AGREEMENT PENDING PURCHASE CLOSING
This AGREEMENT PENDING PURCHASE CLOSING ("Management Agreement") dated as
of this 2nd day of August, 1999 ("Execution Date") is made and entered into by
and among SourceOne Wireless Inc. ("SOWI"), SourceOne Wireless, L.L.C. ("LLC"),
SourceOne Wireless II, L.L.C. ("LLC II") and Aquis Communications, Inc.
("Aquis"). SOWI, LLC, LLC II and Aquis may sometimes be referred to hereinafter
individually as "Party" and collectively as the "Parties." SOWI, LLC and LLC II
may sometimes be referred to collectively hereinafter as "SourceOne."
RECITALS
WHEREAS, SourceOne currently operates Commercial Mobile Radio Service
("CMRS") one-way paging systems ("Systems") on multiple frequencies in numerous
geographic areas throughout the United States pursuant to licenses ("Licenses")
issued to LLC II by the Federal Communications Commission ("FCC").
WHEREAS, the largest of these Systems is a one-way paging system ("Midwest
System") operating pursuant to licenses ("Midwest Licenses") issued by the FCC
in the Paging And Radiotelephone Service on the frequency 931.1875 MHz in the
midwest United States. The Midwest System is made up of one hundred and
twenty-seven (127) 931.1875 MHz transmitter sites: (i) seventy-five (75)
("Midwest Transmitter Sites") of which are clearly currently operational and
used by SourceOne to provide paging service to certain subscribers ("Midwest
Subscribers"); and (ii) fifty-two (52) ("Other Midwest Transmitter Sites") of
which may not currently be operational, but SourceOne has no knowledge that such
Other Midwest Transmitter Sites have been off the air for ninety (90) or more
continuous days as represented by SourceOne herein, and have been used to
provide paging service to Midwest Subscribers. A list of the Midwest Transmitter
Sites and Other Midwest Transmitter Sites that make up the Midwest System and
associated Midwest Licenses is attached hereto as Schedule A.
WHEREAS, the remaining Systems ("Other Systems") authorized to SourceOne
pursuant to FCC Licenses issued to LLC II on other frequencies ("Other
Licenses") provide service to other subscribers ("Other Subscribers").
WHEREAS, SourceOne also provides paging service to additional subscribers
("Additional Subscribers") in various geographic areas on systems not licensed
to SourceOne, including through resale and other agreements ("Additional
Subscriber Agreements"). The term "Subscribers" as used hereinafter will be
defined to include Midwest Subscribers and Additional Subscribers.
WHEREAS, LLC II is wholly owned and controlled by LLC and LLC is, in turn,
controlled by SOWI.
WHEREAS, On April 29, 1999, SOWI, and on July 2, 1999, LLC (together with
SOWI "Debtors") filed voluntary petitions for relief in the Bankruptcy Court for
the Northern District of Illinois ("Bankruptcy Court") under chapter 11 of title
11 of the United States Code ("Bankruptcy Code"). Debtors have continued in the
possession of their assets and the management of their business pursuant to
Bankruptcy Code sections 1107 and 1108.
WHEREAS, as part of Debtors' bankruptcy cases, either simultaneously
herewith or promptly after the Execution Date, Aquis, SOWI, LLC and LLC II will
execute an asset purchase agreement ("Purchase Agreement") pursuant to which
Aquis will purchase the: (i) Midwest System, including the Midwest Licenses, the
Midwest Subscribers and all assets used in the operation of the Midwest System;
(ii) the Other Subscribers and certain other assets used by SourceOne in the
operation of the Other Systems; and (iii) the Additional Subscribers and certain
other assets used by SourceOne in the provision of service to Additional
Subscribers pursuant to Additional Subscriber Agreements.
WHEREAS, the Purchase Agreement requires (or will require) that the
Parties obtain requisite prior FCC consent to assignment of the Midwest Licenses
from LLC II to Aquis pursuant to applications (collectively "Assignment
Application") that must be filed with, processed and granted by the FCC before
the Parties can consummate sale of the assets and de jure assignment of the
Midwest Licenses to Aquis at a closing ("Purchase Closing") to be conducted by
the Parties pursuant to the Purchase Agreement.
WHEREAS, based on representations by SourceOne that SourceOne's dire
financial circumstances severely threaten SourceOne's ability to continue to
operate the Midwest System, Aquis has agreed to step in and assume day-to-day
operational and management control of the Midwest System and related
responsibilities pursuant to this Management Agreement until Purchase Closing.
WHEREAS, LLC II and Aquis have sought and obtained Special Temporary
Authority ("STA") for Aquis to acquire de facto control of the Midwest System
pending filing and FCC grant of the Assignment Application and de jure
assignment of the Midwest Licenses to Aquis at Purchase Closing. This STA will
enable Aquis to provide the functions specified in this Management Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, mutually agree as follows.
1. Assumption Of Midwest Business. At 12:01 AM on a date to be mutually
agreed by the Parties no more than five (5) Business Days after Bankruptcy Court
approval of this Management Agreement ("Take-Over Date"): (i) SourceOne will
transfer and Aquis will
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acquire de facto control of the Midwest System and assume full day-to-day
operational and management responsibilities for operation of the Midwest System,
including provision of service to Midwest Subscribers; and (ii) Aquis will
commence provision of service to Additional Subscribers pursuant to Additional
Subscriber Agreements. The functions referred to in subsections (i) and (ii)
hereof will be referred to collectively hereinafter as the "Midwest Business."
In order to effectuate this transfer, the Parties hereby agree to take the
following actions:
1.1. Use Of Midwest System Assets. On the Take-Over Date, SourceOne
will transfer to Aquis SourceOne's rights to use, have access to and control
over each and every asset utilized by SourceOne in the operation of the Midwest
Business ("Midwest System Assets"), including, but not limited to the following:
1.1.1. All transmission equipment located at the Midwest
Transmitter Sites, Other Midwest Transmitter Sites, or at any other location
utilized in the operation of the Midwest System.
1.1.2. The paging terminals and all associated hardware and
software utilized in the Midwest System and the "calling party pays" platform,
software and associated hardware ("CPP") used as part of the Midwest Business to
provide service to Subscribers.
1.1.3. The satellite control facilities utilized in the
Midwest System, including but not limited to any earth station facilities,
satellite space, associated wireline or wireless transmission facilities,
hardware and software, whether owned by SourceOne or utilized by SourceOne
pursuant to existing agreements with third parties.
1.1.4. All site leases, licenses or other agreements ("Site
Agreements") pursuant to which SourceOne operates transmission equipment at each
of the Midwest Transmitter Sites and Other Midwest Transmitter Sites, it being
Aquis's understanding that SourceOne does not currently own the sites or
supporting structures at any of the Midwest Transmitter Sites or Other Midwest
Transmitter Sites.
1.1.5. All rights to interconnection with the public switched
telephone network ("PSTN") utilized by SourceOne in the operation of the Midwest
Business, whether pursuant to agreement, tariff or otherwise.
1.1.6. Certain leases, licenses or other agreements ("Office
Agreements") for office space related to, or at which SourceOne currently
operates, the Midwest Business as specified at Schedule hereto.
1.1.7. All office equipment, furniture and
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fixtures, computer equipment, tools, vehicles, and other personal property
("Personal Property") utilized by SourceOne in any way in connection with the
Midwest Business.
1.1.8. All software and licenses and other agreements to
utilize software ("Software") utilized by SourceOne in any way in connection
with the Midwest Business.
1.1.9. Those SourceOne employees specified on Schedule hereto
("Retained Employees"), it being expressly understood that: (i) as of the
Take-Over Date, SourceOne will terminate the employment of any other SourceOne
employees currently involved in operation of the Midwest Business and/or
reassign such other employees to operation of the Other Systems with SourceOne
assuming full and complete responsibility for all actions, costs, expenses,
claims and liabilities of any nature whatsoever associated with such termination
and/or reassignment of non-Retained Employees; and (ii) to the extent that
SourceOne will pay "stay bonuses" to Retained Employees, SourceOne will only pay
such "stay bonuses" on or after Purchase Closing, or as otherwise provided in a
Bankruptcy Court order.
1.1.10. All bank accounts ("Bank Accounts") utilized by
SourceOne in the operation of the Midwest Business.
1.1.11. All customer lists and goodwill for Subscribers
(collectively "Customer Lists").
1.1.12. All deposits ("Deposits") held by SourceOne for
Subscribers.
1.1.13. The right to operate the Midwest System in accordance
with the Midwest Licenses as the Midwest Licenses may be modified by LLC II
pursuant to the request of Aquis, subject only to LLC II's ongoing obligations
imposed as the de jure FCC licensee of the Midwest Licenses.
1.1.14. All inventory, pagers and other equipment and/or items
held for resale or lease (or already leased to Subscribers) by SourceOne.
1.1.15. On the Take-Over Date, all accounts receivable held or
owned by SourceOne for Subscribers, including all rights to receive compensation
from "calling party pays" agreements and all accrued but unbilled revenue from
operation of the Midwest Business (collectively, "Accounts Receivable"), will be
turned over to Aquis as manager for administration and collection. SourceOne
represents that accrued but unbilled revenues are not older than thirty-one (31)
days except that accrued but unbilled revenues for July, 1999, are not older
than forty (40) days. The Accounts Receivable transferred on the Take-Over Date
("Take-Over Receivables") will be specified on a schedule agreed to by the
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Parties and will be valued with the following discount factors ("Discount
Factors") as follows:
(a) 100% of the face amount of Accounts Receivable outstanding including
accrued but unbilled revenue for 30 days or less before the
Take-Over Date;
(b) 70% of the face amount of Accounts Receivable outstanding for
between 31 and 60 days before the Take-Over Date;
(c) 40% of the face amount of Accounts Receivable outstanding for
between 61 and 90 days before the Take-Over Date;
(d) 0% of the face amount of Accounts Receivable outstanding for more
than 90 days before the Take-Over Date; and
(e) 95% of the net amount of those certain Accounts Receivable owed by
ESBI and Ameritech and related to "calling party pays" service.
If the Purchase Agreement closes, the Accounts Receivable will be transferred to
Aquis as Purchaser under the Purchase Agreement. If the Management Agreement is
terminated and the Purchase Closing has not occurred, then Aquis will return to
SourceOne accounts receivable from the Midwest Business whose value (after
adjustment by the Discount Factors) is not less than the discounted value of the
Take-Over Receivables less the "Net Service Revenue Adjustment" amount
("Returned Receivables Amount") subject to the first priority lien thereon in
favor of Foothill Capital Corporation, as agent. If the discounted value of the
Take-Over Receivables exceeds the Returned Receivables Amount, then Aquis will
promptly pay SourceOne the difference subject to the first priority lien thereon
in favor of Foothill Capital Corporation, as agent. If the discounted value of
the Take-Over Receivables is less than the Returned Receivables Amount, then
such difference ("Excess Returned Receivables") will be promptly paid by Source
One to Aquis as a fee in addition to any other fees provided in this Management
Agreement. The Net Service Revenue Adjustment amount under this Section is
calculated as follows: (discounted value of the Take-Over Receivables divided by
$7.26 million) times actual Net Service Revenue (as defined in Purchase
Agreement Section 1.6(d)(i)).
1.1.16. All contract rights ("Contracts") held by SourceOne
and utilized in connection with the Midwest Business, such as Additional
Subscriber Agreements, agreements related to "calling party pays", and
subscriber agreements with Subscribers.
1.1.17. All books, records, models and spreadsheets (whether
in hard copy or computerized form) kept in the ordinary course and useful, in
the sole discretion of Aquis, in the operation of the Midwest Business,
including sales and
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marketing information and Retained Employee files.
1.1.18. All corporate names, logos, trade names, trademarks
and copyrights of SourceOne and all other intellectual property owned by or
licensed to SourceOne, used in connection with operation of the Midwest
Business.
1.1.19. Any other assets, privileges, rights, claims or
credits of every kind, character and description, whether tangible, intangible,
real, personal, or mixed and wherever located, owned, leased by SourceOne or
used, or held for use in connection with the Midwest Business as of the
Take-Over Date ("Other Assets").
1.2. No Assumption Of Liabilities By Aquis. It is expressly
understood and agreed that the Parties intend that Aquis is not and will not be
considered to be a successor to SourceOne by reason of any theory of law or
equity.
1.3. Title To Midwest System Assets. Subject to Aquis's right to
use, have access to and control over the Midwest System Assets pursuant to
Section hereof, title to the Midwest System Assets will remain with SourceOne
during the Term of this Management Agreement (as hereinafter defined). Title
will pass to Aquis at Purchase Closing pursuant to the Purchase Agreement;
subject, however, to the provisions of Section hereof.
1.4. Good Faith Cooperation. SourceOne agrees to cooperate in good
faith, use its best efforts and timely take (or omit to take) any additional
action that Aquis reasonably believes is necessary to: (i) effectuate the de
facto transfer of control of the Midwest System and allow Aquis to assume
day-to-day operational and management control of the Midwest System; (ii) allow
Aquis to assume provision of service to Additional Subscribers pursuant to
Additional Subscriber Agreements; and (iii) allow Aquis to carry out any other
related responsibilities with respect to the Midwest Business specified in this
Management Agreement.
2. Operation Of The Midwest Business.
2.1. Aquis Responsibilities. On the Take-Over Date, Aquis will
assume day-to-day operational and management control of the Midwest System using
the Midwest System Assets. Aquis will exercise a reasonable standard of care
normally exercised by operators of similar CMRS one-way paging systems in
similar circumstances; provided, however, that the Parties explicitly recognize
that Debtors' Chapter 11 bankruptcy may result in significant obstacles that may
prevent Aquis from meeting this standard of care. Aquis will use its reasonable
best efforts consistent with sound commercial practice to provide for the
successful operation of the Midwest System and Aquis will render or
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obtain all services and perform or cause to be performed all duties necessary or
appropriate for the operation of the Midwest System. Aquis will also continue
provision of service to Additional Subscribers pursuant to Additional Subscriber
Agreements. Aquis's duties will including the following:
2.1.1. Operate the Midwest System for provision of service to
existing and new Midwest Subscribers in compliance with the Midwest Licenses and
applicable FCC Rules (as hereinafter defined).
2.1.2. Provide service to existing and new Additional
Subscribers pursuant to Additional Subscriber Agreements.
2.1.3. Analyze the existing technical configuration of the
Midwest System and, subject to Section hereof, plan and implement any expansion,
modification or reduction of the Midwest System that Aquis believes in its sole
and unfettered discretion will increase the economic, efficient operation of the
Midwest System.
2.1.4. Analyze the Other Midwest Transmitter Sites to
determine whether transmitting equipment at those sites (such equipment at each
site referred to as "Other Midwest Transmitter Site Equipment") is operational
and that the representations made by SourceOne at Section , and hereof ("Other
Midwest Transmitter Site Representations") with respect to the Other Midwest
Transmitters Sites and all Other Midwest Transmitter Site Equipment are
accurate. To the extent that: (i) Aquis determines that any or all of the Other
Midwest Transmitter Site Representations are not accurate; or (ii) Aquis, in its
sole and unfettered discretion, determines that operation cannot and/or should
not be timely recommenced at any Other Midwest Transmitter Site in accordance
with FCC Rules for any reason whatsoever; then Aquis may instruct SourceOne to
modify the Midwest Licenses for any such Other Midwest Transmitter Site(s).
Aquis's sole remedy in the event SourceOne does not modify the Midwest Licenses
as instructed will be the Purchase Price (as defined in the Purchase Agreement)
adjustments specified at Section 1.6(e) of the Purchase Agreement.
2.1.5. Supervise, manage and train the Retained Employees and
other administrative, technical and sales staff, if any, necessary for the
operation of the Midwest Business.
2.1.6. Administer the invoicing and collection of all accounts
of Subscribers, including new subscribers to the Midwest System and new
Additional Subscribers, and Accounts Receivable; collect and receive all
payments on such accounts; and arrange for the billing and collection of all
other revenues, fees, charges or other compensation ("Revenues") due in
connection with
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the Midwest Business.
2.1.7. Arrange for the payment of all expenses and fees, if
any, incurred in connection with the Midwest Business after the Take-Over Date
during the Term of this Management Agreement (as hereinafter defined)
("Expenses").
2.1.7.1. The Parties agree that Expenses will be pro
rated as of the Take-Over Date with SourceOne retaining sole responsibility for
payment of Expenses prior to the Take-Over Date and Aquis assuming
responsibility for payment of Expenses after the Take-Over Date in accordance
with this Management Agreement and subject to Section hereof.
2.1.8. Maintain the Customer List and files concerning
subscriber agreements for all Subscribers; and
2.1.9. Maintain appropriate property, casualty, liability and
other insurance for the Midwest System.
2.1.10. Maintain appropriate office recordkeeping, bookkeeping
and accounting procedures.
2.1.11. Return to any Subscribers any Deposits transferred to
Aquis pursuant to Section ; provided, however, that the Parties expressly agree
that Aquis undertakes no responsibility for or liability to return to any
Subscriber any Deposit held by SourceOne prior to the Take-Over Date that is not
transferred by SourceOne to Aquis as of the Take-Over Date pursuant to Section
hereof.
2.1.12. In providing services in connection with operation of
the Midwest Business, Aquis may make arrangements to consolidate the provision
of such services with other stations owned, operated or managed by Aquis.
2.1.13. The Parties agree that Aquis will not enter into any
contracts or other agreements during the Term of this Management Agreement (as
hereinafter defined) that would result in an obligation to pay expenses and fees
in connection with the Midwest Business beyond the Purchase Termination Date (as
hereinafter defined); provided, however, that Aquis may enter into such
contracts and agreements upon the prior written consent of SourceOne, such
consent in SourceOne's sole discretion, and upon prior written notice to
Foothill Capital Corporation pursuant to written instructions that Foothill
Capital Corporation will provide to Aquis and SourceOne promptly after the
Execution Date; provided, however, that nothing herein shall be deemed to
constitute consent of Foothill Capital Corporation to the use of its collateral
to pay expenses incurred under such contracts and agreements after the Purchase
Termination Date (as hereinafter defined). The Parties agree that in no event
will Aquis have any liability whatsoever to
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pay any Expenses incurred after the Purchase Termination Date (as hereinafter
defined).
2.2. SourceOne Obligations.
2.2.1. As the FCC de jure licensee of the Midwest Stations
pending Purchase Closing, SourceOne will exercise the minimum amount of
supervision necessary as an FCC de jure licensee subject to Aquis's de facto
control of the Midwest System authorized by the FCC pursuant to the STA.
2.2.2. SourceOne designates Xxxxx Xxxxx as officer of LLC II,
LLC and SOWI, who SourceOne represents and warrants will be available at all
times to assist Aquis in the operation of the Midwest Business pursuant to this
Management Agreement, including, but not limited to, signing any FCC application
or other written submissions that Aquis believes, in its sole and unfettered
discretion and as the party in de facto control of the Midwest System, should be
submitted. SourceOne may specify alternate officers of LLC II, LLC and/or SOWI
upon prior written consent of Aquis.
2.2.3. SourceOne will cooperate with Aquis and use its best
efforts to assist Aquis in the operation of the Midwest Business as specified
herein, including, but not limited to:
2.2.3.1. Assisting Aquis in modifying any signature
cards related to the Bank Accounts to be transferred to Aquis pursuant to this
Management Agreement to make authorized representatives of Aquis the sole
parties authorized to conduct transactions with respect to such Bank Accounts.
2.2.3.2. Fully cooperating with Aquis in its review of
the Other Midwest Transmitter Sites specified at Section hereof and, to the
extent requested by Aquis in Aquis's sole and unfettered discretion, use
reasonable best efforts to assist in recommencement of operation of Other
Midwest Transmitter Site Equipment at the Other Midwest Transmitter Sites,
including, but not limited to: (i) replacement of nonfunctional or nonexistent
Other Midwest Transmitter Site Equipment with other equipment owned by
SourceOne; (ii) assisting Aquis in dealing with owners of Other Midwest
Transmitter Sites; and (iii) assisting Aquis in negotiating with any equipment
manufacturers or other entities with loans or other interests in Other Midwest
Transmitter Site Equipment.
2.3. Additional Obligations.
2.3.1. In addition to its other obligations under this
Management Agreement:
2.3.1.1. In the event Aquis is unable to pay
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all Expenses from Revenues, funds available in Bank Accounts to be transferred
to Aquis and/or collection of any Accounts Receivable transferred to Aquis, then
Aquis will provide funds to pay such Expenses subject to the provisions of this
Section 2.3.
2.3.1.2. In the event that Aquis is unable to pay for
any capital improvements that Aquis believes, in its sole and unfettered
discretion, should be made to the Midwest System or Midwest System Assets
("Capital Improvements"), and Aquis is unable to pay for such Capital
Improvements from Revenues, funds available in Bank Accounts to be transferred
to Aquis and/or collection of any Accounts Receivable transferred to Aquis, then
Aquis will provide funds to pay such Capital Expenditures subject to the
provisions of this Section . If: (i) Aquis pays for any Capital Improvement out
of its own funds or provides equipment to operate the Midwest System; and (ii)
the Purchase Closing does not occur, then Aquis may remove, at its expense,
those Capital Improvements and equipment on or after the Purchase Termination
Date (as hereinafter defined).
2.4. SourceOne Inspection. During the Term of this Management
Agreement (as hereinafter defined), SourceOne may, upon reasonable prior written
request to Aquis and at a reasonable time and place, inspect Aquis's operation
of the Midwest Business and/or the records maintained by Aquis in connection
with the operation of the Midwest Business.
3. Other Subscribers On Other Systems.
3.1. Transfer Of Other Subscriber Assets. Even though Aquis will not
acquire de facto control of or provide any management responsibilities for
SourceOne's Other Systems pursuant to this Management Agreement, as of the
Take-Over Date, SourceOne will also transfer to Aquis SourceOne's rights to use,
have access to and control over the following ("Other Subscriber Assets"):
3.1.1. All customer lists and goodwill ("Other Customer List")
for all of SourceOne's Other Subscribers, regardless of the SourceOne Other
System on which those subscribers receive service.
3.1.2. All deposits ("Other Deposits") held by SourceOne for
Other Subscribers on Other Systems.
3.1.3. On the Take-Over Date, all accounts receivable held or
owned by SourceOne for Other Subscribers, including all rights to receive
compensation from "calling party pays" agreements and all accrued but unbilled
revenue from operation of the Other Subscriber Business (as hereinafter defined)
(collectively, "Other Accounts Receivable"), will be turned over to Aquis as
manager for administration and collection. SourceOne represents that accrued but
unbilled revenues are not older than
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thirty-one (31) days except that accrued but unbilled revenues for July, 1999,
are not older than forty (40) days. The Other Accounts Receivable transferred on
the Take-Over Date ("Take-Over Other Receivables") will be specified on a
schedule to be agreed to by the Parties and will be valued with the following
discount factors ("Discount Factors") as follows:
(a) 100% of the face amount of Other Accounts Receivable outstanding
including accrued but unbilled revenue for 30 days or less before
the Take-Over Date;
(b) 70% of the face amount of Other Accounts Receivable outstanding for
between 31 and 60 days before the TakeOver Date;
(c) 40% of the face amount of Other Accounts Receivable outstanding for
between 61 and 90 days before the TakeOver Date;
(d) 0% of the face amount of Other Accounts Receivable outstanding for
more than 90 days before the Take-Over Date; and
(e) 95% of the net amount of those certain Other Accounts Receivable
owed by ESBI and Ameritech and related to "calling party pays"
service.
If the Purchase Agreement closes, the Other Accounts Receivable will be
transferred to Aquis as Purchaser under the Purchase Agreement. If the
Management Agreement is terminated and the Purchase Closing has not occurred,
then Aquis will return to SourceOne accounts receivable for Other Subscribers
whose value (after adjustment by the Discount Factors) is not less than the
discounted value of the Take-Over Other Receivables less the "Net Service
Revenue Adjustment" amount ("Returned Other Receivables Amount") subject to the
first priority lien thereon in favor of Foothill Capital Corporation, as agent.
If the discounted value of the Take-Over Other Receivables exceeds the Returned
Other Receivables Amount, then Aquis will promptly pay SourceOne the difference
subject to the first priority lien thereon in favor of Foothill Capital
Corporation, as agent. If the discounted value of the Take-Over Other
Receivables is less than the Returned Other Receivables Amount, then such
difference ("Excess Returned Other Receivables") will be promptly paid by
SourceOne to Aquis as a fee in addition to any other fees provided by this
Management Agreement. The Net Service Revenue Adjustment amount under this
Section is calculated as follows: (discounted value of the Take-Over Other
Receivables divided by $7.26 million) times actual Net Service Revenue (as
defined in Purchase Agreement Section 1.6(d)(i)).
3.1.4. Any pagers and related equipment owned by
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SourceOne and leased to Other Subscribers as of the Take-Over Date ("Leased
Pagers").
3.2. Aquis Actions Regarding Other Subscribers. As of the Take-Over
Date:
3.2.1. It is Aquis's understanding that as of the Take-Over
Date, SourceOne may terminate operation of the Other Systems. Accordingly, as of
the Take-Over Date, Aquis may, in its sole and unfettered discretion, take
whatever action Aquis believes necessary with respect to the Other Subscribers,
including but not limited to arranging for Other Subscribers to become
Additional Subscribers who obtain service under existing Additional Subscriber
Agreements. Arrangements by Aquis to continue provision of service to Other
Subscribers during the Term of this Management Agreement (as hereinafter
defined), if any, will be referred to as "Other Subscriber Business".
3.2.2. Aquis will invoice, collect and receive payment on all
accounts of Other Subscribers, including Other Accounts Receivable, during the
Term of this Management Agreement (as hereinafter defined).
3.2.3. Aquis will return to any Other Subscriber any Other
Deposits transferred to Aquis pursuant to Section hereof; provided, however,
that the Parties expressly agree that Aquis undertakes no responsibility for or
liability to return to any Other Subscriber any Other Deposit held by SourceOne
prior to the Take-Over Date that is not transferred by SourceOne to Aquis as of
the Take-Over Date pursuant to Section hereof.
3.2.4. Aquis will retain any Leased Pagers returned by Other
Subscribers during the Term of this Management Agreement (as hereinafter
defined).
3.2.5. Aquis will pay all expenses and fees, if any,
associated with the Other Subscriber Business ("Other Subscriber Expenses") and
Aquis will retain all revenues associated with or arising from the Other
Subscriber Business ("Other Subscriber Revenues") as provided in Section hereof.
3.3. Title To Other Subscriber Assets. Subject to Aquis's right to
use, have access to and control over the Other Subscriber Assets pursuant to
Section 3.1 hereof, title to the Other Subscriber Assets will remain with
SourceOne during the Term of this Management Agreement (as hereinafter defined).
Title will pass to Aquis at Purchase Closing pursuant to the Purchase Agreement;
subject, however, to the provisions of Section 5 hereof.
4. Compensation. In addition to other consideration provided for in this
Management Agreement and the Purchase Agreement, Aquis will retain as
compensation for services provided
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hereunder:
4.1. All "Midwest Cash Flow," if any, obtained from operation of the
Midwest Business during the Term of this Management Agreement (as hereinafter
defined). Midwest Cash Flow is defined as Revenues plus Accounts Receivable
collected by Aquis during the Term of this Management Agreement (as hereinafter
defined) plus credit balances in Bank Accounts as of the Take-Over Date, if any,
less Expenses and Capital Improvements not paid for directly by Aquis; and
4.2. All "Other Subscriber Cash Flow," if any, obtained from
operation of the Other Subscriber Business during the Term of this Management
Agreement (as hereinafter defined). Other Subscriber Cash Flow is defined as
Other Subscriber Revenues plus Other Subscriber Accounts Receivable collected by
Aquis during the Term of this Management Agreement (as hereinafter defined) less
Other Subscriber Expenses.
5. If No Purchase Closing. In the event that the Purchase Agreement
terminates without Purchase Closing, the following provisions apply:
5.1. Return Of Midwest System Assets. As of the date of termination
of the Purchase Agreement without Purchase Closing ("Purchase Termination
Date"), Aquis will return to SourceOne the rights to use, have access to and
control over all Midwest System Assets in existence as of the Purchase
Termination Date and SourceOne will retain title thereto.
5.2. Return Of De Facto Control Of Midwest System. SourceOne and
Aquis will immediately take all action necessary, including but not limited to
termination of the STA, to return to SourceOne as of the Purchase Termination
Date the de facto control over the Midwest System that was transferred to Aquis.
5.3. Termination Of Aquis Operation Of Midwest Business. As of the
Purchase Termination Date, Aquis will cease operating the Midwest Business
pursuant to Section hereof and, at the request of SourceOne, will terminate
employment of any Retained Employees.
5.4. Return Of Other Subscriber Assets. As of the Purchase
Termination Date, Aquis will return to SourceOne the rights to use, have access
to and control over all Other Subscriber Assets in existence as of the Purchase
Termination Date and SourceOne will retain title thereto; except that if Aquis
made arrangements for continued provision of service to Other Subscribers
pursuant to any arrangement other than converting such Other Subscribers to
become Additional Subscribers under SourceOne Additional Subscriber Agreements
in existence as of the Take-Over Date, Aquis has the right, but not the
obligation, to retain such
13
Other Subscribers without returning them to SourceOne and without compensation
to SourceOne.
5.5. Condition Of Assets. Subject to Sections and hereof, the
Parties expressly recognize and agree that the Midwest System Assets and Other
Subscriber Assets may have been modified during the ordinary course of operation
of the Midwest System Assets and Other Subscriber Assets (collectively, "Asset
Change") during Aquis's use thereof in accordance with this Management
Agreement. Aquis will return to SourceOne the Midwest System Assets and Other
Subscriber Assets in the form as of the Take-Over Date, except ordinary wear and
tear and other modifications contemplated by the first sentence of this Section
. Aquis will have no liability of any nature whatsoever for any Asset Change
unless and to the extent such Asset Change was caused by a breach of Aquis's
duty of care as set forth in Section hereof.
5.6. Midwest System Final Accounting.
5.6.1. Within thirty (30) Business Days after the Purchase
Termination Date, Aquis will provide SourceOne with a final accounting ("Final
Accounting") specifying in reasonable detail:
5.6.1.1. The total of any Revenues accrued and related
to the Midwest Business during the Term of this Management Agreement (as
hereinafter defined) ("Outstanding Revenues").
5.6.1.2. The total of any Expenses incurred with respect
to the Midwest Business during the Term of this Management Agreement (as
hereinafter defined) ("Outstanding Expenses").
5.6.1.3. To the extent necessary, Outstanding Revenues
and Outstanding Expenses will be pro rated as of the TakeOver Date and the
Purchase Termination Date.
5.6.2. If Outstanding Revenues exceed Outstanding Expenses
after deducting any prior withdrawals of Midwest Cash Flow by Aquis, then the
difference will be considered "Outstanding Profit" and:
5.6.2.1. SourceOne will pay the Outstanding Profit to
Aquis as additional Midwest Cash Flow earned by Aquis pursuant to Section
hereof; or
5.6.2.2. SourceOne's obligation to pay the Outstanding
Profit to Aquis may be satisfied by allowing Aquis, at Aquis's option, to retain
possession of the Outstanding Revenues, credit balances in Bank Accounts as of
the Purchase Termination Date and the right to collect Accounts Receivable
using, to the
14
extent available and at Aquis's expense, the books and records and systems of
SourceOne; and
5.6.2.3. SourceOne's obligation to pay the Outstanding
Profit and Excess Returned Receivables to Aquis is secured by: (i) a first
priority lien and security interest in the Accounts Receivable (exclusive of the
Returned Receivables Amount) and credit balances in Bank Accounts as of the
Purchase Termination Date; and (ii) a senior, first-priority lien and security
interest under Bankruptcy Code section 364(d)(1) in the Accounts Receivable
(exclusive of the Returned Receivables Amount) and credit balances in Bank
Accounts as of the Purchase Termination Date and, further, this obligation to
Aquis will be an allowed super-priority administrative expense claim under
Bankruptcy Code section 364(c)(1), having priority over any and all
administrative expense or priority claims specified in, or ordered under,
Bankruptcy Code sections 330, 331, 503(b), 506(c), or 507(b), except that this
claim will be subordinate to the claim of Foothill Capital Corporation arising
under Sections 364 or 507(b) of the Bankruptcy Code and the Carve-Out, as
defined in the final debtor-in-possession financing order. The Bankruptcy Court
order approving this Management Agreement will provide that the lien and
security interest in this Section will be perfected upon entry of such
Bankruptcy Court order and without the need for filings or other actions by any
of the Parties.
5.7. Returned Receivables Amount. Within thirty (30) Business Days
after the Purchase Termination Date: (i) Aquis will remit the Returned
Receivables Amount and the Returned Other Receivables Amount and pay any
deficiency as described in Sections and hereof. This obligation is not subject
to setoff or deduction.
5.8. Deferred Revenue Adjustment. The Parties will agree in writing
as to the amount of deferred revenues as of the TakeOver Date and the Purchase
Termination Date. If deferred revenues on the Take-Over Date are less than on
the Purchase Termination Date (as calculated in the same manner as of the
Take-Over Date), then Aquis will pay the difference to SourceOne, subject to
Aquis's right to setoff this obligation against any SourceOne obligation owed to
Aquis.
5.9. Returned SourceOne Deposits. The Parties will agree in writing
as to the amount of any SourceOne deposits held by third parties as of the
Take-Over Date and the Purchase Termination Date. If such deposits on the
Take-Over Date are higher than on the Purchase Termination Date (as a result of
return of any such deposits to Aquis or the use of any such deposits by or for
the benefit of Aquis), then Aquis will pay the difference to SourceOne within
thirty (30) Business Days after the Purchase Termination Date.
15
5.10. Other Final Accounting.
5.10.1. Within thirty (30) Business Days after the Purchase
Termination Date, Aquis will provide SourceOne with a final accounting ("Other
Final Accounting") specifying in reasonable detail:
5.10.1.1. The total of any Other Subscriber Revenues
accrued and related to the Other Subscriber Business during the Term of this
Management Agreement (as hereinafter defined) ("Outstanding Other Subscriber
Revenues").
5.10.1.2. The total of any Other Subscriber Expenses
incurred with respect to the Other Subscriber Business during the Term of this
Management Agreement (as hereinafter defined) ("Outstanding Other Subscriber
Expenses").
5.10.1.3. To the extent necessary, Outstanding Other
Subscriber Revenues and Outstanding Other Subscriber Expenses will be pro rated
as of the Take-Over Date and the Purchase Termination Date.
5.10.2. If Outstanding Other Subscriber Revenues exceed
Outstanding Other Subscriber Expenses after deducting any prior withdrawals of
Other Subscriber Cash Flow by Aquis, then the difference will be considered
"Outstanding Other Subscriber Profit" and:
5.10.2.1. SourceOne will pay the Outstanding Other
Subscriber Profit to Aquis as additional Other Subscriber Profits earned by
Aquis pursuant to Section hereof; or
5.10.2.2. SourceOne's obligation to pay the Outstanding
Other Subscriber Profit to Aquis may be satisfied by allowing Aquis, at Aquis's
option, to retain possession of the Outstanding Other Subscriber Revenue, credit
balances in Bank Accounts as of the Purchase Termination Date and the right to
collect Other Subscriber Accounts Receivable using, to the extent available and
at Aquis's expense, the books and records and systems of SourceOne; and
5.10.2.3. SourceOne's obligation to pay the Outstanding
Other Subscriber Profit and the Excess Returned Other Receivables to Aquis is
secured by: (i) a first priority lien and security interest in the Other
Subscriber Accounts Receivable (exclusive of the Returned Other Receivables
Amount) and credit balances in Bank Accounts as of the Purchase Termination
Date; and (ii) a senior, first-priority lien and security interest under
Bankruptcy Code section 364(d)(1) in the Other Subscriber Accounts Receivable
(exclusive of the Returned Other Receivables Amount) and credit balances in Bank
Accounts as of the Purchase Termination Date and, further, this obligation to
Aquis will be an allowed
16
super-priority administrative expense claim under Bankruptcy Code section
364(c)(1), having priority over any and all administrative expense or priority
claims specified in, or ordered under, Bankruptcy Code sections 330, 331,
503(b), 506(c), or 507(b), except that this claim will be subordinate to the
claim of Foothill Capital Corporation arising under Sections 364 or 507(b) of
the Bankruptcy Code and the Carve-Out, as defined in the final
debtor-in-possession financing order. The Bankruptcy Court order approving this
Management Agreement will provide that the lien and security interest in this
Section will be perfected upon entry of such Bankruptcy Court order and without
the need for filings or other actions by any of the Parties.
5.11. Aquis has no claims against Foothill Capital Corporation or
its collateral, including without limitation, claims arising under Sections 503,
506, or 552 of the Bankruptcy Code, except as expressly set forth in Sections
and of this Management Agreement.
6. Representations And Warranties Of SourceOne. To induce Aquis to enter
into this Management Agreement, SourceOne hereby represents and warrants to
Aquis that:
6.1. Licenses. SourceOne is the bona fide licensee of the Midwest
Licenses and Midwest System. The Midwest Licenses for the Midwest Transmitter
Sites are, and, to the best of SourceOne's actual knowledge the Midwest Licenses
for the Other Midwest Transmitter Sites are, valid, in good standing, in full
force and effect and constitute: (i) all licenses, permits, and authorizations
required by the Communications Act of 1934, as amended (the "Act") and all rules
and regulations promulgated by the FCC thereunder ("FCC Rules"), for the
construction and operation of the Midwest System; and (ii) all of the licenses,
permits and authorizations issued by the FCC to SourceOne for or in connection
with the Midwest System. Except for the Midwest Licenses, there are no permits,
licenses or other authorizations currently held by SourceOne, or required by law
to be held by SourceOne, with respect to ownership of the Transferred Assets (as
defined in the Purchase Agreement) or operation of the Midwest Business, except
where failure to hold such a permit, license or other authorization would not
reasonably be expected to materially affect ownership of the Transferred Assets
(as defined in the Purchase Agreement) or conduct of the Midwest Business.
6.2. Midwest System Construction And Operation. The Midwest System
was timely and properly constructed in substantial accord with its licensed
parameters, and, since commencement of operations, the Midwest System comprised
of the Midwest Transmitter Sites has operated and currently is, and, to the best
of SourceOne's actual knowledge, the Midwest System comprised of the Other
Midwest Transmitter Sites has operated and currently is operating in compliance
with all applicable laws, rules and
17
regulations, including the Act and FCC Rules. The Midwest System currently
provides one-way paging service to at least one unaffiliated subscriber from
each of the Midwest Transmitter Sites and no Midwest Transmitter Site has been
off the air for ninety (90) or more continuous days.
6.3. Other Midwest Transmitter Sites. SourceOne has no knowledge
that the Other Midwest Transmitter Sites have been off the air for ninety (90)
or more continuous days.
6.4. No Adverse Condition. SourceOne has no knowledge of any
condition imposed by the FCC on the Midwest System or Midwest Licenses which is
neither: (i) set forth on the face of the Midwest Licenses as provided by
SourceOne to Aquis or as available to the public on FCC databases; nor (ii)
applicable to the CMRS industry generally.
6.5. No Pending Action. There is no pending or, to SourceOne's
knowledge, threatened action by the FCC or any other federal, state or local
governmental authority or third party: (i) to suspend, revoke, terminate or
challenge the Midwest System, any Midwest License, the Midwest Business or the
Other Subscriber Business; or (ii) that could preclude SourceOne from entering
into or consummating the transactions specified in this Management Agreement and
the Purchase Agreement.
6.6. Exclusive Use. The Midwest Licenses grant SourceOne the
exclusive use of the frequency 931.1875 MHz within the service area defined in
FCC Rules. SourceOne is not a party to any intercarrier, frequency or facilities
sharing agreement of any kind that might in any way affect Aquis's rights to
operate (under this Management Agreement) or acquire (under the Purchase
Agreement) the Midwest System and/or the Transferred Business (as defined in the
Purchase Agreement).
6.7. Orders And Decrees. Neither SourceOne, the Midwest System, the
Midwest Licenses, the Midwest Business, nor the Other Subscriber Business are
subject to any judicial or administrative order, or any ordinance or zoning
restriction, which would materially and adversely affect or impose any condition
on SourceOne, the Midwest System, the Midwest Licenses, the Midwest Business or
the Other Subscriber Business.
6.8. Litigation. There is no judicial or administrative action, suit
or proceeding, pending or, to SourceOne's knowledge, threatened against or
relating to SourceOne, the Midwest System, the Midwest Licenses, the Midwest
Business or the Other Subscriber Business before the FCC or any federal, state
or local court, arbitration tribunal or governmental authority which could,
individually or in the aggregate: (i) result in the voluntary or involuntary
transfer of any of the Midwest System or the Midwest Licenses; or (ii) adversely
affect any or all of
18
SourceOne, the Midwest System, the Midwest Licenses, the Midwest Business or the
Other Subscriber Business or the transactions contemplated in this Management
Agreement or the Purchase Agreement. SourceOne knows of no facts establishing a
reasonable basis for any such action, suit, proceeding or any governmental
investigation relating to the same.
6.9. Compliance With Laws. SourceOne is in compliance, in all
material respects, with all applicable laws, regulations and administrative
orders of: (i) the United States, including, without limitation, the FCC; (ii)
any state; and (iii) any municipality, county, or other subdivision of any of
the foregoing, to which SourceOne, the Midwest System, the Midwest Licenses, the
Midwest Business or the Other Subscriber Business may be subject.
6.10. Taxes And Required Filings. With respect to the Midwest
System, the Midwest Licenses and the Midwest Business, SourceOne has filed all
federal, state, local, foreign and other tax returns and reports of every nature
required to be filed and has paid or will pay all taxes and other assessments
due (other than certain Illinois and Chicago telecommunications taxes which
accrued prior to the filing of SourceOne's bankruptcy petition), including, but
not limited to the following FCC-mandated requirements: (i) universal service;
(ii) Telecommunications Relay Service ("TRS"); (iii) North American Numbering
Plan ("NANPA"); (iv) Local Number Portability ("LNP"); (iv) Equal Employment
Opportunity ("EEO"); (v) ownership information; (vi) regulatory fees; and (vii)
FCC submissions in connection with electronic filing requirements, including but
not limited to submissions required in connection with the FCC's Universal
Licensing System ("ULS").
6.11. Third Party And Governmental Consents. Aside from the STA and
approval by the Bankruptcy Court, no approval, consent, waiver, order or
authorization of, or registration, qualification, declaration, or filing with,
or notice to, any federal, state or local governmental authority or other third
party is required on the part of SourceOne in connection with the execution or
performance of this Management Agreement.
6.12. Midwest System. The Midwest System Assets other than the Other
Midwest Transmitter Sites: (i) constitute all of the properties, assets, and
rights that have been used in the conduct of the Midwest Business and which are
necessary to the operation of the Midwest Business; and (ii) together with the
Other Subscriber Assets, generate all of SourceOne's Net Service Revenue (as
defined in Section 1.6(d)(i) of the Purchase Agreement). There are no assets of
SourceOne not included in the Midwest System Assets other than the Other Midwest
Transmitter Sites that are material to the operation of the Midwest Business and
the absence of which would have a material adverse effect on the Midwest
Business.
19
7. Representations Of Aquis. As of the Take-Over Date, Aquis knows of no
material statement or omission of SourceOne that gives rise to any: (i) material
breach of its representations, warranties, or covenants under this Management
Agreement or in connection with the purchase transaction; or (ii) basis on which
the FCC would not issue its consent to assignment of the Midwest Licenses to
Aquis.
8. Representations And Warranties Of The Parties. Each Party represents to
each other Party as appropriate that: (i) it is a legal organization, duly
organized and validly existing under the laws of the state of its organization;
(ii) it has all necessary power, authority and capacity to enter into and
perform the terms of this Management Agreement; (iii) this Management Agreement
has been authorized by all necessary action; (iv) this Management Agreement has
been duly executed by it and constitutes a valid and binding agreement
enforceable in accordance with its terms; and (v) the execution, delivery and
performance of this Management Agreement does not conflict with the Party's
organizational documents or any indenture, mortgage, deed of trust, agreement or
other instrument by which the Party is bound, and does not violate any law or
regulation, or order or decree of any court applicable to the Party.
9. FCC Compliance. The Parties agree to comply with all applicable FCC
Rules governing the Midwest Licenses and operation of the Midwest System and
specifically agree as follows:
9.1. Aquis may not represent itself as the de jure licensee of the
Midwest System, but Aquis may represent itself as the party in de facto control
of the Midwest System.
9.2. No Party will represent itself as the legal representative of
any other Party before the FCC, but each Party will cooperate with the other
Parties with respect to matters concerning implementation of this Management
Agreement, the Midwest Licenses and the Midwest System.
9.3. In addition to all other obligations imposed on SourceOne
pursuant to this Management Agreement, SourceOne will cooperate with Aquis and
take all actions necessary to keep the Midwest Licenses valid and in full force
and effect and SourceOne will use its best efforts and cooperate with Aquis in
submission to the FCC or any other governmental authority all reports,
applications, renewals, filings or other documents necessary to keep the Midwest
Licenses valid and in full force and effect during the Term of this Management
Agreement.
9.4. SourceOne and Aquis are familiar with a de jure licensee's
responsibilities under the Act and FCC Rules. Nothing in this Management
Agreement is intended to diminish or restrict: (i) SourceOne's remaining
obligations as de jure licensee of the
20
Midwest System; or (ii) SourceOne's obligations as de jure and de facto licensee
of the Other Systems. All Parties desire that this Management Agreement be
carried out in compliance with FCC Rules. In the event that the FCC determines
that any provision of this Management Agreement violates any FCC Rule,
regulation or policy, the Parties will make good faith efforts immediately to
correct the problem to bring this Management Agreement into compliance
consistent with the intent of the Parties.
10. SourceOne Covenants. In view of the fact that Aquis anticipates
committing substantial resources to meeting its obligations pursuant to this
Management Agreement and must rely on the maintenance of the Midwest Licenses
and Midwest System to carry out its responsibilities hereunder, SourceOne
covenants and agrees that it:
10.1. Aside from claims asserted prior to SourceOne's bankruptcy
cases and those previously allowed by the Bankruptcy Court, will not permit any
liens or encumbrances to attach to the Midwest Licenses, the Midwest System, the
Midwest Business or the Other Subscriber Business and, if any such liens and
encumbrances arise, SourceOne will immediately cure and remove all such liens
and encumbrances to the extent possible;
10.2. Will not take any action that would jeopardize the Midwest
Licenses, the Midwest System, the Midwest Business or the Other Subscriber
Business or the rights of Aquis under this Management Agreement or the Purchase
Agreement;
10.3. Will immediately notify Aquis of any pending or threatened
action by the FCC or any other governmental agency, court or third party to
suspend, revoke, terminate or challenge the Midwest Licenses, the Midwest
System, the Midwest Business or the Other Subscriber Business or to investigate
the operation thereof; and
10.4. Will not interfere with Aquis's exercise or performance of its
rights and obligations pursuant to this Management Agreement.
11. Indemnification.
11.1. Indemnification By SourceOne. SourceOne will defend, indemnify
and hold Aquis, any subsidiary or affiliate thereof, and its respective
successors, officers, directors and controlling persons (the "Indemnified Aquis
Group") harmless from and against any and all losses, liabilities, damages,
costs or expenses (including reasonable attorney's fees, penalties and interest)
payable to or for the benefit of, or asserted by, any party resulting from,
arising out of, or incurred as a result of: (i) the breach of any representation
made by SourceOne herein or in accordance herewith; (ii) the breach of any
warranty or covenant
21
made by SourceOne herein or in accordance herewith; (iii) any claim, whether
made before or after the Take-Over Date, or any litigation, proceeding or
governmental investigation, whether commenced before or after the Take-Over
Date, arising out of the business of operating the Systems prior to the
Take-Over Date, or otherwise arising out of any act or occurrence prior to, or
any state of facts existing as of the Take-Over Date (regardless of whether or
not disclosed or known to Aquis as of the Take-Over Date) arising from any act
or omission of SourceOne; or (iv) SourceOne's failure to pay, perform or
discharge any of its obligations, liabilities, agreements or commitments.
Notwithstanding the provisions of this Section , Aquis will have no claims for
indemnification against SourceOne based on a non-willful breach of the
representations and warranties set forth in Sections , and of this Management
Agreement as they relate to Other Midwest Transmitter Sites.
11.2. Indemnification By Aquis. Aquis will defend, indemnify and
hold SourceOne, and its respective successors, officers, directors and
controlling persons (the "Indemnified SourceOne Group") harmless from and
against all direct losses, liabilities, damages, costs or expenses (including
reasonable attorney's fees, penalties and interest) payable to or for the
benefit of, or asserted by, any party resulting from, arising out of, or
incurred as a result of: (i) the breach of any representation made by Aquis
herein or in accordance herewith; (ii) the breach of any warranty or covenant
made by Aquis herein or in accordance herewith; or (c) any claim, whether made
after the Take- Over Date, or any litigation, proceeding or governmental
investigation arising out of Aquis's operation of the Midwest Business or
Aquis's acting as reseller on the Other Systems pursuant to this Management
Agreement after the Take-Over Date.
11.3. Survival Of Covenants And Warranties. This Section of this
Management Agreement will survive the termination of this Management Agreement,
and will be fully enforceable at law or in equity against such other Party and
its successors and assigns for a period of one (1) year after the termination of
this Management Agreement. Any investigation at any time made by or on behalf of
(or any disclosure to) any Party will not diminish in any respect whatsoever its
right to rely on the representations and warranties of any other Party.
11.4. Notice Of Claims.
11.4.1. Each Party will give prompt written notice to any
other Party of any claim against the Party giving notice which might give rise
to a claim by it against the other Party based upon the indemnity provisions
contained herein, stating the nature and basis of the claim and the actual or
estimated amount thereof;
22
11.4.2. Failure to give notice under Section hereof will not
affect the obligation of the indemnifying Party to provide indemnification in
accordance with the provisions of this Section unless, and only to the extent
that, such indemnifying Party is actually prejudiced thereby.
11.4.3. In the event that any action, suit or proceeding is
brought against any member of the Indemnified SourceOne Group or the Indemnified
Aquis Group with respect to which any Party may have liability under the
indemnification provisions contained herein, the indemnifying Party will have
the right, at its sole cost and expense, to defend such action in the name of or
on behalf of the indemnified Party.
11.4.4. In connection with such action, suit or proceeding
which might give rise to a claim by one Party against another Party based on the
indemnity provisions in this Section , the Parties will render to each other
such assistance as may reasonably be required in order to ensure the proper and
adequate defense of any such action, suit or proceeding.
11.4.5. An indemnified Party will have the right to retain its
own counsel, with the fees and expenses to be paid by the indemnifying Party, if
representation of such indemnified Party by the counsel retained by the
indemnifying Party would be inappropriate because of actual or potential
differing interests between such indemnified Party and any other Party
represented by such counsel.
11.4.6. No Party will make any settlement of any claim which
might give rise to liability of another Party under the indemnification
provisions contained herein without the written consent of such other Party,
which consent such other Party covenants will not be unreasonably withheld.
11.5. Notwithstanding the provisions of this Section , Aquis will
not have a claim for indemnification against SourceOne based on a nonwillful
breach of the representations and warranties set forth in Sections , and hereof.
12. Term And Termination.
12.1. Term. The "Term" of this Management Agreement will commence on
the Take-Over Date and end on the Termination Date as defined in Section hereof.
12.2. Termination. This Management Agreement will automatically
terminate on the day ("Termination Date") upon any of the following events
occurs:
12.3. Purchase Closing, in the event that Purchase Closing occurs
pursuant to the Purchase Agreement;
23
12.4. Termination of the Purchase Agreement on the Purchase
Termination Date in the event that Purchase Closing does not occur pursuant to
the Purchase Agreement;
12.5. The loss, revocation or expiration without renewal of all
Midwest Licenses;
12.6. Otherwise, as mutually agreed by the Parties in writing.
13. Notices. All notices or other communications which may be given or
made pursuant hereto will be in writing and delivered by hand delivery, courier
or facsimile transmission to the following:
If to SourceOne: with copy to:
Xxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxxx, Esquire
SourceOne Wireless, Inc. X'Xxxxxx & Xxxxxx
0000 X. Xxxxxxxxx Xxx. 0000 Xxxxxxxxxxxx Xxx., X.X.
Xxxxxxxx, XX 00000 Suite 800
Fax: (000) 000-0000 Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
If to Aquis: with copy to:
Xx. Xxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxx, Esquire
Aquis Communications, Inc. Xxxxxxx X. Xxxxxx &
1719A Route 10; Suite 300 Associates, Chartered
Xxxxxxxxxx, XX 00000 0000 X Xx., X.X.; 8th Fl.
Fax: (000) 000-0000 Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Each Party may designate by notice in writing a new address for it and/or its
attorney to which any notice or communication may thereafter be given. Each
notice or communication will be deemed sufficiently given and received for all
purposes at such time as it is delivered to the addressee or at such time as
delivery is refused by the addressee upon presentation.
14. Amendment. This Management Agreement may not be amended, modified or
changed except in writing signed by all Parties hereto.
15. Successors And Assigns. Aquis may assign its rights and delegate its
duties under this Management Agreement with the consent of SourceOne, which
consent may not be unreasonably withheld or delayed; provided, however, that
Aquis may assign this Management Agreement to an affiliate or subsidiary of
Aquis without SourceOne's prior consent and solely upon notice to SourceOne that
the Aquis affiliate or subsidiary agrees to be bound by the terms of this
Management Agreement and thereupon Aquis will have no
24
further obligations hereunder. SourceOne may not assign its rights or delegate
its duties under this Management Agreement without the prior consent of Aquis,
which consent may be denied in Aquis's sole and unfettered discretion. This
Management Agreement will be binding upon and inure to the benefit of the
Parties hereto, and their respective heirs, representatives, successors and
permitted assigns.
16. Governing Law. This Management Agreement will be governed by and
construed in accordance with the laws of the State of New York without giving
effect to its principles of conflict of laws.
17. Severability. In the event that any provision of this Management
Agreement is held to be invalid, void, or illegal by the FCC, any governmental
authority or court of competent jurisdiction, the remaining provisions of the
Management Agreement will remain in full force and effect and this Management
Agreement will be construed reasonably to preserve the original intent of the
Parties hereto insofar as practical.
18. Interpretation. This Management Agreement is to be construed fairly
and simply and not strictly for or against any of the Parties hereto. The
section headings contained herein are for convenience of reference only, are not
part of this Management Agreement, and will not affect the meaning or
interpretation of any provision hereof.
19. Entire Agreement. This Management Agreement and the Purchase Agreement
constitute the entire agreement between the Parties with respect to the
transactions contemplated hereby, and supersede all prior oral or written
agreements, commitments or understandings with respect to the matters provided
for herein, except as may otherwise be specified in this Management Agreement
and/or the Purchase Agreement.
20. Business Days. "Business Days" for the purposes of this Management
Agreement will be considered days on which federally- chartered banks in New
York are open to the public for transaction of business.
21. Counterparts. This Management Agreement may be executed in as many
counterparts as may be required, and all counterparts will collectively
constitute a single agreement.
22. Schedules. The Parties agree that they will cooperate and use their
reasonable best efforts to generate the Schedules of Midwest System Assets and
Other Subscriber Assets no later than ten (10) Business Days prior to the
Purchase Closing.
25
IN WITNESS WHEREOF, the Parties have duly executed and delivered this
Management Agreement as of the Execution Date first written above.
SOURCEONE WIRELESS II, L.L.C.
By: /s/ XXXXXX X. XXXXX
----------------------------------
Name: XXXXXX X. XXXXX
--------------------------------
Title: CFO
-------------------------------
SOURCEONE WIRELESS, L.L.C.
By: /s/ XXXXX X. XXXXXX
----------------------------------
Name: XXXXX X. XXXXXX
--------------------------------
Title: DIP MANAGER
-------------------------------
SOURCEONE WIRELESS, INC.
By: /s/ XXXXX X. XXXXXX
----------------------------------
Name: XXXXX X. XXXXXX
--------------------------------
Title: DIP MANAGER
-------------------------------
AQUIS COMMUNICATIONS, INC.
By: /s/ XXXX X. XXXXXXXX
----------------------------------
Name: XXXX X. XXXXXXXX
--------------------------------
Title: PRESIDENT AND CEO
-------------------------------
26
Schedule A
Midwest System Transmitter Sites
An asterisk next to a Midwest Transmitter Site or Other Midwest
Transmitter Site indicates that SourceOne must correct FCC records regarding
this site promptly after the Execution Date and prior to Purchase Closing.
SourceOne must also cooperate with Aquis to resolve any additional FCC licensing
issues reasonably identified by Aquis during the Term of this Management
Agreement, including, but not limited to, provision of radial information where
such information is not currently included in the FCC's Universal Licensing
System ("ULS") database. Call signs specified for each site are based on the
FCC's ULS database.
Midwest Transmitter Sites:
ID STATE CITY FREQ CALL SIGN LAT LONG
==============================================================================================
15002 IL AURORA 931.1875 KNKK670 41.48.26 78.16.07
15043 IL CHICAGO (Hancock) 931.1875 KNKK670 41.53.56 87.37.23
00000 XX XXXXXXX (Xxxxxxx Bank) 931.1875 KNKK670 41.41.30 87.36.04
15057 IL CHICAGO (Standard Oil) 931.1875 KNKK670 41.53.08 87.37.15
00000 XX XXXXXXX XXXXX 931.1875 KNKK670 41.42.31 87.47.02
15036 IL CRETE 931.1875 KNKK670 41.25.16 87.38.39
15037 IL DARIEN 931.1875 KNKK670 41.44.25 88.00.30
15032 IL DECATUR 931.1875 KNKK670 39.48.35 88.59.31
15006 IL DEKALB 931.1875 KNKK670 41.52.33 88.45.16
15008 IL EDWARDSVILLE (SIU) 931.1875 KNKK670 38.47.06 89.59.10
15009 IL ELGIN 931.1875 KNKK670 42.01.16 88.23.08
15010 IL EVANSTON 931.1875 KNKK670 42.02.45 87.40.55
15013 IL GURNEE * 931.1875 KNKK670 42.19.44 87.54.38
15014 IL JOLIET 931.1875 KNKK670 41.32.26 88.02.08
15015 IL KANKAKEE 931.1875 KNKK670 41.07.22 87.53.35
15016 IL LAKE VILLA 931.1875 KNKK670 42.23.17 88.05.37
15017 IL LAKE ZURICH 931.1875 KNKK670 42.14.12 88.04.17
15048 IL MAYWOOD 931.1875 KNKK670 41.52.18 87.50.00
15019 IL MOKENA 931.1875 KNKK670 41.32.11 87.51.17
15024 IL OAKBROOK * 931.1875 KNKK670 41.50.44 87.57.21
15027 IL ROCKFORD (North) 931.1875 KNKK670 42.22.02 89.05.13
15029 IL ROCKFORD (South) 931.1875 KNKK670 42.13.41 89.01.11
15055 IL ROSEMONT 931.1875 KNKK670 41.59.50 87.53.09
15056 IL SCHAUMBURG 931.1875 KNKK670 42.02.39 88.02.36
15031 IL WOODSTOCK 931.1875 KNKK670 42.19.00 88.27.59
16004 IN DANVILLE 931.1875 KNKG880 39.48.06 86.34.24
16006 IN FT. XXXXX (XXXX) * 931.1875 KNKG880 41.05.58 85.08.43
16007 IN FT. XXXXX (HILLEGAS) 931.1875 KNKG880 41.06.25 85.11.46
16023 IN XXXX 931.1875 KNKG880 41.33.14 87.22.16
16009 IN XXXXXXXXXXXX-XXXXXXX XX. 000.0000 XXXX000 39.46.38 86.09.10
16010 IN INDIANAPOLIS-XXXX 931.1875 KNKG880 39.46.03 86.00.12
1
16011 IN INDIANAPOLIS-XXXXX 931.1875 KNKG880 39.43.05 86.08.37
16012 IN KOKOMO 931.1875 KNKG880 40.26.58 86.04.57
16013 IN LA PORTE 931.1875 KNKG880 41.38.36 86.48.00
16002 IN LAFAYETTE (Ashgrove) 931.1875 KNKG880 40.32.48 86.50.59
16014 IN NOBLESVILLE 931.1875 KNKG880 40.00.55 85.58.58
16015 IN OSCEOLA 931.1875 KNKK670 41.36.31 86.05.57
16020 IN XXXXXXX 931.1875 KNKG880 41.31.47 87.12.55
23001 MI XXX ARBOR 931.1875 KNKM321 42.16.30 83.44.10
23002 MI AUBURN HILLS 931.1875 KNKM321 42.42.05 83.15.11
23003 MI BATTLE CREEK 931.1875 KNKM321 42.21.09 85.12.28
23004 MI XXXXXX HARBOR 931.1875 KNKM321 42.04.19 86.22.14
23026 MI DETROIT (One Center) * 931.1875 KNKM321 42.19.49 83.02.41
23009 MI XXXX 931.1875 KNKM321 42.38.44 84.33.38
23010 MI XXXXXXX 931.1875 KNKM321 42.16.35 84.24.00
23011 MI KALAMAZOO 931.1875 KNKM321 42.16.29 85.39.14
23013 MI PINCKNEY 931.1875 KNKM321 42.34.53 83.59.27
23016 MI SHELBY TOWNSHIP 931.1875 KNKM321 42.38.55 83.04.31
23017 MI SOUTHFIELD 931.1875 KNKM321 42.27.06 83.12.35
23022 MI SOUTHGATE 931.1875 KNKM321 42.13.32 83.13.44
23018 MI STONY CREEK 931.1875 KNKM321 41.57.26 83.15.30
24007 MN MINNEAPOLIS (IDS Center) 931.1875 KNKL951 44.58.30 93.16.30
24013 MN ST. LOUIS PARK * 931.1875 KNKL951 44.55.50 93.22.26
24014 MN XX. XXXX (Xxxxx Xxxxx Xxx. 000.0000 KNKL951 44.56.54 93.05.42
25018 MO FLORISSANT 931.1875 KNKM222 38.48.47 90.17.35
00000 XX XX. XXXXX-XXXXXXXXX 931.1875 KNKM222 38.38.10 90.20.38
25017 MO WENTZVILLE 931.1875 KNKM222 38.44.53 90.52.56
49044 WI APPLETON * 931.1875 KNKP720 44.15.45 88.21.55
49005 WI FONDULAC 931.1875 KNKP720 43.48.02 88.22.08
49007 WI GREEN BAY * 931.1875 KNKP720 44.32.55 87.47.03
49008 WI HOULTON 931.1875 KNKK670 45.03.39 92.47.33
49009 WI JANESVILLE 931.1875 KNKK670 42.43.47 89.10.10
49010 WI KENOSHA (Pleasant Prairie) 931.1875 KNKP720 42.30.36 87.53.11
49028 WI LA CROSSE 931.1875 KNKK670 43.48.48 91.11.03
49011 WI LEBANON 931.1875 KNLM588 43.17.45 88.37.14
49012 WI MADISON 931.1875 KNLM588 43.04.30 89.22.52
49013 WI MANITOWOC 931.1875 KNKP720 44.08.04 87.44.21
49014 WI MILWAUKEE (First Star Ctr. 931.1875 KNKK670 43.02.18 87.54.05
49016 WI PORT WASHINGTON 931.1875 KNKP720 43.23.50 87.52.33
49017 WI RACINE 931.1875 KNKK670 42.40.56 87.50.58
49019 WI SHEBOYGAN 931.1875 KNKP720 43.47.29 87.59.13
49043 WI XXXXXXX POINT 931.1875 KNKK670 44.32.36 89.40.07
49020 WI STOCKBRIDGE 931.1875 KNKP720 44.05.20 88.18.29
49021 WI WAUKESHA 931.1875 KNKO781 42.58.05 88.11.24
49002 WI WEST BEND 931.1875 KNKP720 43.24.24 88.18.32
Other Midwest Transmitter Sites:
ID STATE CITY FREQ CALL SIGN LAT LONG
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15003 IL BELLEVILLE 931.1875 KNKK670 38.29.05 90.03.26
15061 IL CHAMPAIGN 931.1875 KNKK670 40.06.34 88.14.06
2
15007 IL XXXXX 931.1875 KNKK670 41.49.29 89.29.51
15060 IL XXXXXXX HEIGHTS * 931.1875 KNKK670 41.58.03 87.48.27
15018 IL XXXX 931.1875 KNKK670 42.24.57 89.52.13
15021 IL MT. OLIVE 931.1875 KNKK670 39.05.03 89.42.33
15022 IL MT. XXXXXX 931.1875 KNKK670 38.21.06 88.56.38
15023 IL NORMAL / Bloomington 931.1875 KNKK670 40.28.46 89.03.12
15059 IL OAKBROOK TERRACE * 931.1875 KNKK670 41.51.33 87.57.13
00000 XX XXXXXX 931.1875 KNKK670 41.18.35 88.48.44
15062 IL SPRINGFIELD (Tall) 931.1875 KNKK670 39.46.52 89.36.17
15030 IL VANDALIA 931.1875 KNKK670 38.56.53 89.06.01
16001 IN XXXXXXXX * 931.1875 KNKG880 40.09.22 85.25.48
16003 IN BLOOMINGTON 931.1875 KNKG880 39.10.34 86.27.56
16005 IN EVANSVILLE 931.1875 KNKG880 38.02.56 87.38.53
16021 IN NEW ALBANY 931.1875 KNKG880 38.21.53 85.50.18
16018 IN SHELBYVILLE 931.1875 KNKG880 39.21.45 85.54.23
16019 IN TERRE HAUTE 931.1875 KNKG880 39.20.13 87.28.00
23005 MI CLARKSTON 931.1875 KNKM321 42.46.28 83.28.14
23007 MI FLINT 931.1875 KNKM321 43.01.12 83.41.34
23008 MI GRAND RAPIDS 931.1875 KNKM321 42.59.15 85.37.26
23020 MI PORT HURON 931.1875 KNKM321 43.04.08 82.28.48
23019 MI TRAVERSE CITY 931.1875 KNKM321 44.46.36 85.41.02
23023 MI WARREN 931.1875 KNKM321 42.28.47 82.58.25
24001 MN BLOOMINGTON 931.1875 KNKL951 44.50.50 93.17.10
24002 MN BUFFALO * 931.1875 KNKL951 45.12.48 93.51.01
24005 MN CENTERVILLE 931.1875 KNKL951 45.09.30 93.02.29
24003 MN ELK RIVER 931.1875 KNKL951 45.20.29 93.32.58
24004 MN ELKO 931.1875 KNKL951 44.33.30 93.18.49
24006 MN XXXXXXXX 931.1875 KNKL951 45.24.10 92.50.45
24009 MN NEWPORT * 931.1875 KNKL951 44.53.17 92.59.16
24010 MN OSSEO * 931.1875 KNKL951 45.06.56 93.24.19
24016 MN ROCHESTER 931.1875 KNKL951 44.02.32 92.20.26
24011 MN ROSEVILLE 931.1875 KNKL951 45.01.11 93.12.04
24017 MN ST. CLOUD 931.1875 KNKL951 45.31.00 94.13.52
00000 XX XX. XXXXX XXXXX 000.0000 KNKL951 45.28.53 92.34.24
24015 MN VICTORIA * 931.1875 KNKL951 44.51.35 93.38.01
25001 MO ASHLAND 931.1875 KNKM222 38.47.28 92.17.43
25002 MO DANVILLE 931.1875 KNKM222 38.54.26 91.33.39
25003 MO KINGDOM CITY 931.1875 KNKM222 38.56.18 91.56.42
25004 MO KIRKSVILLE 931.1875 KNKM222 40.15.42 92.34.48
25005 MO LIBERTY/ Nashua 931.1875 KNKM222 39.19.08 94.30.25
25006 MO XXXXXXXX 931.1875 KNKM222 39.00.24 93.15.11
25007 MO NEW FRANKLIN/Rocheport 931.1875 KNKM222 39.00.27 92.35.19
25008 MO ODESSA 931.1875 KNKM222 39.01.52 93.56.06
00000 XX XXXXXX XXXX 931.1875 KNKM222 39.17.15 94.47.46
00000 XX XX. XXXXX-XXXXXXX XX. 931.1875 KNKM222 38.41.56 90.24.33
00000 XX XX. XXXXX-XXXXX XXX 000.0000 KNKM222 38.23.18 90.29.16
00000 XX XX. XXXXX-XXXX XXXX. 931.1875 KNKM222 38.38.26 90.15.22
00000 XX XX. XXXXX-XXXXXX XXXXX 000.0000 KNKM222 38.28.56 90.23.53
25016 MO ST.LOUIS (MERCANTILE) 931.1875 KNKM222 38.37.48 90.11.26
49018 WI RIVER FALLS 931.1875 KNKP720 44.55.30 92.37.24
3
Schedule
Office Agreements
Office lease for 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX
Schedule
Retained Employees
DEPARTMENT NAME JOB TITLE SALARY
Administration Xxxxxxx, Xxxxx Support $ 27,980.
Billing Xxxxx, Xxx Manager $ 40,232.
Engineering Pavioski, Xxx Tech $ 35,900.
Engineering Hawrylicz, Xxxx VP Engineering $125,000.
Finance Xxxx, Xxxxxxxxx Xx. Acct. $ 41,200.
Operations Xxxxxxx, Xxxxxxxx Operations $ 38,000.
Call Center Xxxxxxx, Xxx Manager $ 35,499.
Call Center Xxxxxxxxx, Xxxxxxx CSR $ 24,000.
Call Center Xxxxxx, Xxxx CSR $ 26,000.
Call Center Xxxxxxx, Xxxxxx Jo ESBI $ 26,000.
Call Center Xxxxx, Xxxxxxx CSR $ 23,000.
Call Center Xxxxxxx, Xxxxx CSR $ 30,390.
$473,201.00.