EXHIBIT 10.1
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CONFIDENTIAL & PROPRIETARY
PARTNERSHIP INTEREST PURCHASE AGREEMENT
among
SHENANDOAH MOBILE COMPANY,
SHENANDOAH TELECOMMUNICATIONS COMPANY
and
CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS
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Table of Contents
Page
ARTICLE I THE TRANSACTION ......................................................... 2
1.1 Purchase and Sale ......................................................... 2
1.2 Related Assets ............................................................ 2
1.3 Purchase Price ............................................................ 2
1.4 Purchase Price Adjustment ................................................. 2
1.5 Payment of Purchase Price ................................................. 5
1.6 Closing ................................................................... 5
1.7 Deliveries and Proceedings at Closing ..................................... 5
1.8 Rights of First Refusal ................................................... 6
ARTICLE II REPRESENTATIONS AND WARRANTIES .......................................... 8
2.1 Representations and Warranties of Seller and Parent ....................... 8
2.1.1 Organization and Authority of Seller and Parent .................. 8
2.1.2 Organization and Capitalization of the Partnership ............... 9
2.1.3 Compliance with Law; Authorizations .............................. 10
2.1.4 Litigation ....................................................... 12
2.1.5 Contracts and Other Agreements ................................... 12
2.1.6 No Conflicts; Consents ........................................... 15
2.1.7 Taxes ............................................................ 15
2.1.8 Environmental Matters ............................................ 16
2.1.9 Title; Real and Personal Property ................................ 21
2.1.10 Condition of Assets .............................................. 23
2.1.11 Books of Account; Financial Statements; CapEx Budget ............. 24
2.1.12 Absence of Undisclosed Liabilities ............................... 24
2.1.13 Inventory ........................................................ 25
2.1.14 Accounts Receivable .............................................. 25
2.1.15 Material Changes ................................................. 26
2.1.16 Labor Relations .................................................. 27
2.1.17 Compensation Arrangements ........................................ 27
2.1.18 Employee Benefit Plans and Arrangements .......................... 28
2.1.19 Transactions With Related Parties and Alltel ..................... 30
2.1.20 Insolvency ....................................................... 31
2.1.21 Insurance ........................................................ 31
2.1.22 No Third Party Options ........................................... 32
2.1.23 Intellectual Property Matters .................................... 32
2.1.24 No Interest in Other Entities .................................... 32
2.1.25 Availability of Documents ........................................ 33
2.1.26 No Other Business ................................................ 33
2.1.27 Maintenance of Personal Property ................................. 33
2.1.28 Subscriber Accounts .............................................. 33
2.1.29 Bank Accounts .................................................... 33
2.1.30 Brokers or Finders ............................................... 33
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2.1.31 Completeness of Disclosure ....................................... 33
2.2 Representations and Warranties of Buyer ................................... 33
2.2.1 Partnership Existence and Authority .............................. 33
2.2.2 No Conflicts; Consents ........................................... 34
2.2.3 Litigation ....................................................... 34
2.2.4 Brokers or Finders ............................................... 34
2.2.5 FCC Matters ...................................................... 35
2.2.6 Availability of Funds ............................................ 35
2.2.7 No Outside Reliance .............................................. 35
2.2.8 No Intent to Cancel .............................................. 35
2.2.9 Completeness of Disclosure ....................................... 35
2.2.10 Other Materials .................................................. 35
2.3 Survival of Representations and Warranties ................................ 36
ARTICLE III COVENANTS AND AGREEMENTS ................................................ 36
3.1 Covenants of Seller and Parent Pending the Closing ........................ 36
3.1.1 Conduct of the Business in the Ordinary Course ................... 36
3.1.2 Maintenance of Assets and Insurance .............................. 38
3.1.3 Intentionally Deleted ............................................ 38
3.1.4 Efforts; Relationships; Cooperation .............................. 38
3.1.5 Access ........................................................... 39
3.1.6 Non-solicitation ................................................. 39
3.1.7 Press Releases ................................................... 39
3.1.8 Compliance with Authorizations ................................... 39
3.1.9 Updates .......................................................... 39
3.1.10 Delivery of Financial Statements ................................. 40
3.2 Covenants of Buyer Pending the Closing .................................... 40
3.2.1 Actions of Buyer ................................................. 40
3.2.2 Press Releases ................................................... 40
3.2.3 Updates .......................................................... 40
3.2.4 Non-Solicitation ................................................. 40
3.2.5 Switch Sharing Agreement ......................................... 41
3.3 Mutual Covenants .......................................................... 41
3.3.1 Certain Filings and Consents ..................................... 41
3.3.2 Non-Disclosure ................................................... 42
3.3.3 Maintenance of Books and Records ................................. 42
3.3.4 Compliance with this Agreement; Cooperation ...................... 43
3.3.5 Other Regulatory Requirements .................................... 43
3.3.6 Use of Seller's Names and Logos .................................. 43
3.4 Covenants Regarding Employees and Employee Benefits ....................... 44
3.4.1 Access to Employees .............................................. 44
3.4.2 Employment Termination and Related Benefits ...................... 44
3.4.3 Communications With Employees .................................... 44
3.4.4 No Third Party Rights ............................................ 44
3.4.5 COBRA ............................................................ 44
3.4.6 Employee Benefit Plans ........................................... 45
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3.5 Covenants Regarding Tax Matters ........................................... 45
3.6 Additional Covenants of Seller and Parent ................................. 47
3.6.1 Restructuring of Certain Leases .................................. 47
3.6.2 Termination of Various Agreements ................................ 47
3.6.3 Contour Extension Agreements ..................................... 49
3.6.4 Recording of Memoranda of Leases ................................. 49
ARTICLE IV CONDITIONS PRECEDENT TO CLOSING ....................................... 49
4.1 Conditions Precedent to Obligations of Buyer .............................. 49
4.1.1 Representations and Warranties True as of the Closing ............ 49
4.1.2 Compliance with this Agreement ................................... 50
4.1.3 Closing Certificates ............................................. 50
4.1.4 Opinions of Counsel for Seller and Parent ........................ 50
4.1.5 No Threatened or Pending Litigation .............................. 50
4.1.6 Material Adverse Effect .......................................... 50
4.1.7 Regulatory Approvals ............................................. 51
4.1.8 Required Consents ................................................ 51
4.1.9 Master Site Agreement ............................................ 51
4.1.10 Transition Services Agreement .................................... 51
4.1.11 ROFR ............................................................. 52
4.1.12 Restructuring of Certain Leases .................................. 52
4.1.13 Recording of Memoranda of Leases ................................. 52
4.2 Conditions Precedent to the Obligations of Seller ......................... 52
4.2.1 Representations and Warranties True as of the Closing Date ....... 52
4.2.2 Compliance with this Agreement ................................... 52
4.2.3 Closing Certificate .............................................. 52
4.2.4 No Threatened or Pending Litigation .............................. 53
4.2.5 Regulatory Approvals ............................................. 53
4.2.6 Master Site Agreement ............................................ 53
4.2.7 ROFR ............................................................. 53
ARTICLE V INDEMNIFICATION ......................................................... 53
5.1 General Indemnification Obligation of Seller and Parent ................... 53
5.2 General Indemnification Obligations of Buyer .............................. 54
5.3 Indemnification Procedures ................................................ 55
5.4 Payment ................................................................... 57
5.5 Other Rights and Remedies ................................................. 58
5.6 Threshold and Cap ......................................................... 58
5.7 Environmental Remediation ................................................. 59
ARTICLE VI MISCELLANEOUS ........................................................... 60
6.1 Termination ............................................................... 60
6.2 Expenses .................................................................. 61
6.3 Sales, Transfer and Documentary Taxes ..................................... 61
6.4 Further Assurances ........................................................ 61
6.5 Confidentiality Undertaking by Seller and Parent .......................... 62
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6.6 Contents of Agreement; Parties in Interest ................................ 62
6.7 Assignment and Binding Effect ............................................. 62
6.8 Waiver .................................................................... 63
6.9 Notices ................................................................... 63
6.10 Remedies .................................................................. 64
6.11 Schedules and Exhibits .................................................... 64
6.12 Governing Law ............................................................. 64
6.13 No Benefit to Others ...................................................... 64
6.14 Headings, Gender, "Person," "including" and "Knowledge" ................... 65
6.15 Severability .............................................................. 65
6.16 Counterparts .............................................................. 65
6.17 Partnership Obligations ................................................... 65
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INDEX OF DEFINED TERMS
Term Location
---- --------
Agreement Opening Paragraph
Alltel Recitals
Alltel Purchase Agreement 4.1.11
Asserting Party 5.3(a)
Assignment and Assumption Agreement 1.7(a)(ii)
ASTM Search Distance 2.1.8 (m)
Audited Financial Statements 2.1.11(b)
Auditor Notice 1.4(d)
Authorizations 2.1.3(b)
Balance Sheet Liabilities 1.4(a)
Business Recitals
Buyer Opening paragraph
Buyer Material Adverse Effect 4.2.1
Buyer Required Consents 2.2.2(a)
Buyer's Documents 2.2.1(a)
Buyer's Interest Recitals
CapEx Budget 2.1.11(d)
Cell Sites 2.1.9(d)
Claim Notice 5.3(a)
Closing 1.6
Closing Date 1.6
Closing Date Balance Sheet 1.4(c)
COBRA 2.1.18(e)(i)
Code 1.7(a)(vi)
Confidential Business Information 6.5
Construction Permits 2.1.3(b)
Contracts 2.1.5(b)
Current Assets 1.4(f)
Current Balance Sheet 2.1.11(b)
Current Balance Sheet Date 2.1.11(b)
Currently Leased Property 2.1.8(c)
Currently Owned Property 2.1.8(c)
Defending Party 5.3(a)
Discharged 2.1.8 (d)(iv)
Dispute Notice 1.4(c)
DOL 2.1.18(e)(vi)
Employee Benefit Plan 2.1.18(a)
Environmental Claims 2.1.8(m)
Environmental Laws 2.1.8(m)
Environmental Permits 2.1.8(m)
ERISA 2.1.18(a)
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ERISA Affiliate 2.1.18(a)
Escrow Agent 1.5
Escrow Agreement 1.5
Escrow Amount 1.5
Existing Liens 2.1.9(b)
FCC Recitals
FCC Authorizations 2.1.3(b)
FCC Licenses 2.1.3(b)
FCC Order 1.7(a)(iv)
Final Order 4.1.7
Financial Statements 2.1.11(b)
Formerly Leased Property 2.1.8(c)
Formerly Owned Property 2.1.8(c)
GAAP 1.4(b)
GP Designation Agreement 1.8(a)
Hazardous Materials 2.1.8(m)
H.O. 3.6.2(c)
including 6.14
Indemnification Cap 5.6(a)
Indemnified Buyer Losses 5.6(a)
Indemnified Buyer Party 5.1
Indemnified Seller Losses 5.6(b)
Indemnified Seller Party 5.2
Indemnifying Seller Parties 5.2
Indemnifying Seller Party 5.1
Independent Accountant 1.4(d)
Initial Adjustments Amount 1.4(b)
Intellectual Properties 2.1.23(a)
Interim Financial Statements 3.1.10
IRS 2.1.18(e)(iv)
Know 6.14
Knowledge 6.14
Leased Property 2.1.9(c)
Leases Requiring MOL's 3.6.4
Liabilities 2.1.12(c)
Liens 2.1.3(c)
Losses 5.1
Managed 2.1.8(d)(i)
Market Recitals
Master Site Agreement 4.1.9
multi-employer plan 2.1.18.(f)
Notice Period 5.3(a)
Parent Opening Paragraph
Partners Recitals
Partnership Recitals
Partnership Agreement Recitals
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Partnership Interest Recitals
Person 6.14
Pre-closing Taxes 3.5.2
Preliminary Closing Date Balance Sheet 1.4(b)
Preliminary Purchase Price 1.3
Purchase Price 1.3
Purchase Price Adjustment 1.4(a)
PV 2.1.5(f)
Related Party 2.1.19
Related Party Property 2.1.9(b)
reasonably apprised 5.7
Remediation 5.7
Required Consents 2.1.6
Resolution Period 1.4(d)
XXXX 0.0(x)
XXXX Notice 1.8(a)
SCC 2.1.3(a)
Section 754 Election 3.5.3
Seller Opening Paragraph
Seller Material Adverse Effect 4.1.1
Seller's Closing Date Balance Sheet 1.4(b)
Seller's Closing Payment 1.5
Shenandoah Employee Benefit Plan 2.1.18(a)
Shentel Information 6.5
SIU 2.1.3(f)
Straddle Period Return 3.5.2
Switch Recitals
Switch Sharing Agreement Recitals
Switching Services Recitals
System Recitals
Tax Asset 3.5.8
Tax Returns 2.1.7
Tax Sharing Agreement 3.5.8
Taxes 2.1.7
Threshold Amount 5.6
Transaction Documents 2.1.1(a)
Transition Services Agreement 4.1.10
Unaudited Financial Statements 2.1.11(b)
Working Capital Schedule 1.4(c)
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PARTNERSHIP INTEREST PURCHASE AGREEMENT
THIS PARTNERSHIP INTEREST PURCHASE AGREEMENT ("Agreement"), dated as of
November 21, 2002, is entered into by and among SHENANDOAH MOBILE COMPANY, a
Virginia corporation ("Seller"); SHENANDOAH TELECOMMUNICATIONS COMPANY, a
Virginia corporation ("Parent"); and CELLCO PARTNERSHIP, a Delaware general
partnership doing business as Verizon Wireless ("Buyer").
R E C I T A L S
WHEREAS, Seller owns a 66% general partner interest (the "Partnership
Interest") in Virginia 10 RSA Limited Partnership, a Virginia limited
partnership (the "Partnership") which was formed pursuant to the Agreement
Establishing Virginia 10 RSA Limited Partnership (the "Partnership Agreement")
dated as of January 1, 1990, among Seller, ALLTEL Communications, Inc., as
successor in interest to Centel Cellular Company of Virginia ("Alltel"), and
Buyer, as successor in interest to Contel Cellular, Inc. (together with Seller
and Alltel, the "Partners");
WHEREAS, Alltel owns a 33% limited partner interest in the Partnership and
Buyer owns a 1% limited partner interest in the Partnership ("Buyer's
Interest");
WHEREAS, Seller is a wholly-owned direct subsidiary of Parent;
WHEREAS, the Partnership is the sole holder of a cellular license granted
by the Federal Communications Commission ("FCC") for the Virginia 10 B2 Rural
Service Area #690 (the "Market");
WHEREAS, the Partnership is the owner and operator of a wireless
telecommunications system (the "System") in the Market and, in connection
therewith, is engaged in the business of marketing, selling and providing
wireless telecommunications service in the Market (the "Business");
WHEREAS, Buyer (or an affiliate of Buyer) owns, controls and operates the
switching facilities and equipment (collectively, the "Switch") that perform the
switching and related services in connection with the operation of the System
(the "Switching Services"), and Buyer (or an affiliate of Buyer) is currently
providing such Switching Services to the Partnership pursuant to the terms of a
Switch Sharing Agreement, dated as of December 20, 1990, as amended December 15,
1993, entered into between the Partnership and Buyer (or an affiliate of Buyer)
(as successor to Washington D.C. SMSA Limited Partnership) (the "Switch Sharing
Agreement"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
and assume from Seller, the Partnership Interest, subject to and in accordance
with the terms and conditions of this Agreement;
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NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions herein
contained, and intending to be legally bound, the parties hereto agree as
follows:
ARTICLE I
THE TRANSACTION
1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, at the Closing, Seller shall grant, sell, convey,
assign, transfer and deliver to Buyer, the Partnership
Interest, including all of Seller's right, title and interest
(legal and equitable) therein and all of Seller's rights under
the Partnership Agreement, free and clear of all Liens, and
Buyer shall pay the Purchase Price, purchase the Partnership
Interest from Seller and assume and agree to perform and
discharge all obligations of Seller under the Partnership
Agreement that arise after the Closing and relate to the
period after the Closing; provided, however, that Seller shall
retain its rights under Section 16.1 of the Partnership
Agreement, except to the extent that such rights are
inconsistent with Seller's obligations under this Agreement.
1.2 Related Assets.
(a) Except for assets identified on Schedule 1.2(a) and assets
covered by the Master Site Agreement contemplated by Section
4.1.9, if any Related Party owns or otherwise possesses any
right, title or interest of any type or nature whatsoever in
any assets that are related primarily to or used primarily in
the Business, Seller and Parent shall cause their Related
Parties to transfer such assets, free and clear of all Liens,
to the Partnership prior to Closing at no cost to Buyer
pursuant to instruments of transfer in form and substance
reasonably satisfactory to Buyer, and Seller shall obtain all
consents and give all notices necessary to do so and shall
furnish copies of such consents and notices to Buyer prior to
Closing.
(b) Buyer acknowledges and agrees that Seller shall cause the
Partnership to transfer the assets identified on Schedule
1.2(b) to Seller or a Related Party, as determined by Seller
in its sole discretion, immediately prior to Closing pursuant
to instruments of transfer in form and substance reasonably
satisfactory to Seller and Buyer.
1.3 Purchase Price. The purchase price to be paid by Buyer to
Seller for the Partnership Interest shall be $37 million (the
"Preliminary Purchase Price"), subject to adjustment at and
following Closing as provided in Section 1.4 below (as so
adjusted, the "Purchase Price"), and payable by Buyer to
Seller in accordance with Section 1.5 below.
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1.4 Purchase Price Adjustment.
(a) The Preliminary Purchase Price shall be increased or decreased
(the "Purchase Price Adjustment") on a dollar-for-dollar basis
for the adjustments described in this Section 1.4. The
Preliminary Purchase Price shall be increased by 66% of the
amount by which Current Assets exceed the Liabilities of the
Partnership that are required to be reflected on the face of a
balance sheet prepared in accordance with generally accepted
accounting principles (the "Balance Sheet Liabilities") (both
as set forth on the Working Capital Schedule determined in
accordance with Sections 1.4(c) and 1.4(d) below) or decreased
by 66% of the amount by which Balance Sheet Liabilities exceed
Current Assets. The Purchase Price Adjustment shall be
initially calculated as of the Closing as described in Section
1.5 and reflected in Seller's Closing Payment made pursuant to
Section 1.5, and finally calculated as described in Section
1.4(c).
(b) Not more than five (5) and not less than three (3) business
days prior to the Closing Date, Seller shall deliver to Buyer,
(i) a balance sheet of the Partnership dated as of the opening
of business on the Closing Date and based on information
reasonably available to Seller not more than five (5) business
days prior to the Closing Date, prepared by Seller in
accordance with generally accepted accounting principles
consistently applied ("GAAP") and on an estimated basis (the
"Preliminary Closing Date Balance Sheet"); and (ii) a good
faith estimate prepared by Seller of the dollar amount of the
Purchase Price Adjustment to the Preliminary Purchase Price
(the "Initial Adjustments Amount"), taking account of all
provisions establishing the basis for calculating such
adjustment set forth herein. The Preliminary Purchase Price
shall be increased or decreased at Closing by the Initial
Adjustments Amount. Not more than 30 days after the Closing
Date, Seller shall deliver to Buyer (A) a balance sheet of the
Partnership dated as of the opening of business on the Closing
Date, prepared by Seller in accordance with GAAP ("Seller's
Closing Date Balance Sheet"), (B) a calculation prepared by
Seller of the dollar amount of the Purchase Price Adjustment
to the Preliminary Purchase Price based on the information
shown in Seller's Closing Date Balance Sheet, taking account
of all provisions establishing the basis for calculating such
adjustment set forth herein, and (C) copies of the account
reconciliations supporting Seller's calculation of the
information in Seller's Closing Date Balance Sheet.
(c) As promptly as practicable after the Closing Date (but in no
event later than 90 days thereafter) Buyer shall prepare and
deliver to Seller for its review and comment (i) a schedule
dated as of the opening of business on the Closing Date
showing all Current Assets and Balance Sheet Liabilities of
the Partnership (the "Working Capital Schedule"), (ii) a
balance sheet dated as of the opening of business on the
Closing Date prepared in accordance with GAAP (the "Closing
Date Balance Sheet"), (iii) copies of the account
reconciliations supporting Buyer's calculation of the
information in the Closing Date Balance Sheet, and (iv) a
reconciliation statement setting forth any reconciling items
that account for differences between Seller's Closing
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Date Balance Sheet and the Closing Date Balance Sheet. The
Working Capital Schedule shall be prepared as set forth in
Section 1.4(f). If Seller objects to any amounts reflected on
the Working Capital Schedule or the Closing Date Balance
Sheet, Seller must, within 20 business days after Seller's
receipt thereof, give written notice (the "Dispute Notice") to
Buyer specifying in reasonable detail Seller's objections. If
Seller has not given a Dispute Notice with respect to the
Working Capital Schedule or the Closing Date Balance Sheet by
the end of the 20 business day period after Seller has
received all such documents, Buyer's determination of the
Purchase Price Adjustment shall be final, binding and
conclusive on the parties. Any disputes with respect to the
Working Capital Schedule or the Closing Date Balance Sheet
shall be resolved pursuant to the procedures of Section
1.4(d).
(d) With respect to any disputed amounts concerning the Working
Capital Schedule or the Closing Date Balance Sheet, the
parties shall negotiate in good faith during the 20 business
day period (the "Resolution Period") after the date of Buyer's
receipt of the Dispute Notice to resolve any such disputes. If
the parties are unable to resolve all such disputes within the
Resolution Period, then at any time thereafter, either party
may require that the disputes be submitted to Xxxxx Xxxxxxxx
(the "Independent Accountant"), such action to be triggered by
the requesting party providing written notice to the other
party (an "Auditor Notice"). In the event an Auditor Notice is
given, the Independent Accountant shall be engaged to provide
a final and conclusive resolution of all unresolved disputes
within 45 days after such engagement, which resolution shall
be based on the express provisions of this Agreement;
provided, however, that if the Independent Accountant finds
the express terms of this Agreement are not sufficient to
resolve any issue or issues, the Independent Accountant shall
rely upon GAAP as then in effect. The determination of the
Independent Accountant shall be final, binding and conclusive
on the parties hereto, and the fees and expenses of the
Independent Accountant shall be borne by the party who is not
the substantially prevailing party, as determined by the
Independent Accountant based on the Independent Accountant's
resolution of the issues. If the Independent Accountant is
unable to make a determination of which party is the
substantially prevailing party, the parties shall share the
expenses of the Independent Accountant equally.
(e) From and after the Closing Date, Buyer shall provide Seller
upon reasonable notice with free and full access to the books,
records and personnel of Buyer and the Partnership reasonably
requested by Seller to assist Seller in its review of the
Working Capital Schedule and the Closing Date Balance Sheet
prepared by Buyer.
(f) The Working Capital Schedule shall set forth all Current
Assets and Balance Sheet Liabilities of the Partnership
existing as of the opening of business on the Closing Date.
For clarification purposes, Schedule 1.4(f) sets forth an
example of the Working Capital Schedule if it were to have
been prepared as
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of the Current Balance Sheet Date. For purposes of this
Agreement, "Current Assets" shall mean:
(i) all cash and cash equivalents of the Partnership;
(ii) all assets and rights of the Partnership determined in
accordance with GAAP to be "trade accounts receivable"
(including customer and roaming accounts receivable), provided
that (1) Current Assets shall not include any accounts
receivable owed by any Related Party to the Partnership and
(2) the allowance for uncollectible accounts receivable shall
be equal to 3% of the total value of the Partnership's
customer accounts receivable (not including roaming accounts
receivable);
(iii) the following assets of the Partnership valued at the lower of
cost or market, but in no event valued at an aggregate amount
greater than $40,000: all mobile telephones and accessories
directly related to such mobile telephones of the Partnership
determined in accordance with GAAP to be "inventory," but
excluding any such assets that have been used as displays or
demonstration items in retail sales locations; a physical
audit of the Partnership's inventory will be taken by
representatives of Seller and Buyer during the afternoon or
evening prior to Closing, the results of which shall, except
in the event of theft of inventory on the day before the
Closing after such audit is taken or on the Closing Date, be
final and binding upon the parties (i.e., the physical
inventory count shall not be reviewable by the Independent
Accountant pursuant to Section 1.4(d) above) for purposes of
determining the number and type of inventory items existing as
of the Closing, which information shall be used to derive the
value of the inventory of the Partnership included as Current
Assets and reflected on the Working Capital Schedule; and
(iv) all assets and rights of the Partnership determined in
accordance with GAAP to be "prepaid expenses;" provided that
such prepaid expenses shall not include prepaid insurance or
prepaid amounts under any Shenandoah Employee Benefit Plan.
(g) If the Purchase Price Adjustment (as finally determined in
accordance with the provisions set forth above) less the
Initial Adjustments Amount is a positive amount, then, within
five business days after such final determination, Buyer shall
pay to Seller such amount in immediately available funds, plus
interest on such amount from the Closing Date until such date
of payment at the rate of 2% per annum. If the Purchase Price
Adjustment (as finally determined in accordance with the
provisions set forth above) less the Initial Adjustments
Amount is a negative amount, then, within five (5) business
days after such final determination, Seller shall pay to
Buyer, the absolute value of such amount in immediately
available funds, plus interest on such amount from the Closing
Date until such date of payment at the rate of
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2% per annum. The parties agree that Seller may not satisfy
such payment by directing Buyer to deduct such amount from the
Escrow Amount.
(h) In the event that Seller is required to pay to any third party
after the Closing any Balance Sheet Liability of the
Partnership as of the Closing that was not paid to the third
party by the Partnership after the Closing and that remains
due and payable from the Partnership to the third party as of
the time of payment, then Seller shall so notify Buyer on or
before the date payment is made by Seller to the third party
and Buyer shall cause the Partnership to reimburse Seller for
the amount paid to the third party within 30 days after
Buyer's receipt of such notice.
1.5 Payment of Purchase Price. On the Closing Date Buyer shall
pay, on account of the Purchase Price, to Seller, an amount
equal to the Preliminary Purchase Price (i) less the amount of
$5 million (the "Escrow Amount") to be deposited into escrow
with JPMorgan Chase Bank (the "Escrow Agent") pursuant to the
terms of an Escrow Agreement to be entered into among the
parties in the form attached hereto as Exhibit A (the "Escrow
Agreement"), and (ii) less or plus the amount of any Initial
Adjustments Amount (the "Seller's Closing Payment"), payable
by wire transfer of immediately available funds to such
account(s) as Seller shall designate prior to the Closing
Date.
1.6 Closing. Unless this Agreement shall have been earlier
terminated in accordance with the provisions of this
Agreement, the closing under this Agreement (the "Closing")
shall take place at the offices of Buyer, 000 Xxxxxxxxxx
Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000, at 10:00 a.m. local time on
the date that is five (5) business days after the FCC Order
becomes a Final Order, subject to the satisfaction or waiver
of the conditions set forth in Article IV, or at such other
time or place as may be mutually agreed upon in writing by
Buyer and Seller. The date of the Closing is referred to
herein as the "Closing Date."
1.7 Deliveries and Proceedings at Closing. At the Closing and
subject to the terms and conditions herein contained:
(a) Deliveries by Seller. Seller shall deliver to Buyer the
following:
(i) The Preliminary Closing Date Balance Sheet and Seller's good
faith estimate of the Initial Adjustments Amount in accordance
with Section 1.4(b) above, which shall be delivered not more
than five and not less than three business days prior to
Closing notwithstanding the introductory clause to this
Section;
(ii) an Assignment and Assumption of Partnership Interest in the
form attached hereto as Exhibit B, duly executed by Seller
(the "Assignment and Assumption Agreement");
(iii) the Escrow Agreement, duly executed by Seller;
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(iv) written evidence of FCC approval of Seller's and Buyer's
application to transfer control of the Partnership to Buyer
(the "FCC Order");
(v) the Required Consents in form and substance reasonably
satisfactory to Buyer;
(vi) a "FIRPTA Certificate" as required by Section 1445 of the
Internal Revenue Code of 1986, as amended (the "Code"); and
(vii) a letter from the Department of Taxation of the Commonwealth
of Virginia (the "Tax Department"), dated as of a date no
earlier than 30 days prior to the Closing Date, indicating
with respect to sales taxes that (i) the Partnership's account
is registered for sales taxes and (ii) the Tax Department
found no outstanding assessments or delinquent notices on
file, provided that Seller shall not be required to deliver
any such letter to the extent not available from the Tax
Department.
(b) Deliveries by Buyer. Buyer shall deliver to Seller the
following:
(i) Seller's Closing Payment in accordance with Section 1.5;
(ii) the Escrow Agreement, duly executed by Buyer; and
(iii) the Assignment and Assumption Agreement, duly executed by
Buyer.
(c) Other Deliveries. The parties hereto shall also deliver to
each other the agreements, closing certificates, opinions of
corporate and FCC counsel and other documents and instruments
required to be delivered pursuant to this Agreement.
1.8 Rights of First Refusal.
(a) The parties acknowledge that pursuant to the Partnership
Agreement, Alltel and Buyer each has a right of first refusal
(a "ROFR") with respect to the sale of Seller's Partnership
Interest to Buyer contemplated by this Agreement. As soon as
practicable and in any event within 15 days after the
execution of this Agreement, Seller shall offer the
Partnership Interest to Alltel pursuant to a written notice (the "ROFR Notice")
in accordance with the requirements of the Partnership Agreement, and thereafter
Seller shall comply with the additional requirements of the Partnership
Agreement relating to the ROFR. Seller will promptly furnish to Buyer a copy of
the ROFR Notice sent to Alltel and copies of all subsequent written
communications between Seller and Alltel with respect to such offer. Buyer
hereby waives the requirement of the Partnership Agreement that it be given a
ROFR Notice and hereby notifies Seller that it is exercising its ROFR in
accordance with the Partnership Agreement; provided, however, that if the
Closing condition set forth in Section 4.1.11 of this Agreement is satisfied by
the satisfaction of clause (i), (ii) or (iii) of that Section, then Buyer's
exercise of its ROFR shall be deemed to be rescinded at the time of the
satisfaction of such condition, automatically and
7
without the need for any further notice by any party. In the event that Alltel
validly exercises its ROFR and Buyer and Alltel agree on which of them shall be
the general partner of the Partnership as contemplated by Section 13.3 of the
Partnership Agreement (such agreement to be in the form of a letter agreement
duly executed by Buyer and Alltel and addressed to Seller, and referred to
herein as the "GP Designation Agreement"), the following modifications and
additions shall be deemed to be made to this Agreement, automatically and
without the requirement of any further action by any party, in order to
implement the terms of the ROFR's:
(i) instead of purchasing Seller's entire 66% interest in the
Partnership, Buyer shall purchase from Seller a 49% interest
in the Partnership (and Alltel will purchase the remaining 17%
interest of Seller pursuant to its ROFR), and all references
herein to the "Partnership Interest" shall thereafter mean
such 49% interest,
(ii) the Preliminary Purchase Price shall be reduced in proportion
to the reduction in the interest being purchased, from $37
million to $27,469,696,
(iii) the percentages used to calculate the Purchase Price
Adjustment under Section 1.4(a) shall be changed from 66% to
49%,
(iv) the Escrow Amount shall be reduced in proportion to the
reduction in the interest being purchased, from $5,000,000 to
$3,712,121,
(v) the Indemnification Cap shall be reduced in proportion to the
reduction in the interest being purchased, i.e. the
Indemnification Cap until the first anniversary of the Closing
Date shall be reduced from $25 million to $18,560,605 and the
Indemnification Cap thereafter shall be determined under
Section 5.6(a) based on $11,136,363 rather than $15 million,
(vi) the Threshold Amount shall be reduced in proportion to the
reduction in the interest being purchased, from $250,000 to
$185,606, and
(vii) Buyer and Seller shall file an amendment to the FCC
application filed in accordance with Section 3.3.1, or shall
file a new application in lieu thereof, as appropriate to
reflect the change in the transaction provided for in this
Section 1.8 and the identity of the new general partner in
accordance with FCC requirements, and to reflect Alltel's
purchase of a 17% interest from Seller as part of the same
application if required or advisable in accordance with FCC
requirements, and all references herein to the FCC application
shall thereafter refer to the application as so amended or
replaced.
8
(b) If Alltel validly exercises its ROFR and the GP Designation
Agreement, duly executed by Buyer and Alltel, is delivered to
Seller, the parties agree to execute an amendment to this
Agreement as soon as practicable evidencing such modifications
and additions; it being acknowledged, however, that no such
amendment shall be necessary for such modifications and
additions to be effective.
(c) Notwithstanding anything to the contrary set forth herein, the
execution by Seller of the Alltel Purchase Agreement (as
defined in Section 4.1.11) following the valid exercise of
Alltel's ROFR and the execution and delivery of the GP
Designation Agreement by Buyer and Alltel shall not constitute
a violation by Seller of any covenant or agreement set forth
herein or a breach of any representation or warranty of Seller
set forth herein.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Seller and Parent. Seller
and Parent jointly and severally represent and warrant to
Buyer as of the date of this Agreement and as of the Closing
Date as follows (provided, however, that any breach of any of
Seller's or Parent's representations or warranties directly
caused by either (i) a breach by Buyer or an affiliate of
Buyer of its obligations under the Switch Sharing Agreement,
or (ii) the failure by Buyer or an affiliate of Buyer to
provide to the Partnership the benefits of any modification to
the functionality of the Switch that Buyer or an affiliate of
Buyer makes for its own purposes, shall be disregarded for
purposes of this Agreement):
2.1.1 Organization and Authority of Seller and Parent.
(a) Seller is a corporation duly formed, validly existing and in
good standing under the laws of the Commonwealth of Virginia.
The copies of the certificate of incorporation and by-laws of
Seller included in Schedule 2.1.1(a) are true, correct and
complete copies of such documents, as currently in effect.
Except as set forth in such certificate of incorporation or
by-laws, there is no agreement, commitment or understanding
with respect to the ownership, operation or governance of
Seller or the rights or obligations of the shareholders of
Seller. Seller has the requisite corporate power, authority
and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance by Seller
of this Agreement and all other Transaction Documents to which
Seller is a party have been duly authorized by all necessary
corporate action on the part of Seller, including approval of
this transaction by Parent, as the sole shareholder of Seller.
As used herein, the term "Transaction Documents" means this
Agreement, any amendment to this Agreement, all other
agreements, certificates, documents and instruments required
to be executed and/or delivered by the parties or any one or
more of them in accordance with the provisions of Section 1.7,
4.1, 4.2 or 6.4 of this
9
Agreement and all other agreements, certificates, documents
and instruments that are executed and delivered by the parties
or any one or more of them in connection with the Closing.
This Agreement has been, and the other Transaction Documents
to which Seller is a party will be, duly executed and
delivered by Seller, and this Agreement constitutes, and such
Transaction Documents when executed and delivered will
constitute, the legal, valid and binding obligations of
Seller, enforceable against Seller in accordance with their
respective terms, except as such enforceability may be limited
by bankruptcy laws and other similar laws affecting creditors'
rights generally, and except that the remedy of specific
performance and injunctive relief and other forms of equitable
relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor
may be brought.
(b) Parent is a corporation duly formed, validly existing and in
good standing under the laws of the Commonwealth of Virginia.
The copies of the certificate of incorporation and by-laws of
Parent included in Schedule 2.1.1(b) are true, correct and
complete copies of such documents, as currently in effect.
Except as set forth in such certificate of incorporation or
bylaws, there is no agreement, commitment or understanding
with respect to the ownership, operation or governance of
Parent or the rights or obligations of the shareholders of
Parent. Parent has the requisite corporate power, authority
and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance by Parent
of this Agreement and all other Transaction Documents to which
Parent is a party have been duly authorized by all necessary
corporate action on the part of Parent. This Agreement has
been, and the other Transaction Documents to which Parent is a
party will be, duly executed and delivered by Parent, and this
Agreement constitutes, and such Transaction Documents when
executed and delivered will constitute, the legal, valid and
binding obligations of Parent, enforceable against Parent in
accordance with their respective terms, except as such
enforceability may be limited by bankruptcy laws and other
similar laws affecting creditors' rights generally, and except
that the remedy of specific performance and injunctive relief
and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
2.1.2 Organization and Capitalization of the Partnership.
(a) The Partnership is a limited partnership duly formed, validly
existing and in good standing under the laws of the
Commonwealth of Virginia. The Partnership is not qualified to
do business as a foreign entity in any jurisdiction. The
copies of the Partnership's certificate of limited partnership
(as amended to date) and the Partnership Agreement included in
Schedule 2.1.2(a) are true, correct and complete copies of
such documents, as currently in effect. Except as set forth in
Schedule 2.1.2(a), the Partnership Agreement has not been
amended and no waiver of rights thereunder by Seller or, to
Seller's Knowledge, Alltel, is currently in effect. Except as
set forth in the
10
Partnership Agreement, there is no agreement, commitment or
understanding with respect to the ownership, operation or
governance of the Partnership or the rights or obligations of
the partners of the Partnership. The Partnership has all
necessary partnership power and authority to own and operate
its properties and to carry on the Business as it is now being
conducted.
(b) Seller and, to Seller's Knowledge, Alltel and Buyer are the
only partners in the Partnership. Schedule 2.1.2(b) accurately
sets forth Seller's and to Seller's Knowledge, Alltel's and
Buyer's, ownership interests and capital accounts in the
Partnership. The Partnership has not admitted any partner or
issued any ownership interest in the Partnership to any Person
other than the Partners. Except as set forth on Schedule
2.1.2(b), Seller has not, either in its capacity as General
Partner of the Partnership or otherwise, received any notice
of a transfer by Alltel of any interest in the Partnership,
including a notice pursuant to Section 11.2 of the Partnership
Agreement. The Partners' ownership interests in the
Partnership are not evidenced by any certificate, instrument
or other document (other than the Partnership Agreement). The
Partnership Interest has been duly authorized and validly
issued and is fully paid. To Seller's Knowledge, no Person
other than the Partners has any interest in the Partnership or
any voting rights with respect to the Partnership. Except as
set forth in the Partnership Agreement, there are no
subscriptions, warrants, options, convertible or exchangeable
securities, calls, rights, contracts, understandings or
commitments of any character obligating the Partnership to
issue, deliver or sell to any Person any interest in or voting
rights with respect to the Partnership or any securities
convertible into or exchangeable for any such interest or
rights. Except as set forth in the Partnership Agreement,
there are no outstanding obligations of the Partnership to
repurchase, redeem or otherwise acquire the Partnership
Interest or, to Seller's Knowledge, the partnership interest
of either of the other Partners. There are no subscriptions,
warrants, options, puts, calls, rights, tag-along rights,
drag-along rights, rights of first refusal, contracts,
commitments, voting trusts, proxies, understandings,
restrictions or arrangements relating to the Partnership
Interest or, to Seller's Knowledge, the partnership interest
of either of the other Partners, other than as set forth in
the Partnership Agreement. The Partnership does not own, or
have any other proprietary interest (of record, beneficial or
equitable) in, any Person. Seller and, to Seller's Knowledge,
each of the other Partners, has satisfied all capital calls,
contribution requirements and similar obligations to make
contributions or investments in the Partnership and is not in
default under the Partnership Agreement.
2.1.3 Compliance with Law; Authorizations.
(a) The Partnership and Seller (i) have complied in all respects
with, and are not in violation in any respect of, any federal,
state or local law, ordinance, code, order or governmental
rule or regulation to which the Partnership, any of the
Partnership's assets or the Business are subject, including
rules, regulations or orders of the FCC and the Virginia State
Corporation Commission (the
11
"SCC"), and (ii) have not failed to obtain or to adhere to the
requirements of any license, permit or authorization necessary
to the ownership of the Partnership's assets or to the conduct
of the Business.
(b) Set forth on Schedule 2.1.3(b) is a list of all licenses
issued by the FCC to the Partnership to construct, own and
operate a wireless telecommunications system in the Market,
including licenses related to associated microwave facilities
(collectively, the "FCC Licenses"), all outstanding
construction permits issued by the FCC to the Partnership with
respect to construction of a wireless telecommunications
system in the Market (the "Construction Permits"; and the FCC
Licenses and the Construction Permits collectively, the "FCC
Authorizations"), all of the Partnership's Environmental
Permits, all conditional use permits or other local permits
issued to the Partnership that relate to real property owned
or leased by the Partnership or to the Partnership's use of
any such property, and all other licenses, permits, approvals
or other authorizations issued to the Partnership by any
federal, state or local governmental authority (collectively
(including the FCC Authorizations and the Environmental
Permits), the "Authorizations").
(c) Except as set forth on Schedule 2.1.19, the Authorizations are
the only permits, franchises, easements, licenses, variances,
exemptions, rights, applications, filings, registrations,
orders or other authorizations and approvals from governmental
authorities which are necessary for the Partnership to conduct
the Business as currently being conducted by the Partnership.
Each of the Authorizations is in full force and effect, is
validly and exclusively held by the Partnership, is free and
clear of any legal disqualifications, conditions or other
restrictions (other than those routinely imposed in
conjunction with such Authorizations), is free and clear of
all Liens (defined below) except for Existing Liens (as
defined in Section 2.1.9(b)), and is in compliance with all
laws, rules, regulations, orders and decrees. As used herein,
the term "Liens" means any mortgage, lien, pledge, charge,
security interest, encumbrance, easement, conditional sales
contract, reversionary interest (except for any reversionary
rights of landlords under leases to which the Partnership is a
party), transfer restriction, right of first refusal, voting
trust agreement, preemptive right, or other adverse claim,
defect of title, limitation or restriction of any type or
nature whatsoever. Except as set forth on Schedule 2.1.3(c),
there are no existing applications, petitions to deny or
complaints or proceedings pending or, to Seller's Knowledge,
threatened, before the FCC, the SCC or any other tribunal,
governmental authority or regulatory agency relating to the
Authorizations or the Business (other than proceedings
affecting the wireless telecommunications industry generally).
To Seller's Knowledge, no governmental authority or regulatory
agency has threatened to terminate or suspend any of the
Authorizations. To Seller's Knowledge, there are no disputes
of any kind outstanding with respect to any of the
Authorizations. The Partnership is not in default, nor has it
received any notice of any claim of default, with respect to
any of the Authorizations, and no event has occurred with
respect to any of the Authorizations which
12
permits, or after notice or lapse of time or both would
permit, revocation or termination thereof or which will or
could reasonably be expected to result in any default, claim
of default or impairment of the rights of the holder of any of
the Authorizations. Except as otherwise governed by laws,
ordinances or governmental rules or regulations, all of the
Authorizations are renewable by their terms or in the ordinary
course of the Business without the need to comply with any
special qualification procedures or to pay any amounts other
than routine filing and regulatory fees. None of the
Authorizations will be, or could be reasonably expected to be,
adversely affected by consummation of the transactions
contemplated hereby. The Partnership is the sole holder of the
Authorizations. No partner, officer, employee or former
employee of the Partnership or any affiliate of the
Partnership, or any other Person, firm or corporation, owns or
has any proprietary, financial or other interest (direct or
indirect) in any Authorization which the Partnership owns,
possesses or uses in the operation of the Business as
currently being conducted by the Partnership.
(d) No Person or entity other than the Partnership has any
interest in, or right to, any of the Partnership's contracts
to provide wireless telecommunications services to its
customers, except pursuant to roaming agreements of the
Partnership.
(e) The maps provided by Seller and attached hereto as Schedule
2.1.3(e) are true and accurate depictions of the current
Cellular Geographic Service Areas and boundaries for the
System in all material respects, as such term is defined in
Section 22.911 of the FCC's rules, 47 C.F.R. Section 22.911.
(f) On August 30, 1995, the Partnership filed a System Information
Update with the FCC for the System, and the Partnership has
also made various filings with the FCC as listed on Schedule
2.1.3(f) (such filings, collectively, the "SIU"). The SIU
accurately identifies and describes the predicted contours,
cell sites, and the Cellular Geographic Service Area boundary
for the System as of that date, and the information provided
therein remains accurate and complete.
2.1.4 Litigation.
(a) Except as set forth in Schedule 2.1.4(a), no litigation,
arbitration, investigation or other proceeding of or before
any court, arbitrator or governmental or regulatory official,
body or authority is pending or, to the Knowledge of Seller,
threatened against the Partnership, and Seller does not Know
of any reasonably likely basis for any such litigation,
arbitration, investigation or proceeding. There is no suit,
action or other proceeding, or injunction or final judgment
relating thereto, pending, or to the Knowledge of Seller,
threatened against the Partnership, Seller or, to the
Knowledge of Seller, Alltel, before any court or governmental
or regulatory official, body or authority, including the FCC
or the SCC, in which it is sought to restrain, prohibit,
obtain damages
13
or other relief in connection with, terminate or modify, or
which might otherwise affect, this Agreement or the
consummation of the transactions contemplated hereby, and, to
the Knowledge of Seller, no investigation that might result in
any such suit, action or proceeding is pending or threatened.
The Partnership is not a party to or subject to the provisions
of any judgment, order, writ, injunction, decree or award of
any court, arbitrator or governmental or regulatory official,
body or authority. Neither Seller nor, to the Knowledge of
Seller, Alltel, is a party to or subject to the provisions of
any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body
or authority which will or could reasonably be expected to
affect the Partnership, the Business or consummation of the
transactions contemplated under this Agreement.
(b) Schedule 2.1.4(b) lists all civil fines, penalties, and any
orders, writs, judgments, injunctions, decrees,
determinations, or other awards of any courts, governmental
agencies or other governmental authorities, which have been
imposed or levied against the Partnership during the past five
(5) years, together with all settlements by the Partnership of
any legal claims actually brought or threatened against the
Partnership, or which the Partnership or any of its assets has
or may become subject to, during the past five (5) years.
2.1.5 Contracts and Other Agreements.
(a) Except as listed and described in Schedule 2.1.5(a), the
Partnership is not a party to any written or oral, express or
implied:
(i) agreement, contract or commitment with any present or former
employee or consultant or for the employment of any Person,
including any consultant, who is engaged in the conduct of the
Business;
(ii) agreement, contract, commitment or arrangement with any labor
union or other representative of employees;
(iii) agreement, contract or commitment for the future purchase of,
or payment for, supplies or products, or for the performance
of services by a third party, involving in any one case
$25,000 or more;
(iv) lease, license or other agreement relating to any existing or
proposed cell site or retail store, or any agreement to
purchase, lease or license any real property, improvements or
equipment relating to any existing or proposed cell site or
retail store, except for standard "off-the-shelf" software
license agreements entered into in the ordinary course of
business;
(v) agreement, contract, lease or commitment continuing over a
period of more than six (6) months from the date hereof or
exceeding $25,000 in value;
14
(vi) commission, representative, distributorship or sales agency
agreement, contract or commitment (with any requirement that
the Partnership pay any residuals under any such arrangement
noted on such Schedule);
(vii) conditional sale or lease under which the Partnership is
either purchaser or lessee relating to assets of the
Partnership or any property at which any such assets are
located;
(viii) note, debenture, bond, trust agreement, letter of credit
agreement, loan agreement or other contract or commitment for
the borrowing or lending of money or agreement or arrangement
for a line of credit or guarantee, pledge or undertaking of
the indebtedness of any other Person;
(ix) agreement, contract or commitment for any charitable or
political contribution;
(x) agreement, contract or commitment limiting or restraining the
Partnership, any partner or other Affiliate of the Partnership
or any successor thereto from engaging or competing in any
manner or in any business, nor, to Seller's Knowledge, is any
employee of the Partnership subject to any such agreement,
contract or commitment;
(xi) license, franchise, distributorship or other agreement which
relates in whole or in part to any software, patent,
trademark, trade name, service xxxx or copyright or to any
ideas, technical assistance or other know-how of or used by
the Partnership in the conduct of operating the System, except
for standard "off-the-shelf" software license agreements
entered into in the ordinary course of business;
(xii) any roaming agreement, interconnection agreement or contour
extension agreement;
(xiii) agreement or commitment for any capital expenditure or
leasehold improvement in excess of $25,000;
(xiv) any agreement granting power of attorney to any other Person;
(xv) any confidentiality or non-disclosure agreement pursuant to
which the Partnership has agreed to keep confidential
information obtained from any other Person or which is related
to the assets of the Partnership; or
(xvi) other material agreement, contract or commitment not made in
the ordinary course of the Business consistent with past
practice.
(b) Except as disclosed on Schedule 2.1.9(b): (i) each of the
agreements, contracts, commitments, leases, plans and other
instruments, documents and undertakings listed in Schedule
2.1.5(a), or not required to be listed therein because of the
amount thereof (collectively, the "Contracts"), is valid, in
full
15
force and effect, binding upon and enforceable against the
Partnership and against any other party thereto, in accordance
with its terms except to the extent that such enforcement may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws now or
hereafter in effect affecting creditors' rights generally and
by general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
law); and (ii) with respect to the Contracts, neither the
Partnership, nor, to Seller's Knowledge, any other party
thereto, is in default in the performance, observance or
fulfillment of any material obligation, covenant or condition
contained therein, and no event has occurred which with or
without the giving of notice or lapse of time, or both, would
constitute a default thereunder by the Partnership or, to
Seller's Knowledge, by any other party thereto. The
representations set forth in both clauses of the preceding
sentence will be true as of the Closing with respect to the
agreements listed in Part II of Schedule 2.1.19 and the
agreements to be entered into by the Partnership pursuant to
Section 3.6.1. Seller has delivered to Buyer true, correct and
complete copies of all Contracts listed on Schedule 2.1.5(a)
and all agreements listed in Part II of Schedule 2.1.19,
including all amendments, supplements and modifications
thereto or waivers currently in effect thereunder.
(c) Set forth on Schedule 2.1.5(c) is a true and complete copy of
all forms of contract that govern the Partnership's provision
of wireless service to its current customers, together with a
statement of the period during which each such form was used
by the Partnership to add new customers. Except as disclosed
on Schedule 2.1.5(c), all contracts that govern the
Partnership's provision of wireless service to its customers
are valid, in full force and effect, binding upon the
Partnership and the other parties thereto and enforceable in
accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting creditors' rights generally and
by general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
law). Except for late payments by customers that are
accurately reflected in the books of account of the
Partnership, neither the Partnership, nor to Seller's
Knowledge, any other party thereto, is in default under any of
such contracts, nor, to Seller's Knowledge, does any condition
exist that, with notice or lapse of time or both, would
constitute such a default.
(d) To Seller's Knowledge, no supplier of the Business or party to
any roaming contract, interconnection agreement, or other
agreement (which supplier or party accounts for $25,000 or
more annually in business with the Partnership) intends to
cancel or otherwise modify, other than in the ordinary course
of its relationship with the Partnership or the Business, or
to decrease significantly or limit, its purchases, services,
supplies or materials from or to the Partnership or the
Business.
16
(e) Schedule 2.1.5(e) sets forth a description of each of the
price plans presently in the process of being implemented or
presently covering the active subscribers of the Business,
together with the number of subscribers, as of July 23, 2002,
under each such plan, and the number of such subscribers whose
account balances have been outstanding for more than 60 days.
(f) Schedule 2.1.5(f) sets forth a list of (i) all carriers to
which the Partnership has paid roaming charges during the 12
months ended on June 15, 2002 and (ii) the 10 carriers to
which the Partnership has paid the most roaming charges during
the 12 months ended on September 15, 2002, in order based upon
total amount paid, showing the total amount paid to each of
the 10 carriers during such period. None of the roaming
agreements between the Partnership and any of such carriers
provides for transfer rates in excess of $3.00 per day and
$1.00 per minute. Each such roaming agreement contains
provisions requiring each party thereto to use a pre-call
validation ("PV") system in all markets covered by such
roaming agreement and that any call completed by the serving
carrier under such roaming agreement shall be the sole
responsibility of such serving carrier if either (i) a PV
request has determined that the roamer placing such call is
not a valid customer of the home carrier or (ii) the call has
been placed using an unauthorized ESN after entry to the
Industry Negative File has become effective.
(g) Schedule 2.1.5(g) identifies each loan agreement and each
security agreement to which Seller or Parent is a party and
pursuant to which Seller or Parent has borrowed money,
established a line of credit or granted a security interest to
any third party.
2.1.6 No Conflicts; Consents. Upon the receipt of requisite
consents, approvals and Authorizations from the FCC and other
regulatory agencies, as described in Section 4.2.5, the
post-closing notifications required by the FCC and the receipt
or giving of the consents and notices set forth on Schedule
2.1.6 (collectively, the "Required Consents"), the execution,
delivery and performance of this Agreement and the other
Transaction Documents by Seller and Parent do not and will not
violate, conflict with or result in the breach of any term,
condition or provision of, or require any consent,
authorization or approval of, registration or filing with or
notice to, any other Person (including any governmental or
regulatory official, body or authority) under, (a) any
existing law, ordinance, or governmental rule or regulation to
which the Partnership, Seller, Parent, any of the
Partnership's assets or the Business is subject, (b) any
judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body
or authority which is applicable to the Partnership, Seller,
Parent, any of the Partnership's assets or the Business, (c)
the Partnership Agreement, (d) the Partnership's certificate
of limited partnership, (e) the certificate of incorporation,
by-laws or shareholder agreement of Seller or Parent, or (f)
any mortgage, indenture, agreement, contract, commitment,
lease, plan, Authorization, or other instrument, document or
understanding, oral or
17
written, to which the Partnership, Seller or Parent is a party
or subject, by which the Partnership, Seller or Parent may
have rights or by which any of the assets of the Partnership
may be bound or affected, or give any party with rights
thereunder the right to terminate, modify, accelerate or
otherwise change the existing rights or obligations of the
Partnership, Seller or Parent thereunder. For each Required
Consent, Schedule 2.1.6 specifies whether the Required Consent
consists of an authorization, an approval, a consent, a
registration, a filing or a notice.
2.1.7 Taxes. Except as set forth on Schedule 2.1.7, (a) the
Partnership has timely filed all reports, returns, statements
(including estimated reports, returns, or statements) and
other similar filings required to be filed on or before the
Closing Date by the Partnership ("Tax Returns") and all such
Tax Returns were correct and complete in all material
respects; (b) there are no audits or investigations pending
or, to Seller's Knowledge, threatened against the Partnership
with respect to any Taxes (as defined below in this Section
2.1.7); (c) all Taxes owed by the Partnership, or payable with
respect to any asset of the Partnership, which relate to Tax
periods ending on or before the Closing Date, whether or not
shown on any Tax Return, will have been paid by the
Partnership in full to the appropriate Tax authority prior to
the Closing Date; (d) for all Tax periods beginning before and
ending after the Closing Date, 66% of all Taxes owed by the
Partnership which relate to the portion of such Tax period
ending on and including the Closing Date will be paid by
Seller in full to the appropriate Tax authority within 30 days
after the Closing Date, if and to the extent that any such
Taxes are not included as Balance Sheet Liabilities on
Seller's Closing Date Balance Sheet; (e) there is in effect no
extension for the filing of any Tax Return and the Partnership
has not extended or waived the application of any statute of
limitations of any jurisdiction regarding the assessment or
collection of any Tax; (f) to Seller's Knowledge, no claim has
ever been made by any Tax authority in a jurisdiction in which
the Partnership does not file Tax returns that it is or may be
subject to taxation by that jurisdiction; (e) there are no
Liens for Taxes upon any asset of the Partnership except for
Liens for current Taxes not yet due; (g) to Seller's
Knowledge, no issues have been raised in any examination by
any Tax authority with respect to the Partnership which, by
application of similar principles, reasonably could be
expected to result in a proposed deficiency for any other
period not so examined; and (h) the Partnership is not a party
to any Tax allocation or sharing agreement or otherwise under
any obligation to indemnify any Person with respect to any
Taxes (other than this Agreement). For purposes of this
Section 2.1.7, in the case of any Taxes that are imposed on a
periodic basis and are payable for a Tax period that includes
(but does not end on) the Closing Date, the portion of such
Tax related to the portion of such Tax period ending on and
including the Closing Date shall (i) in the case of any Taxes
other than gross receipts, sales or use Taxes and Taxes based
upon or related to income, be deemed to be the amount of such
Tax for the entire Tax period (which period, with respect to
personal property, ad valorem and real property Taxes, shall
be the calendar year in which the
18
assessment date for such Tax falls) multiplied by a fraction
the numerator of which is the number of days in the Tax period
ending on and including the Closing Date and the denominator
of which is the number of days in the entire Tax period, and
(ii) in the case of any Tax based upon or related to income
and any gross receipts, sales or use Tax, be deemed equal to
the amount which would be payable if the relevant Tax period
ended on and included the Closing Date.
For purposes of this Agreement, "Taxes" means any taxes, duties,
assessments, fees, levies, or similar governmental charges, together with any
interest, penalties, and additions to tax, imposed by any taxing authority,
wherever located (i.e. whether federal, state, local, municipal, or foreign),
including all net income, gross income, gross receipts, net receipts, sales,
use, transfer, franchise, privilege, profits, social security, disability,
withholding, payroll, unemployment, employment, excise, severance, property,
windfall profits, value added, ad valorem, occupation, or any other similar
governmental charge or imposition.
2.1.8 Environmental Matters.
(a) No Environmental Permits are required in connection with the
operation of the Business as currently operated by the
Partnership.
(b) The Partnership, the assets of the Partnership and the
Business are in compliance with all Environmental Laws, and
the Business is being operated in compliance with all
Environmental Laws.
(c) Except as set forth on Schedule 2.1.8(c), neither the
Partnership, nor any Related Party, nor any attorney, engineer
or environmental consultant engaged by the Partnership or any
Related Party, has conducted any environmental audits,
investigations or assessments at any real property currently
owned by the Partnership or currently owned by the Seller or a
Related Party and used by the Partnership ("Currently Owned
Property"), any real property formerly owned by the
Partnership or formerly owned by the Seller or a Related Party
and used by the Partnership ("Formerly Owned Property"), any
real property currently leased or operated by the Partnership
or the Business and not owned by the Seller or a Related Party
("Currently Leased Property") or any other real property
formerly leased or operated by the Partnership or the Business
and not owned by the Seller or a Related Party ("Formerly
Leased Property"), and neither Seller nor the Partnership has
in its possession or within its control any reports or other
communications relating to any such audits, investigations or
assessments prepared by or on behalf of any other person.
Seller has delivered to Buyer true and complete copies of all
items listed on Schedule 2.1.8(c) that are in its possession
or control.
(d) Except in accordance with Environmental Laws and as set forth
on Schedule 2.1.8(d),
19
(i) no Hazardous Materials have been or are being manufactured,
processed, distributed, used, treated, stored or disposed of
("Managed") on any Currently Owned Property or, to Seller's
Knowledge, Currently Leased Property;
(ii) no Hazardous Materials were Managed on any Formerly Owned
Property during the time that the Partnership, Seller or a
Related Party owned such property and, to Seller's Knowledge,
no Hazardous Materials were Managed on any Formerly Owned
Property prior to the time that the Partnership, Seller or a
Related Party owned such property;
(iii) to Seller's Knowledge, no Hazardous Materials were Managed on
any Formerly Leased Property during or prior to the time that
the Partnership operated such property;
(iv) no Hazardous Materials have been or are being discharged,
emitted or released into the environment ("Discharged") from
the Business or from any Currently Owned Property or, to
Seller's Knowledge, any Currently Leased Property;
(v) no Hazardous Materials have been or are being Discharged from
any Currently Leased Property as a result of any actions by
the Partnership, Seller, or Parent, or any of their respective
partners, directors, officers, employees, agents, affiliates,
representatives or subcontractors;
(vi) no Hazardous Materials were Discharged from any Formerly Owned
Property during the time that the Partnership, Seller or a
Related Party owned such property and, to Seller's Knowledge,
no Hazardous Materials were Discharged from any Formerly Owned
Property prior to the time that the Partnership, Seller or a
Related Party owned such property;
(vii) to Seller's Knowledge, no Hazardous Materials were Discharged
from any Formerly Leased Property during or prior to the time
that the Partnership operated such property;
(viii) no Hazardous Materials were Discharged from any Formerly
Owned Property or Formerly Leased Property as a result of any
actions by the Partnership, Seller, or Parent, or any of their
respective partners, directors, officers, employees, agents,
affiliates, representatives or subcontractors during the time
that the Partnership, Seller or a Related Party owned or
operated such property;
(ix) there are no Hazardous Materials present on, in or beneath any
Currently Owned Property or, to Seller's Knowledge, any
Currently Leased Property;
(x) there were no Hazardous Materials present on, in, or beneath
any Formerly Owned Property during the time that the
Partnership, Seller or a Related Party owned such property,
nor to Seller's Knowledge, were any Hazardous
20
Materials present on, in or beneath any Formerly Owned
Property prior to the time that the Partnership, Seller or a
Related Party owned such property; and
(xi) to Seller's Knowledge, there were no Hazardous Materials
present on, in or beneath any Formerly Leased Property during
or prior to the time that the Partnership operated such
property.
(e) There is no civil, criminal or administrative action, suit,
demand, Environmental Claim, hearing, notice or demand letter,
notice of violation, investigation or proceeding pending or,
to Seller's Knowledge, threatened, against the Partnership,
Seller, any Related Party or, to Seller's Knowledge, Alltel or
any affiliate of Alltel, in connection with the conduct of the
Business and relating to any Environmental Permit or any
Environmental Law or any plan, order, decree, judgment,
injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
(f) Except as set forth on Schedule 2.1.8(f): (i) there are no
underground or aboveground storage tanks (active or inactive)
located on or under any Currently Owned Property or, to
Seller's Knowledge, any Currently Leased Property; (ii) no
such tanks have ever been located on or under any Currently
Owned Property, and to Seller's Knowledge, no such tanks have
ever been located on or under any Currently Leased Property;
(iii) no such tanks were located on or under any Formerly
Owned Property during the time that the Partnership, Seller or
a Related Party owned such property and, to Seller's
Knowledge, no such tanks were located on or under any Formerly
Owned Property prior to the time that the Partnership, Seller
or a Related Party owned such property, and (iv) to Seller's
Knowledge, no such tanks were located on or under any Formerly
Leased Property during or prior to the operation of such
property by the Partnership.
(g) Except as set forth on Schedule 2.1.8(g), there is no asbestos
or asbestos containing material contained in or forming part
of any building, building component, structure, facility or
office space located on any Currently Owned Property or, to
Seller's Knowledge, any Currently Leased Property.
(h) There are no polychlorinated biphenyls or items containing
polychlorinated biphenyls in concentrations greater than fifty
(50) parts per million contained in or forming part of any
building, building component, structure, facility or office
space located on any Currently Owned Property or, to Seller's
Knowledge, any Currently Leased Property.
(i) Except as set forth on Schedule 2.1.8(i), there is no lead
based paint in or on any building, building component,
structure, facility or office space located on any Currently
Owned Property or, to Seller's Knowledge, any Currently Leased
Property
21
(j) No incinerator, surface impoundment, lagoon or landfill used
for the management of Hazardous Materials is present or ever
has been present at, on or under any Currently Owned Property
or, to Seller's Knowledge, any Currently Leased Property. No
incinerator, surface impoundment, lagoon or landfill used for
the management of Hazardous Materials was present at any
Formerly Owned Property during the time that the Partnership,
Seller or a Related Party owned such property and, to Seller's
Knowledge, no such incinerator, surface impoundment, lagoon or
landfill was present at any Formerly Owned Property prior to
the time that the Partnership, Seller or a Related Party owned
such property. To Seller's Knowledge, no incinerator, surface
impoundment, lagoon or landfill used for the management of
Hazardous Materials was present at any Formerly Leased
Property during or prior to the Partnership's operation of
such property.
(k) Except as set forth on Schedule 2.1.8(k), no Currently Owned
Property and, to Seller's Knowledge, no Currently Leased
Property, is listed or proposed (in the Federal Register) for
listing on the National Priorities List promulgated pursuant
to CERCLA, CERCLIS (as defined in CERCLA) or on any similar
federal, state, local or foreign list of sites requiring
investigation or cleanup. No other property located within the
ASTM Search Distance from any Currently Owned Property or
Currently Leased Property is listed or proposed (in the
Federal Register) for listing on any such list, and no
property located within the ASTM Search Distance from any
Formerly Owned Property was listed on any such list during the
time that the Partnership, Seller or a Related Party owned
such property. The Partnership has not transported or arranged
for the transportation of any Hazardous Materials to a site
which is listed or proposed (in the Federal Register) for
listing on the National Priorities List promulgated pursuant
to CERCLA, CERCLIS or any similar federal, state, local or
foreign list of sites requiring investigation or cleanup such
that it is liable under Section 107(a)(3) of CERCLA or any
equivalent provision of Virginia law.
(l) Except as set forth on Schedule 2.1.8(l), no oral or written
notification of a release or threat of release of a Hazardous
Material has been filed by or on behalf of the Partnership,
Seller, any Related Party or, to Seller's Knowledge, Alltel or
any affiliate of Alltel, relating to any Currently Owned
Property, Formerly Owned Property, Currently Leased Property
or Formerly Leased Property.
(m) As used herein:
"ASTM Search Distance" means the search distance recommended by ASTM
Standard E-1527-00 for use in identifying sites, listed in
government-maintained databases, that could potentially impact a property
under investigation.
"Environmental Claims" means any and all administrative or judicial
actions, suits, orders, claims, Liens, notices, demands, violations,
investigations or proceedings
22
related to any Environmental Law or any Environmental Permit brought,
issued or asserted by: (i) a federal, state, local or foreign governmental
authority for compliance, damages, penalties, removal, response, remedial
or other action pursuant to any applicable Environmental Law or
Environmental Permit; or (ii) a third party seeking damages, contribution,
remediation or other action for personal injury or property damage
resulting from the release of a Hazardous Material at, to or from any
Currently Owned Property, Formerly Owned Property, Currently Leased
Property or Formerly Leased Property, as the case may be, including the
Partnership's employees seeking damages for exposure to Hazardous
Materials.
"Environmental Laws" means all applicable federal, state, and local
laws (including without limitation common law), ordinances, codes, rules,
regulations, judgments, orders, decrees, injunctions, permits,
governmental restrictions or agreements with a governmental authority or
third party related to protection of the environment, public health and
safety or employee health and safety and/or the handling, use, generation,
treatment, storage, transportation, release, discharge, emission or
disposal of Hazardous Materials.
"Environmental Permits" means all permits, licenses, approvals,
authorizations, or consents required by any governmental authority and
issued pursuant to any Environmental Law and includes any and all orders,
consent orders or binding agreements issued or entered into by a
governmental authority under any Environmental Law.
"Hazardous Materials" means any hazardous or toxic substance,
material or waste which is regulated as of the Closing Date under any
Environmental Law, including, without limitation, any hazardous or toxic
material, substance or waste that is: (i) defined as a "hazardous
substance" under applicable state law; (ii) an oil or petroleum related
product; (iii) asbestos; (iv) designated as a "hazardous substance"
pursuant to Section 311 of the Federal Water Pollution Control Act, as
amended, 33 U.S.C. ss.ss.1251 et seq. (33 U.S.C. ss.1321); (v) defined as
a "hazardous waste" pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, as amended, 42 U.S.C. ss.ss.6901 et seq.
(42 U.S.C. ss.6903); (vi) defined as a "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. ss.ss.9601, et seq. ("CERCLA"); (vii)
defined as a "regulated substance" pursuant to Section 9001 of the Federal
Resource Conservation and Recovery Act, as amended, 42 U.S.C. ss.ss.6901,
et seq. (42 U.S.C. ss.6991); or (viii) otherwise regulated under the Toxic
Substances Control Act, 15 U.S.C. ss.ss.2601, et seq., the Clean Air Act,
as amended, 42 U.S.C. ss.7401, et seq., the Hazardous Materials
Transportation Uniform Safety Act, as amended, 49 U.S.C. ss.ss.5101, et
seq., or the Federal Insecticide, Fungicide and Rodenticide Act, as
amended, 7 U.S.C. ss.ss.136, et seq.
(n) Notwithstanding any other provision of this Agreement, this
Section 2.1.8 contains the sole representations and warranties
of Seller and Parent with respect to environmental matters,
Environmental Laws and Hazardous Materials, except for
representations and warranties relating to Authorizations,
23
Environmental Permits or permits generally and the
representations and warranties set forth in Sections 2.1.6(a),
2.1.6(b), 2.1.9(c) and 2.1.31.
2.1.9 Title; Real and Personal Property.
(a) Seller is the sole record and beneficial owner of, and holds
good, valid and marketable title to, the Partnership Interest,
free and clear of all Liens except for those set forth in the
Partnership Agreement. Subject to obtaining the Required
Consents, Seller has full power, right and authority to sell
and convey to Buyer at Closing, and Seller will sell and
convey to Buyer at Closing, good, valid and marketable title
to the Partnership Interest, free and clear of all Liens
except for those set forth in the Partnership Agreement.
(b) Except as disclosed in Schedule 2.1.9(b), the Partnership has
good, valid and marketable title to, or a valid leasehold or
license interest in, all of its properties and assets, real,
personal and mixed, including all of the properties and assets
reflected in each of the Financial Statements (defined in
Section 2.1.11(b)) and not sold, retired or otherwise disposed
of since the date thereof in the ordinary course of the
Business consistent with past practices, and all of the
properties identified on Schedule 2.1.9(c), free and clear of
all Liens, except for (i) Liens for current real or personal
property taxes not yet due and payable, (ii) Liens disclosed
in Schedule 2.1.9(b) attached hereto, and (iii) Liens, such as
utility easements and the like, that are immaterial in
character, amount and extent, and which do not detract from
the value or interfere (or pose a material threat of
interference) with the present or proposed use of the assets
or properties they affect (the Liens described in subsections
(i), (ii) and (iii) hereof, the "Existing Liens"). Subject to
obtaining the Required Consents, as of the Closing Date the
Partnership shall have good, valid and marketable title to, or
a valid leasehold or license interest in, all of its
properties and assets, real, personal and mixed, including all
of the properties and assets reflected on the Closing Date
Balance Sheet, all of the properties identified on Schedule
2.1.9(c), and all of the properties and assets covered by the
Tower License Agreement identified on Schedule 2.1.19 relating
to the Bear Garden cell site and the agreements contemplated
by Section 3.6.1 (the "Related Party Property"), free and
clear of all Liens and other encumbrances and defects of title
of any nature whatsoever, except for Existing Liens. Except
for assets identified on Schedule 1.2(a), Schedule 2.1.9(b) or
Part II of Schedule 2.1.19 and assets covered by the Master
Site Agreement, the Partnership has good and valid,
unencumbered title to or a valid leasehold or license interest
in all assets necessary or required to operate the Business as
it is currently operated, free and clear of all Liens, except
for Existing Liens.
(c) Schedule 2.1.9(c) lists all real property and interests in
real property owned, leased, licensed or otherwise occupied or
held by the Partnership and, for each property, sets forth the
address or other description suitable to identify the
property, the use of the property, a reasonable description of
the improvements on the property (including square footage, if
available) and
24
whether the property is owned, leased or licensed and, with
respect to each leased or licensed property, the identity of
the lessor or licensor and, if different, the identity of the
owner of the property and the identity of the owner of the
improvements. For each property identified on Schedule
2.1.9(c), Seller has previously delivered to Buyer a true,
correct and complete legal description of such property. For
each property identified on Schedule 2.1.9(c) as leased or
subleased by the Partnership and for the property covered by
the Tower License Agreement identified on Schedule 2.1.19
relating to the Bear Garden cell site (collectively, the
"Leased Property"), Seller has previously delivered to Buyer a
true, correct and complete copy of the Partnership's lease or
sublease (or license or sublicense), all underlying or related
deeds, prime leases, master leases, ground leases, third party
agreements, tower sharing agreements and co-location
agreements, and all other agreements, instruments or documents
pursuant to which the lessor acquired its interest in the
Leased Property or otherwise affecting the Partnership's
interest in or use of the Leased Property, including all
amendments, supplements and modifications thereto or waivers
currently in effect thereunder. The Partnership has not
subleased, sublicensed, assigned or pledged any interest in
any of the Leased Property to any third party. Neither Seller
nor the Partnership has subleased, sublicensed, assigned or
pledged any interest in any of the Related Party Property to
any third party.
(d) The properties identified as cell sites on Schedule 2.1.9(c)
(the "Cell Sites") constitute all of the cell sites currently
comprising the System's cell site network. Each of the Cell
Sites is a fully operational cell site appropriately
integrated into and functioning properly as part of the
System's cell site network. Each Cell Site is equipped with
all equipment and facilities necessary or appropriate for it
to function in such manner. Except as set forth in Schedule
2.1.19, the assets of the Partnership include a supply of
spare parts for the equipment and facilities located at the
Cell Sites that is sufficient for the operation of the
Business in the ordinary course.
(e) There are no cell sites currently under development for
inclusion in the System's cell site network.
(f) The Partnership's activities on the Leased Property and the
activities of Seller and the Partnership on the Related Party
Property are in compliance with applicable building codes,
zoning regulations or other laws (excluding applicable
Environmental Laws), and, to Seller's Knowledge, there are no
proposed changes in such applicable codes, regulations or laws
that would adversely affect such activities. Neither the
Partnership nor Seller has received any notice nor, to
Seller's Knowledge, has the owner of any of the Leased
Property received any notice, of any non-compliance with
applicable building codes, zoning regulations or other laws
(excluding Environmental Laws).
25
(g) All buildings, structures and fixtures owned, leased, licensed
or otherwise utilized by the Partnership are in good operating
condition and repair (ordinary wear and tear excepted), are
sufficient for the conduct of the Business as currently being
conducted, are located on or within property which the
Partnership owns or in which the Partnership has a valid
leasehold interest and do not encroach upon any real property
of any third party. The leasehold improvements to the Leased
Property are located on property in which the Partnership has
a valid leasehold or license interest and do not encroach upon
any real property of any third party.
(h) The Partnership has not experienced any material interruption
in the delivery of adequate quantities of any utilities
(including electricity, natural gas, potable water, water for
cooling or similar purposes and fuel oil) or other public
services (including sanitary and industrial sewer service)
required by the Business.
(i) For each parcel of Leased Property, the Partnership has valid
and enforceable rights of physical and legal ingress and
egress to and from such parcel and the nearest public right of
way, 24 hours per day, seven days per week. In addition, each
such parcel has sufficient legal access to public roads and to
all utilities, including electricity, sanitary and storm
sewer, potable water, natural gas and other utilities used in
the operation of the Business, so as not to inhibit in any way
the operation of the Business as currently conducted. All
rights of way or easements for access and utilities are
located on, through or over property which the Partnership
owns or in which the Partnership has a valid leasehold
interest, or are located on property owned by third parties
subject to a valid and enforceable written easement in favor
of the Partnership.
(j) There has not been any significant interruption in the
operations of the Business due to any inadequate maintenance
of any item of personal property.
2.1.10 Condition of Assets. Schedule 2.1.10 sets forth an accurate
list of all assets and properties owned or leased by the
Partnership which would be required to be included in
"property and equipment" or any similar category of a balance
sheet prepared in accordance with GAAP, and all other assets
and properties owned or leased by the Partnership. All of the
assets and properties owned or leased by the Partnership,
including all network equipment and facilities owned or leased
by the Partnership, are in good working condition and repair,
subject to normal wear and maintenance, are usable in the
regular and ordinary course of the Business consistent with
past practice, and conform in all respects to all applicable
laws, ordinances, codes, rules, regulations and Authorizations
relating to their construction, use and operation. Except as
set forth on Schedule 2.1.19, Schedule 1.2(a) or Schedule
2.1.9(b), no Person other than the Partnership owns any
equipment or other tangible assets or properties situated on
the premises of the Partnership or necessary or material to
the operation of the Business, except for the leased items
disclosed on Schedule 2.1.10. Except for the rights, assets
and properties owned by the
26
Related Parties, as set forth on Schedule 2.1.19 and Schedule
1.2(a), and except as set forth in Schedule 2.1.9(b), the
Partnership owns all rights, assets and property necessary to
the conduct of the Business by Buyer in the manner currently
conducted by the Partnership. Buyer understands, agrees and
acknowledges that except for the representations and
warranties of Seller expressly set forth in Section 2.1.8,
Section 2.1.9 and this Section 2.1.10, Seller is not making
any representations or warranties with respect to the
condition of the assets and properties owned or leased by the
Partnership, and ALL IMPLIED WARRANTIES EXISTING UNDER ANY
APPLICABLE LAW WITH RESPECT TO SUCH ASSETS AND PROPERTIES ARE
HEREBY EXPRESSLY DISCLAIMED AND NEGATED. PARTICULARLY, BUT
WITHOUT LIMITING THE FOREGOING, SELLER HEREBY NEGATES AND
DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE AND ANY IMPLIED
WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MODELS. BUYER
AGREES THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE
EFFECTIVE, THE DISCLAIMERS OF IMPLIED WARRANTIES CONTAINED IN
THIS SECTION ARE "CONSPICUOUS" DISCLAIMERS FOR THE PURPOSES OF
ANY APPLICABLE LAW, RULE OR ORDER.
2.1.11 Books of Account; Financial Statements; CapEx Budget.
(a) The books of account and related records of the Partnership
are true and complete in all material respects and fairly
reflect in reasonable detail its assets, liabilities and
transactions in accordance with GAAP applied on a consistent
basis. The Partnership has not engaged in any transaction or
used funds of the Partnership except for transactions, bank
accounts and funds that have been and are reflected in the
normally maintained books and records of the Partnership.
(b) Set forth in Schedule 2.1.11(b) are true and complete copies
of the audited annual financial statements of the Partnership
as of December 31, 1999, December 31, 2000 and December 31,
2001 and for the years then ended (collectively, the "Audited
Financial Statements"). The Audited Financial Statements (i)
are correct and complete and in accordance with the books and
records of the Partnership, (ii) fairly present in all
material respects the financial condition, assets and
liabilities of the Partnership as at their respective dates
and the results of the operations and changes in cash position
for the periods covered thereby, and (iii) have been prepared
in accordance with GAAP consistently applied. Also set forth
in Schedule 2.1.11(b) are true and complete copies of the
unaudited financial statements of the Partnership as of
September 30, 2002 and for the nine-month period then ended
(collectively, the "Unaudited Financial Statements," and
together with the Audited Financial Statements, the "Financial
Statements"). The Unaudited Financial Statements (i) fairly
present in all material respects the financial
27
condition of the Partnership as of such dates and the results
of its operations for the periods covered thereby and (ii)
were prepared in accordance with GAAP (subject to year-end
adjustments and except for the omission of certain footnotes
and other presentation items required by GAAP with respect to
audited financial statements, which adjustments, footnotes,
and presentation items, if prepared as required for audited
financial statements, would not reveal any fact or condition
materially adverse to the financial condition or results of
the Partnership presented in such Unaudited Financial
Statements). All references in this Agreement to the "Current
Balance Sheet" shall mean the balance sheet of the Partnership
as of December 31, 2001 included in the Financial Statements
and all references to the "Current Balance Sheet Date" shall
mean December 31, 2001.
(c) The unpaid Taxes of the Partnership (i) did not, as of the
most recent month end, exceed the reserve for Tax liability
(other than any reserve for deferred Taxes established to
reflect timing difference between book and tax (income)) set
forth on the face of the most recent balance sheet of the
Partnership (and in any notes thereto) included in the
Financial Statements, and (ii) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the
Partnership in filing Tax Returns. All long-term debt, if any,
of the Partnership is shown on each balance sheet included
within the Financial Statements and listed with more detailed
information regarding lender, principal, interest and any
unpaid penalties on Schedule 2.1.11(c) hereto.
(d) The Partnership has no capital expenditure budget for the year
ending December 31, 2002.
2.1.12 Absence of Undisclosed Liabilities. The Partnership has no
Liabilities, except:
(a) those liabilities or obligations set forth on the September
30, 2002 balance sheet included in the Financial Statements
and not heretofore paid or discharged;
(b) those liabilities or obligations incurred, consistent with
past business practice, in or as a result of the normal and
ordinary course of the Business since September 30, 2002,
which both individually and in the aggregate are not material
to the Partnership and none of which constitutes indebtedness
for borrowed money (or a guaranty of any such indebtedness) or
is for breach of contract, breach of warranty, tort or
infringement; and
(c) those liabilities or obligations set forth on Schedule 2.1.12.
For purposes of this Agreement, the term "Liabilities" shall mean
liabilities, obligations or responsibilities of any nature whatsoever,
whether direct or indirect, matured or unmatured, fixed or unfixed, known
or unknown, asserted or unasserted,
28
xxxxxx or inchoate, liquidated or unliquidated, secured or unsecured,
absolute, contingent or otherwise, including any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost
or expense.
2.1.13 Inventory. All inventory of the Partnership, whether held for
rental, resale or for use as spare parts, consists
substantially of a quality, quantity and condition, usable,
leasable or saleable in the ordinary course of the Business
within the time periods consistent with the past experience of
the Partnership. None of the inventory of the Partnership
which is of a type described in Section 1.4(f)(iii) of this
Agreement is obsolete or non-saleable. Schedule 2.1.13 is a
complete and correct list of inventory as of September 30,
2002. All such inventory of the Partnership is valued in the
Financial Statements at average cost.
2.1.14 Accounts Receivable. All accounts receivable of the
Partnership, as set forth on the Current Balance Sheet and all
subsequent balance sheets and schedules, including the Closing
Date Balance Sheet and the Working Capital Schedule, are or
will be valid and genuine, have arisen or will arise solely
out of bona fide sales and deliveries of goods, performance of
services and other business transactions in the ordinary
course of the Business consistent with past practices, and are
not or will not be subject to valid defenses, set-offs or
counterclaims, and the allowance for collection losses on such
balance sheets have been or will be determined in accordance
with GAAP and based upon the Partnership's historical
experience in collecting its accounts receivable. To Seller's
Knowledge, there are no facts or circumstances that could
reasonably be expected to result in the allowance for
collection losses on the most recent balance sheet included in
the Financial Statements being inadequate to cover expected
collection losses. Schedule 2.1.14 sets forth as of the last
day of each of the months in the 12-month period ended
September 30, 2002 and as of the close of business on October
31, 2002 (a) the total amounts of accounts receivable of the
Partnership and (b) the aging of such receivables based on the
following schedule: current, 1-30 days past due, 31-60 days
past due, 61-90 days past due and over 90 days past due. On or
before the Closing Date, Seller shall deliver to Buyer a
schedule setting forth as of the close of business on the last
of the calendar month prior to the calendar month in which the
Closing occurs (x) the total amounts of accounts receivable of
the Partnership and (y) the aging of such receivables based on
the following schedule: current, 1-30 days past due, 31-60
days past due, 61-90 days past due and over 90 days past due.
2.1.15 Material Changes. Except as disclosed on Schedule 2.1.15,
since December 31, 2001, the Partnership has not:
(a) incurred any liabilities (absolute or contingent), other than
liabilities incurred in the ordinary course of the Business
consistent with past practice, or discharged or satisfied any
Lien, or paid any liabilities, other than in the ordinary
course of the Business consistent with past practice, or
failed to pay
29
or discharge when due any liabilities, in each case for which
the failure to pay or discharge has caused or would reasonably
be expected to cause any material damage or risk of material
loss to it, the Business or any of its material assets or
properties;
(b) sold, encumbered, assigned or transferred any of its assets or
properties, except in the ordinary course of the Business
consistent with past practice;
(c) created, incurred, assumed or guaranteed any indebtedness for
money borrowed, or mortgaged or pledged any of the assets of
the Partnership, or subjected any of the assets of the
Partnership to any Lien, conditional sales contract or other
encumbrance of any nature whatsoever, except for Existing
Liens;
(d) made or suffered any amendment or termination of any material
agreement, contract, commitment, lease under which it is
lessee or plan to which it is a party or by which it is bound,
or canceled, modified or waived any substantial debts or
claims held by it or waived any rights of substantial value,
whether or not in the ordinary course of the Business, except
for any amendment, termination, cancellation, modification or
waiver which, individually or in the aggregate, would not
reasonably be expected to adversely affect the assets of the
Partnership, the Business or the transactions or events
contemplated by this Agreement;
(e) suffered any damage, destruction or loss, whether or not
covered by insurance, (i) materially and adversely affecting
the Business, operations, assets, properties or prospects or
(ii) of any item or items carried on its books of account
individually or in the aggregate at more than $25,000, or
suffered any repeated, recurring or prolonged shortage,
cessation or interruption of supplies or utility or other
services required to conduct the Business;
(f) suffered any events which, individually or in the aggregate,
will, or could be reasonably expected to, have a Seller
Material Adverse Effect;
(g) received notice or had actual or threatened labor trouble,
strike or other occurrence, event or condition of any similar
character which has had or could reasonably be expected to
have a Seller Material Adverse Effect, nor has Seller received
any such notice;
(h) increased the salaries or other compensation of, or made any
advance (excluding advances for ordinary and necessary
business expenses) or loaned any money or assets to, any
employee, or made any increase in, or any addition to, other
benefits to which any employee may be entitled, other than
commercially reasonable salary adjustments commensurate with
position, conforming to general industry norms and in
accordance with past practice;
30
(i) changed any of the accounting principles followed by the
Partnership or the methods of applying such principles
(including any change in depreciation or amortization policies
or rates);
(j) entered into any transaction not described above other than in
the ordinary course of the Business consistent with past
practice;
(k) made any distributions to its partners prior to the date of
this Agreement, other than distributions in amounts consistent
with past practices;
(l) issued any additional partnership interests;
(m) made any capital expenditures or capital additions in excess
of an aggregate of $50,000, or entered into any leases of
capital equipment or property under which the annual lease
charges exceed $10,000 in the aggregate;
(n) agreed, orally or in writing, or granted any other Person or
entity, an option to do any of the things specified in
subparagraphs (a) through (m) above; or
(o) made any representation, warranty or agreement with any of its
employees regarding employment after the Closing by Buyer.
2.1.16 Labor Relations. The relations of the Partnership with its
employees are good. In addition, (a) no employee is
represented by any union or other labor organization; (b)
there is no unfair labor practice complaint against the
Partnership pending or, to Seller's Knowledge, threatened
before the National Labor Relations Board; (c) there is no
labor strike, dispute, slow down or stoppage actually pending
or, to Seller's Knowledge, threatened against or involving the
Business or any of its employees, (d) no labor grievance which
might have an adverse effect on the Partnership or the conduct
of the Business is pending or, to Seller's Knowledge, is
threatened by or on behalf of any labor union or any employee;
(e) no private agreement restricts the Partnership from
relocating, closing or terminating any of its operations or
facilities or would adversely affect its ability to do so; (f)
the Partnership has not experienced any work stoppage or other
labor difficulty or committed any unfair labor practice
related to the Business; and (g) no organizational effort is
being made or, to Seller's Knowledge, is threatened by or on
behalf of any labor union or any employee with respect to any
of the Partnership's employees.
2.1.17 Compensation Arrangements. Schedule 2.1.17 sets forth the
following information: the name and current annual salary,
including bonus, if applicable, of each of the Partnership's
employees, together with a statement of the full amount of all
remuneration or compensation paid by the Partnership to each
such employee during the 12 month period ended September 30,
2002. As of the Closing Date, the Partnership will not have
increased the rate of remuneration of any of its employees
since the date of this Agreement except as contemplated by
Section 2.1.15(h).
31
2.1.18 Employee Benefit Plans and Arrangements.
(a) Schedule 2.1.18 contains a true and complete list of each
bonus, deferred compensation, incentive compensation, stock
purchase, stock option, employment, consulting, severance or
termination pay, hospitalization or other medical, life or
other insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program, agreement
or arrangement, and including each "employee benefit plan"
(within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder ("ERISA")), whether formal
or informal, written or oral ("Employee Benefit Plan"), to
which the Partnership or any ERISA Affiliate is a party, or
that is sponsored, maintained or contributed to by the
Partnership or any ERISA Affiliate, or with respect to which
the Partnership or any ERISA Affiliate has any obligation to
contribute, or any liability with respect thereto, for the
benefit of any of the employees or former employees of the
Partnership or of any ERISA Affiliate, or any present or
former beneficiary, dependent or assignee of any such employee
or former employee (a "Shenandoah Employee Benefit Plan").
Except as set forth in Schedule 2.1.18, no Related Party has
ever been a party to, sponsored, maintained, contributed to,
had any obligation to contribute to, or had any liability or
potential liability with respect to, any Employee Benefit Plan
for the benefit of any employee or former employee of the
Partnership. For purposes of this Section 2.1.18, "ERISA
Affiliate" shall mean any entity which, with the Partnership,
would be treated as a single employer under Section 414 of the
Code or under the provisions of ERISA.
(b) Except as set forth in Schedule 2.1.18, all contributions
required by the terms of any Shenandoah Employee Benefit Plan,
law or contract to be made to fund the Shenandoah Employee
Benefit Plans for any plan year, or other period on the basis
of which contributions are required ending before the Closing
Date, have been made when due.
(c) With respect to each Shenandoah Employee Benefit Plan that is
funded wholly or partially through an insurance policy, all
premiums required to have been paid to date under the
insurance policy have been paid, all premiums required to be
paid under the insurance policy through the Closing Date will
have been paid on or before the Closing Date and, as of the
Closing Date, there will be no liability of the Partnership
under any such insurance policy or ancillary agreement with
respect to such insurance policy in the nature of a
retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out
of events occurring prior to the Closing Date.
(d) Except as set forth on Schedule 2.1.18, the Partnership is
not, nor has ever has been at any time (including by virtue of
applicable attribution rules): (i) a member of a controlled
group of corporations within the meaning of Section 414(b) of
the Code; (ii) a member of a group of trades or businesses
under
32
common control within the meaning of Section 414(c) of the
Code; (iii) a member of an affiliated service group within the
meaning of Section 414(m) of the Code; (iv) a member of a
group of organizations required to be aggregated under Section
414(o) of the Code; or (v) considered to be a member of a
group treated as a "single employer" within the meaning of
Section 4001 of ERISA.
(e) Except as set forth in Schedule 2.1.18:
(i) Each Shenandoah Employee Benefit Plan has been administered in
compliance with its terms including, but not limited to, any
provisions relating to contributions thereunder, and is in
compliance in all respects with the applicable provisions of
ERISA, the Code and all other federal, state and other
applicable laws, rules and regulations, as they relate to such
Shenandoah Employee Benefit Plan (including deductibility,
funding, filing, termination, reporting and disclosure and
continuation coverage obligations pursuant to Title V of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA")). As of the date of this Agreement, there
are no employees or former employees of the Partnership to
which the Partnership is providing or should be providing
continuation coverage under COBRA.
(ii) There have been no "prohibited transactions" (as described in
Section 4975 of the Code or in Part 4 of Subtitle B of Title I
of ERISA) for which an exemption is not available with respect
to any Shenandoah Employee Benefit Plan;
(iii) There are no proceedings, suits actions or claims (other than
routine claims for benefits) pending, or, to the Knowledge of
the Seller, threatened with respect to any Shenandoah Employee
Benefit Plan, the assets of any trust thereunder, or the plan
sponsor or the plan administrator with respect to the design
or operation of any Shenandoah Employee Benefit Plan;
(iv) Each Shenandoah Employee Benefit Plan which is intended to be
"qualified" within the meaning of Section 401(a) of the Code
has been determined by the Internal Revenue Service ("IRS") to
be so qualified, any trust created pursuant to any such
Shenandoah Employee Benefit Plan has been determined by the
IRS to be exempt from federal income tax under Section 501(a)
of the Code, and, to the Knowledge of the Seller, nothing has
occurred and no facts have arisen since such IRS determination
that would jeopardize the tax-qualified status of any such
Shenandoah Employee Benefit Plan or the tax-exempt status of
any related trust;
(v) No circumstance or event has occurred which would cause the
imposition of any liability, penalty or tax (a) under ERISA,
the Code or any other law, regulations or governmental order
applicable to any Shenandoah Employee Benefit Plan; or (b)
under any agreement, instrument, statute, rule of law or
regulation pursuant to or under which the Partnership or the
Seller has agreed
33
to indemnify or is required to indemnify any person against
liability incurred with respect to any Shenandoah Employee
Benefit Plan, other than, in either case, the obligation to
pay benefits in accordance with the terms of any Shenandoah
Employee Benefit Plan; and
(vi) No unsatisfied liabilities to participants, the IRS, the
United States Department of Labor ("DOL"), or to any other
Person or entity have been incurred as a result of the
termination of any Shenandoah Employee Benefit Plan.
(f) The Partnership does not maintain and has never maintained or
been obligated to contribute to a "multi-employer plan" (as
such term is defined by Section 4001(a)(3) of ERISA).
(g) Except as set forth in Schedule 2.1.18, and except as required
by statute and regulations issued thereunder, the Partnership
does not maintain any retiree life and/or retiree health
insurance plans which provide for continuing benefits or
coverage for any employee or any beneficiary of any of its
employees after such employee's termination of employment.
(h) All obligations of the Partnership, whether arising by
operation of law, by contract or by course of conduct, for
payments to trusts or other funds or to any governmental
agency or to any individual, employee or agent (or his heirs,
legatees or legal representatives) with respect to
unemployment compensation or Social Security benefits, or for
vacation or holiday pay, bonuses and other forms of
compensation, which are payable to the Partnership's employees
have been paid when due.
(i) The Partnership has not made any representation, warranty or
promise to, or agreement with, any of its employees regarding
continued employment after the Closing.
(j) Under no circumstances (other than Buyer's voluntary
assumption of such liability) will Buyer have any liabilities
for benefits or otherwise under any Shenandoah Employee
Benefit Plan.
(k) Except as set forth in Schedule 2.1.18, the consummation of
the transactions contemplated by this Agreement will not (in
and of itself) (i) entitle any employee of the Partnership to
severance pay, unemployment compensation or any other payment;
(ii) accelerate the time of payment or vesting, or increase
the amount of compensation due to any such employee; (iii)
result in any prohibited transaction described in Section 406
of ERISA or Section 4975 of the Code for which an exemption is
not available; or (iv) result (either alone or in conjunction
with any other event) in the payment or series of payments by
the Partnership to any Person of an "excess parachute payment"
within the meaning of Section 280G of the Code.
34
(l) Neither the Partnership nor Seller has announced any plan or
legally binding commitment to create any additional Shenandoah
Employee Benefit Plan or to amend or modify any existing
Shenandoah Employee Benefit Plan.
2.1.19 Transactions With Related Parties and Alltel.
(a) Except as disclosed on Schedule 2.1.19, no Related Party: (i)
has borrowed money from, or loaned money to, the Partnership;
(ii) has any contractual or other claims, express or implied,
or of any kind whatsoever against the Partnership; (iii) has
any right, title or interest in any property or assets related
to or used in the conduct of the Business; (iv) is a party to
any oral or written agreement with the Partnership or is
engaged in any other transaction with the Partnership; (v) is
a party to any oral or written agreement or instrument related
to the Partnership or the Business, including any agreement or
instrument of a type described in Section 2.1.5; or (vi) is a
party to any claim, action, proceeding or investigation or
subject to any judgment, order, writ, injunction, decree or
award related in whole or in part to the Business. Part II of
Schedule 2.1.19 specifically identifies those assets owned by
a Related Party which are related primarily to or used
primarily in the Business and which are to be transferred to
the Partnership prior to the Closing pursuant to Section 1.2
hereof. For purposes of this Agreement, a "Related Party"
means any partner, shareholder, member, manager, director,
officer, employee, trustee, beneficiary or affiliate (meaning
a husband, wife or a Person controlled by, controlling or
under common control with another Person) of the Partnership,
Seller or Parent; provided, however, that neither Buyer nor
Alltel, nor any affiliate of Buyer or Alltel, shall be
considered to be a "Related Party" for purposes of this
Agreement.
(b) Except for the Partnership Agreement and other agreements
listed on Schedule 2.1.5(a) which were entered into in the
ordinary course of business on an arm's length basis, neither
Alltel nor any affiliate of Alltel (i) has borrowed money
from, or loaned money to, the Partnership; (ii) to Seller's
knowledge, has any contractual or other claims, express or
implied, or of any kind whatsoever against the Partnership;
(iii) has any right, title or interest in any property or
assets related to or used in the conduct of the Business; (iv)
is a party to any oral or written agreement with the
Partnership or is engaged in any other transaction with the
Partnership; (v) to Seller's Knowledge, is a party to any oral
or written agreement or instrument related to the Partnership
or the Business, including any agreement or instrument of a
type described in Section 2.1.5; or (vi) to Seller's
Knowledge, is a party to any claim, action, proceeding or
investigation or subject to any judgment, order, writ,
injunction, decree or award related in whole or in part to the
Business.
2.1.20 Insolvency. Neither the Partnership, Seller, nor Parent is
the subject of any existing, pending or threatened insolvency
or bankruptcy proceedings. The consummation of the
transactions contemplated by this Agreement will
35
not result in the Partnership, Seller or Parent being the
subject of such proceedings.
2.1.21 Insurance. The Partnership's assets and the Business are
insured, and the Parent maintains on behalf of the Partnership
adequate (in light of the risks of the Business) and all
statutorily required general liability, all risk, worker's
compensation, employer's liability and occupational disease
and bodily injury insurance, under various policies of general
liability and other forms of insurance, all of which are
described on Schedule 2.1.21, which discloses for each policy
the risks insured against, coverage limits, deductible
amounts, all outstanding claims for the Partnership
thereunder, and whether the terms of such policy provide for
retrospective premium adjustments. All such policies are in
full force and effect in accordance with their terms, no
notice of cancellation has been received, and there is no
existing default or event that, with the giving of notice or
lapse of time or both, would constitute a default thereunder.
The coverages provided by such policies are reasonable, both
in scope and amount, in light of the risks attendant to the
Business and are sufficient in the aggregate to cover all
reasonably foreseeable damage to and liabilities or
contingencies relating to the conduct of the Business. Seller
has previously delivered to Buyer true and complete insurance
claim histories for the Partnership for the past three years.
The Partnership has not been refused any insurance, nor has
its coverage been limited, by any insurance carrier to which
it has applied for insurance or with which it has carried
insurance during the past five years on the basis of any
condition, physical or otherwise, of any of the assets of the
Partnership, nor has it failed to file any notice or present
any claim under any such policy in due and timely fashion.
Schedule 2.1.21 also contains a true and complete description
of all outstanding bonds and other surety arrangements issued
or entered into in connection with the Business.
2.1.22 No Third Party Options. Except pursuant to the Partnership
Agreement, there are no existing agreements, options,
commitments or rights with, of or to any Person to acquire any
of the assets of the Partnership.
2.1.23 Intellectual Property Matters. Except as set forth on
Schedule 2.1.23:
(a) The Partnership has no patents, trademarks, registered
copyrights or applications for any of the foregoing. The
Partnership possesses such working copies of all software and
firmware as are necessary for or otherwise used in the current
conduct of the Business, together with copies of all related
manuals and other documentation. All patents, trademarks,
service marks, trade names or copyrights, whether registered
or unregistered, used in the conduct of the Business, and all
software, firmware, trade secrets, proprietary technologies,
know-how, inventions, discoveries, improvements, processes and
formulas (secret or otherwise) related to the Business and any
documentation related thereto (the "Intellectual Properties")
are owned or
36
licensed by the Partnership and are listed on Schedule 2.1.23.
The Intellectual Properties owned or licensed by the
Partnership:
(i) are held by the Partnership pursuant to either good and valid
title or fully-paid (other than upgrade costs and purchaser
maintenance costs) perpetual licenses under which the
Partnership has the right to assign, if applicable, the
license to Buyer in connection with the transactions
contemplated hereby, and no present or former employee,
consultant or other Person (including any former employer of a
present or former employee or consultant of the Partnership)
has any proprietary, commercial or other interest, direct or
indirect, therein; and
(ii) have been adequately protected by maintaining the secrecy of
trade secret processes, by requiring non-disclosure agreements
when appropriate and by affixing copyright notices when
appropriate, and neither the Partnership nor Seller has
received notice of any claim of infringement or any other
claims relating to any such Intellectual Property, nor does
Seller have Knowledge of any facts upon which any such claim
could reasonably be based.
(b) In conducting the Business as presently conducted, the
Partnership is not infringing upon or unlawfully or wrongfully
using any patent, trademark, trade name, service xxxx,
copyright, trade secret or any other form of intellectual
property owned or claimed by another. The Partnership is not
in default under, nor has the Partnership or Seller received
any notice of any claim of infringement or any other claim or
proceeding relating to, any such patent, trademark, trade
name, service xxxx, copyright, trade secret or any other form
of intellectual property or any agreement relating thereto. To
Seller's Knowledge, no third party is infringing any
Intellectual Property of the Partnership.
2.1.24 No Interest in Other Entities. The Partnership does not own
shares of capital stock of any corporation, nor does it have
any other ownership or investment interest, either of record,
beneficially or equitably, in any association, partnership,
joint venture or other Person.
2.1.25 Availability of Documents. Seller has made available to Buyer
copies of all documents and other papers, including all
agreements, contracts, commitments, insurance policies,
leases, plans, instruments, undertakings authorizations,
permits, licenses, patents, trademarks, trade names, service
marks, copyrights and applications therefor, listed or
required to be listed in the Schedules hereto, except for the
documents listed on Schedule 2.1.5(g). Such copies are true,
complete, accurate and authentic and include all amendments,
supplements and modifications thereto or waivers currently in
effect thereunder.
2.1.26 No Other Business. The Partnership does not conduct and has
not conducted any business other than the Business.
37
2.1.27 Maintenance of Personal Property. The Partnership has
maintained all of its equipment and machinery in accordance
with all warranties provided by the vendors or manufacturers
thereof and has delivered accurate descriptions of all
maintenance procedures utilized by the Partnership to maintain
such assets.
2.1.28 Subscriber Accounts. Seller has furnished to Buyer a schedule
that sets forth, as of July 23, 2002, for each rate plan of
the Partnership and, within each rate plan, for each type of
account on that plan (including, if applicable, active,
suspended, employee, demo phone, loaner phone and rental
phone), the identities of the accounts, the dates of initial
activation of the accounts and the total number of accounts in
that category.
2.1.29 Bank Accounts. Schedule 2.1.29 hereto sets forth a complete
list of all banks or other financial institutions at which the
Partnership has an account, the account numbers of all such
accounts and the names of the authorized signatories for all
such accounts.
2.1.30 Brokers or Finders. All negotiations relative to this
Agreement and the transactions contemplated hereby have been
carried on by Seller directly without the intervention of any
Person who may be entitled to any brokerage or finder's fee or
other commission in respect of this Agreement or the
consummation of the transactions contemplated hereby. Neither
the Partnership, Seller nor any of their respective agents has
incurred any obligation or liability, contingent or otherwise,
for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement or the
transactions contemplated hereby.
2.1.31 Completeness of Disclosure. No representation or warranty by
Seller in this Agreement, including any schedule, exhibit or
attachment hereto, or in any Transaction Document, contains or
will contain any untrue statement of a material fact or omits
or will omit to state a material fact required to be stated
herein or therein or necessary to make any statement herein or
therein not misleading.
2.2 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
2.2.1 Partnership Existence and Authority.
(a) Buyer is a general partnership duly formed and validly
existing under the laws of the State of Delaware and has the
requisite partnership power, authority and legal right to
execute, deliver and perform this Agreement. The execution,
delivery and performance by Buyer of this Agreement and all
other Transaction Documents required to be executed and
delivered by Buyer in accordance with the provisions of this
Agreement (collectively, the "Buyer's Documents") have been
duly authorized by all necessary partnership action.
38
This Agreement has been, and the other Buyer's Documents will
be, duly executed and delivered by Buyer, and this Agreement
constitutes, and the other Buyer's Documents when executed and
delivered will constitute, the legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance
with their respective terms, except as such enforceability may
be limited by bankruptcy laws and other similar laws affecting
creditors' rights generally, and except that the remedy of
specific performance and injunctive relief and other forms of
equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding
therefor may be brought.
(b) Buyer is the sole record and beneficial owner of, and holds
good, valid and marketable title to, Buyer's Interest in the
Partnership.
2.2.2 No Conflicts; Consents.
(a) Upon the receipt of requisite consents from the FCC as
described in Section 3.3.1(a) and the receipt or giving of the
consents set forth on Schedule 2.2.2 (the "Buyer Required
Consents"), the execution, delivery and performance of this
Agreement and the other Buyer's Documents by Buyer do not and
will not violate, conflict with or result in the breach of any
term, condition or provision of, or require the consent of any
Person under, (i) any existing law, ordinance, or governmental
rule or regulation to which Buyer is subject, (ii) any
judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body
or authority which is applicable to Buyer, (iii) the
partnership agreement of Buyer, or (iv) any mortgage,
indenture, agreement, contract, commitment, lease, plan,
license, permit, authorization or other instrument, document
or understanding, oral or written, to which Buyer is a party
or by which Buyer is otherwise bound.
(b) Except for the Buyer Required Consents, the requisite consents
from the FCC as described in Section 3.3.1(a) and any
post-Closing notifications required by the FCC, no
authorization, approval or consent of, and no registration or
filing with or notice to, any governmental or regulatory
official, body or authority is required in connection with the
execution, delivery and performance of this Agreement by
Buyer.
2.2.3 Litigation. There is (a) no suit, action or claim, (b) no
investigation or inquiry by any administrative agency or
governmental body, and (c) no legal, administrative or
arbitration proceeding pending or, to Buyer's knowledge,
threatened against Buyer which seeks to terminate or modify or
which might affect this Agreement or the consummation of the
transactions contemplated herein.
2.2.4 Brokers or Finders. All negotiations relative to this
Agreement and the transactions contemplated hereby have been
carried on by Buyer directly without the intervention of any
Person who may be entitled to any brokerage
39
or finder's fee or other commission in respect of this
Agreement or the consummation of the transactions contemplated
hereby. Buyer and its agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in
connection with this Agreement or the transactions
contemplated hereby.
2.2.5 FCC Matters. Buyer is, and pending the Closing, will be
legally, technically, financially and otherwise qualified
under the Communications Act of 1934, as amended, and all
rules, regulations and policies of the FCC to acquire the
Partnership Interest and to conduct the business and
operations of the Partnership. There are no facts or
proceedings which would reasonably be expected to disqualify
Buyer under the Communications Act of 1934, as amended, or
otherwise from acquiring the Partnership Interest or would
cause the FCC not to approve the application for the change of
control of the FCC Authorizations to Buyer. Buyer has no
knowledge of any fact or circumstance relating to Buyer or any
of Buyer's affiliates that would reasonably be expected to (a)
cause the filing of any objection to the application for the
change of control of the FCC Authorizations to Buyer, or (b)
lead to a delay in the processing by the FCC of such
application. No waiver of any FCC rule or policy is necessary
to be obtained for the grant of the application for the change
of control of the FCC Authorizations to Buyer.
2.2.6 Availability of Funds. Buyer will have available on the
Closing Date sufficient funds to enable Buyer to consummate
the transactions contemplated hereby.
2.2.7 No Outside Reliance. Buyer has not relied and is not relying
on any statement, representation or warranty not made in this
Agreement, any Schedule hereto or any Transaction Document.
Buyer is not relying on any projections or other predictions
contained or referred to in any materials that have been or
may hereafter be provided to Buyer or any of its affiliates,
agents or representatives by Seller or Parent, and Seller
makes no representations or warranties with respect to any
such projections or other predictions. Buyer acknowledges that
it and its representatives have been permitted access to the
books and records, facilities, equipment, tax returns,
contracts and other properties and assets of the Partnership
that Buyer and its representatives have desired or requested
to see or review, and that Buyer and its representatives have
had an opportunity to meet with the officers and employees of
Seller and its affiliates to discuss the Partnership.
2.2.8 No Intent to Cancel. Neither Buyer nor any affiliate of Buyer
intends to cancel or otherwise modify the Switch Sharing
Agreement.
2.2.9 Completeness of Disclosure. No representation or warranty by
Buyer in this Agreement or in any certificate, schedule, list,
document, agreement or instrument furnished or to be furnished
to Seller in connection with the execution or performance of
this Agreement, contains or will contain any
40
untrue statement of a material fact or omits or will omit to
state a material fact required to be stated herein or therein
or necessary to make any statement herein or therein not
misleading.
2.2.10 Other Materials. Buyer acknowledges that none of Seller, its
affiliates or any other Person has made any representation or
warranty, expressed or implied, as to the accuracy or
completeness of any information regarding the Partnership
furnished or made available to Buyer and its representatives,
except as expressly set forth in this Agreement and none of
Seller, its affiliates or any other Person shall have or be
subject to any liability to Buyer or any other Person
resulting from the distribution to Buyer, or Buyer's use of,
any such information, documents or material made available to
Buyer in any "data rooms", management presentations or in any
other form in expectation of the transactions contemplated
hereby, except to the extent such information, documents or
materials is included in or covered by the representations or
warranties of Seller or Parent set forth in this Agreement.
2.3 Survival of Representations and Warranties. All
representations and warranties made by the parties in this
Agreement, including any schedule hereto, or in any
certificate furnished hereunder, shall survive for a period
lasting two years after Closing, except that (a) any
intentional misrepresentation shall survive Closing
indefinitely, (b) Section 2.1.8 shall survive for a period
lasting five years after Closing and (c) Sections 2.1.1,
2.1.2, 2.1.7, 2.1.9(a), 2.1.9(b), 2.1.18, 2.1.19 and 2.1.22,
and Sections 2.2.1, 2.2.2 and 2.2.5, shall survive until the
expiration of the 15 day period commencing on the expiration
date of the relevant statute of limitations period (including
any applicable extensions thereof), if longer than the
two-year period previously specified (provided that if there
is no relevant statute of limitations, survival shall be
indefinite), unless survival is governed by the preceding
clause (a). Any claim by a party based upon breach of any such
representation or warranty made pursuant to Article V below or
otherwise must be submitted to the other party prior to or at
the expiration of the applicable survival period. In the case
of any claim submitted within such time period, the right of
the party submitting the claim to recover from the other party
with respect to such claim shall not be dependent on the claim
being resolved or the losses being incurred within such time
period. Notwithstanding any investigation or audit conducted
before or after the Closing Date or the decision of any party
to complete the Closing, each party shall be entitled to rely
upon the representations and warranties set forth herein. The
waiver of any condition regarding the accuracy of any
representation or warranty, regarding the performance of or
compliance with any covenant or obligation or regarding any
other matter, will not affect the right of indemnification or
any other remedy of the waiving party after the Closing based
on the inaccuracy of such representation or warranty, the
nonperformance of or noncompliance with such covenant or
obligation or the failure of such condition to have been
satisfied.
41
ARTICLE III
COVENANTS AND AGREEMENTS
3.1 Covenants of Seller and Parent Pending the Closing. Seller and
Parent jointly and severally covenant and agree that, from the
date hereof until the Closing and except as otherwise agreed
to in writing by Buyer (provided, however, that any breach of
any of Seller's or Parent's covenants directly caused by
either (i) a breach by Buyer of its obligations under the
Switch Sharing Agreement, or (ii) the failure by Buyer to
provide to the Partnership the benefits of any modification to
the functionality of the Switch that Buyer makes for its own
purposes, shall be disregarded for purposes of this
Agreement):
3.1.1 Conduct of the Business in the Ordinary Course. The Business
shall be conducted solely in the ordinary course consistent
with past practice and in compliance with the Communications
Act of 1934 and the rules and regulations of the FCC, all
other laws, ordinances, rules, regulations and orders
applicable to the Business or any of the assets of the
Partnership, including all applicable Environmental Laws, all
of the Authorizations and the Partnership Agreement. Without
limiting the foregoing, from the date hereof until the
Closing, the Partnership shall:
(a) collect its accounts receivable in the ordinary course of the
Business, consistent with past practice, and not compromise,
discount, forgive or otherwise adjust, amend or modify the
terms or conditions of any of its accounts receivable other
than in the ordinary course of the Business, consistent with
past practice;
(b) pay its accounts payable and applicable taxes in the ordinary
course of the Business, consistent with past practice, and not
adjust, amend or modify the terms or conditions of any of its
accounts payable other than in the ordinary course of the
Business, other than taxes which are being disputed in good
faith in accordance with applicable dispute procedures and for
which appropriate reserves have been made, consistent with
past practice;
(c) not sell, lease, license, or otherwise dispose of any assets
or property of the Partnership except (i) pursuant to the
requirements of any agreement listed in Schedule 2.1.5(a), or
(ii) in the ordinary course of the Business consistent with
past practice; and not acquire any assets or property except
in the ordinary course of the Business consistent with past
practice;
(d) not enter into any new lease or license for the Partnership's
use of any cell site or retail space or any other material
agreement;
(e) not enter into any type of business other than the Business;
42
(f) not incur or guaranty any indebtedness for borrowed money or
any other indebtedness, except for trade payables incurred in
the ordinary course of the Business, consistent with past
practice;
(g) not merge or consolidate with any other Person or acquire a
material amount of assets of any other Person;
(h) not (i) take or agree to take any action that would make any
representation or warranty of Seller inaccurate in any respect
at, or as of any time prior to, the Closing Date, or (ii) omit
or agree or commit to omit to take any action necessary to
prevent any such representation or warranty from being
inaccurate in any respect at any such time;
(i) without limiting the generality of subsection (h) above, not
cause or permit to occur any of the events or occurrences
described in Section 2.1.15 hereof;
(j) perform all of its obligations under all Contracts and not
amend, terminate or waive any rights under any material
Contracts or under any material agreements listed in Part II
of Schedule 2.1.19, or enter into any material contracts
relating to the Business, except in the ordinary course of the
Business consistent with past practice; nor shall Seller agree
to amend or terminate the Partnership Agreement, propose any
amendment to or termination of the Partnership Agreement,
withdraw as a Partner (except as contemplated under this
Agreement) or agree to or propose any dissolution or
termination of the Partnership;
(k) maintain the Business's equipment, systems and other fixed
assets as necessary to maintain the Business's reliability
standards, footprint coverage and network capacity;
(l) make capital expenditures in the ordinary course consistent
with past practice as necessary or appropriate to conduct the
Business;
(m) not make any distributions to the partners of the Partnership,
other than distributions in amounts consistent with past
practice that are disclosed to Buyer in writing prior to
Closing;
(n) terminate the lease of each Leased Property that is no longer
being used in the operation of the Business, if any, and pay
all termination fees or similar charges or liabilities in
connection therewith, after giving written notice to Buyer of
the intention to terminate such lease, such termination to be
effected promptly after Buyer notifies Seller that it does not
object to such termination or 15 days elapses without
notification from Buyer that it objects to such termination;
(o) continue in accordance with past practice all marketing and
promotions relating to the maintenance and growth of
subscribers; and
43
(p) not activate customers on any service plans, unless the terms
and conditions of such plans (including price and duration of
contract terms) are no more favorable (taken together, but not
individually) to customers than the plans of the Partnership
listed on Schedule 2.1.5(e); notwithstanding the foregoing,
the Partnership may introduce and activate customers on new
plans which no more than match more favorable terms offered by
competitors, provided that Seller gives Buyer at least three
business days' prior written notice of the implementation of
such plan.
3.1.2 Maintenance of Assets and Insurance. The Partnership shall
take all action reasonably necessary to maintain the assets of
the Partnership, including the Authorizations and all
Intellectual Properties, and otherwise preserve its rights to
provide telecommunications service in the Market. Seller or
Parent shall keep in full force and effect the insurance
policies maintained for the benefit of the Partnership on the
assets of the Partnership as of the date hereof (or
replacement policies providing substantially the same
coverage) and shall notify Buyer of any significant changes in
the terms of the insurance policies and binders currently in
effect.
3.1.3 Intentionally Deleted.
3.1.4 Efforts; Relationships; Cooperation. The Partnership shall use
all commercially reasonable efforts to conduct the Business in
such a manner that at all times prior to and on the Closing
Date, the representations and warranties contained in this
Agreement shall be true as though such representations and
warranties were made on and as of such times. The Partnership
shall (i) use commercially reasonable efforts to keep
available the services of the Partnership's employees and of
all agents of the Business, (ii) use commercially reasonable
efforts to maintain the relations and goodwill of the Business
with the suppliers, customers and distributors of the Business
and any others having business relations with the Business,
and (iii) cooperate with Buyer in establishing network
conversion and switching conversion arrangements and
implementing other transitional arrangements as reasonably
requested by Buyer.
3.1.5 Access. Upon reasonable prior notice from Buyer, (a) the
Partnership shall give Buyer and its authorized
representatives reasonable access during regular business
hours to the Partnership's books and records, facilities and
assets comprising or relating to the Partnership or the
Business, (b) the Partnership shall provide such financial and
operating data and other information with respect to the
Partnership or the Business as Buyer may reasonably request,
and (c) the Partnership and Seller shall, upon reasonable
advance written notice from Buyer, make available their
officers, employees, agents and affiliates who are familiar
with matters relating to the Business in order to facilitate
the Buyer's review of the Partnership or the Business. The
foregoing right of access shall not be exercisable in such a
manner as to interfere unreasonably with the normal operations
of the Business.
44
3.1.6 Non-solicitation. Prior to the Closing and except as expressly
permitted by this Agreement, neither the Partnership nor
Seller shall, directly or indirectly, sell, agree to sell,
solicit inquiries or proposals or furnish any non-public
information with respect to, or initiate or participate in any
negotiations or discussions whatsoever concerning any
acquisition or purchase of, any or all of the assets of the
Partnership outside of the ordinary course of the Business, or
any equity interest in the Partnership, whether by purchase,
merger or otherwise, or any business combination with the
Partnership. The Partnership and Seller shall instruct their
officers, employees, trustees, beneficiaries, agents and
affiliates to refrain from doing any of the above.
3.1.7 Press Releases. Neither the Partnership nor Seller nor Parent
shall make any public statements or releases concerning this
Agreement or the transactions contemplated hereby, except (a)
as shall have been approved in advance as to form and content
by Buyer, and except to such Persons as have been approved in
advance by Buyer, which approvals shall not be unreasonably
withheld or (b) as required by applicable law or any listing
agreement, provided that the Partnership, Seller or Parent
shall use reasonable efforts to provide Buyer with a copy of
such public statements or releases in advance.
3.1.8 Compliance with Authorizations. The Partnership shall maintain
all of its rights and interest in, and the validity of, the
Authorizations, and the Partnership shall not engage in any
transaction or take any action or omit to take any action that
will or could reasonably be expected to adversely affect its
rights or interest in, or the validity of, the Authorizations.
Without limiting the above, the Partnership shall conduct its
operations in accordance with the conditions set by the FCC
for maintaining the FCC Authorizations. Seller shall promptly
provide Buyer with copies of all applications and other
correspondence from the Partnership or Seller to the FCC with
respect to the Business and any notices, Authorizations,
orders or correspondence received by the Partnership or Seller
from the FCC with respect to the Business.
3.1.9 Updates. Between the date hereof and the Closing, Seller and
Parent shall promptly notify Buyer of (a) any fact or
condition of which any of them acquires Knowledge that renders
inaccurate any of the representations or warranties made by
Seller and Parent herein as of the date of this Agreement or
(b) the occurrence after the date of this Agreement of any
fact or condition that would, as of the time of such
occurrence, constitute a failure on the part of Seller and
Parent to meet the conditions set forth in Section 4.1.1
hereof; provided, however, that none of such disclosures shall
be deemed to modify, amend or supplement the representations
and warranties of Seller and Parent or the Schedules hereto
for the purposes of this Agreement (including Article V),
unless Buyer shall have consented thereto in writing. During
the same period, Seller and Parent shall promptly notify Buyer
of the occurrence of any breach of any covenant of Seller or
Parent contained in this Article III, or of
45
any event that may make the satisfaction of the conditions set
forth in Section 4.1 of this Agreement impossible or unlikely.
3.1.10 Delivery of Financial Statements. Seller shall deliver to
Buyer within 15 days after the end of each calendar month
unaudited financial statements for the Partnership, consisting
of a balance sheet, a statement of income (including detailed
revenue classifications) and a statement of cash flows, as
well as key operating statistics, including gross subscriber
additions, disconnects and end-of-period number of subscribers
for such month and for the interim period then ended (all such
financial statements, the "Interim Financial Statements").
Such Interim Financial Statements shall meet the requirements
for Unaudited Financial Statements as set forth in Section
2.1.11(b).
3.2 Covenants of Buyer Pending the Closing. Buyer covenants and
agrees that, from the date hereof until the Closing Date and
except as otherwise agreed to in writing by Seller:
3.2.1 Actions of Buyer. Buyer shall use all commercially reasonable
efforts not to take any action that would result in a breach
of any of its representations and warranties hereunder.
3.2.2 Press Releases. Buyer will not make any public statements or
releases concerning this Agreement or the transactions
contemplated hereby, except (a) as shall have been approved in
advance as to form and content by Seller, and except to such
Persons as have been approved in advance by Seller, which
approvals shall not be unreasonably withheld or (b) as
required by applicable law or any listing agreement, provided
that Buyer shall use reasonable efforts to provide Seller with
a copy of such public statements or releases in advance.
3.2.3 Updates. Between the date hereof and the Closing, Buyer shall
promptly notify Seller of (a) any fact or condition of which
Buyer acquires knowledge that renders inaccurate any of
Buyer's representations or warranties made herein as of the
date of this Agreement or (b) the occurrence after the date of
this Agreement of any fact or condition that would, as of the
time of such occurrence, constitute a failure on the part of
Buyer to meet the conditions set forth in Section 4.2.1
hereof; provided, however, that none of such disclosures shall
be deemed to modify, amend or supplement the representations
and warranties of Buyer for the purposes of this Agreement
(including Article V), unless Seller shall have consented
thereto in writing. During the same period, Buyer shall
promptly notify Seller of the occurrence of any breach of any
covenant of Buyer contained in this Article III, or of any
event that may make the satisfaction of the conditions set
forth in Section 4.2 of this Agreement impossible or unlikely.
3.2.4 Non-Solicitation. From the date of this Agreement until one
year from the Closing Date, Buyer agrees that it will not,
directly or indirectly through any
46
affiliate or representative of Buyer or otherwise, except as
expressly provided in the next sentence, recruit, solicit,
offer to employ or employ any management employee of Seller to
become an employee, independent contractor or consultant of
Buyer or any of Buyer's affiliates. However, Buyer shall not
be prohibited from recruiting, soliciting, offering to employ
or employing any such management employee who is identified as
a result of a search by Buyer for employees through the use of
one or more general advertisements in the media (including
trade media) or through the engagement of one or more firms to
conduct searches that are not targeted or focused on Seller.
3.2.5 Switch Sharing Agreement. Buyer (or an affiliate of Buyer) (i)
shall continue to perform its obligations under the Switch
Sharing Agreement in accordance with the terms and conditions
of the Switch Sharing Agreement, (ii) shall not terminate the
Switch Sharing Agreement pursuant to Section VI(E) thereof or
give notice pursuant to Section III(B)(1) of the Switch
Sharing Agreement of its intention not to renew such
Agreement, (iii) shall provide to the Partnership the benefits
of any modification to the functionality of the Switch that
Buyer (or an affiliate of Buyer) makes for its own purposes,
and (iv) shall not increase the rates for any of the services
performed by Buyer (or an affiliate of Buyer) under the Switch
Sharing Agreement, except in connection with any modifications
to such services that may be requested by Seller (other than
those contemplated by clause (iii) of this Section).
3.3 Mutual Covenants. Seller, Parent and Buyer further covenant
and agree that, except as otherwise agreed to in writing by
Seller and Buyer:
3.3.1 Certain Filings and Consents.
(a) As soon as practicable after the date of this Agreement,
Seller and Buyer shall file (i) applications with or
notifications to the FCC for consent to the transfer of
control of the FCC Authorizations from Seller to Buyer, and
such other applications with the FCC as may be advisable in
the reasonable judgment of the parties hereto, all of which
applications and notifications will comply in all material
respects with the requirements of the Communications Act of
1934 and the rules of the FCC, and (ii) applications for all
consents and approvals of the SCC and other regulatory
consents and approvals necessary for the consummation of the
transactions contemplated hereby, if any. Seller and Buyer
shall use commercially reasonable efforts to file the
applications for the consent of the FCC within 10 business
days after the date of this Agreement. Seller and Buyer shall
diligently prosecute all applications referred to in the first
sentence of this Section and shall take all such actions and
give all such notices as may be required or requested by the
FCC or any other regulatory agency or as may be appropriate in
an effort to expedite the grant of such consent by the FCC or
such regulatory agency. Upon final resolution of all issues
with respect to the ROFR, Buyer and Seller shall file new
applications or notifications with the FCC, or appropriate
amendments to
47
applications or notifications already filed with the FCC,
if necessary to properly reflect the structure of the
transactions contemplated hereby following resolution of such
issues.
(b) The Partnership and Seller shall use all commercially
reasonable efforts to obtain (or give, in the case of
notifications or deliveries constituting Required Consents)
all Required Consents as soon as practicable. Buyer shall use
all commercially reasonable efforts to obtain (or give, in the
case of notifications or deliveries constituting Buyer
Required Consents) all Buyer Required Consents.
3.3.2 Non-Disclosure. None of Seller, Parent and their agents and
none of the Partnership, Buyer and its agents shall at any
time disclose to the public or to any third party the fact
that Buyer is contemplating the purchase of the Partnership
Interest, or that Seller is contemplating the sale of the
Partnership Interest to Buyer, or the existence of this
Agreement or the terms and conditions of this Agreement or the
acquisition, except:
(a) as required by applicable law or the rules of any relevant
stock exchange, by order or decree of a court or regulatory
body having jurisdiction over such party, or in connection
with such party's or its affiliate's enforcement of any rights
it may have at law or equity;
(b) on a "need to know" basis to Persons within such party's
organization, or outside of such party's organization such
as attorneys, accountants, bankers, financial advisors and
other consultants who may be assisting such party in
connection with the transactions contemplated hereby and who
agree to be bound by the nondisclosure obligations of this
Section;
(c) as expressly required by this Agreement;
(d) with the express prior written consent of the other party; or
(e) after such information has become publicly available without
breach of this Agreement.
Notwithstanding anything contained in this Agreement to the
contrary, the provisions of this Section shall survive the Closing. Each
of Seller and Buyer specifically acknowledges and agrees that the remedy
at law for any breach of the provisions of this Section will be inadequate
and that each party, in addition to any other relief available to it,
shall be entitled to temporary and permanent injunctive relief without the
necessity of proving actual damages in the event of any breach or
threatened breach of the provisions of this Section by the other parties
or such other parties' agents.
3.3.3 Maintenance of Books and Records. Each of the Partnership,
Seller and Buyer shall preserve until the fifth anniversary of
the Closing Date, all records possessed or to be possessed by
or controlled or to be controlled by such party relating to
any of the assets, liabilities or business of the Business
prior to the
48
Closing Date. After the Closing Date, where there is a
legitimate purpose, such party shall provide the other parties
with access, upon prior reasonable written request specifying
the need therefor, during regular business hours, to (a) the
officers and employees of such party and (b) the books of
account and records of such party, but, in each case, only to
the extent relating to the assets, liabilities or business of
the Business prior to the Closing Date, and the other parties
and their representatives shall have the right to make copies
of such books and records; provided, however, that the
foregoing right of access shall not be exercisable in such a
manner as to interfere unreasonably with the normal operations
and business of such party; and further provided that as to so
much of such information as constitutes trade secrets or
confidential business information of such party, the
requesting party and its officers, directors and
representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the prior
written consent of such party, which consent shall not be
unreasonably withheld, or (iii) where such information becomes
available to the public generally, or becomes generally known
to competitors of such party, through sources other than the
requesting party, its affiliates or its officers, directors or
representatives. Such records may nevertheless be destroyed by
a party if such party sends to the other parties written
notice of its intent to destroy records, specifying with
particularity the contents of the records to be destroyed.
Such records may then be destroyed after the 30th day after
such notice is given unless another party objects to the
destruction in which case the party seeking to destroy the
records shall deliver such records to the objecting party.
3.3.4 Compliance with this Agreement; Cooperation. Buyer, Parent and
Seller shall each perform and comply with all agreements,
obligations and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
The Partnership, Seller and Parent, on the one hand, and
Buyer, on the other hand, shall each cooperate with the other
and use all commercially reasonable efforts to cause all of
the conditions to the obligations of Buyer and Seller under
this Agreement to be satisfied on or prior to the Closing
Date.
3.3.5 Other Regulatory Requirements. Each party agrees to reasonably
cooperate with the other party in connection with the other
party's efforts to satisfy any regulatory requirements in
connection with the transactions contemplated by this
Agreement.
3.3.6 Use of Seller's Names and Logos. Except as specifically
provided in the Transition Services Agreement, at no time from
and after the Closing Date shall Buyer, the Partnership or any
of their respective affiliates use any trademarks, trade
names, service marks, service names, logos, copyrights, common
law proprietary rights, or similar proprietary rights of
Seller or its affiliates containing the names "Shenandoah,"
"Shentel" or any derivatives thereof or any name confusingly
similar thereto. At no time during the first 18 months after
the Closing Date shall Seller, Parent or any of their
respective
49
affiliates use "Shenandoah," "Shentel" or any derivative
thereof or any name or xxxx confusingly similar thereto in the
Market or within 100 miles of any part of the Market in
connection with any wireless telecommunications business that
is in any way competitive with any business in which the
Partnership is engaged as of the date hereof, except that
Seller, Parent and their respective affiliates shall not be
restricted from using "Shenandoah," "Shentel" or any
derivative thereof or any name or xxxx confusingly similar
thereto in connection with any paging business. At no time
during the first five years after the Closing Date shall
Seller, Parent or any of their respective affiliates use
"Shenandoah Cellular" in the Market or within 100 miles of any
part of the Market in connection with any wireless
telecommunications business that is in any way competitive
with any business in which Buyer is engaged as of the date
hereof. Due to the difficulty of measuring damages that would
result from a breach of this Section 3.3.6, the parties hereby
agree that in the event of a breach or a contemplated breach
of this Section 3.3.6, in addition to any other remedies that
the non-breaching party may have at law or in equity, the
non-breaching party shall have the right to have the
provisions of this Section 3.3.6 specifically performed by the
breaching party, and the non-breaching party shall have the
right to obtain preliminary and permanent injunctive relief to
secure specific performance, and to prevent a breach or
contemplated breach, of this Section 3.3.6.
3.4 Covenants Regarding Employees and Employee Benefits.
Seller and Parent jointly and severally covenant and agree that,
except as otherwise agreed to in writing by Buyer:
3.4.1 Access to Employees. Upon reasonable notice, the Partnership
shall provide Buyer with reasonable access to the
Partnership's employees during normal business hours
throughout the period prior to the Closing Date. Such access
shall be in accordance with applicable law and for the purpose
of interviewing such persons, performing drug testing,
performing background checks and pre-employment testing, and
providing transition training for those employees contemplated
to be hired by Buyer (or an affiliate of Buyer) after the
Closing Date, if any.
3.4.2 Employment Termination and Related Benefits. No less than 30
days prior to the Closing, Buyer shall deliver to Seller a
list of employees of the Partnership that Buyer does not
intend to hire (either directly or through an affiliate) as
employees of the Partnership after the Closing. The
Partnership shall, effective immediately prior to Closing,
terminate the employment of all employees of the Partnership
and, prior to Closing, provide to such employees severance
benefits, if any, to which they are entitled pursuant to any
Employee Benefit Plan covering such employees. In addition,
Seller shall, effective immediately prior to Closing, provide
such employees with health care continuation benefits to the
extent required by applicable law or the terms of any
Shenandoah Employee Benefit Plan. Effective immediately after
50
Closing, Buyer (or an affiliate of Buyer) shall offer
employment to any employees of the Partnership not included on
the list provided to Seller pursuant to the first sentence of
this Section 3.4.2.
3.4.3 Communications With Employees. Buyer and Seller shall consult
with each other regarding communications with the
Partnership's employees who Buyer does not intend to hire
(either directly or through an affiliate) as employees of the
Partnership after the Closing in an effort to minimize any
adverse impact on the Business. Upon the reasonable request of
Buyer, Seller shall use all commercially reasonable efforts to
minimize such impact, including enforcing the Partnership's
rights under any confidentiality or non-compete agreement with
any of the Partnership's employees who are terminated.
3.4.4 No Third Party Rights. Nothing contained in this Agreement
shall confer upon any of the Partnership's employees any right
with respect to continued employment after the Closing. 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 the Partnership after the Closing Date, if
any.
3.4.5 COBRA. Seller shall, at its cost in accordance with the terms
of each applicable health plan (except to the extent of any
premiums required to be paid by the Partnership's employees,
former employees and their eligible dependents), provide (or
cause the Partnership to provide and bear the full cost of
such provision) continuation coverage under COBRA to all of
its eligible employees, former eligible employees and their
eligible dependents to the extent required by applicable law
with respect to any "qualifying event" (as such term is
defined in Section 4980B(f)(3) of the Code) occurring on or
prior to the Closing Date.
3.4.6 Employee Benefit Plans. Seller acknowledges and agrees that
all of the Partnership's employees who are hired by Buyer (or
an affiliate of Buyer) after the Closing, if any, shall cease
to be active participants in any of the Shenandoah Employee
Benefit Plans. Further, the parties agree and acknowledge that
after the Closing, any employees who are hired by Buyer (or an
affiliate of Buyer) shall participate in such employee benefit
plans or arrangements and other compensation programs as Buyer
shall determine in its sole discretion. Without limiting the
generality of anything else contained herein, Buyer shall
assume no pre-closing or post-closing liabilities associated
with any Shenandoah Employee Benefit Plan. Seller and Parent
acknowledge that no portion of the assets of any plan, fund,
program or arrangement, written or unwritten, heretofore
sponsored or maintained by Seller, Parent or any of their
respective affiliates (and no amount attributable to any such
plan, fund, program or arrangement) shall be transferred to
Buyer, and agree that Buyer shall not be required to continue
any such plan, fund, program or
51
arrangement after the Closing Date. The Partnership shall
withdraw as a participating employer under all Shenandoah
Employee Benefit Plans effective immediately prior to Closing.
Seller shall furnish to Buyer, at or prior to Closing, one or
more written instruments, in form and substance reasonably
satisfactory to Buyer, effectuating such withdrawals.
3.5 Covenants Regarding Tax Matters.
3.5.1 Without the prior written consent of Buyer, Seller shall not,
to the extent it may affect or relate to the Partnership, make
or change any Tax election (except for the Section 754
Election, as provided below), adopt or change any method of
Tax accounting, file any amended Tax return, enter into any
closing agreement, settle any Tax claim or assessment,
surrender any right to claim a Tax refund, offset or other
reduction in Tax Liability, consent to any extension or waiver
of the limitations period applicable to any Tax claim or
assessment or take or omit to take any other action, if any
such action or omission referred to in any clause of this
Section 3.5.1 could have the effect of increasing the Tax
liability or reducing any Tax Asset (as defined below) of the
Partnership or Buyer.
3.5.2 All Tax returns required to be filed by the Partnership on or
after the Closing Date in respect of Pre-closing Taxes (other
than such Tax returns (each, a "Straddle Period Return") that
are in respect of a Tax period ending after the Closing Date
and that are not personal property tax returns) (i) will be
prepared and filed by Seller when due in accordance with
applicable law and (ii) as of the time of filing, will be true
and complete in all material respects. All such Tax returns
shall be furnished to Buyer at least five days before the due
date for filing such Tax returns, and Buyer shall have the
right to review and consent to all such Tax returns, which
consent shall not be unreasonably withheld or delayed. All
Straddle Period Returns will be prepared and filed by Buyer
when due in accordance with applicable law. All Straddle
Period Returns shall be furnished to Seller at least five days
before the due date for filing such Tax returns, and Seller
shall have the right to review and consent to the filing of
Straddle Period Returns, which consent shall not be
unreasonably withheld or delayed. For purposes of this
Agreement, the term "Pre-closing Taxes" shall mean (i) any Tax
that is due on or before the Closing Date, (ii) any Tax which
is payable for a Tax period that ends on or before the Closing
Date and which is not due until after the Closing Date, and
(iii) with respect to a Tax which is payable for a Tax period
that includes (but does not end on) the Closing Date, the
portion of such Tax that is related to the portion of such Tax
period ending on and including the Closing Date, which portion
of such Tax shall (A) in the case of any Taxes other than
gross receipts, sales or use Taxes and Taxes based upon or
related to income, be deemed to be the amount of such Tax for
the entire Tax period (which period, with respect to personal
property, ad valorem and real property Taxes, shall be the
calendar year in which the assessment date for such Tax falls)
multiplied by a fraction the numerator of which is the number
of days in
52
the Tax period ending on and including the Closing Date and
the denominator of which is the number of days in the entire
Tax period, and (B) in the case of any Taxes based upon or
related to income and any gross receipts, sales or use Taxes,
be deemed equal to the amount which would be payable if the
relevant Tax period ended on and included the Closing Date.
3.5.3 Seller shall prepare the federal partnership tax return of the
Partnership for its Tax period ending on the Closing Date and,
unless such election is already in full force and effect,
shall make the election described in Section 754 of the
Internal Revenue Code (the "Section 754 Election") with such
return, in the manner and form required by applicable Treasury
Regulations. The income of the Partnership will be apportioned
to the period up to and including the Closing Date and the
period after the Closing Date by closing the books of the
Partnership as of the end of the Closing Date. Buyer shall
provide Seller with any fair market value information with
respect to the assets of the Partnership reasonably requested
by Seller for purposes of making the Section 754 Election.
3.5.4 Seller will allow Buyer, the Partnership and its counsel at
their own expense to be present at and participate in any
audits and appeals with respect to any Tax returns to the
extent that such returns relate to the Partnership. Seller
shall not settle any such audit or appeal in a manner which
would adversely affect Buyer or the Partnership; provided that
a settlement shall be deemed not to have an adverse effect on
Buyer or the Partnership if the settlement agreement (i)
merely requires the Partnership or Seller to make a payment in
respect of a Pre-closing Tax, which payment shall be made by
Seller immediately upon the settlement, (ii) does not require
Buyer or the Partnership to concede or accept, or preclude
Buyer or the Partnership from taking, any Tax position with
respect to any Tax period ending after the Closing Date, and
(iii) could not increase the Tax liability or reduce any Tax
Asset of Buyer or the Partnership with respect to any Tax
period ending after the Closing Date (unless Seller pays to
Buyer or the Partnership the cost of any increase in Tax
liability or reduction in such Tax Asset); and provided,
further, that Buyer shall have the option, exercisable in its
sole discretion, to require Seller to (x) pay Buyer the amount
which Seller would have paid to the relevant Tax authority in
respect of the settlement and (y) allow Buyer to assume the
defense of the audit, appeal and settlement of such issue, in
exchange for granting Seller a release from its
indemnification obligations related to the settlement.
3.5.5 The Partnership has no Tax Sharing Agreements.
3.5.6 Buyer and Seller shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with
the preparation and filing of any Tax return, statement,
report or form, and any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision
of records and
53
information which are reasonably relevant to any such audit,
litigation or other proceeding and making their employees and
tax advisors available on a mutually convenient basis to
provide additional information and explanation of any material
provided hereunder. Subject to Section 3.5.7, Buyer and Seller
agree (i) to retain all books and records with respect to Tax
matters pertinent to the Partnership relating to any
Pre-closing Tax period, and to abide by all record retention
agreements entered into with any Tax authority, and (ii) to
give the other party written notice at least 90 days prior to
destroying or discarding any such books and records and, if
the other party so requests, Buyer or Seller, as the case may
be, shall allow the other party to take possession of such
books and records; provided that after the applicable statute
of limitations with respect to which the Tax items contained
in such books and records has expired (giving effect to any
waiver, mitigation or extension thereof), clause (ii) shall
not apply to any books and records which also pertain to
persons other than the Partnership.
3.5.7 On or before the Closing Date, Seller shall deliver to Buyer
true and correct copies of all currently effective exemption
certificates and other documents which have been furnished by
customers of the Partnership for the purpose of establishing
or supporting any claim of tax exemption with respect to Taxes
collected by the Partnership from its customers.
3.5.8 For purposes of this Agreement:
"Tax Asset" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction or any
other credit or tax attribute that could reduce Taxes (including
deductions and credits related to alternative minimum Taxes and Tax basis
of assets).
"Tax Sharing Agreement" means an agreement or arrangement (whether
or not written) binding the Partnership that provides for the allocation,
apportionment, sharing or assignment of any Tax liability or benefit, or
the transfer or assignment of income, revenues, receipts, or gains for the
purpose of determining any person's Tax liability, but shall not include
the Partnership Agreement.
3.6 Additional Covenants of Seller and Parent. Seller and Parent
further covenant and agree that, except as otherwise agreed to
in writing by Buyer:
3.6.1 Restructuring of Certain Leases. Seller shall use all
commercially reasonable efforts to achieve the results
contemplated by Schedule 3.6.1. Seller shall comply with all
related requirements of Schedule 3.6.1.
3.6.2 Termination of Various Agreements.
(a) The Partnership shall terminate, effective upon or prior to
Closing, all of the Authorized Agent Agreements listed in
Schedule 2.1.5(a), by giving written notice of termination
prior to Closing in accordance with the requirements of such
Agreements, except that Seller shall cause the Authorized
Agent
54
Agreement between the Partnership and ShenTel Service Company,
an affiliate of Seller, to be terminated instead by written
agreement executed by the Partnership and ShenTel Service
Company. Copies of such termination notices and such written
agreement shall be delivered to Buyer prior to Closing.
(b) The Partnership shall terminate the Marketing and Cellular
Radio Service Agreement dated September 30, 1997 between the
Partnership and Xxxx Telecom, Inc. effective upon or prior to
Closing, by giving written notice of termination prior to
Closing in accordance with the requirements of such Agreement.
A copy of such termination notice shall be delivered to Buyer
prior to Closing.
(c) The parties acknowledge that, as described in greater detail
in Schedule 2.1.5(a), the Partnership has been leasing the
space used for the Partnership's Winchester retail store from
ShenTel Service Company, an affiliate of Seller, and that no
written lease has been executed with respect to the use of
such space by the Partnership. The parties further acknowledge
that certain computer equipment of H.O. Software, Inc.
("H.O.") that is used in connection with H.O.'s provision of
services to the Partnership under the License Agreement dated
December 22, 1993 between the Partnership (as successor to
Virginia 10 RSA Resale Limited Partnership) and H.O. is
located at the Winchester retail store. Seller shall cause
this oral lease and all other rights and obligations of the
Partnership and ShenTel Service Company with respect to the
use of such space by the Partnership (except as set forth in
this Section 3.6.2(c) below) to be terminated prior to Closing
by written agreement executed by the Partnership and ShenTel
Service Company in form and substance reasonably satisfactory
to Buyer. Such written agreement shall also contain a
provision, in form and substance reasonably satisfactory to
Buyer, permitting H.O.'s computer equipment to remain where it
is currently located until termination of the License
Agreement with H.O., and permitting the Partnership and H.O.
to have access to such equipment to the extent reasonably
required during such period. A copy of such written agreement
shall be delivered to Buyer prior to Closing. Seller shall be
responsible for any damage to such computer equipment
resulting from lightning, water damage or other acts of God
during such period.
(d) The parties acknowledge that, as described in greater detail
in Schedule 2.1.5(a), the Partnership has been obtaining long
distance service from Shenandoah Long Distance Company, an
affiliate of Seller, and that no written agreement has been
executed with respect to the provision of such services to the
Partnership. Seller shall cause this oral agreement and all
other rights and obligations of the Partnership and Shenandoah
Long Distance Company with respect to the provision of such
services to the Partnership (except as may be set forth in the
Transition Services Agreement) to be terminated prior to
Closing by written agreement executed by the Partnership and
Shenandoah Long Distance Company in form and substance
reasonably
55
satisfactory to Buyer. A copy of such written agreement shall
be delivered to Buyer prior to Closing.
(e) Seller shall cause its affiliate, Shenandoah Telephone
Company, and the Partnership to execute a written agreement
prior to the Closing, in form and substance reasonably
satisfactory to Buyer, providing that Shenandoah Telephone
Company will not be obligated to provide services to the
Partnership after the Closing under the Affiliate Agreement
listed as item E7 on Schedule 2.1.5(a), and that the
Partnership will not be obligated to compensate Shenandoah
Telephone Company for any services performed after the Closing
under the Affiliate Agreement. A copy of such written
agreement shall be delivered to Buyer prior to Closing.
Following the Closing, Seller shall cause Shenandoah Telephone
Company to make application to the Virginia State Corporation
Commission to remove the Partnership as a party to the
Affiliate Agreement.
3.6.3 Contour Extension Agreements. For all contours for which
contour extension agreements are required to be obtained by
the Partnership pursuant to 47 C.F.R Section 22.912, Seller
shall provide to Buyer copies of all such contour extension
agreements (or amendments necessary to conform the contour
extension agreement to areas actually covered by the
Partnership where the current extension is not within the
extension authorized under the terms of the extension
agreement). For contour extensions of the Partnership for
which de minimis extensions were specifically authorized by
the FCC, Seller shall provide copies of the FCC applications
for such cell sites wherein the de minimis extension was
granted, in lieu of providing extension agreements. For other
cell sites of the Partnership which were authorized prior to
the adoption of the extension agreement requirements of 47
C.F.R Section 22.912 and for which contour extensions resulted
solely from the change in the FCC definition of a cell site
service area boundary from 39 dBu to 32 dBu, Seller shall
provide Buyer with documentation that the original 39 dBu
service contour did not extend beyond the market boundary, in
lieu of providing extension agreements.
3.6.4 Recording of Memoranda of Leases. With respect to each lease
between Seller or an affiliate of Seller and a third party
that is identified in Schedule 2.1.9(c) and that relates to
any Leased Property, and with respect to the lease between
Seller's sublessor and the prime lessor relating to the Bear
Garden site (collectively, the "Leases Requiring MOL's"),
Seller shall use commercially reasonable efforts to obtain, as
soon as practicable after the date hereof, a Memorandum of
Lease in customary form, executed by Seller and the relevant
landlord (or, in the case of the Bear Garden lease referred to
above, executed by Seller's sublessor and the prime lessor).
Promptly after Seller obtains any such Memorandum of Lease,
Seller shall record such Memorandum of Lease with the
appropriate recording office and shall furnish a copy of the
recorded document bearing evidence that it has been recorded,
or other reasonable evidence of such recording, to Buyer.
56
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
4.1 Conditions Precedent to Obligations of Buyer. All obligations
of Buyer under this Agreement are subject to the fulfillment
or satisfaction, prior to or at the Closing, of each of the
following conditions precedent, which may be waived in writing
in whole or in part by Buyer:
4.1.1 Representations and Warranties True as of the Closing. All of
the representations and warranties of Seller and Parent
contained in this Agreement or in any Transaction Document
(considered without regard to materiality qualifiers contained
in such representations and warranties) shall have been
accurate in all respects as of the date of this Agreement and
shall be accurate in all respects on the Closing Date as if
made on the Closing Date (except where such representation or
warranty speaks as of a specific date or as otherwise waived
in writing by Buyer), without giving effect to any updated
information disclosed by Seller or Parent to Buyer pursuant to
Section 3.1.9, except that inaccuracies in such
representations and warranties shall be disregarded for
purposes of this Section 4.1.1 if the aggregate effect of such
inaccuracies does not constitute, and could not reasonably be
expected to constitute, a Seller Material Adverse Effect. For
purposes of this Agreement, "Seller Material Adverse Effect"
means a material adverse effect on the business, assets,
Liabilities, properties, conditions (financial or otherwise)
or results of operations of the Business or the Partnership,
taken as a whole, provided, however, that any adverse effect
arising out of any of the following shall not constitute a
Seller Material Adverse Effect: (i) changes in general
economic conditions or changes affecting the wireless
telecommunications industry generally, (ii) any effect caused
by either (A) a breach by Buyer (or an affiliate of Buyer) of
its obligations under the Switch Sharing Agreement, (B) the
failure by Buyer (or an affiliate of Buyer) to provide to the
Partnership the benefits of any modification to the
functionality of the Switch that Buyer (or an affiliate of
Buyer) makes for its own purposes, or (iii) any generally
applicable change in law, rule or regulation or GAAP.
4.1.2 Compliance with this Agreement. Seller and Parent shall have
performed and complied with all covenants and agreements
required by this Agreement to be performed or complied with by
them prior to or at the Closing, other than the covenants
contained in Sections 3.1.1(h) and 3.1.1(i). Seller and Parent
shall have performed and complied with the covenants contained
in Sections 3.1.1(h) and 3.1.1(i), except where the failure to
so perform or comply would not have a Seller Material Adverse
Effect.
4.1.3 Closing Certificates. Buyer shall have received a certificate
from Seller and Parent, dated the Closing Date, certifying in
such detail as Buyer may
57
reasonably request that the conditions specified in Sections
4.1.1 and 4.1.2 have been fulfilled, and a certificate of the
Secretaries of Seller and Parent, in form and substance
reasonably satisfactory to Buyer, with respect to Seller's and
Parent's organizational documents and authorizing resolutions
and the incumbency and signatures of the persons authorized to
execute Transaction Documents on their behalf.
4.1.4 Opinions of Counsel for Seller and Parent. Seller and Parent
shall have caused Xxxxx & Xxxxxxx L.L.P. or other counsel
reasonably satisfactory to Buyer to deliver to Buyer the
written opinions set forth on Exhibit C hereto, which opinions
shall be dated the Closing Date and shall contain only such
changes as shall be in form and substance satisfactory to
Buyer.
4.1.5 No Threatened or Pending Litigation. On the Closing Date, no
suit, action or other proceeding, or injunction or final
judgment relating thereto, shall be threatened or be pending
before any court or governmental or regulatory official, body
or authority in which it is sought to restrain or prohibit the
consummation of the transactions contemplated hereby or to
obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated
hereby, or which could reasonably be expected to have a Seller
Material Adverse Effect and no investigation that might result
in any such suit, action or proceeding shall be pending or
threatened.
4.1.6 Material Adverse Effect. No event or events shall have
occurred which alone or in the aggregate shall have had or
shall be reasonably likely to have a Seller Material Adverse
Effect.
4.1.7 Regulatory Approvals. All consents, approvals and waivers from
and notifications to governmental or regulatory bodies
necessary in connection with the consummation of the
transactions contemplated hereby shall have been obtained or
made including all consents, approvals and actions by the FCC
and the SCC (if any), and they shall have been obtained or
made pursuant to a Final Order, free of any conditions adverse
to Buyer, the Partnership or the Business (other than
conditions set forth in, or imposed pursuant to, Section 47 of
the Code of Federal Regulations). "Final Order" means an
action or decision as to which (a) no request for a stay is
pending, no stay is in effect, and any deadline for filing
such request that may be designated by statute or regulation
has passed, (b) no petition for rehearing or reconsideration
or application for review is pending and the time for the
filing of any such petition or application has passed, (c) the
relevant governmental or regulatory body does not have the
action or decision under reconsideration on its own motion and
the time within which it may effect such reconsideration has
passed, and (d) no appeal is pending or in effect and any
deadline for filing any such appeal that may be designated by
statute or rule has passed.
58
4.1.8 Required Consents. Seller shall have received (or given, in
the case of notifications or deliveries constituting Required
Consents) all Required Consents and shall have delivered to
Buyer copies or other evidence thereof. In addition, Buyer
shall have received (or given, in the case of notifications or
deliveries constituting Buyer Required Consents) all Buyer
Required Consents. Seller shall have received the consent of
Alltel to the transactions contemplated hereby, including the
continuation of the business of the Partnership with Buyer (or
its assignee) as the General Partner of the Partnership. In
the event that Buyer elects to waive Seller's requirement to
obtain any particular Required Consent (or the consent of
Alltel) in order to proceed to Closing, such waiver shall
constitute a waiver of any remedies of Buyer, a release of
Seller and Parent from any indemnification obligations, and an
agreement by Buyer to reimburse, indemnify and hold harmless
any Indemnified Seller Party against and in respect of any and
all Losses incurred or suffered by any Indemnified Seller
Party with respect to the failure to obtain such Required
Consent (or consent of Alltel) prior to Closing.
4.1.9 Master Site Agreement. Seller and the Partnership shall have
executed and delivered (a) a Master Site Agreement in the form
set forth on Exhibit D hereto, containing only such changes as
shall be in form and substance satisfactory to Buyer and
Seller (the "Master Site Agreement"), (b) a Lease Supplement
with respect to each site covered by the Master Site Agreement
(as identified in Schedule 2.1.9(c)), in the form set forth on
Exhibit A to the form of Master Site Agreement, containing
only such changes as shall be in form and substance reasonably
satisfactory to Buyer and Seller (the "Lease Supplements"),
and (c) a Memorandum of Lease Supplement with respect to each
such site, in form and substance reasonably satisfactory to
Buyer and Seller.
4.1.10 Transition Services Agreement. If Buyer requests Seller to
provide any additional or modified transition service that
Buyer is entitled to request Seller to provide pursuant to
Section 1.3 of the Transition Services Agreement dated the
date hereof among Buyer, Seller and Parent (the "Transition
Services Agreement"), Seller shall have furnished the
information required by such Section with respect thereto and
shall not have expressed an intention not to comply with its
obligations under such Section with respect thereto following
the Closing.
4.1.11 ROFR. One of the following shall have occurred: (i) Alltel
shall have waived in writing its right to exercise its ROFR,
(ii) Alltel shall have notified Seller in writing that it has
elected not to exercise its ROFR (or that it is withdrawing a
previous exercise of its ROFR and is electing instead not to
exercise its ROFR), (iii) Alltel shall have failed to exercise
its ROFR within 40 days after its receipt of the ROFR Notice
from Seller, or (iv) all of the following shall have occurred:
(A) Alltel shall have validly exercised its ROFR, (B) Alltel
and Buyer shall have executed the GP Designation Agreement and
delivered it to the Partnership, (C) Alltel and Seller shall
have
59
entered into a partnership interest purchase agreement, on
substantially the same terms as this Agreement, with respect
to Alltel's purchase of a 17% interest in the Partnership from
Seller (the "Alltel Purchase Agreement"), and (D) the closing
of the transaction contemplated by the Alltel Purchase
Agreement shall have taken place contemporaneously with the
Closing.
4.1.12 Restructuring of Certain Leases. The results that Seller is
obligated to use its commercially reasonable efforts to
achieve pursuant to Section 3.6.1 shall have been achieved,
and copies of all related documents shall have been delivered
to Buyer.
4.1.13 Recording of Memoranda of Leases. Seller shall have obtained,
recorded and furnished to Buyer Memoranda of Leases in
accordance with the provisions of Section 3.6.4 with respect
to at least nine of the Leases Requiring MOL's.
4.2 Conditions Precedent to the Obligations of Seller. All
obligations of Seller under this Agreement are subject to the
fulfillment or satisfaction, prior to or at the Closing, of
each of the following conditions precedent, which may be
waived in writing in whole or in part by Seller:
4.2.1 Representations and Warranties True as of the Closing Date.
All of the representations and warranties of Buyer contained
in this Agreement or in any Transaction Document shall have
been accurate in all respects as of the date of this Agreement
and on the Closing Date as if made on the Closing Date (except
where such representation or warranty speaks as of a specific
date or as otherwise waived in writing by Seller), without
giving effect to any updated information disclosed by Buyer to
Seller pursuant to Section 3.2.3, except that inaccuracies in
such representations and warranties shall be disregarded for
purposes of this Section 4.2.1 if the aggregate effect of such
inaccuracies would not result in a material adverse effect on
the ability of Buyer to complete the transactions contemplated
by this Agreement ("Buyer Material Adverse Effect").
4.2.2 Compliance with this Agreement. Buyer shall have performed and
complied with all covenants and agreements required by this
Agreement to be performed or complied with by it prior to or
at the Closing.
4.2.3 Closing Certificate. Seller shall have received a certificate
from Buyer dated the Closing Date certifying in such detail as
Seller may reasonably request that the conditions specified in
Sections 4.2.1 and 4.2.2 have been fulfilled, and a
certificate of an officer of Buyer, in form and substance
reasonably satisfactory to Seller, with respect to Buyer's
authorizing resolutions and the incumbency and signatures of
the persons authorized to execute Transaction Documents on
Buyer's behalf.
60
4.2.4 No Threatened or Pending Litigation. On the Closing Date, no
suit, action or other proceeding, or injunction or final
judgment relating thereto, shall be threatened or be pending
before any court or governmental or regulatory official, body
or authority in which it is sought to restrain or prohibit the
consummation of the transactions contemplated hereby or to
obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated
hereby, and no investigation that might result in any such
suit, action or proceeding shall be pending or threatened.
4.2.5 Regulatory Approvals. All consents, approvals and waivers from
and notifications to governmental or regulatory bodies
necessary to permit the consummation of the transactions
contemplated hereby shall have been obtained or made including
all consents, approvals and actions by the FCC and the SCC (if
any), and they shall have been obtained or made pursuant to a
Final Order, free of any conditions adverse to Seller.
4.2.6 Master Site Agreement. Buyer shall have executed and delivered
to Seller the Master Site Agreement, containing only such
changes as shall be in form and substance satisfactory to
Seller and Buyer.
4.2.7 ROFR. One of the following shall have occurred: (i) Alltel
shall have waived in writing its right to exercise its ROFR,
(ii) Alltel shall have notified Seller in writing that it has
elected not to exercise its ROFR (or that it is withdrawing a
previous exercise of its ROFR and is electing instead not to
exercise its ROFR), (iii) Alltel shall have failed to exercise
its ROFR within 40 days after its receipt of the ROFR Notice
from Seller, or (iv) all of the following shall have occurred:
(A) Alltel shall have validly exercised its ROFR, (B) Alltel
and Buyer shall have executed the GP Designation Agreement and
delivered it to the Partnership, (C) Alltel and Seller shall
have entered into the Alltel Purchase Agreement, and (D) the
closing of the transaction contemplated by the Alltel Purchase
Agreement shall have taken place contemporaneously with the
Closing.
ARTICLE V
INDEMNIFICATION
5.1 General Indemnification Obligation of Seller and Parent. From
and after the Closing, subject to the terms of Section 2.3 and
this Article V, Seller and Parent, jointly and severally (each
an "Indemnifying Seller Party" and collectively, the
"Indemnifying Seller Parties"), will reimburse, indemnify and
hold harmless Buyer, its partners and affiliates (including
the Partnership), and its and their respective directors,
officers, agents, employees, successors and assigns (each, an
"Indemnified Buyer Party") against and in respect of any and
all damages, losses, deficiencies, liabilities, assessments,
fines,
61
judgments, costs and other expenses (including reasonable
legal fees and expenses) (collectively, "Losses") incurred or
suffered by any Indemnified Buyer Party that result from,
relate to or arise out of:
(a) any misrepresentation, breach of warranty or nonfulfillment of
any agreement or covenant on the part of Seller or Parent
under this Agreement or any Transaction Document; any and all
claims made by third parties that arise out of, are based upon
or allege any such misrepresentation, breach or nonfulfillment
or that are inconsistent with the accuracy of any such
representation or warranty or the fulfillment of any such
agreement or covenant, and any and all investigations, audits
or proceedings by third parties for the purpose of determining
whether to make such a claim;
(b) subject to the provisions of Section 1.4(h), any event that
occurred prior to the Closing or any action or inaction prior
to the Closing of the Partnership, Seller or Parent, or any of
their respective partners, directors, officers, employees,
agents, affiliates, representatives or subcontractors; and any
and all actions, suits, claims, proceedings or investigations
brought by a third party against any Indemnified Buyer Party
that arise out of, result from, are based upon or allege any
such event, action or inaction; provided, however, that Seller
and Parent shall not reimburse, indemnify and hold harmless
any Indemnified Buyer Party under this subparagraph for any
Losses that result from, relate to or arise out of (i)
Hazardous Materials, Environmental Laws or environmental
conditions; or (ii) changes in general economic conditions or
changes affecting the wireless telecommunications industry
generally, including any industry wide suit, action or
proceeding related to the Business whether or not such event,
action or inaction occurred prior to the Closing;
(c) any and all Tax assessments relating to the periods or
portions thereof ending on or prior to the Closing Date
against any Indemnified Buyer Party or the Partnership's
assets that relate to the Partnership or arise out of the
Business prior to Closing or as a result of the transactions
contemplated hereby (including, but not limited to, amounts
payable under Section 6.3 hereof); or
(d) claims, demands, proceedings or investigations initiated by
unrelated third parties with respect to Discharges or
potential Discharges of Hazardous Materials, which Discharges
or potential Discharges are listed on Schedule 2.1.8(d) or
2.1.8(l), but only to the extent such Losses arise from
environmental conditions (i) existing at sites identified on
those schedules as sites 4 and 17 as of the Closing; or (ii)
existing at sites 3, 16 and 18 on or after the Closing.
5.2 General Indemnification Obligations of Buyer. From and after
the Closing, Buyer will reimburse, indemnify and hold harmless
Seller, Parent and their respective directors, officers,
agents, employees, successors and assigns (each, an
"Indemnified Seller Party") against and in respect of any and
all Losses
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incurred or suffered by any Indemnified Seller Party that
result from, relate to or arise out of:
(a) any misrepresentation, breach of warranty or nonfulfillment of
any agreement or covenant on the part of Buyer under this
Agreement or any Transaction Document; and any and all claims
made by third parties that arise out of, are based upon or
allege any such misrepresentation, breach or nonfulfillment or
that are inconsistent with the accuracy of any such
representation or warranty or the fulfillment of any such
agreement or covenant, and any and all investigations, audits
or proceedings by third parties for the purpose of determining
whether to make such a claim;
(b) any event that occurred after the Closing or any action or
inaction after the Closing of the Partnership, Buyer or any of
their respective partners, directors, officers, employees,
agents, representatives or subcontractors; and any and all
actions, suits, claims, proceedings or investigations brought
by a third party against any Indemnified Seller Party that
arise out of, result from, are based upon or allege any such
event, action or inaction;
(c) as set forth in Section 4.1.8, the failure to obtain any
particular Required Consent (or consent of Alltel) prior to
Closing, in the event that Buyer elects to waive Seller's
requirement to obtain such Required Consent (or the consent of
Alltel) in order to proceed to Closing; or
(d) allegations related to actions or inactions of the Business
prior to the Closing pursuant to any wireless
telecommunications industry-wide suit, action or proceeding or
series of suits, actions or proceedings related to the
Business and other wireless telecommunications businesses,
including Buyer's business in a substantial number of markets
other than the Market, in which Seller or Parent is named as a
defendant and Buyer (or an affiliate of Buyer) is named as a
defendant in the same action, was named as a defendant in a
previous action by the same plaintiff or settled with the
plaintiff before the filing of the action against Seller or
Parent, in any such case with respect to Buyer's business in a
substantial number of markets other than the Market.
5.3 Indemnification Procedures.
(a) In the event that any claim or demand for which a party from
whom indemnification is sought (a "Defending Party") would be
liable to a party claiming indemnification under this Article
V (the "Asserting Party") is asserted against or sought to be
collected from an Asserting Party by a third party, the
Asserting Party shall give notice of such claim or demand
promptly to the Defending Party, which notice(s) shall specify
the nature of such claim or demand and the amount or the
estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such
claim and demand) (the "Claim Notice"). The Defending Party
shall have ten business days from the mailing of the Claim
Notice in accordance with
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Section 6.9 (the "Notice Period") to notify the Asserting
Party, (A) whether or not any of the Defending Parties
disputes its liability to the Asserting Party hereunder with
respect to such claim or demand and (B) if none of the
Defending Parties disputes its liability, whether or not any
of the Defending Parties desires, at its sole cost and
expense, to defend the Asserting Party against such claim or
demand.
(b) If any of the Defending Parties disputes its liability to the
Asserting Party hereunder with respect to such claim or demand
or the amount thereof, such dispute shall be resolved by a
civil action in a court of appropriate jurisdiction which may
be commenced by either party. During the Notice Period, no
such claim or demand may be settled by the Asserting Party.
Following the Notice Period and pending the resolution of any
dispute by a Defending Party of its liability with respect to
any claim or demand, such claim or demand may be settled by
the Asserting Party only with the prior written consent of the
Defending Party, which consent shall not be unreasonably
withheld; provided, however, that no such consent shall be
required if the settlement does not result in any Losses or if
it results only in Losses that the Asserting Party elects not
to seek to collect from such Defending Party.
(c) Subject to Section 3.5.4, if the Defending Party notifies the
Asserting Party within the Notice Period that it does not
dispute its liability to the Asserting Party hereunder and
that such Defending Party desires to defend the Asserting
Party against such claim or demand (including any Tax audit)
then, except as hereinafter provided, such Defending Party
shall have the right, together with the other Defending
Parties who have notified the Asserting Party that they desire
to defend the Asserting Party, to defend the Asserting Party
by appropriate proceedings, which proceedings shall be
promptly settled or prosecuted by it to a final conclusion;
provided, however, no Defending Party shall, without the prior
written consent of the Asserting Party, consent to the entry
of any judgment against the Asserting Party or enter into any
settlement or compromise which (i) does not include, as an
unconditional term thereof, the giving by the claimant or
plaintiff to the Asserting Party of a release, in form and
substance reasonably satisfactory to the Asserting Party from
all liability in respect of such claim or litigation or (ii)
includes terms and conditions which, in the reasonable
judgment of the Asserting Party, impose any burden, restraint,
cost, liability, duty or other obligation on, or otherwise
adversely affect, or have the potential to adversely affect,
the Asserting Party. If the Asserting Party desires to
participate in, but not control, any such defense or
settlement, it may do so at its sole cost and expense. If, in
the reasonable opinion of the Asserting Party, any such claim
or demand or the litigation or resolution of any such claim or
demand involves an issue or matter which could have a material
adverse effect on the business, operations, assets, properties
or prospects of the Partnership or the Asserting Party,
including the administration of the tax returns and
responsibilities under the tax laws of any Asserting Party,
then the Asserting Party shall have the right to control the
defense or settlement of any such claim or demand, and its
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reasonable costs and expenses (including reasonable attorneys'
fees and expenses) shall be included as part of the
indemnification obligations of the Defending Parties
hereunder; provided, however, that, except as permitted by
Section 3.5.4, the Asserting Party shall not settle any such
claim or demand without the prior written consent of the
appropriate Defending Party, which consent shall not be
unreasonably withheld. If the Asserting Party should elect to
exercise such right, the Defending Parties shall have the
right to participate in, but not control, the defense or
settlement of such claim or demand at their sole cost and
expense.
(d) If any Defending Party does not dispute its liability to the
Asserting Party hereunder and elects not to defend the
Asserting Party against such claim or demand, whether by not
giving the Asserting Party timely notice as provided above or
otherwise, then the amount of any such claim or demand, or if
the same be defended by the Asserting Party (but no Asserting
Party shall have any obligation to defend any such claim or
demand), then that portion thereof as to which such defense is
unsuccessful, and the Asserting Party's reasonable costs and
expenses in conducting such defense (including reasonable
attorneys' fees and expenses) in each case shall be
conclusively deemed to be a liability of the Defending
Parties.
(e) In the event an Asserting Party should have a claim against a
Defending Party hereunder that does not involve a claim or
demand being asserted against or sought to be collected from
it by a third party, the Asserting Party shall promptly send a
Claim Notice with respect to such claim to Seller. If any
Defending Party disputes its liability with respect to such
claim or demand, such dispute shall be resolved by a civil
action in a court of appropriate jurisdiction which may be
commenced by either party; and if any Defending Party does not
notify the Asserting Party within the Notice Period that it
disputes such claim, the amount of such claim shall be
conclusively deemed a liability of the Defending Parties
hereunder. The failure of any indemnified party to give an
indemnifying party a Claim Notice shall not relieve the
indemnifying party from any liability in respect of such
claim, demand or action which it may have to such indemnified
party on account of the indemnity agreement of such
indemnifying party contained in this Article V, except to the
extent such indemnifying party can establish actual prejudice
and direct damages as a result thereof.
(f) Nothing contained herein shall be deemed to prevent any
Asserting Party from making a claim hereunder for potential or
contingent claims or demands provided the Claim Notice sets
forth the specific basis for any such potential or contingent
claim or demand and the estimated amount thereof to the extent
then feasible and the Asserting Party has reasonable grounds
to believe that such a claim or demand will be made. Each
Claim Notice relating to a breach of any representation or
warranty contained in Article II hereof must be given prior to
the expiration date of the applicable survival period for such
representation or warranty, as set forth in Section 2.3
hereof. In the case of
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any Claim Notice submitted within the applicable time period
in accordance with the requirements of Section 2.3, the right
of the party submitting the claim that is the subject of such
Claim Notice to recover from the other party with respect to
such claim shall not be dependent on the claim being resolved
or the losses being incurred within such time period.
5.4 Payment.
(a) Upon a determination of liability under this Article V, the
appropriate party shall pay the indemnified party the amount
so determined within 10 business days after the date of such
determination. If there should be a dispute as to the amount
or manner of determination of any indemnity obligation owed
under this Agreement the party from which indemnification is
due shall nevertheless pay when due such portion, if any, of
the obligation as shall not be subject to dispute. The
difference, if any, between the amount of the obligation
ultimately determined as properly payable under this Agreement
and the portion, if any, theretofore paid shall bear interest
as provided below in Section 5.4(c). Upon the payment in full
of any claim, the party or entity making payment shall be
subrogated to the rights of the indemnified party against any
Person, firm, corporation or other entity with respect to the
subject matter of such claim.
(b) Any items as to which any Indemnified Buyer Party is entitled
to payment under this Agreement shall first be paid to the
Indemnified Buyer Party pursuant to the terms of the Escrow
Agreement, to the extent that the then outstanding amount of
the escrow funds is sufficient to pay such items. If the then
outstanding amount of the escrow funds is insufficient to pay
any such item in full (including if the escrow funds have been
released), the payment of such item as to which the
Indemnified Buyer Party is entitled to payment under this
Agreement and which is not able to be paid from the escrow
funds shall be the joint and several obligation of the
Indemnifying Seller Parties and the Indemnifying Seller
Parties shall make full payment of any and all such items to
the Indemnified Buyer Party within 10 business days after the
date of determination of liability.
(c) If all or part of any indemnification obligation under this
Agreement is not paid when due, then the indemnifying party
shall pay the indemnified party interest on the unpaid amount
of the obligation for each day from the date the amount became
due until payment in full, payable on demand, at the
fluctuating rate per annum which at all times shall be three
percentage points in excess of the "Prime Rate" published from
time to time in the "Money Rates" table of the Eastern Edition
of The Wall Street Journal.
5.5 Other Rights and Remedies. The indemnification rights of the
parties under this Article V are independent of and in
addition to any equitable rights or remedies, including
specific performance and right to rescission because of the
other parties' misrepresentation fundamentally affecting the
character of
66
the Business or the assets of the Partnership or fraud, and
any rights or remedies because of the other party's fraudulent
action, none of which rights or remedies shall be affected or
diminished hereby. Except for the foregoing, from and after
the Closing, the indemnifications set forth in this Article V
shall be the sole and exclusive remedies available to any
Indemnified Buyer Party or Indemnified Seller Party for any
claims arising out of or related to the transactions
contemplated by this Agreement, including any claims for
breaches of representations, warranties, covenants or
agreements contained in this Agreement, or any certificate
delivered pursuant to this Agreement or otherwise in
connection with this Agreement. Except in the case of fraud,
and except for its rights to indemnification under this
Agreement, Buyer releases Seller, Parent and their respective
affiliates from any liability to Buyer under Environmental
Laws in connection with the Business and the Business
Property.
5.6 Threshold and Cap.
(a) Notwithstanding anything to the contrary in this Agreement, an
Indemnifying Seller Party shall not be liable to or be
obligated to reimburse, indemnify and hold harmless any of the
Indemnified Buyer Parties until the aggregate amount of all
Losses actually incurred or actually recognized by the
Indemnified Buyer Parties and for which any Indemnified Buyer
Party is entitled to receive reimbursement or be indemnified
or held harmless under this Agreement ("Indemnified Buyer
Losses") exceeds $250,000 (the "Threshold Amount"), and then
the Indemnifying Seller Parties shall be liable to and be
obligated to reimburse, indemnify and hold the Indemnified
Buyer Parties harmless hereunder for all amounts including the
Threshold Amount; provided that the Threshold Amount shall not
apply to (i) any intentional or willful misrepresentations by
Seller or Parent, any intentional or willful breaches of
Section 3.1.1(h) or Section 3.1.1(i) by Seller or Parent or
any breaches of any other covenants or agreements by Seller or
Parent, (ii) indemnification pursuant to Section 5.1(a) with
respect to any breach of Section 2.1.1 [authority], 2.1.2
[capitalization], 2.1.7 [taxes], 2.1.9(a) or (b) [title],
2.1.18 [ERISA], 2.1.19 [related party transactions] or 2.1.22
[options to acquire assets], or (iii) indemnification pursuant
to Section 5.1(c) or Section 5.1(d) (in all cases under this
subsection (iii), whether or not such indemnification would
also be available under Section 5.1(a) or Section 5.1.(b)).
Solely for purposes of determining whether the Threshold
Amount has been exceeded hereunder, calculations of
Indemnified Buyer Losses shall be made without regard to
materiality qualifiers contained in the applicable
representations and warranties in this Agreement.
Notwithstanding any other provision of this Agreement to the
contrary, Buyer acknowledges and agrees that the maximum
aggregate liability of Indemnifying Seller Parties pursuant to
this Article V to Indemnified Buyer Parties shall not exceed
$25 million, provided however, that from and after the first
anniversary of the Closing Date, such amount shall be reduced
to the lesser of (i) $25 million, or (ii) the sum of $15
million, plus the amount of any claims paid by the
Indemnifying
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Seller Parties prior to the first anniversary of the Closing
Date and the amount of any then pending claims submitted in
good faith for which the Indemnifying Seller Parties are
ultimately responsible (the "Indemnification Cap"), and
provided further, that the Indemnification Cap shall not apply
to any intentional or willful misrepresentations by Seller or
Parent, any misrepresentations under Section 2.1.2(b) or
Section 2.1.9(a) by Seller or Parent, any intentional or
willful breaches of Section 3.1.1(h) or Section 3.1.1(i) by
Seller or Parent or any breaches of any other covenants or
agreements by Seller or Parent.
(b) Notwithstanding anything to the contrary in this Article V,
Buyer shall not be liable to or be obligated to reimburse,
indemnify and hold harmless any of the Indemnified Seller
Parties until the aggregate amount of Losses actually incurred
or actually recognized by the Indemnified Seller Parties and
for which any Indemnified Seller Party is entitled to receive
reimbursement or be indemnified or held harmless under this
Agreement ("Indemnified Seller Losses") exceeds the Threshold
Amount, and then Buyer shall be liable to and be obligated to
reimburse, indemnify and hold the Indemnified Seller Parties
harmless hereunder for all amounts including the Threshold
Amount; provided that this Section 5.6(b) shall not apply to
(i) any intentional or willful misrepresentations or any
breaches of covenants or agreements by Buyer or (ii)
indemnification pursuant to Section 5.2(c). Solely for
purposes of determining whether the Threshold Amount has been
exceeded hereunder, calculations of Indemnified Seller Losses
shall be made without regard to materiality qualifiers
contained in the applicable representations and warranties in
this Agreement.
(c) Notwithstanding any other provision of this Agreement to the
contrary, Losses shall include a party's indirect,
consequential or incidental damages or other special damages
or lost profits, regardless of the theory of recovery, but
shall not include exemplary or punitive damages (except to the
extent payable to a third party). Notwithstanding any other
provision of this Agreement to the contrary, in the event that
the Partnership seeks to be indemnified pursuant to this
Agreement for any Loss, the aggregate liability of the
Indemnifying Seller Parties to the Partnership, subject to
subsection (a) above, shall be limited to 66% of the
indemnifiable Loss. The foregoing limitation shall not be
construed to prevent Buyer from seeking, and Buyer shall be
entitled to seek, indemnification from the Indemnifying Seller
Parties for its 66% share of the Partnership's Loss (in lieu
of the Partnership seeking indemnification for 100% of such
Loss), and the foregoing limitation shall not be applicable in
such case.
(d) Notwithstanding any other provision of this Agreement to the
contrary, Losses shall not include any costs or expenses
incurred by Buyer in performing a Remediation, unless Buyer
performs the Remediation in accordance with Section 5.7 of
this Agreement.
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5.7 Environmental Remediation. Seller shall have the right to
conduct and control the management of a Remediation that is
subject to indemnification pursuant to this Agreement, except
that Seller shall allow Buyer to perform a Remediation if (a)
Buyer receives an order from a governmental entity directing
it to do so, and (b) Buyer has submitted a Claim Notice to
Seller with respect to such order in accordance with Section
5.3 and Seller (i) has disputed its liability or otherwise
declined to perform the Remediation in accordance with Section
5.3, or (ii) agreed to perform the Remediation but failed to
diligently pursue the Remediation to completion within a
reasonable period of time after receiving written notice of
such failure from Buyer. In the event Buyer performs any
Remediation hereunder, Buyer shall employ cleanup standards no
more stringent than those allowed by the governmental entity
exercising jurisdiction over the Remediation. In the event
Seller or Buyer performs a Remediation hereunder, the
performing party shall keep the other party reasonably
apprised of the progress of its work. For purposes of this
Section, "reasonably apprised" shall mean providing the other
party with copies of all material correspondence to or from
any governmental authority with jurisdiction over the
Remediation, and such other relevant information as the other
party shall reasonably request. For purposes of this
Agreement, "Remediation" shall mean any investigation,
clean-up, removal action, remedial action, restoration,
repair, response action, corrective action, monitoring,
sampling and analysis, installation, reclamation, closure, or
post-closure in connection with the threatened or actual
Discharge of Hazardous Materials.
ARTICLE VI
MISCELLANEOUS
6.1 Termination.
(a) Anything herein or elsewhere to the contrary notwithstanding,
this Agreement may be terminated at any time before the
Closing Date only as follows:
(i) by mutual written consent of Seller and Buyer or by either
party if Closing is prohibited by change in law;
(ii) by Seller, at any time if all of the representations and
warranties of Buyer contained herein or in any Transaction
Document (considered collectively), or if any such
representation and warranty (considered individually), in each
case without giving effect to any updated information
disclosed by Buyer to Seller pursuant to Section 3.2.3,
were/was incorrect in any material respect on the date hereof
or shall become incorrect in any material respect prior to
Closing, or if Buyer failed to comply in any material respect
with any of the covenants or obligations set forth herein, in
either case such that the conditions set forth in Section
4.2.1 or Section 4.2.2 would not be satisfied at that time,
provided
69
that Seller shall have promptly given Buyer written notice of
same and Buyer shall not have cured same within thirty (30)
days of receipt of said notice;
(iii) by Buyer, at any time if (A) all of the representations and
warranties of Seller and Parent contained herein or in any
Transaction Document (considered collectively, without regard
to materiality qualifiers contained in such representations
and warranties), or if any such representation and warranty
(considered individually), other than any of the
representations and warranties (or portions thereof) which
contain materiality qualifiers, in each case without giving
effect to any updated information disclosed by Seller or
Parent to Buyer pursuant to Section 3.1.9, were/was incorrect
in any material respect on the date hereof or shall become
incorrect in any material respect prior to Closing, (B) if any
of the representations and warranties of Seller and Parent (or
portions thereof) which contain materiality qualifiers
(considered individually), in each case without giving effect
to any updated information disclosed by Seller or Parent to
Buyer pursuant to Section 3.1.9, were/was incorrect in any
respect on the date hereof or become/becomes incorrect in any
respect prior to Closing, or (C) Seller or Parent failed to
comply in any material respect with any of the covenants or
obligations set forth herein, in each case such that the
condition set forth in Section 4.1.1 or Section 4.1.2 would
not be satisfied at that time, provided that Buyer shall have
promptly given Seller and Parent written notice of the same
and Seller and Parent shall not have cured same within thirty
(30) days of receipt of said notice;
(iv) by either Buyer or Seller, if, through no fault of such
terminating party or its directors, officers, partners,
members, shareholders or affiliates, the Required Consent of
Alltel required pursuant to Section 13.1 of the Partnership
Agreement has not been obtained by the date 90 days following
the date the ROFR Notice was delivered in accordance with the
terms of the Partnership Agreement; or
(v) by either Buyer or Seller, if, through no fault of such
terminating party or its directors, officers, partners,
members, shareholders or affiliates, the Closing does not
occur by the date that is nine months after the date of this
Agreement, unless extended by the parties in writing.
(b) In the event of the termination of this Agreement pursuant to
the provisions of Section 6.1(a), this Agreement shall become
void and have no effect, without any liability on the part of
any of the parties or their shareholders, partners, directors,
trustees, beneficiaries or officers in respect of this
Agreement except as set forth below in this Section 6.1(b). If
the termination was pursuant to Sections 6.1(a)(ii) or
6.1.(a)(iii), the breaching party shall be liable to the other
party for all costs and expenses of such other party in
connection with the preparation, negotiation, execution and
performance of this Agreement, and, in addition to the
foregoing, such other party may pursue all other remedies
available to it at law or in equity.
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6.2 Expenses. Except as otherwise provided in this Agreement,
Seller and Parent, on the one hand, and Buyer, on the other
hand, shall each pay their own expenses incidental to the
preparation of this Agreement, the carrying out of the
provisions of this Agreement and the consummation of the
transactions contemplated hereby. Buyer and Seller shall each
be responsible for half of the filing fees associated with
making the application to the FCC for consent to the
transactions contemplated by this Agreement and Buyer and
Seller shall each be responsible for its own legal or other
fees, costs and expenses incurred in connection with such
application.
6.3 Sales, Transfer and Documentary Taxes. All income, franchise,
franchise telephone tax, gross receipt, value added, transfer,
documentary, sales, use, stamp and registration Taxes
(including any penalties and interest) incurred in connection
with this Agreement shall be paid by Seller when due. Seller
will, at its own expense, file all necessary tax returns and
other documentation with respect to all such Taxes, and, if
required by applicable law, Buyer will, and will cause its
affiliates to, join in the execution of any such Tax returns
and other documentation. Seller shall submit to Buyer proof of
payment of said sales and transfer taxes within 90 days
following the Closing.
6.4 Further Assurances. Seller and Parent from time to time after
the Closing, at Buyer's request, will execute, acknowledge and
deliver to Buyer such other instruments of conveyance and
transfer and will take such other actions and execute and
deliver such other documents, certifications and further
assurances as may reasonably be required in order to vest the
Partnership Interest more effectively in Buyer. Each of the
parties hereto will cooperate with the other and execute and
deliver to the other parties hereto such other instruments and
documents and take such other actions as may be reasonably
requested from time to time by any other party hereto as
necessary to carry out, evidence and confirm the intended
purposes of this Agreement.
6.5 Confidentiality Undertaking by Seller and Parent. From and
after the consummation of the Closing, neither Seller nor
Parent shall take any action whatsoever which would result in
disclosure to any third party of Confidential Business
Information (as defined below), nor shall Seller or Parent use
or permit any Related Party to use any Confidential Business
Information to solicit customers or former customers of the
Business or otherwise for its own benefit; provided that
neither of such parties shall be required to maintain
confidential any information which: (a) is in the published
literature or known to the public prior to the date hereof or
becomes published in the literature or known to the public
after the date hereof through no fault of such parties; (b) is
obtained from a third party which has the right to disclose
such information; or (c) is required by law to be disclosed.
Notwithstanding anything herein to the contrary, Seller,
Parent or any Related Party shall be permitted (i) to make
general solicitations to the public, and (ii) to use Shentel
Information (as defined below) to solicit customers or
otherwise for its own benefit, even if, in
71
the case of clause (i) and (ii), solicitations are made to
current or former customers of the Business.
For purposes of this Agreement, the term "Confidential Business
Information" means the customer list of the Business, or any part thereof or any
information contained therein, or any other confidential or proprietary
information of or about the Business, or any information provided to Seller
pursuant to Section 3.3.3.
For purposes of this Agreement, the term "Shentel Information" means
any customer list of any business of Seller, Parent or any Related Party other
than the Business, or any part thereof or any information contained therein, or
any other information of or about any such business.
6.6 Contents of Agreement; Parties in Interest. This Agreement,
including its Schedules and Exhibits, which are specifically
incorporated herein, together with the Transition Services
Agreement, the Master Site Agreement and the letter agreement
dated October 1, 1999 between Seller and GTE Wireless
Incorporated, a predecessor in interest of Buyer, which
contains provisions regarding confidentiality obligations and
related matters, set forth the entire understanding of the
parties hereto with respect to the transactions contemplated
hereby and supersede any and all previous agreements and
understandings, oral or written, between or among the parties
regarding the transactions contemplated hereby. This Agreement
shall not be amended or modified except by written instrument
duly executed by each of the parties hereto.
6.7 Assignment and Binding Effect. This Agreement may not be
assigned in whole or in part by any party hereto without the
prior written consent of the other party, provided that upon
prior written notice to Seller and if such assignment would
not result in undue delays in obtaining the FCC consent
contemplated by Section 3.3.1(a), Buyer shall have the right
to assign its rights and/or obligations under this Agreement
in whole or in part to one or more of its wholly-owned
affiliates or to Alltel. No assignment shall relieve Buyer of
its responsibility for the performance of any obligation of
Buyer under this Agreement.
6.8 Waiver. No waiver of any term or provision of this Agreement
shall be effective unless in writing, signed by the party
against whom enforcement of the same is sought. The grant of a
waiver in one instance does not constitute a continuing waiver
in all similar instances. No failure to exercise, and no delay
in exercising, by any party, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof.
6.9 Notices. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted
hereunder shall be in writing and shall be deemed given only
if delivered personally or sent by registered or
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certified mail or by Federal Express or other overnight mail
service, postage prepaid, or by fax, with written confirmation
to follow, as follows:
If to Buyer, to:
Cellco Partnership
000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Facsimile: (000) 000-0000
With a required copy to:
Cellco Partnership
000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Seller, to:
Shenandoah Mobile Company
000 Xxxxx Xxxx Xxxxxx
X.X. Xxx 000 Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx, President
Facsimile: (000) 000-0000
With a required copy to:
If to Parent, to:
Shenandoah Telecommunications Company
000 Xxxxx Xxxx Xxxxxx
X.X. Xxx 000 Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx, President
Facsimile: (000) 000-0000
With a required copy to:
Xxxxx & Xxxxxxx L.L.P.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 0000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
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or to such other address or facsimile numbers as the addressee may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, demand, waiver, consent, approval or other communication will be deemed
to have been given as of the date so delivered.
6.10 Remedies. The parties acknowledge and agree that the
Partnership Interest is unique and that remedies at law,
including monetary damages, will be inadequate in the event of
a breach by Seller in the performance of its obligations under
this Agreement. Accordingly, the parties agree that in the
event of any such breach by Seller, Buyer shall be entitled to
a decree of specific performance pursuant to which the
breaching party is ordered to affirmatively carry out its
obligations under this Agreement. The foregoing shall not be
deemed to be or construed as a waiver or election of remedies
by Buyer, and Buyer expressly reserves any and all rights and
remedies available to it at law or in equity in the event of
any breach or default by Seller under this Agreement.
6.11 Schedules and Exhibits. All Exhibits and Schedules referred to
herein are intended to be and hereby are specifically made a
part of this Agreement.
6.12 Governing Law. This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the
State of New Jersey without reference to its choice of law
rules. In connection with any controversy arising out of or
related to this Agreement, Seller, Parent and Buyer hereby
irrevocably consent to the jurisdiction of the United States
District Court for the District of New Jersey, if a basis for
federal court jurisdiction is present, and, otherwise, in the
state courts of the State of New Jersey. Seller, Parent and
Buyer each irrevocably consents to service of process out of
the aforementioned courts and waives any objection which it
may now or hereafter have to the laying of venue of any action
or proceeding arising out of or in connection with this
Agreement brought in the aforementioned courts and hereby
further irrevocably waives and agrees not to plead or claim in
such courts that any such action or proceeding brought in such
courts has been brought in an inconvenient forum.
6.13 No Benefit to Others. The representations, warranties,
covenants and agreements contained in this Agreement are for
the sole benefit of the parties hereto and, in the case of
Article V hereof, the other indemnified parties, and their
heirs, executors, administrators, legal representatives,
successors and assigns, and they shall not be construed as
conferring any rights on any other Persons.
6.14 Headings, Gender, "Person," "including" and "Knowledge". All
section headings contained in this Agreement are for
convenience of reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or
interpretation of this Agreement. Words used herein,
regardless of the number and gender specifically used, shall
be deemed and construed to include any other number, singular
or plural, and any other gender, masculine,
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feminine, or neuter, as the context requires. Any reference to
a "Person" herein shall include an individual, firm,
corporation, partnership, limited liability company, trust,
governmental authority or body, association, unincorporated
organization or any other entity. Whenever used in this
Agreement, the word "including" and variations thereof shall
not be construed to imply any limitation and shall mean
"including but not limited to." "Knowledge" and "Know" and
variations thereof with respect to Seller shall include the
knowledge of the Partnership, Parent and Parent's other
affiliates in addition to the knowledge of Seller.
6.15 Severability. Any provision of this Agreement that is invalid
or unenforceable in any jurisdiction shall be ineffective to
the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining
provisions hereof, and such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable
such provisions in any other jurisdiction. Moreover, the
parties agree that the invalid or unenforceable provision
shall be enforced to the maximum extent permitted by law in
accordance with the intention of the parties as expressed by
such provision.
6.16 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such
counterpart, each of which when executed and delivered shall
be deemed to be an original and all of which counterparts
taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or
more counterparts taken together shall have been executed and
delivered by all of the parties. It shall not be necessary in
making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
6.17 Partnership Obligations. Whenever any provision of this
Agreement purports to impose any pre-Closing obligation on the
Partnership, such provision shall be construed to obligate
Seller and Parent to cause the Partnership to fulfill such
obligation. Whenever any provision of this Agreement purports
to impose any post-Closing obligation on the Partnership, such
provision shall be construed to obligate Buyer to cause the
Partnership to fulfill such obligation. For example, the
phrase "the Partnership shall," when used with respect to a
pre-Closing obligation, shall be construed to mean "Seller and
Parent shall cause the Partnership to."
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the date first written above.
CELLCO PARTNERSHIP
d/b/a VERIZON WIRELESS
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and CEO
SHENANDOAH MOBILE COMPANY
By: /s/ Xxxxxxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title: President
SHENANDOAH TELECOMMUNICATIONS COMPANY
By: /s/ Xxxxxxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title: President
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