Exhibit 2.17
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") is made and entered
into as of January 5, 2000, by and between Lone Star Cellular, Inc., a Nevada
corporation (the "SELLER"), PCM, Inc., a New Jersey corporation ("MANAGER"),
and Xxxxxx Cellular Systems, Inc., an Oklahoma corporation (the "BUYER").
BACKGROUND
A. Seller owns a cellular telephone system and business in the Texas
Rural Xxxxxxxxxxx Xxxx 0, Xxxxxx Xx. 000X (the "SYSTEM"). Manager performs
management services relating to the System for Seller pursuant to a
Management Agreement between Seller and Manager dated as of May 13, 1991,
as amended (as so amended, the "MANAGEMENT AGREEMENT").
B. Seller and Manager desire to sell, transfer, set over and deliver
to Buyer, and Buyer desires to purchase and accept from Seller and Manager,
the Purchased Assets (as defined herein), subject to the Assumed
Liabilities (as defined herein), on the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
AGREEMENT
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings set forth below:
"Accountants" has the meaning set forth in Section 2.5.
"Additional Buyer Requested Cap-Ex" has the meaning set forth in
Section 5.2(d).
"Affiliate" of any specified Person means any other Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. The term
"control" (including, with correlative meaning, the terms "controlled by" and
"under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Agreement" has the meaning set forth in the preamble, and shall
include all Schedules and Exhibits.
"Allocation" shall have the meaning set forth in Section 2.6.
"Assumed Liabilities" refers to, collectively, the following
liabilities, commitments and obligations of Seller and Manager related to, or
incurred in connection with, the System, to the
extent not previously performed or discharged as of the Closing: (a) those
current liabilities, commitments and obligations listed, described or
reserved for on the Interim Balance Sheet or incurred between the Interim
Balance Sheet Date and the Closing Date in the ordinary course of business,
consistent with past practice, that have not been or will not be satisfied or
discharged on or prior to the Closing Date, including, without limitation,
trade accounts payable and accrued expenses, all of which shall be included
as Current Liabilities in the Working Capital, (b) all obligations of Seller
and Manager which accrue and are to be performed from and after the Closing
under those Licenses, Permits and Contracts either set forth on SCHEDULE 3.8,
3.11 OR 3.14 or those agreements of a non-material nature which constitute
Purchased Assets but are not required by this Agreement to be disclosed on
SCHEDULE 3.8, 3.11 OR 3.14, in each case except to the extent such Licenses,
Permits and Contracts are listed on Schedule 1.2 as Excluded Assets, (c)
certain Employee Costs for Transferred Employees as specifically set forth in
Section 6.4, (d) arising in connection with any matters set forth on Schedule
1.1, (e) Costs of Remediation under any Environmental Law (subject to the
provisions of Section 5.2(b) hereof), and (f) for products liability claims
for products sold by Seller before Closing.
"Assumption Agreement" refers to the Assumption Agreement to be
executed at Closing by Buyer, substantially in the form of EXHIBIT B hereto.
"Xxxx of Sale" refers to the Xxxx of Sale to be executed at Closing
by Seller and Manager, substantially in the form of EXHIBIT C hereto.
"Base Rate" shall have the meaning set forth in Section 2.5.
"Business Day" refers to a day, other than a Saturday or a Sunday,
on which commercial banks are not required to be open or authorized to close
in the City of Chicago.
"Buyer Cap-Ex" has the meaning set forth in Section 5.2(d).
"Buyer Indemnified Group" has the meaning set forth in Section 10.1.
"Buyer's Estimate" shall have the meaning set forth in Section
2.4(b).
"Cap-Ex Amount" means the amount of capital expenditures (including
capitalized lease obligations), as determined using GAAP, incurred and paid
in cash (whether funded with debt or operating cash flow, provided, that if
capital expenditures are funded with debt, Cap-Ex Amount shall include any
interest accrued from the date of incurrence of such debt through the Closing
Date) by Seller, whether prior to, on or subsequent to the date hereof
through 12:01 a.m. on the Closing Date, in connection with or related to the
digital build-out of the System, including, without limitation amounts
incurred or paid pursuant to that certain General Agreement for Purchase of
Cellular Systems dated as of September 15, 1999 between Seller and Lucent
Technologies, Inc. and amounts incurred or paid pursuant to agreements with
other vendors in connection with or related to such digital build-out,
provided, however, that the Cap-Ex Amount shall not in any event exceed
$5,000,000.
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"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated) of corporate stock,
partnership interests or any other participation, right, warrant, option or
other interest in the nature of an equity interest in such Person, but
excluding any debt security convertible or exchangeable into such equity
interest.
"Cell Site" has the meaning set forth in Section 3.11.
"Closing" has the meaning set forth in Section 2.7.
"Closing Date" has the meaning set forth in Section 2.7.
"Closing Escrow Agreement" has the meaning set forth in Section
2.3(c).
"Code" refers to the Internal Revenue Code of 1986, as amended, and
the rules, regulations, orders, policies and procedures promulgated
thereunder.
"Communications Act" shall mean the Communications Act of 1934, as
amended, and the rules, regulations, orders, policies and procedures
promulgated thereunder.
"Confidentiality Agreement" has the meaning set forth in Section 5.2.
"Contracts" shall mean all Leases, contracts, agreements, options
and other rights and obligations, whether written or oral, related to the
System and held or owned by the Seller or Manager on the Closing Date, which
are listed on SCHEDULES 3.8 and 3.14.
"Costs of Remediation" refers to all out-of-pocket costs arising out
of or related to the presence of any Hazardous Materials existing as of the
Closing Date at any of the Leased Real Property, including, without
limitation, fees for services of attorneys, consultants, contractors, experts
and laboratories, and all other out-of-pocket costs, incurred in connection
with investigation, characterization, remediation or mitigation thereof.
"Current Assets" shall have the meaning as set forth in the
definition of Working Capital.
"Current Liabilities" shall have the meaning as set forth in the
definition of Working Capital.
"Damages" refers to, in respect of any obligation to indemnify any
Person pursuant to the terms of this Agreement, any losses, claims, Taxes,
damages, liabilities, deficiencies, obligations, judgments, settlements
(including, without limitation, settlements with federal, state and local
governmental entities), costs and expenses (whether or not arising out of
third party claims), including without limitation interest and penalties,
costs of investigation and reasonable attorneys' fees and disbursements;
excluding, however, all punitive, consequential and special damages.
"Deposit" has the meaning set forth in Section 2.3.
"Deposit Escrow Agreement" has the meaning set forth in Section
2.3(a).
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"Dispute Notice" has the meaning set forth in Section 2.5.
"Disputed Items" shall have the meaning set forth in Section 2.5.
"Employee Benefit Plan" refers to an Employee Pension Benefit Plan,
Employee Welfare Benefit Plan (where no distinction is required by the
context in which the term is used), or any compensation plan, incentive plan
(whether or not stock related), bonus plan or fringe benefit plan.
"Employee Costs" refers to all costs of Seller or Manager incurred
in connection with the System Employees, including, without limitation, any
obligation for wages, commissions, severance, vacation and holiday pay, sick
pay, bonuses, retiree or employee medical benefits, obligations to employees
under COBRA and other health insurance obligations, other benefits due
employees under Employee Welfare Benefit Plans or Employee Pension Benefit
Plans, or any obligation under any employment agreement or employment-at-will
relationship.
"Employee Pension Benefit Plan" has the meaning set forth in Section
3(2) of ERISA.
"Employee Welfare Benefit Plan" has the meaning set forth in Section
3(1) of ERISA.
"Enforceability Exceptions" has the meaning set forth in Section 3.1.
"Environmental Laws" refers to, as of the date hereof, any existing
federal, state or local statute, regulation or ordinance or any existing
judicial or administrative decree or decision with respect to any Hazardous
Materials, drinking water, groundwater, wetlands, landfills, open dumps,
storage tanks, underground storage tanks, solid waste, waste water, storm
water runoff, waste emissions or xxxxx. Without limiting the generality of
the foregoing, the term will encompass each of the following statutes, and
the regulations promulgated thereunder, in each case as in effect as of
Closing: (a) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (codified in scattered Sections of 26 U.S.C., 33
U.S.C., 42 U.S.C. and 42 U.S.C. Section 9601 et seq., "CERCLA"); (b) the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et
seq., "RCRA")); (c) the Hazardous Materials Transportation Act (49 U.S.C.
Section 1801 et seq., "HMTA"); (d) the Toxic Substances Control Act (15
U.S.C. Section 2061 et seq., "TSCA"); (e) the Clean Water Act (33 U.S.C.
Section 1251 et seq.); (f) the Clean Air Act and Amendments (42 U.S.C.
Section 7401 et seq.); (g) the Safe Drinking Water Act (21 U.S.C. Section
349; 42 U.S.C. Section 201 and Section 300 et seq.); (h) the National
Environmental Policy Act of 1969 (42 U.S.C. Section 4321); (i) the Superfund
Amendments and Reauthorization Act of 1986 (codified in scattered Section of
10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C., "XXXX"); and (j) Title III of
the Superfund Amendments and Reauthorization Act (42 U.S.C. Section 1101 et
seq.).
"ERISA" refers to the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which is, or was at any relevant time, treated as a single
employer with the Seller pursuant to Section 4001(b) of ERISA.
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"Escrow Agent" has the meaning set forth in Section 2.3(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" refers to, collectively, (a) any cash, cash
equivalents or marketable securities of the Seller (including for this
purpose all collected funds and items in the process of collection received
in bank accounts associated with Seller through 12:01 a.m., Central Time, on
the Closing Date), (b) any rights of the Seller to any Tax refund with
respect to periods prior to the Closing Date, (c) any accounts receivable or
notes receivable of Seller as to which the account debtor is any Affiliate
thereof, (d) any assets of any Employee Benefit Plan maintained by Seller or
Manager, (e) any property, casualty, workers' compensation or other insurance
policy or related insurance services contract relating to Seller or any of
its Affiliates and any rights of Seller or any of its Affiliates under such
insurance policy or contract, other than rights under such insurance policies
or contracts with respect to any Assumed Liability or any casualty affecting
any of the Purchased Assets, (f) any rights of Seller under this Agreement or
under any other agreement between Seller and Buyer, (g) any assets,
properties or rights of Seller listed on SCHEDULE 1.2 and any assets,
properties or rights of Manager that are used in the System but are not
dedicated exclusively to Seller or the System, including, without limitation,
those identified on SCHEDULE 1.2, (h) all past, present or future claims,
chooses in action and rights or actions by Seller against third parties
relating to any Excluded Asset or any Excluded Liability, (i) corporate
minute books and stock records of Seller and (j) any books, records and
information related to any of the Excluded Assets or Excluded Liabilities.
"Excluded Liabilities" has the meaning set forth in Section 2.2.
"FCC" shall mean the United States Federal Communications Commission.
"FCC Counsel" has the meaning set forth in Section 8.5.
"FCC License" means the license issued by the FCC, call sign
KNKN457, to operate a cellular system in the RSA, and any amendments or
modifications thereto.
"Final Approval" means an action of the FCC granting its consent to
the assignment of the FCC License without conditions which in the aggregate
would have a Material Adverse Effect, and which action has become a Final
Order.
"Final Order" means any action of the FCC or any other Governmental
Authority with jurisdiction over Seller, the Licenses or any of the Purchased
Assets which is not reversed, stayed, enjoined, set aside, annulled, or
suspended, and with respect to which no timely request for stay, motion or
petition for reconsideration or rehearing, application or request for review,
or notice of appeal or other judicial petition for review is pending, and as
to which the time for filing any such request, motion, petition, application,
appeal, or notice, and for the entry of an order staying, reconsidering, or
reviewing on the FCC's or other Governmental Authority's own motion, has
expired.
"Final Statement" has the meaning set forth in Section 2.5.
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"GAAP" refers to generally accepted accounting principles of the
United States, as in effect from time to time.
"Governmental Authority" means any government or political
subdivision thereof, whether federal, state, local or foreign, or any agency,
commission or regulatory or administrative authority or instrumentality.
"Hazardous Materials" refers to each and every element, compound,
chemical mixture, contaminant, pollutant, material, waste or other substance
which is defined, determined or identified as hazardous or toxic under any
Environmental Law or the Release of which is prohibited under any
Environmental Law. Without limiting the generality of the foregoing, the term
will include:
(a) "hazardous substances" as defined in CERCLA, XXXX, or
Title III of the Superfund Amendments and Reauthorization Act, each as
amended to date, and regulations promulgated thereunder;
(b) "hazardous waste" as defined in RCRA and regulations
promulgated thereunder;
(c) "hazardous materials" as defined in the HMTA, as amended
to date, and regulations promulgated thereunder; and
(d) "chemical substance or mixture" as defined in the TSCA, as
amended to date, and regulations promulgated thereunder.
"HSR Act" refers to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"HSR Filing" shall have the meaning set forth in Section 6.1.
"HSR Termination" is defined in Section 7.5.
"Inventories" shall mean, with respect to the System, all cellular
telephone and other phone units, and related components, spare parts and
accessories owned by Seller and maintained in inventory, outside warehouses,
by third parties on a consignment basis or in transit or on order on the
Closing Date.
"IRS" refers to the Internal Revenue Service of the United States
Department of the Treasury.
"Knowledge", as applied to Seller refers to the actual knowledge of
those persons listed on SCHEDULE 1.3 hereto.
"Leased Real Property" has the meaning set forth in Section 3.8(b).
"Leases" has the meaning set forth in Section 3.8(b).
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"Licenses" shall mean all licenses, permits, grants, certificates or
other authorizations from the FCC, Federal Aviation Administration, public
utility commissions, public service commissions and any other regulatory
agencies, if any, issued in connection with the System on or before the
Closing Date, and all applications and construction permits related thereto,
including, without limitation, the Licenses identified on SCHEDULE 3.11
hereto.
"Lien" or "Liens" means any lien, pledge, mortgage, security
interest, claim, lease, charge, option, right of first refusal, right of
first offer, put or call right, easement, servitude, transfer restriction
under any stockholder or similar agreement, or encumbrance of every kind.
"Management Agreement" has the meaning set forth in the Background.
"Manager" means PCM, Inc., a New Jersey corporation.
"Material Adverse Change" means a change or set of circumstances or
conditions that has had or is reasonably likely to result in a Material
Adverse Effect.
"Material Adverse Effect" refers to a material adverse effect with
respect to the business, assets, properties, operations or financial
condition of Seller, taken as a whole.
"Monthly Financial Statements" shall have the meaning set forth in
Section 6.7.
"Multiemployer Plan" has the meaning set forth in Section 3(37) of
ERISA.
"Negative Working Capital Amount" shall have the meaning set forth
in Section 2.5(c).
"Permits" refers to any permit, approval, authorization, license,
variance, or permission required by a governmental authority, including
zoning commissions, under any applicable laws other than the Licenses.
"Permitted Exceptions" refers to: (i) the matters disclosed by or
that would be disclosed by any accurate surveys of the Leased Real Property,
(ii) those matters set forth or that would be set forth as title exceptions
in title insurance commitments with respect to the Leased Real Property,
(iii) liens for Taxes not yet delinquent and for which Buyer is receiving a
credit at Closing as a Current Liability in the Working Capital and (iv) such
other minor imperfections of title which will not in the aggregate materially
interfere with the use of the Leased Real Property as it is currently being
used.
"Permitted Liens" means (i) any Lien for taxes and assessments not
yet past due or otherwise being contested in good faith and for which
appropriate reserves have been established on the books of Seller and are
taken into account in determining the amount of Current Liabilities, (ii) any
Lien arising out of deposits made to secure leases or other obligations of a
like nature arising in the ordinary course of business, (iii) as to
leaseholds, interests of the lessors thereof under the applicable Lease and
Liens affecting the interest of such lessors, (iv) any Lien affecting real
property that does not materially interfere with the use by Seller of the
property subject thereto or affected thereby (including any easements, rights
of way, restrictions,
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installations or public utilities, minor title imperfections and
restrictions, reservations in land patents, zoning ordinances or other
similar liens), and (iv) any Lien set forth on SCHEDULE 1.4.
"Person" refers to any individual, corporation, company (including
any limited liability company), partnership, joint venture, trust,
unincorporated organization, government or any agency or political
subdivision thereof.
"Preliminary Grant" means an action by the FCC and other applicable
state regulatory authority consenting to or authorizing the transfer of
control of the Licenses to Buyer, which action has not yet become a Final
Order.
"Preliminary Statement" has the meaning set forth in Section 2.4(b).
"Proratable Items" has the meaning set forth in Section 2.3
"Purchased Assets" refers to all the business, properties, assets,
goodwill, rights and claims of whatever kind and nature, real or personal,
tangible or intangible, known or unknown, actual or contingent and wherever
situated, which are owned by Seller and used in, held for use by, or related
to the System, including Seller's rights under leases of what would otherwise
be Purchased Assets, or owned or leased by Manager, as nominee or agent for
Seller, and dedicated exclusively to the operation of the System, but
excluding all Excluded Assets, as the same may exist on the Closing Date,
including, without limitation, the following:
(a) all Inventories, machinery, equipment, vehicles, fixed
assets, test equipment, computers, vehicles, furniture, fixtures,
office materials and other tangible personal property related to or
used in connection with the operation of the System including, without
limitation, any transmitters/receivers, towers and antennas, switching
equipment, computer hardware and software and all other installed
items, and all spare parts, accessories, supplies thereto, and all
items listed on SCHEDULE 3.9;
(b) all accounts receivable and notes receivable and other
claims for money or other obligations due to Seller arising out of the
System;
(c) all of the Technology;
(d) all right, title and interest in, to and under all
Contracts and Leases, subject in each case to the terms of such
Contracts and Leases;
(e) all books and records of the System, including books and
records and databases related to inventory, purchasing, accounting,
sales, maintenance, repairs, marketing, banking, personnel files for
Transferred Employees and all files, customer and supplier lists,
records, literature and correspondence;
(f) the FCC License;
(g) to the extent legally assignable, all other Licenses and
Permits;
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(h) to the extent any of the following relate to any Assumed
Liability or any of the Purchased Assets: all past, present or future
claims, refunds (excluding Tax refunds with respect to periods prior to
the Closing Date), causes of action, rights of recovery, defenses,
rights of setoff and rights of recoupment, including all rights of
Seller under any property, casualty, workers' compensation or other
insurance policy or related insurance services contract;
(i) all deposits and prepaid expenses of Seller or Manager,
but only to the extent they relate to any Assumed Liability or any of
the Purchased Assets, and provided that Seller shall be entitled to a
credit for such deposits and prepaid expenses as a Current Asset in the
Working Capital;
(j) any other tangible assets of Seller which are used in the
System and which are of a nature not customarily reflected in the books
and records of a business, such as assets which have been written off
for accounting purposes but which are still used by, or of value to,
the System;
(k) the right to receive and retain mail, payments relating to
accounts receivable and other communications, provided that Seller
shall be entitled to a credit for the related accounts receivable as a
Current Asset in the Working Capital;
(l) the right to xxxx and receive payment for products shipped
or delivered and/or services performed but unbilled or unpaid as of the
Closing, provided that Seller shall be entitled to a credit for the
same as a Current Asset in the Working Capital; and
(m) all goodwill associated with the business of the System.
"Release" refers to any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, storing, escaping, leaching,
dumping, burying, abandoning, or disposing into the environment.
"Schedules" refers to, collectively, the various Schedules and
Exhibits attached to this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" refers to the United States Securities and Exchange Commission.
"Seller " has the meaning set forth in the preamble.
"Subsidiary" of any specified Person means any corporation,
partnership, limited liability company, joint venture, association or other
business entity, whether now existing or hereafter organized or acquired, (i)
in the case of a corporation, of which at least 50% of the total voting power
is held by such first named person or any of its Subsidiaries and such first
named Person
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or any of its Subsidiaries has the power to direct the management, policies
and affairs thereof; or (ii) in the case of a partnership, joint venture,
association or other business entity, with respect to which such first named
Person or any of its Subsidiaries has the power to direct or cause the
direction of the management and policies of such entity by contract or
otherwise.
"Support Documents" shall have the meaning set forth in Section
2.4(b).
"System" has the meaning set forth in the Background.
"System Employee" means any employee of Manager who, pursuant to the
terms of the Management Agreement, is currently dedicated exclusively to the
business, operation or maintenance of the System, all of which System
Employees are identified on SCHEDULE 1.5 attached hereto.
"Tax Return" refers to any report, return, information return or
other information required to be supplied to a taxing authority in connection
with Taxes.
"Taxes" or "Tax" refers to all federal, state, local and foreign
taxes, charges, fees, levies, imposts, duties or other assessments,
including, without limitation, income, gross receipts, excise, employment,
sales, use, telecommunications, transfer, license, payroll, franchise,
severance, stamp, occupation, windfall profits, environmental (including
taxes under Code Section 59A), premium, federal highway use, commercial rent,
customs duties, capital stock, paid up capital, profits, withholding, Social
Security, single business and unemployment, disability, real property,
personal property, registration, ad valorem, value added, alternative or
add-on minimum, estimated, or other tax or governmental fee of any kind
whatsoever, imposed or required to be withheld by the United States or any
state, local, foreign government or subdivision or agency thereof, including
any interest, penalties or additions thereto, whether disputed or not.
"Technology" refers to all patents, trademarks, servicemarks, trade
names and copyrights, and all registrations and pending applications for
registration therefor, computer software, technology, inventions, know-how
and trade secrets owned by or licensed to Seller or licensed or franchised or
used in the conduct of the System and operations thereof other than Excluded
Assets.
"Transition Services Agreement" is defined in Section 6.6.
"WARN" means the Worker Adjustment Retraining and Notification Act,
29 U.S.C. 2101 et seq.
"Working Capital" as of the Closing Date shall be equal to the
difference between: (a) the Current Assets and (b) the Current Liabilities.
As used herein, the term "Current Assets" shall mean the sum of all
of Seller's accounts and notes receivable, Inventories which will reasonably
be expected based on past practices to be consumed in the normal course of
business within six months after the Closing, reflected at net
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book value, and prepaid expenses, but only to the extent the foregoing items
constitute Purchased Assets, determined as of 12:01 a.m. on the Closing Date
in accordance with GAAP, subject to the following modification:
(1) Accounts receivable for purposes of the Working Capital shall be
valued as follows:
(a) 100% of the face amount for accounts receivable which are 30
days or less past due;
(b) 90% of the face amount for accounts receivable which are 31
days or more and 60 days or less past due;
(c) 60% of the face amount for accounts receivable which are 61
days or more and 90 days or less past due;
(d) 35% of the face amount for accounts receivable which are 91
days or more and 120 days or less past due; and
(e) 0% of the face amount for accounts receivable which are 121
days or more past due.
Notwithstanding the foregoing, to the extent that any such
accounts are in dispute at the time of the Closing Date, the disputed
portion of such receivables shall be valued at 35% of the face amount
and the undisputed portion shall be valued in accordance with the
applicable provisions of this entire clause (1).
As used herein, the term "Current Liabilities" shall mean the sum of all
of Seller's subscriber deposits received, trade accounts payable and accrued
expenses incurred in the normal course of business, and deferred revenues,
all determined as of 12:01 a.m. on the Closing Date in accordance with GAAP.
"Working Capital Deficiency" shall have the meaning set forth in
Section 2.5.
"Working Capital Excess" shall have the meaning set forth in Section
2.5.
SECTION 2. BASIC TRANSACTION.
2.1 PURCHASE AND SALE OF PURCHASED ASSETS. On the terms and subject
to the conditions set forth in this Agreement, at the Closing, Buyer will
purchase from Seller, and Seller will sell, transfer, assign, convey and
deliver to Buyer, all of Seller's right, title and interest in and to the
Purchased Assets, free and clear of all Liens other than Permitted Liens. In
addition, Manager shall sell, transfer, assign, convey and deliver to Buyer
any Purchased Assets in the possession of Manager or in which Manager is in
title, provided, however, that it is acknowledged that such Purchased Assets
are held by Manager as agent/nominee pursuant to the Management Agreement and
Manager is not entitled to compensation or remuneration from Buyer with
respect thereto.
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2.2 ASSUMPTION OF LIABILITIES. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, Buyer shall assume
and agree to perform and discharge the Assumed Liabilities. Buyer shall not
be liable for any liabilities, debts, contracts, agreements, or other
obligations of Seller or Manager of any nature whatsoever other than the
Assumed Liabilities (such other liabilities, debts, contracts, agreements or
obligations of Seller and Manager other than the Assumed Liabilities being
referred to as the "EXCLUDED LIABILITIES"); without limitation of the
foregoing, the Excluded Liabilities shall be deemed to include any liability
of Seller or Manager (i) for unpaid Taxes for periods ending on or prior to
the Closing or for Taxes arising in connection with the consummation of the
transactions contemplated by this Agreement, (ii) for costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby except as otherwise expressly provided in this Agreement, (iii) under
any Employee Benefits Plans, (iv) for borrowed money, except as expressly
provided in connection with the Cap-Ex Amount, or (v) under this Agreement.
2.3 PURCHASE PRICE.
(a) The purchase price (the "PURCHASE PRICE") for the
Purchased Assets and the Assumed Liabilities shall be the sum of: (a)
One Hundred and twenty-five Million Dollars ($125,000,000) (the "BASE
AMOUNT"), PLUS (b) the Working Capital as of the Closing Date PLUS (c)
the Cap-Ex Amount, plus or minus the amount of any proratable items of
the Seller, including Seller's share of rent, property taxes (based
solely and without further adjustment or reproration on 103% of the
most recent invoices or assessments received by Seller in connection
with such taxes), license fees (including pre-paid license fees),
customer prepayments, prepaid advertising charges, prepaid rent,
accrued revenue relating to the provision of phone services which are
unbilled as of the Closing Date and prepaid insurance policies to the
extent expressly assumed by Buyer, to the extent such items are
proratable, and only to the extent such items are not otherwise
included in Working Capital or the Cap-Ex Amount, all determined in
accordance with GAAP as of the close of business on the date
immediately preceding the Closing Date ("Proratable Items"). The
Purchase Price shall be paid as follows: (a) Buyer shall deliver by
wire transfer of immediately available funds an amount equal to Ten
Million Dollars $10,000,000 (the "DEPOSIT") to an escrow account with
Chase Manhattan Trust Company (the "Escrow Agent") simultaneous with
the execution hereof and pursuant to the terms of an Escrow Agreement
(the "DEPOSIT ESCROW AGREEMENT") by and among Buyer, Seller and the
Escrow Agent, the form of which is attached hereto as Exhibit A, and
(b) on the Closing Date, Buyer shall deliver to Seller by wire transfer
of immediately available funds: (i) an amount equal to the difference
between the Base Amount and the Deposit, minus the Closing Escrow
Amount (as defined below), PLUS (ii) the amount of Working Capital and
Cap-Ex Amount, if any, determined pursuant to Section 2.4, plus or
minus (iii) the Proratable Items, if any, determined pursuant to this
Section 2.3(a) and Section 2.4.
(b) At Closing, the Escrow Agent shall deliver by wire
transfer of immediately available funds the Deposit to Seller and any
accrued interest on the Deposit to Buyer. If the Closing does not occur
as a result of Seller's termination of the
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Agreement pursuant to Section 9.1(c), then, subject to the terms of
the Deposit Escrow Agreement, the Escrow Agent shall deliver the
Deposit to Seller and any accrued interest on the Deposit to Buyer.
(c) Buyer shall deliver to the Escrow Agent $5,000,000 (the
"CLOSING ESCROW AMOUNT"), which Closing Escrow Amount shall be held,
administered and released by the Escrow Agent pursuant to the terms of
a certain closing escrow agreement, the form of which is attached
hereto as EXHIBIT D (the "CLOSING ESCROW AGREEMENT").
2.4 WORKING CAPITAL.
(a) In the event that the Working Capital plus Cap-Ex Amount
plus Proratable Items as of the Closing Date exceeds zero, Seller shall
be entitled to the amount of such excess. In the event that the Working
Capital plus Cap-Ex Amount plus Proratable Items as of the Closing Date
is negative, Buyer shall be entitled to the amount of such deficit.
(b) As soon as practicable but no later than five (5) days
before the scheduled Closing Date, Seller shall prepare and deliver to
Buyer a statement setting forth Seller's good-faith estimate of the
Working Capital, Cap-Ex Amount and Proratable Items as of the Closing
Date ("PRELIMINARY STATEMENT"), which shall be certified by Seller and
the Manager to have been prepared in good faith and in accordance with
the principles described in the definitions of "Working Capital" and
"Cap-Ex Amount" and "Proratable Items." In conjunction with the
preparation of the Preliminary Statement, Buyer and its representatives
shall be entitled to review all work papers, schedules and other
supporting materials ("SUPPORT DOCUMENTS"), and consult with Seller and
Manager and their representatives regarding the methods used to
calculate the Working Capital, Cap-Ex Amount and Proratable Items.
After the delivery of the Preliminary Statement and prior to the
Closing, Buyer and Seller shall attempt to resolve any disputes between
Buyer and Seller with respect to the Preliminary Statement. Prior to
Closing, Buyer shall advise Seller in writing as to any dispute Buyer
has with the Preliminary Statement and provide Seller with Buyer's
calculation of the Working Capital, Cap-Ex Amount and Proratable Items,
accompanied by a certificate signed by the President or Chief Financial
Officer of Buyer certifying that Buyer's calculation was made in good
faith and in accordance with the principles described in the
definitions of "Working Capital", "Cap-Ex Amount" and "Proratable
Items" and shall be accompanied by Support Documents, to the extent the
same is available to Buyer ("BUYER'S ESTIMATE"). In the event Buyer's
Estimate is less than $100,000 less than the Preliminary Statement, the
Closing shall proceed based upon the Preliminary Statement. In the
event Buyer's Estimate is more than $100,000 less than the Preliminary
Statement, then the mid-point between the Preliminary Statement and
Buyer's Estimate shall be used as the Preliminary Statement for
purposes of Closing.
(c) Any Working Capital, Cap-Ex Amount and Proratable Items as
determined pursuant to Section 2.4(b) in excess of zero shall be paid
at Closing, to Seller, by Buyer, by wire transfer of immediately
available funds to an account or accounts
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designated by Seller or Seller's representative. In the event the
Working Capital plus Cap-Ex Amount plus Proratable Items as determined
pursuant to Section 2.4(b) is negative ("NEGATIVE WORKING CAPITAL
AMOUNT"), Seller shall either: (i) pay such Negative Working Capital
Amount to Buyer at Closing by wire transfer of immediately available
funds to an account or accounts designated by Buyer or its
representative; or (ii) authorize a reduction in the Base Amount equal
to the Negative Working Capital Amount.
2.5 POST-CLOSING ADJUSTMENT. As promptly as practicable, but in no
event later than ninety (90) days after the Closing, Seller shall deliver to
Buyer a statement setting forth the Working Capital, Cap-Ex Amount and
Proratable Items as of the Closing Date ("FINAL STATEMENT"), which shall be
certified by the Seller to have been prepared in good faith and in accordance
with the principles described in the definitions of "Working Capital",
"Cap-Ex Amount" and "Proratable Items." Buyer and its representatives shall
be entitled to review all Support Documents, and consult with Seller and its
representatives regarding the methods used to calculate the Working Capital,
Cap-Ex Amount and Proratable Items. Within thirty (30) days after receipt of
the Final Statement, Buyer shall notify Seller in writing (the "Dispute
Notice") of any dispute as to the Final Statement or any supporting
documentation furnished in connection therewith. The parties shall provide
one another with such additional information relating to the Final Statement
as each party shall reasonably request. Within thirty (30) days after
delivery of the Dispute Notice, if any, Seller and Buyer shall attempt to
resolve such dispute in good faith, and if the parties cannot agree within
forty-five (45) days after delivery of the Dispute Notice such dispute shall
be resolved by a nationally known independent firm of certified public
accountants (the "Accountants"), jointly chosen by Seller and Buyer. If
Seller and Buyer are unable to agree upon the Accountants, the Accountants
shall be selected by lot from a list of three "Big Five" accounting firms
(but excluding any firm which has previously audited the financial statements
of Seller or Buyer or any Affiliate). Promptly, but not later than thirty
(30) days after the acceptance of its appointment, the Accountants will
determine (based solely on presentations by the Seller and Buyer to the
Accountants and not by independent review) only those items in dispute
("DISPUTED ITEMS") and will render a report as to its resolution of such
Disputed Items and the resulting calculation of the Disputed Items, which are
the subject of the Dispute Notice. In resolving any Disputed Item, the
Accountants may not assign a value to such Disputed Item greater than the
greatest value for such Disputed Item claimed by either party or less than
the lowest value for such Disputed Item claimed by either party, in each case
as presented to the Accountants. The written decision of the Accountants
shall be final and binding on the parties hereto and shall not be subject to
dispute or review. Any fees or expenses payable to the Accountants shall be
shared equally between Seller and Buyer. If the Working Capital, Cap-Ex
Amount and Proratable Items as finally determined exceeds the amounts paid to
Seller at Closing pursuant to the Preliminary Statement ("WORKING CAPITAL
EXCESS"), then within ten (10) days after the final determination of the
Working Capital Excess, Buyer shall pay by wire transfer of immediately
available funds to an account or accounts designated by Seller or its
representative: (i) such Working Capital Excess, PLUS (ii) interest accrued
thereon from the Closing Date through the date of payment of such Working
Capital Excess, at a rate equal to the corporate base rate of interest
announced to be in effect from time to time by Bank One ("BASE RATE"). If the
Working Capital, Cap-Ex Amount and Proratable Items as finally determined is
less than the amounts paid to Seller at Closing pursuant to the Preliminary
Statement ("WORKING
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XXXXXXX XXXXXXXXXX"), then within ten (10) days after the final determination
of the Working Capital Deficiency, Seller shall pay to Buyer by wire transfer
of immediately available funds to an account or accounts designated by Buyer:
(i) such Working Capital Deficiency, PLUS (ii) interest accrued thereon from
the Closing Date through the date of payment of such Working Capital
Deficiency at a rate equal to the Base Rate.
2.6 ALLOCATION. At least five (5) Business Days prior to the Closing
Date, Buyer shall submit to Seller for its approval an allocation of the
consideration to be received hereunder (the "Allocation"). The parties agree
to file all Tax reports, returns and claims and other statements consistent
with the Allocation (and in particular to report the information required by
Section 1060(b) of the Code) in a manner consistent with such Allocation and
shall not make any inconsistent written statement or take any inconsistent
position on any returns, in any refund claim, during the course of any IRS or
other Tax audit, for any financial or regulatory purpose, in any litigation
or investigation or otherwise, so long as there exists a reasonable basis in
law to maintain such position. Each party shall notify the other party if it
receives notice that the IRS proposes any allocation different from the
Allocation. If no agreement on the Allocation is reached by the Closing, such
Allocation shall be determined by a nationally recognized appraisal firm
mutually acceptable to Buyer and Seller and the costs of such appraisal shall
be borne equally by Buyer and Seller.
2.7 THE CLOSING. The completion of the transfer ("CLOSING") of the
Purchased Assets shall be on a date as may be agreed upon by Buyer and Seller
within ten (10) Business Days after the later of the date of the HSR
Termination or the date of Final Approval, unless such time is extended or
shortened as may be agreed upon by Buyer and Seller, provided that each of
the conditions precedent set forth in Section 7 and Section 8 have been
satisfied ("CLOSING DATE"). The Closing shall be held at the offices of Xxxxx
& Ratner, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000, or if so
requested and agreed by Seller, at the offices of Buyer or its counsel. At
the Closing, all of the transactions provided for in Section 2 hereof shall
be consummated on a substantially concurrent basis, and the deliveries set
forth in Sections 9.3 and 9.4 shall be made.
2.8. VOTING AGREEMENT. Upon execution of this Agreement, Seller
shall obtain signatures of stockholders owning at least fifty-one percent
(51%) of the issued and outstanding shares of Capital Stock of Seller on a
voting agreement with Buyer in the form of EXHIBIT E attached hereto (the
"Voting Agreement") and within thirty (30) days from the date of execution of
this Agreement, Seller shall obtain signatures of stockholders owning
seventy-five percent (75%) of the issued and outstanding shares of Capital
Stock on the Voting Agreement or a resolution authorizing the execution,
delivery and performance of this Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents
and warrants to Buyer as follows:
3.1 DUE ORGANIZATION, POWER AND AUTHORITY.
(a) Seller is a corporation duly organized and validly
existing under the laws of the State of Nevada, and is duly qualified
to transact business as a foreign corporation in the State of Texas.
Seller has full corporate authority to execute, deliver and perform
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this Agreement and the other agreements contemplated hereby, and the
execution, delivery and performance by Seller of this Agreement and the
other agreements contemplated hereby and the consummation of the
transactions contemplated hereby and thereby, have been duly and
validly authorized by all necessary corporate action by Seller, and
this Agreement and the other agreements contemplated hereby constitute
legal, valid, and binding obligations of Seller enforceable in
accordance with their terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, moratorium, or similar laws from
time to time in effect which affect creditors' rights generally, and by
legal and equitable limitations on the enforceability of specific
remedies ("ENFORCEABILITY EXCEPTIONS"). Seller has full corporate power
and authority to own its properties and to carry on the business
presently being conducted by it. Seller does not have nor has it ever
had any Subsidiaries.
(b) Manager is a corporation duly organized and validly
existing under the laws of the State of New Jersey, and is duly
qualified to transact business as a foreign corporation in the State of
Texas. Manager has full corporate authority to execute, deliver and
perform this Agreement and the other agreements contemplated hereby,
and the execution, delivery and performance by Manager of this
Agreement and the other agreements contemplated hereby and the
consummation of the transactions contemplated hereby and thereby, have
been duly and validly authorized by all necessary corporate action by
Manager, and this Agreement and the other agreements contemplated
hereby constitute legal, valid, and binding obligations of Manager
enforceable in accordance with their terms, except as such enforcement
may be limited by the Enforceability Exceptions. Manager has full
corporate power and authority to own its properties and to carry on the
business presently being conducted by it. Manager does not have nor has
it ever had any Subsidiaries.
3.2 NO DEFAULT EFFECTED. Except as set forth on SCHEDULE 3.2,
neither the execution and delivery of this Agreement and the other agreements
contemplated hereby by Seller and Manager, nor the consummation of the
transactions contemplated hereby or thereby, nor the fulfillment of the terms
and compliance with the provisions hereof or thereof, will: (a) violate,
conflict with, result in a breach of or a default (or an occurrence which
with the lapse of time or action by a third party, or both, could result in a
default) or result in the termination or acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
to or consent of another Person or Governmental Authority with respect to any
of the terms, conditions or provisions of (i) any applicable order, writ,
decree, judgment, stipulation, injunction, charge or other restriction of any
court or of any governmental department, commission, board, bureau, agency,
or instrumentality applicable to Seller or Manager, or (ii) their respective
articles of incorporation or by-laws, or (iii) any indenture, contract,
agreement, lease or other instrument to which Seller or Manager is a party or
subject to or by which any of its properties or assets are bound, or (iv) any
applicable statute, law, rule, or regulation to which Seller or Manager is
subject, or (b) result in the creation or imposition of any Lien on the
Purchased Assets other than Permitted Liens.
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3.3 FINANCIAL STATEMENTS. Seller has heretofore provided Buyer with:
(a) reviewed balance sheets and statements of operations and cash flows for
the fiscal years ended December 31, 1997 and 1998, and (b) internally
prepared balance sheets and statements of operations and cash flows for the
period ended November 30, 1999 (the "Interim Financial Statements")
(collectively, including the footnotes thereto, but excluding the Interim
Financial Statements, the "Financial Statements"). The Financial Statements
and the Interim Financial Statements (other than normal year-end and other
adjustments and accruals which have not been included in the Interim
Financial Statements), have been prepared in conformity with GAAP and are
correct and complete and present fairly, in all material respects, the
assets, liabilities, financial position and results of operations of Seller
as of their respective dates and for the respective periods covered thereby.
3.4 NO MATERIAL ADVERSE CHANGE. Other than changes resulting from
general economic conditions or conditions affecting the telecommunications or
cellular telephone industries generally, and except for the transactions
contemplated by this Agreement, since November 30, 1999, a Material Adverse
Change has not occurred.
3.5 UNDISCLOSED LIABILITIES. Seller has no liabilities, commitments
or obligations (including without limitation unasserted claims whether known
or unknown), whether absolute or contingent, liquidated or unliquidated, or
due or to become due or otherwise, except for liabilities and obligations:
(i) reflected or reserved for on the Interim Financial Statements, (ii) that
have arisen since the date of the last of the Interim Financial Statements in
the ordinary course of the operations of the Seller, (iii) relating to
performance obligations under Contracts, Leases and Licenses in accordance
with the terms and conditions thereof, or (iv) as expressly set forth in any
Schedule hereto.
3.6 ACCOUNTS RECEIVABLE; PRICING OF SERVICES. All accounts
receivable of the Seller have arisen in the ordinary course of business of
the Seller and are reflected on the Seller's books and records in accordance
with GAAP and are subject to no asserted counterclaims, defenses or setoffs.
SCHEDULE 3.6(a) attached hereto sets forth a true, complete and accurate
list, as of the end of the most recent normal billing cycle of the System,
listing the total amounts of subscriber receivables and the aging of such
subscriber receivables based on the following schedule: 0-30 days, 31-60
days, 61-90 days and over 90 days, from the date thereof. SCHEDULE 3.6(b)
sets forth a description of all rate plans offered to subscribers of the
System as of the date of this Agreement.
3.7 INVENTORIES. Except as set forth on SCHEDULE 3.7, the values at
which Inventories are shown on the Financial Statements have been determined
in accordance with the normal valuation policy of the Seller, consistently
applied and in accordance with GAAP. The Inventories consist substantially of
items of: (a) quality, which are new, unused, undamaged, not defective and
possess valid manufacturer's warranties, and (b) a mix which is consistent
with Seller's past practices. Except as disclosed on SCHEDULE 3.7, Seller has
not sold and does not have in its Inventories any refurbished telephone
handsets. SCHEDULE 3.7 sets forth a list of manufacturers of telephone
handsets presently in Seller's Inventories. There are no product
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liability claims for products sold by Seller pending or, to the knowledge of
Seller, threatened against Seller.
3.8 REAL PROPERTY.
(a) REAL PROPERTY. Seller does not own any real property.
(b) LEASE OBLIGATIONS. Schedule 3.8 contains a list of all
leases and occupancy and/or use agreements, together with any
amendments thereto (the "Leases") (showing the lessor, lessee and the
location of the real property covered by such lease or other agreement,
the expiration date of the lease and, where available, an accurate
legal description of the property leased) with respect to all real
property leased by the Seller as lessee, all of which are hereinafter
referred to as the "Leased Real Property." No option has been exercised
under any of such Leases, except options whose exercise has been
evidenced by a written document, a true, complete and accurate copy of
which has been provided to Buyer with the corresponding Lease. Except
as set forth on SCHEDULE 3.8, all of the Leases set forth on such
Schedule (i) are in full force and effect and are valid, binding and
enforceable in accordance with their respective terms, (ii) all accrued
and currently payable rents and other payments required by such Leases
have been paid, (iii) neither Seller nor, to the Seller's knowledge,
any other party is in default in any respect under any such Leases,
(iv) no party has asserted any defense, set off, or counterclaim
thereunder, (v) no waiver, indulgence or postponement of any
obligations thereunder has been granted by any party, and (vi) the
validity or enforceability of any such Lease will be in no way affected
by the sale of the Purchased Assets to Buyer, provided all required
consents have been obtained from the other parties to such Lease.
(c) REAL PROPERTY CONDITION. To the knowledge of Seller, there
are no pending or threatened condemnation proceedings relating to any
of the Leased Real Property.
3.9 TANGIBLE PERSONAL PROPERTY . SCHEDULE 3.9 contains a list of all
material tangible personal property owned by Seller as of November 30, 1999.
To Seller's knowledge, the Purchased Assets and the Excluded Assets: (i) in
the aggregate are adequate to conduct the System in substantially the manner
currently conducted; and (ii) are suitable for the purposes for which they
are currently used. Except with respect to the warranties and representations
specifically set forth in this Agreement, Seller makes no warranty, express
or implied, whether of merchantability, suitability or fitness for a
particular purpose, or quality as to the Purchased Assets, or any part
thereof, or as to the condition or workmanship thereof, or the absence of any
defects therein, whether latent or patent, it being understood that, except
as provided in this Agreement, the Purchased Assets are to be conveyed
hereunder "AS IS" on the date hereof and in their present condition, subject
to reasonable use, wear and tear between the date hereof and the Closing
Date, and Buyer shall rely upon its own examination thereof.
3.10 TITLE TO ASSETS. The Seller has good and marketable title to
all of the tangible Purchased Assets, free and clear of all Liens other than
Permitted Liens.
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3.11 LICENSES AND PERMITS. SCHEDULE 3.11 lists all Licenses and
Permits of Seller in connection with the System. SCHEDULE 3.11 also lists
each cell site (a "Cell Site") currently in operation in the System. The
Licenses and Permits are in full force and effect, and there are no
proceedings in which Seller is a party, pending or, to the knowledge of
Seller, threatened, which affect the validity of such Licenses and Permits.
The FCC License has been issued by Final Order. No default or breach exists
with respect to any of the Licenses or Permits and no event or condition
exists which, but for the lapse of time or notice or both, would constitute a
default or breach with respect to any of such Licenses or Permits, which
default or breach would result in the revocation or impairment of the FCC
License or would otherwise have a Material Adverse Effect. Each of the Cell
Sites has been constructed, and is operating substantially in compliance with
the terms and conditions of the FCC License, and Seller has made all filings,
tower registrations and reports relating to each Cell Site or the FCC
License, except where the failure to make such filing, registration or report
would not adversely impact Buyer's ability to operate the System, and all
such filings, reports and registrations are accurate in all material
respects. All fees due and payable to the FCC by reason of Seller's operation
of the System or ownership of the FCC License have been paid. SCHEDULE 3.11
also lists each microwave radio station currently being operated by Seller in
the System, by call sign and location. Seller does not conduct any microwave
operations on frequencies that are subject to relocation under the FCC's
rules. Seller has not engaged in any course of conduct that could reasonably
be expected to impair the ability of Buyer or its Affiliates to be the holder
of the FCC License or is aware of any reason why the FCC License might not be
renewed in the ordinary course or why any pending applications or
notifications might not be approved. The ownership of the Assets and the
operation of the System by Seller are not subject to regulation or
supervision by the Texas Public Service Commission or other similar state
governmental instrumentality.
3.12 COMPLIANCE WITH LAWS. Seller has complied with all federal,
state, county, local and foreign laws, ordinances, regulations, orders,
judgments, injunctions, Licenses, Permits, awards or decrees applicable to
the System, except where non-compliance would not have a Material Adverse
Effect.
3.13 AFFILIATE AGREEMENTS. Except as set forth on SCHEDULE 3.13, no
Affiliate of Seller is presently a party to any agreement or transaction with
Seller.
3.14 CONTRACTS. SCHEDULE 3.14 contains a list of all Contracts
except for Contracts: (a) identified on SCHEDULE 3.8 (Leases), or (b)
included within the Excluded Assets or Excluded Liabilities. Except as set
forth on SCHEDULE 3.8, SCHEDULE 3.14 or SCHEDULE 1.2, Seller is not a party
to or bound by any Contract with respect to the System that requires the
expenditure of more than $10,000, nor is Seller a party to or bound by
Contracts that in the aggregate require the expenditure of more than $100,000
during the stated term of such Contracts (unless such Contracts may be
terminated without cost, penalty or damages on 90 days or less notice, or
except for those Contracts set forth in clauses (a) and (b) above). Except as
disclosed on SCHEDULE 3.8 or SCHEDULE 3.14, Seller has performed in all
material respects all obligations required to be performed by it with respect
to the Contracts and Leases and is not alleged to be in breach or default
under any such item and no event has occurred and no condition or state of
facts exists which, with the passage of time or the giving of notice or both,
would constitute such
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a default or breach by the Seller with respect to a Contract or Lease. Each
of the Contracts constitutes a legal, valid and binding obligation of Seller,
and to the knowledge of Seller, the other parties thereto, enforceable in
accordance with its terms subject to the Enforceability Exceptions and is in
full force and effect. Buyer has been provided with a true and complete copy
of each of the Contracts set forth on SCHEDULE 3.8 and 3.14.
3.15 TECHNOLOGY. SCHEDULE 3.15 is a true and complete list of all
Technology applied for, issued to, believed to be owned by or licensed to the
Seller or franchised and used in the conduct of the System and operations
thereof, and of all licenses of the Technology to or by the Seller and used
in the conduct of the System and operations thereof.
3.16 EMPLOYEES; LABOR RELATIONS. SCHEDULE 1.5 sets forth a true and
complete list of the names and current salaries of all System Employees. Such
employees are employees at will, and, except as disclosed on Schedule 1.5,
are not party to any employment agreement with Seller or Manager. Manager has
withheld all amounts required by law or agreement to be withheld by them from
the wages, salaries and other payments to the System Employees and neither
Seller nor Manager is liable for any arrears of wages or any Taxes for
failure to comply with any of the foregoing. Neither Seller nor Manager is a
party to any collective bargaining agreement, nor, to Seller's knowledge, any
threatened or anticipated union representation petitions respecting the
employees of Seller or Manager or efforts being made to organize any of the
employees of Seller or Manager. There are no controversies, grievances or
arbitrations pending or, to the Seller's knowledge, threatened between either
Seller or Manager and any of its current or former employees or any labor or
other collective bargaining unit representing any current or former employee
of either Seller or Manager that could reasonably be expected to result in a
labor strike, dispute, slow-down or work stoppage. There are no
administrative charges, arbitration or mediation proceedings or court
complaints pending or, to Seller's knowledge, threatened against Seller or
Manager before the U.S. Equal Employment Opportunity Commission or any state
or federal court or agency or any other entity concerning alleged employment
discrimination, contract violation or any other matters relating to the
employment of labor. There is no unfair labor practice charge or complaint
pending or, to Seller's knowledge, threatened against Seller or Manager
before the National Labor Relations Board or any similar state or local body.
There are less than 100 System Employees, and on that basis neither Seller
nor Manager is an "employer" as defined in 29 U.S.C. Section 2101(a)(1), or
otherwise subject to WARN.
3.17 EMPLOYEE BENEFITS.
(a) Schedule 3.17 lists all Employee Benefit Plans
that Manager or Seller maintains or to which Manager contributes for
the benefit of any current or former System Employee. Neither Seller,
Manager nor any ERISA Affiliate has participated in or made
contributions to any Multiemployer Plan during the five year period
prior to the Closing.
(b) Each Employee Benefits Plan is in compliance with
all applicable requirements of ERISA, the Code and other applicable
law. Each Employee Benefit Plan has been administered in all material
respects in accordance with its terms and with
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applicable legal requirements. Each Employee Pension Benefit Plan that
is intended to be qualified under Section 401(a) of the Code has been
determined by the IRS to be qualified under Section 401(a) of the
Code, and no action or proceeding has been instituted or threatened
which would affect the qualification of any such plan. There are not
pending, or to Seller's knowledge, threatened claims against, by or on
behalf of or otherwise involving any Employee Benefit Plan which would
result in any liability to Seller or Manager. No unfunded liabilities,
based upon the Pension Benefit Guarantee Corporation ("PBGC") rates
currently in effect for plan terminations, exist with respect to any
Employee Benefit Plan which is a "defined benefit plan" (within the
meaning of Section 3(35) of ERISA). No reportable event (as described
in Section 4043 or 4063(a) of ERISA), as to which the 30-day notice
requirement has not been waived, has occurred with respect to any
Employee Pension Benefit Plan. Neither Seller nor Manager has engaged
in a prohibited transaction or breach of fiduciary responsibility with
respect to any Employee Benefit Plan which could subject Purchaser or
any affiliate of Purchaser to a penalty or excise tax or other
liability under ERISA or the Code.
(c) With respect to each Employee Welfare Benefit
Plan listed on Schedule 3.17, Seller or Manager has complied with the
group health plan continuation coverage requirements of Section 4980B
of the Code and Section 601 et. seq. of ERISA.
(d) No current System Employee is or may become
entitled to post-employment severance or welfare benefits of any kind,
including without limitation, death or medical benefits (whether or not
insured) other than: (i) coverage mandated by Section 4980B of the Code
or Section 601 et. seq. of ERISA, and (ii) disability and medical
benefits which may be continued for such employees disabled at the
Closing.
(e) Except as disclosed on Schedule 6.4, no Employee
Benefit Plan or other agreement of Seller or Manager entitles any
System Employee or other person to any bonus, retirement, severance,
job security or similar benefit or any enhanced benefit of such type
solely as a result of the transactions contemplated by this Agreement.
No payment or benefit which may be made by Seller or Manager with
respect to any System Employee will be classified as an "excess
parachute payment" within the meaning of Section 280G of the Code.
3.18 INSURANCE. SCHEDULE 3.18 sets forth a list of all material
insurance policies providing coverage for the properties or operations of the
System. Seller shall keep such insurance in full force and effect through the
Closing Date. Such policies are valid and enforceable in accordance with
their terms and, except for the Enforceability Exceptions, are in full force
and effect and insure against risks and liabilities with responsible and
reputable insurance companies in such amounts and covering such risks to the
extent and in the manner deemed appropriate and sufficient by Seller. Seller
has not received written notice from any such insurance carrier: (i)
threatening a suspension, revocation, modification or cancellation of any
insurance policy or a material increase in any premium in connection
therewith, or (ii) informing
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Seller that any coverage listed on SCHEDULE 3.18 will or may not be available
in the future on substantially the same terms as now in effect.
3.19 LITIGATION. Except as set forth in SCHEDULE 3.19, there are no
actions, causes of action, claims, suits, grievances, administrative
proceedings, arbitration proceedings or other proceedings pending or, to the
knowledge of Seller, threatened against Seller or Manager or affecting the
operation of the System or which questions the validity of any action taken
or to be taken by Seller or Manager pursuant to or in connection with the
provisions of this Agreement, at law, in equity, or admiralty, or before or
by any governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, or private arbitrator. Neither Seller
nor Manager is in default with respect to any order, writ, injunction, or
decree of any court or governmental department, commission, board, bureau,
agency, or instrumentality, domestic or foreign, to which it is bound.
3.20 TAX MATTERS. Seller has filed all required Tax Returns, or
filed for extensions in connection therewith. All such Tax Returns are
correct and complete in all material respects. All Taxes owed by Seller have
been or will be paid, or properly reserved on the books of Seller. Seller and
Manager have withheld and paid (or reserved for payment) all Taxes required
to have been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor or other party. There are no
Liens (other than Permitted Liens) on any of the assets of Seller that arose
in connection with any failure (or alleged failure) to pay any Tax. Seller
has never been a member of an Affiliated Group (as defined in Code Sections
1504) filing a consolidated federal income Tax Return and does not have any
liability for the Taxes of any other Person under Reg Sections 1.1502-6 (or
any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise.
3.21 INTERIM OPERATIONS. Since November 30, 1999, except as set
forth in SCHEDULE 3.21, neither Seller nor Manager has: (i) incurred or
become subject to, or agreed to incur or become subject to, any obligation or
liability, except in the ordinary course of business, or otherwise
contemplated by or disclosed in this Agreement; (ii) mortgaged, pledged, or
subjected any of the Purchased Assets to any Lien, except for Permitted
Liens; (iii) sold or transferred or agreed to sell or transfer any portion of
its assets, other than Inventories and an immaterial amount of equipment in
the ordinary course of business, or cancelled or agreed to cancel any debts
or claims; (iv) suffered any extraordinary losses or waived any material
rights; (v) increased in any material respect, the rate of compensation
payable to any of its officers, agents or the System Employees over the rate
being paid or accrued to them as of November 30, 1999, except in accordance
with prior practices; (vi) terminated any material agreement, License, or
other instrument to which it was a party; (vii) through negotiation or
otherwise, made any commitment or incurred any liability or obligation to any
labor organization; (viii) suffered any uninsured casualty; (ix) entered into
any other transaction with an Affiliate, except in the ordinary course of
business; (x) obligated itself to give free or reduced price service to
customers with respect to the System other than promotions offered in the
ordinary course of business; or (xi) entered into any agreement or
understanding to do any of the foregoing.
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3.22 BROKERS. Except for TD Securities, Inc. whose fees shall be
paid by Seller, all negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Seller without the
intervention of any other Person acting on its behalf in such manner as to
give rise to any valid claim by any such Person against Seller for a finder's
fee, brokerage commission or other similar payment based on an arrangement
with Seller.
3.23 ENVIRONMENTAL MATTERS. (i) Neither Seller nor Manager has
generated, used, transported, treated, stored or Released, or suffered or
permitted anyone else to generate, use, transport, treat, store or Release
any Hazardous Materials with respect to the Purchased Assets or the System in
violation of any Environmental Laws; (ii) to the knowledge of Seller, (a)
there has not been any generation, use, transportation, treatment, storage or
Release of any Hazardous Materials in connection with the ownership or use of
the Purchased Assets, the operation of the System or on, in or under any
property or facility used, owned or leased by Seller or Manager or any
adjacent properties or facilities, which has created or might reasonably be
expected to create any liability under any Environmental Laws or which would
require reporting to or notification of any Governmental Authority; and (b)
no friable asbestos or polychlorinated biphenyl, and no underground storage
tank, is contained in or located on or under any property or facility now or
previously owned, used or leased by Seller or Manager in connection with the
System; (iii) any Hazardous Materials handled or dealt with in any way with
respect to the Purchased Assets or the System by Seller or Manager has been
and is being handled or dealt with in compliance with all Environmental Laws;
(iv) neither Seller nor Manager is subject to any order, decree, injunction
or other arrangement with any Governmental Authority or any indemnity or
other agreement with any third party relating to any Environmental Law or
Hazardous Materials; and (vi) there are no other circumstances or conditions
involving Seller or Manager that could reasonably be expected to result in
any claim, liability, investigation, cost or restriction on the ownership,
use or transfer of the Purchased Assets pursuant to any Environmental Law.
3.24 YEAR 2000 COMPLIANCE. Seller and Manager have reviewed the
areas within their business and operations which they believe could be
adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by Seller or Manager in connection with the System
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date on or after December 31, 1999),
and has made related inquiry of material suppliers, vendors and customers,
and, to the knowledge of Seller, any Year 2000 Problem with respect to the
Purchased Assets was eliminated prior to January 1, 2000.
3.25 DISCLOSURE; DISCLAIMER OF ADDITIONAL REPRESENTATIONS AND
WARRANTIES. No representation, warranty or statement made by or on behalf of
Seller or Manager in this Agreement or any Schedule, Exhibit or other
document furnished to Buyer in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby 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 in order to make the representation, warranty or statement, in light
of the circumstances in which it is made, not misleading. Except as expressly
set forth in this Agreement or in the Schedules, Exhibits or other documents
furnished to Buyer in connection with the execution, delivery and performance
of this Agreement or the consummation of the transactions contemplated
hereby, Seller makes no
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representations or warranties with respect to Seller or Manager or the System,
or its operations, assets (including, without limitation, the Purchased Assets),
liabilities, or conditions.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows:
4.1 AUTHORITY OF BUYER. Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Oklahoma and is
duly qualified to transact business as a foreign corporation in each
jurisdiction where the ownership of its assets or the conduct of its operations
requires such qualification. Buyer has full corporate power and authority to
execute, deliver and perform this Agreement, and the execution, delivery and
performance by Buyer of this Agreement and the other agreements contemplated
hereby to which Buyer is a party and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of Buyer, and this Agreement and the
other agreements contemplated hereby to which Buyer is a party constitute the
legal, valid, and binding obligation of Buyer enforceable against Buyer in
accordance with their terms, subject to the Enforceability Exceptions.
4.2 NO DEFAULT EFFECTED. Neither the execution and delivery of this
Agreement and the other agreements contemplated hereby by Buyer, nor the
consummation of the transactions contemplated hereby, nor the fulfillment of the
terms and compliance with the provisions hereof will violate, conflict with,
result in a breach of or a default (or an occurrence which with the lapse of
time or action by a third party, or both, could result in a default), or result
in the termination or acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice to or consent of
another Person or Governmental Authority with respect to any of the terms,
conditions or provisions of (i) any applicable order, writ, decree, judgment,
stipulation, injunction, charge or other restriction of any court or of any
governmental department, commission, board, bureau, agency, or instrumentality
applicable to Buyer, or (ii) the certificate of incorporation or by-laws of
Buyer, or (iii) any indenture, contract, agreement, lease, or other instrument
to which Buyer is a party or subject or by which or any of their properties or
assets are bound, or (iv) any applicable statute, law, rule, or regulation to
which it or its businesses are subject.
4.3 BROKERS. Except for Xxxxxxx & Associates, whose fees, costs and
expenses shall be paid by Buyer, all negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by Buyer without the
intervention of any other Person acting on its behalf in such manner as to give
rise to any valid claim by any such Person against Buyer for a finder's fee,
brokerage commission or other similar payment or reimbursement based on an
arrangement with Buyer.
4.4 APPROVALS AND CONSENTS. Except for the approvals, authorizations,
consents and other actions required from the FCC and the authorization required
under the HSR Act, no approval, authorization, consent or other action by, or
filing with, any governmental authority, administrative agency, court or other
party is necessary for Buyer's execution and delivery of this
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Agreement or performance of its obligations hereunder or the consummation of the
transactions contemplated hereby.
4.5 FINANCIAL CAPABILITY. Buyer has or will have sufficient financing
in place with which to consummate the transactions contemplated hereby and
agrees that it will not qualify any application submitted to the FCC for the
transfer of the Licenses with respect to any financing contingency. Buyer
acknowledges and agrees that its ability to complete the transactions
contemplated hereby is in no respect contingent on the outcome or success of the
impending initial public offering of the shares of Capital Stock of Xxxxxx
Communications Corporation, Buyer's ultimate parent.
4.6 DISCLOSURE; DISCLAIMER OF ADDITIONAL REPRESENTATIONS AND
WARRANTIES. No representation, warranty or statement made by or on behalf of
Buyer in this Agreement or any Schedule, Exhibit or other document furnished to
Seller in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby 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 in order to make the representation,
warranty or statement, in light of the circumstances in which it is made, not
misleading. Except as expressly set forth in this Agreement or in the Schedules,
Exhibits or other documents furnished to Seller in connection with the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, Buyer makes no representations or warranties
with respect to its operations, assets, liabilities, or conditions.
SECTION 5. OBLIGATIONS OF SELLER AND BUYER PENDING CLOSING.
5.1 CONDUCT OF SYSTEM. Between the date hereof and the Closing Date,
Seller and Manager shall conduct the System in the usual and ordinary course,
consistent with past practices, including, without limitation:
(a) operate and manage the System in full compliance with the
Licenses and Permits and the provisions of the Communication Act
applicable to the FCC License and the System;
(b) except for Inventories (other than Excluded Assets) sold
in the ordinary course of business, refrain from making any sale,
lease, transfer or other disposition of any of the Purchased Assets
other than in connection with replacements with assets of like use and
value or disposal of obsolete assets, or with the prior written
approval of Buyer;
(c) refrain from modifying, amending or altering, or
terminating any of the Contracts without the prior written approval of
Buyer, and from waiving or canceling any default or breach (other than
the waiver of late fees) or modifying, altering or terminating any
right or asset relating to or included in the Purchased Assets;
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(d) maintain insurance on the Purchased Assets comparable to
that maintained prior to the date hereof and, subject to Section 9.2,
use the proceeds of any claims for loss under such policies, together
with such other funds as may be required, to repair, replace, or
restore to their former condition any Purchased Assets which may be
damaged by fire or other casualty, all as soon as reasonably possible;
(e) maintain its books and records in accordance with prior
practice; maintain all of its property and assets in their present
condition, ordinary wear and tear excepted; and maintain supplies of
Inventories and spare parts consistent with past practice;
(f) refrain from changing agents' commission rates, sales
practices (including the quality of the credit of subscribers
contracting for cellular telephone service) or marketing practices;
(g) except for customary increases consistent with past
practices or policies, and in any case not exceeding 10% of base
salary, and awards of stay bonuses specific to this transaction, as set
forth on Schedule 6.4, refrain from increasing the compensation payable
or to become payable to any employee or agent;
(h) refrain from entering into any contract or renewal of any
existing contract for the employment of any employee or agent other
than "at-will" employees and agents;
(i) use its commercially reasonable efforts to (x) keep its
business organization intact, (y) retain the services of the key
employees of the System, and (z) maintain good relationships with its
employees, suppliers, advertisers, subscribers, agents and others
having business relations with it, in each case in accordance with past
practices;
(j) refrain from changing its organization documents in any
way which would adversely affect its power or authority to enter into
and perform this Agreement, or which would otherwise adversely affect
its performance of this Agreement;
(k) continue to advertise, promote and market the System and
its services in a manner consistent with past practice;
(l) refrain from subjecting any of the Purchased Assets to any
Lien not in effect on the date hereof other than Permitted Liens;
(m) refrain from doing or omitting to do any act which will
cause a breach of, or default under, or termination of (except in
accordance with its terms), any Contract;
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(n) provide to the Buyer, concurrently with filing thereof,
copies of all reports to and other filings with the FCC;
(o) not permit any of the Licenses or Permits to expire or to
be surrendered or voluntarily modified in a manner adverse to the
System, or take any action which would reasonably be expected to cause
the Licenses or Permits or any other Governmental Authority to
institute proceedings for the suspension, revocation or limitation of
rights under any of the Licenses or Permits; or fail to prosecute with
due diligence any pending applications to any Governmental Authority;
(p) notify Buyer in writing promptly after learning of the
institution or threat of any action against Seller in any court, or any
action against Seller before the FCC or any other Governmental
Authority, and notify Buyer in writing promptly upon receipt of any
administrative or court order relating to the Purchased Assets or the
System;
(q) if Seller deems it to be prudent, promptly replace any
employee who leaves the employ of the System; notify Buyer of the
hiring of any new employee, any material change in job function of an
employee, and the termination of any employee;
(r) pay or cause to be paid or provide for all Taxes of or
relating to Seller, the Purchased Assets and the employees required to
be paid to city, county, state, Federal and other governmental units up
to the Closing Date;
(s) cooperate with Buyer in connection with Buyer's efforts to
identify the current employees of Seller that Buyer would like to hire
following the Closing consistent with all applicable federal, state
and/or local employment laws, rules and regulations; and
(t) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into or exercisable for, or any rights, warrants
or options to acquire, any shares of its capital stock, or enter into
any agreement with respect to any of the foregoing, unless the Person
receiving any of such foregoing simultaneously executes the Voting
Agreement and agrees to be bound thereby as a "Covenanting Party" and
makes the representations and warranties required of a Covenanting
Party thereunder.
5.2 INFORMATION AND ACCESS. (a) Seller will permit Buyer and its
representatives to have full access at all reasonable times, and in a manner so
as not to interfere with Seller's normal operations, to all premises,
properties, books, records, contracts and documents of or pertaining to the
System. Buyer and each of its representatives will treat and hold as
confidential such information in accordance with the terms and provisions of
that certain Confidentiality
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Agreement, dated December 17, 1999, between Buyer and Seller (the
"Confidentiality Agreement"), which Confidentiality Agreement remains in full
force and effect.
(b) Seller acknowledges and agrees, subject to any reasonable
restrictions placed thereon by an owner or lessor of any real property involved,
that Buyer may commission, at Buyer's cost and expense, a data base search with
respect to environmental matters affecting any Leased Real Property. Buyer will
provide Seller and its counsel with a copy of any such data base search. In the
event that such data base search discloses any potential environmental issues
with respect to a parcel of Leased Real Property, Buyer may commission, at
Buyer's cost and expense, a so-called "Phase I" on-site environmental site
assessment of any such parcel of Leased Real Property (the "PHASE I
ASSESSMENT"). The Phase I Assessment shall be conducted by an engineering firm
mutually acceptable to Buyer and Seller. Buyer will provide Seller and its
counsel a copy of any Phase I Assessment. Any data base search reports and Phase
I Assessments shall be kept confidential by the parties, except that after the
Closing Buyer shall have no obligation to maintain the confidentiality thereof.
Seller will comply with any reasonable request for information made by Buyer or
its agents in connection with any such investigation. Seller covenants that any
response to any such request for information will be complete and correct in all
material respects. Seller will afford Buyer and its agents access to all
operations of Seller at all reasonable times and in a reasonable manner in
connection with any such investigation subject to any required approval of
Seller's landlords, which approval Seller will use its best efforts to obtain.
Should Buyer commission data base search reports and or Phase 1 Assessments, the
results of such investigations will have no effect upon the representations and
warranties made by Seller to Buyer under this Agreement. If the Phase I
Assessment indicates that there are significant environmental issues with
respect to a parcel of Leased Real Property, in the sole but reasonable judgment
of Buyer, after consultation with Seller and its counsel, Buyer and Seller shall
agree to either (a) relocate the tower or cell site, as the case may be, on the
affected parcel of Leased Real Property to a mutually agreeable alternative
site, or (b) exclude such parcel of Leased Real Property, and the associated
Lease, from the Purchased Assets, provided, however, that in such case, Seller
shall not be responsible for any breach of representations or warranties with
respect to the integrity or operation of the System as the same may be affected
by the exclusion of such parcel of Leased Real Property from the Purchased
Assets. Buyer and Seller shall share equally in the cost of relocating any tower
or cell site pursuant to this Section 5.2(b), provided, however, that in no
event shall Seller's liability under this Section 5.2(b) for costs of relocating
towers and/or cell sites exceed $100,000 in the aggregate.
(c) Seller shall allow Buyer the opportunity to conduct an engineering
review of the Purchased Assets to confirm that the Purchased Assets comply with
the Licenses and the regulations of the FCC and are otherwise in good condition
and repair, reasonable wear and tear excepted.
(d) Buyer and Seller agree to consult with each other with respect to
the digital build-out of the System and the expenditure of the Cap-Ex Amount,
including in connection with the configuration of the digital System and its
capabilities. In the event that Buyer requests changes to the System, including,
without limitation, configuration of the System, additional features or
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additional capacity, which Seller agrees to incorporate in the digital build-out
("Additional Buyer Requested Cap-Ex"), such Additional Buyer Requested Cap-Ex
shall be included in the Cap-Ex Amount at Closing notwithstanding the $5,000,000
limitation on Cap-Ex Amount. For example if the Cap-Ex Amount is $4,500,000
without the inclusion of Additional Buyer Requested Cap-Ex and the amount of
Additional Buyer Requested Cap-Ex is $1,000,000, the amount paid to Seller at
Closing for Cap-Ex Amount shall be $5,500,000. In the event that the Closing
does not occur as a result of a termination by Seller under Section 9.1(c) or
(e) of this Agreement, (i) Buyer agrees to immediately reimburse Seller for the
amount of all Additional Buyer Requested Cap-Ex, in which case, Additional Buyer
Requested Cap-Ex shall also include any costs incurred by Seller to re-configure
the System in a manner to be compatible with Seller's operations on a going
forward basis and (ii) Seller shall have the right to purchase from Buyer, or
Buyer's Affiliates, as the case may be, at cost, any machinery, equipment or
other capital items purchased by Buyer or its Affiliate to be incorporated into
the digital build-out of the System either before or after the Closing, and any
contracts or leases entered into by Buyer or Buyer's Affiliates related to the
digital build-out of the System (collectively, "Buyer Cap-Ex"). In the event
that the Closing does not occur as a result of a termination by Buyer under
Section 9.1(d) of this Agreement or by Seller or Buyer under Section 9.1(f) of
this Agreement, Seller shall have the right to purchase from Buyer all Buyer
Cap-Ex at cost, but Buyer shall not be obligated to reimburse Seller for any
Additional Buyer Requested Cap-Ex. In the event of a termination by Buyer under
Section 9.1(b), Buyer shall not be obligated to reimburse Seller for any
Additional Buyer Requested Cap-Ex and Seller shall have no right to purchase any
Buyer Cap-Ex from Buyer.
5.3 PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the
parties hereto shall refrain from intentionally taking any action which would
render any representation, warranty or covenant contained in Section 3 or
Section 4 of this Agreement inaccurate as of the Closing Date. Each party shall
promptly notify the other of any: (a) event or condition which would render any
representation or warranty set forth in Section 3 or Section 4 untrue or in
breach, or would cause any covenant in Section 5 or Section 6 to be unfulfilled,
or (b) any action, suit or proceeding that shall be instituted or threatened
against such party to restrain, prohibit or otherwise challenge the legality of
any transaction contemplated by this Agreement; provided that no such
supplemental disclosure shall be deemed to cure any breach of a representation
or warranty of Seller made in this Agreement unless Buyer fails to object in
writing to any such supplemental disclosure within ten (10) Business Days after
Buyer's receipt thereof.
SECTION 6. OTHER AGREEMENTS.
6.1 XXXX-XXXXX-XXXXXX. If necessary, as promptly as practicable after
the execution and delivery of this Agreement, but in any event within fifteen
(15) Business Days following the execution and delivery of this Agreement,
Seller and Buyer shall each prepare and file any required notification and
report form under the HSR Act, in connection with the transactions contemplated
hereby ("HSR FILING"). Seller and Buyer shall each request early termination of
the waiting period thereunder. Seller and Buyer shall respond with reasonable
diligence to any request for additional information made in response to such HSR
Filing. Buyer shall be responsible for the payment of all filing fees related to
the HSR Filing.
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6.2 FCC CONSENT. As promptly as practicable after the execution and
delivery of this Agreement, Buyer and Seller shall prepare all appropriate
applications for FCC consent, and such other documents as may be required, with
respect to the assignment of the FCC License to Buyer (collectively, the "FCC
Application"). Within ten (10) Business Days following execution and delivery of
this Agreement, Buyer and Seller shall deliver to each other their respective
completed portions of the FCC Application. Within twenty (20) Business Days
following the execution and delivery of this Agreement, Seller and Buyer shall
file, or cause to be filed, the FCC Application. Seller and Buyer shall
prosecute the FCC Application in good faith and with due diligence in order to
obtain the Final Order as expeditiously as practicable. If the Closing has not
occurred, for any reason, within the initial effective period of the FCC's grant
of the FCC Application, and neither Buyer nor Seller shall have terminated this
Agreement pursuant to Section 9, Buyer and Seller shall jointly request one or
more extensions of the effective period of such grant. No party hereto shall
knowingly take, or fail to take, any action, the intent or reasonably
anticipated consequence of which action or failure to act would be to cause the
FCC not to grant the FCC Application. Buyer shall pay any costs, fees or
expenses due in connection with the filing, or granting of, the FCC Application.
Buyer and Seller shall each oppose, at its own expense, any request for
reconsideration or judicial review of the granting of the FCC Application. The
parties further agree to cooperate in good faith and shall take all steps as may
be necessary or proper to expeditiously and diligently prosecute the assignment
application filed with the FCC to a favorable conclusion including, but not
limited to, the following: (a) appealing or seeking reconsideration of any FCC
denial of such assignment application or conditional grant; (b) satisfying any
conditions imposed upon such grant to the extent that such conditions require
actions which do not materially alter the benefits or burdens of either party
under this Agreement; and (c) taking all other actions necessary or appropriate
to bring about the transactions contemplated by this Agreement; provided,
however, such actions do not materially alter the benefits or burdens of either
party under this Agreement.
6.3 THIRD PARTY CONSENTS. Seller will use commercially reasonable
efforts to obtain all consents and approvals of other third parties required to
permit the transfer of the Purchased Assets to Buyer, provided that with respect
to Leases, Seller will use commercially reasonable efforts to obtain the
consents in the form of EXHIBIT F. Seller will also use commercially reasonable
efforts to obtain legal descriptions with respect to all of the Leased Real
Property. To the extent that the transfer of the Purchased Assets pursuant to
this Agreement is prohibited without the consent of a third party (including a
governmental entity) to any Contract or Lease and such consent is not obtained
prior to Closing, or if such transfer or attempted transfer would constitute a
breach of any Contract or Lease, nothing in this Agreement will constitute a
transfer or an attempted transfer thereof. In the event that any consent is not
obtained on or prior to the Closing Date, Seller shall use its commercially
reasonable efforts to: (i) provide Buyer with the benefits of the applicable
Contract or Lease, (ii) cooperate in any reasonable and lawful arrangement
designed to provide such benefits to Buyer, and (iii) enforce, at Buyer's
request, for the account of Buyer, any rights of Seller arising from any such
Contract.
6.4 SYSTEM EMPLOYEES. SCHEDULE 1.5 sets forth a list of all System
Employees as of the date hereof. Seller shall deliver to Buyer, at least sixty
(60) days prior to the Closing Date, an updated schedule of all System
Employees, if necessary. Buyer may, at its option, commencing
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sixty (60) days prior to the anticipated Closing Date, offer to hire, effective
as of the Closing Date, any of the System Employees, together with any inactive
System Employees on temporary leave for purposes of disability, jury duty,
family and medical leave, vacation or annual two-week national military duty.
Any System Employees hired by Buyer shall be deemed "Transferred Employees." On
and as of the Closing Date, Manager shall terminate all Transferred Employees
and shall terminate or reassign any System Employees that are not Transferred
Employees. Any cost, expense or liability related to the employment of the
System Employees that are not Transferred Employees (including accrued salaries,
bonuses, benefits, vacation or sick pay expense and other remuneration for
services rendered prior to the Closing) and any cost, expense or liability
resulting from, or incurred in connection with, such terminations or
re-assignments shall be the sole responsibility of Seller and Manager. With
respect to Transferred Employees, Buyer agrees to reimburse Seller, as part of
Working Capital, for one-half (1/2) of any stay-bonuses paid or payable to such
Transferred Employees pursuant to Seller's Stay-Bonus Plan set forth on Schedule
6.4 and Buyer further agrees to assume any accrued vacation of such Transferred
Employees as part of the Assumed Liabilities. The accrued vacation of all System
Employees as of the date of this Agreement is also set forth on Section 6.4. Any
other cost, expense or liability resulting from the employment of the
Transferred Employees prior to the Closing shall be the sole responsibility of
Seller and Manager. Nothing contained herein shall be construed to limit the
ability of Buyer to terminate any Transferred Employee following the Closing
Date for any reason.
6.5 EXCLUSIVITY. Unless and until this Agreement shall have been
terminated in accordance with its terms, the Seller shall not, through any
officer, director, employee, representative, agent or direct or indirect
stockholder of the Seller, directly or indirectly, encourage or solicit any
proposal that constitutes an Acquisition Proposal (as defined below), engage in
any discussions or negotiations or provide any information to any person
relating thereto or in furtherance thereof or accept any Acquisition Proposal.
For purposes of this Agreement, "Acquisition Proposal" means any offer to
acquire (or meaningful indication of interest in the acquisition of) all or any
substantial part of the System and properties or stock of the Seller, whether by
merger, consolidation, sale of assets or stock, tender offer or similar
transaction or series of transactions involving the Seller.
6.6 TRANSITION SERVICES. As of the Closing, Buyer and Seller shall
enter into a Transition Services Agreement ("TRANSITION SERVICES AGREEMENT")
providing for the transition of Seller's billing and other services to Buyer on
terms and conditions mutually acceptable to Buyer and Seller, including
reasonable compensation to Seller or Manager, as the case may be, for the
performance of such services.
6.7 FINANCIAL STATEMENTS AND CELLULAR SYSTEM INFORMATION. Seller
covenants and agrees that during the period after the execution of this
Agreement and prior to the Closing, Seller shall provide Buyer, within 30 days
of the end of each calendar month, Seller's unaudited consolidated balance sheet
and income statement for such month ("MONTHLY FINANCIAL STATEMENTS") and within
ten (10) days of their completion (whether before or after Closing), the
reviewed balance sheet and statements of operations and cash flows for the
fiscal year ended December 31, 1999 (the "1999 Financials"). The Monthly
Financial Statements will be true and
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correct in all material respects, will be prepared using the same accounting
methods and procedures as used in the preparation of the Interim Financial
Statements and will present fairly in all material respects the financial
position of Seller at the date indicated and the results of Seller's operations
for such period. The 1999 Financials will be true and correct in all material
respects, will be prepared using the same accounting methods and procedures as
used in the preparation of the Financial Statements and will present fairly in
all material respects the financial position of Seller at the date indicated and
the results of Seller's operations for such period. Seller also covenants and
agrees that during the period after the execution of this Agreement and prior to
the Closing, Seller shall provide Buyer, within 10 days of the end of each
calendar month (i) the number of subscribers on the System at the beginning and
end of such month, (ii) an accounts receivable aging report for the System,
(iii) the System's monthly billing reports, (iv) the outcollect and incollect
revenue and minutes of use for the top five roaming partners of the System, and
(v) other reports normally generated by Seller's financial accounting and
billing system as reasonably requested by Buyer.
6.8 COOPERATION. Seller and Buyer shall, upon request by the other,
furnish the other with all information concerning itself, its subsidiaries,
directors, officers and stockholders and such other matters as may reasonably be
necessary or advisable in connection with any financing for the transactions
contemplated by this Agreement (including, without limitation, any public debt
and/or equity financing by Buyer and/or its Affiliates) or any other statement,
filing, tax ruling request, notice or application made by or on behalf of Seller
or Buyer to any third party or Governmental Authority in connection with the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, Seller shall, and shall use commercially reasonable efforts to
cause its accountants and other representatives to, cooperate with Buyer and its
Affiliates in connection with any financing for the transactions contemplated by
this Agreement, including authorization to include Seller's financial statements
and any other relevant information in any filing with a Governmental Authority
and obtain comfort letters customary in public financing.
SECTION 7. CONDITIONS TO OBLIGATION OF SELLER AND MANAGER TO CLOSE. The
obligation of Seller and Manager to consummate the transactions contemplated by
this Agreement is subject to the satisfaction (unless waived in writing by
Seller and Manager) of the following conditions on or prior to the Closing Date:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Buyer contained in this Agreement shall have been true on and as of the date
of this Agreement and shall be true on and as of the Closing Date in all
material respects as though such representations and warranties are made on and
as of the Closing Date (provided that any representation or warranty contained
herein that is qualified by a materiality standard shall not be further
qualified hereby), except for representations and warranties that speak as of a
specific date or time other than the Closing Date (which need only be true and
correct in all material respects as of such date or time), and Buyer shall have
delivered to Seller a certificate of its President dated the Closing Date, to
the foregoing effect.
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7.2 COMPLIANCE WITH AGREEMENT. Buyer shall have performed and complied
in all material respects with all covenants and conditions to be performed or
complied with by it on or prior to the Closing Date, and Buyer shall have
delivered to Seller a certificate of its President, dated the Closing Date, to
the foregoing effect.
7.3 NO ADVERSE PROCEEDING. No court or administrative agency or other
governmental instrumentality of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, judgment, injunction or other order (whether temporary,
preliminary or permanent), in any case which will materially, adversely affect
the transactions contemplated in this Agreement; PROVIDED, HOWEVER, that the
parties shall use their reasonable efforts to cause any such decree, judgment,
injunction or other order to be vacated or lifted.
7.4 NECESSARY CONSENTS. At the Closing: (i) Seller and Buyer shall have
obtained all FCC and HSR consents and approvals required for the transfer of the
Purchased Assets to Buyer and the assumption of the Assumed Liabilities by Buyer
and (ii) the waiting periods under the HSR Act shall have expired or been
otherwise terminated without objection or upon satisfaction of any of the
relevant federal authorities ("HSR TERMINATION").
7.5 LEGAL OPINION. Seller shall have received the opinion of Xxxxxxx &
Xxxxxx, LLP, counsel to Buyer, opining to the representations and warranties of
Buyer made in Sections 4.1 and 4.2 (the opinion with respect to Section 4.2(iii)
being qualified by knowledge). In rendering such opinion, such counsel may rely
on certificates of officers of Buyer with respect to factual matters and
opinions of other counsel.
7.6 OTHER DOCUMENTATION. Seller shall have received all of the
documents and showings required to be delivered by Buyer at the Closing pursuant
to this Agreement, and such other documentation reasonably requested by counsel
to Seller and necessary and appropriate to complete the transactions
contemplated hereby.
SECTION 8. CONDITIONS TO OBLIGATION OF BUYER TO CLOSE. The obligation of Buyer
to consummate the transactions contemplated by this Agreement is subject to the
satisfaction (unless waived in writing by Buyer) of the following conditions on
or prior to the Closing Date:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller contained in this Agreement shall be true on and as of the date of
this Agreement and shall be true on and as of the Closing Date in all material
respects as though such representations and warranties are made on and as of the
Closing Date (provided that any representation or warranty contained herein that
is qualified by a materiality standard shall not be further qualified hereby),
except for representations and warranties that speak as of a specific date or
time other than the Closing Date (which need only be true and correct in all
material respects as of such date or time), and Seller shall have delivered to
Buyer a certificate executed by an officer of the Seller, dated as of the
Closing Date, to the foregoing effect.
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8.2 COMPLIANCE WITH AGREEMENT. Seller shall have performed and complied
in all material respects with all covenants and conditions to be performed or
complied with by it on or prior to the Closing Date, and Seller shall have
delivered to Buyer a certificate executed by an officer of Seller, dated as of
the Closing Date, to the foregoing effect.
8.3 NO ADVERSE PROCEEDING. No court or administrative agency or other
governmental instrumentality of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, judgment, injunction or other order (whether temporary,
preliminary or permanent), in any case which will materially, adversely affect
the transactions contemplated in this Agreement; PROVIDED, HOWEVER, that the
parties shall use their reasonable efforts to cause any such decree, judgment,
injunction or other order to be vacated or lifted.
8.4 NECESSARY CONSENTS. At the Closing: (i) Seller and Buyer shall have
obtained all FCC and HSR consents and approvals and all material consents and
approvals from third parties to the Contracts and Leases, required for the
transfer of the Purchased Assets to Buyer and assumption of the Assumed
Liabilities by Buyer, (ii) the HSR Termination shall have occurred, and (iii)
the Final Approval shall have been received. For purposes hereof "material
consents and approvals from third parties to the Contracts and Leases" shall
mean all consents and approvals, the failure of which to obtain would constitute
a Material Adverse Change.
8.5 LEGAL OPINION. Buyer shall have received the opinions of: (a) Xxxxx
& Xxxxxx, counsel to the Seller, opining to the representations and warranties
of Seller made in Sections 3.1 and 3.2 (the opinions with respect to Sections
3.2(a)(iii) and 3.2(b) being qualified by knowledge), and (b) Xxxxx & Xxxxxxx,
L.L.P., "FCC Counsel" to Seller, opining to the representations and warranties
of Seller made in Section 3.11 and Section 3.12 (with respect to the FCC
Licenses only) and that the Final Approval shall have been received. In
rendering its opinion, each such counsel may rely on certificates of officers of
Seller with respect to factual matters.
8.6 OTHER DOCUMENTATION. Buyer shall have received all of the documents
and showings required to be delivered by Seller at the Closing pursuant to this
Agreement, and such other documentation reasonably requested by counsel to Buyer
and necessary and appropriate to complete the transactions contemplated hereby.
SECTION 9. TERMINATION OF AGREEMENT.
9.1 TERMINATION. Anything in this Agreement to the contrary
notwithstanding, this Agreement and the transactions contemplated hereby may be
terminated in any of the following ways at any time before the Closing:
(a) At any time prior to Closing, by the mutual written
agreement of Buyer and Seller;
(b) By Buyer upon the material breach by the Seller or the
material inaccuracy or untruth of any of Seller's covenants or
agreements or representations or warranties
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contained in Section 3, Section 5 or Section 6 of this Agreement,
PROVIDED that: (i) such breach is not due primarily to the actions of
Buyer; (ii) such breach is not remedied within fifteen (15) Business
Days after receipt of notice thereof from Buyer (except a breach not
susceptible of cure, as to which there shall be no cure period, or a
breach which cannot be cured within such time frame provided that
Seller is diligently taking steps to cure such breach and further
provided that such breach is cured not less than two (2) Business Days
prior to Closing), and (iii) Buyer is not also in material breach of
this Agreement;
(c) By Seller upon the material breach by Buyer or the
material inaccuracy or untruth of any of Buyer's covenants or
agreements or representations or warranties contained in Section 4,
Section 5 or Section 6 of this Agreement, PROVIDED that (i) such breach
is not due primarily to the actions of the Seller; (ii) such breach is
not remedied within fifteen (15) Business Days after receipt of notice
thereof from Seller (except a breach not susceptible of cure, as to
which there shall be no cure period, or a breach which cannot be cured
within such time frame provided that Buyer is diligently taking steps
to cure such breach and further provided that such breach is cured not
less than two (2) Business Days prior to Closing), and (iii) Seller is
not also in material breach of this Agreement;
(d) By Buyer, if any of the conditions set forth in Section 8
of this Agreement have not been satisfied on or before September 30,
2000, and such condition or conditions have not been waived by Buyer,
PROVIDED, that (i) in the case of a third party protest in connection
with the Licenses, the parties agree to contest the protest in good
faith notwithstanding the dates set forth in this Section 9.1(d) for a
period not to extend beyond December 31, 2000; (ii) such failure of
condition or conditions is not due primarily to the actions of Buyer;
and (iii) Buyer is not then in material breach of this Agreement;
(e) By Seller, if any of the conditions set forth in Section 7
of this Agreement have not been satisfied on or before September 30,
2000, and such condition or conditions have not been waived by Seller,
PROVIDED, that: (i) in the case of a third party protest in connection
with the Licenses, the parties agree to contest the protest in good
faith notwithstanding the dates set forth in this Section 9.1(e) for a
period not to extend beyond December 31, 2000; (ii) such failure of
condition or conditions is not due primarily to the actions of Seller;
and (iii) Seller is not then in material breach of this Agreement; or
(f) By either Buyer or Seller, by written notice to the other
party, if the consummation of the transactions contemplated hereby
shall be prohibited by a final, non-appealable order, decree of
injunction of a Governmental Authority or court of competent
jurisdiction.
In the event this Agreement is terminated pursuant to this Section 9.1, all
further obligations of the parties hereunder shall terminate, except for the
obligations set forth in Sections 12.6 and
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12.8, except that nothing in this Section 9.1 shall relieve any party hereto of
any liability for such party's breach of this Agreement. In the event of a
termination of this Agreement by Seller in accordance with the terms of
SECTION 9.1(C), Seller shall be entitled to retain the Deposit as liquidated
damages, and not as a penalty, on account of any such termination. The
parties agree that the Deposit is a fair and reasonable approximation of the
damages that would be incurred by Seller in the event of a pre-Closing
default by Buyer resulting in a termination of this Agreement and that it
would be difficult, if not impossible, to quantify the actual damages which
would be incurred as a result of any such default. Seller's remedy provided
in this Section 9.2 shall be Seller's sole and exclusive remedy upon a breach
by Buyer of its representations, warranties, covenants or agreements
contained in this Agreement.
9.2 RISK OF LOSS. The risk of any loss to the Purchased Assets and all
liability with respect to injury and damage occurring in connection therewith
shall be the responsibility of Seller until the Closing. If any material part of
the Purchased Assets shall be damaged by fire, other casualty or other Force
Majeure Event (as defined herein) prior to the Closing hereunder, Seller shall
have the right and option:
(a) if the Closing would be delayed by less than thirty (30)
days in order to repair the damaged property (but not beyond December
31, 2000), to extend the Closing Date to the date that the damage or
destruction is substantially repaired or replaced; or
(b) at the request of Buyer, to proceed with Closing
hereunder, in which event such casualty shall not constitute a breach
by Seller of any representation, warranty or covenant in this
Agreement, and, at the election of Buyer, Seller shall pay or assign to
Buyer the insurance proceeds arising from such casualty. To the extent
any claim is not assignable, such Claim shall be pursued by Buyer, for
its own account and benefit, in the name of Seller. As used in this
Section 9.2, "Force Majeure Event" shall mean an act of God, weather
related event or other natural occurrence or event that can not be
reasonably anticipated or controlled.
9.3 DELIVERIES BY SELLER AT THE CLOSING. At the Closing, Seller shall
deliver, or cause to be delivered, to Buyer, the following items:
(a) The duly executed officer's certificates referred to in
Sections 8.1 and 8.2.
(b) The consents referred to in Section 8.4.
(c) The legal opinions referred to in Section 8.5.
(d) Payoff letters by secured parties to any UCC-1 on the
Purchased Assets (except for secured parties under Permitted Liens).
(e) A xxxx of sale conveying the Purchased Assets.
(f) The Closing Escrow Agreement duly executed by Seller.
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(g) All legal descriptions with respect to the Leased Real
Property, other than those which Seller has not been able to obtain
using its commercially reasonable efforts pursuant to Section 6.3.
(h) A certificate of the secretary of Seller attesting to (i)
the certificate of incorporation and by-laws of Seller, (ii) the
resolutions adopted by the directors and shareholders of Seller duly
authorizing the execution, delivery and performance of this Agreement
and the execution and delivery of all instruments and documents
contemplated hereby, and (iii) the signatures of the officers or
authorized representatives of Seller who have been authorized on behalf
of Seller to execute and deliver this Agreement and any other agreement
executed or to be executed in connection therewith.
(i) Good standing certificates of Seller from the Secretaries
of State of Nevada and Texas.
(j) A certificate of the secretary of Manager attesting to (i)
the certificate of incorporation and by-laws of Manager, (ii) the
resolutions adopted by the directors of Manager duly authorizing the
execution, delivery and performance of this Agreement and the execution
and delivery of all instruments and documents contemplated hereby, and
(iii) the signatures of the officers or authorized representatives of
Manager who have been authorized on behalf of Manager to execute and
deliver this Agreement and any other agreement executed or to be
executed in connection therewith.
(k) Good standing certificates of Manager from the Secretaries
of State of New Jersey and Texas.
(l) Such other documents necessary to the convey the Purchased
Assets, as Buyer may reasonably request.
9.4 DELIVERIES BY BUYER AT THE CLOSING. At the Closing, Buyer shall
deliver, or cause to be delivered, to Seller, the following items:
(a) The duly executed officer's certificates referred to in
Sections 7.1 and 7.2.
(b) The legal opinion referred to in Section 7.6.
(c) An assumption agreement whereby Buyer assumes the Assumed
Liabilities.
(d) A certificate of the secretary of Buyer attesting to (i)
the certificate of incorporation and by-laws of Buyer, (ii) the
resolutions adopted by the board of directors of Buyer duly authorizing
the execution, deliver and performance of this Agreement by Buyer and
the execution and delivery by Buyer of all instruments and documents
contemplated hereby, and (iii) the signatures of the officers or
authorized representatives of Buyer who have been authorized on behalf
of Buyer to execute and deliver this Agreement and any other agreement
executed or to be executed in connection herewith.
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(e) Good standing certificates of Buyer from the Secretaries
of State of Oklahoma and Texas.
(f) The Closing Escrow Agreement duly executed by Buyer.
(g) Such other documents as Seller may reasonably request.
SECTION 10. REMEDIES UNDER THIS AGREEMENT.
10.1 INDEMNIFICATION BY SELLER. After the Closing, subject to the terms
of this Section 10, Seller shall indemnify, hold harmless, defend and bear all
costs of defending Buyer, together with its directors, officers, stockholders,
employees, agents and Affiliates and its and their directors, officers,
stockholders, employees, agents, and its and their successors and permitted
assigns (collectively, the "Buyer Indemnified Group") from, against and with
respect to any and all Damages to or against the Buyer Indemnified Group arising
out of or in connection with:
(a) Any Excluded Liability; and
(b) Any breach, inaccuracy or violation of or non-performance
by Seller or Manager of any of its representations, warranties,
covenants or agreements contained in this Agreement or in any document,
certificate or schedule required to be furnished pursuant to this
Agreement (each representation and warranty being read for this purpose
without regard to any materiality standard or similar exception or
qualifier contained in any such representation or warranty).
For purposes of this Section 10.1, to the extent any claim for
indemnification may be properly made pursuant to either Section 10.1(a) or
Section 10.1(b), then such claim for indemnification to such extent shall be
deemed to be made pursuant to only Section 10.1(b) and not pursuant to Section
10.1(a).
10.2 INDEMNIFICATION BY THE BUYER. After the Closing, subject to the
terms of this Section 10, Buyer shall indemnify, hold harmless, defend and bear
all costs of defending Seller, together with its directors, officers,
stockholders, employees, agents and Affiliates, and its and their directors,
officers, stockholders, employees, agents, and its and their successors and
permitted assigns (collectively, the "Seller Indemnified Group") from, against
and with respect to any and all Damages to or against the Seller Indemnified
Group arising out of or in connection with:
(a) Any Assumed Liability; and
(b) Any breach, inaccuracy or violation of, or non-performance
by, Buyer of any of its representations, warranties, covenants or
agreements contained in this Agreement or in any document, certificate
or schedule required to be furnished pursuant to this Agreement (each
representation and warranty being read for this purpose without regard
to any materiality standard or similar exception or qualifier contained
in any such representation or warranty).
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For purposes of this Section 10.2, to the extent any claim for
indemnification may be properly made pursuant to either Section 10.2(a) or
Section 10.2(b), then such claim for indemnification to such extent shall be
deemed to be made pursuant to only Section 10.2(b) and not pursuant to Section
10.2(a).
10.3 LIMITATIONS.
(a) No indemnification shall be required to be made by an
indemnifying party under this Section 10 until the aggregate amount of
the Damages incurred by the Buyer Indemnified Group or Seller
Indemnified Group, as appropriate, exceeds $500,000 (the "DEDUCTIBLE"),
and then indemnification shall only be required to be made by the
indemnifying party to the extent of such Damages that exceed the
Deductible, and the maximum aggregate liability of an indemnifying
party under this Section 10 shall not exceed $5,000,000 (the "Cap");
PROVIDED, HOWEVER, that the Deductible and the Cap shall not be
applicable to (i) Seller's obligation to indemnify Buyer for Excluded
Liabilities, (ii) Buyer's obligation to indemnify Seller for Assumed
Liabilities, (iii) the Purchase Price adjustment provided for in
Section 2.5, (iv) a breach by Seller of its representations set forth
in Section 3.1, Section 3.10 and Section 3.20, or (v) Damages resulting
from fraud.
(b) All representations and warranties contained in this
Agreement shall survive the Closing until the first anniversary
thereof; provided, however, that notwithstanding the foregoing, (x) the
representations and warranties contained in Section 3.1, Section 3.10,
Section 3.20 and Section 4.1 shall survive the Closing for an unlimited
duration and (y) the representations and warranties contained in
Section 3.23 and 3.12 (as it may relate to Environmental Laws) shall
survive the Closing until the third anniversary thereof (the applicable
period of survival being referred to as the "Survival Period"). To the
extent a claim is made within the applicable Survival Period, the
indemnification obligation shall survive after the Survival Period for
purposes of such claim until such claim is finally determined or
settled. Each party shall be precluded from asserting claims against
the other party after the Survival Period applicable to the claim
sought to be asserted.
(c) All Damages sought by an indemnified party shall be net of
any insurance proceeds received by such indemnified party.
(d) After Closing, the remedy set forth in this Section 10
shall be the sole and exclusive remedies available to the parties.
10.4 NOTICE; RIGHT TO DEFEND. Each party shall give prompt written
notice to the other of the assertion or commencement of any claim, demand,
investigation, action, suit or other legal proceeding for which indemnity is, or
may be sought hereunder; provided, however, that this notice requirement shall
not apply to any claim, demand, investigation, action, suit or other legal
proceeding in which the parties are litigating claims against each other. Any
claim, demand, investigation, action, suit or legal proceeding brought by one
party hereto against the other party hereto shall state with reasonable
specificity the basis of such claim, including the Section of this
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Agreement allegedly breached or inaccurate. The failure by either party hereto
to give such notice to the other party hereto shall relieve such other party of
its obligations under this Section 10.4 if and only to the extent that it has
been prejudiced by the lack of timely and adequate notice. The indemnifying
party shall have the right and obligation to assume, at is own expense, the
defense or settlement of any third-party claim, demand, investigation, action,
suit or other legal proceeding for which it is obligated to provide indemnity
hereunder; provided, however, that the indemnifying party shall not settle or
compromise any such claim, demand, investigation, action, suit or other legal
proceeding without the indemnified party's prior written consent thereto, unless
the terms of such settlement or compromise unconditionally discharge and release
the indemnified party from any and all liabilities and obligations thereunder
and do not involve a remedy other than the payment of money by the indemnifying
party; and provided further that if the Damages in connection with such claim
(from such claim alone or from aggregating such claim with all other Damages
actually paid) will exceed the Cap, the indemnified party shall have the right
to assume the defense or settlement of such claim, provided, however, that the
indemnified party shall not settle or compromise such claim for any amount, all
or a portion of which would be included under the Cap, without the indemnifying
party's prior written consent. Notwithstanding the foregoing, the indemnifying
party may not assume or control the defense if the named parties to the third
party claim (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the same
counsel (in such counsel's reasonable determination) would be inappropriate due
to actual or potential differing interests between them, in which case the
indemnified party shall have the right to defend the third party claim and to
employ counsel reasonably approved by the indemnifying party, and to the extent
the matter is determined to be subject to indemnification hereunder, the
indemnifying party shall reimburse the indemnified party for the reasonable
costs of its counsel. If the indemnifying party does not assume liability for
and the defense of the third party claim pursuant to this Section 10.4, the
indemnified party shall have the right (i) to control the defense thereof and
(ii), if the indemnified party shall have notified the indemnifying party of the
indemnified party's intention to negotiate a settlement of the third party claim
(at the indemnifying party's expense to the extent the matter is determined to
be subject to indemnification hereunder), which notice shall include the
material terms of any proposed settlement in reasonable detail, to settle the
third party claim (at the indemnifying party's expense to the extent the matter
is determined to be subject to indemnification hereunder) on terms not
materially inconsistent with those set forth in such notice, unless the
indemnifying party shall have notified the indemnified party in writing of the
indemnifying party's election to assume liability for and the defense of the
third party claim pursuant to this Section 10.4 within ten days after receipt of
such notice, and the indemnifying party promptly thereafter shall have taken
appropriate action to implement such defense. The indemnified party shall not be
entitled to settle any such third party claim pursuant to the preceding sentence
without the indemnifying party's prior written consent unless the terms of such
settlement includes an unconditional release of the indemnifying party by the
third party claimant on account thereof. Notwithstanding the foregoing, the
indemnified party at all times shall have the right, at its option and expense,
to participate fully in the defense or settlement of such claim, demand,
investigation, action, suit or other legal proceeding. Seller and Buyer shall
cooperate fully in defending or settling any third-party claim, demand,
investigation, action, suit or other legal proceeding, and the defending or
settling party shall have reasonable access to the books and records and
personnel of the other
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party that are relevant to such claim, demand, investigation, action, suit or
other legal proceeding.
10.5 CLOSING ESCROW AGREEMENT. The obligations of Seller to indemnify
the Buyer Indemnified Group for Damages arising from or related to the matters
described in Section 10.1 shall be secured by the Closing Escrow Amount held
pursuant to the Closing Escrow Agreement but the Closing Escrow Amount shall not
represent a limit on the amount of Damages for which the Buyer Indemnified Group
is indemnified hereunder.
SECTION 11. POST-CLOSING MATTERS GENERALLY.
11.1 ONGOING COOPERATION. Seller and Buyer shall cooperate fully with
each other and make available or cause to be made available to each other in a
timely fashion such tax data, prior tax returns and filings and other
information as may be reasonably required for the preparation by Buyer or Seller
of any Tax Returns, elections, consents or certificates required to be prepared
and filed by Buyer or Seller and any audit or other examination by any taxing
authority, or judicial or administrative proceeding relating to liability for
Taxes including, without limitation, sales taxes and sales tax audits. Buyer and
Seller will each retain and provide to the other party all records and other
information which 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
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 copies of all Tax Returns,
supporting work schedules and other records relating to tax periods or portions
thereof ending prior to or on the Closing Date. Buyer will provide Seller with
any necessary payroll records attributable to the period prior to the Closing
Date. Buyer shall cooperate with Seller to the extent reasonably necessary for
Seller's preparation of its financial statements and Tax Returns and in the
sharing of financial and accounting information with respect thereto or with
respect to any audit, examination, or other proceeding with respect thereto.
11.2 LITIGATION SUPPORT. In the event and for so long as any party is
actively contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand in connection with: (a) any
transaction contemplated under this Agreement, or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction on or prior to the Closing Date
involving Seller, the other party will cooperate with the contesting or
defending party and its counsel in such contest or defense, make available its
personnel, and provide such testimony and access to its books and records as may
be necessary in connection with the contest or defense, at the sole cost and
expense of the contesting or defending party (unless the contesting or defending
party is entitled to indemnification therefor under Section 10). For a period of
twelve (12) months after Closing, Seller agrees to provide to Buyer from time to
time any information that Seller possesses with respect to the operation of the
System and Purchased Assets prior to the Closing which the Buyer reasonably
requests in the future in connection with the financing efforts of Buyer and its
Affiliates now or in the future or in connection with any FCC or other
regulatory filing.
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11.3 FURTHER ASSURANCE. Seller and Buyer agree that, from time to time,
at or after the Closing, each of them will execute and deliver such further
instruments of conveyance and transfer and take such other actions as may be
reasonably necessary to carry out the purposes and intent of this Agreement.
SECTION 12. MISCELLANEOUS PROVISIONS.
12.1 NOTICES. Any notice, demand or other communication to be given or
delivered hereunder or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given on the next Business Day after it
is either: (a) delivered personally to the recipient, or (b) sent to the
recipient by telecopy (receipt confirmed) or reputable overnight next day
express courier service (charges prepaid). Such notices, demands and other
communications will be sent to Seller and to Buyer at the addresses indicated
below:
If to Buyer: Xxxxxx Cellular Systems, Inc.
00000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx Xxxxxx, Chief Executive Officer
With a copy to: Xxxxxxx & Xxxxxx, LLP
0000 XxxxXxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Facsimile: 401-276-6611
Attention: Xxxxxx X. Xxxxxxxx, Xx.
If to Seller or Manager:
c/o PCM, Inc.
00000 Xxxxxxxxxx Xxxxx
Xxxxx 000
Xx. Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
E-Mail address: xxxxxxx@xxxxx.xxx
With a copy to: Xxxxx & Ratner
(which shall not 000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000
constitute notice) Xxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
Facsimile No.: 312/236-3241
E-Mail address: xxxxxxxx@xxxxx-xxxxxx.xxx
or to such other address as either party hereto may, from time to time,
designate in writing delivered in a like manner.
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12.2 AMENDMENTS. The terms, provisions, and conditions of this
Agreement may not be changed, modified, or amended in any manner except by an
instrument in writing duly executed by all of the parties hereto.
12.3 WAIVERS. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, by the party or parties entitled
to the benefit thereof. No waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. The failure of any party
hereto to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
12.4 ASSIGNMENT AND PARTIES IN INTEREST. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of Buyer and
Seller and their respective successors and permitted assigns. No party shall
assign, convey, transfer or otherwise dispose of all or any portion of its
interest in, or its rights and obligations under, this Agreement or any other
document or instrument executed and delivered in connection herewith without the
prior written consent of the other party hereto, which consent shall not be
unreasonably withheld, provided, however, that no such assignment by Buyer shall
relieve Buyer of any of its liabilities or obligations hereunder and no such
assignment shall be effectuated prior to Closing if, in the reasonable
determination of Seller's FCC Counsel, such assignment would cause a material
delay in the attainment of any FCC consents required prior to transfer of the
Licenses hereunder.
12.5 THIRD-PARTY BENEFICIARIES. Except to the extent that the Buyer
Indemnified Group and the Seller Indemnified Group shall be entitled to the
benefits of the indemnities set forth herein, no person not a party to this
Agreement shall have any rights under this Agreement as a third-party
beneficiary or otherwise.
12.6 ANNOUNCEMENTS. All press releases, notices to customers and
suppliers and other announcements prior to the Closing Date with respect to this
Agreement and the transactions contemplated by this Agreement shall be approved
by both Buyer and Seller prior to the issuance thereof, provided that either
party may make any public disclosure it believes in good faith is required by
law or regulation (in which case the disclosing party will use its best efforts
to advise the non-disclosing party prior to making such disclosure and provide
the non-disclosing party an opportunity to review the proposed disclosure).
12.7 EXPENSES. Except as otherwise expressly provided herein, each
party to this Agreement will bear all of its legal, accounting, investment
banking, and other expenses incurred by it or on its behalf in connection with
the transactions contemplated by this Agreement, whether or not such
transactions are consummated.
12.8 ENTIRE AGREEMENT. This Agreement, including all Exhibits and
Schedules hereto, and the Confidentiality Agreement constitute the entire
agreement among the parties hereto with respect to the subject matter hereof,
supersede and are in full substitution for any and all prior
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agreements and understandings among them relating to such subject matter, and no
party shall be liable or bound to any other party hereto in any manner with
respect to such subject matter by any warranties, representations, indemnities,
covenants, or agreements except as specifically set forth herein or in an
amendment hereto executed in accordance with Section 12.2 hereof. The Schedules
to this Agreement are hereby incorporated and made a part hereof and are an
integral part of this Agreement.
12.9 DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
12.10 COUNTERPARTS; FACSIMILE SIGNATURES. For the convenience of the
parties, any number of counterparts of this Agreement may be executed by any one
or more parties hereto, and each such executed counterpart shall be, and shall
be deemed to be, an original, but all of which shall constitute, and shall be
deemed to constitute, in the aggregate but one and the same instrument.
Facsimile signatures on this Agreement and any of the agreements and documents
executed in connection herewith shall be deemed original signatures.
12.11 GOVERNING LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Nevada, and any litigation concerning this Agreement or the
transactions contemplated hereby or any other matters relating hereto shall be
cited in the exclusive jurisdiction of a court of competent jurisdiction located
in Nevada.
12.12 CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party. Any references to
any federal, state, local or foreign statute or law will also refer to all rules
and regulations promulgated thereunder, unless the context requires otherwise.
12.13 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any court determines
that any covenant, or any part of any covenant is invalid or unenforceable, such
covenant shall be enforced to the extent permitted by such court, and all other
covenants shall not thereby be affected and shall be given full effect, without
regard to the invalid portions.
12.14 COLLECTION PROCEDURES. From and after the Closing, Buyer shall
have the right and authority, at its expense, to collect for its account all
accounts receivable included as part of the Purchased Assets and all other items
to which it is entitled as provided in this Agreement and to endorse with the
name of Seller or Manager any checks or drafts received on account of any such
items.
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12.15 SPECIFIC PERFORMANCE. The parties recognize and acknowledge
that in the event Seller and/or Manager shall fail to perform its obligations
under the terms of this Agreement, money damages alone will not be adequate to
compensate Buyer. The parties, therefore, agree and acknowledge that in the
event Seller and/or Manager fails to perform its obligations under this
Agreement prior to Closing, Buyer shall be entitled, in addition to any other
rights and remedies on account of such failure, to specific performance of the
terms of this Agreement and of the covenants and obligations hereunder.
BALANCE OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, Seller and Buyer have executed and delivered this
Agreement as of the day and year first written above.
SELLER:
LONE STAR CELLULAR, INC.
By: /s/
--------------------------------
Its:
--------------------------------
MANAGER:
PCM, INC.
By: /s/
--------------------------------
Its:
-------------------------------
BUYER:
XXXXXX CELLULAR SYSTEMS, INC.
By: /s/
--------------------------------
Its:
-------------------------------
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