ASSET PURCHASE AGREEMENT
between
FIRST CELLULAR OF MARYLAND, INC.
and
XXXXXX CELLULAR OF MARYLAND, INC.
DATED AS OF NOVEMBER 24, 1998
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of the 24th day of November,
1998, by and between FIRST CELLULAR OF MARYLAND, INC., a Delaware corporation
("Seller"), and XXXXXX CELLULAR OF MARYLAND, INC., an Oklahoma corporation
("Purchaser").
R E C I T A L S
WHEREAS, Seller owns all right, title and interest in those certain
licenses listed on SCHEDULE 2.01(a) as "FCC Cellular Authorizations" granted
by the Federal Communications Commission (the "FCC") to provide cellular
radio telephone service in each of (i) the FCC's rural service area ("RSA")
#1 in the State of Maryland, (ii) the portion of the Cumberland, Maryland
xxxxxxxxxxxx xxxxxxxxxxx xxxx ("XXX") covered under 269 (A-2), Call Sign
KNKR271 and (iii) any and all extensions into the areas adjacent to such RSA
and MSA listed on Schedule 2.01(a) (collectively, the "Cellular Areas") and
owns and operates non-wireline cellular telephone systems in the Cellular
Areas (individually a "Cellular System" and collectively the "Cellular
Systems");
WHEREAS, Seller owns all right, title and interest in those certain
licenses listed on SCHEDULE 2.01(a) as "FCC Paging Authorizations" granted by
the FCC to provide paging service from transmitters located in the Cellular
Areas and owns and operates a paging system covered by such FCC Paging
Authorizations (the "Paging System") (the Paging System and the Cellular
Systems shall sometimes be referred to collectively as the "Systems"); and
WHEREAS, Purchaser desires to purchase from Seller, and Seller desires
to sell to Purchaser, substantially all of the assets and rights of Seller
relating to the ownership and operation of the Systems (the "Business"), all
subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements herein set forth and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
Subject to the terms and conditions set forth in this Agreement, Seller
agrees to sell, convey, assign, transfer and deliver to Purchaser, and
Purchaser agrees to purchase from Seller at the Closing, all of Seller's
right, title and interest in and to the Assets (as defined in Section 2.01
hereof), free and clear of all debts, liabilities, obligations, taxes, other
than Assumed Liabilities, and free and clear of all security interests,
liens, pledges, charges, rights of third parties and encumbrances of every
kind (collectively, "Liens") other than Permitted Liens. As used herein, the
term "Permitted Liens" means (i) any Lien for taxes and assessments not yet
past due or otherwise being contested in good faith and for which appropriate
reserves have been established
and are taken into account in the Working Capital Adjustment, (ii) any Lien
arising out of deposits made to secure leases or other obligations of a like
nature arising in the ordinary course of business, (iii) any Lien provided
for in any contract or lease listed on the disclosure schedules hereto and
not related to any indebtedness for borrowed money, (iv) any Lien that does
not materially interfere with the use by Seller of the property subject
thereto or affected thereby (including any easements, rights of way,
restrictions, installations or public utilities, title imperfections and
restrictions, reservations in land patents, zoning ordinances or other
similar Liens), (v) as to leaseholds, interests of the lessors thereof and
Liens affecting the interests of such lessors and (vi) any Lien set forth on
SCHEDULE 1 attached hereto.
ARTICLE II
DESCRIPTION OF ASSETS; EXCLUDED ASSETS
SECTION 2.01. ASSETS. The assets to be conveyed to Purchaser shall
include all real and personal tangible and intangible assets, properties and
rights owned by Seller of whatever description which relate in any way to the
ownership, use or operation of the Business, except assets excluded pursuant
to Section 2.02 hereof, but including all property and rights acquired or
obtained by Seller from the date hereof through the date of Closing
(collectively, the "Assets"). Such Assets shall be free and clear of all
Liens other than Permitted Liens as of the Closing. Such Assets shall
include, without limitation:
(a) Seller's FCC authorizations to operate (i) non-wireline
cellular telecommunications systems in the Cellular Areas (the "Cellular
Authorizations") and microwave paths used in connection with such cellular
operations (the "Microwave Authorizations" and together with the Cellular
Authorizations, the "FCC Cellular Authorizations") and (ii) a paging system
from the transmitters covered by the FCC Paging Authorizations (the "FCC
Paging Authorizations", and together with the FCC Cellular Authorizations,
the "FCC Authorizations"); all leases, agreements, licenses, permits,
consents, revenue sharing agreements, agreements for the reception or
transmission of signals by microwave; all easements, appurtenances,
rights-of-way and construction permits, if any, related to the Business; all
right, title and interest, if any, in and to all streets, roads and public
places, open or proposed; all agreements between Seller and any suppliers,
cellular telephone service companies and subscribers, paging service
companies and subscribers, and all other similar rights and agreements
(including roaming and interconnection agreements), including all
applications therefor, which in any way may relate to or concern the
operation by Seller of the Business, all of which items (other than those not
required to be listed pursuant to Sections 7.06 and 7.07 of this Agreement)
are more particularly set forth on SCHEDULE 2.01(a) attached hereto.
(b) Originals or copies (at Seller's option) of all of Seller's
files of correspondence, lists, records and reports concerning (i) customers
and prospective customers of the Business and (ii) all dealings with Federal,
state and local regulatory agencies with respect to the Business, including,
but not limited to, all reports filed by or on behalf of Seller with the FCC.
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(c) All of Seller's right, title and interest in and to towers,
tower equipment, antennas, switching and cell site equipment and buildings,
construction in progress, microwave equipment, machinery, transmitters,
paging equipment, testing equipment, inventory and spare parts used in or
relating to the Business, and all modifications, additions, restorations or
replacements of the whole or any part thereof, substantially all of which
tangible assets as of the date hereof are described on SCHEDULE 2.01(c)
attached hereto.
(d) All real property, leaseholds and other interests in real
property of Seller used in or relating to the Business, as described on
Schedule 2.01(d) attached hereto.
(e) All of Seller's right, title and interest to engineering
records, files, data, drawings, blueprints, schematics, maps, reports, lists
and plans and processes intended for use in connection with the Business
provided that Seller may retain a copy thereof.
(f) All of the following: inventions, trademarks, service marks,
trade dress, trade names, logos and registrations and applications for a
registration thereof together with all of the goodwill associated therewith,
copyrights and copyrightable works and registrations and applications for the
registration thereof, computer software, data, data bases, documentation
thereof, trade secrets and other confidential information, other intellectual
property rights and intangible embodiments thereof (in whatever form or
medium); together with all books, records, drawings and other indicia,
however evidenced; in each case including, without limitation, the items set
forth on SCHEDULE 2.01(f) attached hereto.
(g) All communications towers, buildings, fixtures and other
improvements including, without limitation, all electrical, mechanical,
plumbing and other building systems, security and surveillance systems and
wiring and cable installations located on the property leased by Seller.
(h) All prepayments and prepaid expenses.
(i) All claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind.
(j) The right to receive and retain mail and other
communications.
(k) All advertising, marketing and promotional materials and all
other related printing or written materials.
(l) All goodwill as a going concern.
(m) Any assets of the type-described above which are acquired
after the date hereof but prior to the Closing.
SECTION 2.02. EXCLUDED ASSETS. (a) The properties and assets described
in SCHEDULE 2.02 attached hereto and in Section 2.02(b) of this Agreement
which relate to the Business shall not be
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included in the Assets, shall be retained by Seller and shall not be sold,
assigned or transferred to Purchaser (the "Excluded Assets").
(b) Anything in this Agreement to the contrary notwithstanding,
the Assets sold to the Purchaser pursuant to the terms of this Agreement
shall not include the Seller's corporate records, books of account, cash,
bank deposits and cash equivalents at the time of the Closing, insurance
policies and rights and claims thereunder, bonds, letters of credit, surety
instruments and other similar items, and all claims, rights and interests in
and to any refunds of taxes or fees of any nature, or other claims against
third parties (including collection claims involving delinquent subscribers
who are not active subscribers of the Systems as of the Closing Date and no
portion of whose account receivable is included in the Current Assets (as
defined in Section 5.05(a) as of the Closing Date).
ARTICLE III
ASSUMPTION OF LIABILITIES
At Closing, Purchaser shall assume and agree to perform and discharge
the following to the extent not previously performed or discharged as of the
Closing: (i) all obligations of Seller which accrue and are to be performed
from and after the Closing under those permits, authorizations, licenses,
leases, rights of way, easements and other agreements either set forth on
SCHEDULES 2.01(a) AND (d) attached hereto or those agreements of a
non-material nature which are not required by this Agreement to be disclosed
on SCHEDULES 2.01(a) AND (d) and (ii) all other obligations of Seller entered
into during the period from the date hereof to the Closing by Seller in the
ordinary course of its business in accordance with the provisions of Section
9.05 below and that were identified to and consented by Purchaser (all of
such permits, authorizations, licenses, leases, rights of way, easements and
other agreements referred to in items (i) and (ii) being referred to
hereinafter as the "Assumed Contracts"); and (iii) all "Current Liabilities"
(as defined in Section 5.05(a) hereof) but only if and to the extent that
Purchaser receives a credit against the Purchase Price at the Closing (such
items (i) through (iii) are collectively referred to herein as the "Assumed
Liabilities"). Purchaser shall not be liable for any liabilities, debts,
contracts, agreements, including without limitation any contracts or
agreements set forth on SCHEDULE 2.02, or other obligations of Seller of any
nature whatsoever other than the Assumed Liabilities (such other liabilities,
debts, contracts, agreements or obligations of Seller other than the Assumed
Liabilities being referred to as "the Non-Assumed Liabilities").
ARTICLE IV
INSTRUMENTS OF TRANSFER
AND ASSUMPTION
SECTION 4.01. TRANSFER DOCUMENTS. At the Closing, Seller will deliver
to Purchaser (a) one or more Bills of Sale in substantially the form attached
hereto as EXHIBIT A (a "Xxxx of Sale"), (b) all such other good and
sufficient instruments of sale, transfer and conveyance, including, without
limitation, assignments of leases, in such form and including such matters as
Purchaser shall reasonably request and as shall be reasonably acceptable to
Seller, as shall be effective to vest in Purchaser all of Seller's right and
title to, and interest in, the Assets; and (c) all contracts
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and commitments, instruments, books and records (except as otherwise provided
in Section 2.02 hereof) and other data included in the Assets.
SECTION 4.02. ASSUMPTION DOCUMENTS. At the Closing, Purchaser and
Seller will execute and deliver (a) an Assumption Agreement in substantially
the form attached hereto as EXHIBIT B (the "Assumption Agreement") and (b)
all such other good and sufficient instruments of assumption in such form and
including such matters as Seller shall reasonably request and as shall be
reasonably acceptable to Purchaser in order to effect the assumption of the
Assumed Liabilities by Purchaser.
ARTICLE V
PURCHASE PRICE; ALLOCATION
SECTION 5.01. PURCHASE PRICE. The total purchase price for the Assets
shall be Nine Million One Hundred Thousand Dollars ($9,100,000) (the "Base
Price"), as adjusted in accordance with the provisions of Section 5.05 hereof
(as adjusted, the "Purchase Price").
SECTION 5.02. DEPOSIT. Simultaneously with the execution of this
Agreement, Purchaser is depositing as a good faith deposit Nine Hundred Ten
Thousand Dollars ($910,000) (the "Deposit") with PNC Bank, National
Association (the "Escrow Agent"), to be held, invested and disbursed pursuant
to the terms of the Deposit Escrow Agreement in the form of EXHIBIT C
attached hereto (the "Deposit Escrow Agreement"). If the Closing occurs,
then the Deposit and all earnings on the Deposit shall be paid to Purchaser
pursuant to the Deposit Escrow Agreement and the full amount of the Deposit
and the earnings thereon shall be credited against and deducted from the
Purchase Price to be paid at the Closing by Purchaser for the Assets. If
Seller terminates this Agreement in accordance with the provisions of Section
15.02(d) and, at the time of such termination Seller is not then in breach of
any of its representations, warranties, covenants or agreements set forth in
this Agreement to such an extent that Seller's breaches, in the aggregate,
have caused or would reasonably be expected to cause Purchaser to suffer a
Material Loss (as defined in Section 10.01) or otherwise result in a Material
Adverse Effect (as defined in Section 10.01) and the conditions set forth in
Sections 10.04 and 10.05 would have been satisfied had Closing occurred on
the date Seller terminates this Agreement, then Seller shall be entitled to
the Deposit as liquidated damages (the "Liquidated Damages Amount"), which
Liquidated Damages Amount the parties hereby agree is a fair and reasonable
measure of the damages that Seller would sustain as a result of such
termination. Notwithstanding anything else set forth in this Section 5.02,
Seller's sole and exclusive recourse against Purchaser or any of its
subsidiaries or affiliates for any breach by Purchaser of its representations
or obligations hereunder (including in the event Seller terminates this
Agreement in accordance with the provisions of Section 15.02(d)) shall be to
receive the Liquidated Damages Amount. In any other case if the Closing does
not occur, then, pursuant to the Deposit Escrow Agreement, the Deposit and
all earnings thereon shall be paid to Purchaser. All payments by the Deposit
Escrow Agent shall be made, in accordance with the procedures and other
provisions set forth in the Deposit Escrow Agreement.
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SECTION 5.03. PAYMENT OF PURCHASE PRICE. The Purchase Price less an
amount equal to Four Hundred Twenty-Five Thousand Dollars ($425,000) (the
"Escrow Payment"), shall be payable by wire transfer of immediately available
funds to Seller at Closing. The Escrow Payment shall be paid by the
Purchaser at Closing to the Escrow Agent to be held, invested and disbursed
pursuant to the terms of the Closing Escrow Agreement substantially in the
form of EXHIBIT D attached hereto (the "Closing Escrow Agreement").
SECTION 5.04. ALLOCATION OF PURCHASE PRICE. Prior to the Closing,
Purchaser and Seller in good faith shall each use their respective
commercially reasonable efforts to agree on an allocation of the Purchase
Price and the Assumed Liabilities in accordance with the respective fair
market value of the Assets being purchased and as provided for under Section
1060 of the Code. Purchaser and Seller each further agree to file their
income tax returns and their other tax returns and IRS Form 8594 reflecting
the allocation as determined in this Section 5.04 unless otherwise required
by applicable legal requirements. If no agreement on an allocation of the
Purchase Price with respect to the Assets is reached within such thirty (30)
day period, such allocation of the Purchase Price to the Assets shall be
determined by a nationally recognized appraisal firm mutually agreeable to
Seller and Purchaser and the costs of such appraisal shall be borne equally
by Seller and Purchaser.
SECTION 5.05. PURCHASE PRICE ADJUSTMENT.
(a) As used in this Section 5.05, the following terms shall have
the meaning set forth below:
"CURRENT ASSETS" means the Systems' prepaid items which Purchaser will
receive the benefit of after the Closing such as prepaid rent, property
taxes, utility charges, fees and deposits paid, all determined as of 12:01
a.m. on the Closing Date in accordance with GAAP.
"CURRENT LIABILITIES" means the Systems' (i) subscriber deposits
received, (ii) deferred revenue, (iii) accrued employee vacation and sick pay
expense, (iv) salaries, bonuses, fringe benefits and other remuneration
payable to employees to be hired by Purchaser to the extent not paid (or
provided for by Seller on the Closing Date), (v) expenses for goods and
services received in the normal course of business including taxes, utility
charges, special assessments, commissions, fees and (vi) other trade payables
and accrued expenses incurred in the normal course of business, all
determined as of 12:01 a.m. on the Closing Date in accordance with GAAP.
"GAAP" means generally accepted accounting principles consistently
applied.
(b) The Base Price shall be increased (or decreased) by the
amount by which Current Assets exceeds (or is less than) Current Liabilities
as of the Closing Date (the "Working Capital Adjustment").
(c) Seller shall prepare and submit to Purchaser, not later than
thirty (30) days prior to the Closing Date, a written good faith estimate of
the amount of the Working Capital
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Adjustment and Seller's estimate of the Purchase Price resulting from the
Working Capital Adjustment ("Seller's Estimate"). Seller's Estimate shall be
accompanied by detailed supporting documents, work papers, subscriber records
and other data supporting the Working Capital Adjustment and Seller's
Estimate. The Seller's Estimate shall be based upon the books and records of
the Systems. The Seller's Estimate shall be accompanied by a certificate
signed by the President or Chief Financial Officer of Seller certifying that
Seller's Estimate was calculated in good faith and in accordance with the
provisions of this Section 5.05. After the delivery of Seller's Estimate and
prior to the Closing, Purchaser and Seller shall attempt to resolve any
disputes between Seller and Purchaser with respect to Seller's proposed
Working Capital Adjustments. In connection therewith, Purchaser shall have
full access to all Seller's records related to Seller's proposed Working
Capital Adjustment. At least ten (10) days prior to Closing, Purchaser shall
advise Seller in writing as to any dispute Purchaser has with Seller's
Estimate and provide Seller with Purchaser's calculation of the Working
Capital Adjustment and the Purchase Price, accompanied by a certificate
signed by the President or Chief Financial Officer of Purchaser certifying
that Purchaser's calculation was made in good faith and shall be accompanied
by supporting documents and information, to the extent the same is available
to Purchaser ("Purchaser's Estimate"). In the event Purchaser's Estimate of
the Purchase Price is less than $15,000 less than Seller's Estimate, the
Closing shall proceed with the Purchase Price based upon Seller's Estimate.
In the event the Purchaser's Estimate of the Purchase Price is more than
$15,000 less than Seller's Estimate, then the mid-point between Seller's
Estimate and Purchaser's Estimate shall be used as the Purchase Price for
purposes of Closing.
Within 90 days after the Closing Date, Purchaser shall deliver to Seller
a certificate (the "Closing Certificate") signed by the President or Chief
Financial Officer of Purchaser providing a compilation of the Working Capital
Adjustment to be made pursuant to this Section 5.05 including any changes in
the Working Capital Adjustment used to determine the Purchase Price at
Closing, together with a copy of any supporting documents, work papers,
subscriber records and other data relating to such Closing Certificate and
such other supporting evidence as Seller may reasonably request either prior
to or after delivery thereof. If Seller shall conclude that the Closing
Certificate does not accurately reflect the Working Capital Adjustment to be
made to the Base Price in accordance with this Section 5.05, Seller shall,
within 30 days after their receipt of the Closing Certificate (such 30 day
period being referred to as the "Response Period"), deliver to Purchaser a
written statement of any discrepancies believed to exist. If Seller fails to
so notify Purchaser of any discrepancies, then the calculation of the
Purchase Price set forth in the Purchaser's Closing Certificate shall be
controlling for all purposes hereof and Purchaser or Seller, as the case may
be, shall on or before the fifth business day following the expiration of the
Response Period pay to the other the amount which it is obligated to pay in
accordance with the Closing Certificate. On or before the fifth business day
following the earlier to occur of the expiration of the Response Period and
the date Purchaser receives Seller's statement of discrepancies, Purchaser or
Seller, as the case may be, shall pay the other the amount, if any, as to
which there is no discrepancy. Purchaser and Seller shall use good faith
efforts to jointly resolve their discrepancies within 15 days of Purchaser's
receipt of Seller's written statement of discrepancies, which resolution, if
achieved, shall be binding upon the parties and not subject to further
dispute or review. In the event Purchaser and Seller are unable to resolve
their differences within such fifteen (15) day period, then either party may
request that the matter be
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resolved by Price Waterhouse (the "Independent Accountants"). In submitting
a dispute to the Independent Accountants, each of the parties shall furnish,
at its own expense, the Independent Accountants and the other party with such
documents and information as the Independent Accountants may reasonably
request. Each party may also furnish to the Independent Accountants such
other information and documents as it deems relevant with the appropriate
copies and notification being given to the other party. The Independent
Accountants may conduct a conference concerning the disagreements between
Seller and Purchaser at which conference each party shall have the right to
present additional documents, material and other evidence and to have present
its advisors, accountants and counsel. The Independent Accountants shall
promptly render a decision on the issues presented, and such decision shall
be final and binding on the parties. The fees and expenses of the
Independent Accountants shall be divided equally between Purchaser and
Seller. Within 5 days of receipt of the Independent Accountants' decision
with respect to such dispute, if Purchaser is determined to owe an amount to
Seller, Purchaser shall pay such amount thereof to Seller, and if Seller is
determined to owe an amount to Purchaser, Seller shall pay such amount
thereof to Purchaser. All amounts owed by Purchaser or Seller to the other
in accordance with this Section 5.05(c) shall be paid by wire transfer of
immediately available funds and shall not bear any interest. Any amount due
Purchaser from Seller under this Section 5.05 and not paid when due may also
be paid from the funds held pursuant to the Escrow Agreement.
ARTICLE VI
CLOSING
Subject to the terms and conditions hereof, the closing (the "Closing")
shall take place at the offices of Xxxxxxx & Xxxxxx, LLP, Xxx XxxxXxxxxx
Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000, on the date (the "Closing Date") which
is the latest of (a) the tenth (10th) business day after the date that (i)
the FCC granted its consent to the assignment of the FCC Authorizations from
Seller to the Purchaser by a Final Order (as defined in Section 10.04) or
(ii) if applicable, Seller receives from Purchaser the Finality Waiver Notice
(as defined in Section 10.4); (b) the tenth (10th) business day after the
expiration or early termination of the waiting period under the Xxxx-Xxxxx
Act; or (c) January 1, 1999. The Closing shall be effective as of 12:01 a.m.
on the Closing Date. At Closing, each party shall deliver or cause to be
delivered to the other party the instruments of transfer and assumption
referenced in Article IV of this Agreement and the other deliveries required
by Article X (for Seller) and Article XI (for Purchaser) of this Agreement,
and Purchaser shall deliver to Seller, by wire transfer of immediately
available funds to one or more bank accounts as specified by Seller in wire
transfer instructions to be delivered to Purchaser at least two business days
prior to the Closing Date, the Purchase Price as required pursuant to Section
5.03.
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ARTICLE VII
SELLER'S REPRESENTATIONS
Seller hereby represents and warrants that:
SECTION 7.01. ORGANIZATION, QUALIFICATION. (a) Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; and has all necessary power and authority to own and
operate its properties and to carry on its Business as now being conducted or
proposed to be conducted and to carry out the transactions contemplated by
this Agreement. Seller has the full power and authority to execute and
deliver and, subject to obtaining the FCC's approval to assign the FCC
Authorizations and the other governmental and third-party consents referred
to in Section 10.04, perform its obligations under this Agreement and to
undertake the transactions contemplated hereby. Seller is duly qualified to
conduct business as a foreign corporation in all jurisdictions for which
failure to so qualify would have a Material Adverse Effect (as defined below).
SECTION 7.02. CONSENTS, AUTHORIZATION, EXECUTION AND DELIVERY OF
AGREEMENT. Prior to the Closing, all necessary consents and approvals shall
have been obtained by Seller for the execution and delivery of this
Agreement. The execution, delivery and performance of this Agreement by
Seller and the transfer of the Assets to Purchaser have been duly and validly
authorized and approved by all necessary corporate and stockholder action of
Seller. This Agreement is a valid and binding obligation of Seller,
enforceable against it in accordance with its terms.
SECTION 7.03. SUBSIDIARIES AND INTERESTS IN OTHER COMPANIES. Seller
has no subsidiaries, and does not own or control any shares or other
securities of, or have any other proprietary interest in, any corporation,
partnership, limited liability company, joint venture, business association
or other person.
SECTION 7.04. TITLE TO ASSETS; CONDITION OF ASSETS. Seller has, and
will convey to Purchaser at Closing, good and marketable title to the Assets,
free and clear of all Liens other than Permitted Liens. All Liens in effect
on the date hereof which are to be discharged at Closing are listed on
SCHEDULE 7.04 hereto. The tangible property included among the Assets is in
good working order and repair, reasonable wear and tear excepted. The Assets
constitute all of the assets which are necessary, used or useful in the
operation of the Business as it is currently being conducted by Seller other
than the Excluded Assets. Except as disclosed on SCHEDULE 7.25, no officer,
director, stockholder or employee of Seller or any other individual,
partnership, corporation, person or entity (a "Person") other than the Seller
owns, leases or has any rights in any property, license or other assets
related to the Business other than the Excluded Assets. Except for factors
typically affecting propagation and reception in the cellular telephone and
paging industries generally, the tangible property included in the Assets are
technically sufficient and capable of providing cellular telephone service in
the Cellular Areas and paging service within the reliable service contour
generated by the transmitters covered by the FCC Paging Authorizations in
accordance with applicable FCC regulations except as set forth on SCHEDULE
7.08. All of the buildings, towers, transmitters, antenna, fixtures and
improvements
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owned or leased by Seller, and all heating and air conditioning equipment,
plumbing, electrical and other mechanical facilities and the roof, walls and
other structural components of the real property which are part of, or
located in such buildings, towers, antenna or improvements and are owned or
leased by Seller comply with applicable zoning laws and the building, health,
fire and environmental protection codes of all applicable governmental
jurisdictions, have no structural defects and do not require any repair other
than routine maintenance and the repair of ordinary wear and tear.
SECTION 7.05. REAL PROPERTY - OWNED. Seller owns no real property and
the real property leased by Seller related to the Business has never been
owned by Seller.
SECTION 7.06. REAL AND PERSONAL PROPERTY - LEASED. Set forth on
SCHEDULE 2.01(d) (in the case of real property) and SCHEDULE 2.01(a) (in the
case of personal property), are true and accurate listings of all real and
personal property leases to which Seller is a party (other than personal
property leases with annual payments of less than $2,000 and which leases,
together with the other contracts and agreements not required to be disclosed
on SCHEDULES 2.01(a) AND (d), in the aggregate have annual payments of less
than $25,000 or which are terminable without penalty on one month or less
notice) setting forth (i) the name of the lessor and (ii) with respect to the
real property leases, the legal description of the property leased. Except
as set forth on SCHEDULE 2.01(d) (in the case of leased real property) and
SCHEDULE 2.01(a) (in the case of leased personal property), all of the leases
set forth on Schedule 2.01(d) (i) are in full force and effect and are valid,
binding and enforceable in accordance with their respective terms, (ii) all
accrued and currently payable rents and other payments required by such
leases have been paid, (iii) Seller and, to Seller's knowledge, each other
party thereto have complied with all respective covenants and provisions of
such leases, (iv) neither Seller nor, to Seller's knowledge, any other party
is in default in any respect under any such leases, (v) no party has asserted
any defense, set off, or counter claim thereunder, (vi) no waiver, indulgence
or postponement of any obligations thereunder has been granted by any party,
and (vii) the validity or enforceability of any such lease will be in no way
affected by the sale of the Assets to Purchaser provided all required
consents have been obtained from the other parties to such lease.
SECTION 7.07. EXISTING CONTRACTS. SCHEDULES 2.01(a) AND (d) hereto set
forth all contracts, commitments and agreements in effect on the date hereof
with Seller's subscribers (other than standard subscriber agreements for
cellular), all leases (other than personal property leases with annual payments
of less than $2,000 and which leases, together with the other contracts and
agreements not required to be disclosed on SCHEDULES 2.01(a) AND (d), in the
aggregate have annual payments of less than $25,000 or which are terminable
without penalty on one month or less notice) to which Seller is a party, and all
other contracts, commitments and agreements (other than agreements with annual
payments of less than $2,000 and which agreements, together with the other
leases and contracts not required to be disclosed on SCHEDULES 2.01(a) AND (d),
in the aggregate have annual payments of less than $25,000 or which are
terminable without penalty on one month or less notice) or commitments (written
or oral) to which Seller is a party which relate to the ownership of the Assets
or the operation of the Business (the "Existing Contracts") except for the
contracts, leases, commitments and agreements included among the Non-Assumed
Liabilities (the "Excluded Contracts"). Except as disclosed on SCHEDULE 7.25,
no
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officer, director or employee of Seller or any Person (other than Seller)
controlling, controlled by or affiliated with or family member of any such
officer, director or employee has any contractual relationship relating to the
ownership or operation of the Business. Seller has heretofore delivered to
Purchaser true and correct copies of the Existing Contracts. Except as
disclosed on SCHEDULES 2.01(a) AND (d), Seller has no knowledge of any breach or
anticipated breach by the other parties to any Existing Contracts. The Existing
Contracts are in full force and effect and Seller is in compliance with its
obligations under such Existing Contracts. Except for the Existing Contracts
and the Excluded Contracts, Seller has not entered into any other contract,
commitment or agreement (other than agreements with annual payments of less than
$2,000 and which agreements, together with the other leases and contracts not
required to be disclosed on SCHEDULES 2.01(a) AND (d), in the aggregate have
annual payments of less than $25,000 or which are terminable without penalty on
one month or less notice) relating to the ownership of the Assets or the
operation of the Business, including, but not limited to, rights-of-way, rights
of entry, licenses, easements, leases, or guaranty agreements. There are no
claims by third parties that Seller is required to enter into other agreements
to enable it to continue to own the Assets and operate of the Business as it is
presently being operated.
SECTION 7.08. GOVERNMENTAL LICENSES. Except as set forth on
SCHEDULE 7.08, Seller holds all licenses, consents, permits, approvals and
authorizations of public and governmental bodies including, without limitation,
the FCC Authorizations and the state, counties and municipalities served by the
Business, which are required in connection with the ownership of the Assets
(collectively referred to as the "Authorizations"). All Authorizations are in
full force and effect. Seller has complied with the terms of the Authorizations
which it holds and there are no pending modifications, amendments or revocations
of the Authorizations which would adversely affect the ownership of the Assets
or the operation of the Business. All fees due and payable from Seller to
governmental authorities pursuant to the Authorizations have been paid. All
reports required of Seller to be filed in connection with the Authorizations
have been timely filed and are accurate and complete. With respect to the RSA,
for all of the FCC Authorizations that are FCC Cellular Authorizations in which
the five-year fill-in period expired prior to the date of this Agreement, the
Seller timely filed appropriate applications or notifications with the FCC such
that none of the original authorized area became "unserved area" as defined in
47 C.F.R. Part 22, except where such unserved areas have subsequently been added
to the Seller's Cellular Geographic Service Area pursuant to Phase 2
applications and form 489 notifications or as identified on SCHEDULE 7.08. The
Seller does not conduct any microwave operations on frequencies that are subject
to relocation under the FCC's rules. True and correct copies of the
Authorizations, and all amendments thereto to the date hereof, have been
delivered by Seller to Purchaser and are identified on SCHEDULE 2.01(a) hereto.
The Seller has not engaged in any course of conduct that could reasonably be
expected to impair the ability of Purchaser or its subsidiaries to be the holder
of the FCC Authorizations or is aware of any reason why the FCC Authorizations
might not be renewed in the ordinary course, why any of the FCC Authorizations
might be revoked, or why any pending applications or notifications might not be
approved. The ownership of the Assets and the operation of the Business by
Seller are not subject to regulation or supervision by any applicable state
public utilities commission or other similar state governmental instrumentality.
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SECTION 7.09. COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE 7.09,
Seller is currently complying with and has so complied with, and is not in
default under or in violation of, and neither the Business nor any of the Assets
nor the operation or maintenance thereof, contravenes any statute, law
(including environmental or employment laws), ordinance, decree, order, rule,
regulation of any governmental body applicable to the Assets or the Business,
including, without limitation, the rules and regulations of the FCC.
SECTION 7.10. NO VIOLATION OF EXISTING AGREEMENTS. Subject to the
consents for the Existing Contracts identified in SCHEDULE 7.10, the execution,
delivery and performance of this Agreement by Seller and Seller's transfer of
the Assets to Purchaser (i) will not violate any provisions of any law (ii) will
not, with or without the giving of notice or the passage of time, or both,
conflict with or result in any breach of any of the terms or conditions of, or
constitute a default under any Existing Contracts, and (iii) will not result in
the creation of any Lien upon the Assets or the Business other than Permitted
Liens.
SECTION 7.11. LITIGATION AND LEGAL PROCEEDINGS. Except as set forth on
SCHEDULE 7.11, there is no outstanding judgment against Seller or any director,
officer or stockholder of Seller affecting the Business or the Assets or which
question the validity of any action taken or to be taken by Seller pursuant to
or in connection with the provisions of this Agreement and there is no
litigation, proceeding or investigation pending, or, to Seller's knowledge,
threatened, against Seller or any director, officer or stockholder of Seller
affecting the Business or the Assets or which questions the validity of any
action taken or to be taken by Seller pursuant to or in connection with the
provisions of this Agreement. Except as set forth on SCHEDULE 7.11, there are
no proceedings pending to which Seller or any director, officer or stockholder
of Seller is a party or, to Seller's knowledge, threatened, nor has Seller
received written notice of any demands by any governmental agency, utility or
other party, to terminate, modify or adversely change the terms and conditions
of Seller's rights with respect to the Authorizations or Existing Contracts.
SECTION 7.12. ENVIRONMENTAL COMPLIANCE. (a) Except as set forth on
SCHEDULE 7.12 hereto, (i) Seller has not generated, used, transported, treated,
stored, released or disposed of, or knowingly permitted anyone else to generate,
use, transport, treat, store, release or dispose of any Hazardous Substance (as
hereinafter defined) with respect to the Assets or the Business in violation of
any Environmental Laws (as hereinafter defined); (ii) there has not been any
generation, use, transportation, treatment, storage, release or disposal of any
Hazardous Substance in connection with Seller's ownership or use of the Assets,
the conduct of the Business or, to the best of Seller's knowledge, on, in or
under any property or facility used, owned or leased by Seller or, to the best
of Seller's knowledge, any adjacent properties or facilities, which has created
or might reasonably be expected to create any liability under any Environmental
Laws or which would require reporting to or notification of any governmental
entity; (iii) to the best of Seller's knowledge no friable asbestos,
polychlorinated biphenyl, or underground storage tank is contained in or located
on or under any property or facility owned, used or leased by Seller; and (iv)
any Hazardous Substance handled or dealt with in any way with respect to the
Assets or the Business by Seller, or during Seller's ownership or use of the
Assets or the Business, has been and is being handled or dealt with in
compliance with all Environmental Laws.
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(b) For purposes of this Agreement, the term "Hazardous
Substance" shall mean any substance which, as of the date of this Agreement, is
listed as hazardous or toxic in the regulations implementing the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended
("CERCLA"), the Response Compensation and Liability Act ("RCLA"), the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), or listed as a
hazardous substance under any applicable state environmental laws, or any
substance which has been determined by regulation, ruling or otherwise by any
agency or court to be a hazardous or toxic substance regulated under federal or
state law, and shall include petroleum and petroleum products.
(c) For purposes of this Agreement, the term "Environmental Laws"
shall mean CERCLA, RCRA, RCLA and any applicable statutes, regulations, rules,
ordinances, codes, licenses, permits, orders, approvals, plans, authorizations,
concessions, franchises and similar items of all governmental authorities and
all applicable judicial, administrative and regulatory decrees, judgments and
orders, any of which relate to the protection of human health or the environment
from the effects of Hazardous Substances, including but not limited to those
pertaining to reporting, licensing, permitting, investigating and remediating
emissions, discharges, releases or threatened releases of Hazardous Substances
into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.
(d) Nothwithstanding anything herein to the contrary, in the event
that Purchaser brings an action of any kind against Seller to enforce this
Section 7.12, and the court of competent jurisdiction (or other relevant fact
finder) does not grant relief to Purchaser, Purchaser shall pay one hundred and
ten percent (110%) of the Seller's legal fees and expenses associated with its
defense of such action.
SECTION 7.13. EMPLOYEES. Within thirty (30) days of the date hereof,
Seller will prepare and deliver SCHEDULE 7.13 which will set forth a true and
complete list of the names and current salaries of all employees of the Seller
involved in the operation of the Business. Such employees are employees at
will. Seller has withheld all amounts required by law or agreement to be
withheld by it from the wages, salaries and other payments to its employees and
is not liable for any arrears of wages or any taxes for failure to comply with
any of the foregoing. There are no collective bargaining agreements covering
any of the employees of Seller. The Seller has not breached or otherwise failed
to comply with any provision of any collective bargaining agreement or other
labor union contract applicable to any of its employees. No consent of any
union (or similar group or organization) is required in connection with the
consummation of the transactions contemplated hereby. There are no pending, or,
to Seller's knowledge, threatened or anticipated, and, there is no factual basis
for any (a) employment discrimination (including age, sex, racial or handicap
discrimination) charges or complaints against or involving Seller, before any
federal, state, or local board, department, commission or agency or (b) unfair
labor practice charges or complaints, disputes or grievances affecting Seller.
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SECTION 7.14. EMPLOYEE BENEFITS. Except as set forth on SCHEDULE 7.14
attached hereto, Seller has no pension plan, profit sharing plan, deferred
compensation plan, stock option or stock bonus plan, saving plan, or other
benefit plan, policy, practice, or procedure or contract concerning employee
benefits or fringe benefits of any kind (collectively, "Employee Benefit
Plans"), whether or not governed by the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). Seller is not a party to any employment
contract. No officer, director or employee of Seller participates or is
eligible to participate in a "defined benefit pension plan" as defined in
Section 3(35) of ERISA, maintained or made available by Seller. Neither Seller
nor any Controlled Group Member maintains or contributes to, or ever maintained
or contributed to, a plan under which any employee of Seller participates or is
eligible to participate subject to Section 412 of the Internal Revenue Code of
1986, as amended (the "Code"). The term "Controlled Group Member" means any
trade or business (whether or not incorporated) which is, or was at any relevant
time, aggregated with the Seller pursuant to Section 414(b), (c), (m) or (o) of
the Code. Neither Seller nor any ERISA Affiliate has participated in or made
contributions to any "multiemployer plan" as defined in Section 4001(a)(3) of
ERISA. The term "ERISA Affiliate" means each trade or business (whether or not
incorporated) which is, or was at any relevant time, treated as a single
employer with Seller pursuant to Section 4001(b)(1) of ERISA. Seller has
furnished Purchaser with true, complete and accurate copies of all Employee
Benefit Plans and related trust agreements as in effect on the date hereof, all
summary plan descriptions, and the latest annual reports filed with the
Department of Labor or the Internal Revenue Service (the "IRS").
Each of the Employee Benefit Plans is in compliance in all material
respects with all applicable requirements of ERISA, the Code, and other
applicable law. Each of the Employee Benefit Plans has been administered in all
material respects in accordance with its terms and with applicable legal
requirements. All "employee pension plans" (within the meaning of Section 3(2)
of ERISA) have been determined by the IRS to be qualified under Section 401(a)
of the Code, and no action or proceeding has been instituted or threatened which
would affect the qualification of any pension plan of Seller. No unfunded
liabilities, based upon the Pension Benefit Guarantee Corporation (the "PBGC")
rates currently in effect for plan terminations, exist with respect to any
Employee Benefit Plan which is a "defined benefit plan" (within the meaning of
Section 3(35) of ERISA). There has not been any reportable event with respect
to any pension plan of Seller. Seller has not engaged in a "prohibited
transaction" or breach of fiduciary responsibility with respect to any Employee
Benefit Plan which could subject Purchaser or any affiliate of Purchaser to a
penalty tax or other liability under ERISA or the Code. Neither Seller nor any
Affiliate of Seller has ever incurred any liability under Title IV of ERISA to
the PBGC or to a multi-employer pension plan.
SECTION 7.15. TAX MATTERS. Except as set forth on SCHEDULE 7.15 attached
hereto: (a) Seller has timely filed all Tax (as defined below) returns and
statements which it is required to file; (b) all such returns are complete and
accurate in all material respects and disclose all Taxes required to be paid for
the periods covered thereby; (c) Seller has not waived any statute of
limitations in respect of Taxes or agreed to an extension of time with respect
to a Tax assessment or deficiency; (d) no assessment of any additional Taxes for
periods for which returns have been filed has been asserted and no basis exists
therefor; (e) to Seller's knowledge, there are no
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unresolved questions or claims raised by any Taxing authority concerning the
Tax liability of Seller; and (f) all Taxes which Seller is required by law to
withhold or to collect for payment have been duly withheld and collected, and
have been paid. Seller has paid all Taxes due prior to the date hereof and
will pay when due (or contest in good faith by appropriate proceedings) all
Taxes which may become due on or before the Closing Date. For purposes of
this Section 7.15, the term "Tax" or "Taxes" means all taxes, charges, fees,
levies, imposts and other assessments including all income, sales, use, goods
and services, value added, capital, capital gains, alternative net worth,
transfer, profits, withholding, payroll, employer health, excise, real
property and personal property taxes, and any other taxes, customs duties,
stamp duties, fees, assessments or similar charges in the nature of a tax,
together with any interest, fines and penalties imposed by any governmental
authority (including federal, state, provincial, municipal and foreign
governmental authorities), and whether disputed or not.
SECTION 7.16. FINANCIAL STATEMENTS.
(a) The Purchaser has heretofore been furnished with a true and
complete copy of the unaudited balance sheets of Seller as of October 31, 1996
and the related unaudited statements of income and retained earnings and cash
flows for the fiscal year then ended, such balance sheet and income statement
being attached hereto as SCHEDULE 7.16(a) (together with the balance sheet and
income statement to be delivered pursuant to Section 9.01(b) hereof, the
"Historical Financial Statements").
(b) Each of the Historical Financial Statements delivered under
Section 7.16 (a) and to be delivered under Section 9.01(b) hereof was (and will
be) prepared in accordance with GAAP applied on a basis consistent with prior
periods and past practices; subject to the following proviso, each of the
balance sheets included in such Historical Financial Statements fairly presents
(and will present) in all material respects the financial condition of Seller,
as at the close of business on the date thereof; and, subject to the following
proviso, each of the statements of income included in such Historical Financial
Statements fairly presents (and will present) in all material respects the
results of operations of Seller, for the fiscal period then ended.
(c) Except as set forth on SCHEDULE 7.16(c) attached hereto, since
October 31, 1996, Seller has not:
(i) sold, assigned or transferred any of its Assets (except
for the Excluded Assets and except pursuant to existing contracts or
commitments disclosed on any Schedule to this Agreement or inventory
in the ordinary course of business consistent with past practice or
for assets sold or disposed of and replaced by other assets of
comparable use and value); or canceled any material debts or material
claims;
(ii) waived any material rights, whether or not in the
ordinary course of business;
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(iii) entered into any other transaction, except in the
ordinary course of business, or entered into any transaction with any
officer, director or shareholder of Seller, or any affiliate or family
member of any such Person;
(iv) suffered any material damage, destruction or casualty
loss with respect to the Assets, whether or not covered by insurance;
(v) made any distribution of any of the Assets to any
officer, director or shareholder of Seller or any affiliate or family
member of such officer, director or shareholder;
(vi) except as disclosed in writing by Seller to Purchaser,
obligated itself or the Business to give free or reduced price service
to customers with respect to the Business other than promotions
offered in the ordinary course of business and set forth on SCHEDULE
5.05(a) or occasionally free and temporary price reductions, entered
into any agreement with any governmental or regulatory authority
granting the authorization to freeze fees charged to customers of the
Business; or
(vii) entered into any agreement or understanding to do any of
the foregoing.
SECTION 7.17. SUBSCRIBERS/AGENTS. SCHEDULE 7.17 attached hereto sets
forth (a) the number of subscribers receiving service from (i) the Cellular
Systems and (ii) the Paging System as of a date within 5 days prior to the date
hereof, (b) a list of all agents who sell (i) cellular telephone equipment
and/or service and (ii) paging equipment and/or service on behalf of Seller as
of the date hereof, together with such agent's address and the number of gross
activations produced by each agent, and (c) a list of all entities that have
signed agreements providing for the resale of cellular and/or paging services.
SECTION 7.18. INSURANCE. Seller has delivered previously to Purchaser all
policies of title, liability, fire, worker's compensation and other forms of
insurance (including bonds) which insure against risk and liabilities to the
extent and in a manner customary in the cellular industry and which are adequate
to provide coverage against risk of a material nature to which Seller would
normally be exposed in the operation of the business. All such insurance
policies and binders are in full force and effect. Seller has complied with
each of such insurance policies and binders and has not failed to give any
notice or present any claim thereunder in a due and timely manner. There are no
outstanding unpaid claims under any of such insurance policies or binders and
Seller has not received any notice of cancellation or non-renewal of any such
policy or binder. There is no inaccuracy in any application for such policies
or binders which would reasonably be expected to materially adversely affect
coverage thereunder. No insurance carrier has canceled or reduced any insurance
coverage for Seller or has given any notice or other indication of its intention
to cancel or reduce any such coverage. All premiums due and payable under any
such insurance policies or binders of Seller have been duly paid or accrued to
the extent take into account in the Working Capital Adjustment. Seller
maintains insurance policies
-16-
for the Systems with the insurance carriers, in such amounts and for such
losses or casualties as are described on SCHEDULE 7.18.
SECTION 7.19. BROKERS. Seller has not engaged any agent, broker or other
person acting pursuant to the express or implied authority of Seller which is or
may be entitled to a commission or broker or finder's fee in connection with the
transactions contemplated by this Agreement or otherwise with respect to the
sale of the Assets or the Business.
SECTION 7.20. UNDISCLOSED LIABILITIES. Seller has no liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise,
which are not reflected or reserved against the Historical Balance Sheet except
for liabilities and obligations that have arisen in the ordinary and usual
course of business and consistent with past practice (none of which results
from, arises out of, relates to, is in the nature of, or caused by any breach of
contract, breach of warranty, tort, infringement or violation of law) and except
for liabilities and obligations directly related to the transactions
contemplated hereby.
SECTION 7.21. PRICING OF SERVICES. SCHEDULE 7.21 sets forth a description
of all rate plans currently offered to subscribers of each System.
SECTION 7.22. PROPRIETARY RIGHTS. Seller lawfully possesses, and (except
for rights with respect to intellectual property rights listed on SCHEDULE 2.02)
the Assets will include, all intellectual property rights that are necessary to
the conduct of the Business.
SECTION 7.23. ACCOUNTS RECEIVABLE AND BAD DEBTS. All notes and accounts
receivable of Seller shown on the Historical Balance Sheet or thereafter
acquired were or (to the extent not heretofore collected) are valid and genuine,
were acquired in the ordinary course of business and are subject to no asserted
counterclaims, defenses or setoffs (subject to reserves therefor as will be
taken into account in the determination of Current Assets at Closing in
accordance with Section 5.05).
SECTION 7.24. CERTAIN BUSINESS RELATIONSHIPS WITH SELLER. Except as set
forth in SCHEDULE 7.24 attached hereto, none of the officers, directors or
stockholders of the Seller and its affiliates or family members have been
involved in any business arrangement or relationship with Seller within the past
12 months.
ARTICLE VIII
PURCHASER'S REPRESENTATIONS
Purchaser hereby represents, warrants, covenants and agrees that:
SECTION 8.01. ORGANIZATION; QUALIFICATION. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Oklahoma. Purchaser has all power and authority to (i) own and operate
its properties, (ii) carry on its business as it is now being conducted, and
(iii) carry out the transactions contemplated by this Agreement and to own
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and operate the Assets and the Business, subject to obtaining all necessary
consents required for the transfer by Seller of the Assets.
SECTION 8.02. CONSENTS; AUTHORIZATION; EXECUTION AND DELIVERY OF
AGREEMENT. All necessary consents and approvals have been obtained by
Purchaser for the execution and delivery of this Agreement. The execution
and delivery of this Agreement by Purchaser has been duly and validly
authorized and approved by all necessary corporate action. Purchaser has
full power and authority to execute and deliver and perform its obligations
under this Agreement. This Agreement is a valid and binding obligation of
Purchaser, enforceable against it in accordance with its terms.
SECTION 8.03. LITIGATION AND LEGAL PROCEEDINGS. There is no outstanding
judgment against Purchaser and there is no litigation, proceeding or
investigation pending, or, to Purchaser's knowledge, threatened, against
Purchaser or its assets which individually or in the aggregate would, if
adversely determined, result in a material adverse change in the business
condition (financial or otherwise), properties or assets of Purchaser or which
questions the validity of any action taken or to be taken pursuant to or in
connection with the provisions of this Agreement or the consummation of the
transactions contemplated hereby by the Purchaser or which could have an adverse
effect on Purchaser's ability to perform its obligations hereunder.
SECTION 8.04. BROKERS. Purchaser has not engaged any agent, broker or
other person acting pursuant to the express or implied authority of Purchaser
which is or may be entitled to a commission or broker or finder's fee in
connection with the transactions contemplated by this Agreement or otherwise
with respect to the sale of the Assets or the Business.
SECTION 8.05. FINANCIAL CAPACITY. Purchaser shall have at the Closing the
financial ability to perform its obligations hereunder.
ARTICLE IX
SELLER'S AND PURCHASER'S COVENANTS
SECTION 9.01. FINANCIAL STATEMENTS AND SYSTEM INFORMATION.
(a) INTERIM FINANCIAL STATEMENTS. Seller covenants and agrees that
during the period after the execution of this Agreement and prior to the
Closing, Seller shall use its best efforts to provide Purchaser, within 30 days
of the end of each calendar quarter, Seller's unaudited balance sheet and income
statement for such three month period ("Interim Financial Statements"). The
Interim Financial Statements will be true and correct in all material respects,
will be prepared using the same accounting methods and procedures as used in the
preparation of the Historical Financial Statements except for the absence of
footnotes, subject to normal recurring adjustments, and will present fairly the
financial position of Seller at the date indicated and the results of Seller's
operations for such period.
(b) OCTOBER 31, 1997 FINANCIALS. Seller covenants and agrees that
Seller shall provide to Purchaser within ninety (90) days of the date of this
Agreement Seller's unaudited
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balance sheets as of October 31, 1997 and the related unaudited statements of
income and retained earnings and cash flows for the fiscal year then ended.
(c) ROAMING REPORTS. Seller covenants and agrees that during the
period after the execution of this Agreement and prior to the Closing, Seller
shall provided to Purchaser, within 10 days of the end of each calendar month,
Seller's cellular roaming reports relevant to the Cellular Areas.
SECTION 9.02. GOVERNMENTAL APPROVALS. (a) Purchaser covenants and agrees
that it will cooperate with Seller, and do all things reasonably necessary to
assist Seller, to obtain all consents and approvals necessary for assignment to
Purchaser of the FCC Authorizations, including the furnishing of financial and
other information specifically with respect to Purchaser reasonably required by
the Person whose consent or approval is being sought. Each of Purchaser and
Seller shall use all reasonable efforts to provide adequate prior written notice
to the other party of any meeting with governmental authorities the purpose of
which is to seek a consent or approval to the transactions contemplated hereby,
and such other party shall use all reasonable efforts to furnish a
representative to attend meetings with appropriate government authorities for
the purpose of obtaining such consents or approvals. Each of Purchaser and
Seller hereby agrees to file the necessary Form(s) 490 and 702 with the FCC
transferring or assigning control of the FCC Authorizations for the Business to
Purchaser and diligently pursue the processing of the assignment of the FCC
Authorizations to Purchaser and to file for all other necessary regulatory
approvals for the consummation of the transactions contemplated by this
Agreement within ten (10) business days of the date of execution of this
Agreement to the extent any such filings have not been made prior to the date of
execution of this Agreement. Seller and Purchaser shall share equally all
filing fees in connection with any filings pursuant to this Section 9.02(a).
(b) Seller covenants and agrees that it will cooperate with
Purchaser, and do all things reasonably necessary to assist Purchaser to prepare
and file with the Federal Trade Commission and the Department of Justice and
other regulatory authorities as promptly as possible all requisite applications
and amendments thereto together with related information, data and exhibits
necessary to satisfy the requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act ("Xxxx-Xxxxx Act"). Seller and Purchaser shall share equally
all filing fees in connection with any filings pursuant to this Section 9.02(b).
SECTION 9.03. THIRD PARTY CONSENTS; CLOSING CONDITIONS. (a) Seller
covenants and agrees to use its commercially reasonable efforts to obtain all
consents and approvals necessary for the transfer or assignment to Purchaser of
the Assumed Contracts. In addition, with respect to each real property lease
identified on SCHEDULE 2.01(d), Seller agrees that the instrument whereby Seller
requests the consent, estoppel and waiver of the lessor thereunder to the
assignment of such lease to such Purchaser shall be substantially in the form of
the letter attached hereto as SCHEDULE 9.03 and that Seller shall use its
commercially reasonable efforts to obtain each such lessor's consent to such
assignment by having each such lessor countersign such letter in the space
provided. Purchaser covenants and agrees to cooperate with Seller and assist
Seller in obtaining such consents and approvals including the furnishing of
financial and other information, reasonably required by the Person whose consent
or approval is being sought.
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Notwithstanding the foregoing, to the extent that any Assumed Contracts
listed on SCHEDULE 2.01(a) to be sold, assigned, transferred or conveyed to
Purchaser, or any claim, right or benefit arising thereunder or resulting
therefrom (individually, an "Interest" and collectively, the "Interests"), is
not capable of being sold, assigned, transferred or conveyed without the
approval, consent or waiver of the issuer thereof or the other party thereto,
or any third Person (including a government or governmental unit), and such
approval, consent or waiver has not been obtained, or if such sale,
assignment, transfer or conveyance or attempted assignment, transfer or
conveyance would constitute a breach thereof, and such approval, consent or
waiver has not been obtained, this Agreement shall not constitute a sale,
assignment, transfer or conveyance thereof, or an attempted assignment,
transfer or conveyance thereof; provided Seller shall use its best efforts to
provide Purchaser the benefits of any such Interest as provided in Section
17.01(b).
(b) Purchaser and Seller hereby covenant and agree to use all
reasonable efforts to satisfy, or assist the other party in satisfying, the
closing conditions applicable to the Purchaser in Article X hereof and the
Seller in Article XI hereof prior to the Closing Date.
SECTION 9.04. ACCESS. (a) Purchaser shall have the right, itself or
through its representatives, during normal business hours, after reasonable
notice (which may be oral) and without undue disruption to Seller's normal
business activities, to inspect the Assets and properties of Seller and to
inspect and make abstracts and reproductions of all books and records of Seller
including, without limitation, applications and reports to the FCC, all
financial information relevant to the Business, employee records, and
engineering and environmental reports and Seller shall furnish Purchaser with
such information respecting the Assets and Business and financial records as
Purchaser may, from time to time, reasonably request.
(b) Seller acknowledges and agrees, subject to any restrictions
placed thereon by an owner or lessor of any real property involved, that
Purchaser may commission, at Purchaser's cost and expense, a so-called "Phase I"
environmental site assessment of the Assets (the "Phase I Assessment"). If the
Phase I Assessment indicates that a so-called "Phase II" assessment (the "Phase
II Assessment") or other additional testing or analysis of the Assets is
advisable, the Purchaser may elect to cause its agents to conduct such testing
and analysis. Seller will use its commercially reasonable efforts to comply
with any reasonable request for information made by Purchaser or its agents in
connection with any such investigation. Seller covenants that any response to
any such request for information will be complete and correct in all material
respects. Seller will afford Purchaser and its agents access to all operations
of the Seller at all reasonable times and in a reasonable manner in connection
with any such investigation subject to any required approval of Seller's
landlords, which approval Seller will use its commercially reasonable efforts to
obtain. Should Purchaser commission such an investigation, such investigation
will have no effect upon the representations and warranties made by Seller to
Purchaser under this Agreement except that if any Phase I Assessment or Phase II
Assessment uncovers an environmental condition which then comprises a breach of
Seller's representations or warranties herein, Seller shall not have breached
such representation or warranty if Seller cures such breach in accordance with
the provisions of this Agreement.
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(c) Seller shall allow Purchaser the opportunity to conduct an
engineering review of the Assets to confirm that the Assets comply with the
FCC Authorizations and the regulations of the FCC and are otherwise in good
condition and repair, reasonable wear and tear excepted.
(d) Purchaser shall have the right, prior to the Closing, for
itself and its representatives, during normal business hours, after
reasonable notice (which may be oral) to inspect, install or otherwise modify
equipment relating to the Systems for purposes of transitioning the Systems
from Seller to Purchaser.
SECTION 9.05. CONDUCT OF BUSINESS. From and after the date hereof
Seller shall:
(a) operate the Systems in accordance with the FCC
Authorizations, and comply in all material respect with all laws, rules and
regulations applicable to Seller, including the regulations of the FCC;
(b) except for inventory sold in the ordinary course of
business, refrain from making any sale, lease, transfer or other disposition
of any of the Assets other than in connection with replacements with assets
of like use and value, or with the prior written approval of Purchaser;
(c) refrain from modifying, amending or altering in any material
respect, or terminating any of the Assumed Contracts, and from waiving or
canceling any default or breach or modifying, altering or terminating any
right or asset relating to or included in the Assets without Purchaser's
prior written approval, which approval will not be unreasonably withheld;
(d) maintain insurance on the Assets comparable to that
maintained prior to the date hereof, and subject to Article XII, use the
proceeds of any claims for loss under such policies, together with such other
funds as may be required, to repair, replace, or restore to their former
condition any Assets which may be damaged by fire or other casualty, all as
soon as reasonably possible;
(e) maintain its books and records in accordance with prior
practice; maintain all of its property and assets in their present condition,
ordinary wear and tear excepted, provided, however, Seller shall promptly
repair the items of equipment set forth on SCHEDULE 9.05 so that they are in
good working order or replace such equipment with like equipment which is in
good working order; maintain supplies of inventory and spare parts consistent
with past practice; and otherwise operate its business in the ordinary course
in accordance with past practices;
(f) refrain from changing the Systems' agents' commission rate,
sales practices (including the quality of the credit of subscribers
contracting for cellular telephone and paging service) or marketing practices
without Purchaser's approval, which approval will not be unreasonably
withheld;
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(g) except for Seller's payment of stay bonuses and other
compensation contingent upon Closing, refrain from increasing the
compensation payable or to become payable to any employee or agent without
Purchaser's approval, which approval will not be unreasonably withheld;
(h) refrain from entering into any contract or renewal of any
existing contract for the employment of any employee or agent of Seller other
than "at-will" employees and agents;
(i) use its commercially reasonable efforts to (x) keep its
business organization intact, (y) retain the services of the key employees of
the Systems, and (z) maintain good relationships with its employees,
suppliers, advertisers, subscribers, agents and others having business
relations with it, in each case in accordance with past practices;
(j) refrain from changing its Charter or by-laws in any way
which would materially adversely affect its power or authority to enter into
and perform this Agreement, or which would otherwise materially adversely
affect its performance of this Agreement;
(k) continue to advertise, promote and market the Systems and
its services in a manner consistent with past practice, and in any event from
the date hereof through the Closing, (x) spend on advertising, marketing and
promotion, on an aggregate basis from the date hereof to the Closing, at
least the amounts set forth in SCHEDULE 9.05 and (y) implement the holiday
advertising and sales promotion described on SCHEDULE 9.05 and consult
regularly with Purchaser on the status and effectiveness of such promotion
and on any modifications to such promotion to increase the number of
subscribers to the Systems;
(l) refrain from subjecting any of the Assets to any new Lien
other than Permitted Liens;
(m) refrain from doing or omitting to do any act which will
cause a material breach of, or material default under, or termination of
(except in accordance with its terms), any Assumed Contract;
(n) provide to the Purchaser, concurrently with filing thereof,
copies of all reports to and other filings with the FCC;
(o) not permit any of the FCC Authorizations to expire or to be
surrendered or voluntarily modified in a matter adverse to the Business, or
take any action which would reasonably be expected to cause the FCC
Authorizations or any other governmental authority to institute proceedings
for the suspension, revocation or limitation of rights under any of the FCC
Authorizations; or fail to prosecute with due diligence any pending
applications to any governmental authority;
(p) notify Purchaser in writing promptly after learning of the
institution or threat of any material action against Seller in any court, or
any action against Seller before the
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FCC or any other governmental agency, and notify Purchaser in writing
promptly upon receipt of any administrative or court order relating to the
Assets or the Business;
(q) if Seller deems it to be prudent, promptly replace any
employee who leaves the employ of the Systems; notify Purchaser of the hiring
of any new employee, any material change in job function of an employee, and
the termination of any employee;
(r) pay or cause to be paid or provide for all Taxes of or
relating to Seller, the Assets and the employees required to be paid to city,
county, state, Federal and other governmental units up to the Closing Date;
(s) refrain from taking any action not in Seller's usual course
of business regarding the Systems or the Assets without Purchaser's prior
approval, which approval will not be unreasonably withheld; and
(t) cooperate with Purchaser in connection with (x) Purchaser's
efforts to identify the current employees of Seller that Purchaser would like
to hire following the Closing consistent with all applicable federal, state
and/or local employment laws, rules and regulations, and (y) the prompt and
efficient transition of billing services after Closing to Purchaser's billing
system.
SECTION 9.06. NO SHOPPING. Prior to the Closing or earlier termination
of this Agreement, neither Seller nor any of its affiliates, advisors or
representatives shall, directly or indirectly, solicit, encourage or initiate
any contact with, negotiate with, or provide any information to, endorse or
enter into any agreement with respect to, or take any other action to
facilitate any person or group, other than Purchaser and its representatives,
concerning any inquiries or the making of any proposals concerning any
merger, sale of all or substantially all of the Assets, acquisition of a
substantial equity interest in Seller or any similar transaction involving
Seller.
SECTION 9.07. EMPLOYEES. Nothing contained in this Agreement shall
confer upon any employee of Seller any right with respect to continued
employment by Seller or Purchaser. No provision of this Agreement shall
create any third-party rights in any such employee, or any beneficiary or
dependent thereof, with respect to the compensation, terms and conditions of
employment and benefits that may be provided to such employee by Purchaser or
under any benefit plan that Purchaser may maintain. At least two (2) days
prior to Closing, Purchaser will provide to Seller written notice of the
names of Seller's employees to whom Purchaser will offer employment after
Closing.
SECTION 9.08. SUPPLEMENTAL DISCLOSURE. Seller shall promptly from time
to time prior to the Closing Date supplement in writing the Schedules hereto
with respect to any matter hereafter arising that, if existing or known as of
the date of this Agreement, would have been required to be set forth or
described in the Schedules hereto; provided, however, that no such
supplemental disclosure shall be deemed to cure any breach of any
representation or warranty of Seller made in
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this Agreement unless Purchaser fails to object in writing to Seller to any
such supplemental disclosure within ten (10) business days after Purchaser's
receipt thereof.
SECTION 9.09. DISPUTED ROAMING RECEIVABLES. In the event that
Purchaser collects a Disputed Roaming Receivable after the Closing (which did
not constitute a Current Asset at Closing), Purchaser shall pay the amount so
collected to Seller, net of Purchaser's out-of-pocket costs, if any, to
collect same.
SECTION 9.10. LEASES. Notwithstanding anything herein to the contrary,
Purchaser acknowledges that the leases for the Xxxxxx and Deep Creek cell
sites are not yet fully executed. Seller shall use its best efforts and
Purchaser shall cooperate with Seller to arrange for the full execution of
these two (2) leases on terms reasonably satisfactory to Purchaser.
ARTICLE X
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
The obligation of Purchaser under this Agreement with respect to the
purchase and sale of the Assets shall be subject to the fulfillment on or
prior to the Closing of each of the following conditions, any of which may be
waived in writing by Purchaser:
SECTION 10.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE
OF THIS AGREEMENT. All of the representations and warranties made by Seller
in this Agreement shall be true and correct at and as of the Closing except
for such breaches and inaccuracies therein which, in the aggregate, have not
caused and would not reasonably be expected to cause Purchaser to suffer a
Loss (as defined in Section 13.01) in excess of $10,000 in the aggregate (a
"Material Loss") or otherwise result in a Material Adverse Effect. Seller
shall have complied with and performed all of the agreements and covenants
required by this Agreement to be performed or complied with by it on or prior
to the Closing except for such noncompliances which, in the aggregate, have
not caused and would not reasonably be expected to cause a Material Loss or
otherwise result in a Material Adverse Effect. Purchaser shall have been
furnished with a certificate or certificates of Seller's President, dated as
of the Closing, certifying to the fulfillment of the foregoing conditions.
As used in this Agreement, the term "Material Adverse Effect" means a
material adverse effect on the Assets or the Business taken as a whole, other
than due to changes affecting the cellular telephone and paging industries
generally.
SECTION 10.02. RESOLUTIONS. Seller shall deliver to Purchaser copies
of the resolutions of the board of directors and shareholders of Seller
authorizing the execution, delivery and performance of this Agreement and all
instruments and documents to be delivered in connection herewith and the
transactions contemplated hereby, duly certified by an officer of Seller.
SECTION 10.03. INCUMBENCY CERTIFICATE. Purchaser shall have received a
certificate or certificates of an officer of Seller, certifying as to the
genuineness of the signatures of officers of Seller authorized to take
certain actions or execute any certificate, document, instrument or agreement
to be delivered pursuant to this Agreement, which incumbency certificate
shall include the true signatures of such officers.
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SECTION 10.04. THIRD PARTY CONSENTS; FCC; XXXX-XXXXX ACT. Seller shall
have delivered to Purchaser such instruments, consents and approvals of third
parties (the form and substance of which shall be reasonably satisfactory to
Purchaser). Prior to Closing Date, the FCC's grant of its consent to the
assignment of the FCC Authorizations to Purchaser shall have become a Final
Order, each without any material conditions, excepting conditions applied on
an industry-wide basis, which the Purchaser reasonably deems to be adverse.
Anything herein to the contrary notwithstanding, but subject to the
provisions of Section 9.09, the Purchaser shall have the right (in its sole
discretion) to waive the requirement set forth in the preceding sentence as
to any one or more of the FCC Authorizations by delivery to Seller of a
written notice to such effect (the "Finality Waiver Notice"). In addition,
all applicable waiting periods under the Xxxx-Xxxxx Act (if applicable to the
transactions contemplated by this Agreement) shall have expired or been
terminated and no objection shall have been made by the Federal Trade
Commission ("FTC") or the United States Department of Justice ("DOJ"). For
the purposes of this Agreement, the term "Final Order" shall mean action by
the FCC as to which (i) no request for stay by the FCC, as applicable, of the
action is pending, no such stay is in effect, and, if any deadline for filing
any such request is designated by statute or regulation, such deadline has
passed; (ii) no petition for rehearing or reconsideration of the action is
pending before the FCC, and the time for filing any such petition has passed;
(iii) the FCC, does not have the action under reconsideration on its own
motion and the time for such reconsideration has passed; and (iv) no appeal
to a court, or request for stay by a court, of the FCC's action, as
applicable, is pending or in effect, and, if any deadline for filing any such
appeal or request is designated by statute or rule, it has passed.
Notwithstanding the foregoing, provided that (1) Seller has used its
commercially reasonable efforts to obtain such third party consents and (2)
the absence of such consents would not materially affect Purchaser's rights
hereunder, Seller's failure ultimately to obtain such consents shall not
terminate Purchaser and Seller's obligation to consummate the transactions
contemplated hereby. For purposes of the preceding sentence, the failure to
obtain the consent of the FCC, FTC and DOJ, as described in this Section
10.04, shall be deemed to materially affect Purchaser's rights hereunder.
SECTION 10.05. NO MATERIAL ADVERSE CHANGE. Other than changes
affecting the cellular telephone industry generally, there shall not have
been any material adverse change in the financial condition, assets, business
or properties of the Systems or Assets, from March 31, 1998 to the Closing.
SECTION 10.06. OPINION OF COUNSEL TO SELLER. Purchaser shall have been
furnished with an opinion of Xxxxxx Xxxxx, L.L.P., counsel to Seller, dated
as of the Closing and addressed to Purchaser, and to any institution
designated by Purchaser which has provided financing in connection with the
transactions contemplated by this Agreement, in substantially the form of
EXHIBIT E hereto.
SECTION 10.07. OPINIONS OF FCC COUNSEL TO SELLER. Purchaser shall
have been furnished with opinions of Xxxxxx Xxxxx, L.L.P., FCC counsel for
Seller, dated as of the Closing and addressed to Purchaser, and to any
financial institution designated by Purchaser which has
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provided the financing in connection with the transactions contemplated by
this Agreement, in substantially the form of EXHIBIT F attached hereto.
SECTION 10.08. CLOSING ESCROW AGREEMENT. Seller shall have executed
and delivered the Closing Escrow Agreement to Purchaser.
SECTION 10.09. TITLE INSURANCE; ESTOPPEL. Seller shall have provided
to Purchaser, at Seller's expense, and in a form satisfactory to Purchaser
and its lenders, all of the title commitments, title policies (including
endorsements thereto) and surveys required by Purchaser's lenders with
respect to the leased real property identified on Schedule 2.01(d). In
addition, with respect to each real property lease identified on SCHEDULE
2.01(d), Seller agrees that the instrument whereby Seller requests the
consent, estoppel and waiver of the lessor thereunder to the assignment of
such lease to such Purchaser shall be substantially in the form of the letter
attached hereto as SCHEDULE 9.03 and that Seller shall use its commercially
reasonable efforts to obtain each such lessor's consent to such assignment by
having each such lessor countersign such letter in the space provided.
SECTION 10.10. DUE DILIGENCE. Purchaser and its agents and
representatives shall have conducted a satisfactory legal, regulatory and
business due diligence review of the Assets, including, without limitation,
the Systems' properties, cell sites, transmitters, subscriber base and
revenue potential, the results of which shall be satisfactory to Purchaser.
Without limiting the generality of the foregoing, Purchaser shall be
satisfied that the Assets constitute all assets, licenses and property
necessary for the operation of the Systems as contemplated to be conducted by
Purchaser.
ARTICLE XI
CONDITIONS PRECEDENT TO
SELLER'S OBLIGATION TO CLOSE
The obligations of Seller under this Agreement with respect to the sale
of the Assets shall be subject to the fulfillment on or prior to the Closing
of each of the following conditions, any of which may be waived in writing by
Seller:
SECTION 11.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE
OF THIS AGREEMENT. All of the representations and warranties by Purchaser
contained in this Agreement shall be true and correct in all material
respects at and as of the Closing. Purchaser shall have complied with and
performed in all material respects all of the agreements and covenants
required by this Agreement to be performed and complied with by it on or
prior to the Closing. Seller shall have been furnished with a certificate of
an officer of Purchaser, dated as of the Closing, certifying to the
fulfillment of the foregoing conditions.
SECTION 11.02. DIRECTORS' RESOLUTIONS. Purchaser shall deliver to
Seller copies of the resolutions of its Board of Directors authorizing the
execution, delivery and performance of this Agreement and all instruments and
documents to be delivered in connection herewith and the transactions
contemplated hereby, duly certified by an authorized officer of Purchaser.
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SECTION 11.03. INCUMBENCY CERTIFICATE. Seller shall have received a
certificate of a secretary of Purchaser, certifying as to the genuineness of
the signatures of representatives of Purchaser authorized to take certain
actions or execute any certificate, document, instrument or agreement to be
delivered pursuant to this Agreement, which incumbency certificate shall
include the true signatures of such representatives.
SECTION 11.04. FCC; XXXX-XXXXX ACT. The FCC shall have granted its
consent to the assignment of the FCC Authorizations to Purchaser. In
addition, all applicable waiting periods under the Xxxx-Xxxxx Act (if
applicable to the transactions contemplated by this Agreement) shall have
expired or been terminated and no objection shall have been made by the FTC
or DOJ.
SECTION 11.05. OPINION OF COUNSEL TO PURCHASER. Seller shall have been
furnished with an opinion of Xxxxxxx & Xxxxxx, LLP, counsel to Purchaser,
dated as of the Closing and addressed to Seller in substantially the form of
EXHIBIT G hereto.
SECTION 11.06. CLOSING ESCROW AGREEMENT. Purchaser and the Escrow
Agent each shall have executed and delivered the Purchase Escrow Agreement to
Seller.
SECTION 11.07. NO LITIGATION. On the Closing Date, (i) no litigation,
proceeding, investigation, or inquiry shall be pending that, if sustained,
would materially and adversely affect the value of the Assets, Seller's right
to retain or convey the Assets or to operate the Systems, or Purchaser's
right to acquire, retain and own the Assets or to operate the Systems, and
(ii) no judgment, decree, injunction, rule or order of any court of competent
jurisdiction or other legal authority shall be outstanding against Purchaser,
Seller or any affiliate purporting to enjoin or otherwise prevent the Closing
of the transactions contemplated hereunder.
ARTICLE XII
CASUALTY LOSSES
In the event that there shall have been suffered between the date hereof
and the Closing any casualty loss relating to the Assets that becomes known
to Seller, Seller will promptly notify Purchaser of such event. Seller
shall, to the extent practicable, repair, rebuild or replace the portion of
the Assets damaged, destroyed or lost prior to the Closing Date. To the
extent the repair, rebuild or replacement of the portion of the Assets
damaged, destroyed or lost prior to the Closing Date is not practicable, then
the Purchase Price shall be reduced by the amount, mutually acceptable to
Purchaser and Seller, which is estimated by the parties to equal the
out-of-pocket costs and expenses that Purchaser is reasonably likely to incur
to repair, rebuild or replace, in accordance with cellular telephone industry
practices, such damaged, destroyed or lost Assets after the Closing Date, and
Seller shall retain all insurance proceeds payable as a result of the
occurrence of the event resulting in such loss or damage. Notwithstanding
the foregoing, in the event that Purchaser installs or modifies equipment
pursuant to its rights under Section 9.04(d) hereof, Purchaser shall
indemnify and hold harmless Seller from and against any losses incurred by
Seller arising out of Purchaser's installation or modification of equipment
prior to the Closing Date.
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ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. INDEMNIFICATION BY SELLER. (a) After the Closing, and
regardless of any investigation made at any time by or on behalf of Purchaser
or any information Purchaser may have, but subject to the terms of this
Article XIII, Seller agrees to indemnify and to hold Purchaser, its
shareholders, officers, directors, and employees (the "Indemnified Purchaser
Parties") harmless from and against and in respect of any losses (including
lost revenues), damages, costs, expenses (including costs of investigations
and reasonable attorney fees), suits, demands, judgments and diminutions in
value suffered or incurred (each a "Loss" and collectively "Losses") by
Purchaser arising from or related to:
(i) Any Non-Assumed Liability, whether or not known or
asserted at or prior to Closing, relating to or arising from the
ownership, operation, control or sale of the Assets, the Systems or
the Business or any other state of facts which existed at or prior to
Closing, including fines or forfeitures imposed or threatened to be
imposed by the FCC for the operation, at or prior to Closing, of the
Systems or the Business;
(ii) Any misrepresentation or breach of warranty in, or
omission from, any representation or warranty of Seller in this
Agreement, the Schedules or Exhibits hereto, the Closing Escrow
Agreement, the Deposit Escrow Agreement, the Xxxx of Sale, the
Assumption Agreement or in any closing certificate delivered by Seller
to Purchaser pursuant to Article X hereof;
(iii) Any breach or non-fulfillment of any covenant or
agreement on the part of Seller under this Agreement to be performed
on or following the Closing Date; and
(iv) All reasonable costs and expenses (including reasonable
attorneys' fees) incurred by Purchaser in connection with any action,
suit, proceeding, demand, assessment or judgment incident to any of
the matters Purchaser is indemnified against by Seller in this
Agreement.
(b) In addition and subject to the terms of this Article XIII,
Seller shall indemnify Purchaser against and hold it harmless from any and
all Losses which Purchaser may incur by reason of the failure (if any) of
Seller to comply with the Bulk Transfers Article of the Uniform Commercial
Code of any state.
SECTION 13.02. INDEMNIFICATION BY PURCHASER. After the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have, but subject to the terms of this Article
XIII, Purchaser agrees to indemnify and to hold Seller, and its directors,
officers, stockholders, employees, representatives and agents harmless from
and against and in respect of any Losses incurred by Seller from:
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(i) All liabilities and obligations of Purchaser, and all
claims and demands made in respect thereof, relating to or arising
from Purchaser's ownership, operation or control of the Assets or the
Business after the Closing, including on account of the Assumed
Liabilities; and;
(ii) Any misrepresentation or breach of warranty in, or
omission from, any representation or warranty of Purchaser in this
Agreement, the Schedules or Exhibits hereto, including the Closing
Escrow Agreement, the Deposit Escrow Agreement, the Assumption
Agreement or in any closing certificate delivered by Purchaser to
Seller pursuant to Article XI hereof;
(iii) Any breach or non-fulfillment of any covenant or
agreement on the part of Purchaser under this Agreement to be
performed on or following the Closing Date; and
(iv) All reasonable costs and expenses (including reasonable
attorneys' fees) incurred by Seller in connection with any action,
suit, proceeding, demand, assessment or judgment incident to any of
the matters Seller is indemnified against by Purchaser in this
Agreement.
SECTION 13.03. NOTICE OF CLAIMS; DEFENSE OF THIRD PARTY. A party
claiming indemnification under this Article XIII (the "Asserting Party") must
notify (in writing, in reasonable detail and within a reasonable period of
time after the Asserting Party becomes aware of such claim) the party from
which indemnification is sought (the "Defending Party") of the nature and
basis of such claim for indemnification. If such claim relates to a claim,
suit, litigation or other action by a third party against the Asserting Party
or any fixed or contingent liability to a third party (a "Third Party
Claim"), the Defending Party may elect to assume and control the defense of
the Third Party Claim at its own expense with counsel selected by the
Defending Party from and after such time as the Defending Party
unconditionally agrees in writing to accept, as against the Asserting Party,
all liabilities on account of such Third Party Claim. Assumption of such
liability, as against the Asserting Party, shall not be deemed an admission
of liability as against any such third party. Notwithstanding the foregoing,
the Defending Party may not assume or control the defense if the named
parties to the Third Party Claim (including any impleaded parties) include
both the Defending Party and the Asserting Party and representation of both
parties by the same counsel (in such counsel's reasonable determination)
would be inappropriate due to actual or potential differing interests between
them, in which case the Asserting Party shall have the right to defend the
Third Party Claim and to employ counsel reasonably approved by the Defending
Party, and to the extent the matter is determined to be subject to
indemnification hereunder, the Defending Party shall reimburse the Asserting
Party for the reasonable costs of its counsel. If the Defending Party
assumes liability for the Third Party Claim as against the Asserting Party
and assumes the defense and control of the Third Party Claim pursuant to this
Section 13.03, the Defending Party shall not be liable for any fees and
expenses of counsel for the Asserting Party incurred thereafter in connection
with the Third Party Claim (except in the case of actual or potential
differing interests, as provided in
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the preceding sentence), but shall not agree to any settlement of such Third
Party Claim which does not include an unconditional release of the Asserting
Party by the third party claimant on account thereof, PROVIDED that such
requirement shall be deemed waived to the extent that the Asserting Party
does not undertake to provide and promptly execute and, concurrently with the
delivery of any such release, deliver a corresponding release of the third
party claimant with respect to such Third Party Claim. If the Defending
Party does not assume liability for and the defense of the Third Party Claim
pursuant to this Section 13.03, the Asserting Party shall have the right (i)
to control the defense thereof and (ii), if the Asserting Party shall have
notified the Defending Party of the Asserting Party's intention to negotiate
a settlement of the Third Party Claim (at the Defending Party's expense to
the extent the matter is determined to be subject to indemnification
hereunder), which notice shall include the material terms of any proposed
settlement in reasonable detail, to settle the Third Party Claim (at the
Defending Party's expense to the extent the matter is determined to be
subject to indemnification hereunder) on terms not materially inconsistent
with those set forth in such notice, unless the Defending Party shall have
notified the Asserting Party in writing of the Defending Party's election to
assume liability for and the defense of the Third Party Claim pursuant to
this Section 13.03 within ten days after receipt of such notice, and the
Defending Party promptly thereafter shall have taken appropriate action to
implement such defense. The Asserting Party shall not be entitled to settle
any such Third Party Claim pursuant to the preceding sentence unless such
settlement includes an unconditional release of the Defending Party by the
Third party claimant on account thereof, PROVIDED that such requirement shall
be deemed waived to the extent that the Defending Party does not undertake to
provide and promptly execute and, concurrently with delivery of any such
release, deliver a corresponding release of the third party claimant with
respect to such Third Party Claim. The Asserting Party and the Defending
Party shall use all reasonable efforts to cooperate fully with respect to the
defense and settlement of any Third Party Claim covered by this Article XIII.
SECTION 13.04. LIMITATIONS. The Defending Party's obligations to
indemnify the Asserting Party pursuant to this Article XIII shall be subject
to the following limitations:
(a) No indemnification shall be required to be made by the
Defending Party until the aggregate amount of the Asserting Party's Losses
exceeds $10,000 (the "Deductible") and then indemnification shall only be
required to be made by the Defending Party to the extent of such Losses that
exceed the Deductible; provided, however, the Deductible shall not be
applicable to (i) Seller's obligation to indemnify Purchaser for Non-Assumed
Liabilities, (ii) Purchaser's obligation to indemnify Seller for Losses
arising from or related to the matters described in Section 13.02(i), (iii)
adjustments to the Purchase Price provided for in Section 5.05, (iv) a breach
by Seller of its representations set forth in Section 7.02, the first
sentence of Section 7.04, and Section 7.15 or (v) Losses resulting from fraud.
(b) All representations and warranties contained in this
Agreement shall survive the Closing until the second anniversary thereof;
provided, however, that notwithstanding the foregoing, (x) the
representations and warranties contained in Section 7.02, the first sentence
of Section 7.04, and Section 7.15 shall survive the Closing for an unlimited
duration and (y) the representations and warranties contained in Sections
7.12 and 7.09 (as they
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may relate to Environmental Laws) shall survive the Closing until the second
anniversary thereof (the applicable period of survival being referred to as
the "Survival Period"). To the extent a claim is made in respect of a
representation or warranty within the applicable Survival Period, such
representation or warranty shall survive after the Survival Period for
purposes of such claim until such claim is finally determined or settled.
Each party shall be precluded from asserting claims against the other party
after the applicable Survival Period.
(c) In addition, the liability of any indemnitor with respect to
any Losses shall be determined on a basis that is net of the amount actually
paid to the indemnified party in respect of any such Losses pursuant to a
policy of insurance maintained by such indemnified party.
ARTICLE XIV
CONFIDENTIALITY AND PRESS RELEASES
SECTION 14.01. CONFIDENTIALITY. Each party (in such capacity, a
"Recipient Party") shall hold in strict confidence all documents and
information concerning the other (in such capacity, a "Disclosing Party")
and its business and properties and, if the transaction contemplated hereby
should not be consummated, such confidence shall be maintained, and all such
documents and information (in written form) shall immediately thereafter be
returned to the Disclosing Party. In furtherance of the foregoing, without
the express prior written consent of the Disclosing Party, the Recipient
Party shall not, directly or indirectly, disclose, disseminate, publish,
reproduce, retain, use (for its benefit or for the benefit of others) or
otherwise make available in any manner whatsoever, any such documents or
information to anyone except as provided in Section 14.03. If the Recipient
Party breaches, or threatens to commit a breach of, any of the provisions of
this Article XIV, the Disclosing Party shall have the right (in addition to
any other rights and remedies available at law or in equity) to equitable
relief (including injunctions) against such breach or threatened breach, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable harm to the Disclosing Party and that money damages would
not be an adequate remedy.
SECTION 14.02. PRESS RELEASES. No press release or public disclosure,
either written or oral, of the existence or terms of this Agreement shall be
made by either Purchaser or Seller without the consent of the other subject
to the provisions of Section 14.03, and Purchaser and Seller shall each
furnish to the other advance copies of any release which it proposes to make
public concerning this Agreement or the transactions contemplated hereby and
the date upon which Purchaser or Seller, as the case may be, proposes to make
such press release.
SECTION 14.03. DISCLOSURES REQUIRED BY LAW. This Article XIV shall
not, however, be construed to prohibit any party from making any disclosures
to any governmental authority that it is required to make by law or from
filing this Agreement with, or disclosing the terms of this Agreement to, any
institutional lender to such party, or prohibit Seller, Purchaser or any of
their affiliates from disclosing to its investors, partners, accountants,
auditors, attorneys, parent company and broker/dealers such terms of this
transaction as are customarily disclosed to them in connection with the sale
or acquisition of a cellular telephone system; PROVIDED, HOWEVER, that
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any such party shall be informed of the confidential nature of such
information and shall agree to keep such information confidential; and
PROVIDED, HOWEVER, that each party shall provide to the other reasonable
advance copies of any public release except where the provision of such
advance notice is not permissible.
ARTICLE XV
TERMINATION
SECTION 15.01. BREACHES AND DEFAULTS; OPPORTUNITY TO CURE. Prior to
the exercise by a party of any termination rights afforded under this
Agreement, if either party (the "Non-Breaching Party") believes the other
(the "Breaching Party") to be in breach hereunder, the Non-Breaching Party
shall provide the Breaching Party with written notice specifying in
reasonable detail the nature of such breach, whereupon the Breaching Party
shall have 30 days from the receipt of such notice to cure such breach to the
reasonable satisfaction of the Non-Breaching Party; PROVIDED, HOWEVER, that
if such breach is curable but is not capable of being cured within such
period and if the Breaching Party shall have commenced action to cure such
breach within such period and is diligently attempting to cure such breach,
then the Breaching Party shall be afforded an additional sixty (60) days to
cure such breach, PROVIDED, HOWEVER, that the cure period for a breach shall
in no event extend beyond the Outside Date. If the breach is not cured
within such time period, then the Breaching Party shall be in default
hereunder and the Non-Breaching Party shall be entitled to terminate this
Agreement (as provided in Section 15.02). This right of termination shall be
in addition to, and not in lieu of, any legal or equitable remedies available
to the Non-Breaching Party.
SECTION 15.02. TERMINATION. This Agreement may be terminated and the
transactions contemplated herein may be abandoned, by written notice given to
the other party hereto, at any time prior to the Closing:
(a) by mutual written consent of Seller and Purchaser;
(b) by either Purchaser or Seller, if any court of competent
jurisdiction in the United States or other United States governmental body
shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise permanently prohibiting the
sale of the Assets to Purchaser (which Seller and Purchaser shall have used
all reasonable efforts to have lifted or reversed) and such order, decree,
ruling or other action shall have become final and nonappealable;
(c) subject to Section 15.01, by Purchaser, if Seller shall have
breached any of its representations herein and such breaches, in the
aggregate, would reasonably be expected to have a Material Adverse Effect
or if Seller shall have materially breached any of its covenants;
(d) subject to Section 15.01, by Seller, if Purchaser shall have
materially breached any of its representations or covenants herein and such
breach
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or breaches, in the aggregate, would reasonably be expected to have a
Material Adverse Effect or if Seller shall have materially breached any of
its covenants; or
(e) by either Seller or Purchaser if the Closing shall not have
occurred on or before May 31, 1999 (the "Outside Date"), unless: (i) the
parties agree in writing to extend the Outside Date, or (ii) the failure to
have the Closing shall be due to the failure of the party seeking to
terminate this Agreement to perform in any material respect its obligations
under this Agreement required to be performed by it at or prior to the
Closing.
ARTICLE XVI
BROKERS' FEES
Each party represents and warrants to the other that it shall be solely
responsible for the payment of any fee or commission due to any broker or
finder it has engaged with respect to this transaction and the other party
hereto shall be indemnified for any liability with respect thereto pursuant
to Article XIII hereof.
ARTICLE XVII
MISCELLANEOUS
SECTION 17.01. ADDITIONAL INSTRUMENTS OF TRANSFER. (a) From time to
time after the Closing, each party shall, if requested by another party,
make, execute and deliver such additional assignments, bills of sale, deeds
and other instruments, as may be reasonably necessary or proper to carry out
the specific provisions of this Agreement, including transfer to Purchaser
all of Seller's right, title and interest in and to the Assets. Such efforts
and assistance shall be at the cost of the requesting party.
(b) Anything in this Agreement to the contrary notwithstanding,
Seller is not obligated to sell, assign, transfer or convey to Purchaser any
of its rights and obligations in and to any Interest without first obtaining
all necessary approvals, consents or waivers. To the extent any of the
approvals, consents or waivers listed on SCHEDULE 10.04 have not been
obtained by Seller as of the Closing and Purchaser elects to proceed with the
Closing, Seller shall, for the remaining term of such Interest, use its
commercially reasonable efforts to (i) cooperate with Purchaser to obtain the
consent of any such third party; (ii) cooperate with Purchaser in any
reasonable and lawful arrangements designed to provide the benefits
(including, without limitation, the payment to Purchaser of any monies
received by Seller in connection therewith) of such Interest to Purchaser so
long as Purchaser performs all obligations with respect to the Interest (and
the payment of all expenses in connection therewith); and (iii) enforce, at
the request of Purchaser and at the expense and for the account of Purchaser,
any rights of Seller arising from such Interest against such issuer thereof
or the other party or parties thereto (including the right to elect to
terminate any such Interest in accordance with the terms thereof upon the
request of Purchaser); provided, however, that neither of Purchaser nor
Seller shall be obligated to pay any consideration or other sums therefor
(except for filing fees and other ordinary administrative charges and except
as set forth above) to the third party, or to commence
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any proceedings against the third party, from whom such approval, consent or
waiver is requested.
SECTION 17.02. NOTICES. All notices and other communications required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given if delivered, sent by telecopier, recognized overnight
delivery service or registered or certified mail, return receipt requested,
postage prepaid, to the following addresses:
(i) If to Purchaser:
00000 X. Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
with a required copy (which shall not constitute notice) to:
Xxxxxxx & Xxxxxx, LLP
Xxx XxxxXxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx., Esq.
Facsimile No.: (000) 000-0000
(ii) If to Seller:
First Cellular of Maryland, Inc.
000 Xxxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
with a required copy (which shall not constitute notice) to:
Xxxxxx Xxxxx, L.L.P.
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: J. Xxxxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Notices delivered personally shall be effective upon delivery against
receipt. Notices transmitted by telecopy shall be effective when received,
provided that the burden of proving notice when notice is transmitted by
telecopy shall be the responsibility of the party providing such notice .
Notices delivered by overnight mail shall be effective when received.
Notices
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delivered by registered or certified mail shall be effective on the date set
forth on the receipt of registered or certified mail, or 72 hours after
mailing, whichever is earlier.
SECTION 17.03. EXPENSES. Each party shall bear its own expenses and
costs, including the fees of any corporate or FCC attorney retained by it,
incurred in connection with the preparation of this Agreement and the
consummation of the transactions contemplated hereby; provided that Seller
and Purchaser shall bear equally FCC, Xxxx-Xxxxx Act and other governmental
filing fees.
SECTION 17.04. TRANSFER TAXES. Seller and Purchaser shall bear equally
all use, sales and transfer taxes, if any, imposed in connection with the
sale and delivery of the Assets acquired by Purchaser under this Agreement.
Notwithstanding anything else to the contrary set forth in this Section
17.04, Purchaser shall in no event be responsible in any manner for the
payment of any Taxes on any income or gain which Seller may realize as a
result of the sale of the Assets or otherwise related to the transactions
contemplated by this Agreement.
SECTION 17.05. COLLECTION PROCEDURES. From and after the Closing,
Purchaser shall have the right and authority, at its expense, to collect for
its account all items to which it is entitled as provided in this Agreement
and to endorse with the name of the Seller any checks or drafts received on
account of any such items.
SECTION 17.06. SPECIFIC PERFORMANCE. The parties recognize and
acknowledge that in the event Seller shall fail to perform its obligations
under the terms of this Agreement, money damages alone will not be adequate
to compensate the Purchaser. The parties, therefore, agree and acknowledge
that in the event the Seller fails to perform its obligations under this
Agreement prior to Closing, the Purchaser shall be entitled, in addition to
any action for monetary damages, in addition to any other rights and remedies
on account of such failure, to specific performance of the terms of this
Agreement and of the covenants and obligations hereunder.
SECTION 17.07. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma (without
application of principles of conflicts of law).
SECTION 17.08. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (by merger or other operation of law or otherwise) without the
prior written consent of the other party, which consent will not be
unreasonably withheld except that Purchaser shall have the right to assign
its rights under this Agreement after the Closing to any institutional lender.
SECTION 17.09. SUCCESSORS AND ASSIGNS. All agreements made and entered
into in connection with this transaction shall be binding upon and inure to
the benefit of the parties hereto, their successors and permitted assigns.
SECTION 17.10. AMENDMENTS; WAIVERS. No alteration, modification or
change of this Agreement shall be valid except by an agreement in writing
executed by the parties hereto. No failure or delay by any party hereto in
exercising any right, power or privilege hereunder (and no
- 35 -
course of dealing between or among any of the parties) shall operate as a
waiver of any such right, power or privilege. No waiver of any default on
any one occasion shall constitute a waiver of any subsequent or other
default. No single or partial exercise of any such right, power or privilege
shall preclude the further or full exercise thereof.
SECTION 17.11. ENTIRE AGREEMENT. This Agreement merges all previous
negotiations and agreements between the parties hereto, either verbal or
written, and constitutes the entire agreement and understanding between the
parties with respect to the subject matter of this Agreement.
SECTION 17.12. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which when so executed shall be an original, but
all of which together shall constitute one agreement. Facsimile signatures
shall be deemed original signatures.
SECTION 17.13. SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by
law, but only as long as the continued validity, legality and enforceability
of such provision or application does not materially (a) alter the terms of
this Agreement, (b) diminish the benefits of this Agreement or (c) increase
the burdens of this Agreement, for any person.
SECTION 17.14. SECTION HEADINGS. The section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 17.15. INTERPRETATION. As both parties have participated in
the drafting of this Agreement, any ambiguity shall not be construed against
either party as the drafter.
SECTION 17.16. FURTHER ASSURANCES. For a period of twelve (12) months
after Closing, Seller agrees to provide to Purchaser from time to time any
information that Seller possesses with respect to the operation of the
Business and Assets prior to the Closing which the Purchaser reasonably
requests in the future in connection with the Purchaser's financing efforts
now or in the future or in connection with any FCC or other regulatory filing.
SECTION 17.17. THIRD PARTIES. Nothing herein, expressed or implied, is
intended to or shall confer on any person other than the parties hereto any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 17.18. WAIVER OF JURY THE PARTIES HERETO IRREVOCABLY WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, COUNTERCLAIM, OR
CROSS CLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
[THE REST OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized representative as of the day and year
first above written.
SELLER:
FIRST CELLULAR OF MARYLAND, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxx X. Xxxxx
President
PURCHASER:
XXXXXX CELLULAR OF MARYLAND, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Xxxxxxx Xxxxxx
Chairman
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SCHEDULE 7.17
SUBSCRIBERS: AGENTS
1. Number of Cellular Subscribers: currently roughly 400.
2. Number of Paging Subscribers: approximately 350-400.
3. List of Cellular Agents:
- Xxxxx'x Radio Shack
- Lakeside Cellular
4. List of Paging Agents:
- Xxxxx'x Radio Shack
- Lakeside Cellular
5. List of Cellular Resellers: None
6. List of Paging Resellers: None
