ASSET PURCHASE AGREEMENT
between
ALASKA-3 CELLULAR, LLC
and
XXXXXX CELLULAR SYSTEMS, INC.
DATED AS OF SEPTEMBER 30, 1999
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE....................................................1
ARTICLE II DESCRIPTION OF ASSETS, EXCLUDED ASSETS...............................2
SECTION 2.01. ASSETS...............................................................2
SECTION 2.02. EXCLUDED ASSETS......................................................3
ARTICLE III ASSUMPTION OF LIABILITIES............................................4
ARTICLE IV INSTRUMENTS OF TRANSFER AND ASSUMPTION...............................4
SECTION 4.01. TRANSFER DOCUMENTS...................................................4
SECTION 4.02. ASSUMPTION DOCUMENTS.................................................5
ARTICLE V PURCHASE PRICE; ALLOCATION...........................................5
SECTION 5.01. PURCHASE PRICE.......................................................5
SECTION 5.02. DEPOSIT..............................................................5
SECTION 5.03. PAYMENT OF PURCHASE PRICE............................................5
SECTION 5.04. ALLOCATION OF PURCHASE PRICE.........................................5
SECTION 5.05. PURCHASE PRICE ADJUSTMENT............................................6
ARTICLE VI CLOSING..............................................................8
SECTION 6.01. PRIMARY CLOSING......................................................8
SECTION 6.02. FINAL CLOSING........................................................8
ARTICLE VII SELLER'S REPRESENTATIONS.............................................9
SECTION 7.01. ORGANIZATION, QUALIFICATION..........................................9
SECTION 7.02. CONSENTS, AUTHORIZATION, EXECUTION AND DELIVERY OF AGREEMENT.........9
SECTION 7.03. SUBSIDIARIES AND INTERESTS IN OTHER COMPANIES........................9
SECTION 7.04. TITLE TO ASSETS; CONDITION OF ASSETS.................................9
SECTION 7.05. REAL PROPERTY - OWNED...............................................10
SECTION 7.06. REAL AND PERSONAL PROPERTY - LEASED.................................10
SECTION 7.07. EXISTING CONTRACTS..................................................10
SECTION 7.08. GOVERNMENTAL LICENSES...............................................11
SECTION 7.09. COMPLIANCE WITH LAWS................................................12
SECTION 7.10. NO VIOLATION OF EXISTING AGREEMENTS.................................12
SECTION 7.11. LITIGATION AND LEGAL PROCEEDINGS....................................12
SECTION 7.12. ENVIRONMENTAL COMPLIANCE............................................12
SECTION 7.13. EMPLOYEES...........................................................13
SECTION 7.14. EMPLOYEE BENEFITS...................................................13
SECTION 7.15. TAX MATTERS.........................................................14
SECTION 7.16. FINANCIAL STATEMENTS................................................15
SECTION 7.17. SUBSCRIBERS/AGENTS..................................................16
SECTION 7.18. INSURANCE...........................................................16
SECTION 7.19. BROKERS.............................................................17
SECTION 7.20. UNDISCLOSED LIABILITIES.............................................17
SECTION 7.21. PRICING OF SERVICES.................................................17
SECTION 7.22. PROPRIETARY RIGHTS..................................................17
SECTION 7.23. ACCOUNTS RECEIVABLE AND BAD DEBTS...................................17
SECTION 7.24. PRODUCT INFORMATION.................................................18
SECTION 7.25. CERTAIN BUSINESS RELATIONSHIPS WITH SELLER..........................18
SECTION 7.26. YEAR 2000 COMPLIANCE................................................18
SECTION 7.27. DISCLOSURE..........................................................18
SECTION 7.28. XXXX-XXXXX-XXXXXX...................................................18
ARTICLE VIII PURCHASER'S REPRESENTATIONS.........................................18
SECTION 8.01. ORGANIZATION; QUALIFICATION.........................................18
SECTION 8.02. CONSENTS; AUTHORIZATION; EXECUTION AND DELIVERY OF AGREEMENT........19
SECTION 8.03. LITIGATION AND LEGAL PROCEEDINGS....................................19
SECTION 8.04. BROKERS.............................................................19
ARTICLE IX SELLER'S AND PURCHASER'S COVENANTS..................................19
SECTION 9.01. INTENTIONALLY OMITTED...............................................19
SECTION 9.02. GOVERNMENTAL APPROVALS..............................................19
SECTION 9.03. THIRD PARTY CONSENTS; CLOSING CONDITIONS............................20
SECTION 9.04. ACCESS..............................................................20
SECTION 9.05. CONDUCT OF BUSINESS.................................................21
SECTION 9.06. NO SHOPPING.........................................................23
SECTION 9.07. EMPLOYEES...........................................................24
SECTION 9.08. SUPPLEMENTAL DISCLOSURE.............................................24
SECTION 9.09. MANAGEMENT AGREEMENT................................................24
SECTION 9.10. LITIGATION MATTERS..................................................24
ARTICLE X CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO PRIMARY CLOSING...24
SECTION 10.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF THIS
AGREEMENT..........................................................................24
SECTION 10.02. CERTIFIED AUTHORIZATIONS............................................25
SECTION 10.03. INCUMBENCY CERTIFICATE..............................................25
SECTION 10.04. THIRD PARTY CONSENTS; FCC GRANT.....................................25
SECTION 10.05. NO MATERIAL ADVERSE CHANGE..........................................25
SECTION 10.06. OPINION OF COUNSEL TO SELLER..........................,.............25
SECTION 10.07. OPINIONS OF FCC COUNSEL TO SELLER...................................25
SECTION 10.08. PURCHASE ESCROW AGREEMENT AND MANAGEMENT AGREEMENT..................26
SECTION 10.09. TITLE INSURANCE; ESTOPPEL...........................................26
SECTION 10.10. INTENTIONALLY OMITTED...............................................26
SECTION 10.11. OPERATION OF CELLULAR SYSTEM........................................26
ARTICLE XI CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO PRIMARY CLOSING......26
SECTION 11.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF THIS
AGREEMENT..........................................................................26
SECTION 11.02. DIRECTORS' RESOLUTIONS..............................................26
SECTION 11.03. INCUMBENCY CERTIFICATE..............................................27
SECTION 11.04. FCC.................................................................27
SECTION 11.05. OPINION OF COUNSEL TO PURCHASER.....................................27
SECTION 11.06. PURCHASE ESCROW AGREEMENT AND MANAGEMENT AGREEMENT..................27
ARTICLE XII - CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION AT FINAL CLOSING.....27
SECTION 12.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF THIS
AGREEMENT..........................................................................27
SECTION 12.02. FCC FINAL ORDER.....................................................27
SECTION 12.03. OPINION OF FCC COUNSEL TO SELLER....................................27
ARTICLE XIII CASUALTY LOSSES.....................................................28
ARTICLE XIV INDEMNIFICATION.....................................................28
SECTION 14.01. INDEMNIFICATION BY SELLER...........................................28
SECTION 14.02. INDEMNIFICATION BY PURCHASER........................................29
SECTION 14.03. NOTICE OF CLAIMS; DEFENSE OF THIRD PARTY............................29
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SECTION 14.04. LIMITATIONS.........................................................31
SECTION 14.05. PURCHASE ESCROW AGREEMENT...........................................31
ARTICLE XV CONFIDENTIALITY AND PRESS RELEASES..................................31
SECTION 15.01. CONFIDENTIALITY.....................................................31
SECTION 15.02. PRESS RELEASES......................................................32
SECTION 15.03. DISCLOSURES REQUIRED BY LAW.........................................32
ARTICLE XVI TERMINATION.........................................................32
SECTION 16.01. BREACHES AND DEFAULTS; OPPORTUNITY TO CURE..........................32
SECTION 16.02. TERMINATION.........................................................33
ARTICLE XVII BROKERS' FEES.......................................................34
ARTICLE XVIII MISCELLANEOUS.......................................................34
SECTION 18.01. ADDITIONAL INSTRUMENTS OF TRANSFER..................................34
SECTION 18.02. NOTICES.............................................................34
SECTION 18.03. EXPENSES............................................................35
SECTION 18.04. TRANSFER TAXES......................................................35
SECTION 18.05. COLLECTION PROCEDURES...............................................36
SECTION 18.06. SPECIFIC PERFORMANCE................................................36
SECTION 18.07. GOVERNING LAW.......................................................36
SECTION 18.08. ASSIGNMENT..........................................................36
SECTION 18.09. SUCCESSORS AND ASSIGNS..............................................36
SECTION 18.10. AMENDMENTS; WAIVERS.................................................36
SECTION 18.11. ENTIRE AGREEMENT....................................................36
SECTION 18.12. COUNTERPARTS........................................................37
SECTION 18.13. SEVERABILITY........................................................37
SECTION 18.14. SECTION HEADINGS....................................................37
Section 18.15. INTERPRETATION......................................................37
Section 18.16. FURTHER ASSURANCES..................................................37
Section 18.17. THIRD PARTIES.......................................................37
Section 18.18. WAIVER OF JURY......................................................37
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DEFINED TERMS
TERM SECTION CITE
---- ------------
Asserting Party 13.03
Assets 2.01
Assumed Contracts Article III
Assumption Agreement 4.02
Assumed Liabilities Article III
Audited Historical Financial Statements 7.16(a)(i)
Authorizations 7.08
Balance Sheet Date 7.16(a)(ii)
Base Price 5.01
Xxxx of Sale 4.01
Breaching Party 15.01
Business Recitals
Cellular System Recitals
CERCLA 7.12(b)
Claims Article XIII
Closing Article VI
Closing Certificate 5.05(c)
Closing Date Article VI
Code 7.14
Controlled Group Member 7.14
Current Assets 5.05(a)
Current Financial Statements 7.16(a)(ii)
Current Liabilities 5.05(a)
Deductible 14.05(a)
Defending Party 14.03
Defined Benefit Pension Plan 7.14
Deposit 5.02
Deposit Escrow Agreement 5.02
Disclosing Party 15.01
Employee Benefit Plans 7.14
Environmental Laws 7.12(c)
ERISA 7.14
ERISA Affiliate 7.14
Escrow Agent 5.03
Escrow Payment 5.03
Excluded Assets 2.02(a)
Existing Contracts 7.07
FCC Recitals
FCC Authorization Recitals
Final Closing 6.02
Final Closing Date 6.02
Final Order 6.02
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Finality Waiver Notice 10.04
Full Network Deployment 6.01
GAAP 5.05(a)
Hazardous Substances 7.12(b)
Historical Financial Statements 7.16(a)(ii)
Indemnified Purchaser Parties 14.01(a)
Indemnity Escrow Amount 5.03
Independent Accountants 5.05(c)
Interest 9.03
Interim Balance Sheet 7.16(a)(ii)
Interim Income Statement 7.16(a)(ii)
Interim Financial Statements 9.01
Inventory 5.05(a)
Liens Article I
Losses 14.01(a)
Management Agreement 9.09
Manager Recitals
Material Adverse Effect 10.01
Material Loss 10.01
Multiemployer Plan 7.14
Non-Assumed Liabilities Article III
Non-Breaching Party 16.01
Outside Date 16.02(f)
Permitted Liens Article I
Person 7.04
Phase I Assessment 9.05(b)
Phase II Assessment 9.05(b)
Primary Closing 6.01
Primary Closing Date 6.02
Purchase Escrow Agreement 5.03
Purchase Price 5.01
Purchaser Introduction
Purchaser's Estimate 5.05(c)
RCLA 7.12(b)
RCRA 7.12(b)
Recipient Party 15.01
Response Period 5.05(c)
RSA Recitals
Seller Introduction
Seller's Estimate 5.05(c)
Special Temporary Authority 10.04
Survival Period 14.04
Tax 7.15
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Third Party Claim 14.03
Working Capital Adjustment 5.05(b)
Year 2000 Problem 6.01
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SCHEDULES
1 Permitted Liens
2.01(a) Contracts and Licenses
2.01(d) Interests in Real Property
2.01(f) Intangible Personal Property
2.02 Excluded Assets
7.04 Encumbrances; Condition of Assets
7.08 Governmental Licenses
7.09 Compliance with Laws
7.10 Consents
7.11 Litigation
7.12 Environmental Compliance
7.13 Employees
7.14 Employee Benefits
7.15 Tax Matters
7.16(a)(i) Audited Historical Financial Statements
7.16(a)(ii) Current Financial Statements
7.16(c) Certain Transactions Since Balance Sheet Date
7.17 Subscribers; Agents
7.18 Insurance
7.21 Pricing of Services
7.23 Accounts Receivable Aging
7.24 Product Information
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7.25 Certain Business Relationships
7.26 Year 2000 Problems
9.03 Form of Consent Letter
9.05 Condition of Assets
EXHIBITS
A. Xxxx of Sale
B. Assumption Agreement
C. Purchase Escrow Agreement
D. Management Agreement
E. Opinion of Counsel for Seller
F-1. Opinion of FCC Counsel for Seller (Primary Closing)
F-2. Opinion of FCC Counsel for Seller (Final Closing)
G. Opinion of Counsel for Purchaser
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of the 30th day of September,
1999 by and between ALASKA-3 CELLULAR, LLC, a Mississippi limited liability
company ("Seller"), and XXXXXX CELLULAR SYSTEMS, INC., an Oklahoma
corporation or its designee ("Purchaser").
R E C I T A L S
WHEREAS, Seller owns all right, title and interest in that certain
license (the "FCC Authorization") granted by the Federal Communications
Commission (the "FCC") to provide non-wireline cellular radio telephone
service in the Alaska #3 rural service area (the "RSA") #317A Haines, Alaska
(the "Cellular System");
WHEREAS, Purchaser desires to purchase from Seller, and Seller desires
to sell to Purchaser, substantially all of the assets and rights of Seller
relating to the ownership and operation of the Cellular System (the
"Business"), all subject to the terms and conditions set forth herein; and
WHEREAS, prior to the consummation of all of the transactions
contemplated herein, the Business may be managed by Purchaser or its designee
(the "Manager") on behalf of Seller pursuant to the Management Agreement (as
defined herein).
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements herein set forth and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
Subject to the terms and conditions set forth in this Agreement, Seller
agrees to sell, convey, assign, transfer and deliver to Purchaser, and
Purchaser agrees to purchase from Seller at the Primary Closing, all of
Seller's right, title and interest in and to the Assets (as defined in
Section 2.01 hereof), free and clear of all debts, liabilities, obligations,
taxes, other than Assumed Liabilities, and free and clear of all security
interests, liens, pledges, charges, rights of third parties and encumbrances
of every kind (collectively, "Liens") other than Permitted Liens. As used
herein, the term "Permitted Liens" means (i) any Lien for taxes and
assessments not yet past due or otherwise being contested in good faith and
for which appropriate reserves have been established and are taken into
account in the Working Capital Adjustment, (ii) any Lien that does not
materially interfere with the use by Seller of the property subject thereto
or affected thereby (including any easements, rights of way, restrictions,
installations or public utilities, title imperfections and restrictions,
reservations in land patents, zoning ordinances or other similar
Liens), (iii) the Lien granted to Purchaser in connection with the Management
Agreement, and (iv) any Lien set forth on SCHEDULE 1 attached hereto.
ARTICLE II
DESCRIPTION OF ASSETS; EXCLUDED ASSETS
SECTION 2.01. ASSETS. The assets to be conveyed to Purchaser shall
include all real and personal tangible and intangible assets, properties and
rights owned or used by Seller of whatever description which relate in any
way to the ownership, use or operation of the Business, except assets
excluded pursuant to Section 2.02 hereof, but including all property and
rights acquired or obtained by Seller from the date hereof through the date
of the Primary Closing (collectively, the "Assets"). Such Assets shall be
free and clear of all Liens other than Permitted Liens as of the Primary
Closing. Such Assets shall include, without limitation:
(a) All licenses (including the FCC Authorization), leases,
agreements, licenses, permits, authorizations, consents, revenue sharing
agreements, agreements for the reception or transmission of signals by
microwave; all easements, appurtenances, rights-of-way and construction
permits, if any, related to the Business; all right, title and interest, if
any, in and to all streets, roads and public places, open or proposed; all
agreements between Seller and any suppliers, cellular telephone service
companies and subscribers (including subscriber deposits), and all other
similar rights and agreements (including roaming and interconnection
agreements), including all applications therefor, which in any way may relate
to or concern the operation by Seller of the Business, all of which items are
more particularly set forth on SCHEDULE 2.01(a) attached hereto.
(b) All of Seller's files of correspondence, lists, records and
reports concerning (i) customers and prospective customers of the Business
and (ii) all dealings with Federal, state and local regulatory agencies with
respect to the Business, including, but not limited to, all reports filed by
or on behalf of Seller with the FCC.
(c) All of Seller's right, title and interest in and to towers,
tower equipment, antennas, switching and cell site equipment and buildings,
construction in progress, microwave equipment, machinery, testing equipment,
motor vehicles, office equipment, computers and related software, furniture
and fixtures, supplies, inventory, spare parts, and other physical assets,
used in or relating to the Business, and all modifications, additions,
restorations or replacements of the whole or any part thereof.
(d) All real property, leaseholds and other interests in real
property of Seller used in or relating to the Business, as are described on
SCHEDULE 2.01(d) attached hereto.
(e) All of Seller's right, title and interest to engineering
records, files, data, drawings, blueprints, schematics, maps, reports, lists
and plans and processes used or intended for use in connection with the
Business.
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(f) All right, title and interest to intangible personal property
used in or relating to the Business, including all rights, patents and
copyrights used by Seller, and all of the rights of Seller associated
therewith (including any and all applications, registrations, extensions and
renewals thereof), and such rights, patents and copyrights as are described
on SCHEDULE 2.01(f) attached hereto.
(g) All communications towers, buildings, fixtures and other
improvements including, without limitation, all electrical, mechanical,
plumbing and other building systems, security and surveillance systems and
wiring and cable installations located on the property leased by Seller.
(h) All prepayments and prepaid expenses.
(i) All claims, causes of action, causes in action, rights of
recovery and rights of set-off of any kind.
(j) The right to receive and retain mail, accounts receivable
payments and other communications.
(k) The right to xxxx and receive payment for products shipped or
delivered and/or services performed but unbilled or unpaid as of the Primary
Closing.
(l) All advertising, marketing and promotional materials and all
other related printing or written materials.
(m) All notes receivable and accounts receivable (including
subscriber receivables and roaming revenue receivables).
(n) All goodwill as a going concern.
(o) Any assets of the type-described above which are acquired
after the date hereof but prior to the Closing.
SECTION 2.02. EXCLUDED ASSETS. (a) The properties and assets
described in SCHEDULE 2.02 attached hereto and in Section 2.02(b) of this
Agreement which relate to the Business shall not be included in the Assets,
shall be retained by Seller and shall not be sold, assigned or transferred to
Purchaser (the "Excluded Assets").
(b) Anything in this Agreement to the contrary notwithstanding,
the Assets sold to the Purchaser pursuant to the terms of this Agreement
shall not include the Seller's corporate records, books of account, cash,
bank deposits and cash equivalents on the date hereof.
(c) The Buildout Assets (as defined in the Management Agreement)
shall be purchased by Purchaser pursuant to the terms of the Management
Agreement.
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(d) Roaming receivables accrued as of the date hereof.
ARTICLE III
ASSUMPTION OF LIABILITIES
At the Primary Closing, Purchaser shall assume and agree to perform and
discharge the following to the extent not previously performed or discharged
as of the Primary Closing: (i) all obligations of Seller which accrue and are
to be performed from and after the Primary Closing under those permits,
authorizations, licenses, leases, rights of way, easements and other
agreements either set forth on SCHEDULES 2.01(a) and (d) attached hereto or
those agreements of a non-material nature which are not required by this
Agreement to be disclosed on SCHEDULES 2.01(a) and (d) and (ii) all other
obligations of Seller entered into during the period from the date hereof to
the Primary Closing by Seller in the ordinary course of its business in
accordance with the provisions of Section 9.05 below or that were identified
to and consented by Purchaser (all of such permits, authorizations, licenses,
leases, rights of way, easements and other agreements referred to in items
(i) and (ii) being referred to hereinafter as the "Assumed Contracts"); and
(iii) all "Current Liabilities" (as defined in Section 5.05(a) hereof) but
only if and to the extent that Purchaser receives a credit against the
Purchase Price at the Primary Closing as described in Section 5.05(b) hereof
(such items (i) through (iii) are collectively referred to herein as the
"Assumed Liabilities"). Purchaser shall not be liable for any liabilities,
debts, contracts, agreements, including, without limitation, any
environmental liabilities related to or arising from Seller's and its
predecessors' ownership, operation or control of the Assets, the Cellular
System or the Business (including with respect to Seller's and its
predecessors' interests in owned or leased real property) for the period
prior to the Primary Closing or any contracts or agreements set forth on
SCHEDULE 2.02, or other obligations of Seller of any nature whatsoever other
than the Assumed Liabilities, and it is expressly understood that Purchaser
shall not assume, and shall not be liable for any of Seller's expenses or
obligations relating to or accruing by any reason of the proceedings relating
to the FCC Authorization in FCC File No. 10008CLP317A88, including any
obligations relating to any settlement thereof (such other liabilities,
debts, contracts, agreements or obligations of Seller other than the Assumed
Liabilities being referred to as the "Non-Assumed Liabilities").
ARTICLE IV
INSTRUMENTS OF TRANSFER
AND ASSUMPTION
SECTION 4.01. TRANSFER DOCUMENTS. At the Primary Closing, Seller will
deliver to Purchaser (a) a Xxxx of Sale in substantially the form attached
hereto as EXHIBIT A (a "Xxxx of Sale"), (b) all such other good and
sufficient instruments of sale, transfer and conveyance, including, without
limitation, assignments of leases, in such form and including such matters as
Purchaser shall reasonably request and as shall be reasonably acceptable to
Seller, as shall be effective to vest in Purchaser all of Seller's right and
title to, and interest in, the Assets; and (c) all contracts and commitments,
instruments, books and records (except as otherwise provided in Section 2.02
hereof) and other data relating to the Assets, business and operations of
Seller.
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SECTION 4.02. ASSUMPTION DOCUMENTS. At the Primary Closing, Purchaser
and Seller will execute and deliver an Assumption Agreement in substantially
the form attached hereto as EXHIBIT B (the "Assumption Agreement") in order
to effect the assumption of the Assumed Liabilities by Purchaser.
ARTICLE V
PURCHASE PRICE; ALLOCATION
SECTION 5.01. PURCHASE PRICE. The total purchase price for the Assets
shall be Twelve Million Dollars ($12,000,000) (the "Base Price"), as adjusted
in accordance with the provisions of Section 5.05 hereof (as adjusted, the
"Purchase Price").
SECTION 5.02. DEPOSIT. Purchaser has deposited as a good faith deposit
Two Hundred Fifty Thousand Dollars ($250,000) (the "Deposit") with Chase
Manhattan Trust Company, National Association (the "Escrow Agent"), being
held, invested and disbursed pursuant to the terms of a certain Deposit
Escrow Agreement dated September 23, 1999 (the "Deposit Escrow Agreement").
The Deposit and all earnings thereon will be repaid to Purchaser upon
execution of this Agreement whereupon the Deposit Escrow Agreement shall
terminate.
SECTION 5.03. PAYMENT OF PURCHASE PRICE. On the Primary Closing Date
and subject to the terms and conditions set forth in this Agreement, in
reliance on the representations, warranties, covenants and agreements of the
parties contained herein and in consideration of the sale of the Assets,
Purchaser will pay the Purchase Price into an account (the "Purchase Escrow
Account") maintained by the Escrow Agent, and such amount will be held,
invested and disbursed pursuant to the terms of the Purchase Escrow Agreement
substantially in the form of EXHIBIT C attached hereto (the "Purchase Escrow
Agreement"). At Final Closing, an amount equal to the funds in the Purchase
Escrow Account (the "Escrowed Amount") less the sum of (x) amounts held in
respect of pending but unpaid claims by Purchaser for indemnification
pursuant to Section 14.01 and (y) $900,000 (such sum being referred to
collectively as the "Indemnity Escrow Amount") will be paid to Seller from
the Purchase Escrow Account at the Final Closing and the Indemnity Escrow
Amount shall be held and released in accordance with the terms of the
Purchase Escrow Agreement. In the event this Agreement is terminated after
the Primary Closing for any reason under Article XVI of this Agreement, (i)
the Escrowed Amount shall be released to Purchaser in accordance with the
terms of the Purchase Escrow Agreement and (ii) Seller shall pay Purchaser
the difference, if any, between the Purchase Price and the Escrowed Amount.
SECTION 5.04. ALLOCATION OF PURCHASE PRICE. Prior to the Primary
Closing, Purchaser and Seller in good faith shall each use their respective
commercially reasonable efforts to agree on an allocation of the Purchase
Price and the Assumed Liabilities in accordance with the respective fair
market value of the Assets being purchased and as provided for under Section
1060 of the Code. Purchaser and Seller each further agree to file their
income tax returns and their other tax returns and IRS Form 8594 reflecting
the allocation as determined in this Section 5.03 unless otherwise required
by applicable legal requirements. If no agreement on an allocation of the
Purchase Price with respect to the Assets is reached within such thirty (30)
day period, such
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allocation of the Purchase Price to the Assets shall be determined by a
nationally recognized appraisal firm mutually agreeable to Seller and
Purchaser and the costs of such appraisal shall be borne equally by Seller
and Purchaser.
SECTION 5.05. PURCHASE PRICE ADJUSTMENT.
(a) As used in this Section 5.05, the following terms shall have the
meaning set forth below:
"CURRENT ASSETS" means the Cellular System's (i) subscriber accounts
receivable, excluding roaming revenue receivables, that are current to less
than 91 days past due, net of a reserve for bad debts equal to the sum of the
following amounts: five percent (5%) of such accounts receivable that are
not past due or that are thirty (30) or fewer days past due, fifteen percent
(15%) of such accounts receivable that are more than thirty (30) but less
than sixty-one (61) days past due and fifty percent (50%) of such accounts
receivable that are more than sixty (60) but less than ninety-one (91) days
past due; (ii) inventory of cellular telephone handsets and ancillary
equipment held for sale to subscribers and which are reasonably to be
expected based on past practices to be consumed in the normal course of
business within six months after the Primary Closing and are not otherwise
obsolete, reflected at net book value (the "Inventory"); provided in no event
shall the net book value of the Inventory used to determine Current Assets
exceed $25,000; and (iii) prepaid items which Purchaser will receive the
benefit of after the Primary Closing such as prepaid rent, property taxes,
utility charges, fees and deposits paid, all determined as of 12:01 a.m. on
the date hereof in accordance with GAAP.
"CURRENT LIABILITIES" means the Cellular System's (i) subscriber
deposits received, (ii) deferred revenue, (iii) accrued employee vacation and
sick pay expense, (iv) salaries, bonuses, fringe benefits and other
remuneration payable to employees to be hired by Purchaser, (v) expenses for
goods and services received in the normal course of business including taxes,
utility charges, special assessments, commissions, fees and (vi) other trade
payables and accrued expenses incurred in the normal course of business, all
determined as of 12:01 a.m. on the date hereof in accordance with GAAP.
"GAAP" means generally accepted accounting principles consistently
applied.
(b) The Base Price shall be increased (or decreased) by the amount by
which Current Assets exceeds (or is less than) Current Liabilities as of the
date hereof (the "Working Capital Adjustment").
(c) Seller shall prepare and submit to Purchaser, not later than five
(5) business days prior to the Primary Closing Date, a written good faith
estimate of the amount of the Working Capital Adjustment and Seller's
estimate of the Purchase Price resulting from the Working Capital Adjustment
("Seller's Estimate"). Seller's Estimate shall be accompanied by detailed
supporting documents, work papers, subscriber records and other data
supporting the Working Capital Adjustment and Seller's Estimate. The
Seller's Estimate shall be based upon the books and records of the Cellular
System. The Seller's Estimate shall be accompanied by a certificate
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signed by the Manager, President or Chief Financial Officer of Seller
certifying that Seller's Estimate was calculated in good faith and in
accordance with the provisions of this Section 5.05. After the delivery of
Seller's Estimate and prior to the Primary Closing, Purchaser and Seller
shall attempt to resolve any disputes between Seller and Purchaser with
respect to Seller's proposed Working Capital Adjustment. In connection
therewith, Purchaser shall have full access to all Seller's records related
to Seller's proposed Working Capital Adjustment. Prior to Primary Closing,
Purchaser shall advise Seller in writing as to any dispute Purchaser has with
Seller's Estimate and provide Seller with Purchaser's calculation of the
Working Capital Adjustment and the Purchase Price, accompanied by a
certificate signed by the President or Chief Financial Officer of Purchaser
certifying that Purchaser's calculation was made in good faith and shall be
accompanied by supporting documents and information, to the extent the same
is available to Purchaser ("Purchaser's Estimate"). In the event Purchaser's
Estimate of the Purchase Price is less than $15,000 less than Seller's
Estimate, the Primary Closing shall proceed with the Purchase Price based
upon Seller's Estimate. In the event the Purchaser's Estimate of the
Purchase Price is more than $15,000 less than Seller's Estimate, then the
mid-point between Seller's Estimate and Purchaser's Estimate shall be used as
the Purchase Price for purposes of Primary Closing.
Within 90 days after the Primary Closing Date, Purchaser shall deliver
to Seller a certificate (the "Closing Certificate") signed by the President
or Chief Financial Officer of Purchaser providing a compilation of the
Working Capital Adjustment to be made pursuant to this Section 5.05 including
any changes in the Working Capital Adjustment used to determine the Purchase
Price at the Primary Closing Date, together with a copy of any supporting
documents, work papers, subscriber records and other data relating to such
Closing Certificate and such other supporting evidence as Seller may
reasonably request either prior to or after delivery thereof. If Seller
shall conclude that the Closing Certificate does not accurately reflect the
Working Capital Adjustment to be made to the Base Price in accordance with
this Section 5.05, Seller shall, within thirty (30) days after its receipt of
the Closing Certificate (such 30-day period being referred to as the
"Response Period"), deliver to Purchaser a written statement of any
discrepancies believed to exist. If Seller fails to so notify Purchaser of
any discrepancies, then the calculation of the Purchase Price set forth in
the Purchaser's Closing Certificate shall be controlling for all purposes
hereof and Purchaser or Seller, as the case may be, shall on or before the
fifth business day following the expiration of the Response Period pay the
amount which it is obligated to pay in accordance with the Closing
Certificate. On or before the fifth business day following the earlier to
occur of the expiration of the Response Period and the date Purchaser
receives Seller's statement of discrepancies, Purchaser or Seller, as the
case may be, shall pay the amount, if any, as to which there is no
discrepancy. Purchaser and Seller shall use good faith efforts to jointly
resolve their discrepancies within fifteen (15) days of Purchaser's receipt
of Seller's written statement of discrepancies, which resolution, if
achieved, shall be binding upon the parties and not subject to further
dispute or review. In the event Purchaser and Seller are unable to resolve
their differences within such fifteen (15) day period, then either party may
request that the matter be resolved by Coopers, Price, Waterhouse (the
"Independent Accountants"). In submitting a dispute to the Independent
Accountants, each of the parties shall furnish, at its own expense, the
Independent Accountants and the other party with such documents and
information as the Independent Accountants may reasonably request.
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Each party may also furnish to the Independent Accountants such other
information and documents as it deems relevant with the appropriate copies
and notification being given to the other party. The Independent Accountants
may conduct a conference concerning the disagreements between Seller and
Purchaser at which conference each party shall have the right to present
additional documents, material and other evidence an to have present its
advisors, accountants and counsel. The Independent Accountants shall
promptly render a decision on the issues presented, and such decision shall
be final and binding on the parties. The fees and expenses of the Independent
Accountants shall be divided equally between Purchaser and Seller. Within
five (5) days of receipt of the Independent Accountants' decision with
respect to such dispute, Purchaser or Seller, as the case may be, shall pay
the amount which it is obligated to pay as determined by the Independent
Accountants. Any amounts owed by Purchaser to Seller in accordance with this
Section 5.05(c) shall not bear interest and shall be paid by wire transfer of
immediately available funds into the Purchase Escrow Account. Any amounts
owed by Seller to Purchaser under this Section 5.05(c) shall be paid by wire
transfer of immediately available funds and shall not bear any interest, and
if not paid when due, may also be paid from the Purchase Escrow Agreement.
ARTICLE VI
CLOSING
SECTION 6.01. PRIMARY CLOSING. Subject to the terms and conditions
hereof, the Primary Closing (the "Primary Closing") shall take place at the
offices of Xxxxxxx & Xxxxxx, LLP, 0000 XxxxXxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx
Xxxxxx 00000 on the date (the "Primary Closing Date") that is the later of
(a) ten (10) business days after the date on which the FCC has granted its
consent to the assignment of the FCC Authorization from Seller to Purchaser and
the other conditions precedent to the Primary Closing have been satisfied, or
(b) the earlier of (i) the date on which Full Network Deployment occurs, or
(ii) February 28, 2000. As used herein, the term "Full Network Deployment"
shall mean the later of the date that (a) Purchaser shall have installed a
switch which eliminates any risk that computer applications used by Seller 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 (the "Year
2000 Problem") and such switch shall be fully operational, or (b) Purchaser
shall have updated the radio frequency equipment on all of the Cellular System's
cell sites.
SECTION 6.02. FINAL CLOSING. Subject to the terms and conditions hereof,
the Final Closing (the "Final Closing") shall take place at the offices of
Xxxxxxx & Xxxxxx, LLP, 0000 XxxxXxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000 on
a date designated by Purchaser (provided that such date shall be after the
Primary Closing) that is within ten (10) business days after the date on which
the FCC order granting the FCC Authorization to Seller has become a Final Order
(the "Final Closing Date"). For the purposes of this Agreement, the term "Final
Order" shall mean action by the FCC as to which (i) no request for stay by the
FCC of the action is pending, no such stay is in effect, and, if any deadline
for filing any such request is designated by statute or regulation, such
deadline has passed; (ii) no petition for rehearing or reconsideration of the
action is pending before the FCC, and the time for filing any such petition has
passed; (iii) the FCC, does not have the action under reconsideration on its own
motion and the time for such
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reconsideration has passed; and (iv) no appeal to a court, or request for
stay by a court, of the FCC's action is pending or in effect, and, if any
deadline for filing any such appeal or request is designated by statute or
rule, it has passed.
ARTICLE VII
SELLER'S REPRESENTATIONS
Seller hereby represents and warrants that:
SECTION 7.01. ORGANIZATION, QUALIFICATION. Seller is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Mississippi; and has all necessary power and authority to own and
operate its properties and to carry on its Business as now being conducted or
proposed to be conducted and to carry out the transactions contemplated by this
Agreement. Seller has the full power and authority to execute and deliver and,
subject to obtaining the FCC's approval to assign the FCC Authorization and the
other governmental and third-party consents referred to in Section 10.04,
perform its obligations under this Agreement and to undertake the transactions
contemplated hereby. Seller is duly qualified to conduct business as a foreign
corporation in all jurisdictions for which failure to so qualify would have a
Material Adverse Effect (as defined below).
SECTION 7.02. CONSENTS, AUTHORIZATION, EXECUTION AND
DELIVERY OF AGREEMENT. All necessary consents and approvals have been obtained
by Seller for the execution and delivery of this Agreement. The execution,
delivery and performance of this Agreement by Seller and the transfer of the
Assets to Purchaser have been duly and validly authorized and approved by all
necessary limited liability company and member action of Seller. This Agreement
is a valid and binding obligation of Seller, enforceable against it in
accordance with its terms.
SECTION 7.03. SUBSIDIARIES AND INTERESTS IN OTHER COMPANIES. Seller has
no subsidiaries, and does not own or control any shares or other securities of,
or have any other proprietary interest in, any corporation, partnership, limited
liability company, joint venture, business association or other person.
SECTION 7.04. TITLE TO ASSETS; CONDITION OF ASSETS. Except as set forth
on SCHEDULE 7.04, Seller has, and will convey to Purchaser at the Primary
Closing, good and marketable title to the Assets, free and clear of all Liens
other than Permitted Liens. All Liens in effect on the date hereof which are to
be discharged at the Final Closing are listed on SCHEDULE 7.04 hereto. The
tangible property included among the Assets is in good working order and repair,
reasonable wear and tear excepted except as disclosed on SCHEDULE 7.04. The
Assets constitute all of the assets which are necessary, used or useful in the
operation of the Business as it is currently being conducted by Seller other
than the Excluded Assets. Except as disclosed on SCHEDULE 7.25, no officer,
director, stockholder or employee of Seller or any other individual,
partnership, corporation, limited liability company, person or entity (a
"Person") other than the Seller owns, leases or has any rights in any property,
license or other assets related to the Business other than the Excluded Assets.
Except for factors typically affecting propagation and reception in the cellular
telephone industry generally, the tangible property included in the Assets are
technically
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sufficient and capable of providing cellular telephone service in the RSA in
accordance with applicable FCC regulations except as set forth on SCHEDULE
7.08. All of the buildings, towers, transmitters, antenna, fixtures and
improvements owned or leased by Seller, and all heating and air conditioning
equipment, plumbing, electrical and other mechanical facilities and the roof,
walls and other structural components of the real property which are part of,
or located in such buildings, towers, antenna or improvements and are owned
or leased by Seller comply with applicable zoning laws and the building,
health, fire and environmental protection codes of all applicable
governmental jurisdictions, and, except as disclosed on SCHEDULE 7.04, have
no structural defects and do not require any repair other than routine
maintenance and the repair of ordinary wear and tear.
SECTION 7.05. REAL PROPERTY - OWNED. Seller owns no real property and
the real property leased by Seller related to the Business has never been
owned by Seller.
SECTION 7.06. REAL AND PERSONAL PROPERTY - LEASED. Set forth on
SCHEDULE 2.01(d) (in the case of real property) and SCHEDULE 2.01(a) (in the
case of personal property), are true and accurate listings of all real and
personal property leases to which Seller is a party (other than personal
property leases with annual payments of less than $2,000 and which leases,
together with the other contracts and agreements not required to be disclosed
on SCHEDULES 2.01(a) AND (d), in the aggregate have annual payments of less
than $25,000 or which are terminable without penalty on one month or less
notice) setting forth (i) the name of the lessor and (ii) with respect to the
real property leases, the legal description of the property leased. Except
as set forth on SCHEDULE 2.01(d) (in the case of leased real property) and
SCHEDULE 2.01(a) (in the case of leased personal property), all of the leases
set forth on such Schedules (i) are in full force and effect and are valid,
binding and enforceable in accordance with their respective terms, (ii) all
accrued and currently payable rents and other payments required by such
leases have been paid, (iii) Seller and, to Seller's knowledge, each other
party thereto have complied with all respective covenants and provisions of
such leases, (iv) neither Seller nor, to Seller's knowledge, any other party
is in default in any respect under any such leases, (v) no party has asserted
any defense, set off, or counter claim thereunder, (vi) no waiver, indulgence
or postponement of any obligations thereunder has been granted by any party,
and (vii) the validity or enforceability of any such lease will be in no way
affected by the sale of the Assets to Purchaser provided all required
consents have been obtained from the other parties to such lease.
SECTION 7.07. EXISTING CONTRACTS. SCHEDULES 2.01(a) AND (d) hereto set
forth all contracts, commitments and agreements in effect on the date hereof
with Seller's subscribers (other than standard subscriber agreements for
cellular service), all leases (other than personal property leases with
annual payments of less than $2,000 and which leases, together with the other
contracts and agreements not required to be disclosed on SCHEDULES 2.01(a)
AND (d), in the aggregate have annual payments of less than $25,000 or which
are terminable without penalty on one month or less notice) to which Seller
is a party, and all other contracts, commitments and agreements (other than
agreements with annual payments of less than $2,000 and which agreements,
together with the other leases and contracts not required to be disclosed on
SCHEDULES 2.01(a) AND (d), in the aggregate have annual payments of less than
$25,000 or which are terminable without penalty on one month or less notice)
or commitments (written or oral) to
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which Seller is a party which relate to the ownership of the Assets or the
operation of the Business (the "Existing Contracts") except for the
contracts, leases, commitments and agreements included among the Non-Assumed
Liabilities (the "Excluded Contracts"). Except as disclosed on SCHEDULE
7.25, no officer, director or employee of Seller or any Person (other than
Seller) controlling, controlled by or affiliated with or family member of any
such officer, director or employee has any contractual relationship relating
to the ownership or operation of the Business. Seller has heretofore
delivered to Purchaser true and correct copies of the Existing Contracts.
Except as disclosed on SCHEDULES 2.01(a) AND (d), Seller has no knowledge of
any breach or anticipated breach by the other parties to any Existing
Contracts. The Existing Contracts are in full force and effect and Seller is
in compliance with its obligations under such Existing Contracts. Except for
the Existing Contracts and the Excluded Contracts, Seller has not entered
into any other contract, commitment or agreement (other than agreements with
annual payments of less than $2,000 and which agreements, together with the
other leases and contracts not required to be disclosed on SCHEDULES 2.01(a)
AND (d), in the aggregate have annual payments of less than $25,000 or which
are terminable without penalty on one month or less notice) relating to the
ownership of the Assets or the operation of the Business, including, but not
limited to, rights-of-way, rights of entry, licenses, easements, leases, or
guaranty agreements. There are no claims by third parties that Seller is
required to enter into other agreements to enable it to continue to own the
Assets and operate of the Business as it is presently being operated.
SECTION 7.08. GOVERNMENTAL LICENSES. Except as set forth on SCHEDULE
7.08, Seller holds all licenses, consents, permits, approvals and
authorizations of public and governmental bodies including, without
limitation, the FCC Authorization and the state, counties and municipalities
served by the Business, which are required in connection with the ownership
of the Assets and which are required for the provision of cellular services
in the RSA in connection with applicable FCC regulations (collectively
referred to as the "Authorizations"). All Authorizations are in full force
and effect. Seller has complied with the terms of the Authorizations which
it holds and there are no pending modifications, amendments or revocations of
the Authorizations which would adversely affect the ownership of the Assets
or the operation of the Business. All fees due and payable from Seller to
governmental authorities pursuant to the Authorizations have been paid and no
event has occurred which, with or without the giving of notice or lapse of
time or both, would constitute grounds for revocation or modification of the
Authorizations. All reports required of Seller to be filed in connection
with the Authorizations have been timely filed and are accurate and complete.
The Seller does not conduct any microwave operations on frequencies that are
subject to relocation under the FCC's rules. True and correct copies of the
Authorizations, and all amendments thereto to the date hereof, have been
delivered by Seller to Purchaser and are identified on SCHEDULE 2.01(a)
hereto. The Seller has not engaged in any course of conduct that could
reasonably be expected to impair the ability of Purchaser or its subsidiaries
to be the holder of the Authorizations or (i) is aware of any reason why the
Authorizations might not be renewed in the ordinary course, (ii) why any of
the Authorizations might be revoked, or (iii) why any pending applications or
notifications might not be approved. The ownership of the Assets and the
operation of the Business by Seller are not subject to regulation or
supervision by any applicable state public utilities commission or other
similar state governmental instrumentality.
-11-
SECTION 7.09. COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE
7.09, Seller is currently complying with and has so complied with, and is not
in default under or in violation of, and neither the Business nor any of the
Assets nor the operation or maintenance thereof, contravenes any statute, law
(including environmental or employment laws), ordinance, decree, order, rule,
regulation of any governmental body applicable to the Assets or the Business,
including, without limitation, the rules and regulations of the FCC.
SECTION 7.10. NO VIOLATION OF EXISTING AGREEMENTS. Subject to the
consents for the Existing Contracts identified in SCHEDULE 7.10, the
execution, delivery and performance of this Agreement by Seller and Seller's
transfer of the Assets to Purchaser (i) will not violate any provisions of
any law (ii) will not, with or without the giving of notice or the passage of
time, or both, conflict with or result in any breach of any of the terms or
conditions of, or constitute a default under any Existing Contracts, and
(iii) will not result in the creation of any Lien upon the Assets or the
Business other than Permitted Liens.
SECTION 7.11. LITIGATION AND LEGAL PROCEEDINGS. Except as set forth on
SCHEDULE 7.11, there is no outstanding judgment against Seller or any
manager, officer or member of Seller affecting the Business or the Assets or
which question the validity of any action taken or to be taken by Seller
pursuant to or in connection with the provisions of this Agreement and there
is no litigation, proceeding or investigation pending, or, to Seller's
knowledge, threatened, against Seller or any manager, officer or member of
Seller affecting the Business or the Assets or which questions the validity
of any action taken or to be taken by Seller pursuant to or in connection
with the provisions of this Agreement. Except as set forth on SCHEDULE 7.11,
there are no proceedings pending to which Seller or any manager, officer or
member of Seller is a party or, to Seller's knowledge, threatened, nor has
Seller received written notice of any demands by any governmental agency,
utility or other party, to terminate, modify or adversely change the terms
and conditions of Seller's rights with respect to the Authorizations or
Existing Contracts.
SECTION 7.12. ENVIRONMENTAL COMPLIANCE. (a) Except as set forth on
SCHEDULE 7.12 hereto, (i) Seller has not generated, used, transported,
treated, stored, released or disposed of, or suffered or permitted anyone
else to generate, use, transport, treat, store, release or dispose of any
Hazardous Substance (as hereinafter defined) with respect to the Assets or
the Business in violation of any Environmental Laws (as hereinafter defined);
(ii) there has not been any generation, use, transportation, treatment,
storage, release or disposal of any Hazardous Substance in connection with
Seller's or its predecessors' ownership or use of the Assets, the conduct of
the Business or on, in or under any property or facility used, owned or
leased by Seller 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 entity; (iii) no friable asbestos or polychlorinated biphenyl,
and no underground storage tank, is contained in or located on or under any
property or facility owned, used or leased by Seller; and (iv) any Hazardous
Substance handled or dealt with in any way with respect to the Assets or the
Business by Seller, or during Seller's ownership or use of the Assets or the
Business, has been and is being handled or dealt with in compliance with all
Environmental Laws.
-12-
(b) For purposes of this Agreement, the term "Hazardous
Substance" shall mean any substance which, as of the date of this Agreement,
is listed as hazardous or toxic in the regulations implementing the
Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended ("CERCLA"), the Response Compensation and Liability Act ("RCLA"),
the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), or
listed as a hazardous substance under any applicable state environmental
laws, or any substance which has been determined by regulation, ruling or
otherwise by any agency or court to be a hazardous or toxic substance
regulated under federal or state law, and shall include petroleum and
petroleum products.
(c) For purposes of this Agreement, the term "Environmental Laws"
shall mean CERCLA, RCRA, RCLA and any applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, orders, approvals, plans,
authorizations, concessions, franchises and similar items of all governmental
authorities and all applicable judicial, administrative and regulatory
decrees, judgments and orders, any of which relate to the protection of human
health or the environment from the effects of Hazardous Substances, including
but not limited to those pertaining to reporting, licensing, permitting,
investigating and remediating emissions, discharges, releases or threatened
releases of Hazardous Substances into the air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances.
SECTION 7.13. EMPLOYEES. SCHEDULE 7.13 sets forth a true and complete
list of the names and current salaries of all employees of Seller involved in
the operation of the Business. Such employees are employees at will. Seller
has withheld all amounts required by law or agreement to be withheld by it
from the wages, salaries and other payments to its employees and is not
liable for any arrears of wages or any taxes for failure to comply with any
of the foregoing. SCHEDULE 7.13 sets forth the only collective bargaining
agreements covering any of the employees of Seller. The Seller has not
breached or otherwise failed to comply with any provision of any collective
bargaining agreement or other labor union contract applicable to any of its
employees. No consent of any union (or similar group or organization) is
required in connection with the consummation of the transactions contemplated
hereby. There are no pending, or, to Seller's knowledge, threatened or
anticipated, and, there is no factual basis for any (a) employment
discrimination (including age, sex, racial or handicap discrimination)
charges or complaints against or involving Seller, before any federal, state,
or local board, department, commission or agency or (b) unfair labor practice
charges or complaints, disputes or grievances affecting Seller. There are no
pending or, to Seller's knowledge, threatened or anticipated strikes, slow
downs, work stoppages or lockouts or threats affecting Seller.
SECTION 7.14. EMPLOYEE BENEFITS. Except as set forth on SCHEDULE 7.14
attached hereto, Seller has no pension plan, profit sharing plan, deferred
compensation plan, stock option or stock bonus plan, saving plan, or other
benefit plan, policy, practice, or procedure or contract concerning employee
benefits or fringe benefits of any kind (collectively, "Employee Benefit
Plans"), whether or not governed by the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). Seller is not a party to any employment
contract. No officer, director or employee of Seller participates or is
eligible to participate in a "defined benefit pension plan" as
-13-
defined in Section 3(35) of ERISA, maintained or made available by Seller.
Neither Seller nor any Controlled Group Member maintains or contributes to,
or ever maintained or contributed to, a plan under which any employee of
Seller participates or is eligible to participate subject to Section 412 of
the Internal Revenue Code of 1986, as amended (the "Code"). The term
"Controlled Group Member" means any trade or business (whether or not
incorporated) which is, or was at any relevant time, aggregated with the
Seller pursuant to Section 414(b), (c), (m) or (o) of the Code. Neither
Seller nor any ERISA Affiliate has participated in or made contributions to
any "multiemployer plan" as defined in Section 4001(a)(3) of ERISA. The term
"ERISA Affiliate" means each trade or business (whether or not incorporated)
which is, or was at any relevant time, treated as a single employer with
Seller pursuant to Section 4001(b)(1) of ERISA. Seller has furnished
Purchaser with true, complete and accurate copies of all Employee Benefit
Plans and related trust agreements as in effect on the date hereof, all
summary plan descriptions, and the latest annual reports filed with the
Department of Labor or the Internal Revenue Service (the "IRS").
Each of the Employee Benefit Plans is in compliance with all applicable
requirements of ERISA, the Code, and other applicable law. Each of the
Employee Benefit Plans has been administered in accordance with its terms and
with applicable legal requirements. All "employee pension plans" (within the
meaning of Section 3(2) of ERISA) have been determined by the IRS to be
qualified under Section 401(a) of the Code, and no action or proceeding has
been instituted or threatened which would affect the qualification of any
pension plan of Seller. No unfunded liabilities, based upon the Pension
Benefit Guarantee Corporation (the "PBGC") rates currently in effect for plan
terminations, exist with respect to any Employee Benefit Plan which is a
"defined benefit plan" (within the meaning of Section 3(35) of ERISA). There
has not been any reportable event with respect to any pension plan of Seller.
Seller has not engaged in a "prohibited transaction" or breach of fiduciary
responsibility with respect to any Employee Benefit Plan which could subject
Purchaser or any affiliate of Purchaser to a penalty tax or other liability
under ERISA or the Code. Neither Seller nor any Affiliate of Seller has ever
incurred any liability under Title IV of ERISA to the PBGC or to a
multi-employer pension plan.
SECTION 7.15. TAX MATTERS. Except as set forth on SCHEDULE 7.15
attached hereto: (a) Seller has timely filed all Tax (as defined below)
returns and statements which it is required to file; (b) all such returns are
complete and accurate and disclose all Taxes required to be paid for the
periods covered thereby; (c) Seller has not waived any statute of limitations
in respect of Taxes or agreed to an extension of time with respect to a Tax
assessment or deficiency; (d) no assessment of any additional Taxes for
periods for which returns have been filed has been asserted and no basis
exists therefor; (e) to Seller's knowledge, there are no unresolved questions
or claims raised by any Taxing authority concerning the Tax liability of
Seller; and (f) all Taxes which Seller is required by law to withhold or to
collect for payment have been duly withheld and collected, and have been
paid. Seller has paid all Taxes due prior to the date hereof and will pay
when due (or contest in good faith by appropriate proceedings) all Taxes
which may become due on or before the Primary Closing Date. For purposes of
this Section 7.15, the term "Tax" or "Taxes" means all taxes, charges, fees,
levies, imposts and other assessments including all income, sales, use, goods
and services, value added, capital, capital gains, alternative net worth,
transfer, profits, withholding, payroll, employer health, excise, real
property and personal
-14-
property taxes, and any other taxes, customs duties, stamp duties, fees,
assessments or similar charges in the nature of a tax, together with any
interest, fines and penalties imposed by any governmental authority
(including federal, state, provincial, municipal and foreign governmental
authorities), and whether disputed or not.
SECTION 7.16. FINANCIAL STATEMENTS.
(a) The Purchaser has heretofore been furnished with the following:
(i) true and complete copies of the audited balance sheets of
Seller as of December 31, 1996, December 31, 1997, and December 31,
1998 and the related statements of income and retained earnings and
cash flows for the years then ended, each of such balance sheet and
income statement being attached hereto as SCHEDULE 7.16(a)(i)
(collectively, the "Historical Financial Statements"); and
(ii) true and complete copies of the unaudited balance sheet (the
"Interim Balance Sheet") of Seller as of June 30, 1999 (the "Balance
Sheet Date") and the related unaudited statement of income for the
six-month period then ended (the "Interim Income Statement" and
together with the Interim Balance Sheet, the "Current Financial
Statements"), such balance sheet and income statement being attached
hereto as SCHEDULE 7.16(a)(ii).
(b) Each of the Historical and Current Financial Statements delivered
under Section 7.16 (a)(i) and (ii) hereof was prepared in accordance with GAAP
applied on a basis consistent with prior periods and past practices and, with
respect to the Current Financial Statements, subject to usual and customary
year-end adjustments and except for the omission of certain footnotes and other
presentation items required by GAAP with respect to audited financial
statements; subject to the following proviso, each of the balance sheets
included in such Historical and Current Financial Statements fairly presents the
financial condition of Seller, as at the close of business on the date thereof;
and, subject to the following proviso, each of the statements of income included
in such Historical and Current Financial Statements fairly presents the results
of operations of Seller, for the fiscal period then ended.
(c) Except as set forth on SCHEDULE 7.16(C) attached hereto, since the
Balance Sheet Date, Seller has not:
(i) sold, assigned or transferred any of its Assets (except for
the Excluded Assets and except pursuant to existing contracts or
commitments disclosed on any Schedule to this Agreement or inventory
in the ordinary course of business consistent with past practice or
for assets sold or disposed of and replaced by other assets of
comparable use and value); or canceled any material debts or material
claims;
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(ii) waived any material rights, whether or not in the ordinary
course of business;
(iii) entered into any other transaction, except in the ordinary
course of business, or entered into any transaction with any officer,
director or shareholder of Seller, or any affiliate or family member
of any such Person;
(iv) suffered any material damage, destruction or casualty loss
with respect to the Assets, whether or not covered by insurance;
(v) made any distribution of any of the Assets to any officer,
director or shareholder of Seller or any affiliate or family member of
such officer, director or shareholder;
(vi) except as disclosed in writing by Seller to Purchaser,
obligated itself or the Business to give free or reduced price service
to customers with respect to the Business or entered into any
agreement with any governmental or regulatory authority granting the
authorization to freeze fees charged to customers of the Business; or
(vii) entered into any agreement or understanding to do any of
the foregoing.
SECTION 7.17. SUBSCRIBERS/AGENTS. SCHEDULE 7.17 attached hereto sets
forth (a) the number of subscribers receiving service from the Cellular System
and as of a date within five (5) days prior to the date hereof, (b) a list of
all agents who sell cellular telephone equipment and/or service on behalf of
Seller as of the date hereof, together with such agent's address and the number
of gross activations produced by each agent, and (c) all marketing and
promotional plans Seller has used, is using, or proposes to use during 1999 to
acquire subscribers. For purposes of this Agreement, the term "subscriber"
means a person or entity subscribing for cellular telephone service on the
Cellular System (i) who pays for service under the Cellular System's normal rate
plan for that category of subscriber, (ii) whose account is active within the
normal practices and procedures of the Cellular System and in no case is more
than 60 days past due from the due date and (iii) who was obtained as a
subscriber (A) in the normal course of business of the Cellular System
consistent with past practice and not as a result of marketing efforts that are
not customary in the cellular telephone industry generally or which were not
utilized by Seller during 1999 on a regular basis or (B) any other plans for
which the Seller obtain Purchaser's prior written consent, which consent will
not be unreasonably withheld.
SECTION 7.18. INSURANCE. Seller has delivered previously to Purchaser all
policies of title, liability, fire, worker's compensation and other forms of
insurance (including bonds) which insure against risk and liabilities to the
extent and in a manner customary in the cellular industry and which are adequate
to provide coverage against risk of a material nature to which Seller would
normally be exposed in the operation of the business. All such insurance
policies and binders are in full force and effect. Seller has complied with
each of such insurance policies and
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binders and has not failed to give any notice or present any claim thereunder
in a due and timely manner. There are no outstanding unpaid claims under any
of such insurance policies or binders and Seller has not received any notice
of cancellation or non-renewal of any such policy or binder. There is no
inaccuracy in any application for such policies or binders which would
reasonably be expected to materially adversely affect coverage thereunder.
No insurance carrier has canceled or reduced any insurance coverage for
Seller or has given any notice or other indication of its intention to cancel
or reduce any such coverage. All premiums due and payable under any such
insurance policies or binders of Seller have been duly paid or accrued to the
extent take into account in the Working Capital Adjustment. Seller maintains
insurance policies for the Cellular System with the insurance carriers, in
such amounts and for such losses or casualties as are described on SCHEDULE
7.18.
SECTION 7.19. BROKERS. Seller has not engaged any agent, broker or
other person acting pursuant to the express or implied authority of Seller
which is or may be entitled to a commission or broker or finder's fee in
connection with the transactions contemplated by this Agreement or otherwise
with respect to the sale of the Assets or the Business.
SECTION 7.20. UNDISCLOSED LIABILITIES. Seller has no liabilities or
obligations of any nature, whether absolute, accrued, contingent or
otherwise, which are not reflected or reserved against the Interim Balance
Sheet except for liabilities and obligations that have arisen in the ordinary
and usual course of business and consistent with past practice (none of which
results from, arises out of, relates to, is in the nature of, or caused by
any breach of contract, breach of warranty, tort, infringement or violation
of law) and except for liabilities and obligations directly related to the
transactions contemplated hereby.
SECTION 7.21. PRICING OF SERVICES. SCHEDULE 7.21 sets forth a
description of all rate plans currently offered to subscribers of the
Cellular System.
SECTION 7.22. PROPRIETARY RIGHTS. Seller lawfully possesses, and
(except for rights with respect to intellectual property rights listed on
SCHEDULE 2.02) the Assets will include, all intellectual property rights that
are necessary to the conduct of the Business.
SECTION 7.23. ACCOUNTS RECEIVABLE AND BAD DEBTS. All notes and accounts
receivable of Seller shown on the Interim Balance Sheet or thereafter
acquired were or (to the extent not heretofore collected) are valid and
genuine, were acquired in the ordinary course of business and are subject to
no asserted counterclaims, defenses or setoffs (subject to reserves therefor
as will be taken into account in the determination of Current Assets at
Closing in accordance with Section 5.05). SCHEDULE 7.23 attached hereto sets
forth a true, complete and accurate list, as of the end of the most recent
normal billing cycle of the Cellular System, listing the total amounts of
subscriber receivables and the aging of such subscriber receivables of the
Cellular System based on the following Schedule: 0-30 days, 31-60 days, 61-90
days and over 90 days, from the date thereof.
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SECTION 7.24. PRODUCT INFORMATION. Except as disclosed on SCHEDULE 7.24,
Seller has not sold and does not have in its inventory any refurbished telephone
handsets. SCHEDULE 7.24 sets forth a list of manufacturers of telephone
handsets presently in Seller's inventory.
SECTION 7.25. CERTAIN BUSINESS RELATIONSHIPS WITH SELLER. Except as set
forth in SCHEDULE 7.25 attached hereto, none of the officers, directors or
stockholders of the Seller and its affiliates or family members have been
involved in any business arrangement or relationship with Seller within the past
12 months.
SECTION 7.26. YEAR 2000 PROBLEMS. Attached hereto as SCHEDULE 7.26 is a
description of areas of Seller's business and operations which Seller believes
could be adversely affected by the Year 2000 Problem.
SECTION 7.27. DISCLOSURE. No provision of this Agreement relating to
Seller, the Business or the Assets or any other document, Schedule, Exhibit or
other information furnished by Seller to Purchaser 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 statement, in light of the
circumstances in which it is made, not misleading. In connection with the
preparation of this Agreement and the documents, descriptions, opinions,
certificates, Exhibits, Schedules or written material prepared by Seller and
appended hereto or delivered or to be delivered hereunder, Seller agrees it will
disclose to Purchaser any fact known to Seller which Seller knows or believes
would affect Purchaser's decision to proceed with the execution of this
Agreement. Except for facts affecting the cellular telephone industry
generally, there is no fact now known to Seller relating to the Business or
Assets which in Seller's reasonable opinion adversely affects the condition of
the Assets, the status of the FCC Authorization or the ownership, operation,
financial condition or prospects of the Business which has not been disclosed to
Purchaser or set forth in the Exhibits or Schedules attached hereto.
SECTION 7.28. XXXX-XXXXX-XXXXXX. Seller does not meet the "size of person
test" for an acquired person under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act, since Seller's ultimate parent entity and all entities that its ultimate
parent entity controls do not meet the financial thresholds set forth in 16
C.F.R. Part 801.
ARTICLE VIII
PURCHASER'S REPRESENTATIONS
Purchaser hereby represents, warrants, covenants and agrees that:
SECTION 8.01. ORGANIZATION; QUALIFICATION. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Oklahoma. Purchaser has all power and authority to (i) own and operate
its properties, (ii) carry on its business as it is now being conducted, and
(iii) carry out the transactions contemplated by this Agreement and to own and
operate the Assets and the Business, subject to obtaining all necessary consents
required for the transfer by Seller of the Assets.
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SECTION 8.02. CONSENTS; AUTHORIZATION; EXECUTION AND DELIVERY OF
AGREEMENT. All necessary consents and approvals have been obtained by
Purchaser for the execution and delivery of this Agreement. The execution
and delivery of this Agreement by Purchaser has been duly and validly
authorized and approved by all necessary corporate action. Purchaser has
full power and authority to execute and deliver and perform its obligations
under this Agreement. This Agreement is a valid and binding obligation of
Purchaser, enforceable against it in accordance with its terms.
SECTION 8.03. LITIGATION AND LEGAL PROCEEDINGS. There is no
outstanding judgment against Purchaser and there is no litigation, proceeding
or investigation pending, or, to Purchaser's knowledge, threatened, against
Purchaser or its assets which individually or in the aggregate would, if
adversely determined, result in a material adverse change in the business
condition (financial or otherwise), properties or assets of Purchaser or
which questions the validity of any action taken or to be taken pursuant to
or in connection with the provisions of this Agreement or the consummation of
the transactions contemplated hereby by the Purchaser or which could have an
adverse effect on Purchaser's ability to perform its obligations hereunder.
SECTION 8.04. BROKERS. Purchaser has not engaged any agent, broker or
other person acting pursuant to the express or implied authority of Purchaser
which is or may be entitled to a commission or broker or finder's fee in
connection with the transactions contemplated by this Agreement or otherwise
with respect to the sale of the Assets or the Business.
ARTICLE IX
SELLER'S AND PURCHASER'S COVENANTS
SECTION 9.01. INTENTIONALLY OMITTED.
SECTION 9.02. GOVERNMENTAL APPROVALS. Purchaser covenants and agrees that
it will cooperate with Seller, and do all things reasonably necessary to assist
Seller, to obtain all consents and approvals necessary for assignment to
Purchaser of the Authorizations, including, without limitation, the FCC
Authorization, including the furnishing of financial and other information
specifically with respect to Purchaser reasonably required by the Person whose
consent or approval is being sought. Seller shall provide adequate prior
written notice to Purchaser of any meeting with governmental authorities the
purpose of which is to seek a consent or approval to the transactions
contemplated hereby, and Purchaser shall use all reasonable efforts to furnish a
representative to attend meetings with appropriate government authorities for
the purpose of obtaining such consents or approvals. Each of Purchaser and
Seller hereby agrees to file the necessary Forms 490 and 702 with the FCC
transferring or assigning control of the FCC Authorization for the Business to
Purchaser and diligently pursue the processing of the assignment of the FCC
Authorization to Purchaser and to file for all other necessary regulatory
approvals for the consummation of the transactions contemplated by this
Agreement within five business days of the date of execution of this Agreement
to the extent any such filings have not been made prior to the date of execution
of this Agreement. Seller and
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Purchaser shall share equally all filing fees in connection with any filings
pursuant to this Section 9.02(a).
SECTION 9.03. THIRD PARTY CONSENTS; CLOSING CONDITIONS. (a) Seller
covenants and agrees to use its best efforts to obtain all consents and
approvals necessary for the transfer or assignment to Purchaser of the
Assumed Contracts. In addition, with respect to each real property lease
identified on SCHEDULE 2.01(d), Seller agrees that the instrument whereby
Seller requests the consent, estoppel and waiver of the lessor thereunder to
the assignment of such lease to such Purchaser shall be substantially in the
form of the letter attached hereto as SCHEDULE 9.03 and that Seller shall use
its best efforts to obtain each such lessor's consent to such assignment by
having each such lessor countersign such letter in the space provided.
Purchaser covenants and agrees to cooperate with Seller and assist Seller in
obtaining such consents and approvals including the furnishing of financial
and other information, reasonably required by the Person whose consent or
approval is being sought. Notwithstanding the foregoing, to the extent that
any Assumed Contracts listed on SCHEDULE 2.01(a) to be sold, assigned,
transferred or conveyed to Purchaser, or any claim, right or benefit arising
thereunder or resulting therefrom (individually, an "Interest" and
collectively, the "Interests"), is not capable of being sold, assigned,
transferred or conveyed without the approval, consent or waiver of the issuer
thereof or the other party thereto, or any third Person (including a
government or governmental unit), and such approval, consent or waiver has
not been obtained, or if such sale, assignment, transfer or conveyance or
attempted assignment, transfer or conveyance would constitute a breach
thereof, and such approval, consent or waiver has not been obtained, this
Agreement shall not constitute a sale, assignment, transfer or conveyance
thereof, or an attempted assignment, transfer or conveyance thereof; provided
Seller shall use its best efforts to provide Purchaser the benefits of any
such Interest as provided in Section 17.01(b).
(b) Purchaser and Seller hereby covenant and agree to use all
reasonable efforts to satisfy, or assist the other party in satisfying, the
closing conditions applicable to the Purchaser in Article X hereof and the
Seller in Article XI hereof prior to the Primary Closing Date.
SECTION 9.04. ACCESS. (a) Purchaser shall have the right, itself or
through its representatives, during normal business hours, after reasonable
notice (which may be oral) and without undue disruption to Seller's normal
business activities, to inspect the Assets and properties of Seller and to
inspect and make abstracts and reproductions of all books and records of
Seller including, without limitation, applications and reports to the FCC,
all financial information relevant to the Business, employee records, and
engineering and environmental reports and Seller shall furnish Purchaser with
such information respecting the Assets and Business and financial records as
Purchaser may, from time to time, reasonably request.
(b) Seller acknowledges and agrees, subject to any restrictions
placed thereon by an owner or lessor of any real property involved, that
Purchaser may commission, at Purchaser's cost and expense, a so-called "Phase
I" environmental site assessment of the Assets (the "Phase I Assessment").
If the Phase I Assessment indicates that a so-called "Phase II" assessment
(the "Phase II Assessment") or other additional testing or analysis of the
Assets is
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advisable, the Purchaser may elect to cause its agents to conduct such
testing and analysis. Seller will use its commercially reasonable efforts to
comply with any reasonable request for information made by Purchaser or its
agents in connection with any such investigation. Seller covenants that any
response to any such request for information will be complete and correct in
all material respects. Seller will afford Purchaser and its agents access to
all operations of the Seller at all reasonable times and in a reasonable
manner in connection with any such investigation subject to any required
approval of Seller's landlords, which approval Seller will use its
commercially reasonable efforts to obtain. Should Purchaser commission such
an investigation, such investigation will have no effect upon the
representations and warranties made by Seller to Purchaser under this
Agreement except that if any Phase I Assessment or Phase II Assessment
uncovers an environmental condition which then comprises a breach of Seller's
representations or warranties herein, Seller shall not have breached such
representation or warranty if Seller cures such breach in accordance with the
provisions of this Agreement.
(c) Seller shall allow Purchaser the opportunity to conduct an
engineering review of the Assets to confirm that the Assets comply with the
FCC Authorization and the regulations of the FCC and, except as disclosed on
SCHEDULE 7.04, are otherwise in good condition and repair, reasonable wear
and tear excepted.
SECTION 9.05. CONDUCT OF BUSINESS. From and after the date hereof Seller
shall:
(a) operate the Cellular System in accordance with the FCC
Authorization, and comply in all material respect with all laws, rules
and regulations applicable to Seller, including the regulations of the
FCC;
(b) except for inventory sold in the ordinary course of
business, refrain from making any sale, lease, transfer or other
disposition of any of the Assets other than in connection with
replacements with assets of like use and value, or with the prior
written approval of Purchaser;
(c) refrain from modifying, amending or altering in any
material respect, or terminating any of the Assumed Contracts, and
from waiving or canceling any default or breach or modifying, altering
or terminating any right or asset relating to or included in the
Assets without Purchaser's prior written approval, which approval will
not be unreasonably withheld;
(d) maintain insurance on the Assets comparable to that
maintained prior to the date hereof, and subject to Article XII, use
the proceeds of any claims for loss under such policies, together with
such other funds as may be required, to repair, replace, or restore to
their former condition any Assets which may be damaged by fire or
other casualty, all as soon as reasonably possible;
(e) maintain its books and records in accordance with prior
practice; maintain all of its property and assets in their present
condition, ordinary wear and tear excepted, provided, however, Seller
shall promptly repair the items of
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equipment set forth on SCHEDULE 9.05 so that they are in good working
order or replace such equipment with like equipment which is in good
working order; maintain supplies of inventory and spare parts consistent
with past practice; and otherwise operate its business in the ordinary
course in accordance with past practices;
(f) refrain from changing the Cellular System's agents'
commission rate, sales practices (including the quality of the credit
of subscribers contracting for cellular telephone and paging service)
or marketing practices without Purchaser's approval, which approval
will not be unreasonably withheld;
(g) refrain from increasing the compensation payable or to
become payable to any employee or agent without Purchaser's approval,
which approval will not be unreasonably withheld;
(h) refrain from entering into any contract or renewal of any
existing contract for the employment of any employee or agent of
Seller other than "at-will" employees and agents;
(i) use its commercially reasonable efforts to (x) keep its
business organization intact, (y) retain the services of the key
employees of the Cellular 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 certificate of formation or
operating agreement in any way which would materially adversely affect
its power or authority to enter into and perform this Agreement, or
which would otherwise materially adversely affect its performance of
this Agreement;
(k) continue to advertise, promote and market the Cellular
System and its services in a manner consistent with past practice, and
in any event from the date hereof through the Primary Closing, spend
on advertising, marketing and promotion, on an aggregate basis from
the date hereof to the Primary Closing and consult regularly with
Purchaser on the status and effectiveness of promotions and on any
modifications to promotions to increase the number of subscribers to
the Cellular System;
(l) refrain from subjecting any of the Assets to any new Lien
other than Permitted Liens;
(m) refrain from doing or omitting to do any act which will
cause a material breach of, or material default under, or termination
of (except in accordance with its terms), any Assumed Contract;
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(n) provide to the Purchaser, concurrently with filing thereof,
copies of all reports to and other filings with the FCC;
(o) not permit the FCC Authorization to expire or to be
surrendered or voluntarily modified in a matter adverse to the
Business, or take any action which would reasonably be expected to
cause the FCC Authorization or any other governmental authority to
institute proceedings for the suspension, revocation or limitation of
rights under the FCC Authorization; or fail to prosecute with due
diligence any pending applications to any governmental authority;
(p) notify Purchaser in writing promptly after learning of the
institution or threat of any material action against Seller in any
court, or any action against Seller before the FCC or any other
governmental agency, and notify Purchaser in writing promptly upon
receipt of any administrative or court order relating to the Assets or
the Business;
(q) if Seller deems it to be prudent, promptly replace any
employee who leaves the employ of the Cellular System; notify
Purchaser of the hiring of any new employee, any material change in
job function of an employee, and the termination of any employee;
(r) pay or cause to be paid or provide for all Taxes of or
relating to Seller, the Assets and the employees required to be paid
to city, county, state, Federal and other governmental units up to the
Primary Closing Date;
(s) refrain from taking any action not in Seller's usual course
of business regarding the Cellular System or the Assets without
Purchaser's prior approval, which approval will not be unreasonably
withheld; and
(t) cooperate with Purchaser in connection with (x) Purchaser's
efforts to identify the current employees of Seller that Purchaser
would like to hire following the Primary Closing consistent with all
applicable federal, state and/or local employment laws, rules and
regulations, and (y) the prompt and efficient transition of billing
services after Primary Closing to Purchaser's billing system and (z)
Purchaser's efforts to upgrade equipment (at Purchaser's cost) after
Primary Closing.
SECTION 9.06. NO SHOPPING. Prior to the Primary Closing or earlier
termination of this Agreement, neither Seller nor any of its affiliates,
advisors or representatives shall, directly or indirectly, solicit, encourage or
initiate any contact with, negotiate with, or provide any information to,
endorse or enter into any agreement with respect to, or take any other action to
facilitate any person or group, other than Purchaser and its representatives,
concerning any inquiries or the making of any proposals concerning any merger,
sale of all or substantially all of the Assets, acquisition of a substantial
equity interest in Seller or any similar transaction involving Seller.
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SECTION 9.07. EMPLOYEES. Nothing contained in this Agreement shall
confer upon any employee of Seller any right with respect to continued
employment by Seller or Purchaser. No provision of this Agreement shall
create any third-party rights in any such employee, or any beneficiary or
dependent thereof, with respect to the compensation, terms and conditions of
employment and benefits that may be provided to such employee by Purchaser or
under any benefit plan that Purchaser may maintain.
SECTION 9.08. SUPPLEMENTAL DISCLOSURE. Seller shall promptly from time to
time prior to the Primary Closing Date supplement in writing the Schedules
hereto with respect to any matter hereafter arising that, if existing or known
as of the date of this Agreement, would have been required to be set forth or
described in the Schedules hereto; provided, however, that no such supplemental
disclosure shall be deemed to cure any breach of any representation or warranty
of Seller made in this Agreement unless Purchaser waives such breach in writing
to Seller.
SECTION 9.09. MANAGEMENT AGREEMENT. Simultaneously with the execution of
this Agreement, the Manager and Seller shall enter into the Management Agreement
in the form attached hereto as EXHIBIT E (the "Management Agreement") pursuant
to which the Manager will provide management services to Seller prior to the
Primary Closing.
SECTION 9.10. LITIGATION MATTERS. Seller and Purchaser agree that any and
all costs of litigation and other proceedings pertaining to the FCC
Authorization, shall be the responsibility of Seller, and that Seller shall
control the defense of such litigation or proceeding, subject to Purchaser's
right to assist in the defense.
ARTICLE X
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO PRIMARY CLOSING
The obligation of Purchaser under this Agreement with respect to the
purchase and sale of the Assets shall be subject to the fulfillment on or prior
to the Primary Closing of each of the following conditions, any of which may be
waived in writing by Purchaser:
SECTION 10.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
THIS AGREEMENT. Except as they have been affected by Purchaser's actions, all
of the representations and warranties made by Seller in this Agreement shall be
true and correct at and as of the Primary Closing except for such breaches and
inaccuracies therein which, in the aggregate, have not caused and would not
reasonably be expected to cause Purchaser to suffer a Loss (as defined in
Section 14.01) in excess of $10,000 in the aggregate (a "Material Loss") or
otherwise result in a Material Adverse Effect; provided however, that should
Purchaser elect not to close the transaction contemplated hereby due to a breach
by Seller that causes a Material Loss or a Material Adverse Effect, Seller shall
have the right to cure such breach or inaccuracy as set forth in Section 16.01.
Seller shall have complied with and performed all of the agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Primary Closing except for such noncompliances which, in the
aggregate, have not caused and would not reasonably be expected to cause a
Material Loss or otherwise result in a Material
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Adverse Effect. Purchaser shall have been furnished with a certificate or
certificates of Seller's President, dated as of the Primary Closing,
certifying to the fulfillment of the foregoing conditions. As used in this
Agreement, the term "Material Adverse Effect" means a material adverse effect
on the Assets or the Business taken as a whole, other than due to changes
affecting the cellular telephone industry generally.
SECTION 10.02. CERTIFIED AUTHORIZATIONS. Seller shall deliver to Purchaser
copies of the resolutions of the members and, if applicable, the managers of
Seller authorizing the execution, delivery and performance of this Agreement and
all instruments and documents to be delivered in connection herewith and the
transactions contemplated hereby, duly certified by an officer of Seller.
SECTION 10.03. INCUMBENCY CERTIFICATE. Purchaser shall have received a
certificate or certificates of an officer of Seller, certifying as to the
genuineness of the signatures of officers of Seller authorized to take certain
actions or execute any certificate, document, instrument or agreement to be
delivered pursuant to this Agreement, which incumbency certificate shall include
the true signatures of such officers.
SECTION 10.04. THIRD PARTY CONSENTS; FCC GRANT. Seller shall have
delivered to Purchaser such instruments, consents and approvals (the form and
substance of which shall be reasonably satisfactory to Purchaser) as are
necessary to assign to Purchaser without modification thereof, as of the
Closing, the Assets and the Assumed Contracts. Prior to Primary Closing Date,
the FCC shall have granted its consent to the assignment of the FCC
Authorization to Purchaser without any conditions which the Purchaser reasonably
deems to be adverse. Anything herein to the contrary notwithstanding, but
subject to the provisions of Section 17.01, the Purchaser shall have the right
(in its sole discretion) to waive the requirement set forth in the preceding
sentence by delivery to Seller of a written notice to such effect (the "Finality
Waiver Notice").
SECTION 10.05. NO MATERIAL ADVERSE CHANGE. Other than changes affecting
the cellular telephone industry generally, there shall not have been any
material adverse change in the financial condition, assets, business,
properties or prospects of the Cellular System or Assets, from June 30, 1999 to
the Primary Closing unless such material adverse change occurred as a direct
result of Purchaser's actions or as a result of a Year 2000 Problem.
SECTION 10.06. OPINION OF COUNSEL TO SELLER. Purchaser shall have been
furnished with opinions of Young, Williams, Xxxxxxxxx & Xxxxxxxx, P.A., counsel
to Seller, dated as of the Primary Closing and addressed to Purchaser, and to
any institution designated by Purchaser which has provided financing in
connection with the transactions contemplated by this Agreement, in
substantially the form of EXHIBIT E hereto.
SECTION 10.07. OPINIONS OF FCC COUNSEL TO SELLER. Purchaser shall have
been furnished with opinions of Lukas, Nace, Xxxxxxxxx & Sachs, FCC counsel for
Seller, dated as of the Primary Closing and addressed to Purchaser, and to any
financial institution designated by
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Purchaser which has provided the financing in connection with the
transactions contemplated by this Agreement, in substantially the form of
EXHIBIT F-1 attached hereto.
SECTION 10.08. PURCHASE ESCROW AGREEMENT AND MANAGEMENT AGREEMENT. Seller
and the Escrow Agent each shall have executed and delivered the Purchase Escrow
Agreement, and Seller shall have executed and delivered the Management
Agreement, to Purchaser.
SECTION 10.09. TITLE INSURANCE; ESTOPPEL. Seller shall have provided to
Purchaser, at Seller's expense, and in a form satisfactory to Purchaser and its
lenders, all of the title commitments, title policies (including endorsements
thereto) and surveys required by Purchaser's lenders with respect to the leased
real property identified on SCHEDULE 2.01(d). In addition, with respect to each
real property lease identified on SCHEDULE 2.01(d), Seller agrees that the
instrument whereby Seller requests the consent, estoppel and waiver of the
lessor thereunder to the assignment of such lease to such Purchaser shall be
substantially in the form of the letter attached hereto as SCHEDULE 9.03 and
that Seller shall use its commercially reasonable efforts to obtain each such
lessor's consent to such assignment by having each such lessor countersign such
letter in the space provided.
SECTION 10.10. INTENTIONALLY OMITTED.
SECTION 10.11. OPERATION OF CELLULAR SYSTEM. Seller shall have continued
to operate the Cellular System and market the Cellular System's services in the
normal course of business and in accordance with past practice.
ARTICLE XI
CONDITIONS PRECEDENT TO
SELLER'S OBLIGATION TO PRIMARY CLOSING
The obligations of Seller under this Agreement with respect to the sale of
the Assets shall be subject to the fulfillment on or prior to the Primary
Closing of each of the following conditions, any of which may be waived in
writing by Seller:
SECTION 11.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
THIS AGREEMENT. All of the representations and warranties by Purchaser
contained in this Agreement shall be true and correct in all material respects
at and as of the Primary Closing. Purchaser shall have complied with and
performed in all material respects all of the agreements and covenants required
by this Agreement to be performed and complied with by it on or prior to the
Primary Closing. Seller shall have been furnished with a certificate of an
officer of Purchaser, dated as of the Primary Closing, certifying to the
fulfillment of the foregoing conditions.
SECTION 11.02. DIRECTORS' RESOLUTIONS. Purchaser shall deliver to Seller
copies of the resolutions of its Board of Directors authorizing the execution,
delivery and performance of this Agreement and all instruments and documents to
be delivered in connection herewith and the transactions contemplated hereby,
duly certified by an authorized officer of Purchaser.
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SECTION 11.03. INCUMBENCY CERTIFICATE. Seller shall have received a
certificate of a secretary of Purchaser, certifying as to the genuineness of the
signatures of representatives of Purchaser authorized to take certain actions or
execute any certificate, document, instrument or agreement to be delivered
pursuant to this Agreement, which incumbency certificate shall include the true
signatures of such representatives.
SECTION 11.04. FCC. The FCC shall have issued an order granting its
consent to the assignment of the FCC Authorization to Purchaser.
SECTION 11.05. OPINION OF COUNSEL TO PURCHASER. Seller shall have been
furnished with an opinion of Xxxxxxx & Xxxxxx, LLP, counsel to Purchaser, dated
as of the Primary Closing and addressed to Seller in substantially the form of
EXHIBIT G hereto.
SECTION 11.06. PURCHASE ESCROW AGREEMENT AND MANAGEMENT AGREEMENT.
Purchaser and the Escrow Agent each shall have executed and delivered the
Purchase Escrow Agreement, and Purchaser shall have executed and delivered the
Management Agreement, to Seller.
ARTICLE XII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION AT FINAL CLOSING
The obligations of Purchaser under this Agreement with respect to the
purchase and sale of the Assets shall be subject to the fulfillment on or prior
to the Final Closing of each of the following conditions:
SECTION 12.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
THIS AGREEMENT. All of the representations and warranties by Seller contained
in this Agreement shall be true and correct in all material respects at and as
of the Final Closing, except as they have been affected by Purchaser's actions.
Seller shall have complied with and performed in all material respects all of
the agreements and covenants required by this Agreement to be performed and
complied with by it on or prior to the Final Closing. Purchaser shall have been
furnished with a certificate of a duly authorized representative of Seller,
dated as of the Final Closing, certifying to the fulfillment of the foregoing
conditions.
SECTION 12.02. FCC FINAL ORDER. Each of (i) the FCC order consenting to
the assignment of the FCC Authorization from Seller to Purchaser and (ii) the
FCC order granting the FCC Authorization to Seller shall have become a Final
Order, in each instance without any conditions which the Purchaser shall have
determined, in its sole discretion, to be materially adverse to its ability to
operate a cellular system in the RSA.
SECTION 12.03. OPINION OF FCC COUNSEL TO SELLER. Purchaser shall have
been furnished an opinion of Lukas, Nace, Xxxxxxxxx & Sachs, FCC counsel for
Seller, dated as of the Final Closing and addressed to Purchaser and any
financial institution designated by Purchaser in substantially the form of
EXHIBIT F-2 attached hereto.
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ARTICLE XIII
CASUALTY LOSSES
In the event that there shall have been suffered between the date hereof
and the Primary Closing any casualty loss relating to the Assets that becomes
known to Seller, Seller will promptly notify Purchaser of such event. Seller
shall, to the extent practicable, repair, rebuild or replace the portion of the
Assets damaged, destroyed or lost prior to the Primary Closing Date. To the
extent the repair, rebuild or replacement of the portion of the Assets damaged,
destroyed or lost prior to the Primary Closing Date is not practicable, then the
Purchase Price shall be reduced by the amount, mutually acceptable to Purchaser
and Seller, which is estimated by the parties to equal the out-of-pocket costs
and expenses that Purchaser is reasonably likely to incur to repair, rebuild or
replace, in accordance with cellular telephone industry practices, such damaged,
destroyed or lost Assets after the Primary Closing Date, and Seller shall retain
all insurance proceeds payable as a result of the occurrence of the event
resulting in such loss or damage.
ARTICLE XIV
INDEMNIFICATION
SECTION 14.01. INDEMNIFICATION BY SELLER. (a) After the Primary Closing,
and regardless of any investigation made at any time by or on behalf of
Purchaser or any information Purchaser may have, but subject to the terms of
this Article XIV, Seller agrees to indemnify and to hold Purchaser, its
shareholders, officers, directors, and employees (the "Indemnified Purchaser
Parties") harmless from and against and in respect of any losses (including lost
revenues), damages, costs, expenses (including costs of investigations and
reasonable attorney fees), suits, demands, judgments and diminutions in value
suffered or incurred (each a "Loss" and collectively "Losses") by Purchaser
arising from or related to:
(i) Any Non-Assumed Liability, whether or not known or asserted
at or prior to the Primary Closing, relating to or arising from the
ownership, operation, control or sale of the Assets, the Cellular
System or the Business or any other state of facts which existed at or
prior to Primary Closing, including, without limitation, any
environmental liabilities arising out of Seller's or its predecessors'
interests in real property or any fines or forfeitures imposed or
threatened to be imposed by the FCC for the operation, at or prior to
the Primary Closing, of the Cellular System or the Business;
(ii) Any misrepresentation or breach of warranty in, or omission
from, any representation or warranty of Seller in this Agreement, the
Schedules or Exhibits hereto, the Deposit Escrow Agreement, the
Purchase Escrow Agreement, the Management Agreement, the Xxxx of Sale,
the Assumption Agreement or in any closing certificate delivered by
Seller to Purchaser pursuant to Article X hereof;
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(iii) Any breach or non-fulfillment of any covenant or agreement
on the part of Seller under this Agreement to be performed on or
following the Primary Closing Date; and
(iv) All costs and expenses (including reasonable attorneys'
fees) incurred by Purchaser in connection with any action, suit,
proceeding, demand, assessment or judgment incident to any of the
matters Purchaser is indemnified against by Seller in this Agreement.
(b) In addition and subject to the terms of this Article XIV, Seller
shall indemnify Purchaser against and hold it harmless from any and all Losses
which Purchaser may incur by reason of the failure (if any) of Seller to comply
with the Bulk Transfers Article of the Uniform Commercial Code of any state.
SECTION 14.02. INDEMNIFICATION BY PURCHASER. After the Primary Closing,
and regardless of any investigation made at any time by or on behalf of Seller
or any information Seller may have, but subject to the terms of this
Article XIV, Purchaser agrees to indemnify and to hold Seller, and its managers,
officers, members, employees, representatives and agents harmless from and
against and in respect of any Losses incurred by Seller from:
(i) All liabilities and obligations of Purchaser, and all
claims and demands made in respect thereof relating to or arising
from, Purchaser's ownership, operation or control of the Assets or the
Business after the Primary Closing, including on account of the
Assumed Liabilities; and
(ii) Any misrepresentation or breach of warranty in, or omission
from, any representation or warranty of Purchaser, in this Agreement,
the Schedules or Exhibits hereto, including the Deposit Escrow
Agreement, the Purchase Escrow Agreement, the Management Agreement,
the Assumption Agreement or in any closing certificate delivered by
Purchaser to Seller pursuant to Article XI hereof;
(iii) Any breach or non-fulfillment of any covenant or agreement
on the part of Purchaser under this Agreement to be performed on or
following the Primary Closing Date; and
(iv) All reasonable costs and expenses (including reasonable
attorneys' fees) incurred by Seller in connection with any action,
suit, proceeding, demand, assessment or judgment incident to any of
the matters Seller is indemnified against by Purchaser in this
Agreement.
SECTION 14.03. NOTICE OF CLAIMS; DEFENSE OF THIRD PARTY. A party claiming
indemnification under this Article XIV (the "Asserting Party") must notify (in
writing, in reasonable detail and within a reasonable period of time after the
Asserting Party becomes aware of such claim) the party from which
indemnification is sought (the "Defending Party") of the nature and basis of
such claim for indemnification. If such claim relates to a claim, suit,
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litigation or other action by a third party against the Asserting Party or
any fixed or contingent liability to a third party (a "Third Party Claim"),
the Defending Party may elect to assume and control the defense of the Third
Party Claim at its own expense with counsel selected by the Defending Party
from and after such time as the Defending Party unconditionally agrees in
writing to accept, as against the Asserting Party, all liabilities on account
of such Third Party Claim. Assumption of such liability, as against the
Asserting Party, shall not be deemed an admission of liability as against any
such third party. Notwithstanding the foregoing, the Defending Party may not
assume or control the defense if the named parties to the Third Party Claim
(including any impleaded parties) include both the Defending Party and the
Asserting Party and representation of both parties by the same counsel (in
such counsel's reasonable determination) would be inappropriate due to actual
or potential differing interests between them, in which case the Asserting
Party shall have the right to defend the Third Party Claim and to employ
counsel reasonably approved by the Defending Party, and to the extent the
matter is determined to be subject to indemnification hereunder, the
Defending Party shall reimburse the Asserting Party for the reasonable costs
of its counsel. If the Defending Party assumes liability for the Third Party
Claim as against the Asserting Party and assumes the defense and control of
the Third Party Claim pursuant to this Section 14.03, the Defending Party
shall not be liable for any fees and expenses of counsel for the Asserting
Party incurred thereafter in connection with the Third Party Claim (except in
the case of actual or potential differing interests, as provided in the
preceding sentence), but shall not agree to any settlement of such Third
Party Claim which does not include an unconditional release of the Asserting
Party by the third party claimant on account thereof, PROVIDED that such
requirement shall be deemed waived to the extent that the Asserting Party
does not undertake to provide and promptly execute and, concurrently with the
delivery of any such release, deliver a corresponding release of the third
party claimant with respect to such Third Party Claim. If the Defending
Party does not assume liability for and the defense of the Third Party Claim
pursuant to this Section 14.03, the Asserting Party shall have the right (i)
to control the defense thereof and (ii), if the Asserting Party shall have
notified the Defending Party of the Asserting Party's intention to negotiate
a settlement of the Third Party Claim (at the Defending Party's expense to
the extent the matter is determined to be subject to indemnification
hereunder), which notice shall include the material terms of any proposed
settlement in reasonable detail, to settle the Third Party Claim (at the
Defending Party's expense to the extent the matter is determined to be
subject to indemnification hereunder) on terms not materially inconsistent
with those set forth in such notice, unless the Defending Party shall have
notified the Asserting Party in writing of the Defending Party's election to
assume liability for and the defense of the Third Party Claim pursuant to
this Section 14.03 within ten days after receipt of such notice, and the
Defending Party promptly thereafter shall have taken appropriate action to
implement such defense. The Asserting Party shall not be entitled to settle
any such Third Party Claim pursuant to the preceding sentence unless such
settlement includes an unconditional release of the Defending Party by the
Third party claimant on account thereof, PROVIDED that such requirement shall
be deemed waived to the extent that the Defending Party does not undertake to
provide and promptly execute and, concurrently with delivery of any such
release, deliver a corresponding release of the third party claimant with
respect to such Third Party Claim. The Asserting Party and the Defending
Party shall use all reasonable efforts to cooperate fully with respect to the
defense and settlement of any Third Party Claim covered by this Article XIV.
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SECTION 14.04. LIMITATIONS. The Defending Party's obligations to
indemnify the Asserting Party pursuant to this Article XIV shall be subject to
the following limitations:
(a) No indemnification shall be required to be made by the Defending
Party until the aggregate amount of the Asserting Party's Losses exceeds $10,000
(the "Deductible") and then indemnification shall only be required to be made by
the Defending Party to the extent of such Losses that exceed the Deductible;
provided, however, the Deductible shall not be applicable to (i) Seller's
obligation to indemnify Purchaser for Non-Assumed Liabilities, (ii) Purchaser's
obligation to indemnify Seller for Losses arising from or related to the matters
described in Section 14.02(i), (iii) adjustments to the Purchase Price provided
for in Section 5.05, (iv) a breach by Seller of its representations set forth in
Section 7.02, the first sentence of Section 7.04, and Section 7.15 or (v) Losses
resulting from fraud.
(b) All representations and warranties contained in this Agreement
shall survive the Primary Closing until the second anniversary thereof;
provided, however, that notwithstanding the foregoing, (x) the representations
and warranties contained in Section 7.02, the first sentence of Section 7.04,
and Section 7.15 shall survive the Primary Closing for an unlimited duration and
(y) the representations and warranties contained in Sections 7.09 and 7.12 (as
it may relate to Environmental Laws) shall survive the Primary Closing until the
sixth anniversary thereof (the applicable period of survival being referred to
as the "Survival Period"). To the extent a claim is made in respect of a
representation or warranty within the applicable Survival Period, such
representation or warranty shall survive after the Survival Period for purposes
of such claim until such claim is finally determined or settled. Each party
shall be precluded from asserting claims against the other party after the
applicable Survival Period.
(c) In addition, the liability of any indemnitor with respect to any
Losses shall be determined on a basis that is net of the amount actually paid to
the indemnified party in respect of any such Losses pursuant to a policy of
insurance maintained by such indemnified party.
SECTION 14.05. PURCHASE ESCROW AGREEMENT. The obligation of Seller to
indemnify Indemnified Purchaser Parties for Losses pursuant to this Article XIV
shall be secured by the funds held pursuant to the Purchase Escrow Agreement.
ARTICLE XV
CONFIDENTIALITY AND PRESS RELEASES
SECTION 15.01. CONFIDENTIALITY. Each party (in such capacity, a
"Recipient Party") shall hold in strict confidence all documents and information
concerning the other (in such capacity, a "Disclosing Party") and its business
and properties and, if the transaction contemplated hereby should not be
consummated, such confidence shall be maintained, and all such documents and
information (in written form) shall immediately thereafter be returned to the
Disclosing Party. In furtherance of the foregoing, without the express prior
written consent of the Disclosing Party, the Recipient Party shall not, directly
or indirectly, disclose, disseminate, publish, reproduce,
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retain, use (for its benefit or for the benefit of others) or otherwise make
available in any manner whatsoever, any such documents or information to
anyone except as provided in Section 15.03. If the Recipient Party breaches,
or threatens to commit a breach of, any of the provisions of this Article XV,
the Disclosing Party shall have the right (in addition to any other rights
and remedies available at law or in equity) to equitable relief (including
injunctions) against such breach or threatened breach, it being acknowledged
and agreed that any such breach or threatened breach will cause irreparable
harm to the Disclosing Party and that money damages would not be an adequate
remedy.
SECTION 15.02. PRESS RELEASES. No press release or public disclosure,
either written or oral, of the existence or terms of this Agreement shall be
made by either Purchaser or Seller without the consent of the other subject to
the provisions of Section 15.03, and Purchaser and Seller shall each furnish to
the other advance copies of any release which it proposes to make public
concerning this Agreement or the transactions contemplated hereby and the date
upon which Purchaser or Seller, as the case may be, proposes to make such press
release.
SECTION 15.03. DISCLOSURES REQUIRED BY LAW. This Article XV shall not,
however, be construed to prohibit any party from making any disclosures to any
governmental authority that it is required to make by law or from filing this
Agreement with, or disclosing the terms of this Agreement to, any institutional
lender to such party, or prohibit Seller, Purchaser or any of their affiliates
from disclosing to its investors, partners, accountants, auditors, attorneys,
parent company and broker/dealers such terms of this transaction as are
customarily disclosed to them in connection with the sale or acquisition of a
cellular telephone system; PROVIDED, HOWEVER, that any such party shall be
informed of the confidential nature of such information and shall agree to keep
such information confidential; and PROVIDED, HOWEVER, that each party shall
provide to the other reasonable advance copies of any public release except
where the provision of such advance notice is not permissible.
ARTICLE XVI
TERMINATION
SECTION 16.01. BREACHES AND DEFAULTS; OPPORTUNITY TO CURE. Prior to the
exercise by a party of any termination rights afforded under this Agreement, if
either party (the "Non-Breaching Party") believes the other (the "Breaching
Party") to be in breach hereunder, the Non-Breaching Party shall provide the
Breaching Party with written notice specifying in reasonable detail the nature
of such breach, whereupon the Breaching Party shall have 30 days from the
receipt of such notice to cure such breach to the reasonable satisfaction of the
Non-Breaching Party; PROVIDED, HOWEVER, that if such breach is curable but is
not capable of being cured within such period and if the Breaching Party shall
have commenced action to cure such breach within such period and is diligently
attempting to cure such breach, then the Breaching Party shall be afforded an
additional sixty (60) days to cure such breach, PROVIDED, HOWEVER, that the cure
period for a breach shall in no event extend beyond the Outside Date. If the
breach is not cured within such time period, then the Breaching Party shall be
in default hereunder and the Non-Breaching Party shall be entitled to terminate
this Agreement (as provided in Section 16.02).
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This right of termination shall be in addition to, and not in lieu of, any
legal or equitable remedies available to the Non-Breaching Party.
SECTION 16.02. TERMINATION. This Agreement may be terminated and the
transactions contemplated herein may be abandoned, by written notice given to
the other party hereto, at any time prior to the Final Closing (except as
noted):
(a) by mutual written consent of Seller and Purchaser;
(b) by either Purchaser or Seller, if any court of competent
jurisdiction in the United States or other United States governmental
body shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise permanently
prohibiting the sale of the Assets to Purchaser (which Seller and
Purchaser shall have used all reasonable efforts to have lifted or
reversed) and such order, decree, ruling or other action shall have
become final and nonappealable;
(c) subject to Section 16.01, by Purchaser, if Seller shall
have breached any of its representations herein and such breaches, in
the aggregate, would reasonably be expected to have a Material Adverse
Effect or if Seller shall have materially breached any of its
covenants;
(d) by Purchaser, in the event that the FCC's order granting
its consent to the assignment of the FCC Authorization to Purchaser is
reversed, on reconsideration by the FCC or after judicial review, or
in the event that Seller's rights in the FCC Authorization are
revoked, denied or conditioned on such grounds that the value of the
FCC Authorization is materially impaired, on reconsideration by the
FCC or after judicial review, and in either event, Purchaser's right
to operate the Cellular System pursuant to the FCC Authorization
without materially adverse conditions is terminated;
(e) subject to Section 16.01, by Seller, if Purchaser shall
have materially breached any of its representations or covenants
herein and such breaches, in the aggregate, would reasonably be
expected to have a Material Adverse Effect; or
(f) by either Seller or Purchaser if the Primary Closing shall
not have occurred on or before May 31, 2000 (the "Outside Date"),
unless the failure to have the Closing shall be due to the failure of
the party seeking to terminate this Agreement to perform in any
material respect its obligations under this Agreement required to be
performed by it at or prior to the Primary Closing.
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ARTICLE XVII
BROKERS' FEES
Each party represents and warrants to the other that it shall be solely
responsible for the payment of any fee or commission due to any broker or finder
it has engaged with respect to this transaction and the other party hereto shall
be indemnified for any liability with respect thereto pursuant to Article XIV
hereof.
ARTICLE XVIII
MISCELLANEOUS
SECTION 18.01. ADDITIONAL INSTRUMENTS OF TRANSFER. (a) From time to time
after the Primary Closing, each party shall, if requested by another party,
make, execute and deliver such additional assignments, bills of sale, deeds and
other instruments, as may be reasonably necessary or proper to carry out the
specific provisions of this Agreement, including transfer to Purchaser all of
Seller's right, title and interest in and to the Assets. Such efforts and
assistance shall be at the cost of the requesting party.
(b) Anything in this Agreement to the contrary notwithstanding,
Seller is not obligated to sell, assign, transfer or convey to Purchaser any of
its rights and obligations in and to any Interest without first obtaining all
necessary approvals, consents or waivers. To the extent any of the approvals,
consents or waivers have not been obtained by Seller as of the Primary Closing
and Purchaser elects to proceed with the Primary Closing, Seller shall, for the
remaining term of such Interest, use its commercially reasonable efforts to (i)
obtain the consent of any such third party; (ii) cooperate with Purchaser in any
reasonable and lawful arrangements designed to provide the benefits (including,
without limitation, the payment to Purchaser of any monies received by Seller in
connection therewith) of such Interest to Purchaser so long as Purchaser
performs all obligations with respect to the Interest (and the payment of all
expenses in connection therewith); and (iii) enforce, at the request of
Purchaser and at the expense and for the account of Purchaser, any rights of
Seller arising from such Interest against such issuer thereof or the other party
or parties thereto (including the right to elect to terminate any such Interest
in accordance with the terms thereof upon the request of Purchaser); provided,
however, that neither of Purchaser nor Seller shall be obligated to pay any
consideration or other sums therefor (except for filing fees and other ordinary
administrative charges and except as set forth above) to the third party, or to
commence any proceedings against the third party, from whom such approval,
consent or waiver is requested.
SECTION 18.02. NOTICES. All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered, sent by telecopier, recognized overnight delivery
service or registered or certified mail, return receipt requested, postage
prepaid, to the following addresses:
(i) If to Purchaser:
00000 X. Xxxxxxxx Extension
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Suite 200
Oklahoma City, Oklahoma 73114
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
with a required copy to:
Xxxxxxx & Xxxxxx, LLP
0000 XxxxXxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx., Esq.
Facsimile No.: (000) 000-0000
(ii) If to Seller:
Alaska-3 Cellular, LLC
x/x Xxxxxx-0 Cellular Corporation, Manager
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: X. X. Xxxxxx, Xx.
Facsimile No.: (000) 000-0000
with a required copy to:
Young, Williams, Xxxxxxxxx & Xxxxxxxx, P.A.
0000 Xxxxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
Notices delivered personally shall be effective upon delivery against
receipt. Notices transmitted by telecopy shall be effective when received,
provided that the burden of proving notice when notice is transmitted by
telecopy shall be the responsibility of the party providing such notice.
Notices delivered by overnight mail shall be effective when received. Notices
delivered by registered or certified mail shall be effective on the date set
forth on the receipt of registered or certified mail, or seventy-two (72) hours
after mailing, whichever is earlier.
SECTION 18.03. EXPENSES. Each party shall bear its own expenses and
costs, including the fees of any corporate or FCC attorney retained by it,
incurred in connection with the preparation of this Agreement and the
consummation of the transactions contemplated hereby; provided that Seller and
Purchaser shall bear equally FCC, and other governmental filing fees.
SECTION 18.04. TRANSFER TAXES. Seller and Purchaser shall bear equally all
use, sales and transfer taxes, if any, imposed in connection with the sale and
delivery of the Assets acquired by Purchaser under this Agreement.
Notwithstanding anything else to the contrary set forth in this
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Section 18.04, Purchaser shall in no event be responsible in any manner for
the payment of any Taxes on any income or gain which Seller may realize as a
result of the sale of the Assets or otherwise related to the transactions
contemplated by this Agreement.
SECTION 18.05. COLLECTION PROCEDURES. From and after the Primary Closing,
Purchaser shall have the right and authority, at its expense, to collect for its
account all items to which it is entitled as provided in this Agreement and to
endorse with the name of the Seller any checks or drafts received on account of
any such items.
SECTION 18.06. SPECIFIC PERFORMANCE. The parties recognize and
acknowledge that in the event either party shall fail to perform its obligations
under the terms of this Agreement, money damages alone will not be adequate to
compensate such party. The parties, therefore, agree and acknowledge that in
the event either party fails to perform its obligations under this Agreement
prior to Final Closing, the other party shall be entitled, in addition to any
action for monetary damages, in addition to any other rights and remedies on
account of such failure, to specific performance of the terms of this Agreement
and of the covenants and obligations hereunder.
SECTION 18.07. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma (without
application of principles of conflicts of law).
SECTION 18.08. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (by merger or other operation of law or otherwise) without the prior
written consent of the other party, which consent will not be unreasonably
withheld except that Purchaser shall have the right to assign (i) this Agreement
to any of its affiliates or (ii) its rights under this Agreement after the
Primary Closing to any institutional lender.
SECTION 18.09. SUCCESSORS AND ASSIGNS. All agreements made and entered
into in connection with this transaction shall be binding upon and inure to the
benefit of the parties hereto, their successors and permitted assigns.
SECTION 18.10. AMENDMENTS; WAIVERS. No alteration, modification or change
of this Agreement shall be valid except by an agreement in writing executed by
the parties hereto. No failure or delay by any party hereto in exercising any
right, power or privilege hereunder (and no course of dealing between or among
any of the parties) shall operate as a waiver of any such right, power or
privilege. No waiver of any default on any one occasion shall constitute a
waiver of any subsequent or other default. No single or partial exercise of any
such right, power or privilege shall preclude the further or full exercise
thereof.
SECTION 18.11. ENTIRE AGREEMENT. This Agreement merges all previous
negotiations and agreements between the parties hereto, either verbal or
written, and constitutes the entire agreement and understanding between the
parties with respect to the subject matter of this Agreement.
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SECTION 18.12. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which when so executed shall be an original, but all
of which together shall constitute one agreement. Facsimile signatures shall be
deemed original signatures.
SECTION 18.13. SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law, but only
as long as the continued validity, legality and enforceability of such provision
or application does not materially (a) alter the terms of this Agreement, (b)
diminish the benefits of this Agreement or (c) increase the burdens of this
Agreement, for any person.
SECTION 18.14. SECTION HEADINGS. The section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
SECTION 18.15. INTERPRETATION. As both parties have participated in the
drafting of this Agreement, any ambiguity shall not be construed against either
party as the drafter.
SECTION 18.16. FURTHER ASSURANCES. For a period of twelve (12) months
after Closing, Seller agrees to provide to Purchaser from time to time any
information that Seller possesses with respect to the operation of the Business
and Assets prior to the Primary Closing which the Purchaser reasonably requests
in the future in connection with the Purchaser's financing efforts now or in the
future or in connection with any FCC or other regulatory filing.
SECTION 18.17. THIRD PARTIES. Except with respect to Article XIV hereof,
nothing herein, expressed or implied, is intended to or shall confer on any
person other than the parties hereto any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
SECTION 18.18. WAIVER OF JURY. THE PARTIES HERETO IRREVOCABLY WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, COUNTERCLAIM, OR CROSS
CLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
[THE REST OF THIS PAGE IS LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized representative as of the day and year first
above written.
SELLER:
ALASKA-3 CELLULAR, LLC
By: Alaska-3 Cellular Corporation, its
Manager
By: /s/ X. X. XXXXXX, XX.
-------------------------------------------
Print Name: X. X. Xxxxxx, Xx.
-----------------------------------
Title: Vice President
----------------------------------------
PURCHASER:
XXXXXX CELLULAR SYSTEMS, INC.
By: /s/ XXXXXXX X. XXXXX
-------------------------------------------
Print Name: Xxxxxxx X. Xxxxx
------------------------------------
Title: Senior Vice President of Engineering
-----------------------------------------
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