Exhibit 4.6
EXECUTION COPY
ASSET EXCHANGE AGREEMENT
between
XXXXXX CELLULAR SYSTEMS, INC.
and
AT&T WIRELESS SERVICES, INC.
Dated as of December 24, 2002
ASSET EXCHANGE AGREEMENT
ASSET EXCHANGE AGREEMENT, dated as of December 24, 2002, between XXXXXX
CELLULAR SYSTEMS, INC., an Oklahoma corporation ("DCS"), and AT&T WIRELESS
SERVICES, INC., a Delaware corporation ("AWS").
WHEREAS, AWS directly or indirectly owns (either by itself or with others)
and operates wireless telecommunications systems (the "ALASKA SYSTEMS") in the
territory covered by the Alaska Cellular Authorizations (as defined in Section
2.3(a)) (collectively, the "ALASKA MARKETS"); and DCS directly or indirectly
owns (either by itself or with others) and operates wireless telecommunications
systems (the "CALIFORNIA SYSTEMS") in the territory covered by the California
Cellular Authorizations (as defined in Section 2.1(a)) (collectively, the
"CALIFORNIA MARKETS"); and
WHEREAS, AWS and its Affiliates are engaged in the business of marketing,
selling and providing wireless telecommunications services in the Alaska Markets
(such business, as conducted by AWS, is referred to herein as the "ALASKA
BUSINESS"); and DCS and its Affiliates are engaged in the business of marketing,
selling and providing wireless telecommunications services in the California
Markets (such business, as conducted by DCS, is referred to herein as the
"CALIFORNIA BUSINESS"); and
WHEREAS, AWS and DCS desire to effect an exchange (the "EXCHANGE") of,
among other things, the assets and rights of DCS that relate primarily to the
ownership and operation of the California Systems, including certain licenses
issued by the Federal Communications Commission (the "FCC"), for the assets and
rights of AWS that relate primarily to the ownership and operation of the Alaska
Systems, including certain licenses issued by the FCC, all subject to the terms
and conditions set forth herein; and
WHEREAS, the parties desire that the Exchange be structured as a like-kind
exchange under section 1031 of the Internal Revenue Code of 1986, as amended
(the "CODE"), to the fullest extent practicable.
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 1
EXCHANGE
Section 1.1. Asset Consolidation
At or prior to Closing, (a) AWS and DCS will use all commercially
reasonable efforts, at the expense of DCS (except with regard to any fees of
AWS's outside counsel), to effect the transactions described on Schedule 1.1(a)
(the assets, properties and rights to be conveyed to AWS pursuant to such
transactions are referred to herein as the "REDEMPTION ASSETS") and (b) AWS will
use all commercially reasonable efforts, at the expense of AWS, to effect the
transactions described on Schedule 1.1(b).
Section 1.2. Exchange
Except as otherwise provided and subject to the terms and conditions set
forth in this Agreement:
(a) At Closing, AWS will, and will cause its Affiliates to, assign,
transfer, deliver and convey to DCS, free and clear of all security interests,
liens, pledges, charges, encroachments, defects of title, options, rights of
first refusal or other rights of third parties (absolute or contingent),
easements or any other encumbrance or restriction on the use or exercise of any
attribute of ownership (collectively, "LIENS") other than Permitted Liens (as
defined in Section 18.18), and DCS will acquire, all right, title, and interest
of AWS and its Affiliates in and to, the Alaska Assets (as defined in Section
2.3), in exchange for the California Assets (as defined in Section 2.1).
(b) At Closing, DCS will, and will cause its Affiliates to, assign,
transfer, deliver and convey to AWS, free and clear of all Liens other than
Permitted Liens, and AWS will acquire, all right, title and interest of DCS and
its Affiliates in and to the California Assets, in exchange for the Alaska
Assets.
(c) At Closing, AWS will assign, transfer, deliver and convey to Xxxxxx
Communications Corporation ("DCC"), free and clear of all Liens (other than
Liens created by any agreement to which DCC is a party), all right, title and
interest of AWS in and to the shares of Series AA Preferred Stock of DCC owned
by AWS, including any right to receive dividends or other distributions thereon
(the "DCC SECURITIES").
Section 1.3. Like-Kind Exchange
(a) The parties shall cause the Exchange to be treated in such a manner
that such exchange qualifies as a tax-free exchange of multiple, like-kind
assets to the maximum extent permitted by section 1031 of the Code.
Notwithstanding any other provision in this Agreement, including this Section
1.3, each party acknowledges and agrees that it (i) has obtained its own,
separate tax advice with respect to the characterization of the exchanges
hereunder as like-kind exchanges of property under section 1031 of the Code, and
(ii) is not relying on any representations of the other party with respect to
the characterization of the exchanges hereunder as like-kind exchanges of
property under section 1031 of the Code.
(b) On or prior to the Closing Date, DCS and AWS shall agree upon the
relative fair market values of the assets to be delivered to the other party
pursuant to Section 1.2. AWS and DCS agree to cause all tax returns and reports
relating to the transactions contemplated hereby, including Internal Revenue
Service Form 8594, to be filed in accordance with such agreement and not to take
any position inconsistent therewith unless required to do so pursuant to a
"DETERMINATION" as such term is defined in section 1313 of the Code.
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ARTICLE 2
EXCHANGED ASSETS; EXCLUDED ASSETS
Section 2.1. California Assets. The assets, properties and rights to be
conveyed to AWS pursuant to this Agreement shall be all of the assets,
properties and rights of DCS and its Affiliates that relate primarily to the
California Business (the "CALIFORNIA ASSETS"), including the following assets,
properties and rights of DCS and its Affiliates:
(a) (i) the FCC licenses and authorizations, including (x) FCC licenses
and authorizations to construct, own and operate a cellular telecommunications
system in the California Markets (the "CALIFORNIA CELLULAR AUTHORIZATIONS") and
certain microwave licenses used in connection with such cellular operations (the
"CALIFORNIA MICROWAVE AUTHORIZATIONS") and (y) construction permits, if any,
that have been issued by the FCC to DCS or an Affiliate with respect to
construction of a cellular telecommunications system in the California Markets
(together with the California Cellular Authorizations and the California
Microwave Authorizations, the "CALIFORNIA FCC AUTHORIZATIONS"), that are listed
on Schedule 2.1(a)(i) and (ii) the licenses and authorizations issued by any
state body having jurisdiction over the California Business that are listed on
Schedule 2.1(a)(ii);
(b) all rights of DCS and its Affiliates under (i) all Contracts (as
defined in Section 18.18) between DCS or an Affiliate and subscribers that are
related primarily to the California Business, (ii) all Contracts listed on
Schedule 7.5(a), (iii) all Contracts that are not required to be listed on
Schedule 7.5(a) solely because they involve dollar amounts that are below the
thresholds for inclusion on such Schedule, and (iv) all Contracts, entered into
during the period commencing on the date hereof and ending on the Closing Date,
which AWS agrees to assume in accordance with clause (ii) of the first sentence
of Section 3.1 (all such Contracts that are not Excluded California Contracts
(as defined in Section 2.2(d)) are referred to collectively as the "ASSUMED
CALIFORNIA CONTRACTS");
(c) all right, title and interest of DCS and its Affiliates in and to the
towers, tower equipment, antennas, switching and cell site equipment and
buildings, microwave equipment, mobile identification numbers, tools, testing
equipment, motor vehicles, office equipment, furniture and fixtures, supplies
and inventory, electrical power units, transmission lines, installations,
appliances, improvements and other equipment, machinery and tangible personal
property used primarily in the California Business, including such as are listed
on Schedule 2.1(c);
(d) all interests of DCS and its Affiliates in all those certain lots and
pieces of real property that are owned by or leased to DCS or an Affiliate that
are used primarily in the California Business including those set forth on
Schedule 2.1(d), together with the buildings, structures, facilities and other
improvements erected thereon, and together with all easements, rights-of-way and
other appurtenances thereto;
(e) all right, title and interest of DCS and its Affiliates to the
engineering records, files (including customer information and records), data,
drawings, blueprints,
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books of account, schematics, maps, reports, lists (including customer and
supplier lists) and plans and processes used primarily in the California
Business, provided that DCS may retain copies thereof so long as AWS is provided
with the originals thereof;
(f) all right, title and interest of DCS and its Affiliates in and to the
accounts receivable (billed or unbilled), prepaid assets, and security deposits
(the "CALIFORNIA DEPOSITS"), in each case which are used primarily in the
operation of the California Business;
(g) to the extent assignable, all licenses, certificates of occupancy,
permits, franchises, registrations, certificates of public convenience and
necessity, approvals and operating rights, including any applications therefor,
used primarily in the operation of the California Business;
(h) all computer software owned or licensed by DCS or its Affiliates
(including all related documentation) that is necessary to operate the switches
and other cell site equipment described in paragraph (c) above;
(i) all rights or choses in action relating primarily to the California
Business, including all rights under express or implied warranties relating to
the California Assets, except to the extent listed on Schedule 2.2(f);
(j) subject to Section 12.1, all rights and claims under insurance
policies with respect to the California Assets;
(k) all inventory of cellular telephone handsets and related accessories;
and
(l) any rights in blocks of NPA-NXX numbers assigned to DCS or its
Affiliates for use in the California Business.
Except as otherwise expressly provided herein, the California Assets shall
be deemed to include the Redemption Assets for all purposes of this Agreement.
Section 2.2. Excluded California Assets
All other assets owned by DCS or an Affiliate, except the California
Assets, shall be retained by DCS or such Affiliate and shall not be sold,
assigned or transferred to AWS (the "EXCLUDED CALIFORNIA ASSETS"), including the
following assets, properties and rights of DCS or an Affiliate, all of which
shall be deemed to be Excluded California Assets:
(a) all cash on hand (other than the California Deposits) and in financial
institutions, cash equivalents, marketable securities and bonds;
(b) all claims for refunds and/or credits for Taxes (as defined in Section
18.18);
(c) the minute books and tax returns of DCS or an Affiliate;
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(d) all roaming agreements and the other Contracts listed or described in
Schedule 2.2(d) (the "EXCLUDED CALIFORNIA CONTRACTS");
(e) the rights which accrue or will accrue to DCS or an Affiliate under
this Agreement;
(f) the assets, rights and claims listed in Schedule 2.2(f) and that
relate primarily to the California Business;
(g) subject to Section 2.1(j), all insurance policies and rights and
claims thereunder arising from events, matters, conditions arising prior to the
Closing Date and which have not been assigned to AWS pursuant to Section 12.1;
(h) trademarks, trade names, service marks, service names, logos and
similar rights and all other intellectual property;
(i) copies of the documents referred to in Section 2.1(e);
(j) all California Benefit Plans (as defined in Section 7.11);
(k) all assets relating primarily to paging products and services offered
by DCS or its Affiliates in the California Markets (the "CALIFORNIA PAGING
ASSETS");
(l) all motor vehicles owned or leased by DCS or its Affiliates and used
primarily with respect to the California Business; and
(m) inventory that is off-specification, damaged, dormant, obsolete,
non-salable, non-usable or not first quality.
Section 2.3. Alaska Assets
The assets, properties and rights to be conveyed to DCS pursuant to this
Agreement shall be all of the assets, properties and rights of AWS and its
Affiliates that relate primarily to the Alaska Business (the "ALASKA ASSETS"),
including the following assets, properties and rights of AWS and its Affiliates:
(a) (i) the FCC licenses and authorizations, including (x) FCC licenses
and authorizations to construct, own and operate a cellular telecommunications
system in the Alaska Markets (the "ALASKA CELLULAR AUTHORIZATIONS") and certain
microwave licenses used in connection with such cellular operations (the "ALASKA
MICROWAVE Authorizations") and (y) construction permits, if any, that have been
issued by the FCC to AWS or an Affiliate with respect to construction of a
cellular telecommunications system in the Alaska Markets (together with the
Alaska Cellular Authorizations and the Alaska Microwave Authorizations, the
"ALASKA FCC AUTHORIZATIONS"), that are listed on Schedule 2.3(a)(i) and (ii) the
licenses and authorizations issued by any state body having jurisdiction over
the Alaska Business that are listed on Schedule 2.3(a)(ii);
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(b) all rights of AWS and its Affiliates under (i) all Contracts between
AWS or an Affiliate and subscribers that are related primarily to the Alaska
Business, (ii) all Contracts listed on Schedule 8.5(a), (iii) all Contracts that
are not required to be listed on Schedule 8.5(a), solely because they involve
dollar amounts that are below the thresholds for inclusion on such Schedule, and
(iv) all Contracts, entered into during the period commencing on the date hereof
and ending on the Closing Date, which DCS agrees to assume in accordance with
clause (ii) of the first sentence of Section 3.1 (all such Contracts that are
not Excluded Alaska Contracts (as defined in Section 2.4(d)) are referred to
collectively as the "ASSUMED ALASKA CONTRACTS");
(c) all right, title and interest of AWS and its Affiliates in and to the
towers, tower equipment, antennas, switching and cell site equipment and
buildings, microwave equipment, mobile identification numbers, tools, testing
equipment, motor vehicles, office equipment, furniture and fixtures, supplies
and inventory, electrical power units, transmission lines, installations,
appliances, improvements and other equipment, machinery and tangible personal
property used primarily in the Alaska Business, including such as are listed on
Schedule 2.3(c);
(d) all interests of AWS and its Affiliates in all those certain lots and
pieces of real property that are owned by or leased to AWS or an Affiliate that
are used primarily in the Alaska Business including those set forth on Schedule
2.3(d), together with the buildings, structures, facilities and other
improvements erected thereon, and together with all easements, rights-of-way and
other appurtenances thereto;
(e) all right, title and interest of AWS and its Affiliates to the
engineering records, files (including customer information and records), data,
drawings, blueprints, books of account, schematics, maps, reports, lists
(including customer and supplier lists) and plans and processes used primarily
in the Alaska Business, provided that AWS may retain copies thereof so long as
DCS is provided with the originals thereof;
(f) all right, title and interest of AWS and its Affiliates in and to the
accounts receivable (billed or unbilled), prepaid assets and security deposits
(the "ALASKA DEPOSITS"), in each case which are used primarily in the operation
of the Alaska Business;
(g) to the extent assignable, all licenses, certificates of occupancy,
permits, franchises, registrations, certificates of public convenience and
necessity, approvals and operating rights, including any applications therefor,
used primarily in the operation of the Alaska Business;
(h) all computer software owned or licensed by AWS or its Affiliates
(including all related documentation) that is necessary to operate the switches
and other cell site equipment described in paragraph (c) above;
(i) all rights or choses in action relating primarily to the Alaska
Business, including all rights under express or implied warranties relating to
the Alaska Assets, except to the extent listed on Schedule 2.4(f);
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(j) subject to Section 12.2, all rights and claims under insurance
policies with respect to the Alaska Assets;
(k) all inventory of cellular telephone handsets and related accessories;
and
(l) any rights in blocks of NPA-NXX numbers assigned to AWS or its
Affiliates for use in the Alaska Business.
Section 2.4. Excluded Alaska Assets
All other assets owned by AWS or an Affiliate, except the Alaska Assets,
shall be retained by AWS or such Affiliate and shall not be sold, assigned or
transferred to DCS (the "EXCLUDED ALASKA ASSETS"), including the following
assets, properties and rights of AWS or an Affiliate, all of which shall be
deemed to be Excluded Alaska Assets:
(a) all cash on hand (other than the Alaska Deposits) and in financial
institutions, cash equivalents, marketable securities and bonds;
(b) all claims for refunds and/or credits for Taxes;
(c) the minute books and tax returns of AWS or an Affiliate;
(d) all roaming agreements and the other Contracts listed or described in
Schedule 2.4(d) (the "EXCLUDED ALASKA CONTRACTS");
(e) the rights which accrue or will accrue to AWS or an Affiliate under
this Agreement;
(f) the assets, rights and claims listed in Schedule 2.4(f) and that
relate primarily to the Alaska Business;
(g) subject to Section 2.3(j), all insurance policies and rights and
claims thereunder arising from events, matters, conditions arising prior to the
Closing Date and which have not been assigned to DCS pursuant to Section 12.2;
(h) trademarks, trade names, service marks, service names, logos and
similar rights and all other intellectual property;
(i) copies of the documents referred to in Section 2.3(e);
(j) all Alaska Benefit Plans (as defined in Section 8.11);
(k) the block of NPA-NXX numbers beginning with 907-831-9XXX assigned to
AWS or its Affiliates for use in the Alaska Business (it being agreed that AWS
shall use such numbers solely as E.164 addresses for GSM nodes);
(l) all right, title and interest of AT&T Wireless Services of Alaska,
Inc. ("AWS ALASKA") in and to its partnership interest (the "XXXXXXX INTEREST")
in the Xxxxxxx Wireless Partnership, an Alaska general partnership (the "XXXXXXX
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PARTNERSHIP") formed pursuant to a partnership agreement, dated February 11,
1997, between XxXxx Communications of Anchorage, Inc. (predecessor to AWS
Alaska) and Xxxxxxx Wireless Communications, Inc., as amended by that certain
Letter Agreement between the same parties dated May 20, 1997 (the "XXXXXXX
PARTNERSHIP AGREEMENT"); and
(m) inventory that is off-specification, damaged, dormant, obsolete,
non-salable, non-usable or not first quality.
ARTICLE 3
ASSUMED LIABILITIES; EXCLUDED LIABILITIES
Section 3.1. Assumed Alaska Liabilities
At the Closing, DCS shall assume and agree to perform and discharge as of
the Closing the following Liabilities of AWS and its Affiliates to the extent
not previously performed or discharged, and no others: (i) all Liabilities of
AWS and its Affiliates which are to be performed from and after the Closing
under the Assumed Alaska Contracts, but only to the extent such Liabilities
relate to periods or goods or services provided to DCS on or after the Closing
Date, provided, that DCS shall not assume any Liabilities arising out of any
breach by AWS or its Affiliates of any provision of any Assumed Alaska Contract,
(ii) all Liabilities of AWS and its Affiliates entered into during the period
from the date hereof to the Closing by AWS and its Affiliates that were
identified by AWS in writing as Assumed Alaska Liabilities and consented to in
writing by DCS, and (iii) all Alaska Closing Date Current Liabilities (as
defined in Section 5.1) (the Liabilities described in clauses (i), (ii) and
(iii) are collectively referred to herein as the "ASSUMED ALASKA LIABILITIES").
The Assumed Alaska Liabilities shall specifically exclude all other Liabilities
of AWS and its Affiliates or the Alaska Business (the "EXCLUDED ALASKA
LIABILITIES"), including (w) all Liabilities associated with the ownership of
the Xxxxxxx Interest under the Xxxxxxx Partnership Agreement or otherwise, (x)
all Liabilities in connection with, resulting from, or arising out of, directly
or indirectly, the ownership, operation or control of the Alaska Assets or the
Alaska Business prior to the Closing Date, other than the Assumed Alaska
Liabilities, (y) all Liabilities relating to any Alaska Benefit Plan, and (z)
all Liabilities in connection with, resulting from, or arising out of, directly
or indirectly, the ownership, operation or control of the Excluded Alaska
Assets.
Section 3.2. Assumed California Liabilities
At the Closing, AWS shall assume and agree to perform and discharge as of
the Closing the following Liabilities of DCS and its Affiliates to the extent
not previously performed or discharged, and no others: (i) all Liabilities of
DCS and its Affiliates which are to be performed from and after the Closing
under the Assumed California Contracts, but only to the extent such Liabilities
relate to periods or goods or services provided to AWS on or after the Closing
Date, provided, that AWS shall not assume any Liabilities arising out of any
breach by DCS or its Affiliates of any provision of any Assumed California
Contract, (ii) all Liabilities of DCS and its Affiliates entered into during the
period from the date hereof to the Closing by DCS and its Affiliates that were
identified
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by DCS in writing as Assumed California Liabilities and consented to in writing
by AWS, and (iii) all California Closing Date Current Liabilities (as defined in
Section 5.1) (the Liabilities described in clauses (i), (ii) and (iii) are
collectively referred to herein as the "ASSUMED CALIFORNIA LIABILITIES"). The
Assumed California Liabilities shall specifically exclude all other Liabilities
of DCS and its Affiliates or the California Business (the "EXCLUDED CALIFORNIA
LIABILITIES"), including (x) all Liabilities in connection with, resulting from,
or arising out of, directly or indirectly, the ownership, operation or control
of the California Assets or the California Business prior to the Closing Date,
other than the Assumed California Liabilities, (y) all Liabilities relating to
any California Benefit Plan, and (z) all Liabilities in connection with,
resulting from, or arising out of, directly or indirectly, the ownership,
operation or control of the Excluded California Assets.
ARTICLE 4
INSTRUMENTS OF ASSIGNMENT AND ASSUMPTION
Section 4.1. Assignment Documents
(a) At the Closing, AWS or its Affiliates will deliver to DCS (i) one or
more Bills of Sale in substantially the form attached hereto as Exhibit A, (ii)
one or more Instruments of Assignment in substantially the form attached hereto
as Exhibit B, (iii) all such other good and sufficient instruments of sale,
transfer and conveyance, including assignments of leases, warranty deeds in
recordable form and certificates of title for motor vehicles, as shall be
effective to vest in DCS all of the right, title and interest of AWS and its
Affiliates in and to the Alaska Assets and the DCC Securities and (iv) a FIRPTA
Certificate as required by Section 1445 of the Code.
(b) At the Closing, DCS or its Affiliates will deliver to AWS (i) one or
more Bills of Sale in substantially the form attached hereto as Exhibit A, (ii)
one or more Instruments of Assignment in substantially the form attached hereto
as Exhibit B, (iii) all such other good and sufficient instruments of sale,
transfer and conveyance, including assignments of leases, and warranty deeds in
recordable form and certificates of title for motor vehicles, as shall be
effective to vest in AWS all of the right, title and interest of DCS and its
Affiliates in and to the California Assets (other than the Redemption Assets),
and (iv) a FIRPTA Certificate as required by Section 1445 of the Code.
Section 4.2. Assumption Documents
(a) At the Closing, DCS and AWS and, if appropriate, their respective
Affiliates will execute and deliver an Assumption Agreement in substantially the
form attached hereto as Exhibit C in order to effect the assumption of the
Assumed Alaska Liabilities by DCS.
(b) At the Closing, DCS and AWS and, if appropriate, their respective
Affiliates will execute and deliver an Assumption Agreement in substantially the
form attached hereto as Exhibit C in order to effect the assumption of the
Assumed California Liabilities by AWS.
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ARTICLE 5
WORKING CAPITAL ADJUSTMENT
Section 5.1. Definitions
As used in this Article 5, the following terms shall have the following
meanings:
"ALASKA CLOSING DATE CURRENT ASSETS" means, as of the Closing Date, the
following Alaska Assets: (i) customer accounts receivable, including roaming
accounts receivable (except any such accounts receivable owed by AWS or any
Affiliate), excluding an allowance for uncollectible accounts receivable (not
including roaming accounts receivable), calculated as follows: 2% for subscriber
receivables that are less than or equal to 30 days past due, 5% for subscriber
receivables that are between 31 and 60 days past due, 20% for subscriber
receivables that are between 61 and 90 days past due and 100% for subscriber
receivables that are more than 90 days past due, and (ii) inventory (other than
inventory that is non-salable), including cellular telephone handsets and
ancillary equipment held for sale to subscribers, valued in accordance with GAAP
consistently applied, and (iii) prepaid items relating to the Alaska Assets,
including prepaid rent, property taxes, utility charges, fees and deposits paid
(but excluding prepaid insurance), all determined as of 12:01 a.m. on the
Closing Date in accordance with GAAP consistently applied. A physical audit of
AWS's inventory will be taken by representatives of AWS and DCS during the
afternoon or evening prior to the Closing Date, the results of which shall be
final and binding upon the parties (i.e., the physical inventory count shall not
be reviewable by the Independent Accountants pursuant to Section 5.3(c)) for
purposes of determining the number and type of inventory items existing as of
the Closing, which information shall be used to derive the value of the
inventory of AWS included as Alaska Closing Date Current Assets and reflected in
the AWS Determination.
"ALASKA CLOSING DATE CURRENT LIABILITIES" means, as of the Closing Date,
all of the (i) subscriber deposits received, (ii) deferred revenue, (iii)
accrued payroll and benefits, and (iv) other trade payables and accrued expenses
of the Alaska Systems incurred in the normal course of business, all determined
as of 12:01 a.m. on the Closing Date in accordance with GAAP that are of a type
determined to be current liabilities in accordance with GAAP.
"ALASKA CLOSING DATE WORKING CAPITAL" means an amount equal to the Alaska
Closing Date Current Assets less the Alaska Closing Date Current Liabilities.
"CALIFORNIA CLOSING DATE CURRENT ASSETS" means, as of the Closing Date,
the following California Assets: (i) customer accounts receivable, including
roaming accounts receivable (except any such accounts receivable owed by DCS or
any Affiliate), excluding an allowance for uncollectible accounts receivable
(not including roaming accounts receivable), calculated as follows: 2% for
subscriber receivables that are less than or equal to 30 days past due, 5% for
subscriber receivables that are between 31 and 60 days past due, 20% for
subscriber receivables that are between 61 and 90 days past due and 100% for
subscriber receivables that are more than 90 days past due, (ii)
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inventory (other than inventory that is non-salable and other than the
California Paging Assets), including cellular telephone handsets and ancillary
equipment held for sale to subscribers, valued in accordance with GAAP
consistently applied, and (iii) prepaid items relating to the California Assets,
including prepaid rent, property taxes, utility charges, fees and deposits paid
(but excluding prepaid insurance), all determined as of 12:01 a.m. on the
Closing Date in accordance with GAAP consistently applied. A physical audit of
DCS's inventory will be taken by representatives of DCS and AWS during the
afternoon or evening prior to the Closing Date, the results of which shall be
final and binding upon the parties (i.e., the physical inventory count shall not
be reviewable by the Independent Accountants pursuant to Section 5.3(c)) for
purposes of determining the number and type of inventory items existing as of
the Closing, which information shall be used to derive the value of the
inventory of DCS included as California Closing Date Current Assets and
reflected in the DCS Determination.
"CALIFORNIA CLOSING DATE CURRENT LIABILITIES" means, as of the Closing
Date, all (i) subscriber deposits received, (ii) deferred revenue, (iii) accrued
payroll and benefits, and (iv) other trade payables and accrued expenses of the
California Systems incurred in the normal course of business, all determined as
of 12:01 a.m. on the Closing Date in accordance with GAAP that are of a type
determined to be current liabilities in accordance with GAAP.
"CALIFORNIA CLOSING DATE WORKING CAPITAL" means an amount equal to the
California Closing Date Current Assets less the California Closing Date Current
Liabilities.
"GAAP" means generally accepted accounting principles consistently
applied.
Section 5.2. Post-Closing Determinations
(a) Within 60 days after the Closing Date, (i) DCS shall deliver to AWS a
written good faith estimate of the Alaska Closing Date Working Capital prepared
in accordance with this Article 5 (the "DCS DETERMINATION") and (ii) AWS shall
deliver to DCS a written good faith estimate of the California Closing Date
Working Capital prepared in accordance with this Article 5 (the "AWS
DETERMINATION"). The DCS Determination and the AWS Determination shall be based
upon the books and records of the Alaska Business and the California Business,
respectively, and shall be accompanied by (i) supporting documents, work papers,
subscriber records and other supporting data and (ii) a certificate of a senior
executive officer of DCS or AWS, as the case may be, certifying that the DCS
Determination or the AWS Determination, as applicable, was calculated in good
faith and in accordance with the provisions of this Article 5.
Section 5.3. Post-Closing Objections
(a) After delivery of the DCS Determination and the AWS Determination, AWS
and DCS shall attempt to resolve any disputes between DCS and AWS with respect
to the DCS Determination and the AWS Determination. In connection therewith, AWS
shall have full access to DCS's records related to the DCS Determination, and
DCS shall
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have full access to AWS's records related to the AWS Determination. Within 30
days after delivery of the DCS Determination, AWS shall advise DCS in writing as
to any dispute AWS has with the DCS Determination (the "AWS POST-CLOSING
OBJECTION"). Within 30 days after delivery of the AWS Determination, DCS shall
advise AWS in writing as to any dispute DCS has with the AWS Determination (the
"DCS POST-CLOSING OBJECTION"). The AWS Post-Closing Objection (if any) and the
DCS Post-Closing Objection (if any) shall be accompanied by (i) a certificate
signed by a senior executive officer of AWS or DCS, as the case may be,
certifying that the AWS Post-Closing Objection or the DCS Post-Closing
Objection, as applicable, was made in good faith and (ii) supporting documents
and information, to the extent the same is available to AWS or DCS, as the case
may be.
(b) If AWS does not timely deliver an AWS Post-Closing Objection to DCS,
then the calculation of the California Closing Date Working Capital set forth in
the DCS Determination shall be controlling. If DCS does not timely deliver a DCS
Post-Closing Objection to AWS, then the calculation of the Alaska Closing Date
Working Capital set forth in the AWS Determination shall be controlling. If
neither party timely delivers a Post-Closing Objection, then the payment
contemplated by Section 5.4 shall be made within two business days following the
90th day after the Closing Date.
(c) If either party timely delivers a Post-Closing Objection, AWS and DCS
shall use good faith efforts to jointly resolve their dispute within 15 days
thereafter, which resolution, if achieved, shall be binding upon all parties to
this Agreement and not subject to further dispute or review. If the parties
resolve their dispute, then the payment contemplated by Section 5.4 shall be
made within two business days after such resolution is reached. If AWS and DCS
cannot resolve their dispute within such 15-day period, then the dispute shall
be submitted for resolution to Ernst & Young LLP (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 reasonable 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 DCS and AWS at which conference each party shall have the
right to present additional documents, materials and other evidence and to have
present its or their advisors, accountants or counsel. The Independent
Accountants shall promptly, and no later than 30 days after submission of the
dispute, render a decision on the issues presented, and such decision shall be
final and binding on the parties. The payment contemplated by Section 5.4 shall
be made within two business days after receipt of the Independent Accountants'
decision.
Section 5.4. Post-Closing Adjustment
If the California Closing Date Working Capital is greater than the Alaska
Closing Date Working Capital, then AWS will pay DCS an amount equal to the
excess of the California Closing Date Working Capital over the Alaska Closing
Date Working Capital. If the Alaska Closing Date Working Capital is greater than
the California Closing Date
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Working Capital, then DCS will pay AWS an amount equal to the excess of the
Alaska Closing Date Working Capital over the California Closing Date Working
Capital. Any such payment shall be made by wire transfer of immediately
available funds on the date specified in Section 5.3, and shall not bear any
interest.
ARTICLE 6
CLOSING
Subject to the terms and conditions hereof, the closing of the
transactions contemplated by this Agreement (the "CLOSING") shall take place at
the offices of Xxxxxxx & Xxxxxx, LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, on the date (the "CLOSING DATE") which is the latest of (a) the second
day after the date that the FCC's consent to the assignment of the California
Cellular Authorizations from DCS to AWS becomes a Final Order (as defined in
Section 10.3), (b) the second day after the date that the FCC's consent to the
assignment of the Alaska Cellular Authorizations from AWS to DCS becomes a Final
Order, (c) the fifth (5th) day after the expiration or early termination of the
waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR ACT") (if applicable to the transactions contemplated by
this Agreement) or (d) the date on which all conditions to Closing set forth in
Article 10 and Article 11 have been satisfied or waived; provided if such latest
date is not a business day, the Closing Date shall be the next following
business day; provided, further, if such latest date is within ten days of the
last day of any calendar month, the Closing Date shall be the first day of the
next calendar month and the Closing shall take place at 12:01 a.m. local time on
the Closing Date.
ARTICLE 7
REPRESENTATIONS OF DCS
DCS hereby represents and warrants to AWS that:
Section 7.1. Organization; Qualification
DCS is a corporation duly incorporated, validly existing and in good
standing under the Laws (as defined in Section 7.7) of the state of its
incorporation and has all necessary corporate power and authority to own and
operate its properties and to carry on its business as it is now being conducted
and to carry out the transactions contemplated by this Agreement and the other
Transaction Documents. DCS has the power and authority to execute, deliver and,
subject to DCS obtaining the Required California Consents (as defined in Section
7.8) and giving the Required California Notices (as defined in Section 7.8), to
perform its obligations under this Agreement and the other Transaction Documents
and to undertake the transactions contemplated hereby and thereby, and to cause
its Affiliates that are direct or indirect subsidiaries of DCS to perform their
obligations under this Agreement and the other Transaction Documents and to
undertake the transactions contemplated hereby and thereby.
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Section 7.2. Authorization, Execution and Delivery
The execution, delivery and performance of the Transaction Documents by
DCS, and the transfer of the California Assets to AWS have been duly and validly
authorized and approved by all necessary corporate action, including the
unanimous approval by the Board of Directors of each of DCS and DCC. The
execution, delivery and performance of the Transaction Documents to which any
Affiliate of DCS is a party have been duly and validly authorized and approved
by all necessary corporate action, including approval by such Affiliate's Board
of Directors. This Agreement is, and each of the other Transaction Documents
when executed and delivered will be, a valid and binding obligation of DCS or
its Affiliate, as applicable, enforceable against DCS or such Affiliate in
accordance with its terms subject to bankruptcy, insolvency, reorganization,
moratorium, or similar Laws affecting creditors' rights generally.
Section 7.3. Title to and Condition of Assets
(a) DCS, its Affiliates that are direct or indirect wholly-owned
subsidiaries of DCS and (before giving effect to the transactions contemplated
by Section 1.1(a)) Santa Xxxx Cellular Telephone Company have good and
marketable title or a valid leasehold interest, as applicable, to all of the
California Assets, including all properties and assets reflected on the
California Balance Sheet and not sold, retired or otherwise disposed of since
the date thereof in the ordinary course of the California Business consistent
with past practices, free and clear of all Liens except for Permitted Liens and
except for the Liens listed on Schedule 7.3(a) which will be discharged at
Closing. DCS, its Affiliates that are direct or indirect wholly-owned
subsidiaries of DCS and (before giving effect to the transactions contemplated
by Section 1.1(a)) Santa Xxxx Cellular Telephone Company have full power, right
and authority to sell and convey to AWS good and marketable title to the
California Assets, free and clear of all Liens other than Permitted Liens.
Immediately prior to the Closing, no person other than DCS and its wholly-owned
subsidiaries will have any right, title or interest in or to any of the assets,
properties and rights of DCS and its Affiliates (including Affiliates that are
not wholly-owned subsidiaries of DCS) that relate primarily to the California
Business. Notwithstanding the foregoing, the representations and warranties made
in this paragraph (a) with respect to the Redemption Assets are made solely on
the date hereof and shall not be required or deemed to be made on or as of any
other date.
(b) Except (i) for the Excluded California Assets and (ii) for the
services to be provided to AWS pursuant to the Transition Services Agreement,
the California Assets include all material rights, assets and property necessary
or material to operate the California Business as it is currently operated.
(c) All buildings, structures, facilities, Machinery and Equipment and
other items of tangible property and assets (excluding inventory) which would be
included in the California Assets if the Closing took place on the date hereof,
including all network equipment, are, in the aggregate and taken as a whole, in
good working condition and repair, subject to normal wear and maintenance, and
are located such that they are not
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materially encroaching on the property or rights of any person (as defined in
Section 18.18).
Section 7.4. Real Property
Schedule 2.1(d) lists all real property and interests in real property
owned or leased by DCS or an Affiliate and used primarily in the California
Business, and specifying the address and legal description suitable to identify
the property, a reasonable description of the use of each property, and which of
the properties are owned and which are leased.
(a) With respect to each parcel of owned real property included in the
California Assets, and except for matters set forth on Schedule 7.4(a):
(i) DCS or an Affiliate has good and marketable title to the parcel
of real property, free and clear of all Liens, except for Permitted Liens
and except for the Liens listed on Schedule 7.3(a) which will be
discharged at Closing;
(ii) there are no leases, subleases, licenses, concessions, or other
agreements to which DCS or an Affiliate is a party or, to the knowledge of
DCS, subleases, licenses, concessions or other agreements to which DCS or
an Affiliate is not a party, granting to any party or parties the right of
use or occupancy of any portion of the parcel of real property; and
(iii) there are no outstanding options or rights of first refusal to
purchase the parcel of real property, or any portion thereof or interest
therein.
(b) With respect to each parcel of real property listed on Schedule
2.1(d), and except for matters set forth on Schedule 7.4(b):
(i) To the knowledge of DCS, DCS or an Affiliate has valid and
enforceable rights of physical and legal ingress and egress to and from
such parcel; and
(ii) Neither DCS nor any Affiliate has received any notice of, and
DCS has no knowledge of, any non-compliance with applicable building
codes, zoning regulations, occupational health and safety Laws or any
other Laws, including environmental laws enforced by the FCC, applicable
to such parcel or DCS's or an Affiliate's use or occupancy thereof.
(c) Schedule 7.4(c) contains a list of all leases and occupancy and/or use
agreements of real property used primarily in the California Business to which
DCS or an Affiliate is a tenant, lessee, licensee or grantee, together with any
amendments thereto (the "DCS REAL PROPERTY LEASES"). True, correct and complete
copies of each of the DCS Real Property Leases have been delivered by DCS to
AWS, together with any subleases granted with respect to the real property
covered by the DCS Real Property Leases (the "DCS LEASED PROPERTY"). Each DCS
Real Property Lease that has not expired in accordance with its terms is valid,
binding and enforceable and in full force
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and effect. None of DCS, any Affiliate, or, to the knowledge of DCS, any other
party to any DCS Real Property Lease, is in default, violation or breach of any
material term thereunder or received any written notice of default thereunder.
Except as set forth on Schedule 7.4(c), no DCS Leased Property (or any portion
thereof) has been subleased, licensed or otherwise had a right to use granted by
DCS or an Affiliate with respect thereto to any other Person. No improvement on
any DCS Leased Property materially encroaches upon adjoining real estate, and
all such improvements have been constructed in conformity with all "setback"
lines, easements, and other restrictions, or rights of record, that have been
established by any applicable building or zoning ordinances.
Section 7.5. Assumed Contracts and Subscribers
(a) Set forth on Schedule 7.5(a) is a list of all Contracts currently in
effect to which DCS or an Affiliate is a party that relate primarily to the
California Business, including those that fall within any one or more of the
following categories, other than Excluded California Contracts:
(i) any Contract with any present or former employee or consultant
or for the employment of any person, including any consultant;
(ii) any Contract with any labor union or other representative of
employees;
(iii) any confidentiality or non-disclosure agreement pursuant to
which DCS or an Affiliate has agreed to keep information which is related
to the California Assets obtained from any other person confidential;
(iv) any Contract limiting or restraining DCS or an Affiliate or any
successor thereto from engaging or competing in any manner or in any
business;
(v) any Contract with any shareholder, director or officer of DCS or
an Affiliate, or with any Affiliate of any shareholder, director or
officer of DCS or an Affiliate;
(vi) any retail store lease or cell site lease or license;
(vii) any interconnection agreement or contour extension agreement;
(viii) any material commission, representative, distributorship or
sales agency Contract;
(ix) any material conditional sale or lease under which DCS or an
Affiliate is either purchaser or lessee relating to the California Assets
or any property at which the California Assets are located;
(x) any note, debenture, bond, trust agreement, letter of credit
agreement, loan agreement or other Contract for the borrowing or lending
of money or for a
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line of credit or guarantee, pledge or undertaking of the indebtedness of
any other person;
(xi) any Contract for any charitable or political contribution;
(xii) any material license, franchise, distributorship or other
agreement which relates in whole or in part to any software (other than
standard form licenses for commercially available software), patent,
trademark, trade name, service xxxx or copyright or technical assistance;
(xiii) any Contract granting power of attorney to any other person;
(xiv) any Contract for the performance of services by a third party
involving annual payments of $100,000 or more;
(xv) any Contract for the future purchase of, or payment for,
supplies or products, involving in any one case $100,000 or more;
(xvi) any Contract for any capital expenditure or leasehold
improvement in excess of $100,000;
(xvii) any equipment lease with annual payments of more than
$100,000;
(xviii) any Contract having annual payments greater than $100,000 or
a commitment of $200,000 or more in the aggregate; and
(xix) any other material Contract not made in the ordinary course of
business consistent with past practice.
DCS has heretofore delivered to AWS true and correct copies of the Assumed
California Contracts in effect as of the date hereof that are required to be set
forth on Schedule 7.5(a), including all amendments, supplements and
modifications thereto or waivers currently in effect thereunder.
(b) Except as disclosed on Schedule 7.5(b), neither DCS nor any Affiliate
is in Default (as defined in Section 18.18) in any material respect with respect
to, nor to the knowledge of DCS is there any Default in any material respect by
the other parties to, any Assumed California Contracts. The Assumed California
Contracts are in full force and effect, enforceable against DCS or an Affiliate
in accordance with their terms.
(c) As of September 30, 2002, there were approximately 59,087 subscribers
of the California Business. Schedule 7.5(c) sets forth, for each California
System, the total number of subscribers, the name of each of the price plans
presently in the process of being implemented or presently covering the active
subscribers of the California Business, together with the approximate number of
subscribers, as of September 30, 2002, under each such plan, and the approximate
number of such subscribers whose account balances have been outstanding for more
than 60 days.
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(d) To the knowledge of DCS, no party to an Assumed California Contract
(which party accounts for $50,000 or more annually in business with DCS or an
Affiliate) has informed DCS or an Affiliate in writing of its intent to cancel
or otherwise modify in any material respect, other than in the ordinary course
of its relationship with DCS or an Affiliate or the California Business, or to
decrease significantly or limit significantly its purchases, services, supplies
or materials under such Assumed California Contract.
Section 7.6. Governmental Licenses; FCC Matters
(a) DCS or its Affiliates hold all those licenses, permits and/or
certificates of public convenience and necessity issued by any governmental body
having jurisdiction over the California Business or any California Assets, which
are required in connection with the ownership and operation of the California
Assets and the California Business as it is presently being conducted except for
such licenses, consents, permits, approvals and authorizations for which the
failure to so hold would not be material. DCS or an Affiliate is the exclusive
holder of, and has good, complete and marketable title to, free and clear of all
Liens, the California FCC Authorizations. No person other than DCS or an
Affiliate has any right, title or interest (legal or beneficial) in or to, or
any right or license to use, any California FCC Authorizations. Each California
FCC Authorization has been granted to DCS or an Affiliate by Final Order and is
in full force and effect. Neither DCS nor any Affiliate has entered into any
obligation, agreement, arrangement or understanding to sell, transfer, deliver,
convey, assign or otherwise dispose of any California FCC Authorization or that
would affect the ownership or use of any California FCC Authorization by AWS or
an Affiliate after Closing.
(b) Except as set forth on Schedule 7.6(b)(i), neither DCS nor any
Affiliate is operating in material conflict with, or in material default or
violation of, any Laws applicable to any California FCC Authorization, and each
is in compliance in all material respects with the terms and conditions of each
California FCC Authorization. Except as set forth on Schedule 7.6(b)(ii), and
except for proceedings affecting the wireless industry or wireless licenses
generally, there is not pending or, to the knowledge of DCS, threatened against
DCS or an Affiliate or any California FCC Authorization, nor does DCS have
knowledge of any basis for, any application, action, complaint, claim,
investigation, suit, notice of violation, petition, objection or other pleading,
or any proceeding against DCS or an Affiliate or any California FCC
Authorization, with the FCC or any other Governmental Authority (as defined in
Section 18.18), which questions or contests the validity of, or seeks the
revocation, cancellation, forfeiture, non-renewal or suspension of, any
California FCC Authorization, or which seeks the imposition of any modification
or amendment with respect thereto, or the payment of a fine, sanction, penalty,
damages or contribution in connection with the use of any California FCC
Authorization by DCS or an Affiliate.
(c) Except as set forth on Schedule 7.6(c), all documents required to be
filed during the ownership of the California Systems by DCS or its Affiliates
with the FCC or FAA pursuant to FCC Law with respect to each California FCC
Authorization have been timely filed or the time period for such filing has not
lapsed except where the failure to make such filing would not be material. All
of such filings are complete and correct in
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all material respects. No California FCC Authorization is subject to any
conditions other than those appearing on its face and those imposed by FCC Law.
All amounts owed to the FCC in connection with the ownership of the California
FCC Authorizations have been timely paid, the calculation of all such amounts is
accurate in all material respects and no further amounts currently are due to
the FCC in respect of any California FCC Authorization.
(d) DCS or its designated Affiliate is legally qualified to (A) receive
and hold any Alaska FCC Authorization(s) to be acquired thereby and (B) receive
any authorization or approval from any state or local regulatory authority
necessary for it to acquire any such Alaska FCC Authorization(s).
Section 7.7. Compliance with Laws
Except as set forth on Schedule 7.7, DCS and its Affiliates are in
material compliance with and there is no material Default under any statute,
law, ordinance, regulation, judgment, decree, injunction, ruling, order or rule
of any federal, state, local, foreign or other governmental or
quasi-governmental agency or body ("LAWS") applicable to the California
Business.
Section 7.8. No Conflicts; Consents
Except for compliance with any applicable requirements of the HSR Act,
consent by the FCC to the assignment of the California FCC Authorizations from
DCS to AWS or its designated Affiliate, and the consents, authorizations and
approvals identified on Schedule 7.8 (collectively, the "REQUIRED CALIFORNIA
CONSENTS") and the registrations, filings and notices identified on Schedule 7.8
(collectively, the "REQUIRED CALIFORNIA NOTICES"), neither the execution and
delivery of this Agreement or any of the other Transaction Documents by DCS or
an Affiliate nor the performance by them of the transactions contemplated hereby
or thereby will result in a Default under any term, condition or provision of,
or require the consent, authorization or approval of, or any registrations or
filings with or notices to, any person or Governmental Authority under, (i) any
Law to which DCS or an Affiliate or any of the California Assets or the
California Business is subject, (ii) any Assumed California Contract listed on
Schedule 7.5(a), or any California FCC Authorization, or any material note,
bond, mortgage, indenture, lease, agreement or other instrument, to which DCS or
an Affiliate is a party or subject or by which any of the California Assets or
the California Business is bound or affected, or (iii) the certificate of
incorporation or bylaws of DCS or, if applicable, the governing documents of any
Affiliate; except, with respect to clauses (i) and (ii) above, to the extent
such Default does not (x) result in a material adverse effect to the California
Business as a whole, or (y) impair the ability of DCS or its Affiliates to
consummate the Transactions.
Section 7.9. Litigation and Legal Proceedings
Except as set forth on Schedule 7.9, there is no outstanding judgment,
order, writ, injunction, decree or award of any arbitrator or Governmental
Authority (including the
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FCC or any state body having jurisdiction over the California Business or any
California Asset) against DCS or an Affiliate primarily affecting the California
Business or the California Assets or which questions the validity of any action
taken or to be taken pursuant to this Agreement or in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement. Except as set forth on Schedule 7.9, there is no litigation,
arbitration, investigation or other proceeding of or before any arbitrator or
Governmental Authority (including the FCC or any state body having jurisdiction
over the California Business or any California Asset) pending, or, to the
knowledge of DCS, threatened, against DCS or an Affiliate, the result of which,
alone or in the aggregate, could reasonably be expected to materially adversely
affect the California Business (taken as a whole), the California Assets (taken
as a whole) or the transactions contemplated by this Agreement, and DCS has no
knowledge of any reasonably likely basis therefor.
Section 7.10. California System Employees
Schedule 7.10 sets forth a true and complete list of the names and base
salaries of all employees of DCS and its Affiliates primarily involved in the
operation of the California Business (the "CALIFORNIA SYSTEM EMPLOYEES"). DCS
and its Affiliates: (i) have in all material respects withheld and reported all
amounts required by Law or by Contract to be withheld and reported with respect
to wages, salaries and other payments to California System Employees; (ii) are
not liable for any material arrears of wages or any material Taxes or any
material penalty for failure to comply with any of the foregoing; and (iii) are
not liable for any material payment to any trust or other fund governed by or
maintained by or on behalf of any arbitrator or Governmental Authority
(including the FCC or any state body having jurisdiction over the California
Business or any California Asset), with respect to unemployment compensation
benefits, social security or other benefits or obligations for California System
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no material pending or to
the knowledge of DCS threatened claims or actions against DCS or its Affiliates
under any worker's compensation policy or long-term disability policy involving
any California System Employee. There are no actions, suits, claims or
grievances pending, or, to the knowledge of DCS, threatened relating to any
labor, safety or discrimination matters involving any California System
Employee, including, charges of unfair labor practices or discrimination
complaints. Neither DCS nor any Affiliate has engaged in any unfair labor
practices within the meaning of the National Labor Relations Act with respect to
any California System Employee or the California Business. Neither DCS nor any
Affiliate is presently, nor has it been in the past, a party to, or bound by,
any collective bargaining agreement or other labor union contract applicable to
the California Business and no such collective bargaining agreement is being
negotiated by DCS or any Affiliate. No consent of any union (or similar group or
organization) is required in connection with the consummation of the
transactions contemplated hereby. There are no pending, or, to the knowledge of
DCS, threatened (a) union representation petitions respecting the California
System Employees, (b) efforts being made to organize any of the California
System Employees, or (c) strikes, slow downs, work stoppages, or lockouts or
threats affecting the California System Employees. Neither DCS nor any Affiliate
has made any representation, warranty or
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agreement with any of its California System Employees or any other employees of
DCS concerning employment with AWS after the Closing.
Section 7.11. California System Employee Benefits
Except as set forth on Schedule 7.11, neither DCS nor any Affiliate
maintains or sponsors any California Benefit Plans. For purposes of this
Agreement, the term "CALIFORNIA BENEFIT PLANS" means any material plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, deferred compensation, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether written or unwritten or otherwise,
funded or unfunded, including, each "employee benefit plan," within the meaning
of Section 3(3) of ERISA (a) which is or has been maintained, contributed to, or
required to be contributed to, by DCS or any "ERISA AFFILIATE" (which means any
Affiliate of a person which is required to be aggregated with such person under
Section 414 of the Code), (b) which is for the benefit of any California System
Employee, or (c) for which DCS or any Affiliate has or could have any liability.
Neither DCS nor any Affiliate has any agreement or obligation, whether formal or
informal, to create, enter into or contribute to any additional California
Benefit Plan or to modify or amend any existing California Benefit Plan, unless
such amendment or modification is required by applicable Law. Each California
Benefit Plan has been established and administered in material compliance with
its terms and the applicable provisions of ERISA, the Code and other applicable
Laws. Neither DCS nor any Affiliate has incurred, and there exists no condition
or set of circumstances in connection with which DCS, AWS or any of their
respective Affiliates could incur, directly or indirectly, any liability or
expense (except for routine contributions and benefit payments) under applicable
Laws or pursuant to any indemnification or other agreement with respect to the
California Benefit Plans. None of the California Benefit Plans is subject to
Title IV of ERISA (including any multiemployer plan within the meaning of ERISA
Sections 3(37) or 4001(a)(3) or Section 412 of the Code, or any multiple
employer plan within the meaning of Section 4063 or 4064 of ERISA or Section
413(c) of the Code). No California Benefit Plan provides, reflects or represents
any Liability to provide retiree health to any person for any reason, except as
may be required by COBRA or other applicable statute, and neither DCS nor any
ERISA Affiliate has represented, promised or contracted (whether in oral or
written form) to any California System Employee (either individually or to
California System Employees as a group) or any other person that such California
System Employee(s) or other person would be provided with retiree health, except
to the extent required by statute. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any California Benefit Plan or employment agreement or under any related
trust or loan agreement that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with respect
to any current or former California System Employee. Each California Benefit
Plan that is intended to be a "qualified" within the meaning of Section 401(a)
of the Code has been determined by the IRS to be so qualified by issuance and
receipt of a favorable determination letter or reliance upon
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an opinion letter which states that the California Benefit Plan meets all
requirements under the Code and that any trust(s) associated with such
California Benefit Plan is tax exempt under Section 501(a) of the Code. There
are no claims (other than routine claims for benefits), actions or lawsuits
pending, or to the knowledge of DCS, threatened, with respect to any California
Benefit Plan or the fiduciaries responsible for such California Benefit Plan,
and to the knowledge of DCS, there are no circumstances that would reasonably be
expected to give rise to any action, lawsuit or claim, on behalf of or against
any of the California Benefit Plans or any trusts related thereto.
Section 7.12. Tax Matters
Except as set forth on Schedule 7.12, as relates to the California Assets
and the California Business, DCS and its Affiliates have timely filed all Tax
returns and statements which they were required to file, and have 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. Except as set forth on Schedule 7.12, neither DCS nor any Affiliate has
waived any statute of limitations in respect of Taxes or agreed to an extension
of time with respect to a Tax assessment or deficiency related to the California
Assets or the California Business. To the knowledge of DCS, there are no
unresolved claims raised by any Tax authority concerning the Tax liability of
DCS or an Affiliate related to the California Assets or the California Business.
All Taxes related to the California Assets and the California Business which DCS
or an Affiliate is required by law to withhold or to collect for payment have
been duly withheld and collected, and have been paid.
Section 7.13. Financial Statements; Changes
(a) DCS has delivered to AWS complete and correct copies of (i) the
unaudited financial statements of the California Markets as at and for the
periods ended December 31, 2000 and December 31, 2001, each of which include a
balance sheet and related statement of income for the year then ended (the
"CALIFORNIA HISTORICAL FINANCIAL STATEMENTS") and (ii) the unaudited financial
statements of the California Markets at September 30, 2002 (the "CALIFORNIA
BALANCE SHEET DATE") including a balance sheet (the "CALIFORNIA BALANCE SHEET")
and related statements of income for the nine (9) month period then ended
(collectively, the "CALIFORNIA INTERIM FINANCIAL STATEMENTS"). Except as set
forth on Schedule 7.13(a), the California Historical Financial Statements and
the California Interim Financial Statements fairly present in all material
respects, in accordance with GAAP, the financial position of the California
Markets and the results of its operations for the periods specified therein
(subject to the absence of footnotes, and, in the case of the California Interim
Financial Statements, to normal year end audit adjustments).
(b) Except as set forth on Schedule 7.13(b) or as otherwise set forth in
this Agreement, with respect to the California Assets, since the California
Balance Sheet Date, neither DCS nor any Affiliate has:
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(i) sold, assigned, or transferred any of the material, assets,
properties or rights included in the California Assets (except for the
Excluded California Assets and except pursuant to existing Contracts
relating to the California Business disclosed on any Schedule to this
Agreement or inventory in the ordinary course of business consistent with
past practice);
(ii) entered into any other material transaction primarily relating
to the California Business other than in the ordinary course of business
consistent with past practices;
(iii) suffered any material damage, destruction or casualty loss
with respect to the California Assets not covered by insurance;
(iv) suffered any events which, individually or in the aggregate,
have, or could be reasonably expected to, materially adversely affect the
California Assets (as a whole), the California Business (as a whole) or
the transactions contemplated by this Agreement; or
(v) entered into any agreement or understanding to do any of the
foregoing.
(c) DCS has delivered to AWS complete and correct copies of the unaudited
financial statements of DCS as at the California Balance Sheet Date, including a
balance sheet and related statement of income for the nine (9) month period then
ended (collectively, the "DCS FINANCIAL STATEMENTS"). Except as set forth on
Schedule 7.13(c), the DCS Financial Statements fairly present in all material
respects, in accordance with GAAP, the financial position of DCS and the results
of its operations for the period specified therein (subject to the absence of
footnotes and to normal year end audit adjustments).
Section 7.14. Insurance
DCS and its Affiliates have maintained all policies of title, liability,
fire, worker's compensation and other forms of insurance (including bonds) that
relate to the California Assets and which insure against risks and Liabilities
to an extent and in a manner customary in the cellular industry. All such
insurance policies and binders are in full force and effect. Neither DCS nor any
Affiliate has received any notice of cancellation or non-renewal of any such
policy or binder. No insurance carrier has canceled or reduced any insurance
coverage for DCS or an Affiliate or has given any notice or other indication of
its intention to cancel or reduce any such coverage. DCS and its Affiliates have
complied in all material respects with each of such insurance policies and
binders, and have not failed to give any notice or present any claim thereunder
in a due and timely manner.
Section 7.15. Brokers
Except for Xxxxxx Brothers, DCS has not engaged any agent, broker or other
person acting pursuant to the express or implied authority of DCS which is or
may be
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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 California Assets.
Section 7.16. Environmental Compliance
(a) Except as set forth on Schedule 7.16, (i) neither DCS nor any
Affiliate has generated, used, transported, treated, stored, released or
disposed of, or knowingly permitted anyone else to generate, use, transport,
treat, store, release or dispose of any Hazardous Substance (as defined in
subsection (b) below) at, on or in connection with the ownership or occupancy of
the California Assets in violation of any applicable Environmental Laws (as
defined in subsection (c) below); (ii) there has not been any generation, use,
transportation, treatment, storage, release or disposal of any Hazardous
Substance in connection with DCS's or an Affiliate's ownership, occupancy or use
of the California Assets or on, in or under any property or facility owned or
leased by DCS or an Affiliate and included in the California Assets which has
created or might reasonably be expected to create any Liability under any
applicable Environmental Laws; (iii) any Hazardous Substance handled or dealt
with by DCS or an Affiliate at, on or in connection with the ownership or
occupancy of the California Assets has been and is being handled or dealt with
in material compliance with all Environmental Laws; (iv) to the knowledge of
DCS, the operation of the California Business by DCS and its Affiliates is in
compliance with all Environmental Laws; and (v) to the knowledge of DCS, there
are no claims against DCS or any Affiliate by third parties, including
Governmental Authorities, pending or threatened under Environmental Laws arising
out of DCS's or any Affiliate's ownership or use of the California Assets or the
condition of the California Assets.
(b) For purposes of this Agreement, the term "HAZARDOUS SUBSTANCE" shall
mean any hazardous or toxic substance, pollutant, contaminant or other material
which, as of the date of this Agreement, is defined as hazardous or toxic under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), and its implementing regulations; defined as a
hazardous waste or regulated substance under the Resource Conservation and
Recovery Act of 1976, as amended ("RCRA") and its implementing regulations; or
is regulated under any applicable Environmental Laws, including any substance
which has been determined by regulation, ruling or otherwise by any Governmental
Authority 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 common law, CERCLA, RCRA, NEPA and any applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, orders, approvals, plans,
directives, 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 (i) the
protection of human health or the environment from the effects of Hazardous
Substances, including those pertaining to reporting, licensing, permitting,
investigating and remediating discharges, releases or threatened releases of
Hazardous Substances into the air, surface water, sediments, groundwater or
land; (ii) the
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manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances; or (iii) the ownership, occupancy
or operation of the California Assets or Alaska Assets, as applicable.
(d) DCS has delivered to AWS true and complete copies of all transaction
screens (to the extent any transaction screens were performed) and Phase I
environmental site assessment reports (as such terms are commonly understood in
the industry) that DCS has on file with respect to the California Assets. AWS
acknowledges that it is not entitled to rely on such reports (since the
consultants did not prepare them for the benefit of AWS).
Section 7.17. Accounts Receivable
All accounts receivable of DCS and any Affiliate relating to the
California Business as set forth on the California Balance Sheet are or will be
valid and genuine, have arisen or will arise solely out of bona fide sales and
deliveries of goods, performance of services and other business transactions in
the ordinary course of the California Business consistent with past practices,
and the allowance for collection losses on such balance sheets have been or will
be determined in accordance with GAAP and based upon DCS's historical experience
in collecting its accounts receivable. As of the date of this Agreement, to the
knowledge of DCS, there are no facts or circumstances that will, or would
reasonably be expected to, result in the allowances for collection losses on the
California Balance Sheet being inadequate to cover expected collection losses.
Section 7.18. Solvency
DCS is Solvent. "SOLVENT" means, at any time, that (i) the fair value of
the applicable entity's property is greater than the amount of its Liabilities
(whether subordinated, contingent, unmatured, unliquidated or otherwise); (ii)
the present fair saleable value of the applicable entity's property is not less
than the amount that will be required to pay its probable liability on its debts
as they become absolute and matured; (iii) the applicable entity is able to
realize upon its property and pay its debts and other liabilities as they mature
in the normal course of business; (iv) the applicable entity does not intend to,
and does not believe that it will, incur debts or liabilities beyond its ability
to pay as such debts and liabilities mature; and (v) the applicable entity is
not engaged in business or a transaction for which its property would constitute
unreasonably small capital.
Section 7.19. Valid Transaction
Any transfer made by DCS or any Affiliate of any right, title or interest
in or to the California Assets does not constitute a fraudulent conveyance under
any applicable Law. Without limiting the generality of the foregoing, (a) such
transfer is being made for a valid business purpose and (b) such transfer is
being made for fair consideration. Neither DCS nor any of its Affiliates has
taken any action with the intent to hinder or delay payment to any creditors of
DCS or any Affiliate.
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Section 7.20. Undisclosed Liabilities
Neither DCS nor any Affiliate has any Liabilities arising out of or
relating to the California System or any of the California Assets, except as and
to the extent reflected or reserved for in the California Interim Financial
Statements and except (i) as set forth in Schedule 7.20, (ii) for Liabilities
incurred in the ordinary course of business consistent with past practice since
the California Balance Sheet Date and in each case to the extent permitted to be
incurred in accordance with the terms hereof, (iii) for executory obligations
under any Assumed California Contract, and (iv) for those that are not required
to be disclosed under GAAP.
Section 7.21. DCS Cell Sites
Schedule 7.21 lists each cell site (including each cell site on which DCS
or an Affiliate has placed one or more antennas and the number of antennas
placed on such cell site) (a "DCS CELL SITE") currently operated or used by each
of DCS or an Affiliate in respect of the California System as of the date
hereof, indicating the address of such Cell Site and the geographical
coordinates thereof, whether DCS or such Affiliate is the owner of such Cell
Site and, if so, whether any other person is permitted to co-locate towers or
antennas thereon or has any other rights with respect thereto. Schedule 7.21
also sets forth (i) each instance where DCS or an Affiliate co-locates its
antennas relating to the California System on another person's tower or antenna
structure and (ii) whether any antenna structure on which DCS or an Affiliate
locates antennas is one which requires registration with the FCC under 47 C.F.R.
17.4, by reason of the obligation to file notification with the FAA under 47
C.F.R. 17.7 and, if so, the Antenna Structure Registration Number thereof.
Section 7.22. CALEA
Except as set forth in Schedule 7.22, there has been validly and timely
filed a Flexible Deployment Submission with the Federal Bureau of Investigation
(the "FBI") in accordance with the FBI's Flexible Deployment Assistance Guide
with respect to the California Systems, and a Petition for Extension with the
FCC requesting an extension of the current CALEA capability compliance deadline
with respect to the California Systems until November 19, 2003.
Section 7.23. Subscriber Agreements
Each subscriber agreement with a customer of the California Business
provides either (a) that DCS (or its successor, including, following the
Closing, AWS) may increase the rates for service upon 30 days' notice to the
customer, in which event the customer may without penalty terminate the
agreement, or (b) that DCS may without penalty terminate the subscriber
agreement upon 30 days' notice.
Section 7.24. Inventory
The inventory included in the California Assets as of the dates set forth
on Schedule 7.24, together with the locations thereof, are set forth in Schedule
7.24. Except
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as set forth on Schedule 7.24, such inventory is of good, usable and
merchantable quality in all material respects and does not include items which,
in the ordinary course of the California Business, have been discontinued or are
off-specification, damaged, dormant, obsolete, non-salable, non-usable, or not
first quality; provided, that DCS is not representing hereby that such inventory
would not, in the ordinary course of AWS's business, be discontinued or be
considered off-specification, damaged, dormant, obsolete, non-salable,
non-usable, or not first quality. No mobile phones included in inventory are
pre-programmed to search for the SOC of DCS or an Affiliate on a preferred or
exclusive basis and any pre-programming contained in such phones may be
eliminated without incurring additional costs, in an immaterial amount of time
and without affecting the utility or marketability of such phones.
Section 7.25. Pre-Paid Subscribers
The California Systems have fewer than 500 pre-paid subscribers in the
aggregate.
ARTICLE 8
REPRESENTATIONS OF AWS
AWS hereby represents and warrants to DCS that:
Section 8.1. Organization; Qualification
AWS and AWS Alaska are corporations duly incorporated, validly existing
and in good standing under the Laws of the states of their incorporation and
have all necessary corporate power and authority to own and operate their
properties and to carry on their business as it is now being conducted and to
carry out the transactions contemplated by this Agreement and the other
Transaction Documents. AWS and AWS Alaska have the power and authority to
execute and deliver and, subject to obtaining the Required Alaska Consents (as
defined in Section 8.8) and giving the Required Alaska Notices (as defined in
Section 8.8), perform their obligations under this Agreement and the other
Transaction Documents and to undertake the transactions contemplated hereby and
thereby. AWS has the power and authority to cause its Affiliates that are direct
or indirect subsidiaries of AWS to perform their obligations under this
Agreement and the other Transaction Documents and to undertake the transactions
contemplated hereby and thereby.
Section 8.2. Authorization, Execution and Delivery
The execution, delivery and performance of the Transaction Documents by
AWS, and the transfer of the Alaska Assets and the DCC Securities to DCS or its
designated Affiliate have been duly and validly authorized and approved by all
necessary corporate action, including approval by AWS's Board of Directors. The
execution, delivery and performance of the Transaction Documents to which any
Affiliate of AWS is a party have been duly and validly authorized and approved
by all necessary corporate action, including approval by such Affiliate's Board
of Directors. This Agreement is, and each of the other Transaction Documents
when executed and delivered will be, a valid and binding obligation of AWS or
its Affiliate, as applicable, enforceable against AWS or
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such Affiliate in accordance with its terms subject to bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting creditors' rights
generally.
Section 8.3. Title to and Condition of Assets
(a) AWS, its Affiliates that are direct or indirect wholly-owned
subsidiaries of AWS and (before giving effect to the transactions contemplated
by Section 1.1(b)) Cellular Alaska Partnership have good and marketable title or
a valid leasehold interest, as applicable, to all of the Alaska Assets,
including all properties and assets reflected on the Alaska Balance Sheet and
not sold, retired or otherwise disposed of since the date thereof in the
ordinary course of the Alaska Business consistent with past practices, free and
clear of all Liens except for Permitted Liens and except for the Liens listed on
Schedule 8.3(a) which will be discharged at Closing. AWS, its Affiliates that
are direct or indirect wholly-owned subsidiaries of AWS and (before giving
effect to the transactions contemplated by Section 1.1(b)) Cellular Alaska
Partnership have full power, right and authority to sell and convey to DCS good
and marketable title to the Alaska Assets, free and clear of all Liens other
than Permitted Liens. Immediately prior to the Closing, no person other than AWS
and its wholly-owned subsidiaries will have any right, title or interest in or
to any of the assets, properties and rights of AWS and its Affiliates (including
Affiliates that are not wholly-owned subsidiaries of AWS) that relate primarily
to the Alaska Business.
(b) AWS has good and marketable title to the DCC Securities, free and
clear of all Liens (other than Liens created by any agreement to which DCC is a
party).
(c) Except (i) for the Excluded Alaska Assets and (ii) for the services to
be provided to DCS pursuant to the Transition Services Agreement, the Alaska
Assets include all material rights, assets and property necessary or material to
operate the Alaska Business as it is currently operated.
(d) All buildings, structures, facilities, Machinery and Equipment and
other items of tangible property and assets (excluding inventory) which would be
included in the Alaska Assets if the Closing took place on the date hereof,
including all network equipment, are, in the aggregate and taken as a whole, in
good working condition and repair, subject to normal wear and maintenance, and
are located such that they are not materially encroaching on the property or
rights of any person.
Section 8.4. Real Property
Schedule 2.3(d) lists all real property and interests in real property
owned or leased by AWS or an Affiliate and used primarily in the Alaska
Business, and specifying the address and legal description suitable to identify
the property, a reasonable description of the use of each property, and which of
the properties are owned and which are leased.
(a) With respect to each parcel of owned real property included in the
Alaska Assets, and except for matters set forth on Schedule 8.4(a):
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(i) AWS or an Affiliate has good and marketable title to the parcel
of real property, free and clear of all Liens, except for Permitted Liens
and except for the Liens listed on Schedule 8.3 which will be discharged
at Closing;
(ii) there are no leases, subleases, licenses, concessions, or other
agreements to which AWS or an Affiliate is a party or, to the knowledge of
AWS, subleases, licenses, concessions or other agreements to which AWS or
an Affiliate is not a party, granting to any party or parties the right of
use or occupancy of any portion of the parcel of real property; and
(iii) there are no outstanding options or rights of first refusal to
purchase the parcel of real property, or any portion thereof or interest
therein.
(b) With respect to each parcel of real property listed on Schedule
2.3(d), and except for matters set forth on Schedule 8.4(b):
(i) To the knowledge of AWS, AWS or an Affiliate has valid and
enforceable rights of physical and legal ingress and egress to and from
such parcel; and
(ii) Neither AWS nor any Affiliate has received any notice of, and
AWS has no knowledge of, any non-compliance with applicable building
codes, zoning regulations, occupational health and safety Laws or any
other Laws, including environmental laws enforced by the FCC, applicable
to such parcel or AWS's or an Affiliate's use or occupancy thereof.
(c) Schedule 8.4(c) contains a list of all leases and occupancy and/or use
agreements of real property used primarily in the Alaska Business to which AWS
or an Affiliate is a tenant, lessee, licensee or grantee, together with any
amendments thereto (the "AWS REAL PROPERTY LEASES"). True, correct and complete
copies of each of the AWS Real Property Leases have been delivered by AWS to
DCS, together with any subleases granted with respect to the real property
covered by the AWS Real Property Leases (the "AWS LEASED PROPERTY"). Each AWS
Real Property Lease, that has not expired in accordance with its terms is valid,
binding and enforceable and in full force and effect. None of AWS, any
Affiliate, or, to the knowledge of AWS, any other party to any AWS Real Property
Lease, is in default, violation or breach of any material term thereunder or
received any written notice of default thereunder. Except as set forth on
Schedule 8.4(c), no AWS Leased Property (or any portion thereof) has been
subleased, licensed or otherwise had a right to use granted by AWS or an
Affiliate with respect thereto to any other Person. No improvement on any AWS
Leased Property materially encroaches upon adjoining real estate, and all such
improvements have been constructed in conformity with all "setback" lines,
easements, and other restrictions, or rights of record that have been
established by any applicable building or zoning ordinances.
Section 8.5. Assumed Contracts and Subscribers
(a) Set forth on Schedule 8.5(a) is a list of all Contracts currently in
effect to which AWS or an Affiliate is a party that relate primarily to the
Alaska Business
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including those that fall within any one or more of the following categories,
other than Excluded Alaska Contracts:
(i) any Contract with any present or former employee or consultant
or for the employment of any person, including any consultant;
(ii) any Contract with any labor union or other representative of
employees;
(iii) any confidentiality or non-disclosure agreement pursuant to
which AWS or an Affiliate has agreed to keep information which is related
to the Alaska Assets obtained from any other person confidential;
(iv) any Contract limiting or restraining AWS or an Affiliate or any
successor thereto from engaging or competing in any manner or in any
business;
(v) any Contract with any shareholder, director or officer of AWS or
an Affiliate, or with any Affiliate of any shareholder, director or
officer of AWS or an Affiliate;
(vi) any retail store lease or cell site lease or license;
(vii) any interconnection agreement or contour extension agreement;
(viii) any material commission, representative, distributorship or
sales agency Contract;
(ix) any material conditional sale or lease under which AWS or an
Affiliate is either purchaser or lessee relating to the Alaska Assets or
any property at which the Alaska Assets are located;
(x) any note, debenture, bond, trust agreement, letter of credit
agreement, loan agreement or other Contract for the borrowing or lending
of money or for a line of credit or guarantee, pledge or undertaking of
the indebtedness of any other person;
(xi) any Contract for any charitable or political contribution;
(xii) any material license, franchise, distributorship or other
agreement which relates in whole or in part to any software (other than
standard form licenses for commercially available software), patent,
trademark, trade name, service xxxx or copyright or technical assistance;
(xiii) any Contract granting power of attorney to any other person;
(xiv) any Contract for the performance of services by a third party
involving annual payments of $100,000 or more;
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(xv) any Contract for the future purchase of, or payment for,
supplies or products, involving in any one case $100,000 or more;
(xvi) any Contract for any capital expenditure or leasehold
improvement in excess of $100,000;
(xvii) any equipment lease with annual payments of more than
$100,000;
(xviii) any Contract having annual payments greater than $100,000 or
a commitment of $200,000 or more in the aggregate; and
(xix) any other material Contract not made in the ordinary course of
business consistent with past practice.
AWS has heretofore delivered to DCS true and correct copies of the Assumed
Alaska Contracts in effect as of the date hereof that are required to be set
forth on Schedule 8.5(a), including all amendments, supplements and
modifications thereto or waivers currently in effect thereunder.
(b) Except as disclosed on Schedule 8.5(b), neither AWS nor any Affiliate
is in Default (as defined in Section 18.18) in any material respect with respect
to, nor to the knowledge of AWS is there any Default in any material respect by
the other parties to, any Assumed Alaska Contracts. The Assumed Alaska Contracts
are in full force and effect, enforceable against AWS or an Affiliate in
accordance with their terms.
(c) As of September 30, 2002, there were approximately 122,421 subscribers
of the Alaska Business. Schedule 8.5(c) sets forth, for each Alaska System, the
total number of subscribers, the name of each of the price plans presently in
the process of being implemented or presently covering the active subscribers of
the Alaska Business, together with the approximate number of subscribers, as of
September 30, 2002, under each such plan, and the approximate number of such
subscribers whose account balances have been outstanding for more than 60 days.
(d) To the knowledge of AWS, no party to an Assumed Alaska Contract (which
party accounts for $50,000 or more annually in business with AWS or an
Affiliate) has informed AWS or an Affiliate in writing of its intent to cancel
or otherwise modify in any material respect, other than in the ordinary course
of its relationship with AWS or an Affiliate or the Alaska Business, or to
decrease significantly or limit significantly its purchases, services, supplies
or materials under such Assumed Alaska Contract.
Section 8.6. Governmental Licenses; FCC Matters
(a) AWS or its Affiliates hold all those licenses, permits and/or
certificates of public convenience and necessity issued by any governmental body
having jurisdiction over the Alaska Business or any Alaska Assets, which are
required in connection with the ownership and operation of the Alaska Assets and
the Alaska Business as it is presently being conducted except for such licenses,
consents, permits, approvals and authorizations for which the failure to so hold
would not be material. AWS or an Affiliate is the
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exclusive holder of, and has good, complete and marketable title to, free and
clear of all Liens, the Alaska FCC Authorizations. No person other than AWS or
an Affiliate has any right, title or interest (legal or beneficial) in or to, or
any right or license to use, any Alaska FCC Authorizations. Each Alaska FCC
Authorization has been granted to AWS or an Affiliate by Final Order and is in
full force and effect. Neither AWS nor any Affiliate has entered into any
obligation, agreement, arrangement or understanding to sell, transfer, deliver,
convey, assign or otherwise dispose of any Alaska FCC Authorization or that
would affect the ownership or use of any Alaska FCC Authorization by DCS or an
Affiliate after Closing.
(b) Except as set forth on Schedule 8.6(b)(i), neither AWS nor any
Affiliate is operating in material conflict with, or in material default or
violation of, any Laws applicable to any Alaska FCC Authorization, and each is
in compliance in all material respects with the terms and conditions of each
Alaska FCC Authorization. Except as set forth on Schedule 8.6(b)(ii), and except
for proceedings affecting the wireless industry or wireless licenses generally,
there is not pending or, to the knowledge of AWS, threatened against AWS or an
Affiliate or any Alaska FCC Authorization, nor does AWS have knowledge of any
basis for, any application, action, complaint, claim, investigation, suit,
notice of violation, petition, objection or other pleading, or any proceeding
against AWS or an Affiliate or any Alaska FCC Authorization, with the FCC or any
other Governmental Authority (as defined in Section 18.18), which questions or
contests the validity of, or seeks the revocation, cancellation, forfeiture,
non-renewal or suspension of, any Alaska FCC Authorization, or which seeks the
imposition of any modification or amendment with respect thereto, or the payment
of a fine, sanction, penalty, damages or contribution in connection with the use
of any Alaska FCC Authorization by AWS or an Affiliate.
(c) Except as set forth on Schedule 8.6(c), all documents required to be
filed during the ownership of the Alaska Systems by AWS or its Affiliates with
the FCC or FAA pursuant to FCC Law with respect to each Alaska FCC Authorization
have been timely filed or the time period for such filing has not lapsed except
where the failure to make such filing would not be material. All of such filings
are complete and correct in all material respects. No Alaska FCC Authorization
is subject to any conditions other than those appearing on its face and those
imposed by FCC Law. All amounts owed to the FCC in connection with the ownership
of the Alaska FCC Authorizations have been timely paid, the calculation of all
such amounts is accurate in all material respects and no further amounts
currently are due to the FCC in respect of any Alaska FCC Authorization.
(d) AWS or its designated Affiliate is legally qualified to (A) receive
and hold any California FCC Authorization(s) to be acquired thereby and (B)
receive any authorization or approval from any state or local regulatory
authority necessary for it to acquire any such California FCC Authorization(s).
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Section 8.7. Compliance with Laws
Except as set forth on Schedule 8.7, AWS and its Affiliates are in
material compliance with and there is no material Default under any Laws
applicable to the Alaska Business.
Section 8.8. No Conflicts; Consents
Except for compliance with any applicable requirements of the HSR Act,
consent by the FCC to the assignment of the Alaska FCC Authorizations from AWS
to DCS or its designated Affiliate, and the consents, authorizations and
approvals identified on Schedule 8.8 (collectively, the "REQUIRED ALASKA
CONSENTS") and the registrations, filings and notices identified on Schedule 8.8
(collectively, the "REQUIRED ALASKA NOTICES"), neither the execution and
delivery of this Agreement or any of the other Transaction Documents by AWS or
an Affiliate nor the performance by them of the transactions contemplated hereby
or thereby will result in a Default under any term, condition or provision of,
or require the consent, authorization or approval of, or any registrations or
filings with or notices to, any person or Governmental Authority under, (i) any
Law to which AWS or an Affiliate or any of the Alaska Assets or the Alaska
Business is subject, (ii) any Assumed Alaska Contract listed on Schedule 8.5(a)
, or any Alaska FCC Authorization, or any material note, bond, mortgage,
indenture, lease, agreement or other instrument, to which AWS or an Affiliate is
a party or subject or by which any of the Alaska Assets or the Alaska Business
is bound or affected, or (iii) the certificate of incorporation or bylaws of AWS
or AWS Alaska or, if applicable, the governing documents of any Affiliate;
except, with respect to clauses (i) and (ii) above, to the extent such Default
does not (x) result in a material adverse effect to the Alaska Business as a
whole, or (y) impair the ability of AWS or its Affiliates to consummate the
Transactions.
Section 8.9. Litigation and Legal Proceedings
Except as set forth on Schedule 8.9, there is no outstanding judgment,
order, writ, injunction, decree or award of any arbitrator or Governmental
Authority (including the FCC or any state body having jurisdiction over the
Alaska Business or any Alaska Asset) against AWS or an Affiliate primarily
affecting the Alaska Business or the Alaska Assets or which questions the
validity of any action taken or to be taken pursuant to this Agreement or in
which it is sought to restrain or prohibit or to obtain damages or other relief
in connection with this Agreement. Except as set forth on Schedule 8.9, there is
no litigation, arbitration, investigation or other proceeding of or before any
arbitrator or Governmental Authority (including the FCC or any state body having
jurisdiction over the Alaska Business or any Alaska Asset) pending, or, to the
knowledge of AWS, threatened, against AWS or any Affiliate, the result of which,
alone or in the aggregate, could reasonably be expected to materially adversely
affect the Alaska Business (taken as a whole), the Alaska Assets (taken as a
whole) or the transactions contemplated by this Agreement, and AWS has no
knowledge of any reasonably likely basis therefor.
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Section 8.10. Alaska System Employees
Schedule 8.10 sets forth a true and complete list of the names and base
salaries of all employees of AWS and its Affiliates primarily involved in the
operation of the Alaska Business (the "ALASKA SYSTEM EMPLOYEES"). AWS and its
Affiliates: (i) have in all material respects withheld and reported all amounts
required by Law or by Contract to be withheld and reported with respect to
wages, salaries and other payments to Alaska System Employees; (ii) are not
liable for any material arrears of wages or any material Taxes or any material
penalty for failure to comply with any of the foregoing; and (iii) are not
liable for any material payment to any trust or other fund governed by or
maintained by or on behalf of any arbitrator or Governmental Authority
(including the FCC or any state body having jurisdiction over the Alaska
Business or any Alaska Asset), with respect to unemployment compensation
benefits, social security or other benefits or obligations for Alaska System
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no material pending or to
the knowledge of AWS threatened claims or actions against AWS or its Affiliates
under any worker's compensation policy or long-term disability policy involving
any Alaska System Employee. There are no actions, suits, claims or grievances
pending, or, to the knowledge of AWS, threatened relating to any labor, safety
or discrimination matters involving any Alaska System Employee, including,
charges of unfair labor practices or discrimination complaints. Neither AWS nor
any Affiliate has engaged in any unfair labor practices within the meaning of
the National Labor Relations Act with respect to any Alaska System Employee or
the Alaska Business. Neither AWS nor any Affiliate is presently, nor has it been
in the past, a party to, or bound by, any collective bargaining agreement or
other labor union contract applicable to the Alaska Business and no such
collective bargaining agreement is being negotiated by AWS or any Affiliate. No
consent of any union (or similar group or organization) is required in
connection with the consummation of the transactions contemplated hereby. There
are no pending, or, to the knowledge of AWS, threatened (a) union representation
petitions respecting the Alaska System Employees, (b) efforts being made to
organize any of the Alaska System Employees, or (c) strikes, slow downs, work
stoppages, or lockouts or threats affecting the Alaska System Employees. Neither
AWS nor any Affiliate has made any representation, warranty or agreement with
any of its Alaska System Employees or any other employees of AWS concerning
employment with DCS after the Closing. No Alaska System Employee is on
sabbatical leave or has been granted a sabbatical leave that will commence on or
after the date hereof, as defined in AWS's company policies.
Section 8.11. Alaska System Employee Benefits
Except as set forth on Schedule 8.11, neither AWS nor any Affiliate
maintains or sponsors any Alaska Benefit Plans. For purposes of this Agreement,
the term "ALASKA BENEFIT PLANS" means any material plan, program, policy,
practice, contract, agreement or other arrangement providing for compensation,
severance, termination pay, deferred compensation, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written or unwritten or otherwise, funded or unfunded,
including, each "employee benefit plan," within the meaning of Section 3(3) of
ERISA (a) which is or has been maintained, contributed to, or
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required to be contributed to, by AWS or any ERISA Affiliate, (b) which is for
the benefit of any Alaska System Employee, or (c) for which AWS or any Affiliate
has or could have any liability. Neither AWS nor any Affiliate has any agreement
or obligation, whether formal or informal, to create, enter into or contribute
to any additional Alaska Benefit Plan or to modify or amend any existing Alaska
Benefit Plan, unless such amendment or modification is required by applicable
Law. Each Alaska Benefit Plan has been established and administered in material
compliance with its terms and the applicable provisions of ERISA, the Code and
other applicable Laws. Neither AWS nor any Affiliate has incurred, and there
exists no condition or set of circumstances in connection with which DCS, AWS or
any of their respective Affiliates could incur, directly or indirectly, any
liability or expense (except for routine contributions and benefit payments)
under applicable Laws or pursuant to any indemnification or other agreement with
respect to the Alaska Benefit Plans. None of the Alaska Benefit Plans is subject
to Title IV of ERISA (including any multiemployer plan within the meaning of
ERISA Sections 3(37) or 4001(a)(3) or Section 412 of the Code, or any multiple
employer plan within the meaning of Section 4063 or 4064 of ERISA or Section
413(c) of the Code). No Alaska Benefit Plan provides, reflects or represents any
Liability to provide retiree health to any person for any reason, except as may
be required by COBRA or other applicable statute, and neither AWS nor any ERISA
Affiliate has represented, promised or contracted (whether in oral or written
form) to any Alaska System Employee (either individually or to Alaska System
Employees as a group) or any other person that such Alaska System Employee(s) or
other person would be provided with retiree health, except to the extent
required by statute. The execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any Alaska
Benefit Plan or employment agreement or under any related trust or loan
agreement that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any current
or former Alaska System Employee. Each Alaska Benefit Plan that is intended to
be a "qualified" within the meaning of Section 401(a) of the Code has been
determined by the IRS to be so qualified by issuance and receipt of a favorable
determination letter or reliance upon an opinion letter which states that the
Alaska Benefit Plan meets all requirements under the Code and that any trust(s)
associated with such Alaska Benefit Plan is tax exempt under Section 501(a) of
the Code. There are no claims (other than routine claims for benefits), actions
or lawsuits pending, or to the knowledge of AWS, threatened, with respect to any
Alaska Benefit Plan or the fiduciaries responsible for such Alaska Benefit Plan,
and to the knowledge of AWS, there are no circumstances that would reasonably be
expected to give rise to any action, lawsuit or claim, on behalf of or against
any of the Alaska Benefit Plans or any trusts related thereto.
Section 8.12. Tax Matters
Except as set forth on Schedule 8.12, as relates to the Alaska Assets and
the Alaska Business, AWS and its Affiliates have timely filed all Tax returns
and statements which they were required to file, and have 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
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may become due on or before the Closing Date. Except as set forth on Schedule
8.12, neither AWS nor any Affiliate has waived any statute of limitations in
respect of Taxes or agreed to an extension of time with respect to a Tax
assessment or deficiency related to the Alaska Assets or the Alaska Business. To
the knowledge of AWS, there are no unresolved claims raised by any Tax authority
concerning the Tax liability of AWS or an Affiliate related to the Alaska Assets
or the Alaska Business. All Taxes related to the Alaska Assets and the Alaska
Business which AWS or an Affiliate is required by law to withhold or to collect
for payment have been duly withheld and collected, and have been paid.
Section 8.13. Financial Statements; Changes
(a) AWS has delivered to DCS complete and correct copies of (i) the
unaudited financial statements of the Alaska Markets as at and for the periods
ended December 31, 2000 and December 31, 2001, each of which include a balance
sheet and related statement of income for the year then ended (the "ALASKA
HISTORICAL FINANCIAL STATEMENTS") and (ii) the unaudited financial statements of
the Alaska Markets at September 30, 2002 (the "ALASKA BALANCE SHEET DATE")
including a balance sheet (the "ALASKA BALANCE SHEET") and related statements of
income for the nine (9) month period then ended (collectively, the "ALASKA
INTERIM FINANCIAL STATEMENTS"). Except as set forth on Schedule 8.13(a), the
Alaska Historical Financial Statements and the Alaska Interim Financial
Statements fairly present in all material respects, in accordance with GAAP, the
financial position of the Alaska Markets and the results of its operations for
the periods specified therein (subject to the absence of footnotes, and, in the
case of the Alaska Interim Financial Statements, to normal year end audit
adjustments).
(b) Except as set forth on Schedule 8.13(b) or as otherwise set forth in
this Agreement, with respect to the Alaska Assets, since the Alaska Balance
Sheet Date, neither AWS nor any Affiliate has:
(i) sold, assigned, or transferred any of the material, assets,
properties or rights included in the Alaska Assets (except for the
Excluded Alaska Assets and except pursuant to existing Contracts relating
to the Alaska Business disclosed on any Schedule to this Agreement or
inventory in the ordinary course of business consistent with past
practice);
(ii) entered into any other material transaction primarily relating
to the Alaska Business other than in the ordinary course of business
consistent with past practices;
(iii) suffered any material damage, destruction or casualty loss
with respect to the Alaska Assets not covered by insurance;
(iv) suffered any events which, individually or in the aggregate,
have, or could be reasonably expected to, materially adversely affect the
Alaska Assets (as a whole), the Alaska Business (as a whole) or the
transactions contemplated by this Agreement; or
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(v) entered into any agreement or understanding to do any of the
foregoing.
Section 8.14. Insurance
AWS and its Affiliates have maintained all policies of title, liability,
fire, worker's compensation and other forms of insurance (including bonds) that
relate to the Alaska Assets and which insure against risks and Liabilities to an
extent and in a manner customary in the cellular industry. All such insurance
policies and binders are in full force and effect. Neither AWS nor any Affiliate
has received any notice of cancellation or non-renewal of any such policy or
binder. No insurance carrier has canceled or reduced any insurance coverage for
AWS or any Affiliate or has given any notice or other indication of its
intention to cancel or reduce any such coverage. AWS and its Affiliates have
complied in all material respects with each of such insurance policies and
binders, and have not failed to give any notice or present any claim thereunder
in a due and timely manner.
Section 8.15. Brokers
AWS has not engaged any agent, broker or other person acting pursuant to
the express or implied authority of AWS 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
Alaska Assets.
Section 8.16. Environmental Compliance
(a) Except as set forth on Schedule 8.16, (i) neither AWS nor any
Affiliate has generated, used, transported, treated, stored, released or
disposed of, or knowingly permitted anyone else to generate, use, transport,
treat, store, release or dispose of any Hazardous Substance at, on or in
connection with the ownership or occupancy of the Alaska Assets in violation of
any applicable Environmental Laws; (ii) there has not been any generation, use,
transportation, treatment, storage, release or disposal of any Hazardous
Substance in connection with AWS's or an Affiliate's ownership, occupancy or use
of the Alaska Assets or on, in or under any property or facility owned or leased
by AWS or an Affiliate and included in the Alaska Assets which has created or
might reasonably be expected to create any Liability under any applicable
Environmental Laws; (iii) any Hazardous Substance handled or dealt with by AWS
or an Affiliate at, on or in connection with the ownership or occupancy of the
Alaska Assets has been and is being handled or dealt with in material compliance
with all Environmental Laws; (iv) to the knowledge of AWS, the operation of the
Alaska Business by AWS and its Affiliates is in compliance with all
Environmental Laws; and (v) to the knowledge of AWS, there are no claims against
AWS or any Affiliate by third parties, including Governmental Authorities,
pending or threatened under Environmental Laws arising out of AWS's or any
Affiliate's ownership or use of the Alaska Assets or the condition of the Alaska
Assets.
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(b) AWS has delivered to DCS true and complete copies of all transaction
screens (to the extent any transaction screens were performed) and Phase I
environmental site assessment reports (as such terms are commonly understood in
the industry) that AWS has on file with respect to the Alaska Assets. DCS
acknowledges that it is not entitled to rely on such reports (since the
consultants did not prepare them for the benefit of DCS).
Section 8.17. Accounts Receivable
All accounts receivable of AWS and any Affiliate relating to the Alaska
Business as set forth on the Alaska Balance Sheet are or will be valid and
genuine, have arisen or will arise solely out of bona fide sales and deliveries
of goods, performance of services and other business transactions in the
ordinary course of the Alaska Business consistent with past practices, and the
allowance for collection losses on such balance sheets have been or will be
determined in accordance with GAAP and based upon AWS's historical experience in
collecting its accounts receivable. As of the date of this Agreement, to the
knowledge of AWS, there are no facts or circumstances that will, or would
reasonably be expected to, result in the allowances for collection losses on the
Alaska Balance Sheet being inadequate to cover expected collection losses.
Section 8.18. Solvency
AWS is Solvent.
Section 8.19. Valid Transaction
Any transfer made by AWS or any Affiliate of any right, title or interest
in or to the Alaska Assets does not constitute a fraudulent conveyance under any
applicable Law. Without limiting the generality of the foregoing, (a) such
transfer is being made for a valid business purpose and (b) such transfer is
being made for fair consideration. Neither AWS nor any of its Affiliates has
taken any action with the intent to hinder or delay payment to any creditors of
AWS or its Affiliates.
Section 8.20. Undisclosed Liabilities
Neither AWS nor any Affiliate has any Liabilities arising out of or
relating to the Alaska System or any of the Alaska Assets, except as and to the
extent reflected or reserved for in the Alaska Interim Financial Statements and
except (i) as set forth in Schedule 8.20, (ii) for Liabilities incurred in the
ordinary course of business consistent with past practice since the Alaska
Balance Sheet Date and in each case to the extent permitted to be incurred in
accordance with the terms hereof, (iii) for executory obligations under any
Assumed Alaska Contract, and (iv) for those that are not required to be
disclosed under GAAP.
Section 8.21. AWS Cell Sites
Schedule 8.21 lists each cell site (including each cell site on which AWS
or an Affiliate has placed one or more antennas and the number of antennas
placed on such cell
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site) (an "AWS CELL SITE") currently operated or used by each of AWS or an
Affiliate in respect of the Alaska System as of the date hereof, indicating the
address of such Cell Site and the geographical coordinates thereof, whether AWS
or such Affiliate is the owner of such Cell Site and, if so, whether any other
person is permitted to co-locate towers or antennas thereon or has any other
rights with respect thereto. Schedule 8.21 also sets forth (i) each instance
where AWS or an Affiliate co-locates its antennas relating to the Alaska System
on another person's tower or antenna structure and (ii) whether any antenna
structure on which AWS or an Affiliate locates antennas is one which requires
registration with the FCC under 47 C.F.R. 17.4 by reason of the obligation to
file notification with the FAA under 47 C.F.R. 17.7 and, if so, the Antenna
Structure Registration Number thereof.
Section 8.22. CALEA
Except as set forth in Schedule 8.22, there has been validly and timely
filed a Flexible Deployment Submission with the FBI in accordance with the FBI's
Flexible Deployment Assistance Guide with respect to the Alaska Systems, and a
Petition for Extension with the FCC requesting an extension of the current CALEA
capability compliance deadline with respect to the Alaska Systems until November
19, 2003.
Section 8.23. Subscriber Agreements
Each subscriber agreement with a customer of the Alaska Business provides
either (a) that AWS (or its successor, including, following the Closing, DCS)
may increase the rates for service upon 30 days' notice to the customer, in
which event the customer may without penalty terminate the agreement, or (b)
that AWS may without penalty terminate the subscriber agreement upon 30 days'
notice.
Section 8.24. Inventory
The inventory included in the Alaska Assets as of the dates set forth on
Schedule 8.24, together with the locations thereof, are set forth in Schedule
8.24. Except as set forth on Schedule 8.24, such inventory is of good, usable
and merchantable quality in all material respects and does not include items
which, in the ordinary course of the Alaska Business, have been discontinued or
are off-specification, damaged, dormant, obsolete, non-salable, non-usable or
not first quality; provided, that AWS is not representing hereby that such
inventory would not, in the ordinary course of DCS's business, be discontinued
or be considered off-specification, damaged, dormant, obsolete, non-salable,
non-usable or not first quality. All of the mobile phones included in inventory
are pre-programmed to search for the SOC of AWS on a preferred or exclusive
basis and any pre-programming contained in such phones (other than to search for
the SOC of AWS) may be eliminated without incurring additional costs, in an
immaterial amount of time and without affecting the utility or marketability of
such phones.
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ARTICLE 9
COVENANTS OF THE PARTIES
Section 9.1. Financial Statements and System Information
(a) DCS covenants and agrees that from the date hereof until the Closing,
DCS shall provide AWS, promptly after they become available and in any event
within 45 days of the end of each calendar month, the unaudited balance sheet,
statement of income (including detailed revenue classifications), as well as key
operating statistics, including gross subscriber additions, disconnects and
end-of-period number of subscribers for such month, as they relate to the
California Business conducted in each of the California Markets. Immediately
prior to Closing, DCS will identify in writing the owner of the California
Assets by item or, if appropriate, by category.
(b) AWS covenants and agrees that from the date hereof until the Closing,
AWS shall provide DCS, promptly after they become available and in any event
within 45 days of the end of each calendar month, the unaudited balance sheet,
statement of income (including detailed revenue classifications), as well as key
operating statistics, including gross subscriber additions, disconnects and
end-of-period number of subscribers for such month, as they relate to the Alaska
Business conducted in each of the Alaska Markets. Immediately prior to Closing,
AWS will identify in writing the owner of the Alaska Assets by item or, if
appropriate, by category.
Section 9.2. FCC Approvals
(a) Each of DCS and AWS covenants and agrees that it will fully cooperate
with the other, and do all things reasonably necessary to assist the other to
obtain all consents and approvals and to file all notices necessary for
assignment to DCS of the Alaska FCC Authorizations and applications therefor
that are included in the Alaska Assets, and to AWS of the California FCC
Authorizations and applications therefor that are included in the California
Assets, as soon as practicable after the date hereof, including the furnishing
of financial and other information specifically with respect to DCS or AWS, as
the case may be, reasonably required by the person whose consent or approval is
being sought. Each party (the "NOTIFYING PARTY") shall use all commercially
reasonable efforts to provide adequate prior written notice to the other (the
"NOTIFIED PARTY") of any meeting with Governmental Authorities the purpose of
which is to seek a consent or approval to the transactions contemplated hereby
or resulting from any notice being filed, and the Notified Party shall have the
right to attend all such meetings with appropriate Governmental Authorities for
the purpose of obtaining such consents or approvals and responding to issues
resulting from the filing of a notice. Each of DCS and AWS hereby agrees to file
the necessary applications and other filings with the FCC seeking consent to the
assignment of the Alaska FCC Authorizations to DCS and of the California FCC
Authorizations to AWS, and to file for all other necessary regulatory approvals
for the consummation of the transactions contemplated by this Agreement, within
15 business days following the date hereof to the extent any such filings have
not been made prior to the date hereof, or as soon as practicable after the
filing by the parties hereto of any notifications of pro forma transfers of
control required in connection with
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the implementation of the provisions of Section 1.1, and to diligently pursue
the processing of any such applications and filings before the FCC and other
applicable Governmental Authorities. Neither party shall take any action or fail
to take any action if such act or omission is likely to cause a delay in, or the
FCC not to grant its consent to, the assignment of the FCC Authorizations
contemplated hereby, it being understood that if any petition to deny is filed
against the transfer of the California FCC Authorizations or the Alaska FCC
Authorizations principally by reason of the qualifications of only one of the
parties to this transaction, then it shall be the primary responsibility of such
party to defend against any allegations in such petition. DCS and AWS shall each
pay their own filing fees in connection with any filings pursuant to this
Section 9.2(a).
(b) DCS and AWS shall each cooperate and use their commercially reasonable
efforts to prepare and file with the Federal Trade Commission ("FTC") and the
United States Department of Justice ("DOJ") and other regulatory authorities as
promptly as possible after the date on which the condition set forth in Section
10.11 is satisfied or waived, but in any event within 10 business days following
such date, all requisite applications and amendments thereto together with
related information, data and exhibits necessary to satisfy the requirements of
the HSR Act (if applicable to the transactions contemplated by this Agreement).
DCS and AWS shall each pay their own filing fees in connection with any filings
pursuant to this Section 9.2(b).
Section 9.3. Third Party Consents; Closing Conditions
(a) DCS and AWS covenant and agree that each of them will reasonably
cooperate with each other, and will do all things reasonably necessary to assist
the other, to obtain all Required Alaska Consents and Required California
Consents, as the case may be, and give all Required Alaska Notices and Required
California Notices, as the case may be, as promptly as practicable, including
the furnishing of financial and other information specifically with respect to
it or its Affiliates reasonably required by the person or Governmental Authority
whose consent or approval is being sought.
(b) Notwithstanding the provisions of subsection (a) above, to the extent
that any Assumed Alaska Contract to be sold, assigned, transferred or conveyed
to DCS, or any Assumed California Contract to be sold, assigned, transferred or
conveyed to AWS, or any claim, right or benefit arising thereunder or resulting
therefrom, is not capable of being sold, assigned, transferred or conveyed
without the approval, consent or waiver of the issuer thereof, the other party
thereto, or any third person (including a Governmental Authority), and such
approval, consent or waiver has not been obtained, or if such sale, assignment,
transfer or conveyance, or attempted assignment, transfer or conveyance, of such
Assumed Alaska Contract or Assumed California Contract, as the case may be,
would constitute a breach thereof, and such approval, consent or waiver has not
been obtained, this Agreement shall not constitute an agreement to sell, assign,
transfer or convey such Assumed Alaska Contract or Assumed California Contract,
as the case may be; provided each of DCS and AWS shall comply with Section 18.1.
(c) DCS and AWS shall use reasonable best efforts to consummate the
transactions contemplated hereby. Without limiting the generality of the
foregoing, DCS
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and AWS shall cause their respective Affiliates to take the actions contemplated
to be taken by them pursuant to this Agreement.
(d) DCS and AWS hereby covenant and agree to use all commercially
reasonable efforts to satisfy, or assist the other party in satisfying, prior to
the Closing Date, the closing conditions applicable to DCS in Article 10 and to
AWS in Article 11.
(e) DCS and AWS hereby covenant and agree that they shall agree, prior to
issuance to any third party, upon the forms used to (i) obtain the Required
Alaska Consents, the Required California Consents, the FCC consent to the
transfer of the Alaska FCC Authorizations and the California FCC Authorizations,
and the approvals required under the HSR Act, and (ii) issue the Required Alaska
Notices and the Required California Notices.
(f) DCS and AWS hereby covenant and agree that neither of them will, and
that each of them will cause their respective Affiliates not to, accept or agree
to any modifications or amendments to, or the imposition of any condition to the
transfer of, any of the Assumed Alaska Contracts or Assumed California
Contracts, or (except in the ordinary course of business in compliance with
applicable FCC Laws) any of the FCC Authorizations included in any of the Alaska
Assets or the California Assets, that are not acceptable to the other party
hereto.
Section 9.4. Conduct of Business
(a) From and after the date hereof until the Closing Date, neither DCS nor
AWS shall (and each of DCS and AWS will cause their respective Affiliates not
to) engage in any practice, take any action or enter into any transaction
outside the ordinary course of business with respect to the California Business
and Alaska Business, as appropriate, without the prior approval of the other
party, which approval shall not be unreasonably withheld or delayed, and shall
continue to operate the California Business or the Alaska Business, as the case
may be, in the ordinary course consistent with past practices.
(b) In furtherance and not in limitation of the provisions of subsection
(a) above, from and after the date hereof, DCS shall, and shall cause its
Affiliates to:
(i) operate the California Business in accordance with the
California FCC Authorizations, and comply in all material respects with
all Laws applicable to it, including the regulations of the FCC and any
state body having jurisdiction over the California Business or any
California Asset;
(ii) except as disclosed on Schedule 9.4(b)(ii), and except for
inventory sold, or retirements of assets, in each case in the ordinary
course of business, refrain from making any sale, lease, transfer or other
disposition of any of the California Assets other than in connection with
replacements with assets of like use and value, or with the prior written
approval of AWS, which approval will not be unreasonably withheld or
delayed;
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(iii) (x) use its commercially reasonable efforts to preserve its
relationships with all parties to the Assumed California Contracts, (y)
perform in all material respects all of its obligations thereunder
according to the terms and conditions thereof, and (z) refrain from
amending in any material respect, or terminating, any of the Assumed
California Contracts, without AWS's prior written approval, which approval
will not be unreasonably withheld or delayed;
(iv) maintain insurance on the California Assets comparable to that
maintained prior to the date hereof;
(v) maintain its books and records in accordance with prior
practice;
(vi) take all commercially reasonable actions necessary to maintain
all of its rights and interest in, and the validity of, the California FCC
Authorizations and not permit any of the California FCC Authorizations to
expire or to be surrendered or voluntarily modified in a manner materially
adverse to the operation of the California Systems, or take any action
which would reasonably be expected to cause the FCC or any other
Governmental Authority to institute proceedings for the suspension,
revocation or limitation of rights under any of the California FCC
Authorizations; or fail to prosecute with commercially reasonable due
diligence any pending applications to any Governmental Authority; and
provide to AWS copies of all applications, correspondence, pleadings and
other documents furnished to or received from the FCC relating to the
California Systems;
(vii) notify AWS in writing promptly after learning of the
institution of any material action against DCS or an Affiliate relating to
the California Systems in any court, or any action against DCS or an
Affiliate relating to the California Systems before the FCC or any other
Governmental Authority, and notify AWS in writing promptly upon entry of
any administrative or court order relating to the California Assets or the
California Systems;
(viii) continue in accordance with past practice of the California
Business all marketing and promotions relating to the maintenance and
growth of subscribers of the California Business;
(ix) maintain, in accordance with past practice of the California
Business, relations with the suppliers, employees, agents, subscribers,
customers and distributors of the California Business and any others
having business relations with the California Business;
(x) adhere to current practice with respect to bad debt of the
California Systems, collection of accounts and deactivation of delinquent
account service; and collect accounts receivable of the California Systems
only in the ordinary course consistent with past practice of the
California Business;
(xi) maintain all inventory and expendable supplies at levels
consistent with past practices, current business plans and reasonably
expected consumer
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demand and otherwise prior to the Closing Date maintain its working
capital at reasonable levels necessary to operate the California Systems
in a commercially reasonable manner and consistent with past practice of
the California Business;
(xii) not cause or permit to occur any of the events or occurrences
described in Section 7.13(b); and
(xiii) not implement or commence any pre-paid calling plans or
services with respect to the California Systems.
(c) In furtherance and not in limitation of the provisions of subsection
(a) above, from and after the date hereof, AWS shall, and shall cause its
Affiliates to:
(i) operate the Alaska Business in accordance with the Alaska FCC
Authorizations, and comply in all material respects with all Laws
applicable to it, including the regulations of the FCC and any state body
having jurisdiction over the Alaska Business or any Alaska Asset;
(ii) except as disclosed on Schedule 9.4(c)(ii), and except for
inventory sold, or retirements of assets, in each case in the ordinary
course of business, refrain from making any sale, lease, transfer or other
disposition of any of the Alaska Assets other than in connection with
replacements with assets of like use and value, or with the prior written
approval of DCS, which approval will not be unreasonably withheld or
delayed;
(iii) (x) use its commercially reasonable efforts to preserve its
relationships with all parties to the Assumed California Contracts, (y)
perform in all material respects all of its obligations thereunder
according to the terms and conditions thereof, and (z) refrain from
amending in any material respect, or terminating, any of the Assumed
Alaska Contracts, without DCS's prior written approval, which approval
will not be unreasonably withheld or delayed;
(iv) maintain insurance on the Alaska Assets comparable to that
maintained prior to the date hereof;
(v) maintain its books and records in accordance with prior
practice;
(vi) take all commercially reasonable actions necessary to maintain
all of its rights and interest in, and the validity of, the Alaska FCC
Authorizations and not permit any of the Alaska FCC Authorizations to
expire or to be surrendered or voluntarily modified in a manner materially
adverse to the operation of the Alaska Systems, or take any action which
would reasonably be expected to cause the FCC or any other Governmental
Authority to institute proceedings for the suspension, revocation or
limitation of rights under any of the Alaska FCC Authorizations; or fail
to prosecute with commercially reasonable due diligence any pending
applications to any Governmental Authority; and provide to DCS copies of
all applications, correspondence, pleadings and other documents furnished
to or received from the FCC relating to the Alaska Systems;
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(vii) notify DCS in writing promptly after learning of the
institution of any material action against AWS or an Affiliate relating to
the Alaska Systems in any court, or any action against AWS or an Affiliate
relating to the Alaska Systems before the FCC or any other Governmental
Authority, and notify DCS in writing promptly upon entry of any
administrative or court order relating to the Alaska Assets or the Alaska
Systems;
(viii) continue in accordance with past practice of the Alaska
Business all marketing and promotions relating to the maintenance and
growth of subscribers of the Alaska Business;
(ix) maintain in accordance with past practice of the Alaska
Business the relations with the suppliers, customers and distributors of
the Alaska Business and any others having business relations with the
Alaska Business;
(x) adhere to current practice with respect to bad debt of the
Alaska Systems, collection of accounts and deactivation of delinquent
account service; and collect accounts receivable of the Alaska Systems
only in the ordinary course consistent with past practice of the Alaska
Business;
(xi) maintain all inventory and expendable supplies at levels
consistent with past practices, current business plans and reasonably
expected consumer demand and otherwise prior to the Closing Date maintain
its working capital at reasonable levels necessary to operate the Alaska
Systems in a commercially reasonable manner and consistent with past
practice of the Alaska Business;
(xii) not cause or permit to occur any of the events or occurrences
described in Section 8.13(b);
(xiii) not grant, permit or allow any Alaska System Employee to take
a sabbatical leave, as defined in AWS's company policies; and
(xiv) make the capital expenditures with respect to the Alaska
Assets and the Alaska Systems prior to the Closing Date in accordance with
Schedule 9.4(c)(xiv).
(d) DCS hereby acknowledges and agrees that from and after the date
hereof, AWS may take any actions determined by AWS to be appropriate with
respect to the Excluded Alaska Assets, including selling the Excluded Alaska
Assets. AWS hereby acknowledges and agrees that from and after the date hereof,
DCS may take any actions determined by DCS to be appropriate with respect to the
Excluded California Assets, including selling the Excluded California Assets.
(e) AWS shall use all commercially reasonable efforts to keep available
the services of the Alaska System Employees and of all agents of the Alaska
Business. DCS shall use all commercially reasonable efforts to keep available
the services of the California System Employees and of all agents of the
California Business.
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Section 9.5. Access
(a) Upon reasonable prior notice from DCS and provided that significant
disruption does not result, AWS shall (i) give DCS and its authorized
representatives reasonable access during all reasonable times to AWS's and its
Affiliates' books and records, facilities and assets comprising or relating to
the Alaska Business, (ii) provide such financial and operating data and other
information with respect to the Alaska Business as DCS may reasonably request,
and (iii) make its and its Affiliates' officers, agents and representatives
available to DCS.
(b) Upon reasonable prior notice from AWS and provided that significant
disruption does not result, DCS shall (i) give AWS and its authorized
representatives reasonable access during all reasonable times to DCS's and its
Affiliates' books and records, facilities and assets comprising or relating to
the California Business, (ii) provide such financial and operating data and
other information with respect to the California Business as AWS may reasonably
request, and (iii) make its and its Affiliates' officers, agents and
representatives available to AWS.
Section 9.6. Alaska System Employees
(a) Schedule 9.6 contains a list of all persons employed by AWS in the
operation of the Alaska Systems and physically located in the Alaska Markets to
whom DCS will be obligated to offer employment in accordance with the terms of
this Section 9.6 (the "ALASKA DESIGNATED EMPLOYEES"). Each Alaska Designated
Employee who is actively employed by AWS as of the Closing Date will receive an
offer of employment from DCS as of the Closing Date upon the terms and
conditions described herein. Any Alaska Designated Employee who is not actively
at work as of the Closing Date (deemed "ALASKA INACTIVE EMPLOYEES") shall not
receive an offer of employment from DCS, nor be deemed to be an Alaska
Transitioned Employee (defined below) unless he or she returns to active service
within 90 days of the Closing Date and notifies DCS in writing thereof. DCS
shall promptly offer such Alaska Inactive Employee employment following receipt
of such notice on substantially the same terms and conditions as similarly
situated Alaska Transitioned Employees as of the date that such Alaska Inactive
Employee becomes an Alaska Transitioned Employee, the start-date of such Alaska
Inactive Employee (assuming he or she accepts DCS's offer) to be specified by
DCS in its discretion, provided, that in no event shall it be later than the
expiration of such 90-day period. Each Alaska Inactive Employee shall remain
employed by AWS during such 90-day period following the Closing Date unless and
until such Alaska Inactive Employee becomes an Alaska Transitioned Employee in
accordance with the terms of this Section 9.6(a). For purposes of this
Agreement, all Alaska Designated Employees who accept DCS's offer of employment
and become employed by DCS as of the Closing Date and all Alaska Inactive
Employees who subsequently become employed by DCS within the 90-day period
referred to above are hereafter collectively referred to as the "ALASKA
TRANSITIONED EMPLOYEES." Notwithstanding the foregoing, nothing in this
Agreement limits the rights of DCS to eliminate an employee's position for any
reason following the Closing Date.
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(b) The participation of each Alaska Transitioned Employee in the Alaska
Benefit Plans and programs will terminate effective upon the Closing Date or
such later date on which an Alaska Inactive Employee becomes employed by DCS,
except with respect to compensation and benefits that remain payable or due
under the terms of such Alaska Benefit Plans and programs or benefits and other
employment related rights to which Alaska Inactive Employees are entitled while
receiving benefits pursuant to AWS's short term disability plan, or except as
otherwise required by Law or such Alaska Benefit Plans or programs. Nothing in
this Agreement creates or is intended to create any rights in third parties or
third party beneficiaries, including any rights to be employed or respecting the
terms and duration of employment.
(c) DCS shall be responsible for any and all salaries, wages, benefits and
other compensation or payments payable to each Alaska Transitioned Employee for
services rendered to DCS after the Closing Date or such later date as an Alaska
Inactive Employee becomes an Alaska Transitioned Employee, on such terms and
conditions as DCS may, in its sole discretion, unilaterally implement.
(d) AWS shall remain responsible for any Alaska Inactive Employees who do
not become Alaska Transitioned Employees as provided above for all purposes,
including but not limited to, compensation and benefits.
(e) Each Alaska Transitioned Employee shall be employed on terms and
conditions, including, but not limited to, wages or salaries and benefits, which
are substantially similar in the aggregate to the terms and conditions offered
by DCS to similarly situated employees of DCS. From and after the Closing Date,
each Alaska Transitioned Employee shall be eligible to participate in the
employee benefit plans, programs, agreements and arrangements maintained by DCS
in which similarly situated employees of DCS are generally eligible to
participate, based on the eligibility criteria of each plan, program, agreement
or arrangement. On and after the Closing Date, DCS shall cause each such plan,
program, agreement and arrangement to treat all service with AWS prior to the
Closing Date as service for DCS for purposes of eligibility to participate,
waiting periods, vacation or paid time off accrual level, limitations as to
preexisting medical conditions but not for benefit accrual or contribution
purposes under any pension plan, profit sharing plan, savings plan or other
deferred compensation plan maintained by DCS or for purposes of eligibility for
any retiree health, life or other retiree welfare benefit plan maintained by
DCS. With respect to worker's compensation benefits, AWS accepts continuing
responsibility after the Closing Date for payment of all benefits to or on
behalf of workers for (a) claims accepted or in process on or prior to the
Closing Date, and (b) claims related to industrial injuries or occupational
diseases for which a right to file for worker's compensation benefits existed or
accrued on or prior to the Closing Date.
(f) Nothing contained herein shall be construed to restrict DCS from
operating its existing employee benefit plans, including full authority to amend
or terminate such plans in accordance with their respective terms and applicable
laws.
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(g) AWS agrees to provide or cause to be provided to DCS all such records
and information as DCS may reasonably request in order to carry out the intent
of, and to meet DCS's obligations under this Section 9.6.
(h) Prior to Closing, AWS shall cash out all accrued, unused vacation
hours of Alaska Transitioned Employees as of the Closing Date.
(i) AWS shall remain solely responsible for any and all liabilities
relating to or arising in connection with the requirements of Section 4980B of
the Code, to provide continuation of health care coverage in respect of Alaska
Transitioned Employees and their covered dependents due to coverage under the
Alaska Benefit Plans, including with respect to qualifying events that occur as
a result of their termination of employment with AWS or any ERISA Affiliate
thereof.
(j) On or before the date required by applicable Law, AWS shall contribute
to the accounts of the Alaska Transitioned Employees under each Alaska Benefit
Plan all amounts required by such Alaska Benefit Plan or applicable Laws to be
contributed with respect to such Alaska Transitioned Employee on account of any
period prior to Closing.
(k) AWS and DCS will treat DCS as a "successor employer" and AWS or the
applicable Affiliate thereof as a "predecessor," within the meaning of Sections
3121(a)(1) and 3306(b)(1) of the Code, with respect to Alaska Transitioned
Employees for purposes of taxes imposed under the United States Federal
Unemployment Tax Act or the United States Federal Insurance Contributions Act.
(l) AWS shall comply and cause compliance with the provisions of the WARN
Act and any other federal, state, or local Laws regarding "plant closings,"
"mass layoffs" (or similar triggering event), or change of control, as they
relate to the Transactions. AWS further covenants to comply and cause compliance
with any notice obligations under any applicable state unemployment insurance
Law with respect to employees whose employment has been terminated by AWS or an
Affiliate of AWS.
Section 9.7. California System Employees
(a) Schedule 9.7 contains a list of all persons employed by DCS in the
operation of the California Systems and physically located in the California
Markets to whom AWS will be obligated to offer employment in accordance with the
terms of this Section 9.7 (the "CALIFORNIA DESIGNATED EMPLOYEES"). Each
California Designated Employee who is actively employed by DCS as of the Closing
Date will receive an offer of employment from AWS as of the Closing Date upon
the terms and conditions described herein. Any California Designated Employee
who is not actively at work as of the Closing Date (deemed "CALIFORNIA INACTIVE
EMPLOYEES") shall not receive an offer of employment from AWS, nor be deemed to
be a California Transitioned Employee (defined below), unless he or she returns
to active service within 90 days of the Closing Date and notifies AWS in writing
thereof. AWS shall promptly offer such California Inactive Employee employment
following receipt of such notice on substantially the same terms and conditions
as similarly situated California Transitioned Employees as of
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the date that such California Inactive Employee becomes a California
Transitioned Employee, the start-date of such California Inactive Employee
(assuming he or she accepts AWS's offer) to be specified by AWS in its
discretion, provided, that in no event shall it be later than the expiration of
such 90-day period. Each California Inactive Employee shall remain employed by
DCS during such 90-day period following the Closing Date unless and until such
Alaska Inactive Employee becomes a California Transitioned Employee in
accordance with the terms of this Section 9.7(a). For purposes of this
Agreement, all California Designated Employees who accept AWS's offer of
employment and become employed by AWS as of the Closing Date and all California
Inactive Employees who subsequently become employed by AWS within the 90-day
period referred to above, are hereafter collectively referred to as the
"CALIFORNIA TRANSITIONED EMPLOYEES." Notwithstanding the foregoing, nothing in
this Agreement limits the rights of AWS to eliminate an employee's position for
any reason following the Closing Date.
(b) The participation of each California Transitioned Employee in the
California Benefit Plans and programs will terminate effective upon the Closing
Date or such later date on which a California Inactive Employee becomes employed
by AWS, except with respect to compensation and benefits that remain payable or
due under the terms of such California Benefit Plans and programs or benefits
and other employment related rights to which California Inactive Employees are
entitled while receiving benefits pursuant to DCS's short term disability plan,
or except as otherwise required by Law or such California Benefit Plans or
programs. Nothing in this Agreement creates or is intended to create any rights
in third parties or third party beneficiaries, including any rights to be
employed or respecting the terms and duration of employment.
(c) AWS shall be responsible for any and all salaries, wages, benefits and
other compensation or payments payable to each California Transitioned Employee
for services rendered to AWS after the Closing Date or such later date as a
California Inactive Employee becomes a California Transitioned Employee, on such
terms and conditions as AWS may, in its sole discretion, unilaterally implement.
(d) DCS shall remain responsible for any California Inactive Employees who
do not become California Transitioned Employees as provided above for all
purposes, including but not limited to, compensation and benefits.
(e) Each California Transitioned Employee shall be employed on terms and
conditions, including, but not limited to, wages or salaries and benefits, which
are substantially similar in the aggregate to the terms and conditions offered
by AWS to similarly situated employees of AWS. From and after the Closing Date,
each California Transitioned Employee shall be eligible to participate in the
employee benefit plans, programs, agreements and arrangements maintained by AWS
in which similarly situated employees of AWS are generally eligible to
participate, based on the eligibility criteria of each plan, program, agreement
or arrangement. On and after the Closing Date, AWS shall cause each such plan,
program, agreement and arrangement to treat all service with DCS prior to the
Closing Date as service for AWS for purposes of eligibility to participate,
waiting periods, vacation or paid time off accrual level, limitations as to
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preexisting medical conditions but not for benefit accrual or contribution
purposes under any pension plan, profit sharing plan, savings plan or other
deferred compensation plan maintained by AWS or for purposes of eligibility for
any retiree health, life or other retiree welfare benefit plan maintained by
AWS. With respect to worker's compensation benefits, DCS accepts continuing
responsibility after the Closing Date for payment of all benefits to or on
behalf of workers for (a) claims accepted or in process on or prior to the
Closing Date, and (b) claims related to industrial injuries or occupational
diseases for which a right to file for worker's compensation benefits existed or
accrued on or prior to the Closing Date.
(f) Nothing contained herein shall be construed to restrict AWS from
operating its existing employee benefit plans, including full authority to amend
or terminate such plans in accordance with their respective terms and applicable
laws.
(g) DCS agrees to provide or cause to be provided to AWS all such records
and information as AWS may reasonably request in order to carry out the intent
of, and to meet AWS's obligations under this Section 9.7.
(h) Prior to Closing, DCS shall cash out all accrued, unused vacation
hours of California Transitioned Employees as of the Closing Date.
(i) DCS shall remain solely responsible for any and all liabilities
relating to or arising in connection with the requirements of Section 4980B of
the Code, to provide continuation of health care coverage in respect of
California Transitioned Employees and their covered dependents due to coverage
under the California Benefit Plans, including with respect to qualifying events
that occur as a result of their termination of employment with DCS or any ERISA
Affiliate thereof.
(j) On or before the date required by applicable Law, DCS shall contribute
to the accounts of the California Transitioned Employees under each California
Benefit Plan all amounts required by such California Benefit Plan or applicable
Laws to be contributed with respect to such California Transitioned Employee on
account of any period prior to Closing.
(k) DCS and AWS will treat AWS as a "successor employer" and DCS or the
applicable Affiliate thereof as a "predecessor," within the meaning of Sections
3121(a)(1) and 3306(b)(1) of the Code, with respect to California Transitioned
Employees for purposes of taxes imposed under the United States Federal
Unemployment Tax Act or the United States Federal Insurance Contributions Act.
(l) DCS shall comply and cause compliance with the provisions of the WARN
Act and any other federal, state, or local Laws regarding "plant closings,"
"mass layoffs" (or similar triggering event), or change of control, as they
relate to the Transactions. DCS further covenants to comply and cause compliance
with any notice obligations under any applicable state unemployment insurance
Law with respect to employees whose employment has been terminated by DCS or an
Affiliate of DCS.
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Section 9.8. No Shop
(a) Prior to the Closing, AWS shall not (and shall cause its Affiliates
not to), directly or indirectly, sell, agree to sell, solicit inquiries or
proposals or furnish any information with respect to, or initiate or participate
in any negotiations or discussions whatsoever concerning any acquisition or
purchase of, (i) any or all of the Alaska Assets outside of the ordinary course
of the Alaska Business, and (ii) the DCC Securities. AWS shall cause its and its
Affiliates' officers, employees, agents and representatives to refrain from
doing any of the above.
(b) Notwithstanding the provisions of paragraph (a) above, AWS or an
Affiliate may, directly or indirectly, sell, agree to sell, solicit inquiries or
proposals or furnish any information with respect to, or initiate or participate
in any negotiations or discussions whatsoever concerning any acquisition or
purchase of, any or all of the Alaska Assets pursuant to a transaction in which
(x) such Alaska Assets constitute an immaterial or incidental portion of the
assets being sold, assigned or otherwise disposed of, and (y) the person
acquiring the Alaska Assets (whether by operation of law or otherwise) agrees in
writing and is obligated to consummate or cause the consummation of the
Transactions in accordance with the terms hereof, without delay or impairment to
the Transactions.
(c) Except as contemplated by Section 1.1, prior to the Closing, DCS
shall not (and shall cause its Affiliates not to), directly or indirectly, sell,
agree to sell, solicit inquiries or proposals or furnish any information with
respect to, or initiate or participate in any negotiations or discussions
whatsoever concerning any acquisition or purchase of, any or all of the
California Assets outside of the ordinary course of the California Business. DCS
shall cause its and its Affiliates' officers, employees, agents and
representatives to refrain from doing any of the above.
(d) Notwithstanding the provisions of paragraph (c) above, DCS or an
Affiliate may, directly or indirectly, sell, agree to sell, solicit inquiries or
proposals or furnish any information with respect to, or initiate or participate
in any negotiations or discussions whatsoever concerning any acquisition or
purchase of, any or all of the California Assets pursuant to a transaction in
which (x) such California Assets constitute an immaterial or incidental portion
of the assets being sold, assigned or otherwise disposed of, and (y) the person
acquiring the California Assets (whether by operation of law or otherwise)
agrees in writing and is obligated to consummate or cause the consummation of
the Transactions in accordance with the terms hereof, without delay or
impairment to the Transactions.
Section 9.9. Post-Closing Non-Compete
(a) During the Non-Compete Period, subject to the other provisions of
this Section 9.9, AWS will not, and will cause its Affiliates not to, directly
or indirectly, either alone or jointly with any other person, acquire or hold an
ownership interest in (other than an ownership interest in an Exempt Person),
manage, operate, control or otherwise engage in a business that provides or
resells, or a license that enables the provision or resale of, facilities-based
mobile wireless telecommunications services using spectrum in the 824-849 MHz,
869-894 MHz or 1850-1990 MHz frequency bands, in the
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State of Alaska (the services described in this sentence being referred to
herein as the "COMPETITIVE SERVICES"). In addition, during the Non-Compete
Period, AWS will not grant any person the right to market Competitive Services
(on a primary basis, tagline basis or otherwise) under the "AT&T WIRELESS" brand
or any successor brand used by AWS or its Affiliates on a national basis.
Competitive Services shall not include roaming services provided to customers of
any person other than AWS and its Affiliates roaming in the State of Alaska
(whether or not such person has the right to use the "AT&T WIRELESS" brand or
any successor brand used by AWS or its Affiliates on a national basis).
"NON-COMPETE PERIOD" means (i) with respect to Competitive Services using the
TDMA protocol, the period beginning on the Closing Date and expiring on February
25, 2007 and (ii) with respect to Competitive Services using the GSM/GPRS or
EDGE protocols, or using spectrum in the 824-849 MHz, 869-894 MHz or 1850-1990
MHz frequency bands, the period beginning on the Closing Date and expiring on
the fifth anniversary thereof. "EXEMPT PERSON" means any person that (x) is not
an Affiliate of AWS, (y) to which AWS and its Affiliates do not direct their
roaming traffic (in respect of Competitive Services) on a priority basis with
respect to DCS and (z) does not market Competitive Services (on a primary basis,
tagline basis or otherwise) under the "AT&T Wireless" brand or any successor
brand used by AWS or its Affiliates on a national basis. DCS's agreement to
enter into the GSM Build-Out Agreement (Alaska) and the GSM Roaming Agreement
(Alaska) at Closing is a material inducement to AWS's agreement to the
restrictions set forth in this Section 9.9. Accordingly, AWS's obligations in
this Section 9.9 relating to Competitive Services using any protocol other than
TDMA shall terminate upon any early termination (prior to the stated expiration
of the initial term or any renewal term) of the GSM Build-Out Agreement (Alaska)
or the GSM Roaming Agreement (Alaska), or any successor agreements, other than a
termination by DCS resulting from a breach thereof by AWS. Furthermore, if AWS
and its Affiliates intend to offer Competitive Services that are based on a
protocol that AWS uses or will use on a nationwide basis in the same time frame
as in the State of Alaska using spectrum in the 824-849 MHz, 869-894 MHz or
1850-1990 MHz frequency bands, AWS shall notify DCS of such intention, and if
DCS demonstrates a good faith intention to provide such Competitive Services
(other than Competitive Services using the TDMA or GSM/GPRS protocols) in the
State of Alaska within a reasonable period of time thereafter, then, for so long
as DCS continues to take reasonable measures to provide such Competitive
Services, AWS and its Affiliates will refrain, until the expiration of the
applicable Non-Compete Period, from providing such Competitive Services in the
State of Alaska.
(b) Notwithstanding the provisions of paragraph (a) above, AWS and its
Affiliates may enter into a merger, consolidation, sale of assets or other
similar business combination transaction with a third party (any such
transaction being referred to herein as a "COMPETITIVE TRANSACTION") that
results in AWS or any such Affiliates owning, managing, operating or controlling
systems providing Competitive Services that are then operating commercially in
the State of Alaska (any such systems, but only the portion thereof operating in
the State of Alaska, being referred to herein as the "COMPETITIVE SYSTEMS"), but
subject to the further provisions of this Section 9.9. Upon the execution of
definitive agreements relating to a Competitive Transaction, AWS will notify DCS
thereof and, if DCS so requests, AWS and DCS will discuss the sale of the
Competitive Systems to DCS at their Fair Market Value (as defined below) as of
the date that AWS
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and DCS agree in principle to such a sale. If AWS and DCS do not agree in
principle to such a sale within 30 days after the commencement of such
discussions, then AWS will be free to sell or otherwise dispose of the
Competitive Systems to a third party, provided, that for a period of 90 days
after the commencement of such discussions, any such third party sale must be on
terms no less favorable than those discussed with DCS.
(c) During the period from the date of the closing of the applicable
Competitive Transaction to the expiration of the applicable Non-Compete Period
or, if earlier, the consummation of a sale or other disposition of such
Competitive Systems (if any) in accordance with paragraph (b) above, AWS will
either:
(i) cause substantially all its subscribers (other than
subscribers of the Competitive Systems and subscribers acquired by AWS or
its Affiliates as a result of the Competitive Transaction), for purposes
of the GSM Roaming Agreement (Alaska) and the Operating Agreement (as
defined in Section 18.18), to seek service from DCS in those portions of
the Alaska Markets (if any) served by the Competitive Systems before
seeking service from the Competitive Systems; or
(ii) if and to the extent either AWS or DCS or any of their
respective Affiliates has, and is using in the ordinary course of its
business, the technological capability to identify its own intra-company
roaming traffic (provided that to the extent DCS or an Affiliate has such
capability and AWS does not have such capability, DCS will provide the
relevant technology to AWS, at no cost to AWS, if AWS elects to make
reimbursement payments pursuant to this clause (ii)), then AWS shall (once
the technology is installed and tested) pay DCS on a monthly basis an
amount equal to the actual monthly roaming revenue (net of production
costs) generated by subscribers of AWS's non-Alaska markets roaming on the
Competitive Systems; provided that, until the foregoing technology has
been installed and tested, or if no such technology is available in
accordance with the foregoing terms, then AWS will pay DCS on a monthly
basis an amount equal to DCS's average monthly roaming revenue (net of
production costs) generated by AWS's subscribers roaming in the Alaska
Markets during the period from the Closing Date to the date of closing of
the Competitive Transaction.
(d) In addition to complying with clause (i) or (ii) of paragraph (c)
above (the election (which shall be a one-time election for each Competitive
Transaction) between such alternatives to be made by AWS in its sole discretion
at the time of closing of such Competitive Transaction), if (at the date of the
closing of the Competitive Transaction) the Fair Market Value of the Competitive
Systems (determined by an independent appraiser selected by AWS and DCS or, if
they cannot agree, appointed by the American Arbitration Association at the
request of either party) is greater than ten percent of the Fair Market Value of
the assets, properties and rights transferred in the Competitive Transaction (as
determined by AWS in its reasonable judgment), AWS will not operate the
Competitive Systems under the "AT&T Wireless" brand or any successor brand used
by AWS or its Affiliates on a national basis.
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(e) "FAIR MARKET VALUE" means, with respect to any asset, as of the date
of determination, the cash price at which a willing seller would sell and a
willing buyer would buy such asset in a transaction negotiated at arm's length,
each being apprised of and considering all relevant facts, circumstances and
factors, and neither acting under compulsion, with the parties being
unaffiliated third parties acting without time constraints.
(f) Notwithstanding any provision of this Agreement to the contrary, AWS
shall have the right to terminate this Section 9.9 with respect to Competitive
Services using the GSM/GPRS protocol in the event of a material breach by DCS of
either the GSM Buildout Agreement (Alaska) or the GSM Roaming Agreement (Alaska)
that is not cured within the applicable cure period.
(g) Notwithstanding any provision of this Agreement to the contrary, DCS
shall not be entitled to injunctive relief with respect to that portion of any
proposed Competitive Transaction, or any other provisions of paragraph (b)
above, that relate to service areas located outside the Alaska Markets, and
DCS's only remedy in respect of such provisions or portion of the proposed
Competitive Transaction shall be to seek monetary damages from AWS. To the
extent that any proposed Competitive Transaction or other provisions of
paragraph (b) above relate to service areas located within the Alaska Markets,
DCS shall be entitled to injunctive relief with respect to such provisions or
portion of the proposed Competitive Transaction.
Section 9.10. Personal Computers
(a) Within ten business days after the Closing Date, DCS shall have the
right to uninstall and/or remove from the personal computers that are California
Assets any proprietary software owned by DCS and other files not constituting
California Assets; provided that such uninstallation or removal shall take place
at mutually convenient times, and with mutually convenient processes, for AWS
and DCS within such ten-business day period.
(b) Within ten business days after the Closing Date, AWS shall have the
right to uninstall and/or remove from the personal computers that are Alaska
Assets any proprietary software owned by AWS and other files not constituting
Alaska Assets; provided that such uninstallation or removal shall take place at
mutually convenient times, and with mutually convenient processes, for AWS and
DCS within such ten-business day period.
Section 9.11. Contracts Held by Affiliates
(a) All of the Contracts set forth in Schedule 7.5(a) that relate
primarily to the California Business and that are held by an Affiliate of DCS
shall be assigned to DCS prior to the Closing, and DCS shall obtain all consents
and give all notices necessary to do so and shall furnish copies of such
consents and notices to AWS. Any agreements described in Section 7.5(a)(v) and
listed on Schedule 7.5(a), including the DCS Affiliate
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Leases, shall have been terminated pursuant to documentation in form and
substance reasonably satisfactory to AWS.
(b) All of the Contracts set forth in Schedule 8.5(a) that relate
primarily to the Alaska Business and that are held by an Affiliate of AWS shall
be assigned to AWS prior to the Closing, and AWS shall obtain all consents and
give all notices necessary to do so and shall furnish copies of such consents
and notices to DCS. Any agreements described in Section 8.5(a)(v) and listed on
Schedule 8.5(a), including the AWS Affiliate Leases, shall have been terminated
pursuant to documentation in form and substance reasonably satisfactory to DCS.
Section 9.12. Negative Covenants
With respect to the California Business and the Alaska Business, during
the period from the date hereof until the earlier of the Closing or the
termination of this Agreement and except as otherwise contemplated by this
Agreement, neither DCS nor AWS shall (and such parties shall cause their
Affiliates not to) take any of the following actions without the prior written
consent of the other party which consent shall not be unreasonably withheld:
(a) enter into any agreement, arrangement or understanding involving
payments, assets, or Liabilities with a value in excess of $100,000 in the
aggregate, or materially alter, amend, or modify or terminate, or exercise any
option under any existing agreement involving payments, projected revenues,
assets, or Liabilities with a value in excess of $100,000 in the aggregate,
other than in the ordinary course of business consistent with past practice;
(b) except in the ordinary course of business consistent with past
practice, dispose of assets for consideration in excess of $100,000 in the
aggregate;
(c) except in the ordinary course of business consistent with past
practice, incur or assume any indebtedness for borrowed money or guarantee any
such obligations;
(d) enter into any contracts with any of its Affiliates which will be
binding upon such Affiliate after Closing;
(e) fail to pay when due any Liability that, if unpaid, would become a
Lien upon any of the California Assets or Alaska Assets as applicable;
(f) with the exception of any changes required by Law or affecting all
or substantially all of the wireless systems owned by DCS or AWS nation-wide,
implement any material change in (i) the terms and conditions of any agreements
with subscribers or (ii) the types or quality of products and services provided
to subscribers;
(g) add any new pre-paid subscribers;
(h) except as required by Law, enter into any collective bargaining
agreement, or make any commitment whatsoever to any union or other
representative or party which
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intends to represent any employees of either the California Systems or the
Alaska Systems, as applicable;
(i) change its accounting practices except as required by GAAP; or
(j) authorize or enter into an agreement in contravention of any of the
foregoing.
Section 9.13. Certain Expenses
At Closing or, if due thereafter, promptly when due, Taxes arising out of
or imposed upon the Transactions, other than income taxes and franchise taxes
for periods up to and including the Closing Date, whether imposed on DCS (or its
Affiliates) or AWS (or its Affiliates), shall be paid one-half by DCS and
one-half by AWS.
Section 9.14. FCC Compliance
(a) With regard to any non-compliance with FCC Laws set forth on
Schedules 7.6(b)(i) and (ii), DCS agrees to remediate and bring into material
compliance any such instances of non-compliance prior to the Closing Date.
Between the date hereof and the Closing Date, DCS will use its commercially
reasonable efforts to identify and cure any instances of non-compliance by DCS
or its Affiliates with any FCC Laws that are discovered.
(b) With regard to any non-compliance with FCC Laws set forth on
Schedules 8.6(b)(i) and (ii), AWS agrees to remediate and bring into material
compliance any such instances of non-compliance prior to the Closing Date.
Between the date hereof and the Closing Date, AWS will use its commercially
reasonable efforts to identify and cure any instances of non-compliance by AWS
or its Affiliates with any FCC Laws that are discovered.
Section 9.15. Cell Site Compliance
(a) Between the date hereof and the Closing Date, DCS will use its
commercially reasonable efforts to identify and cure any material instances of
non-compliance by DCS or its Affiliates with any FCC Laws or state or local Laws
discovered by DCS and relating to any DCS cell site in the California Systems.
(b) Between the date hereof and the Closing Date, AWS will use its
commercially reasonable efforts to identify and cure any material instances of
non-compliance by AWS or its Affiliates with any FCC Laws or state or local Laws
discovered by AWS and relating to any AWS cell site in the Alaska Systems.
Section 9.16. Transition Branding
AWS and DCS shall use commercially reasonable efforts to work together in
good faith to negotiate the AT&T Wireless Brand Transition License Agreement
with AT&T Corp. DCS acknowledges that the terms of the AT&T Wireless Brand
Transition
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License Agreement shall be subject to the approval of AT&T Corp. in its sole
discretion. AWS shall pay any expenses in connection with its use of the
Cellular One brand under the Cellular One Agreements. DCS shall pay any expenses
in connection with its use of the AT&T Wireless brand under the AT&T Wireless
Brand Transition License Agreement.
Section 9.17. Tagline Branding
At the election of DCS, made by written notice to AWS given at least 60
days prior to the End Date (as defined in the Transition Services Agreement),
AWS and DCS shall use commercially reasonable efforts to work together in good
faith to negotiate a tagline branding license agreement with AT&T Corp.,
pursuant to which DCS would have the right to use the AT&T Wireless tagline in
the State of Alaska together with a brand of DCS specified therein (other than
Cellular One). DCS acknowledges that the terms of any such license agreement
shall be subject to the approval of AT&T Corp. in its sole discretion.
Section 9.18. Environmental Security Deposit
Prior to the Closing, AWS will provide a security deposit, letter of
credit or combination of the two in the amount required by the County of Santa
Xxxx, and enter into a compliance security agreement with the County of Santa
Xxxx, with regard to the biological mitigation, monitoring and reporting program
required by the County of Santa Xxxx at the Mount Xxxxxx cell site.
ARTICLE 10
CONDITIONS PRECEDENT TO AWS'S OBLIGATION TO CLOSE
The obligation of AWS to consummate the Transactions shall be conditioned
upon the satisfaction or fulfillment, at or prior to Closing, of the following
conditions, unless waived in writing by AWS:
Section 10.1. Accuracy of Representations and Warranties; Performance of
this Agreement
Each of the representations and warranties made by DCS in this Agreement
and made by DCC in the letter agreement of even date herewith between DCC and
AWS (the "DCC Letter Agreement") and made by Xxxxxx XX Limited Partnership
("DCCLP") in the letter agreement of even date herewith between DCCLP and AWS
(the "DCCLP Letter Agreement"), shall be true and correct in all material
respects on and as of each of the date hereof and the Closing Date (unless such
representation or warranty is made as of a particular date in which case such
representation or warranty will be considered only as of such particular date),
provided, however, that for purposes of determining the accuracy of such
representations and warranties, such representations and warranties that are
qualified by materiality qualifications shall be true and correct in all
respects the date hereof and at and as of the Closing Date. DCS shall have
complied with and performed in all material respects all of the agreements and
covenants required by this Agreement and each other Transaction Document to be
performed or complied with by DCS on or
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prior to the Closing. Each of DCS, DCC and DCCLP shall have furnished AWS with a
certificate of an officer of such person (in the case of DCCLP, an officer of
the DCCLP's general partner) dated as of the Closing Date, certifying to the
fulfillment of the foregoing conditions applicable to such person.
Section 10.2. Authorizing Resolutions
DCS shall deliver to AWS copies of the resolutions or consents of the
board of directors of DCS and its applicable Affiliates authorizing the
execution, delivery and performance of this Agreement by DCS and all instruments
and documents to be delivered in connection herewith and the transactions
contemplated hereby, duly certified by an officer of DCS.
Section 10.3. Third Party Consents; FCC; HSR Act
DCS shall have received all Required California Consents with respect to
all mobile telephone switching office leases, retail store leases, cell site
leases (other than those for which AWS is the lessor) and debt instruments of
DCS or DCC, and shall have delivered to AWS copies thereof. DCS shall have given
all Required California Notices and shall have delivered to AWS copies thereof.
The FCC action granting the FCC's consent to the assignment of the California
FCC Authorizations to AWS shall have become a Final Order, free of any
conditions adverse to the California Business, except for such conditions that
are generally applicable to cellular licenses. In addition, all applicable
waiting periods under the HSR Act (if applicable to the transactions
contemplated by this Agreement) shall have expired or been terminated and no
objection shall have been made by the FTC or the DOJ. For the purposes of this
Agreement, the term "FINAL ORDER" shall mean action by the FCC or its staff
acting under delegated authority as to which (a) 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; (b) no timely petition for review, rehearing or
reconsideration of the action is pending before the FCC, and the time for filing
any such petition has passed; (c) 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 10.4. Bills of Sale; Assumption Agreement
DCS shall have delivered to AWS one or more executed Bills of Sale and
Instruments of Assignment, and an Assumption Agreement pursuant to Sections
4.1(b) and 4.2(b).
Section 10.5. Regulatory and Corporate Opinions of Counsel for DCS
DCS shall have caused its counsel to deliver to AWS written legal opinions
substantially in the forms attached as Exhibits D and E hereto, which opinions
shall be dated the Closing Date. AWS acknowledges that the regulatory opinion
set forth in
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Exhibit D may be given by an employee of DCS. The opinion set forth in Exhibit E
as to the validity under Oklahoma law of the transfer of the DCC Securities
contemplated by Section 1.2(c) and other Oklahoma law matters shall be given by
Xxxx, Xxxxx & Xxxxx and/or other Oklahoma counsel to DCS reasonably acceptable
to AWS.
Section 10.6. No Threatened or Pending Litigation
On the Closing Date, no suit, action or other proceeding, or injunction or
final judgment relating thereto, shall be threatened or be pending before any
arbitrator or Governmental Authority having jurisdiction over the California
Business or the California Assets in which it is sought to restrain or prohibit
the consummation of the transactions contemplated hereby or to obtain damages or
other relief in connection with this Agreement or any other Transaction
Documents, or the consummation of the transactions contemplated hereby or
thereby.
Section 10.7. Release of Liens
Before or at the Closing, DCS shall have furnished to AWS documentation
reasonably satisfactory to AWS releasing all Liens set forth on Schedule 7.3(a).
Section 10.8. Other Transaction Documents
DCS shall have executed and delivered to AWS the Addendum No. 3 to the
Operating Agreement, the GSM Roaming Agreement (Alaska), the GSM Build-Out
Agreement (Alaska) and the SOC Letter.
Section 10.9. Governmental Authorizations
All Governmental Authorizations required to be obtained prior to Closing
by either party in order to consummate the Transactions shall have been made or
obtained free of conditions materially adverse to AWS.
Section 10.10. Asset Consolidation Transactions
The transactions contemplated by Section 1.1 shall have been consummated
to the reasonable satisfaction of AWS.
Section 10.11. Lender Acknowledgement
Within 75 days after the date hereof, Required Lenders (as defined in the
DOC Credit Agreement) to that certain Amended, Restated and Consolidated
Revolving Credit and Term Loan Agreement dated January 18, 2000 (together with
any successor or replacement agreement, the "DOC CREDIT AGREEMENT") among Xxxxxx
Operating Co., L.L.C. ("DOC") as borrower, Bank of America, N.A., as
administrative agent, and the lenders named therein, as amended from time to
time, shall have executed and delivered to DOC the Lender Acknowledgement
substantially in the form attached hereto as Exhibit J (the "LENDER
ACKNOWLEDGEMENT"). On the Closing Date, the Lender
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Acknowledgement shall remain in full force and effect, and no challenge to its
validity shall be pending or threatened in writing.
ARTICLE 11
CONDITIONS PRECEDENT TO DCS'S OBLIGATION TO CLOSE
The obligation of DCS to consummate the Transactions shall be conditioned
upon the satisfaction or fulfillment, at or prior to Closing, of the following
conditions, unless waived in writing by DCS.
Section 11.1. Accuracy of Representations and Warranties; Performance of
this Agreement
Each of the representations and warranties made by AWS in this Agreement
shall be true and correct in all material respects on and as of each of the date
hereof and the Closing Date (unless such representation or warranty is made as
of a particular date in which case such representation or warranty will be
considered only as of such particular date), provided, however, that for
purposes of determining the accuracy of such representations and warranties,
such representations and warranties that are qualified by materiality
qualifications shall be true and correct in all respects the date hereof and at
and as of the Closing Date. AWS shall have complied with and performed in all
material respects all of the agreements and covenants required by this Agreement
and each other Transaction Document to be performed or complied with by AWS on
or prior to the Closing. AWS shall have furnished DCS with a certificate of an
officer of AWS, dated as of the Closing Date, certifying to the fulfillment of
the foregoing conditions.
Section 11.2. Authorizing Resolutions
AWS shall deliver to DCS copies of the resolutions or consents of the
board of directors of AWS and its applicable Affiliates authorizing the
execution, delivery and performance of this Agreement by AWS and all instruments
and documents to be delivered in connection herewith and the transactions
contemplated hereby, duly certified by an officer of AWS.
Section 11.3. Third Party Consents; FCC; HSR Act
AWS shall have received all Required Alaska Consents with respect to all
mobile telephone switching office leases, retail store leases, cell site leases
and debt instruments of AWS, and shall have delivered to DCS copies thereof. AWS
shall have given all Required Alaska Notices and shall have delivered to DCS
copies thereof. The FCC action granting the FCC's consent to the assignment of
the Alaska FCC Authorizations to DCS shall have become a Final Order, free of
any conditions adverse to the Alaska Business, except for such conditions that
are generally applicable to cellular licenses. In addition, all applicable
waiting periods under the HSR Act (if applicable to the transactions
contemplated by this Agreement) shall have expired or been terminated and no
objection shall have been made by the FTC or the DOJ.
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Section 11.4. Bills of Sale; Assumption Agreement
AWS shall have delivered to DCS one or more executed Bills of Sale and
Instruments of Assignment, and an Assumption Agreement pursuant to Sections
4.1(a) and 4.2(a).
Section 11.5. Regulatory and Corporate Opinions of Counsel for AWS
AWS shall have caused its counsel to deliver to DCS written legal opinions
substantially in the forms attached as Exhibits D and E hereto, which opinions
shall be dated the Closing Date. DCS acknowledges that the regulatory opinion
set forth in Exhibit D may be given by an employee of AWS.
Section 11.6. No Threatened or Pending Litigation
On the Closing Date, no suit, action or other proceeding, or injunction or
final judgment relating thereto, shall be threatened or be pending before any
court, arbitrator or Governmental Authority having jurisdiction over the Alaska
Business or the Alaska Assets in which it is sought to restrain or prohibit the
consummation of the transactions contemplated hereby or to obtain damages or
other relief in connection with this Agreement or any other Transaction
Documents, or the consummation of the transactions contemplated hereby or
thereby.
Section 11.7. Release of Liens
Before or at the Closing, AWS shall have furnished to DCS documentation
reasonably satisfactory to DCS releasing all Liens set forth on Schedule 8.3(a).
Section 11.8. Other Transaction Documents
AWS shall have executed and delivered to DCS the Addendum No. 3 to the
Operating Agreement, the GSM Roaming Agreement (Alaska), the GSM Build-Out
Agreement (Alaska) and the SOC Letter. AT&T Corp. and AWS shall have executed
and delivered to DCS the AT&T Wireless Brand Transition License Agreement.
Section 11.9. Governmental Authorizations
All Governmental Authorizations required to be obtained prior to Closing
by either party in order to consummate the Transactions shall have been made or
obtained free of conditions materially adverse to DCS.
Section 11.10. Asset Consolidation Transactions
The transactions contemplated by Section 1.1 shall have been consummated
to the reasonable satisfaction of DCS.
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ARTICLE 12
CASUALTY LOSSES
Section 12.1. Casualty Losses Relating to the California Assets
In the event that there shall have been suffered between the date hereof
and the Closing any casualty loss relating to the California Assets, DCS will
promptly notify AWS of such event. DCS shall, at its option, either (a) repair,
rebuild or replace the portion of the California Assets damaged, destroyed or
lost prior to the Closing Date, or (b) assign to AWS at Closing all claims to
insurance proceeds or other rights (the "CALIFORNIA CLAIMS") of DCS against
third parties arising from such casualty loss, provided, however, that the
foregoing shall not be deemed to affect AWS's right not to proceed with the
Closing because the casualty event has resulted in one or more of the conditions
set forth in Article 10 not being satisfied, notwithstanding the aforesaid
options of DCS. To the extent any Claim is not assignable, such claim may be
pursued by AWS, for its own account and benefit, in the name of DCS.
Section 12.2. Casualty Losses Relating to the Alaska Assets
In the event that there shall have been suffered between the date hereof
and the Closing any casualty loss relating to the Alaska Assets, AWS will
promptly notify DCS of such event. AWS shall, at its option, (a) repair, rebuild
or replace the portion of the Alaska Assets damaged, destroyed or lost prior to
the Closing Date, or (b) assign to DCS at Closing all claims to insurance
proceeds or other rights (the "ALASKA CLAIMS") of AWS against third parties
arising from such casualty loss, provided, however, that the foregoing shall not
be deemed to affect DCS's right not to proceed with the Closing because the
casualty event has resulted in one or more of the conditions set forth in
Article 11 not being satisfied, notwithstanding the aforesaid options of AWS. To
the extent any Claim is not assignable, such claim may be pursued by DCS, for
its own account and benefit, in the name of AWS.
ARTICLE 13
INDEMNIFICATION
Section 13.1. Indemnification by DCS
Notwithstanding the Closing, subject to the terms of this Article 13, DCS
agrees to indemnify and to hold AWS and its Affiliates, and their respective
shareholders, officers, directors and employees (the "AWS INDEMNIFIED PARTIES")
harmless from and against and in respect of any Liability, action, suit, demand,
judgment, cost of investigation and reasonable attorney fees (but excluding the
Assumed California Liabilities and any exemplary, consequential or punitive
damages) (collectively, "AWS LOSSES"), sustained, incurred or paid by any AWS
Indemnified Party in connection with, resulting from or arising out of, directly
or indirectly: (a) any breach of a representation or warranty on the part of DCS
under this Agreement or on the part of DCC under the DCC Letter Agreement or on
the part of DCCLP under the DCCLP Letter Agreement, (b) any breach or
nonfulfillment of any covenant on the part of DCS under this
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Agreement, (c) any Excluded California Liability, (d) any Excluded California
Asset, (e) DCS's ownership, operation or control of the California Assets or the
California Business for the period prior to the Closing, or (f) any and all
Taxes that are (i) obligations of DCS or an Affiliate or (ii) Pre-closing Taxes
(as defined below) that arise out of the California Business or California
Assets (including any such Taxes which become Liabilities of AWS as a transferee
of the California Business or the California Assets).
Section 13.2. Indemnification by AWS
Notwithstanding the Closing, subject to the terms of this Article 13, AWS
agrees to indemnify and to hold DCS and its Affiliates, and their respective
shareholders, officers, directors and employees (the "DCS INDEMNIFIED PARTIES")
harmless from and against and in respect of any Liability, action, suit, demand,
judgment, cost of investigation and reasonable attorney fees (but excluding the
Assumed Alaska Liabilities and any exemplary, consequential or punitive damages)
(collectively, "DCS LOSSES"), sustained, incurred or paid by any DCS Indemnified
Party in connection with, resulting from or arising out of, directly or
indirectly: (a) any breach of a representation or warranty on the part of AWS
under this Agreement, (b) any breach or nonfulfillment of any covenant on the
part of AWS under this Agreement, (c) any Excluded Alaska Liability, (d) any
Excluded Alaska Asset, (e) AWS's ownership, operation or control of the Alaska
Assets or the Alaska Business for the period prior to the Closing, or (f) any
and all Taxes that are (i) obligations of AWS or an Affiliate or (ii)
Pre-closing Taxes that arise out of the Alaska Business or Alaska Assets
(including any such Taxes which become Liabilities of DCS as a transferee of the
Alaska Business or the Alaska Assets).
Section 13.3. Notice and Defense of Claims
(a) A party claiming indemnification under this Article 13 (the
"ASSERTING PARTY") must promptly notify (in writing and in reasonable detail)
the party from which indemnification is sought (the "DEFENDING PARTY") of the
nature and basis of such claim for indemnification not later than the end of the
applicable survival period set forth in Section 13.6. If such claim relates to a
claim, suit, litigation or other action by a third party against the Asserting
Party or any Liability to a third party (a "THIRD PARTY CLAIM"), the Defending
Party may elect to assume such Liability and control the defense of the Third
Party Claim at its own expense with counsel selected by the Defending Party.
Assumption of such Liability, as against the Asserting Party, shall not be
deemed an admission of liability as against any such third party. 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 13.3, the Asserting Party may participate in the
defense of such Third Party Claim through counsel of its choosing, but 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,
provided, however, that no Defending Party shall, without the prior written
consent of the Asserting Party, consent to the entry of any judgment against the
Defending Party or enter into any settlement or compromise which (i) does not
include, as an unconditional term thereof, the giving by the claimant or
plaintiff to the Asserting Party of a release, in form and substance reasonably
satisfactory to the Asserting Party from all liability in respect of
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such claim or litigation, provided that this 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, or (ii) includes terms and conditions that adversely affect
the Asserting Party; provided further, however, that in the case of clause (ii),
the Asserting Party may not unreasonably withhold such consent.
(b) If the Defending Party does not assume liability for, and the
defense of, the Third Party Claim pursuant to this Section 13.3, the Asserting
Party shall have the right (a) to control the defense thereof, and (b) 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, the Asserting Party may 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 13.3 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
commercially reasonable efforts to cooperate fully with respect to the defense
and settlement of any Third Party Claim covered by this Article 13.
(c) The failure of any indemnified party to give an indemnifying party a
notice of claim shall not relieve the indemnifying party from any liability in
respect of such claim, demand or action which it may have to such indemnified
party on account of the indemnity agreement of such indemnifying party contained
in this Article 13, except to the extent such indemnifying party can establish
actual prejudice and direct damages as a result thereof.
Section 13.4. Set-Off
(a) DCS shall have the right to offset its obligation to pay any amount
of indemnification to the AWS Parties pursuant to Section 13.1 against any
amount of indemnification that AWS may owe the DCS Parties pursuant to Section
13.2 of this Agreement.
(b) AWS shall have the right to offset its obligation to pay any amount
of indemnification to the DCS Parties pursuant to Section 13.2 against any
amount of
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indemnification that DCS may owe the AWS Parties pursuant to Section 13.1 of
this Agreement.
Section 13.5. Limitations
The Defending Party's obligations to indemnify the Asserting Party
pursuant to this Article 13 shall be subject to the following limitations:
(a) No indemnification under Section 13.1(a) or 13.2(a) for any Losses
shall be required to be made by the Defending Party until the aggregate amount
of the Asserting Party's Losses exceeds $2,000,000, and then indemnification
shall be required to be made by the Defending Party only to the extent of such
Losses that exceed $1,000,000; provided that the foregoing limitation shall not
apply to (i) any intentional breach of a representation or warranty, (ii) any
breach by DCS of a representation or warranty set forth in Sections 7.2, 7.3(a),
7.6, 7.12, 7.15, 7.16 and 7.21 (each, a "DCS EXEMPT REPRESENTATION"), or (iii)
any breach by AWS of a representation or warranty set forth in Sections 8.2,
8.3(a), 8.3(b), 8.6, 8.12, 8.15, 8.16 and 8.21 (each, an "AWS EXEMPT
REPRESENTATION").
(b) The aggregate liability of the Defending Party under Section 13.1(a)
or 13.2(a), as applicable, shall not exceed $15,000,000, provided, that the
foregoing limitation shall not apply to (w) any intentional breach of a
representation or warranty, (x) any breach by AWS of Section 8.3(b), (y) any
breach by DCS of a DCS Exempt Representation, or (z) any breach by AWS of an AWS
Exempt Representation.
(c) The indemnification obligation of a Defending Party shall be reduced
to the extent of any available insurance proceeds payable to the Asserting
Party, net of any increased insurance premiums becoming payable by the Asserting
Party to the extent such increase is a direct result of such insurance proceeds
becoming available. The Defending Party shall pay its indemnification
obligations as and when required by this Article 13 and the Asserting Party
shall refund to the Defending Party any such amounts determined to be in excess
of the Defending Party's obligations due to reductions pursuant to this Section
13.5(c). Additionally, the Asserting Party shall refund promptly to the
Defending Party any amount of the Asserting Party's Losses that are subsequently
recovered by the Asserting Party pursuant to a settlement or otherwise.
(d) To the extent that any AWS Losses relate to California Assets used
in, or the California Business conducted in, the Santa Cruz, CA MSA, any
payments made by DCS as indemnification under this Article 13 for such AWS
Losses shall be paid in an amount equal to the product of (i) the full amount
otherwise required to be paid under this Article 13 multiplied by (ii)
87.38649%. This discount shall be applied with regard to the calculation of the
aggregate amount of an Asserting Party's Losses, pursuant to Section 13.5(a).
(e) From and after the Closing Date, the indemnification rights
contained in this Article 13 shall constitute the sole and exclusive remedies of
the parties hereunder, and shall supersede and displace all other rights that
either party may have under Law,
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with respect to any breach of any of the representations and warranties made by
the parties in this Agreement or in any certificate, schedule, statement,
document or instrument furnished hereunder or in connection with the execution
and performance of this Agreement.
Section 13.6. Survival of Representations and Warranties
All representations and warranties made by the parties in this Agreement
or in any certificate, schedule, statement, document or instrument furnished
hereunder shall survive for a period lasting eighteen months after Closing,
except that (a) the representations and warranties set forth in Sections 7.3(a),
8.3(a) and 8.3(b) shall survive Closing indefinitely, (b) any intentional breach
or misrepresentation or fraud shall survive Closing indefinitely, and (c) except
as otherwise provided in clause (a) above, the DCS Exempt Representations and
the AWS Exempt Representations shall survive until the expiration of the 15-day
period commencing on the expiration date of the relevant statute of limitations
period (including any applicable extensions thereof), unless in each case
survival is governed by the preceding clauses (a) or (b). Any claim by a party
based upon breach of any such representation or warranty made pursuant to
Article 15 or otherwise must be submitted to the other party prior to or at the
expiration of the applicable survival period, along with a written explanation
in reasonable detail of the specifics of such breach. In the case of any claim
submitted within such time period, the right of the party submitting the claim
to recover from the other party with respect to such claim shall not be
dependent on the claim being resolved or the losses being incurred within such
time period. The right to indemnification hereunder shall not be affected by any
investigation or audit conducted before or after the Closing Date or the actual
or constructive knowledge of any party and each party shall be entitled to rely
upon the representations and warranties set forth herein regardless of any such
investigation or knowledge. The waiver of any condition regarding the accuracy
of any representation or warranty, or regarding the performance of or compliance
with any covenant or obligation, will not affect the right of indemnification or
any other remedy of the waiving party after Closing based on the inaccuracy of
such representation or warranty or the nonperformance of or noncompliance with
such covenant or obligation.
Section 13.7. Disclaimer of Other Representations and Warranties
(a) AWS acknowledges and agrees that DCS does not make, and has not
made, any representations or warranties relating to DCS or its Affiliates, the
California Business or the California Assets other than the representations and
warranties of DCS expressly set forth in this Agreement. In addition, AWS
acknowledges and agrees that DCS has not made any implied warranties including
implied warranties of merchantability or fitness for a specific purpose with
regard to any of the California Assets or the California Business. Without
limiting the generality of the disclaimer set forth in the two preceding
sentences, DCS does not make, and DCS, its officers, employees, representatives
and agents have not made, and shall not be deemed to have made any
representation relating to DCS or its Affiliates, the California Business or the
California Assets given in connection with the transactions contemplated by this
Agreement, in any filing made by or on behalf of DCS or an Affiliate with any
Governmental Authority or in any other
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information provided to or made available to AWS, and no statement made in any
such filing or contained in any such other information shall be deemed to be a
representation or warranty of DCS hereunder or otherwise. DCS represents to AWS
that no person has been authorized by DCS to make any representation or warranty
in respect of DCS or its Affiliates, the California Business or the California
Assets in connection with the transactions contemplated by this Agreement that
is inconsistent with or in addition to the representations and warranties of DCS
expressly set forth in this Agreement.
(b) DCS acknowledges and agrees that AWS does not make, and has not
made, any representations or warranties relating to AWS or its Affiliates, the
Alaska Business or the Alaska Assets other than the representations and
warranties of AWS expressly set forth in this Agreement. In addition, DCS
acknowledges and agrees that AWS has not made any implied warranties including
implied warranties of merchantability or fitness for a specific purpose with
regard to either the Alaska Assets or the Alaska Business. Without limiting the
generality of the disclaimer set forth in the two preceding sentences, AWS does
not make, and AWS, its officers, employees, representatives and agents have not
made, and shall not be deemed to have made any representation relating to AWS or
its Affiliates, the Alaska Business or the Alaska Assets given in connection
with the transactions contemplated by this Agreement, in any filing made by or
on behalf of AWS or an Affiliate with any Governmental Authority or in any other
information provided to or made available to DCS, and no statement made in any
such filing or contained in any such other information shall be deemed to be a
representation or warranty of AWS hereunder or otherwise. AWS represents to DCS
that no person has been authorized by AWS to make any representation or warranty
in respect of AWS or its Affiliates, the Alaska Business or the Alaska Assets in
connection with the transactions contemplated by this Agreement that is
inconsistent with or in addition to the representations and warranties of AWS
expressly set forth in this Agreement.
Section 13.8. Payment
(a) Upon a determination of Liability under this Article 13, the
appropriate party shall pay the indemnified party the amount so determined
within 10 business days after the date of such determination. If there should be
a dispute as to the amount or manner of determination of any indemnity
obligation owed under this Agreement, the party from which indemnification is
due shall nevertheless pay when due such portion, if any, of the obligation as
shall not be subject to dispute. The difference, if any, between the amount of
the obligation ultimately determined as properly payable under this Agreement
and the portion, if any, theretofore paid shall bear interest as provided below
in Section 13.8(b).
(b) If all or part of any indemnification obligation under this
Agreement is not paid when due, then the indemnifying party shall pay the
indemnified party interest on the unpaid amount of the obligation for each day
from the date the amount became due until payment in full, payable on demand, at
the fluctuating rate per annum which at all times shall be two percentage points
in excess of the "PRIME RATE" published from time to time in the "MONEY RATES"
table of the Eastern Edition of The Wall Street Journal.
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ARTICLE 14
CONFIDENTIALITY AND PRESS RELEASES
Section 14.1. Confidentiality
The Mutual Non-Disclosure Agreement dated May 21, 2002 between DCS and AWS
(the "NDA") shall remain in effect in accordance with its terms, except that it
may be terminated upon termination of this Agreement. The obligations of AWS
under the NDA and under this Article 14 shall terminate as of the Closing,
except with respect to Information (as defined in the NDA) of DCS that does not
relate to the California Business that AWS is required by the NDA to keep
confidential. The obligations of DCS under the NDA and under this Article 14
shall terminate as of the Closing, except with respect to Information (as
defined in the NDA) of AWS that does not relate to the Alaska Business that DCS
is required by the NDA to keep confidential.
Section 14.2. Press Releases
No press release or public disclosure or disclosure to any third party,
either written or oral, of the existence or terms of this Agreement shall be
made by either AWS or DCS without the consent of the other subject to the
provisions of Section 14.3, and AWS and DCS 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 AWS or
DCS, as the case may be, proposes to make such press release.
Section 14.3. Disclosures Required by Law
This Article 14 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 DCS, AWS or
any of their Affiliates from disclosing to its investors, partners, accountants,
auditors, attorneys, parent company and, with regard to DCS, to Xxxxxx Brothers
as its broker/dealer on this transaction, such terms of this transaction as are
customarily disclosed to them in connection with the sale or acquisition of a
cellular telephone system; provided, however, that in the case of disclosure to
any Governmental Authority, the disclosing party shall request confidential
treatment of this Agreement and its terms, and in the case of disclosure to any
other person, the disclosing party shall inform the recipient of the
confidential nature of such information and shall use its commercially
reasonable efforts to cause the recipient to agree to keep such information
confidential in accordance with the terms of Section 14.1; 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.
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ARTICLE 15
TERMINATION
Section 15.1. Breaches and Defaults; Opportunity to Cure
Prior to the exercise by a party of any termination rights afforded under
this Agreement (other than Section 15.2(f)), 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 if such
breach is curable the Breaching Party shall have sixty (60) days from the
receipt of such notice to cure such breach to the reasonable satisfaction of the
Non-Breaching Party; provided, however, that if such breach is curable but is
not capable of being cured within such period and if the Breaching Party shall
have commenced action to cure such breach within such period and is diligently
attempting to cure such breach, then the Breaching Party shall be afforded an
additional sixty (60) days to cure such breach; provided, however, the cure
period for a breach shall in no event extend beyond the Outside Date (as defined
in Section 15.2(e)). 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 15.2).
This right of termination shall be in addition to, and not in lieu of, any
rights of the Non-Breaching Party under Article 13 of this Agreement.
Section 15.2. Termination
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned, by written notice given to the other party, at any time prior
to the Closing:
(a) by mutual written consent of DCS and AWS;
(b) by either DCS or AWS, if any court of competent jurisdiction in the
United States or other United States Governmental Authority shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the sale of the California Assets to AWS or
the sale of the Alaska Assets to DCS (in either case, which DCS and AWS shall
have used all commercially 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 15.1, by AWS, if, as of any date, DCS shall have
breached any of its representations, warranties or covenants such that the
condition set forth in Section 10.1 shall not be satisfied as of such date;
(d) subject to Section 15.1, by DCS, if, as of any date, AWS shall have
materially breached any of its representations, warranties or covenants such
that the condition set forth in Section 11.1 shall not be satisfied as of such
date;
(e) by either DCS or AWS if the Closing shall not have occurred on or
before the date that is (i) nine months after the date of this Agreement or (ii)
if the Closing shall have not occurred within nine months after the date of this
Agreement by reason of a
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petition to deny FCC approval of the Transactions, 12 months after the date of
this Agreement (the "OUTSIDE DATE"), unless the failure to consummate 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; or
(f) by AWS if the Lender Acknowledgement is not delivered to DOC with a
copy to AWS within 75 days after the date hereof, provided, that if AWS does not
notify DCS in writing within five business days following such 75th day of its
election to terminate this Agreement, then AWS's right to terminate this
Agreement as a result of the Lender Acknowledgement not being delivered to DOC
with a copy to AWS within 75 days after the date hereof shall be deemed to have
been waived.
ARTICLE 16
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 15
hereof.
ARTICLE 17
ARBITRATION
Any controversy, dispute or claim (collectively, a "DISPUTE") between the
parties arising out of or relating to this Agreement, or the breach, termination
or validity thereof, shall be finally settled by arbitration in accordance with
the commercial arbitration rules of the American Arbitration Association ("AAA")
then pertaining. However, in all events, these arbitration provisions shall
govern over any conflicting rules that may now or hereafter be contained in the
AAA rules. The arbitration shall be held in the State of New York unless the
parties mutually agree to have the arbitration held elsewhere, and judgment upon
the award made therein may be entered by any court having jurisdiction in the
State of New York; provided however, that nothing contained in this Article 17
shall be construed to limit or preclude a party from bringing any action in any
court of competent jurisdiction for injunctive or other provisional relief to
compel another party to comply with its obligations under this Agreement during
the pendency of the arbitration proceedings. Any judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction over
the subject matter hereof. The arbitrator shall have the authority to grant any
equitable and legal remedies that would be available in any judicial proceeding
instituted to resolve any claim hereunder.
Any such arbitration will be conducted before a single arbitrator who
shall be chosen by agreement of the parties, or, if the parties cannot agree, in
accordance with the rules of the AAA. The arbitrator shall permit such discovery
as he shall determine is appropriate in the circumstances, taking into account
the needs of the parties and the desirability of making discovery expeditious
and cost-effective. Any such discovery
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shall be limited to information directly related to the controversy or claim in
arbitration and shall be concluded within sixty (60) days after appointment of
the third arbitrator.
The substantially prevailing party in any arbitration hereunder, as
determined by the arbitrator, shall be entitled to an award of a percentage of
its reasonable costs incurred in connection therewith, including attorneys'
fees, determined by dividing the amount actually awarded to the prevailing party
by the amount claimed by the prevailing party.
For any Dispute submitted to arbitration, the burden of proof will be as
it would be if the claim were litigated in a judicial proceeding.
Upon the conclusion of any arbitration proceedings hereunder, the
arbitrator will render findings of fact and conclusions of law and a written
opinion setting forth the basis and reasons for any decision reached and will
deliver such documents to each party to this Agreement along with a signed copy
of the award.
The arbitrator chosen in accordance with these provisions will not have
the power to alter, amend or otherwise affect the terms of these arbitration
provisions or the provisions of this Agreement and shall make his decision based
on and in accordance with the provisions of this Agreement.
ARTICLE 18
MISCELLANEOUS
Section 18.1. Additional Instruments of Transfer
(a) From time to time after the Closing, each party shall, if requested
by the other 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 (i) the
transfer to AWS of all of DCS's right, title and interest in and to the
California Assets and any right, title or interest that any Affiliate of DCS may
have in any asset used primarily in the California Business, other than an
Excluded California Asset, and (ii) the transfer to DCS of all of AWS's right,
title and interest in and to the Alaska Assets and any right, title or interest
that any Affiliate of AWS may have in any asset used primarily in the Alaska
Business, other than an Excluded Alaska Asset. Such efforts and assistance shall
be at the cost of the requesting party.
(b) Anything in this Agreement to the contrary notwithstanding, DCS is
not obligated to sell, assign, transfer or convey to AWS any of its rights and
obligations in and to any California Assumed Contract to be sold, assigned,
transferred or conveyed, or any claim, right or benefit arising thereunder or
resulting therefrom (a "CALIFORNIA INTEREST") without first obtaining all
necessary approvals, consents or waivers. To the extent any Required California
Consents have not been obtained by DCS as of the Closing and AWS elects to
proceed with the Closing, DCS shall, for a period equal to the shorter of twelve
months after the Closing, or the remaining term of such Interest, (i) use all
commercially reasonable efforts to obtain the consent of any such third party;
(ii) cooperate with AWS in any reasonable and lawful arrangements designed to
provide the
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benefits (including the payment to AWS of any monies received by DCS in
connection therewith and including cooperation with AWS's efforts to obtain the
consent of the third party to any such cell site lease or license regarding the
assignment of such cell site lease or license to AWS) of such California
Interest to AWS so long as AWS performs all obligations with respect to the
California Interest (and the payment of all expenses in connection therewith);
and (iii) enforce, at the request of AWS and at the expense and for the account
of AWS, any rights of DCS arising from such California Interest against such
issuer thereof or the other party or parties thereto (including the right to
elect to terminate any such California Interest in accordance with the terms
thereof upon the request of AWS); provided, however, that none of AWS or DCS
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 from whom such approval, consent or waiver is
requested.
(c) Anything in this Agreement to the contrary notwithstanding, AWS is
not obligated to sell, assign, transfer or convey to DCS any of its rights and
obligations in and to any Alaska Assumed Contract to be sold, assigned,
transferred or conveyed, or any claim, right or benefit arising thereunder or
resulting therefrom (an "ALASKA INTEREST") Interest without first obtaining all
necessary approvals, consents or waivers. To the extent any Required Alaska
Consents have not been obtained by AWS as of the Closing and DCS elects to
proceed with the Closing, AWS shall, for a period equal to the shorter of twelve
months after the Closing, or the remaining term of such Alaska Interest, (i)
except with regard to cell site leases or licenses, use all commercially
reasonable efforts to obtain the consent of any such third party; (ii) cooperate
with DCS in any reasonable and lawful arrangements designed to provide the
benefits (including the payment to DCS of any monies received by AWS in
connection therewith and including cooperation with DCS's efforts to obtain the
consent of the third party to any such cell site lease or license regarding the
assignment of such cell site lease or license to DCS) of such Alaska Interest to
DCS so long as DCS performs all obligations with respect to the Alaska Interest
(and the payment of all expenses in connection therewith); and (iii) enforce, at
the request of DCS and at the expense and for the account of DCS, any rights of
AWS arising from such Alaska Interest against such issuer thereof or the other
party or parties thereto (including the right to elect to terminate any such
Alaska Interest in accordance with the terms thereof upon the request of DCS);
provided, however, that none of AWS or DCS 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 from
whom such approval, consent or waiver is requested.
Section 18.2. 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, electronic
mail (provided that such communications are concurrently sent by first class
mail in accordance with this Section 18.2), return receipt requested, or
registered or certified first class mail, return receipt requested, postage
prepaid, to the following addresses:
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If to AWS:
0000 000xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: 000-000-0000
Email: xxxxxxxx@xxxxx.xxx
with a required copy (which shall not constitute notice) to:
Xxxxxxxx Xxxxxx Xxxxxx & Xxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: 212-833-1250
Email: xxxxxxx@xxxxx.xxx
If to DCS:
Xxxxxx Cellular Systems, Inc.
00000 Xxxxxxxx Xxx
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Email: xxxxxxx@xxxxxx.xxx
with a required copy (which shall not constitute notice) to:
Xxxxxxx & Xxxxxx, LLP
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Email: xxxxxxxx@xxxxx.xxx
Notices delivered personally shall be effective upon delivery against
receipt. Notices transmitted by telecopy or electronic mail shall be effective
when received, provided that the burden of proving notice when notice is
transmitted by telecopy or electronic mail 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 72 hours after mailing, whichever is earlier.
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Section 18.3. 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.
Section 18.4. Transfer Taxes
AWS and DCS shall bear equally the expense of all use, sales, transfer and
other similar transaction taxes, if any, which are imposed solely and directly
by reason of the sale and delivery of the California Assets from DCS to AWS and
the Alaska Assets from AWS to DCS under this Agreement. Notwithstanding anything
else to the contrary set forth in this Section 18.4, (i) AWS shall in no event
be responsible in any manner for the payment of any taxes on any gross or net
income, gross or net receipts or gain which DCS may realize as a result of the
sale of the California Assets or otherwise related to the transactions
contemplated by this Agreement and (ii) DCS shall in no event be responsible in
any manner for the payment of any taxes on any gross or net income, gross or net
receipts or gain which AWS may realize as a result of the sale of the Alaska
Assets or otherwise related to the transactions contemplated by this Agreement.
Section 18.5. Collection Procedures
From and after the Closing, each of DCS and AWS shall have the right and
authority, at its expense, to collect for its account all items to which it is
entitled as provided in this Agreement and to endorse with the name of the other
party any checks or drafts received on account of any such items.
Section 18.6. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York (without application of principles of conflicts of
law). In connection with any controversy arising out of or related to this
Agreement, DCS and AWS hereby irrevocably consent to the jurisdiction of the
United States District Court for the District of New York, if a basis for
federal court jurisdiction is present, and, otherwise, in the state courts of
the State of New York located in New York County. DCS and AWS each irrevocably
consents to service of process out of the aforementioned courts and waives any
objection which it may now or hereafter have to the laying of venue of any
action or proceeding arising out of or in connection with this Agreement brought
in the aforementioned courts.
Section 18.7. Assignment
Except as permitted by Section 9.8(b) and Section 9.8(d), neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned (by operation of law or otherwise) by any of the parties hereto without
the prior written consent of the other parties, which consent will not be
unreasonably withheld or delayed; provided, however, that DCS may assign its
rights under this Agreement to acquire the Alaska Assets and assume the Assumed
Alaska Liabilities to DCC or any wholly-owned
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subsidiary of DCC, and AWS may assign its rights under this Agreement to acquire
the California Assets and to assume the Assumed California Liabilities to any of
its wholly-owned subsidiaries; provided, further, however, that no such
assignment shall relieve DCS or AWS of any of its obligations under this
Agreement.
Section 18.8. Successors and Assigns
All agreements made and entered into in connection with this transaction
shall be binding upon and inure to the benefit of the parties hereto, their
successors and permitted assigns.
Section 18.9. Amendments; Waivers
No alteration, modification or change of this Agreement shall be valid
except by an agreement in writing executed by the parties hereto. Except as
otherwise expressly set forth herein, no failure or delay by any party hereto in
exercising any right, power or privilege hereunder (and no course of dealing
between or among any of the parties) shall operate as a waiver of any such
right, power or privilege. No waiver of any default on any one occasion shall
constitute a waiver of any subsequent or other default. No single or partial
exercise of any such right, power or privilege shall preclude the further or
full exercise thereof.
Section 18.10. Entire Agreement
Except for the NDA, 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 18.11. Counterparts
This Agreement may be executed in one or more counterparts, each of which
when so executed shall be an original, but all of which together shall
constitute one agreement. Facsimile signatures shall be deemed original
signatures.
Section 18.12. Severability
If any provision of this Agreement or the application thereof to any
person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law, but only as long as the continued
validity, legality and enforceability of such provision or application does not
materially (a) alter the terms of this Agreement, (b) diminish the benefits of
this Agreement or (c) increase the burdens of this Agreement, for any person.
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Section 18.13. Section Headings
The section headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the parties and shall not
in any way affect the meaning or interpretation of this Agreement.
Section 18.14. Interpretation
As both parties have participated in the drafting of this Agreement, any
ambiguity shall not be construed against either party as the drafter. Unless the
context of this Agreement clearly requires otherwise, (a) "OR" has the inclusive
meaning frequently identified with the phrase "AND/OR," (b) "INCLUDING" has the
inclusive meaning frequently identified with the phrase "INCLUDING, BUT NOT
LIMITED TO" and (c) references to "HEREOF," "HEREUNDER" or "HEREIN" or words of
similar import relate to this Agreement.
Section 18.15. Further Assurances
(a) For a period of six (6) months after Closing, DCS agrees to provide
to AWS from time to time any information that DCS possesses with respect to the
operation of the California Assets prior to the Closing which AWS reasonably
requests in connection with AWS's financing efforts or in connection with any
FCC or other regulatory filing. No such information furnished by DCS shall
constitute a representation or warranty to AWS or any other person; DCS shall
not have any Liability in respect of such information to AWS or any other
person; and any Liability, action, suit, demand, judgment, cost of investigation
and reasonable attorney fees (but excluding any exemplary, consequential or
punitive damages) sustained, incurred or paid by any DCS Indemnified Party in
connection with, resulting from or arising out of, directly or indirectly, the
provision of any such information to AWS pursuant to this paragraph shall be
considered a DCS Loss for purposes of this Agreement.
(b) For a period of six (6) months after Closing, AWS agrees to provide
to DCS from time to time any information that AWS possesses with respect to the
operation of the Alaska Assets prior to the Closing which DCS reasonably
requests in connection with DCS's financing efforts or in connection with any
FCC or other regulatory filing. No such information furnished by AWS shall
constitute a representation or warranty to DCS or any other person; AWS shall
not have any Liability in respect of such information to DCS or any other
person; and any Liability, action, suit, demand, judgment, cost of investigation
and reasonable attorney fees (but excluding any exemplary, consequential or
punitive damages) sustained, incurred or paid by any AWS Indemnified Party in
connection with, resulting from or arising out of, directly or indirectly, the
provision of any such information to DCS pursuant to this paragraph shall be
considered an AWS Loss for purposes of this Agreement.
Section 18.16. 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.
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Section 18.17. Remedies
The parties acknowledge and agree that the material California Assets,
including the California FCC Authorizations, and the material Alaska Assets,
including the Alaska FCC Authorizations, and the DCC Securities are unique and
that remedies at law, including monetary damages, will be inadequate in the
event of a breach by DCS or AWS in the performance of its obligations under this
Agreement. Accordingly, the parties agree that in the event of any such breach
by DCS or AWS prior to the Closing, the other party shall be entitled, among
other remedies, to a decree of specific performance. In addition, the parties
agree that in the event of a breach by DCS or AWS of Section 9.8 prior to
Closing, or (except as otherwise provided in Section 9.9(g)) in the event of a
breach by AWS of Section 9.9 after the Closing, the non-breaching party shall be
entitled, among other remedies, to a decree of specific performance.
Section 18.18. Certain Defined Terms
(a) The following terms are defined in the following Sections:
Defined Term Section
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AAA Article 17
Alaska Assets 2.3
Alaska Balance Sheet 8.13(a)
Alaska Balance Sheet Date 8.13(a)
Alaska Benefit Plans 8.11
Alaska Business Second Recital
Alaska Cellular Authorizations 2.3(a)
Alaska Claims 12.2
Alaska Closing Date Current Assets 5.1
Alaska Closing Date Current Liabilities 5.1
Alaska Closing Date Working Capital 5.1
Alaska Deposits 2.3(f)
Alaska Designated Employees 9.6(a)
Alaska FCC Authorizations 2.3(a)
Alaska Historical Financial Statements 8.13(a)
Alaska Interest 18.1(c)
Alaska Interim Financial Statements 8.13(a)
Alaska Markets First Recital
Alaska Microwave Authorizations 2.3(a)
Alaska System Employees 8.10
Alaska Systems First Recital
Appraiser 9.9(d)
Asserting Party 13.3
Assumed Alaska Contracts 2.3(b)
Assumed Alaska Liabilities 3.1
Assumed California Contracts 2.1(b)
Assumed California Liabilities 3.2
AWS Preamble
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Defined Term Section
------------ -------
AWS Alaska 2.4(l)
AWS Cell Site 8.21
AWS Determination 5.2(a)
AWS Exempt Representation 13.5(a)
AWS Indemnified Parties 13.1
AWS Leased Property 8.4(c)
AWS Losses 13.1
AWS Post Closing Objection 5.3(a)
AWS Real Property Leases 8.4(c)
Breaching Party 15.1
California Assets 2.1
California Balance Sheet 7.13
California Balance Sheet Date 7.13
California Benefit Plans 7.11
California Business Second Recital
California Cellular Authorizations 2.1(a)
California Claims 12.1
California Closing Date Current Assets 5.1
California Closing Date Current 5.1
Liabilities California Closing Date Working Capital 5.1
California Deposits 2.1(f)
California Designated Employees 9.7(a)
California FCC Authorizations 2.1(a)
California Historical Financial Statements 7.13
California Interest 18.1(b)
California Interim Financial Statements 7.13
California Markets First Recital
California Microwave Authorizations 2.1(a)
California Paging Assets 2.2(k)
California System Employees 7.10
California Systems First Recital
CERCLA 7.16(b)
Closing Article 6
Closing Date Article 6
Code Fourth Recital
Competitive Services 9.9(a)
Competitive Systems 9.9(b)
Competitive Transaction 9.9(b)
Xxxxxxx Interest 2.4(l)
Xxxxxxx Partnership 2.4(l)
Xxxxxxx Partnership Agreement 2.4(l)
DCC 1.2(c)
DCC Letter Agreement 10.1
DCCLP 10.1
DCCLP Letter Agreement 10.1
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Defined Term Section
------------ -------
DCC Securities 1.2(c)
DCS Preamble
DCS Based Property 7.4(c)
DCS Cell Site 7.21
DCS Determination 5.2(a)
DCS Exempt Representation 13.5(a)
DCS Indemnified Parties 13.2
DCS Leased Property 7.4(c)
DCS Losses 13.2
DCS Post Closing Objection 5.3(a)
DCS Real Property Leases 7.4(c)
Defending Party 13.3
Dispute Article 17
DOJ 9.2(b)
Environmental Laws 7.16(c)
ERISA Affiliate 7.11
Exchange Third Recital
Excluded Alaska Assets 2.4
Excluded Alaska Contracts 2.4(d)
Excluded Alaska Liabilities 3.1
Excluded California Assets 2.2
Excluded California Contracts 2.2(d)
Excluded California Liabilities 3.2
Exempt Person 9.9(a)
Fair Market Value 9.9(d)
FBI 7.22
FCC Third Recital
Final Order 10.3
FTC 9.2(b)
GAAP 5.1
Hazardous Substance 7.16(b)
HSR Act Article 6
Independent Accountants 5.3(c)
Laws 7.7
Lender Acknowledgement 10.11
Liens 1.2(a)
Money Rates 13.7(b)
NDA 14.1
Non-Breaching Party 15.1
Non-Compete Period 9.9(a)
Notified Party 9.2(a)
Notifying Party 9.2(a)
Offer 9.9(b)
Outside Date 15.2(e)
Prime Rate 13.7(b)
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Defined Term Section
------------ -------
RCRA 7.16(b)
Redemption Assets 1.1
Required Alaska Consents 8.8
Required Alaska Notices 8.8
Required California Consents 7.8
Required California Notices 7.8
Solvent 7.18
Straddle Period 9.13(b)
Straddle Tax 9.14(b)
Third Party Claim 13.3
(b) The following terms have the following meanings:
"ADDENDUM NO. 3 TO OPERATING AGREEMENT" means Addendum No. 3 to the
Operating Agreement of even date herewith between DCS and AWS, in substantially
the form attached hereto as Exhibit F.
"AFFILIATE" means, as to any person, any other person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such person. The term "CONTROL" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as applied to any person,
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities or other ownership interest, by Contract or
otherwise.
"AT&T WIRELESS BRAND TRANSITION LICENSE AGREEMENT" means the License
Agreement dated as of the Closing Date among AT&T Corp., AWS and DCS pursuant to
which AT&T Corp. will grant to DCS the right to use, until the End Date (as
defined in the Transition Services Agreement), the trademarks and service marks
of AT&T Corp. used by AWS in the Alaska Markets prior to Closing, the terms and
conditions of which shall be satisfactory to each of AT&T Corp., AWS and DCS.
"AWS AFFILIATE LEASES" means the lease agreements between AWS or an
Affiliate as lessor and AWS or an Affiliate as lessee covering any Alaska
Assets.
"TO THE KNOWLEDGE OF AWS" or any similar phrase means the actual knowledge
of the officers and employees of AWS and its subsidiaries.
"CELLULAR ONE LICENSE AGREEMENTS" means the License Agreements dated as of
October 1, 1996 and December 1, 1996 between Cellular One Group and DCS or an
Affiliate with respect to the California Systems in the Santa Cruz, CA MSA and
California-4 RSA.
"CONTRACT" means any written or oral contract, agreement, lease, license,
instrument, or other document or commitment, arrangement, undertaking, practice
or authorization that is binding on any person or its property under any
applicable Law.
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"DCS AFFILIATE LEASES" means the lease agreements between DCS or an
Affiliate as lessor and DCS or an Affiliate as lessee covering any California
Assets.
"DEFAULT" means (a) a breach, default or violation, (b) the occurrence of
an event that with or without the passage of time or the giving of notice, or
both, would constitute a breach, default or violation or cause a Lien to arise,
or (c) with respect to any Contract, the occurrence of an event that with or
without the passage of time or the giving of notice, or both, would give rise to
a right of termination, cancellation, amendment, renegotiation, acceleration or
a right to receive damages or a payment of penalties.
"TO THE KNOWLEDGE OF DCS" or any similar phrase means the actual knowledge
of the officers and employees of DCS and its subsidiaries.
"FCC LAW" means the Communications Act of 1934, as amended, and the
published rules, regulations and policies promulgated by the FCC thereunder.
"GOVERNMENTAL AUTHORITY" means a Federal, state or local court,
legislature, governmental agency, commission or regulatory (including any state
public utilities commission) or administrative authority or instrumentality
lawfully asserting jurisdiction over the California System and/or the California
Assets, or the Alaska System and/or the Alaska Assets, as the case may be.
"GSM BUILD-OUT AGREEMENT (ALASKA)" means the GSM Build-Out Agreement
(Alaska) dated as of the Closing Date between DCS and AWS, in substantially the
form attached hereto as Exhibit G.
"GSM ROAMING AGREEMENT (ALASKA)" means the GSM Roaming Agreement (Alaska)
dated as of the Closing Date between DCS and AWS, in substantially the form
attached hereto as Exhibit H.
"LIABILITY" means any liability, indebtedness, obligation, expense, claim,
loss, cost, damage, obligation, responsibility, guaranty or endorsement of or by
any person, absolute or contingent, accrued or unaccrued, known or unknown, due
or to become due, liquidated or unliquidated, whether or not secured.
"MACHINERY AND EQUIPMENT" means all machinery, equipment (both fixed and
mobile, including computer equipment), trucks and other vehicles, office
equipment, furniture, furnishings and fixtures, in each case principally
relating to or principally used in connection with the California Business or
the Alaska Business, as applicable.
"OPERATING AGREEMENT" means that certain Operating Agreement, dated
January 16, 1998, between AWS on behalf of itself and certain Affiliates and DCS
on behalf of itself and certain Affiliates, as amended.
"PERMITTED LIENS" means (i) any Lien for Taxes not yet past due, (ii) any
Lien provided for in, or arising out of, any Assumed California Contract or
Assumed Alaska Contract and not related to any indebtedness for borrowed money,
(iii) any Lien, granted or otherwise created by a person other than DCS or AWS
or their respective Affiliates,
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that does not materially detract from the value of, or interfere with the use
of, the property subject thereto or affected thereby or materially impair the
operation of the California Business or Alaska Business, as applicable
(including any easements, rights of way, restrictions, installations or public
utilities, title imperfections and restrictions, encroachments, reservations in
land patents, zoning ordinances or other similar Liens) and (iv) as to
leaseholds, interests of the lessors thereof and Liens affecting interests of
such lessors.
"PERSON" means any corporation, partnership, limited liability company,
joint venture, business association, other entity or individual.
"SOC LETTER" means the SOC Letter dated as of the Closing Date between DCS
and AWS, in substantially the form attached hereto as Exhibit I.
"TAXES" means any taxes, duties, assessments, fees, levies, or similar
governmental charges, together with any interest, penalties, and additions to
tax, imposed by any taxing authority, wherever located (i.e., whether federal,
state, local, municipal, or foreign), including all net income, gross income,
gross receipts, net receipts, sales, use, transfer, franchise, privilege,
profits, social security, disability, withholding, payroll, unemployment,
employment, excise, severance, property, windfall profits, value added, ad
valorem, occupation, or any other similar governmental charge or imposition.
"TRANSACTIONS" means the transactions contemplated by this Agreement and
each of the other Transaction Documents.
"TRANSACTION DOCUMENTS" means this Agreement and all other agreements,
documents and instruments executed in connection herewith or required to be
executed and/or delivered by the parties or any one or more of them in
accordance with the provisions of this Agreement.
"TRANSITION SERVICES AGREEMENT" means the Transition Services Agreement of
even date herewith between DCS and AWS.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Asset
Exchange Agreement to be executed by its duly authorized representative as of
the day and year first above written.
XXXXXX CELLULAR SYSTEMS, INC.
By _________________________________________
Name:
Title:
AT&T WIRELESS SERVICES, INC.
By _________________________________________
Name:
Title:
TABLE OF CONTENTS
Page
----
ARTICLE 1 EXCHANGE........................................................ 1
Section 1.1. Asset Consolidation................................... 1
Section 1.2. Exchange.............................................. 2
Section 1.3. Like-Kind Exchange.................................... 2
ARTICLE 2 EXCHANGED ASSETS; EXCLUDED ASSETS............................... 3
Section 2.1. California Assets..................................... 3
Section 2.2. Excluded California Assets............................ 4
Section 2.3. Alaska Assets......................................... 5
Section 2.4. Excluded Alaska Assets................................ 7
ARTICLE 3 ASSUMED LIABILITIES; EXCLUDED LIABILITIES....................... 8
Section 3.1. Assumed Alaska Liabilities............................ 8
Section 3.2. Assumed California Liabilities........................ 8
ARTICLE 4 INSTRUMENTS OF ASSIGNMENT AND ASSUMPTION........................ 9
Section 4.1. Assignment Documents.................................. 9
Section 4.2. Assumption Documents.................................. 9
ARTICLE 5 WORKING CAPITAL ADJUSTMENT...................................... 10
Section 5.1. Definitions........................................... 10
Section 5.2. Post-Closing Determinations........................... 11
Section 5.3. Post-Closing Objections............................... 11
Section 5.4. Post-Closing Adjustment............................... 12
ARTICLE 6 CLOSING......................................................... 13
ARTICLE 7 REPRESENTATIONS OF DCS.......................................... 13
Section 7.1. Organization; Qualification........................... 13
Section 7.2. Authorization, Execution and Delivery................. 14
Section 7.3. Title to and Condition of Assets...................... 14
Section 7.4. Real Property......................................... 15
Section 7.5. Assumed Contracts and Subscribers..................... 16
Section 7.6. Governmental Licenses; FCC Matters.................... 18
Section 7.7. Compliance with Laws.................................. 19
Section 7.8. No Conflicts; Consents................................ 19
Section 7.9. Litigation and Legal Proceedings...................... 19
Section 7.10. California System Employees........................... 20
Section 7.11. California System Employee Benefits................... 21
Section 7.12. Tax Matters........................................... 22
Section 7.13. Financial Statements; Changes......................... 22
Section 7.14. Insurance............................................. 23
Section 7.15. Brokers............................................... 23
Section 7.16. Environmental Compliance.............................. 24
Section 7.17. Accounts Receivable................................... 25
Section 7.18. Solvency.............................................. 25
Section 7.19. Valid Transaction..................................... 25
Section 7.20. Undisclosed Liabilities............................... 26
Section 7.21. DCS Cell Sites........................................ 26
Section 7.22. CALEA................................................. 26
Section 7.23. Subscriber Agreements................................. 26
Section 7.24. Inventory............................................. 26
Section 7.25. Pre-Paid Subscribers.................................. 27
ARTICLE 8 REPRESENTATIONS OF AWS.......................................... 27
Section 8.1. Organization; Qualification........................... 27
Section 8.2. Authorization, Execution and Delivery................. 27
Section 8.3. Title to and Condition of Assets...................... 28
Section 8.4. Real Property......................................... 28
Section 8.5. Assumed Contracts and Subscribers..................... 29
Section 8.6. Governmental Licenses; FCC Matters.................... 31
Section 8.7. Compliance with Laws.................................. 33
Section 8.8. No Conflicts; Consents................................ 33
Section 8.9. Litigation and Legal Proceedings...................... 33
Section 8.10. Alaska System Employees............................... 34
Section 8.11. Alaska System Employee Benefits....................... 34
Section 8.12. Tax Matters........................................... 35
Section 8.13. Financial Statements; Changes......................... 36
Section 8.14. Insurance............................................. 37
Section 8.15. Brokers............................................... 37
Section 8.16. Environmental Compliance.............................. 37
Section 8.17. Accounts Receivable................................... 38
Section 8.18. Solvency.............................................. 38
Section 8.19. Valid Transaction..................................... 38
Section 8.20. Undisclosed Liabilities............................... 38
Section 8.21. AWS Cell Sites........................................ 38
Section 8.22. CALEA................................................. 39
Section 8.23. Subscriber Agreements................................. 39
Section 8.24. Inventory............................................. 39
ARTICLE 9 COVENANTS OF THE PARTIES........................................ 40
Section 9.1. Financial Statements and System Information........... 40
Section 9.2. FCC Approvals......................................... 40
Section 9.3. Third Party Consents; Closing Conditions.............. 41
Section 9.4. Conduct of Business................................... 42
Section 9.5. Access................................................ 46
Section 9.6. Alaska System Employees............................... 46
Section 9.7. California System Employees........................... 48
Section 9.8. No Shop............................................... 51
Section 9.9. Post-Closing Non-Compete.............................. 51
ii
Section 9.10. Personal Computers.................................... 54
Section 9.11. Contracts Held by Affiliates.......................... 54
Section 9.12. Negative Covenants.................................... 55
Section 9.13. Certain Expenses...................................... 56
Section 9.14. FCC Compliance........................................ 56
Section 9.15. Cell Site Compliance.................................. 56
Section 9.16. Transition Branding................................... 56
Section 9.17. Tagline Branding...................................... 57
Section 9.18. Environmental Security Deposit........................ 57
ARTICLE 10 CONDITIONS PRECEDENT TO AWS'S OBLIGATION TO CLOSE.............. 57
Section 10.1. Accuracy of Representations and Warranties;
Performance of this Agreement....................... 57
Section 10.2. Authorizing Resolutions............................... 58
Section 10.3. Third Party Consents; FCC; HSR Act.................... 58
Section 10.4. Bills of Sale; Assumption Agreement................... 58
Section 10.5. Regulatory and Corporate Opinions of Counsel for DCS.. 58
Section 10.6. No Threatened or Pending Litigation................... 59
Section 10.7. Release of Liens...................................... 59
Section 10.8. Other Transaction Documents........................... 59
Section 10.9. Governmental Authorizations........................... 59
Section 10.10. Asset Consolidation Transactions..................... 59
Section 10.11. Lender Acknowledgement............................... 59
ARTICLE 11 CONDITIONS PRECEDENT TO DCS'S OBLIGATION TO CLOSE.............. 60
Section 11.1. Accuracy of Representations and Warranties;
Performance of this Agreement....................... 60
Section 11.2. Authorizing Resolutions............................... 60
Section 11.3. Third Party Consents; FCC; HSR Act.................... 60
Section 11.4. Bills of Sale; Assumption Agreement................... 61
Section 11.5. Regulatory and Corporate Opinions of Counsel for AWS.. 61
Section 11.6. No Threatened or Pending Litigation................... 61
Section 11.7. Release of Liens...................................... 61
Section 11.8. Other Transaction Documents........................... 61
Section 11.9. Governmental Authorizations........................... 61
Section 11.10. Asset Consolidation Transactions..................... 61
ARTICLE 12 CASUALTY LOSSES................................................ 62
Section 12.1. Casualty Losses Relating to the California Assets..... 62
Section 12.2. Casualty Losses Relating to the Alaska Assets......... 62
ARTICLE 13 INDEMNIFICATION................................................ 62
Section 13.1. Indemnification by DCS................................ 62
Section 13.2. Indemnification by AWS................................ 63
Section 13.3. Notice and Defense of Claims.......................... 63
iii
Section 13.4. Set-Off............................................... 64
Section 13.5. Limitations........................................... 65
Section 13.6. Survival of Representations and Warranties............ 66
Section 13.7. Disclaimer of Other Representations and Warranties.... 66
Section 13.8. Payment............................................... 67
ARTICLE 14 CONFIDENTIALITY AND PRESS RELEASES............................. 68
Section 14.1. Confidentiality....................................... 68
Section 14.2. Press Releases........................................ 68
Section 14.3. Disclosures Required by Law........................... 68
ARTICLE 15 TERMINATION.................................................... 69
Section 15.1. Breaches and Defaults; Opportunity to Cure............ 69
Section 15.2. Termination........................................... 69
ARTICLE 16 BROKERS' FEES.................................................. 70
ARTICLE 17 ARBITRATION.................................................... 70
ARTICLE 18 MISCELLANEOUS.................................................. 71
Section 18.1. Additional Instruments of Transfer.................... 71
Section 18.2. Notices............................................... 72
Section 18.3. Expenses.............................................. 74
Section 18.4. Transfer Taxes........................................ 74
Section 18.5. Collection Procedures................................. 74
Section 18.6. Governing Law......................................... 74
Section 18.7. Assignment............................................ 74
Section 18.8. Successors and Assigns................................ 75
Section 18.9. Amendments; Waivers................................... 75
Section 18.10. Entire Agreement..................................... 75
Section 18.11. Counterparts......................................... 75
Section 18.12. Severability......................................... 75
Section 18.13. Section Headings..................................... 76
Section 18.14. Interpretation....................................... 76
Section 18.15. Further Assurances................................... 76
Section 18.16. Third Parties........................................ 76
Section 18.17. Remedies............................................. 77
Section 18.18. Certain Defined Terms................................ 77
Exhibits
Exhibit A Form of Xxxx of Sale
Exhibit B Form of Instrument of Assignment
Exhibit C Form of Assumption Agreement
Exhibit D Form of Opinion of Corporate Counsel
Exhibit E Form of Opinion of FCC Counsel
Exhibit F Form of Addendum No. 3 to Operating Agreement
iv
Exhibit G Form of GSM Build-Out Agreement (Alaska)
Exhibit H Form of GSM Roaming Agreement (Alaska)
Exhibit I Form of SOC Letter
Exhibit J Form of Lender Acknowledgement
Schedules
(Attached)
v
