ASSET PURCHASE AGREEMENT
between
LAKE HURON CELLULAR CORP.
and
XXXXXX CELLULAR SYSTEMS, INC.
DATED AS OF December 14, 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 4
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 ADJUSTMENTS 6
ARTICLE VI 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 11
SECTION 7.07. EXISTING CONTRACTS 12
SECTION 7.08. GOVERNMENTAL LICENSES 12
SECTION 7.09. COMPLIANCE WITH LAWS 13
SECTION 7.10. NO VIOLATION OF EXISTING AGREEMENTS 13
SECTION 7.11. LITIGATION AND LEGAL PROCEEDINGS 13
SECTION 7.12. ENVIRONMENTAL COMPLIANCE 13
SECTION 7.13. EMPLOYEES 14
SECTION 7.14. EMPLOYEE BENEFITS 15
SECTION 7.15. TAX MATTERS 16
SECTION 7.16. FINANCIAL STATEMENTS 16
SECTION 7.17. SUBSCRIBERS/AGENTS 17
SECTION 7.18. INSURANCE 18
SECTION 7.19. BROKERS 18
SECTION 7.20. UNDISCLOSED LIABILITIES 18
SECTION 7.21. PRICING OF SERVICES 18
SECTION 7.22. PROPRIETARY RIGHTS 18
SECTION 7.23. ACCOUNTS RECEIVABLE AND BAD DEBTS 18
SECTION 7.24. PRODUCT INFORMATION 19
SECTION 7.25. CERTAIN BUSINESS RELATIONSHIPS WITH SELLER 19
SECTION 7.26. YEAR 2000 COMPLIANCE 19
ARTICLE VIII PURCHASER'S REPRESENTATIONS 19
SECTION 8.01. ORGANIZATION; QUALIFICATION 19
SECTION 8.02. CONSENTS; AUTHORIZATION; EXECUTION AND DELIVERY OF AGREEMENT 19
SECTION 8.03. LITIGATION AND LEGAL PROCEEDINGS 19
SECTION 8.04. BROKERS 20
SECTION 8.05. ACCESS TO FUNDS 20
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SECTION 8.06. QUALIFICATIONS TO HOLD FCC AUTHORIZATIONS 20
SECTION 8.07. BANKRUPTCY 20
ARTICLE IX SELLER'S AND PURCHASER'S COVENANTS 20
SECTION 9.01. FINANCIAL STATEMENTS AND CELLULAR SYSTEM INFORMATION 20
SECTION 9.02. GOVERNMENTAL APPROVALS 21
SECTION 9.03. THIRD PARTY CONSENTS; CLOSING CONDITIONS 21
SECTION 9.04. ACCESS 22
SECTION 9.05. CONDUCT OF BUSINESS 23
SECTION 9.06. NO SHOPPING 25
SECTION 9.07. EMPLOYEES 25
SECTION 9.08. SUPPLEMENTAL DISCLOSURE 26
SECTION 9.09. SELLER'S ACCESS TO RECORDS POST-CLOSING 26
SECTION 9.10. CONSUMMATE TRANSACTION 26
SECTION 9.11. PURCHASER NOT TO CONTROL 26
SECTION 9.12. RESCISSION 27
ARTICLE X CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE 27
SECTION 10.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF THIS AGREEMENT 27
SECTION 10.02. RESOLUTIONS 28
SECTION 10.03. INCUMBENCY CERTIFICATE 28
SECTION 10.04. THIRD PARTY CONSENTS; FCC; XXXX-XXXXX ACT 28
SECTION 10.05. NO MATERIAL ADVERSE CHANGE 28
SECTION 10.06. OPINION OF COUNSEL TO SELLER 29
SECTION 10.07. INTENTIONALLY OMITTED 29
SECTION 10.08. CLOSING ESCROW AGREEMENT 29
SECTION 10.09. TITLE INSURANCE; ESTOPPEL 29
SECTION 10.10. OPERATION OF CELLULAR SYSTEM 29
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ARTICLE XI CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE 29
SECTION 11.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF THIS AGREEMENT 29
SECTION 11.02. DIRECTORS' RESOLUTIONS 29
SECTION 11.03. INCUMBENCY CERTIFICATE 30
SECTION 11.04. FCC; XXXX-XXXXX ACT 30
SECTION 11.05. OPINION OF COUNSEL TO PURCHASER 30
SECTION 11.06. CLOSING ESCROW AGREEMENT 30
SECTION 11.07. NO LITIGATION 30
SECTION 11.08. PAYMENT OF PURCHASE PRICE 30
ARTICLE XII CASUALTY LOSSES 30
ARTICLE XIII INDEMNIFICATION 31
SECTION 13.01. INDEMNIFICATION BY SELLER 31
SECTION 13.02. INDEMNIFICATION BY PURCHASER 32
SECTION 13.03. NOTICE OF CLAIMS; DEFENSE OF THIRD PARTY 32
SECTION 13.04. LIMITATIONS 33
ARTICLE XIV CONFIDENTIALITY AND PRESS RELEASES 34
SECTION 14.01. CONFIDENTIALITY 34
SECTION 14.02. PRESS RELEASES 35
SECTION 14.03. DISCLOSURES REQUIRED BY LAW 35
ARTICLE XV TERMINATION 35
SECTION 15.01. BREACHES AND DEFAULTS; OPPORTUNITY TO CURE 35
SECTION 15.02. TERMINATION 36
ARTICLE XVI BROKERS' FEES 36
ARTICLE XVII MISCELLANEOUS 36
SECTION 17.01. ADDITIONAL INSTRUMENTS OF TRANSFER 37
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SECTION 17.02. NOTICES 37
SECTION 17.03. EXPENSES 38
SECTION 17.04. TRANSFER TAXES 38
SECTION 17.05. COLLECTION PROCEDURES 38
SECTION 17.06. SPECIFIC PERFORMANCE 39
SECTION 17.07. GOVERNING LAW 39
SECTION 17.08. ASSIGNMENT 39
SECTION 17.09. SUCCESSORS AND ASSIGNS 39
SECTION 17.10. AMENDMENTS; WAIVERS 39
SECTION 17.11. ENTIRE AGREEMENT 39
SECTION 17.12. COUNTERPARTS 39
SECTION 17.13. SEVERABILITY 39
SECTION 17.14. SECTION HEADINGS 40
SECTION 17.15. INTERPRETATION 40
SECTION 17.16. FURTHER ASSURANCES 40
SECTION 17.17. THIRD PARTIES 40
SECTION 17.18. WAIVER OF JURY 40
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DEFINED TERMS
TERM SECTION CITE
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Adjustments 5.05(c)
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
Capex Adjustment 5.05(c)
Cellular System Recitals
CERCLA 7.12(b)
Claims Article XII
Closing Article VI
Closing Certificate 5.05(d)
Closing Date Article VI
Closing Escrow Agreement 5.03
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 13.05(a)
Defending Party 13.03
Defined Benefit Pension Plan 7.14
Deposit 5.02
Deposit Escrow Agreement 5.02
Disclosing Party 14.01
DOJ 10.04
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
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FCC Authorizations Recitals
Final Order 10.04
Finality Waiver Notice 10.04
FTC 10.04
GAAP 5.05(a)
Xxxx-Xxxxx Act 9.02(b)
Hazardous Substances 7.12(b)
Historical Financial Statements 7.16(a)(ii)
Indemnified Purchaser Parties 13.01(a)
Independent Accountants 5.05(d)
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)
Liquidated Damages Amount 5.02
Liens Article I
Losses 13.01(a)
Material Adverse Effect 10.01
Material Loss 10.01
Multiemployer Plan 7.14
Non-Assumed Liabilities Article III
Non-Breaching Party 15.01
Nortel Agreement 5.05(a)
Operating Budget 9.01
Outside Date 15.02(e)
Permitted Liens Article I
Person 7.04
Phase I Assessment 9.05(b)
Phase II Assessment 9.05(b)
Purchase Price 5.01
Purchaser Introduction
Purchaser's Estimate 5.05(d)
RCLA 7.12(b)
RCRA 7.12(b)
Recipient Party 14.01
Response Period 5.05(d)
RSA Recitals
Seller Introduction
Seller's Estimate 5.05(d)
Special Temporary Authority 10.04
Tax 7.15
Third Party Claim 13.03
Working Capital Adjustment 5.05(b)
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SCHEDULES
1 Permitted Liens
2.01(a) Contracts and Licenses
2.01(c) Tangible Asset List
2.01(d) Interests in Real Property
2.01(f) Intangible Personal Property
2.02 Excluded Assets
5.05(c) Expansion Budget
7.04 Encumbrances
7.05 Real Property-Owned
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
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7.21 Pricing of Services
7.23 Accounts Receivable Aging
7.24 Product Information
7.25 Certain Business Relationships
9.01 Operating Budget
9.03 Form of Consent Letter
EXHIBITS
A. Xxxx of Sale
B. Assumption Agreement
C. Deposit Escrow Agreement
D. Closing Escrow Agreement
E. Opinion of Corporate and FCC Counsel for Seller
F. Opinion of Counsel for Purchaser
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of the 14th day of
December, 1999, by and between LAKE HURON CELLULAR CORP., a Delaware
corporation ("Seller"), and XXXXXX CELLULAR SYSTEMS, INC., an Oklahoma
corporation ("Purchaser").
R E C I T A L S
WHEREAS, Seller owns all right, title and interest in certain
cellular and microwave licenses (the "FCC Authorizations") granted by the
Federal Communications Commission (the "FCC") to provide non-wireless
cellular radio telephone service in the Michigan 10 - Tuscola Rural Service
Area (the "RSA") Market No. 481 (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.
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 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 affecting real property that does not
secure a monetary obligation and which 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) any Lien arising
out of deposits made to secure leases or other obligations of like nature
arising in the ordinary course of business, including materialman's and
xxxxxxx'x liens created by operation of law in the ordinary course of
Seller's Business (provided that the holder of such Lien has not taken any
action to perfect, record or otherwise enforce such Lien), (iv) any Lien
provided for in any contract or lease listed on the disclosure schedules
hereto and not related to any indebtedness for
borrowed money and for which Seller has not granted a security interest in
any of its Assets to the other party or parties thereto, (v) as to
leaseholds, interests of the lessors thereof and Liens affecting interests of
such lessors and (vi) 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 by Seller, of whatever description, used in, held for use or
relating to the ownership or operation of the Business, including all
property and rights acquired or obtained by Seller from the date hereof
through the date of Closing, except assets excluded pursuant to Section 2.02
hereof (collectively, the "Assets"). Such Assets shall be free and clear of
all Liens other than Permitted Liens as of the Closing. Such Assets shall
include, without limitation:
(a) All licenses (including the FCC Authorizations),
leases, agreements, trademark licenses, permits, 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, 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 of Seller's right, title and interest in and to
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 for use in, held for use or relating
to the Business or Assets.
(h) All prepayments and prepaid expenses related to the
Business or Assets.
(i) All claims, causes of action, rights of recovery and
rights of set-off of any kind related to the Business or Assets.
(j) The right to receive and retain mail, accounts
receivable payments and other communications related to the Business or
Assets.
(k) The right to xxxx and receive payment for products
shipped or delivered and/or services performed, but unbilled or unpaid as of
the Closing, related to the Business or Assets.
(l) All advertising, marketing and promotional materials
and all other related printing or written materials related to the Business
or Assets..
(m) All notes receivable and accounts receivable (including
subscriber receivables and roaming revenue receivables) related to the
Business or Assets..
(n) All goodwill as an ongoing Business.
(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 at the time of the Closing.
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ARTICLE III
ASSUMPTION OF LIABILITIES
At Closing, Purchaser shall assume and agree to perform and
discharge, to the extent not previously performed or discharged as of the
Closing, the following : (i) all obligations of Seller which accrue and are
to be performed from and after the Closing, under those permits,
authorizations, licenses, leases, rights of way, easements and other
agreements 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); (ii) all other obligations of
Seller entered into during the period from the date hereof to the 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 for such Current Liabilities against
the Purchase Price (in accordance with Section 5.05 hereof) at the Closing
(such items (i) through (iii) are collectively referred to herein as the
"Assumed Liabilities"). Unless otherwise expressly agreed to herein,
Purchaser shall not be liable for any liabilities, debts, contracts,
agreements, including, without limitation, any environmental liabilities
related to or arising from Seller's ownership, operation or control of the
Assets, the Cellular System or the Business (including with respect to
Seller's interests in owned or leased real property) for the period prior to
the 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 (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 Closing, Seller will
deliver to Purchaser (a) one or more Bills of Sale substantially in 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, warranty deeds and 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
Assumed Contracts, books and records (except as otherwise provided in Section
2.02 hereof) and other instruments or materials included in the Assets.
SECTION 4.02. ASSUMPTION DOCUMENTS. At the Closing, Purchaser and
Seller will execute and deliver an Assumption Agreement substantially in the
form attached hereto as EXHIBIT B (the "Assumption Agreement") in order to
effect the assumption of the Assumed Liabilities by Purchaser.
ARTICLE V
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PURCHASE PRICE; ALLOCATION
SECTION 5.01. PURCHASE PRICE. The total purchase price for the
Assets shall be Thirty-Four Million Dollars ($34,000,000) (the "Base Price")
in immediately-available U.S. funds, as adjusted in accordance with the
provisions of Section 5.05 hereof (as adjusted, the "Purchase Price").
SECTION 5.02. DEPOSIT. Simultaneously with the execution of this
Agreement, Purchaser is depositing a good faith deposit of Two Million Three
Hundred Fifty Thousand Dollars ($2,350,000) in immediately-available U.S.
funds (the "Deposit") with Chase Manhattan Trust Company, National
Association (the "Escrow Agent"), to be held, invested and disbursed pursuant
to the terms of the Deposit Escrow Agreement substantially in the form of
EXHIBIT C attached hereto (the "Deposit Escrow Agreement"). If the Closing
occurs, then the Deposit and all earnings on the Deposit shall be paid to
Seller pursuant to the Deposit Escrow Agreement and the full amount of the
Deposit and the earnings thereon shall be credited against and deducted from
the Purchase Price to be paid at the Closing by Purchaser for the Assets. If
Seller terminates this Agreement in accordance with the provisions of Section
15.02(d), at the time of such termination Seller is not then in breach of any
of its representations, warranties, covenants or agreements and the
conditions set forth in Sections 10.04 and 10.05 shall have been satisfied,
then Seller shall be entitled to the Deposit as liquidated damages (the
"Liquidated Damages Amount") without the necessity for proof by Seller of
actual damages. The parties agree that the Liquidated Damages Amount is a
fair and reasonable measure of the damages that Seller would sustain as a
result of such termination. Notwithstanding anything else set forth in this
Agreement, but subject to the terms and conditions set forth in this Section
5.02, Seller's sole and exclusive recourse for Purchaser's breach prior to
Closing of its representations or obligations under this Agreement shall only
be to receive an amount up to Two Million Three Hundred Fifty Thousand
Dollars ($2,350,000). In any other case if the Closing does not occur, then,
pursuant to the Deposit Escrow Agreement, the Deposit and all earnings
thereon shall be paid to Purchaser. All determinations of satisfaction of
conditions, and all payments by the Deposit Escrow Agent, shall be made in
accordance with he procedures and other provisions set forth in the Deposit
Escrow Agreement.
SECTION 5.03. PAYMENT OF PURCHASE PRICE. The Purchase Price less the
Deposit and all earnings thereon and less an amount equal to Seven Hundred
Fifty Thousand Dollars ($750,000) (the "Escrow Payment"), shall be payable by
wire transfer of immediately-available U.S. funds to Seller at Closing. The
Escrow Payment shall be paid by the Purchaser at Closing to the Escrow Agent
to be held, invested and disbursed pursuant to the terms of the Closing
Escrow Agreement substantially in the form of EXHIBIT D attached hereto (the
"Closing Escrow Agreement").
SECTION 5.04. ALLOCATION OF PURCHASE PRICE. Prior to the 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
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otherwise required by applicable legal requirements. If no agreement on an
allocation of the Purchase Price with respect to the Assets is reached prior
to Closing, such 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. The designated appraisal firm shall make the
required determination and notify the Seller and Purchaser within sixty (60)
days after final resolution of the Working Capital Adjustment.
SECTION 5.05. PURCHASE PRICE ADJUSTMENTS.
(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) roaming receivables
and subscriber accounts receivable 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: zero percent (0%) 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 Closing, 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 $150,000; and (iii) prepaid items which Purchaser will receive
the benefit of after the Closing such as prepaid rent, property taxes,
utility charges, fees and deposits paid, all determined as of 12:01 a.m. on
the Closing Date in accordance with GAAP.
"CURRENT LIABILITIES" means the Cellular System's (i) subscriber
deposits received, (ii) deferred revenue, (iii) employee vacation and sick
pay expense (whether or not to be paid or for previously-accrued time
actually taken after Closing), (iv) to the extent not paid by Seller prior to
Closing, employee salaries, bonuses, fringe benefits and other remuneration
payable to employees to be hired by Purchaser, (v) other trade payables and
accrued expenses of the Cellular System incurred in the normal course of
business, all determined as of 12:01 a.m. on the Closing Date in accordance
with GAAP.
"GAAP" means generally accepted accounting principles consistently
applied.
"NORTEL AGREEMENT" means the Master Purchase Agreement dated August
11, 1999 between Nortel Networks, Inc. and Seller, a true, accurate and
complete copy of which, certified by the Secretary of Seller, has been
delivered to Purchaser on the date hereof.
(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 Closing Date (the "Working Capital Adjustment").
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(c) In addition to the adjustment required by Section 5.05(b) the Base
Price shall also be increased by the amount equal to the capital expenditures
made by Seller pursuant to (i) its obligations under the Nortel Agreement, and
(ii) the cell site expansion at Xxxx, Deckerville and Mayville and upgrades from
cell extenders at the Lexington, Port Austin and Harbor Beach cell sites all
made in accordance with the Expansion Budget provided by Seller to Purchaser and
attached hereto as SCHEDULE 5.05(c) (collectively, the "Capex Adjustment", which
together with the Working Capital Adjustment are hereinafter collectively
referred to as the "Adjustments"). Notwithstanding the foregoing provisions in
this Section 5.05(c), the Capex Adjustment shall not exceed $3,910,000.
(d) Seller shall prepare and submit to Purchaser, not later than five
(5) business days prior to the Closing Date, a written good faith estimate of
the amount of the Adjustments and Seller's estimate of the Purchase Price
resulting from the Adjustments ("Seller's Estimate"). Seller's Estimate shall be
accompanied by supporting documents, work papers, subscriber records and other
data supporting the Adjustments and Seller's Estimate reasonably satisfactory to
Purchaser. 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
signed by the 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 Closing, Purchaser and Seller shall attempt to resolve any disputes
between Seller and Purchaser with respect to Seller's proposed Adjustments. In
connection therewith, Purchaser shall have full access to all Seller's records
related to Seller's proposed Adjustments. Prior to 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 Adjustments 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 $50,000 less
than Seller's Estimate, the 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 $50,000 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 Closing.
Within ninety (90) days after the 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 Adjustments
to be made pursuant to this Section 5.05, including any changes in the
Adjustments used to determine the Purchase Price at Closing, 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, which
supporting evidence Purchaser shall provide within ten (10) days after receipt
of any such request. If Seller shall conclude that the Closing Certificate does
not accurately reflect the Adjustments 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 thirty (30)-day period being
referred to as the "Response Period"),
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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 to the other any 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 other 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 a major national independent
accounting firm which does not provide services to Purchaser, Seller or any of
their subsidiaries or affiliates. (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.
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 and to have present its advisors,
accountants and counsel. The Independent Accountants shall render a decision on
the issues presented not later than thirty (30) days after submission of the
dispute, 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, if Purchaser is determined
to owe an amount to Seller, Purchaser shall pay such amount thereof to Seller,
and if Seller is determined to owe an amount to Purchaser, Seller shall pay such
amount thereof to Purchaser. All amounts owed by Purchaser or Seller to the
other in accordance with this Section 5.05(d) shall be paid by wire transfer of
immediately-available U.S. funds and shall not bear any interest. Any amount due
Purchaser from Seller under this Section 5.05 and not paid when due may also be
paid from the funds held pursuant to the Closing Escrow Agreement.
ARTICLE VI
CLOSING
Subject to the terms and conditions hereof, the parties hereby covenant
and agree that the closing (the "Closing") shall take place at the offices of
Xxxxxxx & Xxxxxx, LLP, 0000 Xxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000,
or at such other place as may be mutually agreed upon by the parties, on the
date (the "Closing Date") which is the latest of (a) the tenth (10th) day
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after the date that (i) the FCC order granting its consent to the assignment of
the FCC Authorizations from Seller to the Purchaser by a Final Order (as defined
in Section 10.04) or (ii) if applicable, Seller receives from Purchaser the
Finality Waiver Notice (as defined in Section 10.04); (b) the tenth (10th) day
after the expiration or early termination of the waiting period under the
Xxxx-Xxxxx Act; or (c) January 31, 2000; PROVIDED, HOWEVER, that if such latest
date is not a business day, the Closing Date shall be the next following
business day. The Closing shall be effective as of 12:01 a.m. on the Closing
Date. At Closing, each party shall deliver or cause to be delivered to the other
party the instruments of transfer and assumption referenced in Article IV of
this Agreement and the other deliveries required by Article X (for Seller) and
Article XI (for Purchaser) of this Agreement, and Purchaser shall deliver by
wire transfer of immediately available U.S. funds, to one or more bank accounts
as specified by Seller in wire transfer instructions to be delivered to
Purchaser at least two (2) business days prior to the Closing Date, the Purchase
Price required pursuant to Section 5.03.
ARTICLE VII
SELLER'S REPRESENTATIONS
Seller hereby represents and warrants that:
SECTION 7.01. ORGANIZATION, QUALIFICATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; 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 Authorizations 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
corporate and stockholder 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. Seller has, and
will convey to Purchaser at 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
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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. The Assets constitute all of the assets which are reasonably
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 signal propagation and
reception in the cellular telephone industry generally, the tangible property
included in the Assets are technically sufficient and capable of providing
cellular telephone service throughout Seller's established cellular geographic
service area 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 by Seller and, to Seller's knowledge, leased by Seller
which are part of the Assets (i) comply with applicable zoning laws and the
building, health, fire and environmental protection codes of all applicable
governmental jurisdictions, (ii) have no structural defects and (iii) do not
require any repair other than routine maintenance and the repair of ordinary
wear and tear.
SECTION 7.05. REAL PROPERTY - OWNED. SCHEDULE 7.05 sets forth (i) an
accurate legal description, (ii) the street address and (iii) a description of
the use of each parcel of real property owned by Seller which are included in
the Assets. With respect to each such parcel of owned real property:
(a) Seller has (and will deliver to Purchaser at Closing) good
and marketable title to the parcel of owned real property, free and
clear of any Liens other than Permitted Liens;
(b) there are no pending or, to Seller's knowledge, threatened
condemnation proceedings, lawsuits, or administrative actions relating
to the owned real property or other matters affecting adversely the
current use, occupancy, or value thereof;
(c) the fixtures, towers and other improvements are located
within the boundary lines of the described parcels of land, are not in
violation of applicable setback requirements, zoning laws, and
ordinances (and none of the properties or buildings or improvements
thereon are subject to "permitted non-conforming use" or "permitted
non-conforming structure" classifications), and do not encroach on any
easement which may burden the land, the land does not serve any
adjoining property for any purpose inconsistent with the use of the
land, and the owned real property is not located within any flood plain
or subject to any similar type restriction for which any Authorizations
necessary to the use thereof have not been obtained;
(d) except as disclosed on Schedule 7.05(d) there are no
outstanding leases, subleases, licenses, concessions, or other
contracts, written or oral,
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granting to any party or parties the right of use or occupancy of any
portion of the parcel of owned real property;
(e) there are no outstanding options or rights of first
refusal to purchase the parcel of owned real property, or any portion
thereof or interest therein;
(f) there are no parties (other than Seller) in possession of
the parcel of owned real property, other than tenants under any leases
disclosed in SCHEDULE 7.05 who are in possession of space to which they
are entitled;
(g) all fixtures, towers and other improvements located on the
parcel of owned real property are supplied with utilities and other
services necessary for the operation of such facilities, including gas,
electricity, water, telephone, sanitary sewer, and storm sewer, all of
which services are adequate in accordance with all applicable laws and
are provided via public roads or via a permanent irrevocable,
appurtenant easement benefiting the parcel of owned real property; and
(h) each parcel of owned real property abuts on and has direct
vehicular access to a public road, or has access to a public road via a
permanent, irrevocable, appurtenant easement benefiting the parcel of
owned real property.
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 $5,000 and which leases,
together with the other contracts and agreements (other than real property
leases) not required to be disclosed on SCHEDULES 2.01(a) AND (d), in the
aggregate have annual payments of less than $50,000 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) Seller has paid all accrued and currently payable rents
and other payments required by such leases, (iii) Seller and, to Seller's
knowledge, each other party thereto have complied with all their 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 counterclaim 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.
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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 $5,000 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 $50,000 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 $5,000 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 $50,000 or which are
terminable without penalty on one month or less notice) or commitments (written
or oral) to which Seller is a party and which contracts, commitments, agreements
and leases 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 a 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 $5,000 and
which agreements, together with the other personal property leases and contracts
not required to be disclosed on SCHEDULES 2.01(a) AND (d), in the aggregate have
annual payments of less than $50,000 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
either to enable it to continue to own the Assets or to operate 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, those issued by
the FCC and the state, counties and municipalities served by the Business, which
are required in connection with the ownership of the Assets or the operation of
the Business (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. Except as set forth on
SCHEDULE 7.08, all fees due and payable from Seller to governmental authorities
pursuant to the Authorizations have been paid. Except as set forth on SCHEDULE
7.08, all reports required of Seller to be filed in connection with the
Authorizations have been timely filed and are accurate and complete. Except as
set forth on SCHEDULE 7.08, the Seller does not conduct any microwave operations
on frequencies that are subject to relocation under the FCC's
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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 neither 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 nor is
aware of any reason why the Authorizations might not be renewed in the ordinary
course, why any of the Authorizations might be revoked, or 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 currently subject to
regulation or supervision by the Michigan Public Service Commission or other
similar state governmental instrumentality.
SECTION 7.09. COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE
7.09, Seller is currently complying with, and to Seller's knowledge, has
previously complied with, and is not in default under or in violation of, and
neither the Business nor any of the Assets nor the current operation or
maintenance thereof, contravenes any statute, law (including employment laws but
excluding environmental 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 director,
officer or stockholder 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 and there is no
litigation, proceeding or investigation pending, or, to Seller's knowledge,
threatened, against Seller or any director, officer or stockholder 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 director, officer or stockholder 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 knowingly 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 applicable Environmental Laws (as hereinafter defined); (ii)
there has not been any generation, use, transportation, treatment, storage,
release or disposal of any
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Hazardous Substance in connection with Seller's or, to Seller's knowledge, its
predecessors' ownership or use of the Assets, the conduct of the Business or, to
Seller's knowledge, on, in or under any property or facility used, owned or
leased by Seller or, to Seller's knowledge any adjacent properties or
facilities, which has created or might reasonably be expected to create, to
Seller's knowledge any liability under any applicable Environmental Laws or
which would require reporting to or notification of any governmental entity;
(iii) to Seller's knowledge, 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 by Seller in any way with respect to the Assets
or the Business , 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.
(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 is, as of the
date of this Agreement, listed as a hazardous substance under any applicable
state environmental law, or any substance which, as of the date of this
Agreement, 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
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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 affecting Seller's
Business.
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"). Except as set forth on SCHEDULE 7.14, 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 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 listed on SCHEDULE 7.14 is in
compliance with all applicable requirements of ERISA, the Code, and other
applicable law. Each of the said 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.
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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 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 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");
(ii) true and complete copies of the unaudited balance sheet
(the "Interim Balance Sheet") of Seller as of September 30, 1999 (the
"Balance Sheet Date") and the related unaudited statement of income for
the nine-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); and
(iii) the budget for capital expenditures for the expansion of
the Cellular System is attached hereto as SCHEDULE 7.16(a)(iii).
(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 reviewed
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financial statements; subject to the foregoing 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 foregoing 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;
(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
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this Agreement, the term "subscriber" means a person or entity subscribing for
cellular telephone service on the Cellular System.
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 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 taken 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. Except for Xxxxxxx & Associates, Inc., 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 to
Purchaser.
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 as it is currently being conducted.
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
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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 past due, 31-60 days past due, 61-90 days past due and over 90 days
past due, from the date thereof.
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
cellular telephone handsets. SCHEDULE 7.24 sets forth a list of manufacturers of
cellular 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 COMPLIANCE. SCHEDULE 7.26 sets forth the
representation and warranty received from Nortel Networks, Inc. with respect to
Year 2000 compliance.
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.
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, or against any affiliate of
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Purchaser, 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.
SECTION 8.05. ACCESS TO FUNDS. Purchaser has available or shall have
available on the Closing Date sufficient funds to consummate the transactions
contemplated by this Agreement, including without limitation, payment of the
Purchase Price and Purchaser shall be solvent on the Closing Date with the
financial capability to meet its other obligations when they become due.
SECTION 8.06. QUALIFICATIONS TO HOLD FCC AUTHORIZATIONS. Purchaser is
legally, technically, financially and otherwise qualified under the
Communications Act of 1934, as amended, to hold the FCC Authorizations and to
consummate the transactions contemplated hereby. Purchaser has no knowledge of
any fact that would, under existing law (including the Communications Act),
disqualify Purchaser as an assignee of the FCC Authorizations.
SECTION 8.07. BANKRUPTCY. No insolvency proceedings of any character,
including without limitation, bankruptcy, receivership, reorganization,
composition, or arrangement with creditors, voluntary or involuntary, affecting
Purchaser (other than as a creditor) are pending, or to the best of Purchaser's
knowledge, threatened, and Purchaser has not made any assignment for the benefit
of creditors or taken any action in contemplation of or which would constitute
the basis for the institution of such insolvency proceedings.
ARTICLE IX
SELLER'S AND PURCHASER'S COVENANTS
SECTION 9.01. FINANCIAL STATEMENTS AND CELLULAR SYSTEM INFORMATION.
Seller covenants and agrees that during the period after the execution of this
Agreement and prior to the Closing (the "Interim Period"), Seller shall provide
Purchaser, within thirty (30) days of the end of each calendar month, Seller's
unaudited balance sheet and income statement for such month ("Interim Financial
Statements"). The Interim Financial Statements will be true and correct in all
material respects, will be prepared using the same accounting methods and
procedures as used in the preparation of the Historical Financial Statements
except for the absence of footnotes, subject to normal recurring adjustments,
and will present fairly the financial position of Seller at the date indicated
and the results of Seller's operations for such period. During the Interim
Period Seller also shall provide Purchaser within fourteen (14) days of the end
of each calendar month (i) the number of subscribers on the Cellular System at
the beginning and end of such month, (ii) an
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accounts receivable aging report for the Cellular System for such month and
(iii) other monthly reports normally generated by the Seller's billing system as
reasonably requested by Purchaser.
SECTION 9.02. GOVERNMENTAL APPROVALS. (a) 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 FCC Authorizations, 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 use all reasonable efforts to 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 make
the necessary filings 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 Authorizations to Purchaser and to file for all
other necessary regulatory approvals for the consummation of the transactions
contemplated by this Agreement within five (5) 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 Purchaser shall
share equally all filing fees in connection with any filings pursuant to this
Section 9.02(a).
(b) Seller and Purchaser shall each cooperate and use its
commercially reasonable efforts to prepare and file with the Federal Trade
Commission and the Department of Justice and other regulatory authorities as
promptly as possible all requisite applications and amendments thereto together
with related information, data and exhibits necessary to satisfy the
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act ("Xxxx-Xxxxx
Act"). Purchaser shall be responsible for payment of the application filing fee
under the Xxxx-Xxxxx Act, but not the Seller's costs and expenses (including,
without limitation, attorneys fees and other legal fees and expenses) associated
with the preparation of the Seller's portion of such filing.
SECTION 9.03. THIRD PARTY CONSENTS; CLOSING CONDITIONS. (a) Seller
covenants and agrees to use its commercially reasonable 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
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. 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,
- 21 -
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 commercially reasonable 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 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 advisable, the Purchaser may elect to cause its agents to
conduct such testing and analysis, again at Purchaser's cost and expense. 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 Article 15.01 of this Agreement.
(c) Seller shall allow Purchaser a reasonable opportunity to
conduct an engineering review of the Assets to confirm that the Assets comply
with the FCC Authorizations
- 22 -
and the regulations of the FCC and 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) subject to the disclosures made on Schedule 7.09, operate
the Cellular System in accordance with the FCC Authorizations, 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, 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 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
(excluding any year-end bonuses given to employees consistent with past
practices), which approval will not be unreasonably withheld;
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(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 Charter or by-laws 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 during the Interim Period, spend on advertising, marketing
and promotion, on an aggregate basis from the date hereof to the
Closing, at least the amounts set forth in Seller's 1998 income
statement attached hereto as SCHEDULE 9.05 and consult on a
mutually-agreeable basis 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;
(n) timely make all required filings with the FCC and timely
pay all regulatory and other fees as such filings and fees become due,
and provide to the Purchaser, concurrently with filing thereof, copies
of all reports to and other filings with the FCC;
(o) not permit the FCC Authorizations 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 Authorizations or any other governmental authority to
institute proceedings for the suspension, revocation or limitation of
rights under the FCC Authorizations; or fail to prosecute with due
diligence any pending applications to any governmental authority;
-24-
(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
Closing Date, except to the extent that there is a good faith basis for
contesting the imposition of such Taxes (provided such contested Taxes
shall be properly accrued), in which case Seller shall notify Purchaser
of such contestation and the basis thereof;
(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;
(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 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 Closing to Purchaser's billing system and (z)
Purchaser's efforts to upgrade equipment (at Purchaser's cost) after
Closing; and
(u) Upon Purchaser's reasonable request, Seller shall cause
the appropriate engineering, computer information system and other
personnel of Seller to meet (telephonically or otherwise) monthly after
the date hereof with representatives of Purchaser to discuss Year 2000
compliance issues.
SECTION 9.06. NO SHOPPING. Prior to the 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.
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
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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. Notwithstanding any other provision of this Agreement
Purchaser shall use commercially reasonable efforts to (i) offer continued
employment to Seller's employees on the date of Closing for a period of at
least six (6) months subject to each employee's satisfactory job performance
and (ii) negotiate with Seller mutually agreeable severance terms for
employees of Seller that Purchaser elects not to employ on a going forward
basis.
SECTION 9.08. SUPPLEMENTAL DISCLOSURE. Seller shall promptly from
time to time prior to the 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
fails to object in writing to Seller to any such supplemental disclosure
within ten (10) business days after Purchaser's receipt thereof; PROVIDED,
HOWEVER, that Seller shall have the right to cure any breached representation
or warranty in accordance with Section 15.01 below.
SECTION 9.09. SELLER'S ACCESS TO RECORDS POST-CLOSING. After the
Closing, Purchaser shall provide to Seller, during normal business hours
after reasonable advance request, with access to books and records of the
Cellular System, Business or Assets relating to the operation of the Business
for the period prior to the Closing which are reasonably required by Seller
to prepare Seller's financial statements, complete tax returns, respond to
requests for information from taxing authorities or in connection with any
tax audits. In addition Purchaser shall permit, in a fashion not inconsistent
with any continuing responsibilities he might have to Purchaser, Xx. Xxxxxx
Xxxxx, to assist Seller in the preparation of tax returns.
SECTION 9.10. CONSUMMATE TRANSACTION. Purchaser shall preserve and
maintain its eligibility to be an assignee of the FCC Authorizations and use
all reasonable efforts to cause the transactions contemplated by this
Agreement to be consummated in accordance with the terms hereof, and to make
all filings with and to give all notices to third parties which may be
necessary or reasonably required of Purchaser in order to consummate the
transactions contemplated hereby. On the Closing Date, if the conditions set
forth in Article X have been satisfied, and if this Agreement has not been
terminated pursuant to Article XV, Purchaser shall purchase the Assets from
Seller as provided in Article V and shall make the deliveries provided in
Article VI.
SECTION 9.11. PURCHASER NOT TO CONTROL. Notwithstanding any other
provision of this Agreement that may be construed to the contrary, pending
the consummation of the Closing, Seller shall maintain actual (DE FACTO) and
legal (DE JURE) control over the Cellular System. Specifically, and without
limitation, the responsibility for the operation of Seller and the Cellular
System shall, pending the Closing, reside with the Board of Directors of
Seller, including, but not limited to, responsibility for the following
matters: (a) access to and the use of the facilities
-26-
of and equipment owned by Seller; (b) control of the daily operation of the
Cellular System; (c) creation and implementation of policy decisions; (d)
employment and supervision of employees; (e) payment of financing obligations
and expenses incurred in the operation of the Cellular System; (f) receipt
and distribution of monies and profits derived from the operation of the
Cellular System; and (g) execution and approval of all contracts and
applications prepared and filed before regulatory agencies.
SECTION 9.12. RESCISSION. In the event that the Closing occurs prior
to the date on which the FCC approval for the assignment of the FCC
Authorizations becomes a Final Order and if such approval is subsequently
withdrawn and if at such time or thereafter the parties are legally obligated
to rescind the transactions contemplated by this Agreement, the parties shall
rescind the transaction in a manner that puts each party in the position it
would have been in as of the Closing Date, had the transactions contemplated
hereby not been consummated. Purchaser further covenants and agrees that in
the event of a rescission pursuant to this Section 9.12, Purchaser will
transfer, assign and deliver the Assets and the Cellular System to Seller in
substantially the same condition as the Assets and Cellular System existed on
the Closing Date, except and, to the extent there is a net diminution in the
value of the Assets, subject to appropriate compensation, except for (i)
ordinary wear and tear, (ii) Assets sold, transferred or otherwise disposed
of in the ordinary course of business and (iii) changes in any Assets
(including the loss or destruction thereof) after the Closing Date to the
extent such changes are not due to the acts or omissions of Purchaser or
would have occurred absent the Closing and Seller shall return the Purchase
Price to Purchaser net of compensation; provided that, in the event of the
loss or destruction of any Assets, Purchaser shall deliver to Seller all
insurance proceeds, if any, Purchaser receives with respect thereto and
provided, further, that if the acts, omissions or qualifications of Purchaser
were the proximate cause of the withdrawal of the FCC Consents, then Seller
shall be permitted to retain an amount equal to the Deposit as damages for
the failure of the transaction to be consummated.
ARTICLE X
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
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 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. All of the representations and warranties made by Seller in
this Agreement shall be true and correct at and as of the Closing except for
such uncured 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 13.01) in excess of $50,000 in the aggregate (a "Material
Loss") or otherwise result in a Material Adverse Effect. 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 Closing
except for such noncompliances which, in the aggregate, have not caused and
would not reasonably be expected to cause a
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Material Loss or otherwise result in a Material Adverse Effect. Purchaser
shall have been furnished with a certificate or certificates of Seller's
President, dated as of the 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. RESOLUTIONS. Seller shall deliver to Purchaser copies of
the resolutions of the board of directors and shareholders 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; XXXX-XXXXX ACT. 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. Prior to Closing Date, the FCC shall
have granted its consent to the assignment of the FCC Authorizations to
Purchaser and such grant shall have become a Final Order, without any
material conditions (excepting conditions generally applied to the grant of
such applications or applied on an industry-wide basis) which the Purchaser
reasonably deems to be materially 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"). In addition,
all applicable waiting periods under the Xxxx-Xxxxx Act shall have expired or
been terminated and no objection shall have been made by the Federal Trade
Commission ("FTC") or the United States Department of Justice ("DOJ"). 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, as applicable, 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 reconsideration has passed; and (iv) no appeal
to a court, or request for stay by a court, of the FCC's action, as
applicable, 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.
SECTION 10.05. NO MATERIAL ADVERSE CHANGE. Other than changes resulting
from business or regulatory developments affecting the cellular telephone
industry generally, there shall not have been any material adverse change in the
financial condition, assets, business, properties of the Cellular System or
Assets, from October 8, 1999 to the Closing.
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SECTION 10.06. OPINION OF COUNSEL TO SELLER. Purchaser shall have
been furnished with opinions of Xxxxxx Xxxxx LLP, corporate and FCC counsel
to Seller, dated as of the 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,
substantially in the form of EXHIBIT E hereto.
SECTION 10.07. INTENTIONALLY OMITTED.
SECTION 10.08. CLOSING ESCROW AGREEMENT. Seller and the Escrow Agent
each shall have executed and delivered the Closing Escrow Agreement.
SECTION 10.09. TITLE INSURANCE; SURVEYS. 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 with respect to (i) the leased real
property on which Seller's cell sites and equipment are situated and (ii) the
real property owned by Seller; PROVIDED, HOWEVER, that Seller shall not be
obligated to deliver any title commitments, title policies or surveys for the
leased property in items 1, 5, 7, 10, 11 and 12 of the Leases Payable and
Receivable section of SCHEDULE 2.01(a).
SECTION 10.10. 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 CLOSE
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
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 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 Closing. Seller shall have been furnished with a
certificate of an officer of Purchaser, dated as of the 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
the 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; XXXX-XXXXX ACT. The FCC shall have issued an
order granting its consent to the assignment of the FCC Authorization to
Purchaser. In addition, all applicable waiting periods under the Xxxx-Xxxxx
Act shall have expired or been terminated and no objection shall have been
made by the FTC or DOJ.
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 Closing and addressed to Seller in substantially
the form of EXHIBIT F hereto.
SECTION 11.06. CLOSING ESCROW AGREEMENT. Purchaser and the Escrow
Agent each shall have executed and delivered the Closing Escrow Agreement.
SECTION 11.07. NO LITIGATION. On the Closing Date, (i) no
litigation, proceeding, investigation, or inquiry shall be pending that, if
sustained, would materially and adversely affect Purchaser's right to
acquire, retain and own the Assets or to operate the Cellular System, and
(ii) no judgment, decree, injunction, rule or order of any court of competent
jurisdiction or other legal authority shall be outstanding against Purchaser,
Seller or any affiliate purporting to enjoin or otherwise prevent the Closing
of the transactions contemplated hereunder.
SECTION 11.08. PAYMENT OF PURCHASE PRICE. Purchaser shall have paid
the Purchase Price to Seller.
ARTICLE XII
CASUALTY LOSSES
In the event that there shall have been suffered between the date
hereof and the 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 reasonably practicable, repair, rebuild or replace the
portion of the Assets damaged, destroyed or lost prior to the Closing Date.
To the extent the repair, rebuild or replacement of the portion of the Assets
damaged, destroyed or lost prior to the Closing Date is not reasonably
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,
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destroyed or lost Assets after the 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 XIII
INDEMNIFICATION
SECTION 13.01. INDEMNIFICATION BY SELLER. (a) After the Closing and
subject to the provisions of Section 13.04, 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
XIII, 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 and judgments (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 Closing, relating to or arising from the
Seller's ownership, operation, control or sale of the Assets, the
Cellular System or the Business or any other state of facts relating to
Seller which existed at or prior to Closing, including, without
limitation, any environmental liabilities arising out of Seller's
interests in real property or any fines or forfeitures imposed or
threatened to be imposed by the FCC for the Seller's operation, at or
prior to Closing, of the Cellular System or the Business;
(ii) Any misrepresentation in, breach of, or omission from,
any representation or warranty of Seller in this Agreement, the
Schedules or Exhibits hereto, the Deposit Escrow Agreement, the Closing
Escrow Agreement, the Xxxx of Sale, the Assumption Agreement or in any
closing certificate delivered by Seller to Purchaser pursuant to
Article X hereof;
(iii) Any breach or non-fulfillment of any covenant or
agreement on the part of Seller under this Agreement, the Deposit
Escrow Agreement, the Closing Escrow Agreement, the Xxxx of Sale or the
Assumption Agreement to be performed on or following the Closing Date;
and
(iv) All reasonable 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
XIII, 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.
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SECTION 13.02. INDEMNIFICATION BY PURCHASER. After the Closing and
subject to the provisions of Section 13.04, 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 XIII, Purchaser
agrees to indemnify and to hold Seller, and its directors, officers,
stockholders, 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
Cellular System or the Business after the Closing, including on account
of the Assumed Liabilities; and
(ii) Any misrepresentation in, breach of, or omission from,
any representation or warranty of Purchaser, in this Agreement, the
Schedules or Exhibits hereto, including the Deposit Escrow Agreement,
the Closing Escrow Agreement or 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, the Deposit
Escrow Agreement, the Closing Escrow Agreement or the Assumption
Agreement to be performed on or following the 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 13.03. NOTICE OF CLAIMS; DEFENSE OF THIRD PARTY. A party
claiming indemnification under this Article XIII (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, 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
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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 13.03, 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 13.03, 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 13.03 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 XIII.
SECTION 13.04. LIMITATIONS. The Defending Party's obligations to
indemnify the Asserting Party pursuant to this Article XIII 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 $50,000 (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 13.02(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
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7.04, and Section 7.15, (v) a breach by Purchaser of its representations set
forth in Section 8.02 or (vi) Losses resulting from fraud. Under no
circumstance will either Seller or Purchaser have any right to recover any
amounts under this Article XIII in excess of $6 million (the "Cap");
PROVIDED, HOWEVER, notwithstanding anything else set forth in this Agreement
to the contrary, the Cap 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 13.02(i), (iii) adjustments to the Purchase
Price provided in Section 5.05, (iv) a breach by Seller of its
representations set forth in Section 7.02 and the first sentence of Section
7.04, (v) a breach by Purchaser of its representations set forth in Section
8.02 and (vi) Losses resulting from fraud.
(b) All representations and warranties contained in this
Agreement shall survive the Closing until the first anniversary thereof;
provided, however, that notwithstanding the foregoing, (x) the
representations and warranties contained in Section 7.02, the first sentence
of Section 7.04. Section 7.15 and Section 8.02 shall survive the Closing for
an unlimited duration and (y) the representations and warranties contained in
Section 7.12 (as it may relate to Environmental Laws) shall survive the
Closing until the second 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 as a result of a breached representation or warranty
after the applicable Survival Period. Subject to Section 17.06, the parties
sole and exclusive remedy for any and all claims relating to and arising out
of this Agreement and the transactions contemplated herein (whether made in
contract, tort, breach of warranty or otherwise) shall be governed by this
Article XIII.
(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 any policy of insurance maintained by such indemnified party.
ARTICLE XIV
CONFIDENTIALITY AND PRESS RELEASES
SECTION 14.01. 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, 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 14.03.
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If the Recipient Party breaches, or threatens to commit a breach of, any of
the provisions of this Article XIV, 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 14.02. 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 14.03, 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 14.03. DISCLOSURES REQUIRED BY LAW. This Article XIV 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 FURTHER, 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 XV
TERMINATION
SECTION 15.01. 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 thirty (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 FURTHER, 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 15.02). 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. Notwithstanding anything to the
contrary set forth in this Section 15.01, the provisions of this Section
15.01 shall not apply in the event
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Purchaser fails to deliver the Purchase Price even though all of the closing
conditions set forth in Article X have been satisfied.
SECTION 15.02. 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 Closing:
(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 15.01, 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) subject to Section 15.01, 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 if Purchaser shall have materially
breached any of its covenants herein; or
(e) by either Seller or Purchaser if the Closing shall not
have occurred on or before December 31, 2000 (the "Outside Date"),
unless (i) the parties agree in writing to extend the Outside Date, or
(ii) 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 Closing.
ARTICLE XVI
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 XIII hereof.
ARTICLE XVII
MISCELLANEOUS
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SECTION 17.01. ADDITIONAL INSTRUMENTS OF TRANSFER. (a) From time to
time after the 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 Closing and Purchaser elects to proceed with the 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 17.02. 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 Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
with a required copy to:
Xxxxxxx & Xxxxxx, LLP
0000 XxxxXxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
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Attention: Xxxxxx X. Xxxxxxxx, Xx., Esq.
Facsimile No.: (000) 000-0000
(ii) If to Seller:
Lake Huron Cellular Corp.
c/o 000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx XxXxxxx, Esq.
Facsimile No.: (000) 000-0000
with a required copy to:
Xxxxxx Xxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxxxx, 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 17.03. 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. Except as set forth in
Section 9.02(b), Seller and Purchaser shall bear equally FCC and other
governmental filing fees.
SECTION 17.04. TRANSFER TAXES. Purchaser shall bear 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 Section 17.04, 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 17.05. COLLECTION PROCEDURES. From and after the Closing,
Purchaser shall have the right and authority, at its expense, to collect for
its account all items to which it is entitled as part of the Assets and
Business acquired pursuant to this Agreement and to endorse with the name of
the Seller any checks or drafts received on account of any such items.
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SECTION 17.06. SPECIFIC PERFORMANCE. The parties recognize and
acknowledge that in the event Seller shall fail to perform its obligations
under the terms of this Agreement, money damages alone will not be adequate
to compensate the Purchaser. The parties, therefore, agree and acknowledge
that in the event the Seller fails to perform its obligations under this
Agreement prior to Closing, the Purchaser 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 17.07. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Michigan (without
application of principles of conflicts of law).
SECTION 17.08. 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
its rights under this Agreement after the Closing to any institutional
lender, PROVIDED, HOWEVER that Purchaser shall notify Seller ten (10) days in
advance of any such assignment and notwithstanding any such assignment
Purchaser shall remain obligated to perform post-Closing obligations imposed
on Purchaser under the terms of this Agreement.
SECTION 17.09. 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 17.10. 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 17.11. 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.
SECTION 17.12. 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 17.13. 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
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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 17.14. 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 17.15. 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 17.16. 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 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
relating to the Cellular System.
SECTION 17.17. THIRD PARTIES. 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 17.18. 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:
LAKE HURON CELLULAR CORP.
By: /s/ Xxxxxx X. XxXxxxx
-------------------------------------
Print Name: Xxxxxx X. XxXxxxx
-----------------------------
Title: Executive Vice President
----------------------------------
PURCHASER:
XXXXXX CELLULAR SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------
Print Name: Xxxxx X. Xxxxxxxxxxx
-----------------------------
Title: CFO & Vice President
----------------------------------
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