Exhibit 2.1
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (this "Agreement") is entered into this
22nd day of December, 1998 (the "Effective Date"), by and among (i) XxXxxxx
Electronics Corporation, a Massachusetts corporation, as seller ("Seller"); and
(ii) Minnesota Southern Wireless Company, a Minnesota corporation, as buyer
("Buyer"), and Hickory Tech Corporation, a Minnesota corporation, as guarantor
of the obligations of Buyer hereunder ("Guarantor"). Seller, Buyer, and
Guarantor are sometimes referred to herein each individually as a "party" and
collectively as the "parties."
RECITALS
A. Seller holds a one hundred percent (100%) interest in the Radio Station
Authorization granted by the Federal Communications Commission ("FCC") (the "FCC
Authorization") for Cellular Radiotelephone Service ("CRS") Station KNKR320
(Frequency Xxxxx X0, Xxxxxx Xx. 00 [A2]), in a portion of the Minneapolis-St.
Xxxx Metropolitan Statistical Area designated as "unserved area," which area is
more particularly described on the map attached hereto as EXHIBIT A as "XxXxxxx
1988 Authorized CGSA" and "XxXxxxx Pending CGSA" (the "Market"), and in related
assets and obligations (together with the FCC Authorization, and as further
defined in Section 1 below, the "System Assets") used to operate or useful in
the operation of the Cellular System serving the market (the "System"). The
System Assets are more particularly described in SCHEDULE 1 attached hereto.
B. Seller has determined to sell to Buyer all of its interest in the System
Assets, and Buyer has determined to purchase from Seller all of its interest in
the System Assets, subject to FCC approval of the Assignment Application, as
defined in Section 8.1.1 below, for assignment of the FCC Authorization to Buyer
(the "FCC Approval"), and the other terms and conditions of this Agreement as
set forth below. Seller has obtained FCC approval of the Major Modification
Application as defined in Section 6.7 below. A copy of the amended FCC filing
for major modification depicting the Cellular Geographic Service Area of CRS
Station KNKR320 to be covered by the composite 32 dBu contours is attached
hereto as EXHIBIT A-1. Seller has agreed to proceed diligently with the
construction of the System from the Effective Date through the time of closing,
to assure completion of the System prior to November 6, 1999.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, the parties agree as follows:
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1. PURCHASE AND SALE. Subject to the terms and conditions hereof, Seller
agrees to sell, transfer, convey, assign and deliver to Buyer, and Buyer agrees
to purchase, acquire, accept and assume from Seller, Seller's interest in and
selected obligations under the System Assets, in accordance with the "Xxxx of
Sale, Assignment and Assumption" attached hereto as EXHIBIT B, which will be
executed by the parties as of the Closing Date, as defined in Section 2 below.
The System Assets include, but are not necessarily limited to, the assets
identified on SCHEDULE 1 attached hereto. The obligations relating thereto,
which Buyer has agreed to assume (the "Permitted Encumbrances"), are identified
on SCHEDULE 2 attached hereto.
2. CLOSING.
2.1 CLOSING DATE. Unless the contingencies specified in Section 6 and
Section 7 below have not been satisfied, the closing of the transactions
contemplated by this Agreement (the "Close" or "Closing") shall occur at the
offices of Hickory Tech Corporation at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxx 00000 on the date that is five (5) business days after the date that
the FCC Approval becomes a Final Order, as described in Section 6.3 below, or at
such other time and place as the parties shall mutually agree. The date at which
the Closing occurs is referred to herein as the "Closing Date."
2.2 DOCUMENTS DELIVERED BY SELLER. On or before 10:00 a.m. Eastern
Time on the Closing Date, Seller shall deliver to Buyer the following:
i. A fully executed (in counterpart, if
applicable) Xxxx of Sale, Assignment and Assumption (in form
of EXHIBIT B) transferring Seller's interest in the System
Assets to Buyer;
ii. Updated EXHIBIT E-1, Litigation Disclosure
(Seller);
iii. Updated EXHIBIT F, List of Contracts;
iv. Updated EXHIBIT M, Build-out Plan;
v. Certificate of Authority (in form of EXHIBIT
N-1);
vi. Updated SCHEDULE 1, System Assets;
vii. Updated SCHEDULE 2, Permitted Encumbrances;
viii. Updated SCHEDULE 3, Divisional Financial
Statements;
ix. Updated SCHEDULE 4, Employee List;
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x. Written opinions of Seller's corporate counsel,
the LLC's (as defined below) corporate counsel and Seller's
and the LLC's Federal Communications Commission counsel (in
forms of EXHIBITS G-1, G-2 and G-3), pursuant to Section 6.5
below;
xi. Purchase Price Allocation made pursuant to
Internal Revenue Code Section 1060 on IRS Form 8594;
xii. Evidence of maturity of FCC Approval to a
Final Order;
xiii. Seller's written confirmation that the
Escrow Agent has disbursed the funds escrowed under the
terms of the Escrow Agreement;
xiv. A Certificate of Good Standing issued by the
Secretary of State of the State of Massachusetts, indicating
that the corporate status of Seller is in good standing, and
evidence satisfactory to Buyer that Seller is qualified to
do business in the State of Minnesota;
xv. Original contracts, leases, agreements and
other documentation relating to the System and the System
Assets, as then exists in operation or under construction;
xvi. A fully executed non-competition agreement in
the form of EXHIBIT ___ ___ ___ ___ ___ K hereto; and
xvii. Such other items and instruments as are
required by this Agreement and may be necessary to
accomplish the Closing in accordance with this Agreement.
Seller is delivering to Buyer the following documents concurrently with the
execution of this Agreement:
i. An executed original of the Multiple Advance
Promissory Note (in form of EXHIBIT I) in the original
amount of $6,000,000, pursuant to which the Seller's build
out obligations will be financed;
ii. Seller's original executed counterpart of the
Security Agreement (in form of EXHIBIT J-1 ) and Financing
Statements, securing the advances made under the Promissory
Note and perfecting the security interest granted therein;
and
iii. Seller's original executed counterpart of the
Escrow Agreement (in form of EXHIBIT C), pursuant to which
the Deposit (as defined below) will be held in escrow.
Seller will deliver to Buyer the following documents concurrently with the
assignment of Seller's rights and obligations under this Agreement to the LLC
pursuant to Section 12.2 below:
i. A copy of an executed xxxx of sale, assignment
and assumption assigning Seller's rights and obligations
with respect to the System Assets and under this Agreement
to the LLC (in form of EXHIBIT O);
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ii. An executed original of the pledge agreement
(in form of EXHIBIT J-2) and corresponding financing
statements, pursuant to which Seller will pledge its
membership interests in the LLC to Buyer;
iii. An executed original of a security agreement
(in form of EXHIBIT J-3) and financing statements, pursuant
to which the LLC will secure the Promissory Note; and
iv. An executed original of a guaranty (in form of
EXHIBIT P), pursuant to which Seller will guaranty the LLC's
obligations under this Agreement.
2.3 CLOSING DOCUMENTS DELIVERED BY BUYER. On or before 10:00 a.m.
Eastern Time on the Closing Date, Buyer shall deliver to Seller the following:
i. The Final Payment, as defined in and in
accordance with Section 3.2 below, together with evidence
that the Escrow Agent has disbursed the funds escrowed under
the terms of the Escrow Agreement;
ii. Buyer's original executed counterpart of the
Xxxx of Sale, Assignment and Assumption (in form of EXHIBIT
B) accepting Seller's interest in the System Assets and
assuming the Permitted Encumbrances;
iii. A written opinion of Buyer's counsel (in the
form of EXHIBIT H) pursuant to Section 7.5 below;
iv. Updated EXHIBIT E-2, Litigation Disclosure
(Buyer), reflecting any changes or modifications from the
Effective Date to the Closing Date;
v. Purchase Price Allocation made pursuant to
Internal Revenue Code Section 1060 on IRS Form 8594;
vi. Certificates of Good Standing issued by the
Secretary of State of the State of Minnesota, evidencing
that the corporate status of both the Buyer and Guarantor
are in good standing as of the Closing Date;
vii. A fully executed original of the Guaranty (in
form of EXHIBIT L);
viii. Certificate of Authority (in form of EXHIBIT
N-2); and
viii. Such other funds and other items and
instruments as are required by this Agreement and may be
necessary to accomplish the Closing in accordance with this
Agreement.
Buyer is also delivering the following document concurrently with the execution
of this Agreement:
i. Buyer's original executed counterpart of the
Escrow Agreement (in form of EXHIBIT C), signed by both
Buyer and the Escrow Agent.
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3. PURCHASE PRICE. In consideration of the sale, transfer, conveyance,
assignment and delivery of the System Assets at the Closing, Buyer shall pay to
Seller Thirty-Seven Million Five Hundred Thousand and 00/100 Dollars
($37,500,000.00), PLUS the balance of the Loan (including principal and any
accrued interest thereon) outstanding on the Closing Date for the build-out of
the System as contemplated in Section 8.2.2 below (the "Purchase Price"), all
payable as follows:
3.1 DEPOSIT.
A total of Two Million Eight Hundred Twelve Thousand Five Hundred and
00/100 Dollars ($2,812,500.00) (including all interest accrued thereon, the
"Deposit"), to be paid on the Effective Date by a wire transfer of immediately
available funds, to Norwest Bank Minnesota, N.A. or another mutually acceptable
third party ("Escrow Agent"), to be held in escrow in an interest bearing
account by Escrow Agent pursuant to the terms of an escrow agreement in the form
attached hereto as EXHIBIT C (the "Escrow Agreement"), to be applied (principal
and accrued interest) against the Purchase Price at Closing. The Escrow
Agreement will outline the conditions of escrow more specifically, but, in
general, the escrow deposit will be forfeitable only if Buyer fails to close
this transaction with Seller due to conditions under the control of Buyer. By
way of example only, if Buyer does not achieve a financing arrangement, and as a
result the Closing does not take place in accordance with Section 2 above, then
the Deposit shall be forfeited to Seller. If, however, Closing does not take
place due to conditions not under the control of Buyer, then the Deposit shall
be refundable to Buyer. For instance, if the FCC does not provide or denies the
necessary consent to the assignment of the FCC Authorization or Seller does not
receive other necessary approvals, and as a result the Closing does not take
place by September 30, 1999, then (except where such delay or denial results
from an adverse finding as to the character qualifications of Buyer or other
circumstances within the control of Buyer, in which case the Deposit shall be
forfeited to Seller) the Deposit shall be refunded to Buyer.
3.2 FINAL PAYMENT.
3.2.1. The Purchase Price, (i) MINUS the Deposit, and (ii) MINUS the
balance of the Loan (including principal and any interest accrued thereon)
outstanding on the Closing Date for the build-out of the System contemplated
under Section 8.2.2. below (the "Final Payment"), to be paid at the Closing Date
by Buyer by a wire
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transfer of immediately available funds, to an account or accounts identified
in writing by Seller at least five (5) business days prior to the Closing
Date.
3.3 PURCHASE PRICE ALLOCATION.
On or before the Closing Date, Seller and Buyer shall cooperate in the
preparation of a jointly-prepared IRS Form 8594 (the "Purchase Price Allocation
Schedule") allocating the Purchase Price (including, for purposes of this
Section 3.3, any other consideration paid by Buyer and any assumed liabilities)
among the purchased System Assets in accordance with Section 1060 of the
Internal Revenue Code. Each party agrees to file the IRS Form 8594, and all
federal, state, local and foreign tax returns, in accordance with the Purchase
Price Allocation Schedule.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby makes the
following representations and warranties to Buyer, each of which is true in all
material respects as of the Effective Date and will be true in all material
respects as of the Closing Date.
4.1 ORGANIZATION IN GOOD STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Massachusetts, and has the full power and authority to carry on its business as
it is now being conducted and to execute and deliver this Agreement and any
other agreements or documents executed in connection herewith and to consummate
the transactions contemplated hereby.
4.2 AUTHORIZATION, EXECUTION AND DELIVERY OF AGREEMENT. The execution,
delivery and performance of this Agreement and all other agreements and
transactions contemplated hereby do not violate the articles of organization or
bylaws of Seller, as such corporate documents have been from time to time
amended as of the Effective Date. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereunder
will not: (a) (i) conflict with or result in a breach of the terms, conditions
or provisions of, (ii) constitute a default under, (iii) give any third party
the right to accelerate any obligation under, or (iv) result in a violation of,
any law, statute, ordinance, rule or regulation applicable to Seller or the
System Assets, or any agreement, mortgage, indenture, judgment or decree to
which the Seller or any of the System Assets are subject (whether upon giving of
notice or lapse of time or both) where the result of any such conflict, breach,
default, acceleration or violation will have a material adverse effect on the
System Assets (for purposes of this Agreement, a material adverse effect is
deemed to result from an occurrence or event that would cause loss or liability
to the System in excess of $25,000 for
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each occurrence, or $100,000 when aggregated with the losses and liabilities
caused by all other acts or occurrences constituting a breach hereunder, or
which would cost in excess of $25,000 to remedy or correct, or $100,000 when
aggregated with the costs to remedy or correct all other acts or occurrences
constituting a breach hereunder) or (b) result in the creation of a lien,
security interest, charge or encumbrance upon the System Assets. As used in
this Agreement, "System Assets" means all rights, plans and assets (both
tangible and intangible) related to the System, including, but not limited
to, the FCC Authorization and all other governmental or regulatory
authorizations, permits, licenses and applications necessary or appropriate
to own and operate the System, and any customer accounts, contract rights,
equipment, facilities, real property and good will associated therewith.
4.3 TITLE. Seller is the exclusive owner of, and has good and
marketable title to (either fee or leasehold interest), all of the System
Assets, and none of the System Assets is subject to a contract of sale or to
security interests, mortgages, encumbrances, liens or charges of any kind or
character ("Liens") that will not be discharged at Closing. Any and all contract
rights, leases and other intangible assets are valid and enforceable by Seller
in accordance with their terms (except insofar as such enforcement may be
limited by applicable principles of bankruptcy, insolvency and other principles
relating to or limiting the rights of contracting parties generally).
4.4 CONSENTS. No provision of any material contract, lease, trust
agreement, mortgage, indenture or other agreement or instrument to which Seller
is a party or is subject or by which any of its System Assets is bound, requires
the consent or authorization of any other person or non-governmental entity as a
condition precedent to the consummation of the transaction contemplated by this
Agreement, unless such consent is obtained by closing.
4.5 GOVERNMENTAL CONSENTS. Except for the FCC Approval and expiration
or termination of the Xxxx-Xxxxx-Xxxxxx waiting period following proper
notification, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration, or filing with, any governmental
authority is required to be obtained in connection with the transfer of the
System Assets contemplated by this Agreement.
4.6 LICENSES, CERTIFICATES AND PERMITS.
4.6.1. Seller has all cellular licenses and authorizations from the
FCC to operate the System (I.E., the FCC Authorization). The FCC Authorization
is disclosed on EXHIBIT D, which also contains a true and complete copy of the
public notice of grant of the FCC Authorization, which FCC Authorization is in
full force
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and effect. It is understood that (i) any Common Carrier Fixed Point-to-Point
Microwave Radio Service ("PPMRS") licenses necessary to the build-out and
operation of the System will be licensed to Buyer, and prior to the Closing
Seller in turn will lease from Buyer, at no charge, sufficient capacity
pursuant to such licenses to enable Seller to backhaul signals from the cell
sites to the switch, and (ii) in the event Closing does not occur, then Buyer
will assign the PPMRS licenses to Seller at no cost, subject to and
conditioned upon prior receipt of all required FCC and other regulatory
approvals, all of which will be pursued diligently by both Buyer and Seller.
There are no pending modifications, amendments or revocation proceedings
which would adversely affect the operation of the System. All fees due and
payable to governmental authorities pursuant to the FCC Authorization have
been paid. No event has occurred which, with the giving of notice or the
lapse of time or both, would constitute grounds for revocation of the FCC
Authorization. Seller is in compliance in all material respects with and is
not in default under the terms of the FCC Authorization. There is no
condition, event or occurrence existing, or, to Seller's actual knowledge, no
proceeding threatened or being conducted, which would cause the termination,
suspension or cancellation of the FCC Authorization. All actions taken by
Seller in connection with the System have been and are being conducted in all
material respects to protect the FCC Authorization. The initial application,
as amended, for the FCC Authorization neither contains an untrue statement of
material fact nor omits to state a material fact necessary to make the
statements contained therein not misleading.
4.6.2. Seller is in full compliance with any applicable Federal law,
any applicable state or local law or ordinance, and any applicable state public
utilities commission rules and regulations, except where failure to comply will
not have a material adverse effect on the System Assets.
4.6.3. To Seller's actual knowledge, no actions have been taken
by any entity or person, including Seller, which could reasonably be expected
to lead to the revocation of any licenses, certificates, permits,
authorizations, franchises or rights of Seller granted by governmental
regulatory or administrative agencies or authorities, prior to expiration
thereof.
4.7 FCC AND OTHER GOVERNMENTAL REPORTS AND APPLICATIONS. All material
reports and applications required to be filed with the FCC and all other
governmental or administrative authorities by Seller with respect to the System
have been filed and are accurate and complete in all material respects.
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4.8 LITIGATION. Except as set forth on attached EXHIBIT E-1, there is
no action, suit, proceeding, investigation or inquiry at law or in equity in or
before any federal, state or local court or governmental or regulatory authority
or private arbitration tribunal pending or threatened against Seller which
individually or in the aggregate would have a material adverse effect on the
transactions contemplated by this Agreement.
4.9 CONTRACTS. EXHIBIT F attached hereto lists all insurance policies
owned by or covering the System Assets for risks of the System. All such
policies are in full force and effect, and all premiums on such policies due
prior to the date hereof have been paid. Seller has not received notice that any
such insurance is in default, will be canceled or not be renewed. Also set forth
on EXHIBIT F hereto is a true and complete list of all material agreements
(including volume purchase agreements), contracts (including vendor contracts),
commitments, letters of engagement and arrangements, written or oral, to which
Seller is a party, including, without limitation, all such documents with
respect to the System Assets or by which the System Assets are bound
(collectively, "Contracts"). All Contracts are either valid, binding and
enforceable in accordance with their respective terms (except insofar as such
enforcement may be limited by applicable principles of bankruptcy, insolvency
and other principles relating to or limiting the rights of contracting parties
generally) or are immediately terminable by Seller without any penalty, charge
or claim. Seller is not in material default under any Contract, nor has any
event occurred which, after the giving of notice or the passage of time or both,
would constitute a material default by Seller under any Contract. Buyer shall
assume all obligations and liabilities of Seller under all Contracts listed on
SCHEDULE 2 hereto to the extent such obligations and liabilities pertain to
periods after the Closing.
4.10 NO FINDER'S FEES. Seller has not retained any broker, finder or
agent, or agreed to pay any brokerage fee, finder's fee or commission with
respect to the transactions contemplated by this Agreement. If a broker or
finder claims that it represented Seller and that it is entitled to a commission
or finder's fee, then Seller shall indemnify, protect, defend and hold harmless
Buyer from all loss, claim, expense and liability arising out of such claim,
including reasonable attorney's fees.
4.11 OPERATION OF SYSTEM. Seller will not, following the execution of
this Agreement, operate the System other than in the ordinary course of business
and consistent with the build-out of the System, and Seller will not take any
action that will negatively impact the beneficial business relationships with
customers, suppliers or others
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having business dealings with Seller relating to the System. Seller agrees it
will not (other than in the ordinary course of business or in connection with
the build-out of the System): (a) make any business decisions which could
adversely affect the System or the System Assets; (b) sell, transfer or
assign any of the System Assets or permit the creation of any encumbrance on
any System Asset; (c) permit the amendment or cancellation of any Contract
which affects the System; (d) enter into any contract or commitment or incur
any indebtedness or other liability or obligation of any kind relating to the
System, if such contract, commitment, indebtedness, liability or obligation,
by its terms, will materially affect the System and will survive the Closing;
or (e) take or omit to take any action that would cause Seller to be in
breach of any of its representations or warranties in this Agreement. Seller
will deliver to Buyer copies of its monthly Divisional Financial Statements
(defined below) regarding the System as reasonably requested by Buyer between
the Effective Date and the Closing Date.
4.12 NO OPTIONS ON ASSETS. There is no contract, option or any other
right of another binding upon or which at any time in the future may become
binding upon Seller to sell, transfer, assign, pledge, charge, mortgage or in
any other way dispose of or encumber the System or any of the System Assets.
4.13 FINANCIAL STATEMENTS. The unaudited financial statements of the
System (the "Divisional Financial Statements") for the eleven (11) month period
ended November 30, 1998 (the "Interim Date") (copies of which are attached
hereto as SCHEDULE 3):
(i) are in accordance with the books and accounts
of Seller as at the Interim Date;
(ii) are true and correct in all material respects
and present fairly the financial position of the System as
at the Interim Date;
(iii) have been prepared in accordance with
generally accepted accounting principles consistently
applied with previous years' calculations; and
(iv) present fairly all of the assets and
liabilities related to the System as at the Interim Date.
4.14 INTELLECTUAL PROPERTY. Except as disclosed on SCHEDULE 2 hereof,
the Seller is the sole and exclusive owner of, with all right, title and
interest in and to (free and clear of any liens), its intellectual property
pertaining to the System, and has such rights (and is not contractually
obligated to pay any compensation to any third party in respect thereof) to the
use thereof or the material covered thereby as are necessary to construct and
operate the
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System. There is not and has not been any unauthorized use, infringement or
misappropriation of any of intellectual property by any principal or employee
of Seller or, to Seller's knowledge, any other person in connection with the
System.
4.15 CONTRACTS. The contracts listed in EXHIBIT F (the "Contracts")
are the only contracts and agreements, whether written or oral, by which Seller
is bound pertaining to the System. The Contracts represent the entire agreement
of Seller and the respective parties to the Contracts (other than RFP's and
proposals which are referred to in such agreements). Seller is not in default
under any Contract, and there exists no condition, event or act that, with the
giving of notice or lapse of time or both, would constitute such a default or
breach by Seller; and Seller has no knowledge of a default by any other party to
any of the Contracts. The Contracts are in good standing and in full force and
effect without amendment thereto except as described in EXHIBIT F, and, except
as disclosed in SCHEDULE 2, Seller is entitled to all benefits thereunder, and
Seller has performed all obligations required to be performed by it under the
Contracts.
4.16 EQUIPMENT. SCHEDULE 1 sets forth a complete list of the equipment
used in the System. All such equipment is owned by Seller free and clear of all
liens, except as disclosed in SCHEDULE 2, and such equipment comprises the only
equipment used by the Seller to carry on the business of the System prior to the
Effective Date. All such equipment has been properly maintained and is in good
working order for the purposes of on-going operation, subject to ordinary wear
and tear for machinery and equipment of comparable age.
4.17 ACCESS TO INFORMATION. Seller understands that Buyer is a
publicly traded company and that Buyer is under an SEC requirement to conduct
and obtain an audit of the System prior to Closing, performed in accordance with
generally accepted accounting principles. Between the Effective Date and the
Closing Date, Seller will (i) afford Buyer and its authorized representatives
reasonable access, during ordinary business hours and upon two (2) business
days' notice, to all books, records, offices and other facilities and properties
of Seller pertinent to the System and permit Buyer and its authorized
representatives to make such inspections thereof as they may reasonably request,
(ii) make available to Buyer during ordinary business hours and upon five (5)
business days' notice, all senior management personnel of Seller responsible for
the management of the System for the purpose of obtaining information regarding
the System, and (iii) furnish Buyer with such financial and operating data and
other information
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with respect to the financial statements, business and properties of Seller
pertinent to the System as Buyer may from time to time reasonably request;
provided, however, that any such investigation shall be conducted in such a
manner as not to interfere unreasonably with the operation of the business of
Seller. Any information provided to Buyer pursuant to this Agreement shall be
held by Buyer in the strictest confidence. No investigation pursuant to this
Section 4.17 shall affect any representation or warranty of Seller herein or
the conditions to the obligations of Buyer hereunder.
4.18 TAXES. All tax returns, including those covering, without
limitation, income and sales taxes, and any other federal, state or local taxes,
filed by Seller were in all material respects true, complete and correct and
prepared in accordance with the requirements of the income tax or other tax laws
applicable to Seller. Seller has paid or will have paid prior to the due date on
such tax returns (or has validly contested or will validly contest in a manner
in compliance with the procedures established therefor) all taxes shown to be
due on such tax returns, and has filed all related tax returns required to be
filed. Seller has no liability, obligation or commitment for the payment of
income taxes, corporation taxes or any other taxes or duties of whatever nature
or kind, or interest or penalties with respect thereto arising before the
Closing Date or arising as a result of the transactions contemplated by this
Agreement, except such as are disclosed in the Divisional Financial Statements
or such taxes or duties not yet due as have arisen since the Interim Date in the
usual and ordinary course of business and for which adequate provision in the
accounts of Seller has been made. Seller is not in arrears with respect to any
required withholdings or installment payments of any tax or duty of any kind in
respect of the System, and Seller has not filed any waiver or extension of the
statute of limitations on assessment of tax for a taxation year of Seller under
the IRS Code or any other legislation imposing tax on Seller. There are no
pending audits by any federal, state, local or foreign taxing authority of any
payment, return or report made or filed by the Seller (nor has there been any
claimed failure to pay or report any kind of tax which may be assessed by any
such taxing authority against the Seller). The representations and warranties
set forth in this Section are made only to the extent that taxes are or may
become liens on the System Assets or for which Buyer is or may be liable in the
capacity of transferee of the System Assets.
4.19 ENVIRONMENTAL COMPLIANCE. Except as disclosed in the SCHEDULE 2:
(i) Seller has no actual knowledge, without
independent investigation or inquiry, that Seller's leased
premises used for the System ("Leased Premises") are in
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violation of any Environmental Laws (defined below) or
environmental permits as a result of actions or events not
occasioned by Seller (see items (ii) and (iii) below);
(ii) Seller as tenant of its Leased Premises has
not released or emitted into the natural environment or
discharged or disposed of, at or on, or otherwise acquiesced
or participated in the discharge of, at or on, the Leased
Premises or any adjoining properties any Hazardous
Substances in violation of Environmental Laws;
(iii) There are no Hazardous Substances brought in
or produced by Seller existing at, in, on, below or within
the Leased Premises, or at, in, on, below or within any
adjoining properties with respect to which the Seller has
any duty under Environmental Laws (except in compliance with
Environmental Laws);
(iv) Seller is not aware of any notices of
non-compliance, complaints, summons, legal actions, charges,
work orders, control orders, stop orders, remedial and waste
removal or other orders relating to the natural environment
currently existing against Seller and pertinent to the
System under Environmental Laws and made by any court,
governmental authority or third party, and there is no
judicial, governmental or third party complaint, action or
investigation, and there are no facts of which Seller has
notice which could give rise to any such complaint, action
or investigation, in respect of the existence on the Leased
Premises of Hazardous Substances brought on or introduced by
Seller (except in compliance with Environmental Laws);
(v) All environmental permits required in order to
conduct the business of the System and the operations
pertaining to the System or conducted on the Leased Premises
by Seller have been obtained, are valid and in full force
and effect and are being complied with;
(vi) Seller has never been convicted of any
offence under Environmental Laws or been found liable in any
proceeding to pay any fine or judgment to any person or
governmental authority or been required to conduct any
clean-up or remediation of the Leased Premises or any
adjoining properties, in each case as a result of a release
by Seller of any Hazardous Substances from the Leased
Premises into the environment or the creation of a nuisance;
(vii) Any polychlorinated biphenysis ("PCBs") in
use, in storage or existing on the Leased Premises and
introduced by Seller are being used, have been stored or
exist in such concentration or quantities as, in each case,
to comply with all Environmental Laws; and
(viii) Seller is not aware of any asbestos or
asbestos containing materials in or on the Leased Premises.
For the purposes of this Section 4.19: "Hazardous Substances" means any
contaminant, pollutant or dangerous substance which may cause, immediately, or
at some future time, material harm or degradation to the environment or material
risk to human life, health and safety, including, without limitation, any
pollutant, contaminant, waste, hazardous waste, toxic substance or dangerous
good which is defined or identified in any Environmental Laws or
17
which is present in the environment in such quantity or concentration as to
contravene any Environmental Laws; and "Environmental Laws" means all
statutes, regulations, municipal by-laws, codes, ordinances, decrees, rules,
protocols, orders, judicial or administrative or ministerial or regulatory
judgments, orders, decisions and rulings, guidelines and policies applicable
to Seller and the Leased Premises relating to the protection of the natural
environment, health and safety matters or conditions, Hazardous Substances,
including but not limited to storage, transportation, treatment and disposal
of Hazardous Substances, employee and product safety, releases of pollutants,
contaminants, chemical or industrial, toxic or Hazardous Substances into the
environment or any building or structure or otherwise relating to the
manufacture, processing, distributing, using, treating, storing, transporting
or handling of Hazardous Substances.
4.20 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller in this Agreement and in the documents and instruments
to be delivered by Seller pursuant to this Agreement will survive the Closing
without limitation until the second anniversary of the Closing Date, except that
all such representations and warranties with respect to any federal, state or
local taxes, or copyright matter will survive until the expiration of the
applicable statute of limitations (including any extensions) for such federal,
state or local taxes or copyright matter, respectively. The representations and
warranties of Buyer in this Agreement and in the documents and instruments to be
delivered by Buyer pursuant to this Agreement will survive the Closing without
limitation until the second anniversary of the Closing Date. The period of
survival of the representations and warranties prescribed by this Section 4.20
is referred to as the "Survival Period." The liabilities of the parties under
their respective representations and warranties will expire as of the expiration
of the applicable Survival Period; provided, however, that such expiration will
not include, extend or apply to any representation or warranty, the breach of
which has been asserted in written notice to the other party before such
expiration indicating the facts or conditions existing that, with the passage of
time or otherwise, can reasonably be expected to result in a breach (and
describing such potential breach in reasonable detail).
5. REPRESENTATIONS AND WARRANTIES OF BUYER AND GUARANTOR. Each of Buyer
and Guarantor hereby makes the following representations and warranties to
Seller, each of which is true in all material respects as of the Effective Date
and will be true in all material respects as of the Closing Date.
18
5.1 ORGANIZATION IN GOOD STANDING. Each of Buyer and Guarantor is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota, and each has the full power and authority to carry on
its business as it is now being conducted and to execute and deliver this
Agreement and any other agreements or documents executed in connection herewith
and to consummate the transactions contemplated hereby.
5.2 AUTHORIZATION, EXECUTION AND DELIVERY OF AGREEMENT. The execution,
delivery and performance by each of Buyer and Guarantor of this Agreement and
all other agreements and transactions contemplated hereby have been duly
authorized by Buyer and Guarantor, respectively, and do not violate the articles
of incorporation or bylaws of either, as such have been amended from time to
time as of the Effective Date, and this Agreement constitutes a legal, valid and
binding obligation of Buyer and Guarantor, respectively, enforceable against
them in accordance with its terms except to the extent that such enforcement may
be limited by applicable bankruptcy, insolvency and other principles relating to
or limiting the rights of contracting parties generally.
5.3 NO FINDER'S FEES. Neither Buyer nor Guarantor has retained any
broker, finder or agent, or agreed to pay any brokerage fee, finder's fee or
commission with respect to the transactions contemplated by this Agreement. If a
broker or finder claims that it represented Buyer or Guarantor and that it is
entitled to a commission or finder's fee, then Buyer and Guarantor, jointly and
severally, shall indemnify, protect, defend and hold harmless Seller from all
loss, claim, expense and liability arising out of such claim, including
reasonable attorneys fees.
5.4 CONSENTS. No provision of any material contract, lease, trust
agreement, mortgage, indenture or other agreement or instrument to which Buyer
or Guarantor is a party or is subject, requires the consent or authorization of
any other person or non-governmental entity as a condition precedent to the
consummation of the transactions contemplated by this Agreement.
6. BUYER'S CONTINGENCIES. Buyer's obligation to purchase the System
Assets is subject to the satisfaction of the following conditions or Buyer's
written waiver of such conditions on or before the Closing Date. Buyer may waive
in writing any or all of such conditions in its sole and absolute discretion.
6.1 SELLERS' PERFORMANCE. Seller's performance of its obligations
described in this Agreement, on or before the times and in the manner described
herein, in all material respects. Buyer shall notify Seller of any breach
hereunder, and Seller shall have thirty (30) days after receiving such notice to
cure such breach, which period shall be
19
extended for up to an additional thirty (30) days as long as Seller is
diligently pursuing cure, provided that in no event shall the Drop Dead Date
(as defined in Section 9.1.1 below) be extended pursuant hereto.
6.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller under this Agreement shall be true and correct in all material
respects on and as of the Closing Date as if made on and as of the Closing Date,
except with respect to changes to the representations and warranties of Seller
under Section 4.9 ("Contracts") above that are made by Seller in the ordinary
course of business. Buyer shall notify Seller of any breach hereunder, and
Seller shall have thirty (30) days after receiving such notice to cure such
breach, which period shall be extended for up to an additional thirty (30) days
as long as Seller is diligently pursuing cure, provided that in no event shall
the Drop Dead Date (as defined in Section 9.1.1 below) be extended pursuant
hereto.
6.3 FINAL ORDER. The FCC's grant of the FCC File No. 02909-XX-XX-97
Major Modification Application and the FCC's grant of the FCC Approval
(including, without limitation, the grant of waivers of Sections 22.137(d)(3)(i)
and 22.943(b)(i) of the FCC's Rules, provided the FCC Approval, by its terms,
expressly requires grant of such waivers) shall have each become a Final Order
of the FCC. For purposes of this Agreement, the term "Final Order" shall mean
action by the FCC as to which (i) no request for stay by the FCC of the transfer
is pending, no such stay is in effect, and any deadline for filing any such
request designated by statute or regulation has passed; (ii) no petition for
rehearing or reconsideration of the action is pending before the FCC, and the
time for filing any such petition has passed; (iii) the FCC does not have the
action under reconsideration on its own motion and the time for such
reconsideration has passed; and (iv) no appeal to a court, or request for stay
by a court, of the FCC's action is pending or in effect, and any deadline for
filing any such appeal or request as designated by statute or rule has passed.
6.4 LITIGATION. Except as disclosed on EXHIBIT E-2, there shall be no
injunction, decree or order issued or known by Buyer or Seller to be threatened
by any court, governmental agency or authority, or any litigation pending, known
by Buyer or Seller to be threatened or instituted, challenging or seeking to
prohibit or enjoin any of the transactions contemplated by this Agreement or
which would have a material adverse effect on Buyer's rights under the FCC
Authorization or this Agreement; provided, however, that any such threatened
matter shall be a contingency to Buyer's obligation to Close only if the threat
(i) could reasonably be expected to result in a proceeding or litigation that
20
has a reasonable likelihood of success, (ii) has occurred within three (3)
months prior to Closing, and (iii) if successful, could reasonably be expected
to result in a material diminution in the value of the System Assets.
6.5 OPINION OF COUNSEL FOR SELLER AND THE LLC. Buyer shall have
received the written opinions of corporate and FCC counsel for Seller and the
LLC (as defined in Section 12.2 below), reasonably satisfactory to Buyer, dated
as of the Closing Date, substantially in the forms of attached EXHIBITS G-1, G-2
and G-3.
6.6 NO TERMINATION OF AGREEMENT. This Agreement shall not have been
terminated by any party in accordance with the terms hereof.
6.7 GRANT OF MAJOR MODIFICATION APPLICATION; BUILD OUT. On November 6,
1998, the FCC granted the major modification Application filed by Seller on June
10, 1998 (FCC File No. 02909-XX-XX-97) (the "Major Modification Application").
From the Effective Date through the Closing, Seller shall diligently proceed
with the construction of the System to assure completion of the System by
November 6, 1999, in accordance with the provisions of Section 8.2 below.
7. SELLER'S CONTINGENCIES. Seller's obligation to sell the System
Assets to Buyer is subject to the satisfaction of the following conditions or
Seller's written waiver of such conditions on or before the Closing Date. Seller
may waive in writing any or all of such conditions in its sole and absolute
discretion.
7.1 BUYER'S PERFORMANCE. Buyer's performance of its obligations
described in this Agreement, on or before the times and in the manner described
herein, in all material respects. Seller shall notify Buyer of any breach
hereunder, and Buyer shall have thirty (30) days after receiving such notice to
cure such breach, which period shall be extended for up to an additional thirty
(30) days as long as Buyer is diligently pursuing cure, provided that in no
event shall the Drop Dead Date (as defined in Section 9.1.1 below) be extended
pursuant hereto.
7.2 PAYMENT. Payment to Seller of the Deposit and the Final Payment in
accordance with Sections 3.1 and 3.2 above.
7.3 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Buyer under this Agreement shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of the Closing Date. Seller
shall notify Buyer of any breach hereunder, and Buyer shall have thirty (30)
days after receiving such notice to cure such breach, which period shall be
extended for up to an additional thirty (30) days as long as Buyer
21
is diligently pursuing cure, provided that in no event shall the Drop Dead
Date (as defined in Section 9.1.1 below) be extended pursuant hereto.
7.4 LITIGATION. There shall be no injunction, decree or order issued
or known by Buyer or Seller to be threatened by any court, governmental agency
or authority, or any litigation pending, known by Buyer or Seller(s) to be
threatened or instituted, challenging or seeking to prohibit or enjoin any of
the transactions contemplated by this Agreement or which would have a material
adverse effect on Seller's rights under this Agreement; provided, however, that
any such threatened matter shall be a contingency to Seller's obligation to
Close only if the threat (i) could reasonably be expected to result in a
proceeding or litigation that has a reasonable likelihood of success and (ii)
has occurred within three (3) months prior to Closing.
7.5 OPINION OF COUNSEL FOR BUYER. Seller shall have received the
written opinion of counsel for Buyer, reasonably satisfactory to Seller, dated
as of the Closing Date, in the form of attached EXHIBIT H.
7.6 NO TERMINATION OF AGREEMENT. This Agreement shall not have been
terminated by any party in accordance with the terms hereof.
8. COVENANTS OF SELLER AND BUYER.
8.1 ASSIGNMENT APPLICATION AND OTHER GOVERNMENTAL REPORTS AND
APPLICATIONS.
8.1.1 Seller and Buyer will cooperate with the other to prepare
and file the application for the assignment of the FCC Authorization to Buyer
(the "Assignment Application") as soon as possible after the Effective Date,
but in no event later than six (6) business days after the Effective Date.
8.1.2. Seller and Buyer will cooperate with the other to
prepare and file with the Federal Trade Commission and the Department of
Justice any required Xxxx-Xxxxx-Xxxxxx Notification and Report Forms for the
consummation of this transaction as soon as possible after the Effective
Date, but in no event later than twenty-two (22) business days after the
Effective Date.
8.1.3. Seller and Buyer will each provide the other party with
such assistance as may reasonably be requested in connection with the
preparation of any tax return, audit, or other examination by any taxing
authority or judicial or administrative proceeding relating to liability for
taxes, will each retain and provide to the other party all records and other
information that may be relevant to any such tax return, audit or
examination, proceeding or determination and will each provide the other
party with any final determination of any such audit or examination,
proceeding or
22
determination that affects any amount required to be shown on any tax return
of the other party for any period. Without limiting the generality of the
foregoing, each of Buyer and Seller will retain, until the expiration of the
applicable statutes of limitation (including any extensions thereof), copies
of all tax returns supporting work schedules and other records relating to
tax periods or portions thereof ending on or prior to the Closing Date.
8.2 DESIGN, CONSTRUCTION, MANAGEMENT, OPERATION AND SWITCHING OF THE
SYSTEM PRIOR TO CLOSING. Except as otherwise stated in this Agreement, prior to
the Closing Date, Seller will retain all rights and obligations related to
managing, operating, switching, designing and constructing the System.
8.2.1. The System shall be constructed under Seller's overall
supervision and control, consistent with the requirements of the FCC's
policies that control of the System remain vested with Seller prior to
receipt of the FCC approval of the assignment of the FCC Authorization to
Buyer. Seller will exercise all commercially reasonable efforts to meet
applicable construction and operational deadlines specified in the rules and
regulations of the FCC so that substantially all of the commercially
significant highway and population centers within the Cellular Geographic
Service Area of CRS Station KNKR320 are covered by the composite 32 dBu
contours of said station prior to expiration of the FCC File No.
02909-XX-XX-97 construction permit, in accordance with EXHIBIT A-1 hereto, as
the CGSA is calculated under the formula method specified in Section
22.911(a)(1) of the FCC's rules, 47 C.F.R. ss.22.911(a)(1). Seller will
continue with the construction of the System and endeavor to complete the
System substantially in accordance with the build-out plan attached hereto as
EXHIBIT M (the "Build-out Plan"). To the extent that any aspect of the
construction of the System is not fully specified in the Build-out Plan or
that Seller finds it necessary to diverge from the specifications set forth
in the Build-out Plan in any significant respect, then, prior to performing
such construction, Seller will notify Buyer and, if requested, consult with
Buyer and implement the suggestions, proposals and recommendations of Buyer,
provided that the same are consistent with sound engineering practice. As
specified in the Build-out Plan, Seller will continue to utilize Buyer's
switch located in Mankato, Minnesota in the Minnesota 10 RSA and will, to the
extent feasible, use Nortel equipment for the cellular base stations. Seller
and Buyer will cooperate to enable Seller to purchase equipment for the
System from Nortel in a manner that maximizes the amount of discount on the
purchase of such equipment. This will be accomplished either by a direct
23
purchase of equipment by Seller from Nortel or another vendor(s) or by a
purchase by Buyer from Nortel or another vendor(s) with a subsequent invoice
by Buyer to Seller, all in compliance with the FCC's control requirements.
8.2.2. Buyer shall serve as the unpaid construction manager
during the period from the Effective Date through either (i) the Closing Date
or (ii) the termination of this Agreement, subject to Seller's overall
supervision and control, taking into account, however, the proposals of Buyer
and Buyer's direct financial support. In this regard, Buyer shall assist
Seller with the purchase of certain equipment, as provided above, and manage
the installation and testing of equipment and facilities for the System. As
construction manager, Buyer shall be expected to carry out its
responsibilities in a professional and xxxxxxx like manner consistent with
standards generally applicable to construction managers in the cellular radio
industry. Buyer shall provide Seller with bi-weekly progress reports and
shall notify Seller promptly of any problems which might prevent realization
of the system coverage and performance objectives described below in this
paragraph by the date specified therein. Seller shall have the right to
terminate Buyer as construction manager, upon fifteen (15) days prior notice,
(i) in the event of Buyer's gross negligence or intentional misconduct in its
role as construction manager, or (ii) if, for reasons within the reasonable
control of Buyer as construction manager exercising commercially reasonable
efforts, Buyer fails to comply substantially with the Build-out Plan and the
cellular station sites referred to in EXHIBIT M are not field tested and
ready for operation within 30 days following the dates set forth in the
deployment schedule included in EXHIBIT M. In the event of any termination as
described in the preceding sentence, Buyer shall cooperate in effecting a
smooth transition of its construction duties to another manager or to Seller,
as the case may be, and remain obligated to proceed to Closing in accordance
with the terms of this Agreement. In the event Seller terminates Buyer for
any other reason, then Buyer shall cooperate in effecting a smooth transition
of its construction duties to another manger or to Seller, as the case may
be, but Buyer may, at its option, terminate this Agreement, with return of
the Deposit to Buyer.
8.2.3. Buyer will advance funds to Seller for the buildout of the
System (including engineering design, consulting, towers, equipment and any
incidental costs in connection therewith, including sales and use taxes) from
the Effective Date through either (i) the Closing Date or (ii) the termination
of this Agreement, in the form of a loan on an as needed basis (the "Loan") that
is secured by the System Assets (other than the FCC Authorization). Buyer shall
advance funds under the Loan, at Buyer's option, either to Seller or directly to
a third-party vendor,
24
contractor or agent, as specified in Section 8.2.3 below. The Loan shall not
bear interest from the Effective Date through June 30, 1999. Thereafter, the
Loan shall bear interest at the prime lending rate as announced from time to
time by Norwest Bank Minnesota, N.A. or its successors in interest. At
Closing, the entire principal balance of the Loan and any interest accrued
thereon shall be disposed of as described in Section 3.2 above. In the event
the parties do not proceed to Closing, then Seller shall repay the Loan in
full within forty (40) days after the date on which its is determined that
Closing will not occur (the "Termination Date"), and the outstanding balance
of the Loan as of the Termination Date shall bear interest from the
Termination Date through the date of repayment at the prime lending rate as
announced from time to time by Norwest Bank Minnesota, N.A. or its successors
in interest. The Loan shall be evidenced by a promissory note and secured by
a security agreement encumbering the System Assets and a pledge of the
membership interests of the LLC (as defined in Section 12.2 below) as the
holder of the FCC Authorization, in the form of EXHIBITS I, J-1, and J-2,
respectively, each of which shall be executed and delivered on the Effective
Date.
8.2.4. The following procedures shall apply to the build-out of
the System, which at all times and in all respects shall be subject to the
overall supervision and control of Seller, and advances of funds under the
Loan. FIRST, and from time to time, Buyer will provide to Seller's designated
representative a proposed purchase order (a "Proposal") for equipment,
services and other items pertaining to the build-out of the System. Seller
shall approve each Proposal or state its reasonable objections thereto within
two (2) business days of its receipt of same. Each Proposal that is approved
becomes a "Purchase Order." It is anticipated, but not required, that each
Purchase Order will include all items pertinent to the completion of
construction and installation of one or more cell sites, in accordance with
EXHIBIT M. Each Purchase Order will state a maximum price to be paid for all
items shown thereon. Buyer shall procure all such items at the lowest
possible cost, not to exceed the maximum shown in the Purchase Order, and any
savings that Buyer is able to implement shall be for the benefit of the
System. SECOND, Buyer (a) will place an order for all System hardware
included in each Purchase Order and make suitable arrangements for any
services and other items covered thereby and will confirm same in writing to
Seller, all within five (5) business days after receipt of each Purchase
Order, and (b) will notify Seller when all equipment covered by the Purchase
Order has been delivered to the site. THIRD, Buyer will exercise all
commercially reasonable diligence to install and test such equipment and
construct the cell site, and will notify Seller when the equipment at each
site has been installed and fully tested and the site is
25
operational and ready to be placed into service (a "Completion Notice"). In
the event that any cell site will not be operational and ready to be placed
into service within thirty (30) days after the deployment date for such site
set forth in EXHIBIT M, then Buyer must notify Seller of such fact and
describe the reasons for the delay and the actions proposed to be taken to
expedite completion of the site, with an estimated completion date, as soon
as Buyer determines that a delay will occur. FOURTH, upon the receipt of a
Completion Notice (or on such earlier date as necessary to make timely
payments to all vendors), Seller will submit to Buyer a request for advance
under the Loan (a "Loan Request"). FIFTH, upon receipt of a Loan Request,
Buyer shall advance funds under the Loan as requested in the Loan Request, at
Buyer's option, either to Seller or to a third party vendor, contractor or
agent.
8.2.5. Seller and Buyer each acknowledges that the Build-out
Plan sets forth a system design and description that meets its satisfaction
in all respects. Furthermore, neither Seller nor Buyer makes any
representation or warranty to the other regarding the fitness of the System,
as constructed prior to Closing, for any particular purpose. Buyer
acknowledges that Seller, in order to implement the system design set forth
in the Build-out Plan in certain respects, will require the consents and
other agreements of other carriers and other third parties (for example,
securing consent for a 32 dBu contour extension). Obtaining such consents and
agreements may not be within Seller's control, and Seller may be required to
modify the System design in accordance with its inability to obtain certain
consents or agreements (subject to Seller's prior notification of Buyer and
implementation of Buyer's recommendations that are consistent with sound
engineering practice as provided above), in all events with the goal of
preserving as much as possible of the originally proposed coverage as
described in the Build-out Plan. To the extent that Seller does not complete
the construction of the System substantially in accordance with the Build-out
Plan and such failure is the result of the actions or inactions of Seller (as
opposed to the actions or inactions of Buyer, as Seller's construction
manager, or other actions or events beyond the reasonable control of Seller),
then (i) Seller agrees to appoint one of three engineers recommended by Buyer
to devise a plan to correct such failure, which shall include estimates of
costs associated therewith, and (ii) prior to Closing, and as a condition
thereof, a portion of the Purchase Price in an amount consistent with such
estimates shall be escrowed with the Escrow Agent and used to correct such
failure in accordance with the aforesaid plan (with any amounts left over to
be paid to, and any shortfalls to be paid by, Seller). Seller's inability to
implement fully the System (including coverage contours) as described in the
Build-out
26
Plan because of actions or events beyond the reasonable control of Seller
will not result in any breach by Seller or liability of Seller under this
Agreement or constitute a failure of conditions precedent for Buyer to
proceed to Closing.
8.3 MANAGEMENT OF THE SYSTEM AFTER BUILD-OUT. In the event the Closing
has not occurred prior to June 30, 1999 and the "Group A Sites," as shown on
EXHIBIT M, have been constructed, field tested and ready for operation by that
date (unless failure to achieve such complete construction of the Group A Sites
is the result of the actions or inactions of Seller), Seller and Buyer agree to
enter into good faith negotiations for Seller to retain Buyer as compensated
manager of the System commencing June 30, 1999.
8.4 SELLER'S EMPLOYEES. All employees employed by Seller in connection
with the construction or operation of the System who are not principals in
Seller are disclosed in SCHEDULE 4 hereto. Seller will cooperate with Buyer in
allowing Buyer to enter into employment arrangements with such employees
immediately following the Closing.
9. PERMITTED TERMINATION OF AGREEMENT.
9.1 BY BUYER. Buyer shall have the right at any time on or before the
Closing Date unilaterally to terminate this Agreement without having any
liability to the Seller hereunder except with respect to obligations that
survive the termination of this Agreement, if:
9.1.1. The Closing has not occurred on or before September 30,
1999 (the "Drop Dead Date"); provided however, that the right to terminate
this Agreement under this Section 9.1.1 shall not be available to Buyer (i)
if the failure to Close by said date is the result of a material breach of
this Agreement by Buyer or (ii) while Buyer is in material breach of this
Agreement; or
9.1.2. Any of the representations or warranties of Seller
contained in this Agreement are incorrect in any material respect; or
9.1.3 Any of the contingencies contained in Section 6 of this
Agreement are not fulfilled, or cannot be fulfilled, on or before the Closing
Date; or
9.1.4 Seller is in material breach of this Agreement, which
material breach remains uncured by Seller thirty (30) days after receiving
written notice thereof from Buyer, which period shall be extended for up to
an additional thirty (30) days as long as Seller is diligently pursuing cure.
27
9.2 BY SELLER. Seller shall have the right at any time on or before
the Closing Date unilaterally to terminate this Agreement without creating any
liability to Buyer hereunder except with respect to obligations that survive the
termination of this Agreement, if:
9.2.1. The Closing has not occurred on or before September 30,
1999 (the Drop Dead Date); provided, however, that the right to terminate
this Agreement under this Section 9.2.1 shall not be available (i) if the
failure to Close by said date is the result of a material breach of this
Agreement by Seller or (ii) while Seller is in material breach of this
Agreement; or
9.2.2 Any of the representations or warranties of Buyer or
Guarantor contained in this Agreement are incorrect in any material respect;
or
9.2.3. Any of the contingencies contained in Section 7 of this
Agreement are not fulfilled, or cannot be fulfilled, on or before the Closing
Date; or
9.2.4 Buyer or Guarantor is in material breach of this
Agreement, which material breach remains uncured by Buyer or Guarantor thirty
(30) days after receiving written notice thereof from Seller, which period
shall be extended for up to an additional thirty (30) days as long as Buyer
or Guarantor is diligently pursuing cure; or
9.3 EFFECT. Upon such termination in accordance with Sections 9.1 or
9.2, this Agreement shall be of no further force and effect except with respect
to the provisions of this Agreement that survive the termination hereof. Such
termination shall not be the basis for any liability of the terminating party.
In the event of such termination, all documents delivered by any party hereto
shall be returned to such party.
9.4 EXTENSION OF DROP-DEAD DATE. In the event that Closing is not
expected to occur by September 30, 1999, then (i) in the event that the FCC has
granted the FCC Approval and the parties are awaiting the grant to be by Final
Order, the Drop Dead Date will automatically be extended to permit the parties
to receive the Final Order and proceed to Closing under this Agreement, and (ii)
in the event that the FCC Approval has not been granted but Buyer and Seller
both have been advised by the Chief of the FCC's Commercial Wireless Division or
any senior attorney in said Division that the FCC Approval is imminent, the Drop
Dead Date will automatically be extended from September 30, 1999 until October
31, 1999. If the FCC Approval has been granted by October 31, 1999, then the
Drop Dead Date will automatically be extended further to permit the parties to
receive the Final Order and proceed to Closing under this
28
Agreement. Additionally, Buyer shall have the unilateral option, by notifying
Seller no later than September 1, 1999, to extend the Drop Dead Date for one
additional three month period (I.E., until December 31, 1999) for any reason.
10. INDEMNIFICATION.
10.1 Each party ("Indemnitor") shall defend, indemnify, and
hold harmless the other party ("Indemnitee"), and the Indemnitee's directors,
officers, employees, agents, successors, assigns, heirs, and legal
representatives, from and against any and all damages, costs, expenses
(including reasonable attorneys' fees), claims, actions, liabilities, or
losses of any nature whatsoever (collectively the "Liabilities") to which the
Indemnitee may become subject as a result of (i) the breach of any of the
Indemnitor's covenants, (ii) the untruth or inaccuracy of any of the
Indemnitor's representations or warranties set forth herein, or (iii) the
injury or death of any individual, or the loss or damage to real or tangible
personal property, resulting from the acts or omissions of the Indemnitor or
its agents or employees. Indemnitor further agrees to indemnify, defend and
hold harmless Indemnitee against any and all debts, liabilities, choses in
action, or claims of any nature, absolute or contingent, resulting from any
such breach, untruth or inaccuracy, or acts or omissions, which may be
incurred to cure, compromise or defend such Liabilities, together with all
expenses, including, without limitation, court costs and reasonable legal and
other professional fees. It is understood that prior to seeking any remedy
under this Section 10, the Indemnitee shall notify the Indemnitor of the
breach, untruth, inaccuracy, acts or omissions that are the subject of
indemnification (to the extent the same is capable of being cured and such
cure would eradicate any actual or potential loss, liability or damage to the
Indemnitor), and that the Indemnitor shall have thirty (30) days after
receiving such notice to cure or correct such breach, untruth, inaccuracy,
acts or omissions, which period shall be extended for up to an additional
thirty (30) days as long as Indemnitor is diligently pursuing cure. This
Section 10 shall survive delivery by Buyer of the consideration to be given
by it hereunder, any cancellation or termination of this Agreement, including
without limitation any termination under Section 9 above, and the Closing
hereunder.
10.2 The parties each acknowledge and agree that no indemnification
claim for damages shall be made by any party under this Section 10 unless and
until the potential damage claim(s) by such party totals an aggregate of Twenty
Five Thousand Dollars ($25,000) or more.
11. CONFIDENTIALITY, PUBLICITY AND EXCLUSIVITY.
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11.1 CONFIDENTIALITY. From the Effective Date of this Agreement until
the Closing Date, and thereafter, it may be necessary for the parties mutually
to exchange certain information, data and material of a proprietary or
confidential nature, whether related to marketing, technical, financial and
other matters ("Confidential Information"). To be treated as Confidential
Information, information disclosed in writing shall be marked as confidential or
proprietary, and the disclosing party shall indicate the confidential nature of
the verbal information at the time of disclosure. All Confidential Information,
including, without limitation, this Agreement, shall: (i) be received and
retained in the strictest confidence by the parties and will be deemed to be
proprietary information of the disclosing party, and the recipient(s) agree(s)
that it (or they) will not disclose it to third parties other than in connection
with the transactions contemplated by this Agreement and further will treat such
information, data or material as proprietary using the same degree of care that
it (or they) would normally use in protecting it (or their) own proprietary
information; and (ii) be used by the parties hereto solely for the purpose of
implementing this Agreement. The provisions of this Section 11.1 shall not apply
to any Confidential Information which: (i) is known by the receiving party prior
to the date hereof, and is not subject to or in violation of any obligation of
confidentiality; (ii) is or becomes public knowledge other than by default of
the receiving party; or (iii) is obtained by the receiving party from a bona
fide third party having free right of disposal of such information.
11.2 PUBLICITY. Any party may announce the fact that this Agreement
has been entered into and, upon Closing, may announce that this transaction has
occurred. However, none of the parties hereto shall make any press release or
public announcement of the terms of this Agreement, without the prior written
consent of the non-disclosing parties. If any party is obligated by law or
regulation to make a disclosure, all parties hereto will use their best efforts
to cause a mutually agreeable disclosure to be issued.
11.3 EXCLUSIVITY. Seller hereby agrees not to enter into any
discussions, agreement(s) or other commitment(s) to transfer the System Assets
with any person or entity other than Buyer during the period commencing on the
Effective Date and ending upon the earlier to occur of the Closing Date or the
termination of this Agreement.
11.4 SURVIVAL. Sections 11.1 and 11.2 shall survive any cancellation
or termination of this Agreement, including without limitation any termination
under Section 9 above, and the Closing hereunder, for a period of two (2) years,
and shall otherwise lapse as of the Closing Date.
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12. PARTIES IN INTEREST; ASSIGNMENT.
12.1 GENERAL RULE. No party shall have the right to assign or
otherwise transfer its rights and obligations under this Agreement to any other
person or entity without the prior written consent of the other party hereto.
Any prohibited assignment shall be null and void. Subject to the foregoing, all
covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto shall bind and inure to the benefit of their respective
heirs, executors, successors and assigns, whether so expressed or not.
12.2 LLC FORMATION. Notwithstanding the foregoing, the parties
contemplate that Seller, prior to the Effective Date and prior to the Closing
Date, has created a wholly-owned limited liability company, to be organized in
the State of Minnesota (the "LLC"), to which Seller, on the Effective Date and
immediately after the execution of this Agreement, will transfer and assign the
FCC Authorization and the other System Assets. As a result of such transfer and
assignment, Seller will assign all of its rights and obligations under this
Agreement to the LLC, which shall accept and assume such rights and obligations
and become the "Seller" under this Agreement. Such transfer, assignment and
assumption described in the preceding two sentences shall be effected pursuant
to a xxxx of sale, assignment and assumption substantially in the form attached
hereto as EXHIBIT O. Also on the Effective Date, Seller will execute and deliver
to Buyer a guaranty in the form of EXHIBIT P attached hereto (the "Seller
Guaranty"), pursuant to which Seller will guaranty the performance by the LLC of
all of its obligations under this Agreement arising after the Effective Date. It
is further understood that Seller may dissolve the LLC after Closing, and that,
concurrently therewith, the LLC will reassign its rights under this Agreement to
Seller. No consent by either Seller or Buyer will be required for any of the
aforesaid transfers or assignments.
13. DISPUTE RESOLUTION. All disputes and claims under this Agreement
shall be resolved by binding arbitration in accordance with the Commercial Rules
of the American Arbitration Association then in effect. The party not prevailing
in the arbitration proceeding shall bear all costs associated with the
arbitration, including, without limitation, reasonable attorneys' fees of the
prevailing party.
14. CLOSING AND POST-CLOSING COVENANTS.
14.1 ADJUSTMENTS. Operation of the System and the income and expenses
attributable thereto up through the close of business on the day before the
Closing Date shall be for the account of Seller, and thereafter for the
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account of Buyer. The prorations and adjustments hereunder shall be made and
paid insofar as feasible on the Closing Date, with a final settlement sixty
(60) days after the Closing Date.
14.2 ACCOUNTS RECEIVABLE. Buyer shall promptly pay to Seller any
accounts receivable (including but not limited to customer and roaming revenues)
collected by Buyer after Closing that are attributable to periods prior to the
Closing Date. Similarly, Seller shall promptly pay to Buyer any accounts
receivable collected by Seller after Closing that pertain to periods after the
Closing Date.
15. MISCELLANEOUS PROVISIONS.
15.1 NOTICES. Except as otherwise provided in this Agreement, all
notices or other communications hereunder shall be deemed to have been duly
given when made in writing by an authorized representative of a party and
delivered to an authorized representative of the other party or parties either
1) in person or by facsimile transmission, 2) by an overnight courier,
messenger, or similar delivery service, or 3) by deposit into the United States
Mail, certified or registered mail, postage prepaid, and addressed as follows:
If to Seller to: XxXxxxx Electronics Corporation
00-00 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. XxXxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxx, Xxxxx & Xxxxxxxx, Chartered
0000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Buyer to: Minnesota Southern Wireless Company
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000-0000
Attention: F. Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxxx, Gage & Xxxxxx, PLLP
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
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If to Guarantor to: Hickory Tech Corporation
000 X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxx X Xxxxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxxx, Gage & Xxxxxx, PLLP
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
The address or fax number of a party to which notices or communications are to
be sent may be changed by written notice given by such party to the other party
pursuant to this Section 15.1. All notices or other communications shall be
effective upon delivery or attempted delivery as aforesaid.
15.2 CONSTRUCTION. The section headings in this Agreement are inserted
as a matter of convenience only and shall not affect the construction or the
terms of this Agreement in any way. Whenever required by the context of this
Agreement, the singular shall include the plural and the masculine shall include
the feminine and vice versa. This Agreement shall not be construed as if it had
been prepared by one of the parties, but rather as all the parties had prepared
the same. All exhibits referred to in this Agreement are attached and
incorporated by this reference.
15.3 THIRD PARTY RIGHTS. Nothing in this Agreement shall be deemed to
create any right with respect to any person or entity not a party to this
Agreement.
15.4 TIME IS OF THE ESSENCE. The parties hereby acknowledge and agree
that time is strictly of the essence with respect to each and every term,
condition, obligation and provision hereof.
15.5 SPECIFIC PERFORMANCE. Each party represents and warrants that,
because of the unique nature of the transactions contemplated by this Agreement,
the failure of any party to carry out its obligations to perform this Agreement
would cause irreparable injury. The parties accordingly agree that, in addition
to any other remedies available to a party, any such failure by any party to
perform this Agreement shall be subject to the remedy of specific performance.
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15.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as otherwise
expressly provided, all covenants, representations and warranties contained in
this Agreement shall survive for a period of two (2) years after the later to
occur of (i) any termination of this Agreement, including without limitation any
termination under Section 9 above, and (ii) the Closing hereunder, and shall
survive and continue notwithstanding any investigations by or on behalf of Buyer
or Seller at any time.
15.7 ENTIRE AGREEMENT. This Agreement (including all exhibits attached
hereto) is the final expression of, and contains the entire agreement between,
the parties with respect to the subject matter hereof and supersedes all prior
understandings with respect thereto. This Agreement may not be modified,
changed, supplemented, superseded, canceled or terminated, except by written
instrument signed by each and every party hereto, except as otherwise expressly
permitted herein.
15.8 PARTIAL INVALIDITY. If any term or provision of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is determined invalid or unenforceable, shall not be affected thereby, and
each such term and provision of this Agreement shall be valid, and shall be
enforced to the fullest extent permitted by law.
15.9 WAIVERS. No waiver of any breach of any covenant or provision
herein contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision contained herein. No extension of
time for performance of any other obligation or act shall be deemed an extension
of time for performance of any other obligation or act.
15.10 EXPENSES. Whether or not the Closing occurs, each party to this
Agreement shall pay any and all fees and expenses that such party may incur in
connection with the negotiation, execution or closing of the transactions
contemplated by this Agreement, including the preparation, filing and
prosecution of its portion of the applications and other materials required
under this Agreement, provided that (i) Seller and Buyer shall each be
responsible for and shall pay fifty percent (50%) of any charges, fees or taxes
(including any transfer taxes but in all instances excluding income and capital
gains taxes) incurred in connection with or arising out of the Closing, and (ii)
Buyer shall be responsible for the filing fee for any Xxxx-Xxxxx-Xxxxxx filing.
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15.11 FURTHER ASSURANCES. Each party hereto agrees to cooperate with
the others in obtaining the FCC Approval, and to take all such actions and
execute, acknowledge and deliver any and all additional papers, documents and
other assurances, as are reasonably necessary in connection with the performance
of its obligations hereunder and to carry out the intent of the parties.
15.12 SURVIVAL. In addition to those Sections or subsections of this
Agreement that expressly contain a survival provision, the parties agree that
where the context of any provision indicates an intent that such provision shall
survive any cancellation or termination of this Agreement and the Closing
hereunder, then it shall survive.
15.13 RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be
deemed or construed by the parties to create a fiduciary relationship between
Buyer/Guarantor and Seller, a relationship of principal and agent between
Buyer/Guarantor and Seller, or a joint venture or any other association between
Buyer/Guarantor and Seller.
15.14 AUTHORITY. Each party hereby covenants and warrants that the
person or persons signing on its behalf is or are authorized to do so.
15.15 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which, taken
together, shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first above written.
Seller:
XXXXXXX ELECTRONICS CORPORATION,
a Massachusetts Corporation
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
Buyer:
MINNESOTA SOUTHERN WIRELESS COMPANY,
a Minnesota Corporation
By:
------------------------------------
Name:
----------------------------------
35
Its:
-----------------------------------
Guarantor:
HICKORY TECH CORPORATION,
a Minnesota Corporation
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
36
LIST OF SCHEDULES AND EXHIBITS
------------------------------
SCHEDULE 1 - List of System Assets
---------
SCHEDULE 2 - List of Permitted Encumbrances
---------
SCHEDULE 3 - Divisional Financial Statements
---------
SCHEDULE 4 - Seller's Employees
---------
EXHIBIT A - Map of the Market
---------
EXHIBIT A-1 - Application for Major Modification
-----------
EXHIBIT B - Form of Xxxx of Sale, Assignment and Assumption (Seller and Buyer)
---------
EXHIBIT C - Form of Escrow Agreement
---------
EXHIBIT D - Copy of FCC Authorization
---------
EXHIBIT E-1 - Litigation Disclosure (Seller)
-----------
EXHIBIT E-2 - Litigation Disclosure (Buyer)
-----------
EXHIBIT F - List of Contracts
---------
EXHIBIT G-1 - Form of Opinion of Corporate Counsel for Seller
-----------
EXHIBIT G-2 - Form of Opinion of Corporate Counsel for the LLC
-----------
EXHIBIT G-3 - Form of Opinion of FCC Counsel for Seller and the LLC
-----------
EXHIBIT H - Form of Opinion of Counsel for Buyer and Guarantor
---------
EXHIBIT I - Form of Promissory Note
---------
EXHIBIT J-1 - Form of Security Agreement (Seller to Buyer)
-----------
EXHIBIT J-2 - Form of Pledge Agreement (Seller to Buyer)
-----------
EXHIBIT J-3 - Form of Security Agreement (LLC to Buyer)
-----------
EXHIBIT K - Form of Non-competition agreement
---------
EXHIBIT L - Form of Guarantor Guaranty
---------
EXHIBIT M - Build-out Plan
---------
EXHIBIT N-1 - Certificate of Authority (Seller)
-----------
EXHIBIT N-2 - Certificate of Authority (Buyer)
-----------
EXHIBIT O - Form of Xxxx of Sale, Assignment and Assumption (Seller and LLC)
---------
EXHIBIT P - Form of Seller Guaranty
---------
The above mentioned schedules and exhibits have been omitted. The Company agrees
to furnish supplementally a copy of any omitted schedule to the Commission upon
request.
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