or any other
Person is required in connection with the execution, delivery or performance
of
this Agreement by Sellers and SWC. For each Required Consent, Schedule
2.1.6(a)
specifies whether the Required Consent consists of (i) a governmental filing,
approval or registration, (ii) a contractual notice, or (iii) a contractual
consent.
(b) Upon
the
receipt of the FCC Consent and any approval of the CPUC that may be required,
the giving of any notices to the CPUC that may be required, compliance with
the
applicable requirements of the HSR Act and the receipt or giving of the Required
Consents, the execution, delivery and performance of this Agreement and the
other Transaction Documents by Sellers and SWC do not and will not violate,
conflict with or result in the breach of any term, condition or provision of,
or
require the consent of any other Person under, (a) any existing law, ordinance,
or governmental rule or regulation to which either Seller, SWC, any of the
Assets or the Business is subject, (b) any judgment, order, writ, injunction,
decree or award of any court, arbitrator or governmental or regulatory official,
body or authority which is applicable to either Seller, SWC, any of the Assets
or the Business, (c) the Bylaws or the certificate of incorporation of SWW,
(d)
the Operating Agreement of West Coast, (e) the bylaws or the certificate of
incorporation of SWC, or (f) any mortgage, indenture, agreement, contract,
commitment, lease, plan, Authorization, or other instrument, document or
understanding, oral or written, to which either Seller or SWC is a party or
subject, by which either Seller or SWC may have rights or by which any of the
Assets may be bound or affected, or give any party with rights thereunder the
right to terminate, modify, accelerate or otherwise change the existing rights
or obligations of either Seller or SWC thereunder.
17
2.1.7 Taxes.
Except
as set forth on Schedule
2.1.7,
(a)
each Seller has timely filed all reports, returns, statements (including
estimated reports, returns, or statements) and other similar filings required
to
be filed by it on or before the Closing Date (“Tax
Returns”)
and
all such Tax Returns were correct and complete in all material respects; (b)
there are no audits or investigations pending or, to Sellers’ Knowledge,
threatened against either Seller with respect to any Taxes (as defined below
in
this Section
2.1.7);
(c)
all Taxes due and owing by each Seller, or due and payable with respect to
any
Asset, which relate to Tax periods ending on or before the Closing Date, whether
or not shown on any Tax Return, will have been paid by such Seller in full
to
the appropriate Tax authority prior to the Closing Date; (d) for all Tax periods
beginning before and ending after the Closing Date, all Taxes owed by either
Seller that relate to the portion of such Tax period ending on and including
the
Closing Date, except Taxes that constitute Assumed Liabilities, will be paid
by
such Seller in full to the appropriate Tax authority on or prior to the due
dates thereof; (e) there is in effect no extension for the filing of any Tax
Return of either Seller and neither Seller has extended or waived the
application of any statute of limitations of any jurisdiction regarding the
assessment or collection of any Tax; (f) to Sellers’ Knowledge, no claim has
ever been made by any Tax authority in a jurisdiction in which a Seller does
not
file Tax returns that such Seller is or may be subject to taxation by that
jurisdiction; (g) there are no Liens for Taxes upon any Asset of either Seller
except for Liens for current Taxes not yet due; (h) to Sellers’ Knowledge, no
issues have been raised in any examination by any Tax authority with respect
to
either Seller which, by application of similar principles, reasonably could
be
expected to result in a proposed deficiency for any other period not so
examined; and (i) neither Seller is a party to any Tax allocation or sharing
agreement or otherwise under any obligation to indemnify any Person with respect
to any Taxes (other than this Agreement). For purposes of this Agreement, in
the
case of any Taxes that are imposed on a periodic basis and are payable for
a Tax
period that includes (but does not end on) the Closing Date, the portion of
such
Tax related to the portion of such Tax period ending on and including the
Closing Date shall (i) in the case of any Taxes other than gross receipts,
sales
or use Taxes and Taxes based upon or related to income, be deemed to be the
amount of such Tax for the entire Tax period (which period, with respect to
personal property, ad valorem and real property Taxes, shall be the calendar
year in which the assessment date for such Tax falls, and for purposes of this
allocation such Taxes shall not be increased as a result of the transfer of
the
Assets pursuant to this Agreement) multiplied by a fraction the numerator of
which is the number of days in the Tax period ending on and including the
Closing Date and the denominator of which is the number of days in the entire
Tax period, and (ii) in the case of any Tax based upon or related to income
and
any gross receipts, sales or use Tax, be deemed equal to the amount which would
be payable if the relevant Tax period ended on and included the Closing Date.
The foregoing allocation methods shall be utilized, inter
alia,
for
purposes of determining the amounts of accrued real and personal property taxes
payable as of the Closing Date in connection with the calculation of the
Purchase Price Adjustment.
For
purposes of this Agreement, “Taxes”
means
any taxes, duties, assessments, fees, levies, or similar governmental charges,
together with any interest, penalties, and additions to tax, imposed by any
taxing authority, wherever located (i.e. whether federal, state, local,
municipal, or foreign), including all net income, gross income, gross receipts,
net receipts, sales, use, transfer, franchise, privilege, profits, social
security, disability, withholding, payroll, unemployment, employment, excise,
severance, property, windfall profits, value added, ad
valorem,
occupation, or any other similar governmental charge or imposition.
18
2.1.8 Environmental
Matters.
(a) Sellers
hold all Environmental Permits (defined below) that are currently required
for
Sellers to conduct the Business as currently operated and no Environmental
Permits are required in connection with the sale of the Business.
(b) The
Assets and the Business are in compliance with all Environmental Laws (defined
below), and the Business is being operated in compliance with all applicable
Environmental Laws.
(c) Sellers
have made available to Buyer true and complete copies of any written audits,
investigations or assessments of compliance with Environmental Laws at any
real
property currently or formerly owned, leased or occupied by either Seller or
the
Business or upon which any part of the Business is or previously was conducted
(“Business
Property”),
in
each case, to the extent in either Seller’s, Sellers' agents or any Related
Party's possession.
(d) No
Hazardous Materials (defined below) have been or are being manufactured,
processed, distributed, used, treated, stored or disposed of on any Business
Property, and no Hazardous Materials have been or are being discharged, emitted
or released into the environment from the Business or from any Business
Property, by the Sellers during the time the Business or Business Property
has
been owned or operated by either Seller or a Related Party, nor, to Sellers’
Knowledge, at any other time. To Sellers’ Knowledge, except as set forth in
Schedule
2.1.8(d),
there
are no Hazardous Materials present on, in or beneath any Business Property
other
than in compliance with Environmental Law.
(e) There
is
no pending civil, criminal or administrative action, suit, notice of violation
or docketed proceeding including an Environmental Claim (defined below), with
respect to the Business or the Business Property, or to the Knowledge of the
Sellers, any hearing, notice or demand letter or investigation relating to
an
Environmental Claim pending or threatened in connection with the conduct of
the
Business relating in any way to any Environmental Permit or any Environmental
Law or any plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved with respect to a former Environmental
Claim against either of the Sellers.
(f) Except
as
set forth on Schedule
2.1.8(f),
no
underground or aboveground storage tanks (active or inactive) have been used
in
connection with the Business or, to the Knowledge of Seller, have been located
on or under any Business Property during the period the Business Property has
been owned or operated by either Seller or a Related Party, nor to the Knowledge
of Sellers, have any such tanks ever been located on or under any Business
Property.
(g) Except
as
set forth on Schedule
2.1.8(g),
there
is no asbestos or asbestos containing material contained in or forming part
of
any building, building component, structure, facility or office space used
by
the Business and, to the Knowledge of Seller, none is located on any Business
Property that requires inspection, maintenance, removal or
abatement.
(h) There
are
no polychlorinated biphenyls or items containing polychlorinated biphenyls
contained in or forming part of any building, building component, structure,
facility or office space used by the Business and, to the Knowledge of Seller,
none is located on any Business Property that requires inspection, maintenance,
removal or abatement.
19
(i) Except
as
set forth on Schedule
2.1.8(i),
there
is no lead based paint in or on any building, building component, structure,
facility or office space used by the Business and, to the Knowledge of Seller,
none is located on any Business Property that requires inspection, maintenance,
removal or abatement.
(j) No
incinerator, surface impoundment, lagoon or landfill is used by the Business
and, to the Knowledge of Seller, none is present or ever has been present at,
on
or under any structure owned by Sellers that will be transferred to Buyer
pursuant to this Agreement for which Sellers are responsible for inspection,
maintenance, removal or abatement.
(k) Except
as
set forth on Schedule
2.1.8(k),
no
Business Property and, to Sellers’ Knowledge (without investigation of public
records available to Buyer), no property located within 500 feet of any Business
Property, is listed or proposed for listing on the National Priorities List
promulgated pursuant to CERCLA, CERCLIS (as defined in CERCLA) or on any similar
federal, state, local or interstate list of sites identifying the presence
of
Hazardous Materials or indicating the potential for investigation or cleanup
of
Hazardous Materials. Neither of the Sellers nor any Related Party has received
notice of an Environmental Claim against Seller or any Related Party, alleging
or asserting that either Seller has, directly or indirectly, transported or
arranged for the transportation of any Hazardous Materials to a site that is
listed or proposed for listing on the National Priorities List promulgated
pursuant to CERCLA, CERCLIS or any similar federal, state, local or interstate
list of sites identifying the presence of Hazardous Materials or indicating
the
potential for investigation or cleanup of Hazardous Materials.
(l) Except
as
set forth on Schedule
2.1.8(1),
no oral
or written notification of a release or threat of release of a Hazardous
Material relating to any Business Property has been received by either Seller
or
any Related Party or has been filed by or on behalf of either Seller or any
Related Party except as could not reasonably be expected to result in an
Environmental Claim against either Seller.
(m) As
used
herein:
“Environmental
Claims”
means
any and all administrative or judicial actions, suits, orders, claims, Liens,
notices, demands, violations, investigations or proceedings related to any
applicable Environmental Law or any Environmental Permit brought, issued or
asserted by: (i) a federal, state or local governmental authority for
compliance, damages, penalties, removal, response, remedial or other action
pursuant to any applicable Environmental Law or Environmental Permit; or (ii)
a
third party seeking damages, contribution, remediation or other action for
personal injury or property damage resulting from the release of a Hazardous
Material at, to or from any Business Property, including but not limited to
the
employees of either Seller or any of their Affiliates seeking damages for
exposure to Hazardous Materials.
“Environmental
Laws”
means
all applicable federal, state or local laws, ordinances, codes, rules,
regulations, guidance, judgments, orders, decrees, injunctions, permits,
governmental restrictions or agreements with a governmental authority or third
party related to protection of the environment, public health and safety or
employee health and safety and/or the handling, use, generation, treatment,
storage, transportation, release, discharge, emission or disposal of Hazardous
Materials in effect on or before the Closing Date.
“Environmental
Permits”
means
all permits, licenses, approvals, authorizations, or consents required by any
governmental authority issued pursuant to any applicable Environmental Law
and
includes any and all orders, consent orders or binding agreements issued to
or
entered into by either Seller and a governmental authority under any applicable
Environmental Law.
20
“Hazardous
Materials”
means
any hazardous or toxic substance, material or waste that is regulated as of
the
Closing Date by any state or local governmental authority within the State
of
California or the United States or the release of which is subject to
investigation, reporting, cleanup or other regulatory requirements, including
any material or substance that is: (i) defined as a “hazardous substance” under
applicable state law; (ii) an oil or petroleum related product; (iii) asbestos;
(iv) designated as a “hazardous substance” pursuant to Section 311 of the
Federal Water Pollution Control Act, as amended, 33 U.S.C. §1251 et seq. (33
U.S.C. §1321); (v) defined as a “hazardous waste” pursuant to Section 1004 of
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §6901 et seq.
(42 U.S.C. §6903); (vi) defined as a “hazardous substance” pursuant to Section
101 of the Comprehensive Environmental Response, Compensation and Liability
Act
of 1980, as amended, 42 U.S.C. §9601, et seq. (“CERCLA”);
(vii)
defined as a “regulated substance” pursuant to Section 9001 of the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. §6901, et seq. (42 U.S.C.
§6991); or (viii) otherwise regulated under the Toxic Substances Xxxxxxx Xxx,
00
X.X.X. §0000, et seq., the Clean Air Act, as amended, 42 U.S.C. §7401, et seq.,
the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §5101, et
seq., or the Federal Insecticide, Fungicide and Rodenticide Act, as amended,
7
U.S.C. §136, et seq.
2.1.9 Title;
Real and Personal Property.
(a) Sellers
collectively have good, valid and marketable title to, or a valid leasehold
or
license interest in, all of the Assets (as they exist on the date hereof),
free
and clear of all Liens, except for (i) Liens for current real or personal
property taxes not yet due and payable, (ii) Liens disclosed in Schedule
2.1.9(a)
attached
hereto, (iii) Liens, such as utility and access easements and the like, that
are
immaterial in character, amount and extent, and which do not materially detract
from the value or materially interfere (or pose a material threat of such
interference) with the present or proposed use of the assets or properties
they
affect; (iv) Liens imposed or promulgated by laws with respect to real property
and improvements; or (v) mechanics’, carriers’, workmen’s, repairmen’s and
similar Liens incurred in the ordinary course of business evidencing amounts
that are not yet due (the Liens described in subsections (i) through (v) hereof,
the “Existing
Liens,”
and
the Liens described in subsections (i), (iii), (iv), and (v) hereof, the
“Permitted
Liens”).
As of
the Closing Date, Sellers collectively will have good, valid and marketable
title to, or a valid leasehold or license interest in, all of the Assets (as
they exist on the Closing Date), free and clear of all Liens, except for
Permitted Liens.
(b) Neither
of the Sellers owns any real property. For each Leased Property, Schedule
1.1(f)
sets
forth the address or other description suitable to identify the Leased Property,
the use of the Leased Property, the type of structure on the Leased Property,
the type and dimensions of the shelter on the Leased Property (if applicable),
the identity of the lessor or licensor, the identity of the owner of the Leased
Property and the identity of the owner of the improvements. For each Leasehold
Interest, Sellers have previously delivered to Buyer (i) a true and complete
copy of the related lease or sublease (or license or sublicense); (ii) true
and
complete copies of all underlying or related deeds, prime leases, master leases,
ground leases, third party agreements, tower sharing agreements and co-location
agreements to the extent in the possession or under the control of a Seller
or a
Related Party; and (iii) true and complete copies of all other agreements,
instruments or documents pursuant to which the lessor acquired its interest
in
such Leased Property or otherwise affecting Sellers’ interests in or use of such
Leased Property to the extent in the possession or under the control of a Seller
or a Related Party. Except as set forth on Schedule
2.1.9(b),
neither
Seller has subleased, sublicensed, assigned or pledged any interest in any
of
the Leasehold Interests to any third party.
21
(c) The
properties identified as cell sites on Schedule
2.1.9(c)
(the
“Cell
Sites”)
constitute all of the cell sites currently comprising the System’s cell site
network. Each of the Cell Sites is operational and is appropriately integrated
into and functioning properly in accordance with industry standards as part
of
the System’s cell site network. Each Cell Site is equipped with all equipment
and facilities reasonably necessary for it to function in such manner in the
ordinary course of business. The Assets include a supply of spare parts for
Seller’s equipment and facilities located at the Cell Sites that is sufficient
for the operation of the Business in the ordinary course of business based
on
experience and any known maintenance issues.
(d) Except
as
set forth on Schedule
2.1.9(d),
there
are no cell sites currently under development for inclusion in the System’s cell
site network.
(e) Sellers’
activities on the Leased Property are in compliance in all material respects
with applicable building codes and zoning regulations, and, to Sellers’
Knowledge, there are no proposed changes in such applicable codes, regulations
or laws that would adversely affect such activities. Neither Seller has received
any notice nor, to Sellers’ Knowledge, has the owner of any of the Leased
Property received any notice, of any non-compliance with applicable building
codes, zoning regulations or laws other than where such non-compliance has
been
cured or otherwise legally resolved.
(f) All
buildings, structures and fixtures owned, leased or licensed by either Seller
that constitute part of the Assets or that relate to sites covered by the Master
License Agreement are in good operating condition and repair subject to
reasonable wear and tear appropriate for the age of such property and are
sufficient for the conduct of the Business as conducted during the twelve-month
period prior to the date hereof and as currently being conducted. All such
buildings, structures and fixtures, and all leasehold improvements to the Leased
Property that constitute part of the Assets or that relate to sites covered
by
the Master License Agreement, are located on or within property that a Seller
owns or in which a Seller has a valid leasehold or license interest and do
not
encroach upon any real property of any third party.
(g) One
of
the Sellers has valid and enforceable rights of physical and legal ingress
and
egress to and from each Leased Property that constitutes part of the Assets
or
relates to a site covered by the Master License Agreement and to a nearby public
right of way, 24 hours per day, seven days per week. In addition, each such
Leased Property has sufficient legal access to public roads and to all
utilities, including electricity and any other necessary utilities used in
its
operation, so as not to inhibit in any material respect the operation of the
Business as currently conducted. In the last two years, Sellers have not
experienced any material interruption in the delivery of adequate quantities
of
any such utilities or other public services required by the Business. All rights
of way or easements for access and utilities are located on, through or over
property that a Seller owns or in which a Seller has a valid leasehold interest
or other rights, or are located on property owned by third parties subject
to a
valid and enforceable written easement or other rights in favor of one of the
Sellers.
(h) In
the
past two years there has not been any significant interruption in the operations
of the Business due to any inadequate maintenance of any item of personal
property by Sellers’ employees, contractors or agents.
22
2.1.10 Condition
and Sufficiency of Assets.
All of
the Assets, including all assets and properties leased pursuant to any lease
included among the Assets, and all telecommunications tower structures located
on the Cell Sites, are in good working condition and repair, subject to normal
wear and tear appropriate for the age of such property, are fit for their
intended purposes, are usable in the regular and ordinary course of the Business
consistent with past practice, and conform in all material respects to all
applicable laws, ordinances, codes, rules, regulations and Authorizations
relating to their construction, use and operation. Sellers have inspected and
maintained all of the Equipment and all of the telecommunications tower
structures owned by either Seller in accordance with industry standards and
all
warranties provided by vendors or manufacturers thereof in all material
respects. Sellers have made available to Buyer copies of their inspection and
maintenance records relating to the Equipment and accurate descriptions of
all
maintenance procedures utilized by Sellers to maintain the Equipment. Except
for
assets owned by third parties that are leased or licensed to either Seller
pursuant to the Contracts or contracts not required to be listed on Schedule
1.1(k)
and
rights of third parties under the Contracts or contracts not required to be
listed on Schedule
1.1(k),
and as
otherwise set forth on Schedule
2.1.10,
no
Person other than Sellers owns or has any interest in (i) any assets, properties
or rights related to or used in connection with the Business, or (ii) any
equipment or other tangible assets situated on the Leased Property. The Assets
include all assets, properties, contract rights and other rights necessary
for
Buyer to conduct the Business in the manner currently conducted by Sellers,
except for the Excluded Assets and as set forth on Schedule
2.1.10.
Further, the Assets include all of the properties and assets reflected in each
of the Financial Statements (defined in Section
2.1.11(b))
and not
sold, retired or otherwise disposed of since the date thereof in the ordinary
course of the Business, consistent with past practice, other than the Excluded
Assets.
2.1.11 Books
of Account; Financial Statements; CapEx Budget.
(a) The
books
of account and related records of Sellers fairly reflect in reasonable detail
their assets, liabilities and transactions in accordance with GAAP applied
on a
consistent basis. Neither Seller has engaged in any transaction or used funds
of
either Seller except for transactions, bank accounts and funds that have been
and are reflected in the normally maintained books and records of
Sellers.
(b) Set
forth
in Schedule
2.1.11(b)
are true
and complete copies of the annual financial statements of Sellers as of December
31, 2005 and December 31, 2006 and for the two years in the period ended on
December 31, 2006, as reviewed by Sellers’ independent certified public
accountants (collectively, the “Annual
Financial Statements”).
The
Annual Financial Statements (i) are correct and complete and in accordance
with
the books and records of Sellers, (ii) fairly present the financial condition,
assets and liabilities of Sellers as at their respective dates and the results
of the operations and changes in cash position for the periods covered thereby,
and (iii) have been prepared in accordance with GAAP consistently applied.
Also
set forth in Schedule
2.1.11(b)
are true
and complete copies of the unaudited financial statements of Sellers for the
10
months ended October
31, 2007
(collectively, the “Monthly
Financial Statements,”
and
together with the Annual Financial Statements, the “Financial
Statements”).
The
Monthly Financial Statements (i) fairly present the financial condition of
Sellers as of such dates and the results of their operations for the periods
covered thereby and (ii) were prepared in accordance with GAAP (except for
the
lack of footnote disclosure and customary year-end audit adjustments, which
adjustments and footnotes, if prepared as required for audited financial
statements, would not reveal any fact or condition materially adverse to the
financial condition or results of Sellers presented in the Monthly Financial
Statements). All references in this Agreement to the “Current
Balance Sheet”
shall
mean the balance sheet of Sellers as of October 31, 2007 included in the
Financial Statements and all references to the “Current
Balance Sheet Date”
shall
mean October 31, 2007.
23
(c) All
long-term debt of either Seller, including information regarding lender,
principal, interest and any unpaid penalties, is set forth on Schedule
2.1.11(c).
(d) Set
forth
in Schedule
2.1.11(d)
is a
true and complete copy of the capital expenditure budget of Sellers for the
year
ending December 31, 2007 as in effect on the date hereof (the “CapEx
Budget”).
(e) The
unpaid Taxes of Sellers (i) did not, as of the most recent month end, exceed
the
reserve for Tax liability (other than any reserve for deferred Taxes established
to reflect timing difference between book and tax (income)) set forth on the
face of the most recent balance sheet of Sellers (and in any notes thereto),
and
(ii) do not exceed that reserve as adjusted for the passage of time through
the
Closing Date in accordance with the past custom and practice of Sellers in
filing Tax Returns.
2.1.12 Absence
of Undisclosed Liabilities Affecting the Assets or the Business.
Sellers
have no liabilities or obligations, either direct or indirect, matured or
unmatured or absolute, contingent or otherwise, that could affect Buyer or
the
Assets or the Business that will be transferred to Buyer upon the consummation
of this transaction, except:
(a) those
liabilities or obligations set forth on Schedule
2.1.12;
(b) those
liabilities or obligations reflected on the Current Balance Sheet and not
heretofore paid or discharged;
(c) liabilities
not required under GAAP to be shown on the face of a balance sheet or in the
notes thereto;
(d) transaction
costs and expenses related to this Agreement; and
(e) those
liabilities or obligations incurred, consistent with past business practice,
in
or as a result of the normal and ordinary course of the Business since the
Current Balance Sheet Date, none of which is for breach of contract, breach
of
warranty, tort or infringement.
For
purposes of this Section, the term “liabilities”
shall
include any direct or indirect indebtedness, guaranty, endorsement, claim,
loss,
damage, deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, xxxxxx or inchoate,
liquidated or unliquidated, secured or unsecured that could affect Buyer or
the
Assets or the Business that will be transferred to Buyer upon the consummation
of this transaction.
2.1.13 Inventory.
All
inventory of either Seller relating to the Business, whether held for rental,
resale or for use as spare parts, consists substantially of a quality, quantity
and condition, usable, leasable or saleable in the ordinary course of the
Business within the time periods consistent with the past experience of Sellers.
None of such inventory is obsolete or non saleable in the ordinary course of
the
Business consistent with the past experience of Sellers. Schedule
2.1.13
is a
complete and correct list of such inventory as of October 31, 2007. All such
inventory is valued at the lower of cost or market.
24
2.1.14 Accounts
Receivable.
All
accounts receivable of Sellers, as set forth on the Current Balance Sheet and
all subsequent balance sheets and schedules, including the Preliminary Working
Capital Schedule and Sellers’ Working Capital Schedule, are or will be valid and
genuine, have arisen or will arise solely out of bona fide sales and deliveries
of goods, performance of services and other business transactions in the
ordinary course of the Business consistent with past practices, and are not
more
than 90 days past due, and to the Sellers’ Knowledge are not or will not be
subject to valid defenses, set-offs or counterclaims. The allowance for
collection losses on such balance sheets have been or will be determined in
accordance with GAAP and based upon Sellers’ historical experience in collecting
its accounts receivable. All accounts any part of which is over 90 days past
due
have been written off by Sellers and are no longer classified as accounts
receivable, and service has been terminated to all customers whose accounts
receivable have been written off. To Sellers’ knowledge, there are no facts or
circumstances that could result in the allowance for collection losses on the
most recent balance sheet included in the Financial Statements being inadequate
to cover expected collection losses. Schedule
2.1.14
sets
forth as of the date of the most recent balance sheet included in the Financial
Statements and as of the close of business on the day before execution of this
Agreement (a) the total amounts of accounts receivable of Sellers and (b) the
aging of such receivables based on the following schedule: current, 1-30 days
past due, 31-60 days past due and 61-90 days past due. On the morning of the
Closing, Sellers shall deliver a schedule setting forth as of the close of
business on the day before Closing (x) the total amounts of accounts receivable
of Sellers and (y) the aging of such receivables based on the following
schedule: current, 1-30 days past due, 31-60 days past due and 61-90 days past
due.
2.1.15 Accounts
Payable.
All
accounts payable of Sellers, as set forth on the Current Balance Sheet and
all
subsequent balance sheets and schedules, including the Preliminary Working
Capital Schedule and Sellers’ Working Capital Schedule, are or will be valid and
genuine and have arisen or will arise solely out of bona fide sales and
deliveries of goods, performance of services and other business transactions
in
the ordinary course of the Business consistent with past practice.
2.1.16 Material
Changes.
Except
as disclosed on Schedule
2.1.16,
since
the Current Balance Sheet Date, neither Seller has:
(a) incurred
any liabilities (absolute or contingent) other than liabilities incurred in
the
ordinary course of the Business consistent with past practice, or discharged
or
satisfied any Lien, or paid any such liabilities, other than in the ordinary
course of the Business consistent with past practice, or failed to pay or
discharge when due any such liabilities, in each case for which the failure
to
pay or discharge has caused or would reasonably be expected to cause any
material damage or risk of material loss to it, the Business or any of its
material assets or properties;
(b) sold,
encumbered, assigned or transferred any of its assets or properties which would
have been included in the Assets if the Closing had been held as of the Current
Balance Sheet Date or on any date since such date, except in the ordinary course
of the Business consistent with past practice;
(c) created,
incurred, assumed or guaranteed any indebtedness for money borrowed, or
mortgaged or pledged any of the Assets, or subjected any of the Assets to any
Lien, conditional sales contract or other encumbrance of any nature whatsoever,
except for Permitted Liens;
25
(d) made
or
suffered any amendment or termination of any material agreement, contract,
commitment, lease under which it is lessee or by which it is bound, or canceled,
modified or waived any substantial debts or claims held by it or waived any
rights of substantial value, whether or not in the ordinary course of the
Business, except for any amendment, termination, cancellation, modification
or
waiver which, individually or in the aggregate, would not reasonably be expected
to materially adversely affect the Assets, the Business or the transactions
or
events contemplated by this Agreement;
(e) suffered
any damage, destruction or loss, whether or not covered by insurance, (i)
materially and adversely affecting the Business, operations, assets, properties
or prospects of Sellers or (ii) of any item or items carried on Sellers’ books
of account individually or in the aggregate at more than $10,000, or suffered
any repeated, recurring or prolonged shortage, cessation or interruption of
supplies or utility or other services required to conduct the
Business;
(f) suffered
any events which, individually or in the aggregate, will, or could be reasonably
expected to, result in a Seller Material Adverse Effect or materially and
adversely affect the transactions contemplated by this Agreement;
(g) received
notice or had actual or threatened labor trouble, strike or other occurrence,
event or condition of any similar character which has had or could reasonably
be
expected to materially and adversely affect the Assets, the Business or the
transactions contemplated by this Agreement, nor has any Related Party received
any such notice;
(h) except
as
permitted by Section
3.4.5(c)
with
respect to Incentive Bonuses and Severance, increased the salaries or other
compensation of, or made any advance (excluding advances for ordinary and
necessary business expenses) or loaned any money or assets to, any employee,
or
made any increase in, or any addition to, other benefits to which any employee
may be entitled, other than ordinary course salary adjustments commensurate
with
position and consistent with past practice within the SWC
organization;
(i) changed
any of the accounting principles followed by it or the methods of applying
such
principles (including any change in depreciation or amortization policies or
rates);
(j) entered
into any transaction not described above other than in the ordinary course
of
the Business consistent with past practice;
(k) issued
any equity interest in either Seller;
(l) made
any
capital expenditures or capital additions in excess of an aggregate of $25,000
or entered into any leases of capital equipment or property under which the
annual lease charges exceed $10,000 in the aggregate; or
(m) agreed,
orally or in writing, or granted any other Person or entity, an option to do
any
of the things specified in subparagraphs (a) through (l) above.
2.1.17 Labor
Relations.
The
relations of each Seller with its employees are good. In addition, (a) no such
employee is represented by any union or other labor organization; (b) there
is
no unfair labor practice complaint against either Seller or SWC pending or,
to
Sellers’ Knowledge, threatened before the National Labor Relations Board; (c)
there is no labor strike, dispute, slow down or stoppage actually pending or,
to
Sellers’ Knowledge, threatened against or involving the Business or any of the
employees of either Seller or of SWC; (d) no labor grievance that might have
an
adverse effect on Sellers or the conduct of the Business is pending; (e) no
labor agreement restricts either Seller from relocating, closing or terminating
any of its operations or facilities or would adversely affect its ability to
do
so; (f) neither of the Sellers nor SWC has experienced any work stoppage or
other labor difficulty or committed any unfair labor practice related to the
Business; and (g) to Sellers’ Knowledge, no organizational effort is being made
or is threatened by or on behalf of any labor union with respect to any of
the
employees of either Seller or of SWC.
26
2.1.18 Compensation
Arrangements; Officers and Directors.
Schedule
2.1.18
sets
forth the following information: the name and current annual salary, including
bonus opportunity, if applicable, of each of the employees of either Seller
together with a statement of the full amount of all cash and equity compensation
paid by either Seller to each such employee during the 12 month period ended
December 31, 2007. As of the Closing Date, neither Seller will have increased
the rate of cash or equity compensation of any of its employees since the date
of this Agreement, except as contemplated by Section
2.1.16(h)
and
Section
3.4.5(c).
2.1.19 Employee
Benefit Plans and Arrangements.
(a) Schedule
2.1.19(a)
contains
a true and complete list of each bonus, deferred compensation, incentive
compensation, stock purchase, stock option, employment, consulting, severance
or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement plan,
program, agreement or arrangement, and including each “employee benefit plan”
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations promulgated thereunder
(“ERISA”)),
whether formal or informal, written or oral (“Employee
Benefit Plan”),
with
respect to which either Seller or any Related Party has any obligation to
contribute or any liability with respect thereto (contingent or otherwise),
in
each case, for the benefit of any present or former employee of either Seller
or
any present or former beneficiary, dependent or assignee of any such employee
or
former employee (a “Seller
Employee Benefit Plan”).
(b) Each
Seller Employee Benefit Plan has been administered in compliance in all material
respects with its terms including, but not limited to, any provisions relating
to contributions thereunder, and is in compliance in all material respects
with
the applicable provisions of ERISA, the Code and all other federal, state and
other applicable laws, rules and regulations, as they relate to such Seller
Employee Benefit Plan (including deductibility, funding, filing, termination,
reporting and disclosure and continuation coverage obligations pursuant to
the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”)).
(c) Neither
of the Sellers, SWC nor any other ERISA Affiliate maintains or has ever
maintained or been obligated to contribute to a “multi-employer plan” (as such
term is defined by Section 4001(a)(3) of ERISA). With respect to each employee
pension plan maintained by Sellers, SWC or any ERISA Affiliate that is subject
to the funding requirements of Section 412 of the Code (each a “Pension
Plan”),
all
minimum contributions that are required under Section 412 of the Code have,
in
all material respects, been made, and there is no lien and, to the Sellers’
Knowledge no reasonable basis for the imposition of a lien pursuant to Section
4068 of ERISA. Schedule
2.1.19
includes
the most recent actuarial report of each Pension Plan. For purposes of this
paragraph, the term “ERISA
Affiliate”
includes any person or entity that has, with the Seller, ever been at any time
(including by virtue of applicable attribution rules): (i) members of a
controlled group of corporations within the meaning of Section 414(b) of the
Code; (ii) members of a group of trades or businesses under common control
within the meaning of Section 414(c) of the Code; (iii) members of an affiliated
service group within the meaning of Section 414(m) of the Code; (iv) members
of
a group of organizations required to be aggregated under Section 414(o) of
the
Code; or (v) considered to be members of a group treated as a “single employer”
within the meaning of Section 4001 of ERISA.
27
(d) All
obligations of either Seller or of any Related Party, whether arising by
operation of law, by contract or by course of conduct, for payments to trusts
or
other funds or to any governmental agency or to any individual, employee or
agent (or his heirs, legatees or legal representatives) with respect to
unemployment compensation or Social Security benefits, or for vacation or
holiday pay, bonuses and other forms of compensation, with respect to employees
of either Seller have in all material respects been paid when due.
(e) No
Seller
Employee Benefit Plan contains any provision or is subject to any law that
would
prohibit the transactions contemplated by this Agreement.
(f) Except
as
set forth on Schedule
3.4.5(c),
neither
Seller nor any Related Party has paid or committed to pay (whether orally or
in
writing) any bonus compensation in contemplation of or otherwise in connection
with the transactions contemplated by this Agreement.
(g) Neither
Seller nor any Related Party has made any representation, warranty or promise
to, or agreement with, any Person regarding employment after the Closing by
Buyer.
(h) Except
as
set forth on Schedule
2.1.19(h)
or as
required by applicable law, under no circumstances will Buyer or any Affiliate
of Buyer or any of their respective partners, shareholders, members, board
members or employees have any liability, whether related to the transactions
contemplated by this Agreement or otherwise, for payments to any person who
is
or was providing services to the Sellers, SWC or any Related Party (including
severance, change in control, or transition payments) or for any benefits or
other payments under any Seller Employee Benefit Plan, other than liabilities
that arise from (i) offers of employment or other engagement for services made
to such persons by Buyer or any Affiliate of Buyer, (ii) communications or
similar actions directed to such persons by Buyer or any Affiliate of Buyer,
or
(iii) actual employment or other engagement for services of such persons by
Buyer or any Affiliate of Buyer.
2.1.20 Transactions
with Related Parties.
Except
as disclosed on Schedule
2.1.20 or
pursuant to an Employee Benefit Plan, no Related Party: (i) has borrowed money
from, or loaned money to either Seller that has not been fully repaid; (ii)
has
any contractual or other claims, express or implied, of any kind whatsoever
against either Seller; (iii) has any right, title or interest in any property
or
assets used in the conduct of the Business other than the Excluded Assets and
the property and assets listed on Schedule
1.3;
(iv) is
a party to any oral or written agreement with either Seller or is engaged in
any
other transaction with either Seller; (v) is a party to any oral or written
agreement or instrument related to the Business, including any agreement or
instrument of a type described in Section
2.1.5;
or
(vi) is a party to any claim, action, proceeding or investigation or
subject to any judgment, order, writ, injunction, decree or award related in
whole or in part to the Business. For purposes of this Agreement, a
“Related
Party”
means
(1) SWC, (2) any Affiliate of either Seller or of SWC, or (3) any partner,
member, manager, director, officer, employee, agent, trustee, beneficiary or
spouse of either Seller or SWC or any of their respective Affiliates.
2.1.21 Insolvency.
Neither
Seller nor SWC is the subject of any existing, pending or threatened insolvency
or bankruptcy proceedings. The consummation of the transactions contemplated
by
this Agreement will not result in either of the Sellers or SWC being the subject
of such proceedings.
28
2.1.22 Insurance.
The
Assets and the Business are insured, and Sellers maintain without limitation
adequate, as such Seller has reasonably determined to be prudent in accordance
with industry practice, and all statutorily required general liability, all
risk, worker’s compensation, employer’s liability and occupational disease and
bodily injury insurance, under various policies of general liability and other
forms of insurance, all of which are described on Schedule
2.1.22,
which
discloses for each policy the risks insured against, coverage limits, deductible
amounts, all outstanding claims thereunder, and whether the terms of such policy
provide for retrospective premium adjustments. All such policies are in full
force and effect in accordance with their terms, no notice of cancellation
has
been received, and there is no existing default or event that, with the giving
of notice or lapse of time or both, would constitute a default thereunder.
The
coverages provided by such policies are adequate as each Seller has reasonably
determined to be prudent in accordance with industry practice. Sellers have
previously delivered to Buyer true and complete insurance claim histories for
Sellers for the past three years. Sellers have not been refused any insurance,
nor has their coverage been limited, by any insurance carrier to which either
of
them has applied for insurance or with which either of them has carried
insurance during the past five years on the basis of any condition, physical
or
otherwise, of any of the Assets, nor has either of them failed to file any
notice or present any claim under any such policy in due and timely fashion.
Schedule
2.1.22
also
contains a true and complete description of all outstanding bonds and other
surety arrangements issued or entered into in connection with the
Business.
2.1.23 Intellectual
Property Matters.
(a) Except
as
set forth on Schedule
2.1.23,
neither
Seller has any patents, trademarks, registered copyrights or applications for
any of the foregoing. Except as set forth on Schedule
2.1.23,
Sellers
possess working copies of all software and firmware necessary for or otherwise
used in the current conduct of the Business, together with copies of all related
manuals and other documentation. Set forth on Schedule
2.1.23
is a
list of all patents, trademarks, service marks, trade names or copyrights,
whether registered or unregistered, used in the conduct of the Business, and
all
software, firmware, trade secrets, proprietary technologies, know how,
inventions, discoveries, improvements, processes and formulas (secret or
otherwise) used in the conduct of the Business other than any of the foregoing
listed in Schedule
1.3
(all of
the foregoing collectively, the “Intellectual
Properties”).
Each
Seller owns or possesses all legal rights to, or is licensed or otherwise has
the right to use, all Intellectual Properties used by such Seller. Except as
set
forth on Schedule
2.1.23,
the
Intellectual Properties owned or licensed by Sellers:
(i) are
held
by a Seller pursuant to either good and valid title or fully-paid (other than
upgrade costs and purchaser maintenance costs) licenses under which such Seller
has the right to assign, if applicable, the license to Buyer in connection
with
the transactions contemplated hereby, and no present or former employee,
consultant or other Person (including any former employer of a present or former
employee or consultant of Seller) has any proprietary, commercial or other
interest, direct or indirect, therein; and
(ii) have
been
adequately protected by maintaining the secrecy of trade secret processes,
by
requiring nondisclosure agreements when appropriate and by affixing copyright
notices when appropriate, and neither Seller has received notice of any claim
of
infringement or any other claims relating to any such Intellectual Property,
nor
does either Seller have Knowledge of any facts upon which any such claim could
reasonably be based.
29
(b) In
conducting the Business as presently conducted, to Sellers’ Knowledge, neither
Seller is infringing upon or unlawfully or wrongfully using any patent,
trademark, trade name, service xxxx, copyright, trade secret or any other form
of intellectual property owned or claimed by another. Neither Seller is in
default under, nor has either Seller received any notice of any claim of
infringement or any other claim or proceeding relating to, any such patent,
trademark, trade name, service xxxx, copyright, trade secret or any other form
of intellectual property or any agreement relating thereto. To Sellers’
Knowledge, no third party is infringing any Intellectual Property of either
Seller.
2.1.24 No
Interest in Other Entities.
No
shares of capital stock of any corporation and no ownership or other investment
interest, either of record, beneficial or equitable, in any association,
partnership, joint venture or other Person is included in the
Assets.
2.1.25 Availability
of Documents.
Sellers
have made available to Buyer copies of all documents and other papers in the
possession or under the control of a Seller or a Related Party, including all
agreements, contracts, commitments, insurance policies, leases, plans,
instruments, written undertakings, authorizations, permits, licenses, patents,
trademarks, trade names, service marks, copyrights and applications therefor
held by them, listed in the Schedules hereto, referred to herein or requested
in
Buyer’s written due diligence requests. Such copies are true, complete, accurate
and authentic and include all amendments, supplements and modifications thereto
or waivers currently in effect thereunder. To the extent that any material
contract or understanding is oral, Sellers have made available an accurate
written summary thereof.
2.1.26 Restrictions.
Neither
Seller is a party to any indenture, agreement, contract, commitment, lease,
plan, license, permit, authorization or other instrument, document or
understanding, oral or written, or subject to any charter or other similar
restriction or any judgment, order, writ, injunction, decree or award that
is
reasonably likely to materially and adversely affect or restrict any of the
Assets or the operation of the Business or any other activities of Buyer after
consummation of the transactions contemplated hereby, assuming that the Business
is to be conducted on the same basis as it is presently conducted.
2.1.27 Reserved.
2.1.28 Brokers
or Finders.
Except
for UBS Securities LLC and Xxxxxx Xxxxxxxx & Company, Inc. (together, the
“Brokers”),
all
negotiations relative to this Agreement and the transactions contemplated hereby
have been carried on by Sellers directly without the intervention of any Person
who may be entitled to any brokerage or finder’s fee or other commission in
respect of this Agreement or the consummation of the transactions contemplated
hereby. Sellers and their agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders’ fees or agents’ commissions
or other similar payments in connection with this Agreement or the transactions
contemplated hereby, except to the Brokers. Sellers shall be solely responsible
for any compensation due to the Brokers in connection with this Agreement and
the transactions contemplated hereby.
2.1.29 No
Foreign Storage of Information.
To
Sellers’ Knowledge, no information pertaining to Sellers’ systems,
infrastructure, employees or customers or pertaining to phone calls made by
Sellers’ customers is stored, transmitted or accessed at, in, through or from
any site located outside the United States or made available to any Person
who
is located outside the United States.
30
2.1.30 No
Other Representations or Warranties.
Except
for the representations and warranties set forth in this Agreement, Sellers
make
no other express or implied representation or warranty on behalf of themselves
or any of their properties or businesses.
2.2 Representations
and Warranties of Buyer.
Buyer
represents and warrants to Sellers as follows:
2.2.1 Existence
and Authority.
Buyer
is a general partnership duly formed and validly existing under the laws of
the
State of Delaware and has the requisite power, authority and legal right to
execute, deliver and perform this Agreement. The execution, delivery and
performance by Buyer of this Agreement and all other Transaction Documents
required to be executed and delivered by Buyer in accordance with the provisions
of this Agreement (collectively, the “Buyer’s
Documents”)
have
been duly authorized by all necessary action. This Agreement has been, and
the
other Buyer’s Documents will be, duly executed and delivered by Buyer, and this
Agreement constitutes, and the other Buyer’s Documents when executed and
delivered will constitute, the legal, valid and binding obligation of Buyer
enforceable against Buyer in accordance with their respective terms, except
as
such enforceability may be limited by bankruptcy laws and other similar laws
affecting creditors’ rights generally, and except that the remedy of specific
performance and injunctive relief and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
2.2.2 No
Conflicts; Consents.
(a) Except
for the FCC Consent, any required approvals of or notices to the CPUC, any
post-Closing notifications required by the FCC and compliance with the
applicable requirements of the HSR Act, no authorization, approval or consent
of, and no registration or filing with or notice to, any governmental or
regulatory official, body or authority is required in connection with the
execution, delivery and performance of this Agreement by Buyer.
(b) Upon
the
receipt of the FCC Consent and any approvals of the CPUC that may be required,
the giving of any notices to the CPUC that may be required and compliance with
the applicable requirements of the HSR Act, the execution, delivery and
performance of this Agreement and the other Buyer’s Documents by Buyer will not
violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other party to, (i) any existing
law, ordinance, or governmental rule or regulation to which Buyer is subject,
(ii) any judgment, order, writ, injunction, decree or award of any court,
arbitrator or governmental or regulatory official, body or authority which
is
applicable to Buyer, (iii) the partnership agreement of Buyer, or (iv) any
mortgage, indenture, agreement, contract, commitment, lease, plan, license,
permit, authorization or other instrument, document or understanding, oral
or
written, to which Buyer is a party or by which Buyer is otherwise bound.
2.2.3 Litigation.
There
is (a) no suit, action or claim, (b) no investigation or inquiry by any
administrative agency or governmental body, and (c) no legal, administrative
or
arbitration proceeding pending or, to Buyer’s knowledge, threatened against
Buyer which seeks to terminate or modify or which might affect this Agreement
or
the consummation of the transactions contemplated herein.
31
2.2.4 Brokers
or Finders.
All
negotiations relative to this Agreement have been carried on by Buyer directly
without the intervention of any Person who may be entitled to any brokerage
or
finder’s fee or other commission in respect of this Agreement or the
consummation of the transactions contemplated hereby. Buyer and its agents
have
incurred no obligation or liability, contingent or otherwise, for brokerage
or
finders’ fees or agents’ commissions or other similar payment in connection with
this Agreement or the transactions contemplated hereby.
2.2.5 FCC
Matters.
Buyer
is 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.
2.2.6 No
Other Representations or Warranties.
Except
for the representations and warranties set forth in this Agreement, Buyer makes
no other express or implied representation or warranty on behalf of itself
or
any of its properties or businesses.
2.3 Survival
of Representations and Warranties.
All
representations and warranties made by the parties in this Agreement or in
any
certificate, schedule, statement, document or instrument furnished hereunder
or
in connection with the execution and performance of this Agreement shall survive
for a period until the second anniversary of the Closing, except that (a) any
intentional misrepresentation shall survive Closing indefinitely, and (b)
Sections
2.1.1,
2.1.3,
2.1.7,
2.1.8,
2.1.9(a),
2.1.19
and
2.1.20
and
Sections
2.2.1
and
2.2.5,
shall
survive until the expiration of the 15 day period commencing on the expiration
date of the relevant statute of limitations period (including any applicable
extensions thereof), if longer than the period specified above (provided that
if
there is no relevant statute of limitations, survival shall be indefinite),
unless survival is governed by the preceding clause (a) (the “Survival
Period”).
Any
claim by a party based upon breach of any such representation or warranty made
pursuant to Article
V
below or
otherwise must be submitted to the other party prior to or at the expiration
of
the applicable Survival Period. In the case of any claim submitted within such
time period, the right of the party submitting the claim to recover from the
other party with respect to such claim shall not be dependent on the claim
being
resolved or the losses being incurred within such time period. Notwithstanding
any investigation or audit conducted before or after the Closing Date or the
decision of any party to complete the Closing, each party shall be entitled
to
rely upon the representations, warranties and covenants set forth herein. The
waiver of any condition regarding the accuracy of any representation or
warranty, regarding the performance of or compliance with any covenant or
obligation or regarding any other matter, will not affect the right of
indemnification or any other remedy of the waiving party after the Closing
based
on the inaccuracy of such representation or warranty, the nonperformance of
or
noncompliance with such covenant or obligation or the failure of such condition
to have been satisfied, unless otherwise expressly agreed by the parties in
writing prior to the Closing.
32
ARTICLE
III
COVENANTS
AND AGREEMENTS
3.1 Covenants
of Sellers Pending the Closing.
Each
Seller covenants and agrees that, from the date hereof until the Closing and
except as expressly contemplated or permitted by this Agreement, as required
to
comply with applicable law, rule or regulation or as otherwise consented to
in
writing by Buyer, which consent shall not be unreasonably withheld or
delayed:
3.1.1 Conduct
of the Business in the Ordinary Course.
The
Business shall be conducted solely in the ordinary course consistent with past
practice. Without limiting the foregoing, from the date hereof until the
Closing, each Seller shall:
(a) collect
its accounts receivable in the ordinary course of the Business, consistent
with
past practice, and not compromise, discount, forgive or otherwise adjust, amend
or modify the terms or conditions of any of its accounts receivable other than
in the ordinary course of the Business, consistent with past
practice;
(b) pay
its
accounts payable and applicable taxes in the ordinary course of the Business,
consistent with past practice, and not adjust, amend or modify the terms or
conditions of any of its accounts payable other than in the ordinary course
of
the Business, other than accounts payable or taxes which are being disputed
in
good faith in accordance with applicable dispute procedures and for which
appropriate reserves have been made, consistent with past practice;
(c) not
sell,
lease, license, encumber, assign, transfer or otherwise dispose of any of the
Assets, or any other assets or properties of such Seller that are needed for
the
performance of Sellers’ obligations under the Transition Services Agreement,
except (i) pursuant to the requirements of any agreement listed in Schedule
1.1(k),
or (ii)
in the ordinary course consistent with past practice; and not acquire any assets
or properties except in the ordinary course consistent with past
practice;
(d) not
enter
into any new lease or license for the use of any cell site or retail space
or
any other material agreement;
(e) not
enter
into any type of business other than the Business;
(f) not
merge
or consolidate with any other Person or acquire all or substantially all of
the
assets of any other Person;
(g) not
(i)
take or agree to take any action that would make any representation or warranty
of Sellers inaccurate in any respect at, or as of any time prior to, the Closing
Date, or (ii) omit or agree or commit to omit to take any action necessary
to
prevent any such representation or warranty from being inaccurate in any respect
at any such time;
(h) without
limiting the generality of subsection (g) above, not cause or permit to occur
any of the events or occurrences described in clauses (a), (c), (h), (i) or
(k)
of Section
2.1.16
hereof;
(i) perform
(and cause any Related Party to perform) all of its obligations under all
Contracts and not (and cause any Related Party not to) amend, terminate or
waive
any rights under any material Contracts, or enter into any contracts, except
in
the ordinary course of the Business consistent with past practice;
(j) maintain
the Business’s equipment, systems and other fixed assets as necessary to
maintain the Business’s reliability standards, footprint coverage and network
capacity;
(k) make
capital expenditures consistent with the CapEx Budget;
(l) maintain
inventories of handsets and accessories sufficient to satisfy the needs of
the
Business as currently operated;
(m) continue
in accordance with past practice all marketing and promotions relating to the
maintenance and growth of subscribers; and
33
(n) not
activate a sufficient number of customers to materially impair the value of
the
Business on any service plan that materially differs in price or other respects
from the service plans that Sellers are now offering.
3.1.2 Maintenance
of Assets and Insurance.
Sellers
shall use commercially reasonable efforts to comply with and maintain the
Assets, including the Authorizations and all Intellectual Properties, and
otherwise preserve their rights to provide wireless telecommunications service
in the Markets. Sellers shall keep in full force and effect the insurance
policies maintained by Sellers on the Assets as of the date hereof (or
replacement policies providing substantially the same coverage) and shall notify
Buyer of any significant changes in the terms of the insurance policies and
binders currently in effect.
3.1.3 Compliance
with Laws, Etc.
(a) Sellers
shall comply in all material respects with all laws, ordinances, rules,
regulations and orders applicable to the Business or any of the
Assets.
(b) The
Business shall be conducted in the public interest, convenience and necessity
and in compliance in all material respects with the Communications Act of 1934
and the rules and regulations of the FCC.
3.1.4 Efforts;
Relationships; Cooperation.
Sellers
shall use all commercially reasonable efforts to conduct the Business in such
a
manner that on the Closing Date, the representations and warranties contained
in
this Agreement shall be true as though such representations and warranties
were
made on and as of such date. Sellers shall (a) use all commercially reasonable
efforts to keep available the services of their employees, the employees of
SWC
who devote a significant portion of their time to providing services to Sellers
(the “SWC
Employees”)
and
all agents of the Business, (b) use all commercially reasonable efforts to
maintain the relations and goodwill of the Business with customers, material
suppliers and material agents of the Business and any others having material
business relations with Sellers related to the Business, and (c) cooperate
with
Buyer in establishing network conversion and switching conversion arrangements
and implementing other transitional arrangements as reasonably requested by
Buyer.
3.1.5 Access.
(a) Upon
reasonable prior notice from Buyer, Sellers shall (i) give Buyer and its
authorized representatives reasonable access during all reasonable times to
Sellers’ books and records, facilities and assets comprising or relating to
Sellers or the Business, (ii) provide such financial and operating data and
other information with respect to Sellers or the Business as Buyer may
reasonably request, and (iii) make reasonably available their officers, agents
and other Persons who are familiar with matters relating to the Business and
cause SWC to make reasonably available the SWC Employees in order to facilitate
Buyer’s review of Sellers or the Business and Buyer’s transitional arrangements.
(b) All
information and materials furnished pursuant to this Agreement shall be subject
to the provisions of the Nondisclosure Agreement.
3.1.6 Non-solicitation.
Prior
to the earlier to occur of the Closing and any termination of this Agreement
in
accordance with the provisions of Article
VI,
Sellers
shall not, and shall cause their Affiliates and the officers, employees, agents
and representatives of Sellers and their Affiliates not to, directly or
indirectly, except with the written approval of Buyer, sell or agree to sell
any
of the Assets to any third party other than sales of inventory in the ordinary
course of business consistent with past practice, issue or agree to issue any
equity interest in either Seller, merge or consolidate either Seller with any
other entity, or solicit inquiries or proposals, furnish any non-public
information with respect to, or initiate or participate in any negotiations
or
discussions whatsoever concerning, any of the foregoing transactions, if and
to
the extent that any such act would be inconsistent with the sale of the Assets
to Buyer hereunder.
34
3.1.7 Compliance
with Authorizations.
Each
Seller shall maintain all of its rights and interest in, and the validity of,
the FCC Licenses, and shall use commercially reasonable efforts to maintain
all
of its rights and interest in, and the validity of, the other Authorizations.
Each Seller shall not, and shall cause its Affiliates not to, engage in any
transaction or take any action or omit to take any action that will or could
reasonably be expected to adversely affect their rights or interest in, or
the
validity of, the Authorizations. Without limiting the above, each Seller shall
conduct the Business and operate the Assets in accordance with the conditions
set by the FCC for maintaining the FCC Authorizations. Each Seller shall
promptly provide Buyer with copies of all applications and other correspondence
to the FCC or the CPUC and any notices, Authorizations, orders or correspondence
received from the FCC or the CPUC that relate to the Authorizations, the other
Assets or the conduct of the Business. Each Seller shall promptly provide Buyer
with copies of any E-911 Phase I or Phase II “deployment requests” pursuant to
47 C.F.R. Section 20.18 of the FCC’s rules that are received by such Seller with
respect to the Markets after the date hereof.
3.1.8 Updates.
Between
the date hereof and the Closing, Sellers shall promptly notify Buyer of any
occurrence, fact or condition of which either Seller acquires Knowledge that
results in it being reasonably likely that any of the conditions set forth
in
Section
4.1
hereof
will not be satisfied by the Outside Date; provided, however, that none of
such
disclosures shall be deemed to modify, amend or supplement the representations
and warranties of Sellers or the Schedules hereto for the purposes of this
Agreement (including Article
V),
unless
Buyer shall have consented thereto in writing.
3.1.9 Delivery
of Financial Statements.
Sellers
shall deliver to Buyer within 15 business days after the end of each calendar
month unaudited financial statements of Sellers, consisting of a balance sheet,
a statement of income (including detailed revenue classifications) and a
statement of cash flows, as well as key operating statistics, including gross
subscriber additions, disconnects and
end-of-period number of subscribers, for
each
price plan for such month and for the interim period then ended (all such
financial statements, the “Interim
Financial Statements”).
The
Interim Financial Statements shall meet the requirements for the Monthly
Financial Statements as set forth in Section
2.1.11(b).
3.1.10 Tax
Exemption Certificates.
On or
before the Closing Date, Sellers shall deliver to Buyer true and correct copies
of all currently effective exemption certificates and other documents which
have
been furnished by customers of the Business for the purpose of establishing
or
supporting any claim of tax exemption with respect to Taxes collected by Sellers
from such customers.
3.1.11 Additional
Deliveries.
(a) Sellers
shall use commercially reasonable efforts to obtain either originals or true
and
complete copies of all agreements, instruments or documents that Sellers would
be required to provide to Buyer pursuant to this Agreement but for the fact
that
such agreements, instruments or documents are not in the possession or under
the
control of a Seller or a Related Party, and shall provide true and complete
copies of such agreements, instruments or documents to Buyer promptly upon
receipt.
35
(b) Within
45
days of the date of this Agreement, Sellers shall provide to Buyer a list of
the
Authorizations.
3.2 Covenants
of Buyer Pending the Closing.
Buyer
covenants and agrees that, from the date hereof until the Closing Date and
except as otherwise agreed to in writing by Sellers:
3.2.1 Actions
of Buyer.
Buyer
shall use all commercially reasonable efforts not to take any action that would
result in a breach of any of its representations and warranties hereunder.
3.2.2 Updates.
Between
the date hereof and the Closing, Buyer shall promptly notify Sellers of any
occurrence, fact or condition of which Buyer acquires knowledge that results
in
it being reasonably likely that any of the conditions set forth in Section
4.2
hereof
will not be satisfied by the Outside Date; provided, however, that none of
such
disclosures shall be deemed to modify, amend or supplement the representations
and warranties of Buyer for the purposes of this Agreement (including
Article
V),
unless
Sellers shall have consented thereto in writing.
3.3 Additional
Covenants.
Sellers
and Buyer further covenant and agree that, except as otherwise agreed to in
writing by Sellers and Buyer:
3.3.1 Certain
Filings and Consents.
(a) As
soon
as practicable after the date of this Agreement, (i) West Coast and Buyer shall
file applications with or notifications to the FCC for consent to the assignment
by West Coast to Buyer of all of West Coast’s rights and interests in and to the
FCC Authorizations, and such other applications with the FCC as may be advisable
in the reasonable judgment of the parties hereto, all of which applications
and
notifications will comply in all material respects with the requirements of
the
Communications Act of 1934 and the rules of the FCC, and (ii) Sellers and Buyer
shall file applications for all other regulatory consents and approvals
necessary for the consummation of the transactions contemplated hereby, if
any.
West Coast and Buyer shall use commercially reasonable efforts to file the
applications for the consent of the FCC within 10 business days after the date
of this Agreement. Sellers and Buyer shall diligently prosecute all applications
referred to in the first sentence of this Section
3.3.1
and
shall take all such actions and give all such notices as may be required or
requested by the FCC or any other regulatory agency or as may be appropriate
in
an effort to expedite the grant of such consent by the FCC or such regulatory
agency.
(b) SWC
and
Buyer shall cooperate with one another in preparing and filing Notification
and
Report Forms under the HSR Act, which are required in connection with the
consummation of the transactions contemplated hereby, and furnishing information
required in connection therewith. Buyer will be responsible for paying the
required filing fee under the HSR Act. SWC and Buyer will each be responsible
for preparing and filing the form required to be filed by it under the HSR
Act.
SWC and Buyer shall use commercially reasonable efforts to submit such filings
within 15 business days after the date of this Agreement.
(c) Sellers
shall use all commercially reasonable efforts to obtain (or give, in the case
of
notifications or deliveries constituting Required Consents) all Required
Consents as soon as practicable.
36
3.3.2 Non
Disclosure.
Sellers
shall not, and Sellers shall cause their respective agents, representatives
and
Affiliates not to, and Buyer shall not at any time prior to the Closing, and
shall cause its agents, representatives and Affiliates not to at any time prior
to the Closing, disclose to the public (by means of any press release, public
statement, public filing with a regulatory body or otherwise) or to any third
party the fact that Buyer is contemplating the purchase of the Assets, or that
Sellers are contemplating the sale of the Assets to Buyer, or the existence
of
this Agreement or the terms and conditions of this Agreement, or the substance
of the negotiations between the parties regarding such terms and conditions,
except:
(a) as
required by applicable law or the rules of any relevant stock exchange, by
order
or decree of a court or regulatory body having jurisdiction over such party,
or
in connection with such party’s or its agent’s or Affiliate’s enforcement of any
rights it may have at law or equity; provided
that
each party shall, and shall cause any of its applicable agents, representatives,
Affiliates and the Brokers to, (i) notify the other party as long as reasonably
practicable prior to the disclosure pursuant to this subsection of information
of the type described in the immediately preceding paragraph, (ii) afford the
other party an opportunity to seek a protective order or other legal relief
limiting such disclosure, (iii) cooperate with the other party in obtaining
such
relief, (iv) furnish a copy of the disclosure to the other party as long in
advance as reasonably practicable, and (v) afford the other party an opportunity
to review and comment thereon;
(b) on
a
“need to know” basis to Persons within such party’s organization, or outside of
such party’s organization such as attorneys, accountants, bankers, financial
advisors and other consultants who may be assisting such party in connection
with the transactions contemplated hereby and who agree to keep such information
confidential on terms as least as favorable to Buyer as the terms contained
in
this Section
3.3.2;
(c) as
expressly required by this Agreement;
(d) with
the
express prior written approval of the other party; or
(e) after
such information has become publicly available without breach of this
Agreement.
Notwithstanding
anything contained in this Agreement to the contrary, the provisions of this
Section
3.3.2
(except
for the obligations of Buyer) shall survive the Closing. Each party specifically
acknowledges and agrees that the remedy at law for any breach of the provisions
of this Section
3.3.2
will be
inadequate and that each party, in addition to any other relief available to
it,
shall be entitled to temporary and permanent injunctive relief without the
necessity of proving actual damages in the event of any breach or threatened
breach of the provisions of this Section
3.3.2
by the
other parties or such other parties’ agents.
3.3.3 Maintenance
of Books and Records.
Sellers
and Buyer shall each preserve until the fifth anniversary of the Closing Date
all records possessed or to be possessed by or controlled or to be controlled
by
such party relating to any of the assets or liabilities of the Business or
otherwise relating to the conduct of the Business prior to the Closing Date.
After the Closing Date, where there is a legitimate purpose, such party shall
provide the other party with access, upon prior reasonable written request
specifying the need therefor, during regular business hours, to (a) the officers
and employees of such party and its Affiliates and (b) the books of account
and
records of such party, but, in each case, only to the extent relating to the
Assets, the Assumed Liabilities or the conduct of the Business prior to the
Closing Date, and the other party and its representatives shall have the right
to make copies of such books and records; provided, however, that the foregoing
right of access shall not be exercisable in such a manner as to interfere
unreasonably with the normal operations and business of such party; and further
provided that as to so much of such information as constitutes trade secrets
or
confidential business information of such party, the requesting party and its
officers, directors and representatives will not disclose such information
except (i) as required by law, (ii) with the prior written consent of such
party, which consent shall not be unreasonably withheld, or (iii) where such
information becomes available to the public generally, or becomes generally
known to competitors of such party, through sources other than the requesting
party, its Affiliates or their respective officers, directors or
representatives. Such records may nevertheless be destroyed by a party if such
party sends to the other party written notice of its intent to destroy records,
specifying with particularity the contents of the records to be destroyed.
Such
records may then be destroyed after the 30th day after such notice is given
unless the other party objects to the destruction, in which case the party
seeking to destroy the records shall deliver such records to the objecting
party.
37
3.3.4 Cooperation.
Sellers
and Buyer shall cooperate with each other and use all commercially reasonable
efforts to cause all of the conditions to the obligations of Buyer and Sellers
under this Agreement to be satisfied on or prior to the Closing
Date.
3.3.5 Other
Regulatory Requirements.
Each
party agrees to reasonably cooperate with the other party in connection with
the
other party’s efforts to satisfy any regulatory requirements in connection with
the transactions contemplated by this Agreement.
3.3.6 Transition
Services Agreement.
Sellers
and Buyer acknowledge that Buyer and SWC have entered into a Transition Services
Agreement on the date hereof (the “Transition
Services Agreement”).
Buyer
and SWC each agrees to fulfill all of its obligations thereunder.
3.3.7 Removal
of LMDS Equipment.
Within
60 days following the Expiration Date, as defined in the Transition Services
Agreement, Sellers shall decommission all LMDS equipment and T-1 termination
equipment located at the Leased Property, whether on the tower or on the ground
(which equipment is an Excluded Asset hereunder) and remove it from the Leased
Property. Sellers shall give Buyer advance written notice of the dates and
approximate times at which such work will be done and shall coordinate with
Buyer regarding the provision by Buyer of access to the Leased Property for
such
purpose. Such decommissioning work shall be completed in compliance with
existing regulatory codes, industry standards, manufacturer recommendations
and
instructions, safety policies and procedures, FCC regulations, environmental
laws and other applicable laws, rules, regulations and ordinances. During the
time that such work is being performed, Sellers shall maintain in effect the
General Liability, Workers Compensation/Employer's Liability, Automobile
Liability and Umbrella insurance described on Schedule
2.1.22.
Prior
to the commencement of such work and until such work is completed, Buyer shall
be named as an additional insured on Sellers’ general and automobile liability
policies. Prior to the commencement of such work, Sellers shall furnish to
Buyer
a certificate of insurance showing that all policies required by the foregoing
are in effect and that Buyer has been named as an additional insured on Sellers’
general and automobile liability policies.
3.3.8 Delivery
of Tangible Assets.
Upon
receipt of a request from Buyer, Sellers shall use all commercially reasonable
efforts to, as soon as practicable after receipt of such notice, deliver to
the
location specified by Buyer any of the Assets that are in tangible form, and
original (or copies, to the extent originals are not available) tangible
embodiments of rights constituting Assets, including originals (or copies,
to
the extent originals are not available) of all of the agreements, contracts,
commitments, leases, plans, bids, quotations, proposals, instruments, computer
programs and software, data bases whether in the form of computer tapes or
otherwise, related object code and, to the extent either Seller has transferable
rights thereto, source code, manuals and guidebooks, price books and price
lists, customer and subscriber lists, supplier lists, sales records, files,
correspondence, legal opinions, rulings issued by governmental entities, and
other documents, books, records, papers, files, office supplies and data
belonging to either Seller that are part of the Assets.
38
3.3.9 Use
of
Sellers’ Names and Logos.
Except
as specifically provided for in the Transition Services Agreement, at no time
during the first five years after the Closing Date shall either Seller or any
Related Party use in the Markets or within 100 miles of any part of the Markets
in connection with any wireless telecommunications business (a) the name
“SureWest Wireless” or any derivative thereof or any name confusingly similar
thereto, or (b) any trademark, service xxxx or logo associated with “SureWest
Wireless” or otherwise previously used in the Business or any derivative thereof
or any xxxx or logo confusingly similar thereto; provided, however, that either
Seller or a Related Party may use the word “SureWest” or “Wireless” separately
for any purpose that does not violate the following provisions of this
Section
3.3.9.
During
the period commencing on the Closing Date and ending on the fifth anniversary
of
the Closing Date, Sellers and SWC agree that they shall not, directly or
indirectly, (i) except with Buyer or any of its controlled Affiliates, engage
in
the marketing, selling or provision of any wireless commercial mobile radio
services using the 850 or 1900 MHz frequencies (“CMRS
Services”),
either directly or through any wholesale arrangement, within the Markets or
within 100 miles of any part of the Markets, or (ii) be a shareholder, partner,
member or other equity holder of, exercise management control over, or acquire
or maintain an interest in, any entity that provides CMRS Services, either
directly or through any wholesale arrangement, within the Markets or within
100
miles of any part of the Markets. Due to the difficulty of measuring damages
that would result from a breach of this Section
3.3.9,
the
parties hereby agree that in the event of a breach or a contemplated breach
of
this Section
3.3.9,
in
addition to any other remedies that Buyer may have at law or in equity, Buyer
shall have the right to have the provisions of this Section
3.3.9
specifically performed by Sellers, and Buyer shall have the right to obtain
preliminary and permanent injunctive relief to secure specific performance,
and
to prevent a breach or contemplated breach, of this Section
3.3.9.
3.4 Covenants
Regarding Employees and Employee Benefits.
Sellers
covenant and agree that, except as otherwise agreed to in writing by
Buyer:
3.4.1 Employment
Termination and Related Benefits.
Sellers
shall take appropriate actions to terminate the employment of their employees
who they do not intend to employ following the Closing. Sellers shall provide
any and all severance and related benefits to its employees who terminate
employment in connection with the transactions contemplated by this Agreement
either before or after the Closing Date to the extent required pursuant to
the
Seller Employee Benefit Plans or otherwise.
3.4.2 Communications
With Employees.
From
the date hereof until the Closing Date, Sellers shall provide Buyer with
reasonable access to Sellers’ employees during normal business hours upon
reasonable notice, subject to such reasonable procedures as may be established
by Sellers and in accordance with applicable law, including for purposes of
communicating information regarding employment or potential employment with
Buyer. With regard to persons interested in employment with Buyer, such access
shall include conducting interviews, performing drug testing and performing
background checks and pre-employment testing, as well as providing transition
training for those employees Buyer expects to employ as of the Closing. Buyer
and Sellers shall consult with each other regarding communications with Sellers’
employees to whom Buyer does not intend to offer employment as of the Closing
in
an effort to minimize any adverse impact on the Business. Upon the reasonable
request of Buyer, Sellers shall use all commercially reasonable efforts to
minimize such impact, including without limitation enforcing Sellers’ rights
under any confidentiality or non-compete agreement with any of Sellers’
employees who are terminated.
39
3.4.3 No
Third Party Rights.
Nothing
contained in this Agreement shall confer upon any employee of either Seller
any
right with respect to employment by Buyer. 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 Buyer if such
employee is hired by Buyer.
3.4.4 COBRA.
From
and after the Closing Date, Sellers and Buyer shall each comply with their
respective obligations, if any, to provide health care continuation coverage
in
accordance with the requirements of COBRA or other applicable law to all
eligible employees of either Seller, former eligible employees of either Seller
and their eligible dependents.
3.4.5 Employee
Benefits.
(a)
Without limiting the generality of anything else contained herein, Sellers
shall
pay directly to each employee of either Seller, within a reasonable time after
the Closing Date, that portion of all benefits (including the arrangements,
plans and programs set forth on Schedule
3.4.5(c))
which
has been accrued on behalf of such employee (or is attributable to expenses
properly incurred by such employee) as of the Closing Date, to the extent then
payable per its terms, and Buyer shall assume no liability therefor. Sellers
acknowledge that no portion of the assets of any plan, fund, program or
arrangement, written or unwritten, heretofore sponsored or maintained by either
Seller or any of their Affiliates (and no amount attributable to any such plan,
fund, program or arrangement) shall be transferred to Buyer, and agree that
Buyer shall not be required to continue any such plan, fund, program or
arrangement. Any of Sellers’ employees who commence employment with Buyer as
contemplated in Section
3.4.5(b)
shall be
credited under the appropriate employee benefit plans of the Buyer for service
performed with the Sellers.
(b) Except
with respect to offers of employment made by Buyer (and other actions by Buyer)
and Buyer’s actual employment of employees of either Seller, Buyer shall have no
responsibility whatsoever with respect to Sellers’ employees. Buyer shall have
no obligation to hire any employee of Sellers. Sellers, however, acknowledge
that Buyer shall be entitled to hire any of Sellers’ employees who it chooses to
hire. All offers of employment by Buyer may be conditioned upon Buyer’s normal
hiring procedures (e.g.,
drug
testing, background check). Prior to the Closing, Buyer shall provide Sellers
a
written list of those employees to whom Buyer desires to make offers of
employment to be effective on the Closing Date. Sellers shall be solely
responsible for any and all liability arising directly or indirectly under
the
Worker Adjustment and Retraining Notification Act, as amended (the “WARN
Act”),
as a
result of the transactions contemplated by this Agreement. Sellers acknowledge
and agree that Buyer does not assume or agree to discharge any liability of
either Seller under COBRA with respect to any current or former employees of
either Seller. Sellers acknowledge and agree that all employees of either Seller
who commence employment with Buyer as of the Closing shall be treated as new
employees of Buyer and, subject to Section
3.4.5(d),
any
prior employment of such new employees by a Seller shall not affect entitlement
to, or the amount of, salary, other cash compensation, current or deferred,
or
benefits that Buyer may make available to its employees.
40
(c) Sellers
shall pay, or cause to be paid, bonuses to the individuals listed and at the
times set forth on Schedule
3.4.5(c) and
severance to the employees of Sellers in accordance with the severance policy
set forth on Schedule
3.4.5(c)
(“Incentive
Bonuses and Severance”).
Liability for paying Incentive Bonuses and Severance shall be the sole
responsibility of Sellers, and Buyer shall not assume or have any liabilities
or
obligations with respect thereto. Sellers will take any and all actions
reasonably requested by Buyer to facilitate compliance with any withholding
or
other legal requirements in respect of the Incentive Bonuses and Severance.
For
the avoidance of doubt, Sellers and Buyer agree that any Tax deduction arising
from the payment of the Incentive Bonuses and Severance shall be for the benefit
of Sellers or their Affiliates.
(d) Buyer
shall, or shall cause its Affiliates to, (i) give each Seller’s employees who
are employed by Buyer or its Affiliates in connection with Buyer’s purchase of
the Assets (the “Continuing
Employees”)
full
credit for purposes of eligibility and vesting under any employee benefit plans
or arrangements maintained by Buyer or any of its Affiliates (collectively,
the
“Buyer
Plans”)
for
such Continuing Employees’ service with either Seller or its Affiliates prior to
the Closing to the same extent recognized thereby, and (ii) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Continuing
Employees under any Buyer Plan that is a welfare benefit plan that such
employees may be eligible to participate in after the Closing, and (iii) provide
credit under any such welfare plan for any co-payments, deductibles and
out-of-pocket expenditures for the remainder of the coverage period during
which
any transfer of coverage occurs; provided, however, that no such service shall
be recognized to the extent such recognition would result in the duplication
of
benefits. Buyer shall also recognize service with either Seller or its
Affiliates for benefit accrual purposes under any of Buyer’s vacation, sick,
personal leave and severance policies.
(e) Each
Seller and its Affiliates shall take all actions necessary so that following
the
Closing, all Continuing Employees who participate in any tax qualified Employee
Benefit Plan that is an “employee pension benefit plan” (as such term is defined
under Section 3(2) of ERISA)) (the “Seller
Retirement Plans”)
shall
be credited with imputed vesting service credit on account of continued service
with the Buyer or its Affiliates for the purposes of continuing to vest in
their
interest in each such Seller Retirement Plan. Buyer agrees to reasonably
cooperate with SWC and each Seller to implement the imputed vesting service
credit. Such imputed vesting service credit shall otherwise be subject to the
terms of the applicable Seller Retirement Plan. To the extent permitted under
applicable law, Buyer shall permit the Continuing Employees who are participants
in the SureWest KSOP (and any other Seller Employee Benefit Plan that is a
Section 401(k) Plan) to rollover their distributions from such plan(s)
(excluding any participant loans) into a 401(k) plan sponsored by the Buyer
or
its Affiliates.
ARTICLE
IV
CONDITIONS
PRECEDENT TO CLOSING
4.1 Conditions
Precedent to Obligations of Buyer.
All
obligations of Buyer under this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent, which may be waived in writing in whole or in part by
Buyer:
4.1.1 Representations
and Warranties True as of the Closing.
All of
the representations and warranties of Sellers and SWC contained in this
Agreement or in any schedule, certificate or document delivered to Buyer
pursuant to the provisions hereof (considered collectively without regard to
materiality qualifiers contained in such representations and warranties), and
each such representation and warranty (considered individually), other than
the
representations and warranties (or portions thereof) which contain materiality
qualifiers, shall have been true in all material respects as of the date of
this
Agreement and on the Closing Date as if made on the Closing Date (except where
such representation or warranty speaks as of a specific date or as otherwise
waived in writing by Buyer), without giving effect to any updated information
disclosed by Sellers to Buyer pursuant to Section
3.1.8.
Each of
the representations and warranties of Sellers and SWC (or portions thereof)
which contain materiality qualifiers (considered individually), shall have
been
true in all respects as of the date of this Agreement and on the Closing Date
as
if made on the Closing Date (except where such representation or warranty speaks
as of a specific date or as otherwise waived in writing by Buyer), without
giving effect to any updated information disclosed by Sellers to Buyer pursuant
to Section
3.1.8.
41
4.1.2 Compliance
with this Agreement.
Sellers
and SWC shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by them prior to or at the Closing.
4.1.3 Closing
Certificates.
Buyer
shall have received a certificate from Sellers and SWC, dated the Closing Date,
certifying in such detail as Buyer may reasonably request that the conditions
specified in Sections
4.1.1
and
4.1.2
have
been fulfilled, and certificates of an executive officer of each of SWW, West
Coast and SWC, dated the Closing Date, in form and substance reasonably
satisfactory to Buyer, with respect to such entity’s organizational documents
and authorizing resolutions and the incumbency and signatures of the persons
authorized to execute Transaction Documents on its behalf.
4.1.4 Opinions
of Counsel for Sellers.
Sellers
shall have caused Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP to deliver to Buyer a
corporate opinion and counsel reasonably satisfactory to Buyer to deliver to
Buyer a regulatory opinion, in each case, in form and substance reasonably
satisfactory to Buyer.
4.1.5 No
Threatened or Pending Litigation.
On the
Closing Date, no suit, action or other proceeding, or injunction or final
judgment relating thereto, shall be threatened or be pending before any court
or
governmental or regulatory official, body or authority in which it is sought
to
restrain or prohibit the consummation of the transactions contemplated hereby
or
to obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, or which could reasonably
be expected to have a material adverse effect on the Business or its value
to
Buyer or on Buyer’s enjoyment of the benefits of consummating this Agreement,
and no investigation that might result in any such suit, action or proceeding
shall be pending or threatened.
4.1.6 Material
Adverse Changes.
No
event or events shall have occurred which alone or in the aggregate shall have
had or shall be reasonably likely to have a Seller Material Adverse
Effect.
4.1.7 Payment
of Debt by Sellers; Release of Liens.
Before
or at the Closing, Sellers shall have paid all of their respective indebtedness
for borrowed money related to the Assets, or Sellers shall have made
arrangements reasonably satisfactory to Buyer for the payment at the Closing
of
all such indebtedness that results in a release of all Liens on the Assets
securing such indebtedness; and Sellers shall have furnished to Buyer
documentation from all lenders of such indebtedness, in form reasonably
satisfactory to Buyer, releasing all Liens on the Assets securing such
indebtedness, which documentation shall be delivered to Buyer at or before
the
Closing. In addition, any other Liens (including Existing Liens) on the Assets
that are not Permitted Liens shall have been released and Sellers shall have
terminated any derivatives associated with such indebtedness, and Sellers shall
have furnished to Buyer documentation thereof in form reasonably satisfactory
to
Buyer.
42
4.1.8 Regulatory
Approvals.
All
consents, approvals and waivers from and notifications to governmental or
regulatory bodies necessary in connection with the consummation of the
transactions contemplated hereby, including the FCC Consent, shall have been
obtained or made, and they shall have been obtained or made pursuant to a Final
Order, free of any conditions, statements or conclusions of fact or law
materially adverse to Buyer or the Business. “Final
Order”
means
an action or decision as to which (a) no request for a stay is pending, no
stay
is in effect, and any deadline for filing such request that may be designated
by
statute or regulation has passed, (b) no petition for rehearing or
reconsideration or application for review is pending and the time for the filing
of any such petition or application has passed, (c) the relevant governmental
or
regulatory body does not have the action or decision under reconsideration
on
its own motion and the time within which it may effect such reconsideration
has
passed, and (d) no appeal is pending or in effect and any deadline for filing
any such appeal that may be designated by statute or rule has
passed.
4.1.9 Expiration
of HSR Act Waiting Period.
The
applicable waiting period under the HSR Act relating to the transactions
contemplated by this Agreement shall have expired.
4.1.10 Required
Consents.
Sellers
shall have received (or given, in the case of notifications or deliveries
constituting Required Consents) all Required Consents and shall have delivered
to Buyer copies or other evidence thereof.
4.1.11 Transition
Services Agreement.
Buyer
and SWC shall have agreed upon a Final Description of Services (as defined
in
the Transition Services Agreement), subject to any dispute resolution process
that may have been commenced in accordance with the Transition Services
Agreement.
4.1.12 Master
Tower Lease Agreement.
Buyer,
Sellers and SureWest Telephone shall have executed a Master Tower Lease
Agreement in substantially the form attached hereto as Exhibit
C (the
“Master
Lease Agreement”).
4.1.13 Exclusivity
Amendments.
Each of
the License Agreement dated October 19, 1998 between West Coast and Verisign
Inc. (f/k/a H.O. Software, Inc.) and its Addenda, the MMS IG Addendum, dated
February 1, 2007, between West Coast and Syniverse Technologies and the SMS
IG
Addendum, dated February 1, 2007, between West Coast and Syniverse Technologies
shall have been amended in a manner reasonably satisfactory to Buyer so as
to
remove all obligations of Buyer, as assignee of West Coast, to use Verisign
or
Syniverse, as the case may be, exclusively for any purpose following the
Closing.
4.1.14 Removal
of FCC License Condition.
Sellers
shall have obtained from the FCC and delivered to Buyer new official copies
of
the FCC Licenses that do not contain the condition currently contained in the
FCC Licenses regarding payment of the remaining balance of the winning bid
amount to the FCC.
43
4.2 Conditions
Precedent to the Obligations of Sellers.
All
obligations of Sellers under this Agreement are subject to the fulfillment
or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent, which may be waived in whole or in part by Sellers:
4.2.1 Representations
and Warranties True as of the Closing Date.
All of
the representations and warranties of Buyer contained in this Agreement or
in
any certificate or document delivered to Sellers pursuant to the provisions
hereof (considered collectively), and each such representation and warranty
(considered individually), shall have been true in all material respects as
of
the date of this Agreement and on the Closing Date as if made on the Closing
Date (except where such representation or warranty speaks as of a specific
date
or as otherwise waived in writing by Sellers), without giving effect to any
updated information disclosed by Buyer to Sellers pursuant to Section
3.2.2.
4.2.2 Compliance
with this Agreement.
Buyer
shall have performed and complied in all material respects with all covenants
and agreements required by this Agreement to be performed or complied with
by it
prior to or at the Closing.
4.2.3 Closing
Certificate.
Sellers
shall have received a certificate from Buyer dated the Closing Date certifying
in such detail as Sellers may reasonably request that the conditions specified
in Sections
4.2.1
and
4.2.2
have
been fulfilled.
4.2.4 No
Threatened or Pending Litigation.
On the
Closing Date, no suit, action or other proceeding, or injunction or final
judgment relating thereto, shall be threatened or be pending before any court
or
governmental or regulatory official, body or authority in which it is sought
to
restrain or prohibit the consummation of the transactions contemplated hereby
or
to obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no investigation
that
might result in any such suit, action or proceeding shall be pending or
threatened.
4.2.5 Regulatory
Approvals.
All
consents, approvals and waivers from and notifications to governmental or
regulatory bodies necessary to permit the consummation of the transactions
contemplated hereby, including the FCC Consent, shall have been obtained or
made, free of any conditions materially adverse to Sellers.
4.2.6 Expiration
of HSR Act Waiting Period.
The
applicable waiting period under the HSR Act relating to the transactions
contemplated by this Agreement shall have expired.
44
ARTICLE
V
INDEMNIFICATION
5.1 General
Indemnification Obligation of Sellers and SWC.
From
and after the Closing, SWW, West Coast and SWC, jointly and severally (each
an
“Indemnifying
Seller Party”
and
collectively, the “Indemnifying
Seller Parties”),
will
reimburse, indemnify and hold harmless Buyer, its partners and Affiliates,
and
its and their respective directors, officers, agents, employees, successors
and
assigns (each, an “Indemnified
Buyer Party”)
against and in respect of any and all damages, losses, deficiencies,
liabilities, assessments, fines, judgments, costs and other expenses (including
reasonable legal fees and expenses) (“Losses”)
incurred or suffered by any Indemnified Buyer Party that result from, relate
to
or arise out of:
(a) any
and
all liabilities and obligations of either Seller of any kind or nature
whatsoever, known or unknown, accrued, contingent or otherwise, including
third-party claims alleging any such liabilities or obligations and including
any liabilities or obligations of any kind or nature whatsoever, known or
unknown, accrued, contingent or otherwise, that either Seller may have with
respect to any Employee Benefit Plan, except for the Assumed Liabilities to
the
extent that (i) they are included in the computation of the Purchase Price
Adjustment (as finally determined in accordance with the provisions of
Section
1.5)
or (ii)
they are pursuant to leases, licenses, contracts or commitments that are
disclosed on Schedule
1.1(k)
or are
entered into after the date of this Agreement in accordance with Section
3.1,
and
they relate to periods, or goods or services provided to or by Buyer, on or
after the Closing Date;
(b) any
misrepresentation or breach of warranty on the part of either of the Sellers
or
SWC under this Agreement or any certificate, schedule, exhibit, document,
agreement or instrument executed or furnished to Buyer pursuant hereto, or
in
connection with the execution or performance of this Agreement; and any and
all
claims made by third parties that, if true, would constitute or give rise to
a
misrepresentation or breach of any such representation or warranty, and any
and
all investigations, audits or proceedings by third parties for the purpose
of
determining whether to make such a claim; provided that for purposes of this
Section
5.1(b),
the
“Knowledge” qualifications in the first sentence of Section
2.1.5(b)
and the
first sentence of Section
2.1.23(b)
shall be
disregarded;
(c) any
breach or nonfulfillment of any agreement or covenant on the part of either
of
the Sellers or SWC under this Agreement or any certificate, schedule, exhibit,
document, agreement or instrument executed or furnished to Buyer pursuant
hereto, or in connection with the execution or performance of this Agreement;
and any and all claims made by third parties that, if true, would constitute
or
give rise to a breach or nonfulfillment of any such covenant or agreement,
and
any and all investigations, audits or proceedings by third parties for the
purpose of determining whether to make such a claim;
(d) any
event
that occurred prior to the Closing Date or any action or inaction prior to
the
Closing Date of either of the Sellers or SWC, or any of their respective
directors, officers, employees, agents, Affiliates, representatives or
subcontractors; and any and all actions, suits, claims, proceedings or
investigations brought by a third party against any Indemnified Buyer Party
to
the extent they arise out of, result from, are based upon or allege any such
event, action or inaction;
(e) any
and
all Tax assessments against any Indemnified Buyer Party or the Assets that
relate to either Seller or any Affiliate of either Seller, or arise out of
the
Business that are attributable to the period prior to Closing or attributable
to
Sellers’ portion of the Transfer Taxes payable under Section
6.3
hereunder; or
(f) any
and
all matters described in Schedule
5.1
hereto
and any and all actions, suits, claims, demands, proceedings, investigations
and
audits to the extent that they arise out of or relate to such matters or the
subject matter thereof.
45
5.2 General
Indemnification Obligations of Buyer.
From
and after the Closing, Buyer will reimburse, indemnify and hold harmless Sellers
and their Affiliates, and their directors, officers, agents, successors and
assigns (each, an “Indemnified
Seller Party”)
against and in respect of any and all Losses incurred or suffered by any
Indemnified Seller Party that result from, relate to or arise out
of:
(a) any
misrepresentation or breach of warranty on the part of Buyer under this
Agreement or any certificate, schedule, exhibit, document, agreement or
instrument executed or furnished to Sellers pursuant hereto, or in connection
with the execution or performance of this Agreement; and any and all claims
made
by third parties that, if true, would constitute or give rise to a
misrepresentation or breach of any such representation or warranty, and any
and
all investigations, audits or proceedings by third parties for the purpose
of
determining whether to make such a claim;
(b) any
breach or nonfulfillment of any agreement or covenant on the part of Buyer
under
this Agreement or any certificate, schedule, exhibit, document, agreement or
instrument executed or furnished to Sellers pursuant hereto, or in connection
with the execution or performance of this Agreement; and any and all claims
made
by third parties that, if true, would constitute or give rise to a breach or
nonfulfillment of any such covenant or agreement, and any and all
investigations, audits or proceedings by third parties for the purpose of
determining whether to make such a claim;
(c) any
claim, liability or obligation to the extent arising or asserted with respect
to
the ownership or operation of the Assets from and after the Closing Date; any
action or inaction after the Closing Date of Buyer or its partners, directors,
officers, employees, agents, representatives or subcontractors; and any and
all
actions, suits, claims, proceedings or investigations brought by a third party
against any Indemnified Seller Party that arise out of, result from, are based
upon or allege any such action or inaction; or
(d) the
Assumed Liabilities to the extent that (i) they are included in the computation
of the Purchase Price Adjustment (as finally determined in accordance with
the
provisions of Section
1.5)
or (ii)
they are pursuant to leases, licenses, contracts or commitments that are
disclosed on Schedule
1.1(k)
or are
entered into after the date of this Agreement in accordance with Section
3.1,
and
they relate to periods, or goods or services provided to or by Buyer, on or
after the Closing Date;
(e) the
failure of Buyer to pay its portion of the Transfer Taxes payable under
Section
6.3
hereunder.
5.3 Indemnification
Procedures.
(a) In
the
event that any claim or demand for which an Indemnifying Seller Party would
be
liable to an Indemnified Buyer Party under this Article
V
is
asserted against or sought to be collected from an Indemnified Buyer Party
by a
third party, the Indemnified Buyer Party shall give notice of such claim or
demand promptly to such Indemnifying Seller Party, which notice shall specify
the nature of such claim or demand and the amount or the estimated amount
thereof to the extent then feasible (which estimate shall not be conclusive
of
the final amount of such claim and demand) (the “Claim
Notice”)
;
provided, however, that the failure or delay to so notify the Indemnifying
Seller Party shall not relieve the Indemnifying Seller Party of any obligation
or liability that the Indemnifying Seller Party may have to the Indemnified
Buyer Party, unless, and then only to the extent that, the Indemnifying Seller
Party’s ability to defend or resolve such Indemnification Claim is adversely
affected thereby. The Indemnifying Seller Party shall have 15 days after receipt
of the Claim Notice (the “Notice
Period”)
to
notify the Indemnified Buyer Party (A) whether or not the Indemnifying Seller
Party disputes its liability to the Indemnified Buyer Party hereunder with
respect to such claim or demand and (B) whether or not the Indemnifying Seller
Party desires, at its sole cost and expense, to defend the Indemnified Buyer
Party against such claim or demand.
46
(b) If
any
Indemnifying
Seller Party disputes
its liability to the Indemnified Buyer Party hereunder with respect to such
claim or demand or the amount thereof, such dispute shall be resolved by a
civil
action in a court of appropriate jurisdiction which may be commenced by either
party. During the Notice Period, no such claim or demand may be settled by
the
Indemnified Buyer Party. Following the Notice Period and pending the resolution
of any dispute by an Indemnifying Seller Party of its liability with respect
to
any claim or demand, the Indemnified Buyer Party shall not agree to a settlement
of, or consent to the entry of any judgment to, such claim or demand without
the
prior written consent of the Indemnifying Seller Party, which consent shall
not
be unreasonably withheld.
If the
Indemnifying
Seller Party desires
to participate in, but not control, any defense or settlement negotiations
with
respect to such claim or demand, it may do so at its sole cost and
expense.
(c) If
an
Indemnifying Seller Party notifies the Indemnified Buyer Party within the Notice
Period that it does not dispute its liability to the Indemnified Buyer Party
hereunder and that such Indemnifying Seller Party desires to defend the
Indemnified Buyer Party against such claim or demand (including any Tax audit)
then, except as hereinafter provided, such Indemnifying Seller Party shall
have
the right, together with the other Indemnifying Seller Parties who have notified
the Indemnified Buyer Party that they desire to defend the Indemnified Buyer
Party, to defend the Indemnified Buyer Party by appropriate proceedings, which
proceedings shall be promptly settled or prosecuted by it to a final conclusion;
provided,
however,
no
Indemnifying Seller Party shall, without the prior written consent of the
Indemnified Buyer Party, consent to the entry of any judgment against the
Indemnified Buyer Party or enter into any settlement or compromise which (i)
does not include, as an unconditional term thereof, the giving by the claimant
or plaintiff to the Indemnified Buyer Party of a release, in form and substance
reasonably satisfactory to the Indemnified Buyer Party from all liability in
respect of such claim or litigation or (ii) includes terms and conditions which,
in the reasonable judgment of the Indemnified Buyer Party, impose any burden,
restraint, cost, liability, duty or other obligation on, or otherwise adversely
affect, or have the potential to adversely affect, the Indemnified Buyer Party.
If the Indemnified Buyer Party desires to participate in, but not control,
any
such defense or settlement, it may do so at its sole cost and expense. If,
in
the reasonable opinion of the Indemnified Buyer Party, any such claim or demand
or the litigation or resolution of any such claim or demand involves an issue
or
matter which could have a material adverse effect on the business, operations,
assets, properties or prospects of the Indemnified Buyer Party, including
without limitation the administration of the tax returns and responsibilities
under the tax laws of any Indemnified Buyer Party, then the Indemnified Buyer
Party shall have the right to control the defense or settlement of any such
claim or demand, and its reasonable costs and expenses (including reasonable
attorneys’ fees and expenses) shall be included as part of the indemnification
obligations of the Indemnifying Seller Parties hereunder; provided,
however,
that
the Indemnified Buyer Party shall not settle any such claim or demand without
the prior written consent of the appropriate Indemnifying Seller Party, which
consent shall not be unreasonably withheld. If the Indemnified Buyer Party
should elect to exercise such right, the Indemnifying Seller Parties shall
have
the right to participate in, but not control, the defense or settlement of
such
claim or demand at their sole cost and expense.
(d) If
any
Indemnifying Seller Party does not dispute its liability to the Indemnified
Buyer Party hereunder and elects not to defend the Indemnified Buyer Party
against such claim or demand, whether by not giving the Indemnified Buyer Party
timely notice as provided above or otherwise, then the amount of any such claim
or demand, or if the same be defended by the Indemnified Buyer Party (but no
Indemnified Buyer Party shall have any obligation to defend any such claim
or
demand), then that portion thereof as to which such defense is unsuccessful,
and
the Indemnified Buyer Party’s reasonable costs and expenses in conducting such
defense (including reasonable attorneys’ fees and expenses) in each case shall
be conclusively deemed to be a liability of the Indemnifying Seller
Parties.
47
(e) In
the
event an Indemnified Buyer Party should have a claim against an Indemnifying
Seller Party hereunder that does not involve a claim or demand being asserted
against or sought to be collected from it by a third party, the Indemnified
Buyer Party shall promptly send a Claim Notice with respect to such claim to
such Indemnifying Seller Party. If any Indemnifying Seller Party disputes its
liability with respect to such claim or demand, such dispute shall be resolved
by a civil action in a court of appropriate jurisdiction which may be commenced
by either party; and if any Indemnifying Seller Party does not notify the
Indemnified Buyer Party within the Notice Period that it disputes such claim,
the amount of such claim shall be conclusively deemed a liability of the
Indemnifying Seller Parties hereunder.
(f) Nothing
contained herein shall be deemed to prevent any Indemnified Buyer Party from
making a claim hereunder for potential or contingent claims or demands provided
the Claim Notice sets forth the specific basis for any such potential or
contingent claim or demand and the estimated amount thereof to the extent then
feasible and the Indemnified Buyer Party has reasonable grounds to believe
that
such a claim or demand will be made.
(g) All
claims for indemnification by an Indemnified Seller Party under Article
V
shall be
asserted and resolved under the procedures set forth above substituting in
the
appropriate place “Indemnified Seller Party” for “Indemnified Buyer Party” and
variations thereof and “Buyer” for “Indemnifying Seller Party.”
5.4 Payments.
(a) Upon
a
determination of liability under this Article
V,
the
appropriate party shall pay the indemnified party the amount so determined
within 10 business days after the date of such determination. If there should
be
a dispute as to the amount or manner of determination of any indemnity
obligation owed under this Agreement, the party from which indemnification
is
due shall nevertheless pay when due such portion, if any, of the obligation
as
shall not be subject to dispute. Upon the payment in full of any claim, the
party or entity making payment shall be subrogated to the rights of the
indemnified party against any Person, firm, corporation or other entity with
respect to the subject matter of such claim. In computing the dollar amount
of
any claim resulting from any inaccuracy or breach of a representation or
warranty herein, as opposed to whether a breach has occurred, all materiality
and “material adverse effect” qualifications in this Agreement shall be
disregarded. All payments made pursuant to this Article
V
shall be
treated as adjustments to the Purchase Price.
(b) Notwithstanding
the foregoing provisions of Section
5.4(a),
any
items as to which any Indemnified Buyer Party is entitled to payment under
this
Agreement shall first be paid to the Indemnified Buyer from the Escrow Funds,
to
the extent that the then outstanding amount of the Escrow Funds is sufficient
to
pay such items. If the then outstanding amount of the Escrow Funds is
insufficient to pay any such item in full (including if the Escrow Funds have
been released), the payment of such item as to which the Indemnified Buyer
Party
is entitled to payment under this Agreement and which is not able to be paid
from the Escrow Funds shall be the joint and several obligation of the
Indemnifying Seller Parties, and the Indemnifying Seller Parties shall make
full
payment of any and all such items to the Indemnified Buyer Party within 10
business days after the date of determination of liability.
48
(c) If
all or
part of any indemnification obligation under this Agreement is not paid when
due
pursuant to Section
5.4(a),
then
the indemnifying party shall pay the indemnified party interest on the unpaid
amount of the obligation for each day from the date the amount became due until
payment in full, payable on demand, at a fluctuating rate per annum which at
all
times shall be equal to the “Prime Rate” published from time to time in the
“Money Rates” table of the Eastern Edition of The
Wall Street Journal
(“Prime
Rate”).
To
the extent that any indemnification obligation payable under this Agreement
addresses an out-of-pocket expense previously paid by the indemnified party,
such indemnification obligation shall include interest on the amount of the
out-of-pocket expense paid by the indemnified party for each day from the date
the expense was actually paid by the indemnified party until payment in full
by
the indemnifying party, at a fluctuating rate per annum which at all times
shall
be equal to the Prime Rate.
(d) The
parties hereto agree to report any indemnification payment made under this
Article
V
as an
adjustment to the Purchase Price for income tax purposes unless otherwise
required by a taxing authority.
5.5 Limitations.
(a) Any
Person against whom a claim for indemnification under this Article
V
(an
“Indemnification
Claim”)
is
being asserted (an “Indemnifying
Party”)
shall
not be obligated to defend and hold harmless any Person claiming indemnification
under this Article
V
(an
“Indemnified
Party”),
or
otherwise be liable to such Indemnified Party, with respect to any
Indemnification Claim made by the Indemnified Party after the applicable
Survival Period, except that indemnity may be sought after the expiration of
the
Survival Period if a Claim Notice with respect to such Indemnification Claim
shall have been delivered to the Indemnified Party prior to the expiration
of
the Survival Period.
(b) No
Indemnified Party shall be entitled to receive any indemnification payment
with
respect to Indemnification Claims made under Section
5.1(b)
or
Section
5.2(a),
as the
case may be, until the aggregate Losses that the Indemnified Buyer Parties
or
Indemnified Seller Parties, as the case may be, would otherwise be entitled
to
receive as indemnification with respect to Indemnification Claims (“Indemnified
Losses”)
exceed
0.75% of the Purchase Price (it being understood and agreed that neither the
Indemnified Buyer Parties nor Indemnified Seller Parties, as the case may be,
shall be liable for the first 0.75% of the Purchase Price of Losses for which
the Indemnified Parties are entitled to indemnification); provided that this
Section
5.5(b)
shall
not apply to (i) any intentional or knowing misrepresentations or any breaches
of covenants or agreements by either party, or (ii) indemnification pursuant
to
Section
5.1(b)
with
respect to a breach of Section
2.1.7
or
Section
2.1.19.
Solely
for purposes of determining whether the threshold of 0.75% of the Purchase
Price
has been exceeded hereunder, calculations of Indemnified Losses shall be made
without regard to materiality qualifiers contained in the applicable
representations and warranties in this Agreement.
(c) The
indemnification provided by each of the Seller Indemnified Parties and the
Buyer
Indemnified Parties under this Article
V
for any
Indemnification Claim and all Indemnification Claims shall be limited to 30%
of
the Purchase Price; provided that this Section
5.5(c)
shall
not apply to (i) any intentional or knowing misrepresentation or (ii)
indemnification pursuant to Section 5.1(a), (d), (e) or (f) or
Section 5.2(c), (d) or (e).
49
(d) Subject
to the limitations set forth in this Article
V,
consideration must be given to the amount that any party recovers as proceeds
of
insurance in respect of such Losses, net of any costs of collection, deductible,
premium adjustment, reimbursement obligation or other cost directly related
to
the insurance claim in respect of such Losses. Each Indemnified Party agrees
that it will use commercially reasonable efforts to prosecute all claims against
its insurers diligently and in good faith with regard to matters for which
Losses are claimed under this Article V.
Should
an Indemnified Party recover Losses and subsequently recover any amount from
an
insurer with respect to the matter for which such Losses were paid, such
Indemnified Party shall refund the lesser of (i) the Losses paid by the
Indemnifying Party and (ii) the amount recovered from the insurer.
(e) No
Indemnifying Party shall have any obligation to indemnify any Indemnified Party
for consequential damages, special damages, incidental damages, indirect
damages, lost profits, unrealized expectations or other similar items, except
to
the extent payable to a third party, nor shall any damages be calculated using
a
“multiplier” or any other similar method having a similar effect, except damages
arising from any breach of the representation and warranty set forth in the
first sentence of Section
2.1.5(e).
(f) Notwithstanding
anything to the contrary contained herein, Buyer and Sellers shall not have
any
liability following the Closing for any breach of Section
3.1.1(g),
the
first sentence of Section
3.1.4,
Section
3.1.8
or
Section
3.2
(the
“Representation
Covenants”),
other
than a claim for indemnification under this Article
V for
the
breach of representations or warranties that caused the breach of such
Representation Covenants.
5.6 Exclusive
Remedy.
The
indemnification rights of the parties under this Article
V
are the
exclusive remedies available to the Sellers and Buyer with respect to any claims
or disputes for monetary damages arising between the parties with respect to
the
Business or the Assets other than claims involving fraud, fraudulent action
or
intentional misrepresentation, with respect to which the parties’ rights and
remedies shall not be affected or diminished hereby. Claims hereunder for
monetary damages are in addition to any equitable rights or remedies, including
specific performance and right to rescission because of the other parties’
misrepresentation fundamentally affecting the character of the Business or
the
Assets.
ARTICLE
VI
MISCELLANEOUS
6.1 Termination.
(a) Anything
herein or elsewhere to the contrary notwithstanding, this Agreement may be
terminated at any time before the Closing Date only as follows:
(i) by
mutual
consent of Sellers and Buyer or by either party if Closing is prohibited by
change in law;
(ii) by
Sellers, if no Seller is in material breach of its obligations under this
Agreement, at any time (A) if all of the representations and warranties of
Buyer
contained herein or in any certificate or document delivered to Sellers pursuant
to the provisions hereof (considered collectively), or if any such
representation and warranty (considered individually), in each case without
giving effect to any updated information disclosed by Buyer to Sellers pursuant
to Section
3.2.2,
(x)
were/was incorrect in any material respect on the date hereof or (y)
become/becomes incorrect in any material respect such that it is reasonably
certain that any of the conditions set forth in Section
4.2.1
will not
be satisfied by the Outside Date (as it may be extended pursuant to this
Agreement or by mutual agreement of the parties), or (B) if Buyer failed to
comply in any material respect with any of the covenants or obligations set
forth herein, provided that in the case of the foregoing clause (A)(x) or (C)
above, Sellers shall have promptly given Buyer written notice of such failure
and Buyer shall not have cured same within 30 days of receipt of said
notice;
50
(iii) by
Buyer,
if Buyer is not in material breach of its obligations under this Agreement,
at
any time (A) if all of the representations and warranties of Sellers and SWC
contained herein or in any schedule, certificate or document delivered to Buyer
pursuant to the provisions hereof (considered collectively, without regard
to
materiality qualifiers contained in such representations and warranties), or
if
any such representation and warranty (considered individually), other than
any
of the representations and warranties (or portions thereof) which contain
materiality qualifiers, in each case without giving effect to any updated
information disclosed by Sellers to Buyer pursuant to Section
3.1.8,
(x)
were/was incorrect in any material respect on the date hereof or (y)
become/becomes incorrect in any material respect such
that
it is reasonably certain that any of the conditions set forth in Section
4.2.1
will not
be satisfied by the Outside Date (as it may be extended pursuant to this
Agreement or by mutual agreement of the parties), (B)
if
any of the representations and warranties of Sellers or SWC (or portions
thereof) which contain materiality qualifiers (considered individually), in
each
case without giving effect to any updated information disclosed by Sellers
to
Buyer pursuant to Section
3.1.8,
(x)
were/was incorrect in any respect on the date hereof or (y) become/becomes
incorrect in any respect such that it is reasonably certain that any of the
conditions set forth in Section
4.2.1
will not
be satisfied by the Outside Date (as it may be extended pursuant to this
Agreement or by mutual agreement of the parties), or (C) if either of the
Sellers or SWC failed to comply in any material respect with any of their
covenants or obligations set forth herein, provided that, in the case of the
foregoing clauses (A)(x), (B)(x) or (C) above, Buyer shall have promptly given
Sellers and SWC written notice of such failure and Sellers and SWC shall not
have cured same within 30 days of receipt of said notice;
(iv) by
either
Buyer or Sellers, if, through no fault of such terminating party or its
directors, officers, partners, members, shareholders or Affiliates, the Closing
does not occur by the date that is five months after the date of this Agreement
(the “Outside
Date”);
provided, however, that the Outside Date shall be extended through the date
that
is nine months after the date of this Agreement for any party who has complied
with or performed, or who is in a position to comply with or perform, all
conditions to the other party’s obligations other than receipt of one or more of
the regulatory approvals required for the consummation of the transaction,
and
provided further that if one or more of the required regulatory approvals have
not been received by such extended Outside Date, the parties will discuss in
good faith whether it is appropriate to further extend the Outside Date to
a
later time; or
(v) by
either
Buyer or Sellers upon written notice to the other party if the consummation
of
the transactions contemplated hereunder shall be prohibited by a final,
non-appealable order, decree or injunction of a court of competent
jurisdiction.
51
(b) In
the
event of the termination of this Agreement pursuant to the provisions of
Section
6.1(a),
this
Agreement shall become void and have no effect, without any liability on the
part of any of the parties or their partners, shareholders, directors, trustees,
beneficiaries or officers in respect of this Agreement except as set forth
below
in this Section
6.1(b);
provided, however, that Sections 3.1.5(b), 3.3.2, 6.1(b), 6.2, 6.6, 6.8, 6.9,
6.14, 6.15, 6.16, 6.17, 6.18 and 6.23 shall survive the termination of this
Agreement.
If the
termination was pursuant to Section
6.1(a)(ii)
or
6.1(a)(iii),
the
breaching party shall be liable to the other party for up
to
$500,000 of
third
party out-of-pocket costs and expenses of such other party in connection with
the preparation, negotiation, execution and performance of this Agreement,
and,
in addition to the foregoing, such other party may pursue all other remedies
available to it at law or in equity for any intentional or willful breach of
this Agreement. In the case where the breaching party is one or both of the
Sellers, SWC shall be liable to Buyer, on a joint and several basis with
Sellers, for any and all breaches of representations, warranties, covenants
and
other obligations hereunder by either Seller prior to the termination of this
Agreement.
6.2 Expenses.
Except
as otherwise provided in this Agreement, Sellers and SWC shall pay their own
expenses (including all fees and expenses of the Brokers), and Buyer shall
pay
its own expenses, incidental to the preparation of this Agreement, the carrying
out of the provisions of this Agreement and the consummation of the transactions
contemplated hereby. Buyer and Sellers shall each be responsible for half of
the
filing fees associated with making the application to the FCC for consent to
the
transactions contemplated by this Agreement, and Buyer and Sellers shall each
be
responsible for its or their own legal or other fees, costs and expenses
incurred in connection with such application.
6.3 Sales,
Transfer and Documentary Taxes.
All
income, franchise, franchise telephone tax, gross receipt, value added,
transfer, documentary, sales, use, stamp and registration Taxes (including
any
penalties and interest) (collectively, “Transfer
Taxes”)
incurred in connection with this Agreement shall be paid one-half by Sellers
and
one-half by Buyer when due. Sellers will, at their own expense, file all
necessary tax returns and other documentation with respect to all such Transfer
Taxes, and, if required by applicable law, Buyer will, and will cause its
Affiliates to, join in the execution of any such Tax returns and other
documentation. Sellers shall submit to Buyer proof of payment of such Transfer
Taxes within 90 days following the Closing. For purposes of calculating Transfer
Taxes due in connection with this Agreement, the parties have agreed that $2.5
million shall be allocated to tangible personal property.
6.4 Further
Assurances.
Sellers
from time to time after the Closing, at Buyer’s request, will execute,
acknowledge and deliver to Buyer such other instruments of conveyance and
transfer and will take such other actions and execute and deliver such other
documents, certifications and further assurances as Buyer may reasonably require
in order to vest more effectively in Buyer, or to put Buyer more fully in
possession of, any of the Assets, or to better enable Buyer to complete, perform
or discharge any of the Assumed Liabilities. Each party will cooperate with
the
other and execute and deliver to the other party such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by the other party as necessary to carry out, evidence and confirm
the
intended purposes of this Agreement.
6.5 Confidentiality
Undertaking by Sellers.
From
and after the consummation of the Closing, each Seller agrees that it shall
not,
and shall cause it Affiliates not to, take any action whatsoever that would
result in disclosure to any third party of the Business’s customer list or any
part thereof or any information contained therein or any other confidential
or
proprietary information of or about the Assets or the Business, or any
information provided to Sellers pursuant to Section
3.3.2,
nor
shall either Seller use or permit any of its Affiliates to use any such
confidential or proprietary information or any information provided to Sellers
pursuant to Section
3.3.2
to
solicit customers or former customers of the Business or otherwise for its
own
benefit, provided that none of such parties shall be required to maintain
confidential any information which: (a) is in the published literature or known
to the public prior to the date hereof or becomes published in the literature
or
known to the public after the date hereof through no fault of such parties;
(b)
is obtained from a third party that is rightfully in possession of such
information and that has the unconditional right to disclose such information
to
such parties; or (c) is required by law to be disclosed; provided further,
however, that the foregoing exceptions in clauses (a) and (b) shall not apply
to
“customer proprietary network information” as defined in 47 U.S.C. §
222(h)(1).
52
6.6 Contents
of Agreement; Parties in Interest.
(a) This
Agreement, including its Schedules and Exhibits, which are specifically
incorporated herein, together with the Confidentiality Agreement between Buyer
and UBS Securities LLC, as representative of SWC, dated August 21, 2007 (the
“Nondisclosure
Agreement”),
set
forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby and supersede any and all previous agreements
and understandings, oral or written, between or among the parties regarding
the
transactions contemplated hereby. This Agreement shall not be amended or
modified except by written instrument duly executed by each of the parties
hereto.
(b) The
parties agree that Buyer’s obligations under the Nondisclosure Agreement, except
for its obligations under paragraph 5 regarding solicitation of employees of
SWC, shall terminate automatically as of the Closing and shall not survive
thereafter, without any further action on the part of either party being
required.
6.7 Assignment
and Binding Effect.
This
Agreement may not be assigned in whole or in part prior to the Closing by any
party hereto without the prior written consent of the other party, provided
that
Buyer shall have the right to assign its rights and/or obligations under this
Agreement in whole or in part to one or more of its wholly-owned Affiliates,
but
no such assignment shall relieve Buyer of its obligations under this
Agreement.
6.8 Waiver.
No
waiver of any term or provision of this Agreement shall be effective unless
in
writing, signed by the party against whom enforcement of the same is sought.
The
grant of a waiver in one instance does not constitute a continuing waiver in
all
similar instances. No failure to exercise, and no delay in exercising, by any
party, any right, remedy, power or privilege hereunder shall operate as a waiver
thereof.
6.9 Notices.
Any
notice, request, demand, waiver, consent, approval or other communication which
is required or permitted hereunder shall be in writing and shall be deemed
given
only if delivered personally or sent by registered or certified mail or by
Federal Express or other overnight mail service, postage prepaid, or by fax,
with written confirmation to follow, as follows:
If
to
Buyer, to:
Verizon
Wireless
Xxx
Xxxxxxx Xxx, XX00X-000
Xxxxxxx
Xxxxx, XX 00000
Attention: |
Xxxxxxx
X. Xxxxxxx
|
Director
- Business Development
|
Facsimile:
(000) 000-0000
53
With
a
required copy to:
Verizon
Wireless
Xxx
Xxxxxxx Xxx, XX00X-000
Xxxxxxx
Xxxxx, XX 00000
Attention:Xxxxxx
X.
Xxxxxxx, Esq.
Facsimile:
(000) 000-0000
If
to
either Seller or to SWC, to:
000
Xxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Attention: |
Xxxxxx
X. Xxxxxx
|
President
and CEO
|
Facsimile:
(000) 000-0000
With
a
required copy to:
Xxxxxxx
Xxxxxxxx, Esq.
General
Counsel
000
Xxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Facsimile:
(000) 000-0000
Xxxxxx,
Xxxxxxxxxx & Xxxxxxxxx LLP
000
Xxxxxx Xxxxxx
Xxx
Xxxxxxxxx, XX 00000
Attention:
Xxxx Xxxx, Esq.
Facsimile:
(000) 000-0000
or
to
such other address or facsimile numbers as the addressee may have specified
in a
notice duly given to the sender as provided herein. Such notice, request,
demand, waiver, consent, approval or other communication will be deemed to
have
been given as of the date so delivered.
6.10 Remedies.
The
parties acknowledge and agree that the material
Assets,
including the FCC Authorizations, are unique and that remedies at law, including
monetary damages, will be inadequate in the event of a willful breach by either
of the Sellers or SWC in the performance of its obligations to close the
transactions governed by this Agreement. Accordingly, the parties agree that
in
the event of any such breach by a Seller or SWC, Buyer shall be entitled to
a
decree of specific performance pursuant to which the breaching party is ordered
to affirmatively carry out its obligation to close the transactions governed
by
this Agreement. The foregoing shall not be deemed to be or construed as a waiver
or election of remedies by Buyer, and Buyer expressly reserves any and all
rights and remedies available to it at law or in equity in the event of any
breach or default by a Seller or SWC under this Agreement.
6.11 Discharge
of Obligations.
From
and after the Closing Date, Sellers shall pay and discharge, in accordance
with
past practice but not less than on a timely basis, all obligations and
liabilities incurred prior to the Closing Date in respect of the Business or
the
Assets except for the Assumed Liabilities, unless any such obligation or
liability is being contested in good faith by a Seller.
54
6.12 Payments
Received.
Sellers
and Buyer agree that after the Closing they will hold and will promptly transfer
and deliver to the other, from time to time as and when received by them, any
cash, checks with appropriate endorsements (using their best efforts not to
convert such checks into cash), or other property that they may receive on
or
after the Closing which properly belongs to the other party, including any
insurance proceeds, and will account to the other for all such receipts. From
and after the Closing, Buyer shall have the right and authority to endorse
without recourse the name of either Seller on any check or any other evidences
of indebtedness received by Buyer on account of the Business and the Assets
transferred to Buyer hereunder.
6.13 UCC
Matters.
From
and after the Closing Date, Sellers will promptly refer all inquiries with
respect to ownership of the Assets or the Business to Buyer. In addition,
Sellers will execute and file, or authorize Buyer to file, in the appropriate
state and local jurisdictions, such documents and financing statements as Buyer
may reasonably request from time to time to evidence transfer of the Assets
to
Buyer, including any necessary assignments of financing statements.
6.14 Schedules
and Exhibits.
All
Exhibits and Schedules referred to herein are intended to be and hereby are
specifically made a part of this Agreement.
6.15 Governing
Law.
This
Agreement shall be governed by and interpreted and enforced in accordance with
the laws of the State of New York without reference to any portion thereof
that
would result in the application of the law of any other jurisdiction. In
connection with any controversy arising out of or related to this Agreement,
SWW, West Coast, SWC and Buyer each hereby irrevocably consents to the
jurisdiction of the United States District Court for the Southern District
of
New York, if a basis for federal court jurisdiction is present, and, otherwise,
in the state courts of the State of New York. SWW, West Coast, SWC and Buyer
each hereby irrevocably consents to service of process out of the aforementioned
courts and waives any objection which it may now or hereafter have to the laying
of venue of any action or proceeding arising out of or in connection with this
Agreement brought in the aforementioned courts and hereby further irrevocably
waives and agrees not to plead or claim in such courts that any such action
or
proceeding brought in such courts has been brought in an inconvenient
forum.
6.16 No
Benefit to Others.
The
representations, warranties, covenants and agreements contained in this
Agreement are for the sole benefit of the parties hereto and, in the case of
Article
V
hereof,
the other indemnified parties, and their heirs, executors, administrators,
legal
representatives, successors and assigns, and they shall not be construed as
conferring any rights on any other Persons.
6.17 Construction
and Certain Definitions.
All
section headings contained in this Agreement are for convenience of reference
only, do not form a part of this Agreement and shall not affect in any way
the
meaning or interpretation of this Agreement. Words used herein, regardless
of
the number and gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other gender, masculine,
feminine, or neuter, as the context requires. For purposes of references herein
to a “party”
or
to
the “parties,”
Sellers shall be considered collectively as a single party whenever appropriate
in the context. Any reference to a “Person”
herein
shall include an individual, firm, corporation, partnership, limited liability
company, trust, governmental authority or body, association, unincorporated
organization or any other entity. Whenever used in this Agreement, the word
“including”
and
variations thereof, even when not modified by the phrase “but not limited to” or
“without limitation” shall not be construed to imply any limitation and shall
mean “including but not limited to.” “Knowledge”
and
“Know”
and
variations thereof with respect to Sellers shall mean the actual knowledge
of
the President, any of the Vice Presidents or the General Counsel of SWC or
the
Sellers. “Seller
Material Adverse Effect”
means
a
material adverse effect on the Assets or the condition or results of operations
of the Sellers, taken as a whole; provided, however, that in determining whether
a Seller Material Adverse Effect has occurred, there shall be excluded any
effect on any Seller the cause of which is (i) the negotiation (including
activities relating to due diligence), execution, delivery or public
announcement or the pendency of this Agreement or the transactions contemplated
hereby or any actions taken in compliance herewith or otherwise on the
instruction of Buyer, including the impact thereof on the relationships of
any
Seller with its customers, suppliers, distributors, consultants, employees
or
independent contractors or other third parties with whom any Seller has any
relationship, (ii) any change in GAAP or federal or state law, regulations,
policies or procedures, or interpretations thereof of general application,
(iii)
changes generally affecting the wireless telecommunication industry, (iii)
changes in economic conditions (including changes in the prevailing interest
rates) in the United States, or in any region thereof, generally, or in any
non-U.S. or global economy, or (iv) any attack on, or by, outbreak or escalation
of hostilities or acts of terrorism involving, the United States, or any
declaration of war by the United States Congress.
55
6.18 Severability.
Any
provision of this Agreement that is invalid or unenforceable in any jurisdiction
shall be ineffective to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining provisions hereof,
and such invalidity or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provisions in any other jurisdiction. Moreover,
the
parties agree that the invalid or unenforceable provision shall be enforced
to
the maximum extent permitted by law in accordance with the intention of the
parties as expressed by such provision.
6.19 Counterparts
and Facsimile Signatures.
This
Agreement may be executed in any number of counterparts and any party hereto
may
execute any such counterpart, each of which when executed and delivered shall
be
deemed to be an original and all of which counterparts taken together shall
constitute but one and the same instrument. This Agreement shall become binding
when one or more counterparts taken together shall have been executed and
delivered by all of the parties. It shall not be necessary in making proof
of
this Agreement or any counterpart hereof to produce or account for any of the
other counterparts. The parties intend to sign and deliver this Agreement by
facsimile transmission. Each party agrees that the delivery of this Agreement
by
facsimile shall have the same force and effect as delivery of original
signatures and that each party may use such facsimile signatures as evidence
of
the execution and delivery of this Agreement by all parties to the same extent
that an original signature could be used.
6.20 Final
Tax Clearance Certificate.
The
Sellers shall deliver to Buyer within 60 days after the Closing Date a Tax
clearance certificate under California Revenue and Taxation Code Section 6812
releasing Buyer from liability with respect to any sales or use Tax of Sellers.
6.21 Agreements;
Representations and Warranties of SWC.
(a) SWC
hereby agrees to cause each Seller to perform all of its covenants and
obligations under this Agreement.
(b) SWC
hereby represents and warrants to Buyer that it is a corporation, duly
organized, validly existing and in good standing, under the laws of the State
of
California.
(c) SWC
hereby represents and warrants to Buyer that (i) it has all requisite power,
authority and legal right, and has taken all action necessary, in order to
execute, deliver and perform its obligations under this Agreement; (ii) this
Agreement has been, and any other Transaction Documents which it shall deliver
to Buyer will be as of the respective dates of delivery of such Transaction
Documents, duly authorized, executed and delivered by it, and this Agreement
constitutes, and each such other Transaction Document when executed and
delivered will constitute, the legal, valid and binding obligations of SWC,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy laws and other similar laws
affecting creditors’ rights generally.
56
(d) SWC
hereby represents and warrants to Buyer that neither the execution, delivery
and
performance by SWC of this Agreement and the other Transaction Documents, nor
the consummation of the transactions contemplated hereunder, will violate,
conflict with or result in a breach of any term, condition or provision of,
or
require the consent of any Person under, (i) any existing law, ordinance or
governmental rule or regulation to which SWC is subject; (ii) any judgment,
order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which is applicable
to
SWC; (iii) the certificate of incorporation or bylaws of SWC; or (iv) any
mortgage, indenture, agreement, contract, commitment, lease, plan, license,
permit, approval, authorization, instrument, document or understanding, oral
or
written, to which SWC is a party or subject, or by which SWC may have rights,
or
give any party with rights thereunder the right to terminate, modify, accelerate
or otherwise change the existing rights or obligations of SWC thereunder.
(e) SWC
shall
be subject to, bound by and entitled to the benefits of the other relevant
provisions of this Article
VI
in the
same manner as such provisions apply to Sellers.
6.22 Amendment.
This
Agreement may not be amended except by an instrument in writing signed on behalf
of Buyer, each Seller and SWC.
6.23 WAIVER
OF JURY TRIAL.
EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF
OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION
HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (a) NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE SUCH WAIVER, (b) IT UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (c) IT MAKES SUCH WAIVER
VOLUNTARILY, AND (d) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION
6.23.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
57
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the
date first written above.
CELLCO
PARTNERSHIP
|
||
D/B/A
VERIZON WIRELESS
|
||
By:
|
/s/
Xxxxxx X. XxXxxx
|
|
|
Name:
Xxxxxx X. XxXxxx
|
|
|
Title:
President and Chief Executive Officer
|
|
SUREWEST
WIRELESS
|
||
By:
|
/s/
Xxxxxx X. Xxxxxx
|
|
|
Name:
Xxxxxx X. Xxxxxx
|
|
|
Title:
President and Chief Executive Officer
|
|
WEST
COAST PCS LLC
|
||
By:
|
/s/
Xxxxxx X. Xxxxxx
|
|
|
Name:
Xxxxxx X. Xxxxxx
|
|
|
Title:
President and Chief Executive Officer
|
|
Executed
solely for the purposes set forth in the opening paragraph of this
Agreement:
|
||
By:
|
/s/
Xxxxxx X. Xxxxxx
|
|
|
Name:
Xxxxxx X. Xxxxxx
|
|
|
Title:
President and Chief Executive
Officer
|