PARTNERSHIP INTEREST AND ASSET
PURCHASE AGREEMENT
between
XXXXXX CELLULAR SYSTEMS, INC.
and
CELLCO PARTNERSHIP
D/B/A VERIZON WIRELESS
DATED AS OF DECEMBER 6, 2001
PARTNERSHIP INTEREST AND ASSET PURCHASE AGREEMENT
THIS PARTNERSHIP INTEREST AND ASSET PURCHASE AGREEMENT (the "Agreement") is
made and entered into as of December 6, 2001 by and between XXXXXX CELLULAR
SYSTEMS, INC., an Oklahoma corporation ("Seller") and CELLCO PARTNERSHIP, a
Delaware general partnership, d/b/a Verizon Wireless ("Purchaser").
R E C I T A L S
WHEREAS, Gila River Cellular General Partnership, an Arizona general
partnership (the "Partnership") holds the necessary FCC Authorizations (as
defined in Article IV) to operate the Frequency Block B cellular system (the
"Cellular System") in the Arizona 5 - Gila Rural Service Area ("RSA") (the
"Cellular Area"); and
WHEREAS, Seller, as successor by merger to Xxxxxx Cellular of Arizona,
Inc., and Gila River Telecommunications, Inc., successor to Gila River
Telecommunications Subsidiary, Inc., ("GRT") are partners of the Partnership
pursuant to that certain Second Amended and Restated Partnership Agreement of
the Partnership dated September 30, 1997 (the "Partnership Agreement"); and
WHEREAS, the Partnership is engaged in the business of marketing, selling
and providing cellular telephone service in the Cellular Area (such business, as
conducted by the Partnership, is referred to herein as the "Business"); and
WHEREAS, Seller manages, and since September 30, 1997 has managed, the
Business as system manager to the Partnership pursuant to the Partnership
Agreement (the "System Manager"); and
WHEREAS, Seller holds (i) an interest in the Partnership (the "Interest")
which entitles it to 75% of the Partnership's income and losses and (ii) title
to the Switch (as defined herein); and
WHEREAS, Seller desires to sell and the Purchaser desires to purchase the
Interest and the Switch.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein set forth and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE
Except as otherwise provided and subject to the terms and conditions set
forth in this Agreement, Seller agrees to sell, convey, assign, transfer and
deliver to Purchaser, and Purchaser agrees to purchase from Seller, on the dates
specified herein, all of Seller's right, title and interest in and to the
Interest and the Switch (the Interest and the Switch may sometimes be referred
to as the "Purchased Assets") in exchange for the payment of the Purchase Price
(as defined herein), and the assumption by Purchaser of Seller's obligations
under the Partnership Agreement. For avoidance of doubt, Purchaser hereby
acknowledges and agrees that nothing herein will be deemed to have transferred,
assigned or otherwise conveyed to Purchaser any debt owed by the GRT to Seller
or its Affiliates or any claims relating thereto or arising therefrom, all of
which shall remain the property of Seller and its Affiliates.
ARTICLE II
INSTRUMENTS OF TRANSFER
At the Closing, (i) Seller and Purchaser shall enter into an Assignment and
Assumption Agreement substantially in the form of Exhibit A attached hereto (the
"Partnership Assignment and Assumption Agreement"), (ii) Seller shall deliver to
Purchaser the original of its partnership interest certificate representing the
Interest and (iii) Seller shall deliver to Purchaser a FIRPTA Certificate as
required by Section 1445 of the Internal Revenue Code of 1986, as amended (the
"Code"). At the Second Closing (as defined herein), Seller shall execute and
deliver to Purchaser a Xxxx of Sale substantially in the form of Exhibit B
attached hereto (the "Xxxx of Sale").
ARTICLE III
PURCHASE PRICE
Section 3.01. Purchase Price. The total purchase price for the Purchased
Assets shall be Eighty Five Million Dollars ($85,000,000.00) (the "Base Price"),
as adjusted in accordance with the provisions of Section 3.04 hereof (as
adjusted, the "Purchase Price").
Section 3.02. Indemnity Escrow. At Closing, Purchaser will deposit by wire
transfer of immediately available funds an amount equal to four percent (4%) of
the Purchase Price (the "Escrowed Amount") with X.X. Xxxxxx Trust Company,
National Association (the "Escrow Agent"), to be held, invested and disbursed by
the Escrow Agent pursuant to the terms of the Escrow Agreement substantially in
the form of Exhibit C attached hereto (the "Escrow Agreement").
Section 3.03. Payment of Purchase Price. The Purchase Price, less the
Escrowed Amount and less any Taxes Purchaser is required by law to withhold or
remit to any taxing authority on account of the transactions contemplated
hereby, shall be payable by wire transfer of immediately available funds to
Seller at Closing ("Seller's Closing Payment").
Section 3.04. Purchase Price Adjustment.
(a) As used in this Section 3.04, the following terms shall have the
meaning set forth below:
"Current Assets" means the following assets owned by the Partnership: (i)
customer accounts receivable, including roaming accounts receivable (except any
such accounts receivable owed by Seller or any Affiliate of Seller) 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) inventory, 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 Business,
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
the Partnership's inventory will be taken by representatives of Seller and
Purchaser 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 Accountant pursuant
to Section 3.04(d) below) 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 the Partnership included as Current Assets
and reflected on the Closing Certificate.
"Current Liabilities" means the Partnership's liabilities that are of a
type determined to be "current liabilities" in accordance with GAAP.
"GAAP" means generally accepted accounting principles consistently applied.
(b) The Base Price shall be increased (or decreased) by seventy-five
percent (75%) of the amount by which Current Assets exceed (or are less than)
Current Liabilities as of the Closing Date (the "Working Capital Adjustment").
(c) Seller shall prepare and submit to Purchaser, not later than 5 business
days prior to the Closing Date, a written good faith estimate of the amount of
the Working Capital Adjustment (the "Adjustment") in accordance with this
Section 3.04 and Seller's estimate of the Purchase Price resulting from the
Adjustment ("Seller's Estimate"). Seller's Estimate shall be accompanied by
supporting documents, work papers, subscriber records and other data supporting
the Adjustment and Seller's Estimate. Seller's Estimate shall be based upon the
books and records of the Business. Seller's Estimate shall be accompanied by a
certificate signed by an officer of Seller certifying that the Seller's Estimate
was calculated in good faith and in accordance with the provisions of this
Section 3.04. After the delivery of Seller's Estimate and prior to the Closing,
Purchaser and Seller shall attempt to resolve any disputes between Seller and
Purchaser with respect to Seller's proposed Adjustment. In connection therewith,
Purchaser shall have full access to Seller's records related to Seller's
proposed Adjustment. Prior to Closing, Purchaser shall advise Seller in writing
as to any dispute Purchaser has with Seller's Estimate and provide to Seller
Purchaser's calculation of the Adjustment and the Purchase Price, accompanied by
a certificate signed by a senior officer of Purchaser certifying that
Purchaser's calculation was made in good faith and supporting documents and
information, to the extent the same is available to Purchaser ("Purchaser's
Estimate"). In the event Purchaser's Estimate of the Purchase Price is less than
$100,000 less than Seller's Estimate, the Closing shall proceed with the
Purchase Price based upon Seller's Estimate. In the event the Purchaser's
Estimate of the Purchase Price is more than $100,000 less than Seller's
Estimate, then the mid-point between Seller's Estimate and Purchaser's Estimate
shall be used as the Purchase Price for purposes of Closing.
(d) Within 60 days after the Closing Date, Seller shall deliver to
Purchaser a certificate (the "Closing Certificate") signed by a senior officer
of Seller providing a compilation of the Adjustment to be made pursuant to this
Section 3.04 including any changes in the Adjustment used to determine the
Purchase Price at Closing, together with a copy of any supporting documents,
work papers, subscriber records and other data relating to such Closing
Certificate and such other supporting evidence as Purchaser may reasonably
request either prior to or after delivery thereof. If Purchaser shall conclude
that the Closing Certificate does not accurately reflect the adjustment to be
made to the Base Price in accordance with this Section 3.04, Purchaser shall,
within 40 days after their receipt of the Closing Certificate (such 40 day
period being referred to as the "Response Period"), deliver to Seller a written
statement of any discrepancies believed to exist. If Purchaser fails to so
notify Seller of any discrepancies, then the calculation of the Purchase Price
set forth in the Seller's Closing Certificate shall be controlling for all
purposes hereof and Purchaser or Seller, as the case may be, shall on or before
the fifth day following the expiration of the Response Period pay to the other
the amount which it is obligated to pay in accordance with the Closing
Certificate. On or before the fifth day following the earlier to occur of the
expiration of the Response Period and the date Seller receives Purchaser's
statement of discrepancies, Purchaser or Seller, as the case may be, shall pay
the other the amount, if any, as to which there is no discrepancy. Purchaser and
Seller shall use good faith efforts to jointly resolve their discrepancies
within 15 days of Seller's receipt of Purchaser's written statement of
discrepancies, which resolution, if achieved, shall be binding upon all parties
to this Agreement and not subject to further dispute or review. If Purchaser and
Seller cannot resolve the discrepancies to their mutual satisfaction within such
15 day period, then the matter shall be submitted to KPMG, 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 reasonably request. Each party may also furnish to the
Independent Accountants such other information and documents as it deems
relevant with the appropriate copies and notification being given to the other
party. The Independent Accountants may conduct a conference concerning the
disagreements between Seller and Purchaser at which conference each party shall
have the right to present additional documents, materials and other evidence and
to have present its or their advisors, accountants or counsel. The Independent
Accountants shall promptly render a decision on the issues presented, and such
decision shall be final and binding on the parties. Within 5 days of receipt of
the Independent Accountants' decision with respect to such dispute, if Purchaser
is determined to owe an amount to Seller, Purchaser shall pay such amount
thereof to Seller, and if Seller is determined to owe an amount to Purchaser,
Seller shall pay such amount thereof to Purchaser. All amounts owed by Purchaser
or Seller to the other in accordance with this Section 3.04(d) shall be paid by
wire transfer of immediately available funds and shall not bear any interest.
Section 3.05. Preliminary Tax Certificate. At or before the Closing, Seller
will deliver to Purchaser a tax clearance certificate from the State of Arizona
for all periods through the last completed calendar month prior to the Closing
Date (provided that if the Closing Date shall occur during the first twenty days
of a calendar month, the certificate shall be for the period through the next
previous completed calendar month), indicating that all tax returns required to
have been filed by the Partnership through and including such date have been
filed and that all Taxes required to be paid by the Partnership, as shown on
such returns, have been paid (the "Preliminary Tax Certificate"). If Seller is
unable to deliver the Preliminary Tax Certificate because the Partnership has
not paid all Taxes which it was required to pay to the applicable jurisdiction,
then Purchaser shall have the option of paying such Taxes on the Closing Date on
behalf of the Partnership, and reducing the amount of the Seller's Closing
Payment by the amount of such tax payment, which shall be treated for purposes
of this Agreement as a payment on account of the Purchase Price. Purchaser shall
furnish Seller at Closing with appropriate evidence of any such payment.
ARTICLE IV
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, 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000,
on the date (the "Closing Date") which is the latest of (a) the second (2nd) day
after the date that the Federal Communications Commission ("FCC") consent to the
transfer of control of the Partnership with respect to the Partnership's (i) FCC
licenses, consents, permits and authorizations to operate the Cellular System
(the "Cellular Authorizations") and microwave paths used in connection with the
Cellular System (the "Microwave Authorizations"), and (ii) construction permits,
if any, that have been issued by the FCC to the Partnership with respect to the
construction of a cellular telecommunications system in the Cellular Area (the
"FCC Construction Permits," and together with the Cellular Authorizations and
the Microwave Authorizations, the "FCC Authorizations"), from Seller to the
Purchaser shall have become a Final Order (as defined in Section 8.04) or (b)
the date on which all conditions to Closing set forth in Articles VIII and IX
hereof 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.
ARTICLE V
SELLER'S REPRESENTATIONS
To the extent that a representation or warranty given by Seller in this
Agreement relates to the Partnership, its assets or activities, such
representation or warranty shall only cover the time period from and after
September 30, 1997 (the date Seller acquired the Interest from U S West New
Vector Group, Inc. ("New Vector") and others); provided, however, that with
respect to switching, billing and customer care services of the Partnership, any
such representation or warranty shall only cover the time period from and after
the date (the "Services Termination Date") New Vector ceased providing such
services to the Partnership under the Services Agreement dated September 30,
1997 between Seller and New Vector, as such agreement may have been extended
from time to time. Subject to the preceding sentence, Seller, in its capacity as
owner of the Purchased Assets and in its capacity as System Manager, hereby
represents, warrants, covenants and agrees, as of the date hereof and also at
and as of the Closing Date, and, with respect to the representations and
warranties set forth in Sections 5.01, 5.02, 5.03, 5.07(a), 5.08, 5.09, 5.10,
5.13, 5.14(c), 5.15 and 5.17 to the extent they relate to the Switch, also at
and as of the date of the Second Closing (except to the extent that a
representation or warranty is given as of a particular date in which case such
representation or warranty shall be made only as of such particular date), which
representations, warranties, covenants and agreements, together with all other
representations, warranties, covenants and agreements of Seller in this
Agreement, shall survive the Closing as provided in Section 11.06, that:
Section 5.01. Organization, Qualification. (a) Seller is a corporation duly
incorporated, validly existing and in good standing under the Laws 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, as defined below. Seller has the power and
authority to execute and deliver and, subject to Seller obtaining the Required
Consents and giving the Required Notices, perform its obligations under this
Agreement and the other Transaction Documents, as defined below, and to
undertake the transactions contemplated hereby and thereby. As used herein, the
term "Transaction Documents" means this Agreement, the Transition Services
Agreement dated October 29, 2001 between Seller and Purchaser (the "Transition
Services 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.
(b) The Partnership is a general partnership duly organized and validly
existing under the laws of the State of Arizona, and has all necessary power and
authority to own and operate its properties and to carry on its business as is
now being conducted or proposed to be conducted. A true and complete copy of the
Partnership Agreement, has previously been delivered to the Purchaser. The
Partnership Agreement has not been amended and no rights thereunder have been
waived by Seller or, to Seller's knowledge, GRT where such waiver is currently
in effect. The Partnership does not own, or have any other proprietary interest
(of record, beneficial or equitable) in, any Person.
(c) Seller and, to Seller's knowledge, GRT are the only partners in the
Partnership. Schedule 5.01(c) accurately sets forth Seller's ownership interest
in the Partnership and to Seller's knowledge GRT's ownership interest in the
Partnership. The Interest and to Seller's knowledge GRT's interest in the
Partnership have been duly authorized and validly issued and are fully paid.
There are no subscriptions, warrants, options, convertible securities, calls,
rights, contracts, understandings or commitments of any character obligating the
Partnership to issue, deliver or sell any interest in the Partnership to any
Person. Except as set forth on Schedule 5.01(c), there are no subscriptions,
warrants, options, calls, rights, tag-along rights, drag-along rights, rights of
first refusal, contracts, commitments, voting trusts, proxies, understandings,
restrictions (except for the sovereign immunity of GRT and the rights and
obligations relating thereto) or arrangements relating to the Interest or, to
Seller's knowledge, the partnership interest held by GRT other than as set forth
in the Partnership Agreement.
Section 5.02. Authorization, Execution and Delivery of Agreement and
Transaction Documents. The execution, delivery and performance of this Agreement
and the other Transaction Documents by Seller and the transfer of the Purchased
Assets to Purchaser have been duly and validly authorized and approved by all
necessary corporate action, including approval by Seller's Board of Directors.
This Agreement is, and each of the other Transaction Documents when so executed
and delivered will be, a valid and binding obligation of Seller, enforceable
against it in accordance with its terms subject to bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting creditors' rights
generally.
Section 5.03. Title to Interest and Condition of Assets.
(a) Seller holds good and marketable title to the Interest, free and clear
of all Liens except for the Liens listed on Schedule 5.03(a)(i) which will be
discharged at Closing. Seller holds good and marketable title to the Switch.
Such title is free and clear of all Liens except for Permitted Liens and except
for the Liens listed on Schedule 5.03(a)(ii) which will be discharged at
Closing. Seller has full power, right and authority to sell and convey to
Purchaser good and marketable title to the Interest, free and clear of all
Liens. Seller has full power, right and authority to sell and convey to
Purchaser good and marketable title to the Switch. Seller has full power, right
and authority to sell and convey to Purchaser title to the Switch free and clear
of all Liens other than Permitted Liens. Seller has satisfied all capital calls,
contribution requirements and similar obligations to make contributions or
investments in the Partnership and is not in default under the Partnership
Agreement. Seller's balance in its capital account in the Partnership represents
75% of the aggregate balances in the capital accounts of the partners of the
Partnership.
(b) The Partnership has good and marketable title or a valid leasehold or
license interest, as applicable, to all of its properties and assets, real,
personal and mixed, including all properties and assets identified on Schedule
5.03(b)(i) and all properties and assets reflected in the Balance Sheet (as
defined in Section 5.14) and not sold, retired or otherwise disposed of since
the date thereof in the ordinary course of the Business consistent with past
practices, free and clear of all Liens except for Permitted Liens and except for
the Liens listed on Schedule 5.03(b)(ii) which will be discharged at Closing.
Except as set forth on Schedule 5.03(b)(ii), the Partnership owns or has valid
and enforceable rights to use all material rights, assets and property necessary
or material to operate the Business as it is currently operated. Except as
listed on Schedule 5.03(b)(ii), neither Seller or any Affiliate of Seller (other
than the Partnership) nor, to the Seller's knowledge, GRT or any Affiliate of
GRT (other than the Partnership) owns or has an interest in any asset used
primarily in the Business.
(c) All buildings, structures, facilities, fixtures, equipment and other
items of tangible property and assets (excluding inventory), including all
network equipment, owned or leased by the Partnership, and the Switch owned by
Seller, are 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.
(d) Seller has not caused the Partnership to engage, and to Seller's
knowledge the Partnership has not engaged, in any business other than the
Business and Seller has not caused the Partnership to have, and to Seller's
knowledge the Partnership does not have, any assets or liabilities that are not
related to the Business.
Section 5.04. Real Property. Schedule 5.04 lists all real property and
interests in real property owned or leased by the Partnership and specifies the
address or other 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 Partnership-owned real property, and
except for matters set forth on Schedule 5.04(a):
(i) the Partnership 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 5.03(b)(ii) which will be
discharged at Closing;
(ii) there are no leases, subleases, licenses, concessions, or other
agreements to which the Partnership is a party or, to Seller's knowledge,
subleases, licenses, concessions or other agreements to which the
Partnership 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 5.04,
and except for matters set forth on Schedule 5.04(b):
(i) the Partnership has valid and enforceable rights of physical and
legal ingress and egress to and from such parcel; and
(ii) neither Seller nor to Seller's knowledge the Partnership has
received any notice of, and Seller has no knowledge of, any non-compliance
with applicable building codes, zoning regulations, occupational health and
safety Laws or any other Laws applicable to such parcel or the
Partnership's or Seller's use or occupancy thereof.
Section 5.05. [Intentionally Deleted.]
Section 5.06. Contracts and Subscribers.
(a) Set forth on Schedule 5.06(a) is a list of (x) all Contracts to which
the Partnership is a party, and (y) all Contracts to which Seller or any of its
Affiliates is a party that relate primarily to the Business (all Contracts
described in clauses (x) and (y) collectively, the "Partnership Contracts"), in
each case that are in existence on the date hereof and that fall within any one
or more of the following categories:
(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 Seller or any of its Affiliates has agreed to keep, Seller has caused
the Partnership to agree to keep or to Seller's knowledge, the Partnership
has otherwise agreed to keep, information obtained from any other person or
entity confidential;
(iv) any Contract limiting or restraining the Partnership, Seller, an
Affiliate of either or any successor thereto from engaging or competing in
any manner or in any business;
(v) any Contract between or among the Partnership and any of its
partners, any Affiliate of Seller or any Affiliate of any shareholder of
Seller;
(vi) any retail store lease or cell site lease or license;
(vii) any roaming agreement, interconnection agreement or contour
extension agreement;
(viii) any Contract with a third party to provide services to
customers of the Partnership;
(xi) any commission, representative, distributorship or sales agency
Contract;
(x) any conditional sale or lease under which the Partnership, Seller
or any of its Affiliates is either purchaser or lessee relating to the
partnership assets or any property at which the partnership assets are
located;
(xi) 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 or entity;
(xii) any Contract for any charitable or political contribution;
(xiii) any license, franchise, distributorship or other agreement
which relates in whole or in part to any software, patent, trademark, trade
name, service xxxx or copyright or technical assistance;
(xiv) any Contract granting power of attorney to any other person or
entity;
(xv) any Contract for the performance of services by a third party
involving annual payments of $25,000 or more;
(xvi) any Contract for the future purchase of, or payment for,
supplies or products, involving in any one case $25,000 or more;
(xvii) any Contract for any capital expenditure or leasehold
improvement in excess of $25,000;
(xviii) any equipment lease with annual payments of more than $12,000;
(xix) any Contract having annual payments greater than $25,000 or a
commitment of $75,000 or more in the aggregate; and
(xx) any other material Contract not made in the ordinary course of
business consistent with past practice.
Seller has heretofore delivered or made available to Purchaser true and correct
copies of the Contracts existing on the date of this Agreement that are required
to be set forth on Schedule 5.06(a), including all amendments, supplements and
modifications thereto or waivers currently in effect thereunder. To Seller's
knowledge, neither GRT nor any Affiliate of GRT (other than the Partnership) is
a party to any Contract in existence as of the date hereof that relates
primarily to the Business.
(b) Except as disclosed on Schedule 5.06(b), Seller is not, and Seller has
not caused the Partnership to be, and to Seller's knowledge, the Partnership is
not, in Default in any material respect with respect to any Partnership
Contract, and to Seller's knowledge there is no Default in any material respect
by the other parties to any Partnership Contract. The Partnership Contracts are
in full force and effect, enforceable against the Partnership, Seller or one of
its Affiliates, as applicable, that is a party thereto in accordance with their
terms.
(c) As of July 31, 2001, there were approximately 15,948 subscribers of the
Business. Schedule 5.06(c) sets forth the name of each of the price plans
presently in the process of being implemented or presently covering the active
subscribers of the Business, together with the approximate number of
subscribers, as of July 31, 2001, 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 Seller, no party to a Partnership Contract (which
party accounts for $50,000 or more annually in business with the Partnership)
has informed Seller or to Seller's knowledge the Partnership of its intent to
cancel or otherwise modify in any material respect, other than in the ordinary
course of its relationship with the Partnership or the Business, or to decrease
significantly or limit significantly its purchases, services, supplies or
materials under such Partnership Contract.
(e) Each roaming agreement between the Partnership and any carrier to which
the Partnership has paid roaming charges in the past 12 months contains
provisions requiring each party thereto to use a pre-call validation ("PV")
system in all markets covered by such roaming agreement and that any call
completed by the serving carrier under such roaming agreement shall be the sole
responsibility of such serving carrier if either (i) a PV request has determined
that the roamer placing such call is not a valid customer of the home carrier or
(ii) the call has been placed using an unauthorized ESN after entry to the
Industry Negative File has become effective. Notwithstanding the foregoing
sentence, in no event shall Seller or the Partnership be liable for any point to
point validations where the carrier "assumes positive" (as such term is commonly
understood in the industry) at the switch level.
(f) Schedule 5.06(f) sets forth all products and services that the
Partnership offers or provides to its subscribers of the Cellular System in
addition to voice cellular service.
Section 5.07. Governmental Licenses.
(a) Schedule 5.07(a) lists all FCC Authorizations used by the Partnership
in the Business. The Partnership holds all FCC Authorizations and those
licenses, permits, certificates of public convenience and necessity of any other
governmental body having jurisdiction over the Business, which are required in
connection with the ownership and operation of the Business as it is presently
being conducted (collectively referred to as the "Authorizations") except for
such licenses, consents, permits, approvals and authorizations for which the
failure to so hold would not be material. All FCC Authorizations are in full
force and effect. Seller and the Partnership have complied in all material
respects with the terms of the FCC Authorizations. True and correct copies of
the FCC Authorizations, and all amendments thereto to the date hereof, have been
delivered or made available by Seller to Purchaser.
(b) To Seller's knowledge, there are no existing applications, petitions to
deny or complaints or proceedings (other than proceedings affecting the wireless
industry generally) pending before the FCC or any state public utility
commission ("State PUC") having jurisdiction over the Business or the
Partnership relating to the FCC or State PUC Authorizations or the Business.
Neither Seller nor to Seller's knowledge the Partnership has received notice of
any claim of material Default with respect to any of the FCC and State PUC
Authorizations. None of the FCC Authorizations will be, or could be reasonably
expected to be, adversely affected by consummation of any action of Seller taken
in connection with the transactions contemplated hereby or by any other
Transaction Document. The Partnership is the sole holder of the Authorizations.
(c) The map attached hereto as Schedule 5.07(c) is a true and accurate
depiction of the current Cellular Geographic Service Area and boundaries for the
Cellular System in all material respects, as such term is defined in Section
22.911 of the FCC's rules, 47 C.F.R. Section 22.911.
Section 5.08. Compliance with Laws. Except as set forth on Schedule 5.08,
Seller is and, to Seller's knowledge, the Partnership is in material compliance
with and Seller is not and has not caused the Partnership to be, and, to
Seller's knowledge, the Partnership is not, in 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 Business.
Section 5.09. No Conflicts; Consents. Except for consent by the FCC to the
transfer of control of the Partnership from Seller to Purchaser and the
consents, authorizations and approvals identified on Schedule 5.09
(collectively, the "Required Consents") and the registrations, filings and
notices identified on Schedule 5.09 ("Required Notices"), neither the execution
and delivery of this Agreement nor any of the other Transaction Documents by
Seller nor the performance by it 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 or regulatory official,
body or authority under, (i) any Law to which Seller, the Partnership or the
Business is subject, (ii) any Partnership Contract listed on Schedule 5.06(a) or
any Authorization, (iii) the Partnership Agreement or (iv) the certificate of
incorporation or bylaws of Seller, except, with respect to clause (i) above,
where such Default or failure to gain a consent or file a notice would not be
material.
Section 5.10. Litigation and Legal Proceedings. Except as set forth on
Schedule 5.10, there is no outstanding judgment, order, writ, injunction, decree
or award of any court, arbitrator or governmental or regulatory official, body
or authority (including the FCC or any state body having jurisdiction over the
Business) against Seller or the Partnership affecting the Business or the
Purchased Assets, or which questions the validity of any action taken or to be
taken by Seller 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 5.10, there is no litigation,
arbitration, investigation or other proceeding of or before any court,
arbitrator or governmental or regulatory official, body or authority (including
the FCC or any state body having jurisdiction over the Business) pending, or, to
Seller's knowledge, threatened, against Seller or the Partnership the result of
which, alone or in the aggregate, could reasonably be expected to adversely
affect the Business or the Purchased Assets, or the transactions contemplated by
this Agreement, and Seller has no knowledge of any reasonably likely basis
therefor.
Section 5.11. System Employees. The Partnership does not have any
employees. Schedule 5.11 sets forth a true and complete list of the names and
base salaries of all employees of the Seller primarily involved in the operation
of the Business (the "System Employees"). Except as set forth on Schedule 5.11,
Seller and the Partnership: (i) have in all material respects withheld and
reported all amounts required by law or by agreement to be withheld and reported
with respect to wages, salaries and other payments to 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 court, arbitrator or governmental or
regulatory official, body or authority (including the FCC or any state body
having jurisdiction over the Business or Seller), with respect to unemployment
compensation benefits, social security or other benefits or obligations for
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 Seller's knowledge, threatened, claims or actions against Seller or the
Partnership under any worker's compensation policy or long-term disability
policy involving any System Employee. Except as set forth in Schedule 5.11,
there are no actions, suits, claims or grievances pending, or, to the knowledge
of Seller, threatened relating to any labor, safety or discrimination matters
involving any System Employee, including charges of unfair labor practices or
discrimination complaints. Neither the Partnership nor Seller has engaged in any
unfair labor practice within the meaning of the National Labor Relations Act
with respect to any System Employee or the Business. Except as set forth in
Schedule 5.11, neither the Partnership nor Seller 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 Business and no such collective
bargaining agreement is being negotiated by Seller or any Affiliate of Seller or
the Partnership. There are no collective bargaining agreements covering any of
the System Employees. No consent of any union (or similar group or organization)
is required in connection with the consummation of the transactions contemplated
hereby. There are no pending, or, to Seller's knowledge threatened (a) union
representation petitions respecting the System Employees, (b) efforts being made
to organize any of the System Employees, or (c) strikes, slow downs, work
stoppages, or lockouts or threats affecting the System Employees. Neither the
Partnership nor Seller has made any representation, warranty or agreement with
any of the System Employees or any other employees of Seller or the Partnership
concerning employment with Purchaser after the Closing.
Section 5.12. System Employee Benefits. The Partnership does not maintain
or sponsor any System Employee Benefit Plans. Except as set forth on Schedule
5.12 attached hereto, Seller does not maintain or sponsor any System Employee
Benefit Plans with respect to the System Employees. For purposes of this
Agreement, the term "System Employee 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 which is or has been maintained, contributed to, or
required to be contributed to, by Seller, the Partnership or any ERISA Affiliate
of either (which means any Affiliate or any entity which is required to be
aggregated with Seller or the Partnership under Section 414 of the Code). Each
System Employee 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. None of the System Employee Benefit Plans is subject to
Title IV of ERISA (including any multiemployer plan within the meaning of ERISA
Section 3(37) or 4001(a)(3)). No System Employee 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 none
of the Partnership, Seller or any ERISA Affiliate of either has represented,
promised or contracted (whether in oral or written form) to any System Employee
(either individually or to System Employees as a group) or any other person that
such Employee(s) or other person would be provided with retiree health, except
to the extent required by statute. Except as set forth on Schedule 5.12, 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 System Employee
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 System Employee. Neither Purchaser, the Partnership, nor any
post-closing affiliate of Purchaser or the Partnership will be subject to any
liability attributable to any System Employee Benefit Plan as a result of the
execution of this Agreement or consummation of the transactions contemplated
hereby.
Section 5.13. Tax Matters. Except as set forth on Schedule 5.13 attached
hereto, as relates to the Partnership or the Business, the Partnership has
timely filed, and with respect to the Switch, Seller has timely filed, all Tax
returns and statements which it was required to file, and has paid all Taxes due
prior to the date hereof and will pay when due (or contest in good faith by
appropriate proceedings) all Taxes which may become due on or before the Closing
Date. Except as set forth on Schedule 5.13, the Partnership has not waived any
statute of limitations in respect of Taxes or agreed to an extension of time
with respect to any Tax assessment or deficiency. To Seller's knowledge, there
are no unresolved claims raised by any Tax authority concerning the Tax
liability of the Partnership. Except as set forth on Schedule 5.13, all Taxes
related to the Purchased Assets or the Business which the Partnership or Seller
is required by law to withhold or to collect for payment have been duly withheld
and collected, and have been paid.
Section 5.14. Financial Statements.
(a) The Purchaser has heretofore been furnished with the following
information with respect to the Business:
(i) true and complete copies of audited statements of income of the
Partnership for the years ended December 31, 1999 and December 31, 2000
(such statements collectively, the "Historical Financial Statements"), such
income statements being included in Schedule 5.14(a)(i); and
(ii) true and complete copies of the unaudited balance sheet of the
Partnership at July 31, 2001 (the "Balance Sheet") and the related
unaudited statement of income of the Partnership for the seven-month period
then ended (such statement together with the Balance Sheet, the "Current
Financial Statements"), such balance sheet and income statement being
included in Schedule 5.14(a)(ii).
(b) Each of the Historical and Current Financial Statements delivered under
Section 5.14(a) above was prepared in accordance with GAAP applied on a basis
consistent with prior periods and past practices except as otherwise stated
therein and with respect to the Current Financial Statements, subject to normal
recurring year-end adjustments and except in each case for the omission of
certain footnotes and other presentation items required by GAAP with respect to
audited financial statements; the balance sheets included in such Current
Financial Statements fairly present the financial condition of the Partnership,
as of the close of business on the date thereof and do not include any assets
that are not intended to constitute part of the assets used in the Business
after giving effect to the transactions contemplated hereby; and each of the
statements of income included in such Historical and Current Financial
Statements fairly presents the results of operations of the Partnership, for the
fiscal period then ended.
(c) Except as set forth on Schedule 5.14(c) attached hereto, with respect
to the Business, since July 31, 2001, Seller has not and has not caused the
Partnership to, and, to Seller's knowledge, the Partnership has not:
(i) sold, assigned, or transferred any of the material, assets,
properties or rights owned or leased by the Partnership (except pursuant to
existing Partnership Contracts 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 relating to the
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 assets used in the Business 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
Purchased Assets, the Partnership's assets or the Business or the
transactions contemplated by this Agreement; or
(v) entered into any agreement or understanding to do any of the
foregoing.
Section 5.15. Insurance. The Partnership has maintained all policies of
title, liability, fire, worker's compensation and other forms of insurance
(including bonds) that 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 Seller nor the Partnership 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 the
Partnership or has given Seller or the Partnership any notice or other
indication of its intention to cancel or reduce any such coverage. The
Partnership and Seller 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 5.16. Brokers. Except for Xxxxxxx & Associates, L.P., neither
Seller nor the Partnership has engaged any agent, broker or other person acting
pursuant to the express or implied authority of Seller or the Partnership 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 Purchased Assets.
Section 5.17. Environmental Compliance.
(a) Except as set forth on Schedule 5.17 hereto, (i) neither the
Seller nor to Seller's knowledge the Partnership 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 hereinafter defined) at, on or in
connection with the ownership or occupancy of the assets of the Partnership
or any other assets that relate primarily to the Business in violation of
any applicable Environmental Laws (as hereinafter defined); (ii) there has
not been any generation, use, transportation, treatment, storage, release
or disposal of any Hazardous Substance in connection with the ownership,
occupancy or use by the Partnership or Seller of the assets of the
Partnership or any other assets that relate primarily to the Business or
on, in or under any property or facility owned or leased by the Partnership
or any property or facility owned or leased by Seller that relates
primarily to the Business that 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 Seller or to Seller's
knowledge the Partnership at, on or in connection with the ownership or
occupancy of the assets of the Partnership or any other assets that relate
primarily to the Business has been and is being handled or dealt with in
material compliance with all Environmental Laws; (iv) to Seller's
knowledge, the operation of the Business by each of Seller and the
Partnership is in compliance with all Environmental Laws; (v) to Seller's
knowledge, there are no claims against the Partnership or Seller by third
parties, including governmental agencies, pending or threatened under
Environmental Laws arising out of the ownership or use by the Partnership
of its assets or out of the ownership or use by the Seller of assets that
relate primarily to the Business or out of the condition of any such
assets; and (vi) to Seller's knowledge, there are no penalties that may be
assessed against Seller or the Partnership for voluntary self-disclosures
under Environmental Laws that have been made by the Partnership or for
matters disclosed therein.
(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 agency or
court to be a hazardous or toxic substance regulated under federal or state
law, and shall include petroleum and petroleum products.
(c) For purposes of this Agreement, the term "Environmental Laws"
shall mean common law, CERCLA, RCRA, and any applicable statutes,
regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, directives, authorizations, concessions, franchises and
similar items of all federal, state, interstate or local 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 manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances; or (iii)
the ownership, occupancy or operation of the assets used in the Business.
Section 5.18. Accounts Receivable. All accounts receivable of the
Partnership as set forth on the Balance Sheet and all subsequent balance sheets
and schedules required to be delivered pursuant to this Agreement, including the
Closing Certificate, 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 Partnership's
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 the Seller's historical experience in collecting the
Partnership's accounts receivable. As of the date of this Agreement, to Seller's
knowledge, there are no facts or circumstances that will or could reasonably be
expected to result in the allowances for collection losses on the Balance Sheet
being inadequate to cover expected collection losses.
Section 5.19. Undisclosed Liabilities. Seller has not caused the
Partnership to have, and to Seller's knowledge the Partnership does not have,
any Liabilities, other than (a) as specified in the Balance Sheet (except as
heretofore paid or discharged), (b) as incurred in the ordinary course of
business consistent with past practice since the date of the Balance Sheet, (c)
pursuant to the Partnership Contracts set forth on Schedule 5.06(a) or not
required to be set forth on such Schedule, (d) pursuant to this Agreement, or
(e) as specified on Schedule 5.19.
ARTICLE VI
PURCHASER'S REPRESENTATIONS
Purchaser hereby represents, warrants, covenants and agrees, as of the date
hereof and also at and as of the Closing Date, which representations,
warranties, covenants and agreements, together with all other representations,
warranties, covenants and agreements of Purchaser in this Agreement, shall
survive the Closing as provided in Section 11.06, that:
Section 6.01. Organization; Qualification. Purchaser is a general
partnership duly formed and validly existing under the laws of the state of its
organization. Purchaser has all necessary power and authority to (a) own and
operate its properties, (b) carry on its business as it is now being conducted,
and (c) carry out the transactions contemplated by this Agreement and to own the
Purchased Assets and to operate the Business.
Section 6.02. Consents; Authorization; Execution and Delivery of Agreement.
Except for compliance with any applicable requirements of the Xxxx-Xxxxx-Xxxxxx
Act and consent by the FCC to the transfer of control of the Partnership from
Seller to Purchaser all necessary consents and approvals have been obtained by
Purchaser for the execution and delivery of this Agreement. The execution,
delivery and performance of this Agreement by Purchaser has been duly and
validly authorized and approved by all necessary partnership action. This
Agreement is a valid and binding obligation of Purchaser, enforceable against it
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect affecting creditors'
rights generally.
Section 6.03. Litigation and Legal Proceedings. There is no outstanding
judgment, order, writ, injunction, decree or award of any court, arbitrator, or
governmental or regulatory official, body or authority (including the FCC or any
state body having jurisdiction over the Purchaser) against Purchaser, and there
is no litigation, arbitration, investigation or other proceeding of or before
any court, arbitrator or governmental or regulatory official, body or authority
(including the FCC or any state body having jurisdiction over the Purchaser)
pending, or, to Purchaser's knowledge, threatened, against Purchaser or its
assets which individually or in the aggregate, if adversely determined, could
reasonably be expected to result in a Purchaser Material Adverse Effect or which
questions the validity of any action taken or to be taken pursuant to or in
connection with the provisions of this Agreement or the consummation of the
transactions contemplated hereby by the Purchaser.
Section 6.04. Brokers. Purchaser has not engaged any agent, broker or other
person acting pursuant to the express or implied authority of Purchaser which is
or may be entitled to a commission or broker or finder's fee in connection with
the transactions contemplated by this Agreement or otherwise with respect to the
sale of the Purchased Assets.
Section 6.05. Compliance with Laws. Purchaser is in material compliance
with, and is not in material Default under, any Law applicable to its assets or
its business that could reasonably be expected to adversely affect its ability
to hold title to the Purchased Assets at Closing or to fulfill its obligations
under this Agreement and the Transaction Documents from and after Closing.
Section 6.06. FCC Matters. Purchaser is fully qualified under the
Communications Act of 1934, as amended (the "Communications Act"), to be an FCC
licensee, and to be approved as the transferee of the Interest. Purchaser knows
of no reason why the FCC will not grant its consent to the transfer of control
of the Partnership from Seller to Purchaser.
Section 6.07. Financial Ability to Close. Purchaser specifically represents
and warrants to Seller that Purchaser at Closing will have the financial ability
to perform its obligations under this Agreement. Furthermore, Purchaser
specifically agrees with Seller that the obligation of Purchaser to consummate
the transactions contemplated hereby is not subject to any financing
contingency.
Section 6.08. Environmental Site Assessments. Purchaser has delivered to
Seller 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 were
ordered by Purchaser with respect to the Business. Seller acknowledges that it
is not entitled to rely on such reports (since the consultants did not prepare
them for the benefit of Seller).
Section 6.09. Acknowledgement of DOC's Right to Receive GRT Distributions.
Purchaser hereby acknowledges that, in connection with a loan (the "Loan") that
GRT obtained from Xxxxxx Operating Company ("DOC"), GRT (i) pledged its
partnership interest in the Partnership to DOC and (ii) irrevocably authorized
and directed the Partnership to deliver to DOC 60% of all "Partnership
Distributions" (as defined in that certain Non-Recourse Term Loan Agreement
dated September 30, 1997 between DOC and GRT) after September 30, 1998 to be
applied against amounts owed under the Loan. Purchaser agrees to cause the
Partnership to honor such irrevocable authorization during any period Purchaser
or any of its Affiliates serves as System Manager of the Partnership.
ARTICLE VII
SELLER'S AND PURCHASER'S COVENANTS
Section 7.01. Financial Statements and Cellular System Information. Seller
covenants and agrees that from the date of execution of this Agreement until the
Closing, Seller shall provide Purchaser, as soon as they become available and in
any event within 60 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 Business ("Interim Financial Statements").
Section 7.02. Governmental Approvals.
(a) Purchaser and Seller covenant and agree that they will fully cooperate
with each other, and do all things reasonably necessary to assist each other in
obtaining all consents and approvals and filing all notices necessary with
respect to the Authorizations and applications therefor for transfer to
Purchaser of control of the Partnership as soon as practicable after the date
hereof. Purchaser's cooperation shall include the furnishing of financial and
other information specifically with respect to Purchaser 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 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 upon the
Notifying Party's request the other shall use all commercially reasonable
efforts to furnish a representative to attend 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. Purchaser and
Seller acknowledge that they have filed the necessary applications and other
filings with the FCC seeking consent to the transfer of control of the
Partnership to Purchaser. Each of Purchaser and Seller hereby agrees to
diligently pursue the processing of such applications and filings and to file
for all other necessary regulatory approvals for the consummation of the
transactions contemplated by this Agreement within fifteen business days of the
date of execution of this Agreement to the extent any such filings have not been
made prior to the date of execution of this Agreement. Neither party shall take
any action or fail to take any action where such act or omission is likely to
cause the FCC not to grant its consent to the transfer of control of the
Partnership. Purchaser shall bear the expense of all filing fees in connection
with any filings pursuant to this Section 7.02(a).
(b) Seller and Purchaser acknowledge and agree that no filing under the
Xxxx-Xxxxx-Xxxxxx Act needs to be made in connection with the transactions
contemplated by this Agreement.
Section 7.03. Third Party Consents; Closing Conditions.
(a) Seller will use commercially reasonable efforts to obtain all Required
Consents and give all Required Notices as promptly as practicable. Purchaser and
Seller covenant and agree that each of them will reasonably cooperate with each
other, and Purchaser will do all things reasonably necessary to assist Seller,
to obtain all Required Consents and give all Required Notices, including the
furnishing of financial and other information specifically with respect to
Purchaser, its Affiliates, or Seller, as the case may be, reasonably required by
the Person whose consent or approval is being sought. Purchaser and Seller shall
use all commercially reasonable efforts to consummate the transactions
contemplated hereby.
(b) Purchaser and Seller hereby covenant and agree to use, and Seller shall
cause the Partnership to use, all commercially reasonable efforts to satisfy, or
assist the other party in satisfying, the closing conditions applicable to the
Purchaser in Article VIII hereof and the Seller in Article IX hereof prior to
the Closing Date.
Section 7.04. Conduct of Business. (a) From and after the date hereof until
the Closing Date, Seller shall not, and shall cause the Partnership not to,
engage in any practice, take any action or enter into any transaction outside
the ordinary course of business without the prior approval of Purchaser, which
approval shall not be unreasonably withheld or delayed, and Seller shall and
shall cause the Partnership to continue to operate the Business in the ordinary
course consistent with past practices and in compliance with the Partnership
Agreement. In furtherance and not in limitation of the foregoing, from and after
the date hereof, Seller shall (and, with respect to subsections 7.04(a)(i),
(ii), (iii), (vi) and (xi), Seller shall cause the Partnership to):
(i) operate the Business in accordance with the FCC Authorizations,
and comply in all material respects with all FCC rules and regulations
relating thereto;
(ii) except as disclosed on Schedule 7.04(a)(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 asset of the Partnership, the Switch or any asset of
Seller or any Affiliate of Seller used primarily in the Business, other
than the assets listed in Schedule 7.15 or in connection with replacements
with assets of like use and value, or with the prior written approval of
Purchaser, which approval will not be unreasonably withheld or delayed;
(iii) refrain from amending in any material respect, or terminating
any of the Partnership Contracts, without Purchaser's prior written
approval, which approval will not be unreasonably withheld or delayed; and
refrain from entering into any store leases, cell site leases or licenses,
interconnect agreements, agreements with Affiliates or other material
Contracts, without Purchaser's prior written approval, which approval will
not be unreasonably withheld or delayed.
(iv) maintain insurance on the assets used in the Business comparable
to that maintained prior to the date hereof;
(v) maintain its books and records in accordance with prior practice;
(vi) take all actions necessary to maintain all of the Partnership's
rights and interest in, and the validity of, the FCC Authorizations and not
permit any of the FCC Authorizations to expire or to be surrendered or
voluntarily modified in a manner materially adverse to the operation of the
Cellular System, 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 FCC
Authorizations; or fail to prosecute with commercially reasonable due
diligence any pending applications to any governmental authority; and
provide to Purchaser copies of all applications, correspondence, pleadings
and other documents furnished to or received from the FCC relating to the
Cellular System;
(vii) notify Purchaser in writing promptly after learning of the
institution of any material action against the Partnership or Seller
relating to the Cellular System in any court, or any action against the
Partnership or Seller relating to the Cellular System before the FCC or any
other governmental agency, and notify Purchaser in writing promptly upon
receipt of any administrative or court order relating to the Business or
the Cellular System;
(viii) maintain the Business's equipment, systems and other fixed
assets as necessary to maintain the Business's reliability standards,
footprint coverage and network capacity in accordance with the prior
practice of Seller as System Manager;
(ix) continue in accordance with past practice of Seller as System
Manager all marketing and promotions relating to the maintenance and growth
of subscribers of the Business;
(x) maintain the relations with the suppliers, customers and
distributors of the Business and any others having business relations with
the Business;
(xi) refrain from incurring or guaranteeing indebtedness or incurring
other balance sheet liabilities outside the ordinary course of business
consistent with past practice;
(xii) not cause to occur any of the events or occurrences described in
Section 5.14(c) hereof; and
(xiii) operate the Business in accordance with the Authorizations
other than the FCC Authorizations and comply in all material respects with
all Laws applicable to it, including the regulations of any state body
having jurisdiction over the Business or the Partnership, other than FCC
rules and regulations.
(b) Seller shall use all commercially reasonable efforts to keep available
the services of the System Employees and of all agents of the Business.
Section 7.05. Access. Upon reasonable prior notice from Purchaser and
provided that significant disruption does not result, Seller shall, and shall
cause the Partnership to, (a) give Purchaser and its authorized representatives
reasonable access during all reasonable times to the Partnership's books and
records, facilities and assets comprising or relating to the Partnership or the
Business, (b) provide such financial and operating data and other information
with respect to the Partnership or the Business as Purchaser may reasonably
request, and (c) make its officers, agents and affiliates available to
Purchaser.
Section 7.06. System Employees. Upon reasonable notice, Seller shall
provide Purchaser with reasonable access to the System Employees during normal
business hours. Such access shall be in accordance with applicable law and for
the purpose of performing drug tests, administering employment applications,
interviewing employees, and informing employees about Purchaser benefit plans.
Requests for the necessary information to perform background checks can be
included in the employment applications. All System Employee contact by
Purchaser will be done on the Partnership's premises and Purchaser's
representative(s) will be accompanied by the Seller's Human Resource
representative(s). Purchaser shall have access to System Employees two weeks
before the Closing for the purpose of transition training, provided that such
training does not unreasonably interfere with the System Manager's operation of
the Business. At least 30 days prior to the Closing Date, Purchaser shall
provide written notice to Seller identifying any System Employees to whom
Purchaser does not intend to extend offers of employment. Any medical plans
offered by Purchaser to System Employees hired by Purchaser shall contain no
restrictions or limitations with respect to pre-existing conditions, except to
the extent any such restrictions or limitations actually applied to the System
Employees prior to the Closing Date. Seller shall, at its option, effective
immediately prior to Closing, terminate or retain the employment of any System
Employees not to be hired by Purchaser and, as soon as practicable after
Closing, shall provide to those terminated System Employees who have not been
employed by Purchaser severance benefits, if any, in accordance with the current
severance arrangements covering the System Employees. Seller shall also pay off
all accrued vacation and sick time for all terminated System Employees and all
System Employees hired by Purchaser. As of the Closing Date, all System
Employees hired by Purchaser shall cease to participate as active employees in
or accrue benefits under System Employee Benefit Plans or any other employee
benefit plans that are sponsored by Seller. From and after the Closing Date,
Purchaser shall cause each employee benefit plan, program, agreement and
arrangement maintained by Purchaser (including any 401(k) plans) in which any
System Employee hired by Purchaser participates to treat all service accrued or
deemed accrued prior to the Closing Date with Seller and its Affiliates and
their respective predecessors, successors and assigns as service rendered to
Purchaser and its Affiliates for all purposes under each such plan, program,
agreement and arrangement of Purchaser, other than for benefit accrual purposes
under any defined benefit plan maintained or sponsored by Purchaser. Purchaser
shall take all appropriate action to permit System Employees hired by Purchaser
who were participants in Seller's 401(k) plan and who received distributions of
their account balances from Seller's 401(k) plan in connection with the
consummation of the transactions contemplated hereby to make a direct rollover
pursuant to Section 401(a)(31) of the Code to Purchaser's 401(k) plan. Nothing
contained in this Agreement shall confer upon any System Employee any right with
respect to continued employment by Seller or Purchaser following the Closing
Date.
Section 7.07. Non-solicitation; No Shop.
(a) From the date of this Agreement until one year from the Closing Date,
Purchaser agrees that it will not, except as expressly provided in the next
sentence, directly or indirectly through any Affiliate or representative or
otherwise, recruit or solicit any management employee of Seller or any Affiliate
of Seller to become an employee, independent contractor or consultant of
Purchaser or of any of its Affiliates. However, Purchaser and its Affiliates
shall not be prohibited from recruiting, soliciting, offering to employ or
employing any such management employee who (i) contacts Purchaser or its
subsidiaries on his or her own initiative without solicitation directly or
indirectly by Purchaser or its Affiliates or on Purchaser's or its Affiliates'
behalf, or (ii) is solicited directly by Purchaser or its Affiliates, provided
that there was no direct or indirect communication regarding Seller or the
solicited management employee between the person making such solicitation and
any of Purchaser's representatives who were given access to Information (as
defined in the NDA) of Seller in connection with the negotiation of this
Agreement, or (iii) is identified as a result of a search by Purchaser or its
Affiliates for employees through the use of one or more general advertisements
in the media (including trade media) or through the engagement of one or more
firms to conduct searches that are not targeted or focused on Seller and its
subsidiaries.
(b) Prior to the Closing, neither Seller nor any Affiliate of Seller shall,
and Seller shall not cause the Partnership to, directly or indirectly, 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 the Business or any interest therein (other than
GRT's partnership interest in the Partnership), whether by acquisition of the
Interest, substantially all assets of the Partnership, by merger or otherwise.
Furthermore, prior to Closing, neither Seller nor any Affiliate of Seller shall,
Seller shall not cause the Partnership to, and Seller shall use all reasonable
efforts to cause the Partnership not to, directly or indirectly, sell or agree
to sell the Business or any interest therein (other than GRT's partnership
interest in the Partnership), whether by acquisition of the Interest,
substantially all assets of the Partnership, by merger or otherwise. Seller
shall instruct its officers, trustees, beneficiaries, agents and affiliates to
refrain from doing any of the above.
Section 7.08. Restrictions on Certain Actions. From the date hereof until
the earlier to occur of the Closing Date or the termination of this Agreement,
Purchaser and its Affiliates will not, in any manner, directly or indirectly,
solicit, initiate, encourage or participate in applications, bids, purchases or
negotiations with respect to the acquisition of any interest in an FCC license,
permit, approval or authorization that, if consummated, would have the effect
under the Communications Act of preventing or delaying Purchaser from
consummating the transactions contemplated by this Agreement.
Section 7.09. Supplemental Disclosure. Seller shall have the right from
time to time prior to the Closing Date to supplement in writing the Schedules
hereto with respect to any event, matter, condition or circumstance first
arising after the date of this Agreement that, if existing or known as of the
date of this Agreement, would have been required to be set forth or described in
the Schedules hereto and that does not arise out of a breach by Seller of a
covenant in Article VII (other than a breach of a covenant in Article VII that
was outside Seller's control) (collectively, the "Updates"). In conjunction with
the Updates, Seller shall also specify the amount of Losses (as such term is
defined in Section 11.01) reasonably expected by Seller to result from the
Updates (the "Expected Loss Amount"). In the event that the aggregate Expected
Loss Amount resulting from such Updates is less than $1,700,000, Purchaser shall
be deemed to have waived its right to terminate this Agreement pursuant to
Section 13.02(c) as a result of such Updates and it shall be required to
consummate the transactions contemplated herein (subject to the satisfaction of
the conditions set forth in Article VIII), provided, however, that Purchaser
shall be entitled to seek indemnification for any Losses, including any Losses
suffered by Purchaser as a result of the Updates, pursuant to Article XI. If,
however, the aggregate Expected Loss Amount equals or exceeds $1,700,000,
Purchaser shall be entitled to either (i) consummate the transactions
contemplated herein but upon doing so Purchaser shall have automatically and
irrevocably been deemed to have released Seller and its Affiliates for all
Losses suffered by Purchaser as a result of such Updates in excess of
$1,700,000, provided, however, that Purchaser shall be entitled to seek
indemnification pursuant to Article XI for all Losses suffered by Purchaser as a
result of such Updates up to $1,700,000 and for all other Losses not related to
the Updates, or (ii) terminate this Agreement pursuant to Section 13.02(c).
Section 7.10. Disclaimer of Other Representations and Warranties. PURCHASER
ACKNOWLEDGES AND AGREES THAT SELLER DOES NOT MAKE, AND HAS NOT MADE, ANY
REPRESENTATIONS OR WARRANTIES RELATING TO SELLER, THE PARTNERSHIP OR ITS ASSETS,
THE BUSINESS, OR THE INTEREST OTHER THAN THE REPRESENTATIONS AND WARRANTIES OF
SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT. IN ADDITION, PURCHASER
ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT MADE ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A SPECIFIC PURPOSE WITH REGARD TO EITHER THE
ASSETS USED IN THE BUSINESS OR THE BUSINESS ITSELF. Without limiting the
generality of the disclaimer set forth in the two preceding sentences, Seller
does not make, and Seller, its officers, employees, representatives and agents
have not made, and shall not be deemed to have made any representations or
warranties in the Confidential Information Memorandum dated as of June, 2001
relating to the transaction contemplated by this Agreement, and any supplements
or addenda thereto (collectively, the "Offering Memorandum"), any presentation
relating to Seller, the Partnership or its assets, the Business or the Interest
given in connection with the transactions contemplated by this Agreement, in any
filing made by or on behalf of Seller or the Partnership with any governmental
agency or in any other information provided to or made available to Purchaser,
and no statement contained in the Offering Memorandum, made in any such
presentation, made in any such filing or contained in any such other information
shall be deemed to be a representation or warranty of Seller hereunder or
otherwise. No Person has been authorized by Seller to make any representation or
warranty in respect of Seller, the Partnership or its assets, the Business or
the Interest in connection with the transactions contemplated by this Agreement
that is inconsistent with or in addition to the representations and warranties
of Seller expressly set forth in this Agreement.
Section 7.11. Transitional Arrangements. Seller shall, and shall cause the
Partnership to, cooperate with Purchaser in establishing network conversion and
switching conversion arrangements and implementing other transitional
arrangements as reasonably requested by Purchaser provided that such cooperation
shall not unreasonably disrupt Seller's or the Partnership's operation of the
Business and neither the Partnership nor Seller shall be required to incur any
out-of-pocket costs in connection therewith.
Section 7.12. Final Tax Clearance Certificates. Seller shall deliver to
Purchaser no later than 60 days after the Closing Date a tax clearance
certificate from the State of Arizona, for all periods through the Closing Date,
indicating that all tax returns required to have been filed by the Partnership
through and including such date have been filed and that all Taxes required to
be paid by the Partnership, as shown on such returns, have been paid.
Section 7.13. [Intentionally omitted].
Section 7.14. Personal Computers. Within ten business days after the
Closing Date, Seller shall have the right to uninstall and/or remove from the
personal computers that are used by the Partnership in the Business any
proprietary software owned by Seller; provided that such uninstallation or
removal shall take place at mutually convenient times for Purchaser and Seller
within such ten-business day period and in the presence of both Seller's and
Purchaser's IT personnel. Purchaser will assume any obligations of Seller for
any Microsoft Operating System software and the Microsoft Office suite of
products in the personal computers (which shall not be uninstalled or removed).
Section 7.15. Assets Held by Affiliates. All of the assets (including
Contracts) set forth in Schedule 5.03(b)(ii) under the heading "Affiliate
Rights" that are held by Seller or any of its Affiliates, other than those
assets set forth in Schedule 7.15, shall be conveyed or assigned to the
Partnership prior to the Closing, and Seller shall obtain all consents and give
all notices necessary to do so and shall furnish copies of such consents and
notices to Purchaser. The assets set forth on Schedule 7.15 shall not be
assigned or conveyed to the Partnership.
Section 7.16. Call Agreement. Purchaser and Seller shall amend prior to the
Closing that certain Agreement for Wireless Visiting Service dated May 25, 2001
("Call Agreement") between Purchaser and Seller to delete from Exhibit A to the
Call Agreement all references to the Cellular System, which amendment shall be
effective as of the Closing Date.
Section 7.17. Transfer of Title to Switch. Provided that the sale of the
Interest to Purchaser is consummated, on the fifth business day (the "Second
Closing") following the date on which Seller ceases to provide the services
listed on Schedule 7.17 under the Transition Services Agreement with respect to
both the Cellular System and California Rural Service Area No. 7, Seller agrees
to assign and transfer to Purchaser, and Purchaser agrees to accept from Seller,
the switching equipment more particularly described on Schedule 7.17 (the
"Switch"). At the Closing, Seller shall grant to Purchaser a first priority
security interest in the Switch and agrees to cooperate with Purchaser in
perfecting such security interest. From the date hereof through the Second
Closing, Seller shall maintain insurance on the Switch comparable to that
maintained prior to the date hereof.
Section 7.18. Payment of Debt. Prior to Closing, Seller shall pay and fully
discharge or cause to be extinguished all (i) indebtedness of the Partnership
and (ii) other Liabilities of the Partnership which Liabilities relate to the
period prior to the Closing (other than current liabilities as determined in
accordance with GAAP) which would be reflected on the face of a balance sheet
prepared in accordance with GAAP.
Section 7.19. ROFR. As soon as reasonably practicable after the date hereof
but in no event later than December 28, 2001, Seller will offer the Interest to
GRT in accordance with the requirements of Section 10.3 of the Partnership
Agreement. Seller will promptly furnish to Purchaser a copy of such offer and
copies of all subsequent written communications between Seller and GRT with
respect to such offer.
Section 7.20. Tax Covenants.
(a) Without the prior written consent of Purchaser, Seller shall not, to
the extent it may affect or relate to the Partnership, make or change any Tax
election (except for the Section 754 Election, as provided below), adopt or
change any method of Tax accounting, file any amended Tax return, enter into any
closing agreement, settle any Tax claim or assessment, surrender any right to
claim a Tax refund, offset or other reduction in Tax Liability, consent to any
extension or waiver of the limitations period applicable to any Tax claim or
assessment or take or omit to take any other action, if any such action or
omission referred to in any clause of this Section 7.20(a) could have the effect
of increasing the Tax liability or reducing any Tax Asset (as defined below) of
the Partnership or Purchaser.
(b) All Tax returns required to be filed by the Partnership on or after the
Closing Date in respect of Pre-closing Taxes (other than such Tax returns which
are in respect of a Tax period ending after the Closing Date (each, a "Straddle
Period Return")) (i) will be prepared and filed by Seller when due in accordance
with applicable law and (ii) as of the time of filing, will be true and complete
in all material respects. All such Tax returns shall be furnished to Purchaser
at least 15 days before the due date for filing such Tax returns, and Purchaser
shall have the right to review and consent to all such Tax returns, which
consent shall not be unreasonably withheld or delayed. All Straddle Period
Returns will be prepared and filed by Purchaser when due in accordance with
applicable law. All Straddle Period Returns shall be furnished to Seller at
least 15 days before the due date for filing such Tax returns, and Seller shall
have the right to review and consent to the filing of Straddle Period Returns,
which consent shall not be unreasonably withheld or delayed.
(c) Seller shall prepare the federal partnership tax return of the
Partnership for its Tax period ending on the Closing Date and, unless such
election is already in full force and effect, shall make the election described
in Section 754 of the Internal Revenue Code (the "Section 754 Election") with
such return, in the manner and form required by applicable Treasury Regulations.
The income of the Partnership will be apportioned to the period up to and
including the Closing Date and the period after the Closing Date by closing the
books of the Partnership as of the end of the Closing Date.
(d) Seller will allow Purchaser, the Partnership and its counsel at their
own expense to be present at and participate in any audits and appeals with
respect to any Tax returns to the extent that such returns relate to the
Partnership. Seller shall not settle any such audit or appeal in a manner which
would adversely affect Purchaser or the Partnership; provided that a settlement
shall be deemed not to have an adverse effect on Purchaser or the Partnership if
the settlement agreement (i) merely requires the Partnership or Seller to make a
payment in respect of a Pre-closing Tax, which payment shall be made by Seller
immediately upon the settlement, (ii) does not require Purchaser or the
Partnership to concede or accept, or preclude Purchaser or the Partnership from
taking, any Tax position with respect to any Tax period ending after the Closing
Date, and (iii) could not increase the Tax liability or reduce any Tax Asset of
Purchaser or the Partnership with respect to any Tax period ending after the
Closing Date (unless Seller pays to Purchaser or the Partnership the cost of any
increase in Tax liability or reduction in such Tax Asset); and provided,
further, that Purchaser shall have the option, exercisable in its sole
discretion, to require Seller to (x) pay Purchaser the amount which Seller would
have paid to the relevant Tax authority in respect of the settlement and (y)
allow Purchaser to assume the defense of the audit, appeal and settlement of
such issue, in exchange for granting Seller a release from its indemnification
obligations related to the settlement.
(e) All existing Tax Sharing Agreements shall be terminated on or before
the Closing Date.
(f) Purchaser and Seller shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the preparation and
filing of any Tax return, statement, report or form, and any audit, litigation
or other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Subject to subsection (g), Purchaser and Seller agree (i) to retain
all books and records with respect to Tax matters pertinent to the Partnership
relating to any Pre-closing Tax period, and to abide by all record retention
agreements entered into with any Tax authority, and (ii) to give the other party
written notice at least 90 days prior to destroying or discarding any such books
and records and, if the other party so requests, Purchaser or Seller, as the
case may be, shall allow the other party to take possession of such books and
records; provided that after the applicable statute of limitations with respect
to which the Tax items contained in such books and records has expired (giving
effect to any waiver, mitigation or extension thereof), clause (ii) shall not
apply to any books and records which also pertain to persons other than the
Partnership.
(g) On or before the Closing Date, Seller shall deliver to Purchaser true
and correct copies of all currently effective exemption certificates and other
documents which have been furnished by customers of the Partnership for the
purpose of establishing or supporting any claim of tax exemption with respect to
Taxes collected by the Partnership from its customers.
(h) Prior to the Closing Date, Seller shall refund to subscribers of the
Partnership all amounts that such subscribers were billed in connection with the
Arizona Telecommunications Devices for the Deaf Surcharge, subject to any offset
rights of the Partnership for the Arizona 911 Telecommunications Wireless
Services Excise Tax that the Partnership was required to but did not collect
from subscribers.
(i) For purposes of this Agreement:
"Tax Asset" means any net operating loss, net capital loss, investment tax
credit, foreign tax credit, charitable deduction or any other credit or tax
attribute that could reduce Taxes (including without limitation deductions and
credits related to alternative minimum Taxes and Tax basis of assets).
"Tax Sharing Agreement" means an agreement or arrangement (whether or not
written) binding the Partnership that provides for the allocation,
apportionment, sharing or assignment of any Tax liability or benefit, or the
transfer or assignment of income, revenues, receipts, or gains for the purpose
of determining any person's Tax liability, but shall not include the Partnership
Agreement.
Section 7.21. Switch Sharing Agreement. Seller agrees that between the date
hereof and the date of the Second Closing, Seller will not terminate that
certain Switch Sharing Agreement dated January 1, 2001 between Seller and the
Partnership. From and after the Closing, Purchaser agrees to cause the
Partnership to provide Seller with reasonable access to the Switch for the
purposes of providing switching services to the Cellular System and the CA-7
Cellular System during the period in which Seller has been engaged to provide
switching services thereto.
ARTICLE VIII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
The obligation of Purchaser under this Agreement with respect to the
purchase and sale of the Interest shall be subject to the fulfillment on or
prior to the Closing of each of the following conditions, any of which may be
waived in writing by Purchaser (provided that if any condition shall not have
been satisfied due to the actions or inaction of Purchaser or any of its
Affiliates that constitutes a breach of this Agreement, such condition shall be
deemed to have been satisfied or waived by Purchaser):
Section 8.01. Accuracy of Representations and Warranties; Performance of
this Agreement. Each of the representations and warranties made by Seller in (i)
the first sentence of Section 5.02, (ii) the last sentence of Section 5.06(a),
(iii) Sections 5.07(a) and (b) (but only as they relate to FCC Authorizations)
and (iv) Sections 5.14(a) and (b) shall be true and correct in all material
respects on and as of the date hereof (unless such representation or warranty is
given 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 Seller Material
Adverse Effect or other materiality qualifications shall be true and correct in
all respects at and as of the date hereof. Each of the representations and
warranties made by Seller in this Agreement shall be true and correct in all
material respects on and as of the Closing Date (unless any representation or
warranty is given 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, all representations and warranties made by Seller in this Agreement
that are qualified by Seller Material Adverse Effect or other materiality
qualifications shall be true and correct in all respects at and as of the
Closing Date. Seller shall have complied with and performed all of the
agreements and covenants required by this Agreement and each other Transaction
Document to be performed or complied with by it on or prior to the Closing.
Purchaser shall have been furnished with a certificate of an officer of Seller,
dated as of the Closing Date, certifying to the fulfillment of the foregoing
conditions. As used in this Agreement, the term "Seller Material Adverse Effect"
means a material adverse effect on the business, assets, Liabilities,
properties, condition (financial or otherwise), or results of operations of the
Partnership, the Business, the Interest or the Switch taken as a whole;
provided, however, that neither (a) the effects of any events, circumstances or
conditions resulting from changes, developments or circumstances in worldwide or
national conditions (political, economic, or regulatory) that adversely affect
generally the market where the Cellular System is operated or affect generally
industries engaged in the telecommunications business (including proposed
legislation or regulation by any governmental or regulatory body or the
introduction of any technological changes in the telecommunications industry),
nor (b) any effects of competition resulting from the offering of personal
communication services or other wireless telecommunications services, will
constitute a Seller Material Adverse Effect.
Section 8.02. Authorizing Resolutions. Seller shall deliver to Purchaser
copies of the resolutions or consents of the board of directors of Seller
authorizing the execution, delivery and performance of this Agreement by Seller
and all instruments and documents to be delivered in connection herewith and the
transactions contemplated hereby, duly certified by an officer of Seller.
Section 8.03. Incumbency Certificate. Purchaser shall have received a
certificate or certificates of an officer of Seller, certifying as to the
genuineness of the signatures of officers of Seller authorized to take certain
actions or execute any certificate, document, instrument or agreement to be
delivered pursuant to this Agreement, which incumbency certificate shall include
the true signatures of such officers.
Section 8.04. Third Party Consents; FCC. Seller shall have received all
Required Consents with respect to all mobile telephone switching office leases
and shall have delivered to Purchaser copies thereof. Seller shall have received
all Required Consents with respect to retail store leases and shall have
delivered to Purchaser copies thereof; provided that if only one Required
Consent with respect to a retail store lease has not been obtained and no mobile
telephone switching office is located in the store with respect to which a
Required Consent has not been obtained, then the requirements of this sentence
shall be satisfied even though such Required Consent was not obtained. Seller
shall have received all Required Consents with respect to cell site leases and
shall have delivered to Purchaser copies thereof; provided that if only one
Required Consent with respect to a cell site has not been obtained and no mobile
telephone switching office or microwave hop is located on the cell site with
respect to which a Required Consent has not been obtained, then the requirements
of this sentence shall be satisfied even though such Required Consent was not
obtained. Seller and the Partnership, as applicable, shall have given all
Required Notices and shall have delivered to Purchaser copies thereof. The FCC
action granting the FCC's consent to the transfer of control of the Partnership
to Purchaser shall have become a Final Order, free of any conditions adverse to
the Business except for such conditions that are generally applicable to
cellular licenses. 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 8.05. Assignment and Assumption Agreement and Partnership Interest
Certificate. Seller shall have delivered to Purchaser an executed Partnership
Assignment and Assumption Agreement and the original partnership interest
certificate representing the Interest.
Section 8.06. Regulatory and Corporate Opinions of Counsel for Seller.
Seller shall have caused its counsel to deliver to Purchaser written legal
opinions substantially in the form set forth on Exhibit D hereto, which opinions
shall be dated the Closing Date.
Section 8.07. 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 or regulatory official, body or authority having jurisdiction over
the Business, the Seller, the Partnership or the Partnership's 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, or which could reasonably be
expected to have a Seller Material Adverse Effect.
Section 8.08. Release of Liens. Before or at the Closing, Seller shall have
furnished to Purchaser documentation reasonably satisfactory to Purchaser
releasing all Liens set forth on Schedules 5.03(a)(i) and (ii) and 5.03(b)(ii).
Section 8.09. Simultaneous Closing of Other Transactions. Simultaneously
with the closing of the transactions contemplated by this Agreement, (i) Seller
and Purchaser shall consummate the transactions contemplated by that certain
Asset Purchase Agreement dated October 29, 2001 (the "CA-7, GA-1 and OH-2
Purchase Agreement") between Seller and Purchaser and (ii) ACC of Tennessee LLC,
ACC Tennessee License LLC, and Purchaser shall consummate the transactions
contemplated by that certain Asset Purchase Agreement dated October 30, 2001
(the "TN-4 Purchase Agreement").
Section 8.10. Transition Services Agreement. The Transition Services
Agreement shall not have been terminated by Seller and, if any force majeure
event has occurred thereunder, such event shall have ceased and Seller shall
have resumed its performance thereunder.
Section 8.11. Resignation of System Manager. Purchaser shall have received
the Seller's written resignation as System Manager effective as of the Closing
Date; provided, however, that such resignation of Seller shall provide that it
shall not affect the rights and obligations of Seller to perform any of its
covenants in Section 7.20(c).
Section 8.12. GRT Waiver. Either (i) GRT shall have waived in writing its
right of first refusal pursuant to Section 10.3 of the Partnership Agreement, or
(ii) the Seller shall have delivered the required notice under Section 10.3 of
the Partnership Agreement to GRT and GRT shall have failed to exercise its right
of first refusal pursuant to such Section prior to the expiration of the period
in which GRT could have exercised its right of first refusal as set forth in
such Section.
ARTICLE IX
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The obligations of Seller under this Agreement with respect to the purchase
and sale of the Interest shall be subject to the fulfillment on or prior to the
Closing of each of the following conditions, any of which may be waived in
writing by Seller (provided that if any condition shall not have been satisfied
due to the actions or inaction of Seller or its Affiliates that constitutes a
breach of this Agreement, such condition shall be deemed to have been satisfied
or waived by Seller):
Section 9.01. Accuracy of Representations and Warranties; Performance of
this Agreement. Each of the representations and warranties made by Purchaser in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date provided, however, that, for purposes of determining the
accuracy of such representations and warranties, all representations and
warranties made by Purchaser in this Agreement that are qualified by Purchaser
Material Adverse Effect or other materiality qualifications shall be true and
correct in all respects at and as of the Closing Date. Purchaser shall have
complied with and performed all of the agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing.
Seller shall have been furnished with a certificate of an officer of Purchaser,
dated as of the Closing, certifying to the fulfillment of the foregoing
conditions. As used in this Agreement, the term "Purchaser Material Adverse
Effect" means a material adverse effect on the ability of the Purchaser to
complete the transactions contemplated by this Agreement or to pay the Purchase
Price at the Closing.
Section 9.02. Authorizing Resolutions. Purchaser shall have delivered to
Seller copies of the authorizing resolutions of its Board of Representatives
authorizing the execution, delivery and performance of this Agreement and all
instruments and documents to be delivered in connection herewith and the
transactions contemplated hereby, duly certified by an authorized officer of
Purchaser.
Section 9.03. 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 or regulatory official, body or authority 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, or which could reasonably be expected to have a Purchaser
Material Adverse Effect, and no investigation that might result in any such
suit, action or proceeding shall be pending or threatened.
Section 9.04. Incumbency Certificate. Purchaser shall have delivered to
Seller a certificate of its secretary, certifying as to the genuineness of the
signatures of its representatives authorized to take certain actions or execute
any certificate, document, instrument or agreement to be delivered pursuant to
this Agreement, which incumbency certificate shall include the true signatures
of such representatives.
Section 9.05. FCC. The FCC action granting the FCC's consent to the
transfer of control of the Partnership to Purchaser shall have become a Final
Order.
Section 9.06. Simultaneous Closing of Other Transactions. Simultaneously
with the closing of the transaction contemplated by this Agreement, the
transactions contemplated by (i) the CA-7, GA-1 and OH-2 Purchase Agreement and
(ii) the TN-4 Purchase Agreement shall be consummated.
Section 9.07. Purchase Price. Purchaser shall have paid to Seller the
Seller's Closing Payment pursuant to Section 3.03 hereof and shall have
delivered to Seller an executed Assignment and Assumption Agreement.
Section 9.08. Opinions of Counsel of Purchaser. Purchaser shall have caused
its counsel to deliver to Seller a written legal opinion substantially in the
form set forth on Exhibit E hereto, which opinion shall be dated the Closing
Date.
ARTICLE X
CASUALTY LOSSES
In the event that there shall have been suffered between the date hereof
and the Second Closing any casualty loss relating to the Switch, Seller will
promptly notify Purchaser of such event. Seller shall at its option (a) repair,
rebuild or replace the Switch prior to the Second Closing, or (b) assign to
Purchaser at the Second Closing all claims to insurance proceeds or other rights
of the Seller against third parties arising from such casualty loss (the
"Claims"). To the extent any Claim is not assignable, such claim may be pursued
by Purchaser, for its own account and benefit, in the name of Seller.
ARTICLE XI
INDEMNIFICATION
Section 11.01. Indemnification by Seller. Notwithstanding the Closing,
subject to the terms of this Article XI, Seller agrees to indemnify and to hold
Purchaser and its partners, officers, directors, and employees (the "Indemnified
Purchaser Parties") harmless from and against and in respect of any Liability
(including consequential damages), action, suit, demand, judgment, cost of
investigation and reasonable attorney fees (but excluding any exemplary or
punitive damages, other than exemplary or punitive damages payable to third
parties) (collectively, "Losses"), sustained, incurred or paid by any
Indemnified Purchaser 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 Seller under this Agreement, (b) any breach or nonfulfillment of any
covenant on the part of Seller under this Agreement, (c) the ownership,
operation or control of the Partnership, its assets or the Business (but only to
the extent such Losses are not related to, or did not arise out of, actions or
omissions that GRT caused the Partnership to take or not to take and that Seller
does not have knowledge of) for the period commencing on, in the case of
switching, billing and customer care services, the Services Termination Date
and, for all other matters, September 30, 1997, and ending on the Closing, or
(d) any and all Taxes (i) that are obligations of Seller or the Partnership or
any of their Affiliates unrelated to the Business or the assets used in the
Business or (ii) which are Pre-closing Taxes (as defined below) that arise out
of the Business or the assets used in the Business (including any such Taxes
which become legal liabilities of Purchaser as a transferee of the Business, the
Switch or the Interest). For purposes of this Agreement, the term "Pre-closing
Taxes" shall mean (i) any Tax that is due on or before the Closing Date, (ii)
any Tax which is payable for a Tax period that ends on or before the Closing
Date and which is not due until after the Closing Date, and (iii) with respect
to a Tax which is payable for a Tax period that includes (but does not end on)
the Closing Date, the portion of such Tax that is related to the portion of such
Tax period ending on and including the Closing Date, which portion of such Tax
shall (A) in the case of any Taxes other than gross receipts, sales or use Taxes
and Taxes based upon or related to income, be deemed to be the amount of such
Tax for the entire Tax period (which period, with respect to personal property,
ad valorem and real property Taxes, shall be the calendar year in which the
assessment date for such Tax falls) multiplied by a fraction the numerator of
which is the number of days in the Tax period ending on and including the
Closing Date and the denominator of which is the number of days in the entire
Tax period, and (B) in the case of any Taxes based upon or related to income and
any gross receipts, sales or use Taxes, be deemed equal to the amount which
would be payable if the relevant Tax period ended on and included the Closing
Date.
Section 11.02. Indemnification by Purchaser. Notwithstanding the Closing,
subject to the terms of this Article XI, Purchaser agrees to indemnify and to
hold Seller, and its shareholders, directors, officers, employees,
representatives and agents (the "Indemnified Seller Parties") harmless from and
against and in respect of any Losses suffered, sustained, incurred or paid by
any Indemnified Seller 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 Purchaser under this Agreement, (b) any breach or nonfulfillment of
any covenant on the part of Purchaser under this Agreement, or (c) Purchaser's
ownership, operation or control of the assets used in the Business or the
Business itself after the Closing.
Section 11.03 Notice of Claims; Defense of Third Party.
(a) A party claiming indemnification under this Article XIII (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 11.06. 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 11.03, 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 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 11.03, 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 11.03 within ten days after receipt of such notice, and
the Defending Party promptly thereafter shall have taken appropriate action to
implement such defense. The Asserting Party shall not be entitled to settle any
such Third Party Claim pursuant to the preceding sentence unless such settlement
includes an unconditional release of the Defending Party by the Third party
claimant on account thereof, provided that such requirement shall be deemed
waived to the extent that the Defending Party does not undertake to provide and
promptly execute and, concurrently with delivery of any such release, deliver a
corresponding release of the third party claimant with respect to such Third
Party Claim. The Asserting Party and the Defending Party shall use all
commercially reasonable efforts to cooperate fully with respect to the defense
and settlement of any Third Party Claim covered by this Article XI.
(c) The failure of any Asserting Party to give an indemnifying party a
notice of claim shall not relieve the Defending Party from any liability in
respect of such claim, demand or action which it may have to such Asserting
Party on account of the indemnity agreement of such Defending Party contained in
this Article XI, except to the extent such Defending Party can establish actual
prejudice and direct damages as a result thereof.
Section 11.04. Non-Recourse to Seller's Affiliates. The obligations of
Seller to Purchaser under this Agreement and any related agreements,
instruments, documents or certificates are non-recourse to Seller's Affiliates
and if Seller is in default hereof or under such other agreements, instruments,
documents or certificates, Purchaser shall not have any recourse to the assets
of any Affiliate of Seller. Purchaser's recourse shall be limited following
Closing as provided in Section 11.05 below.
Section 11.05. Limitations. The Defending Party's obligations to indemnify
the Asserting Party pursuant to this Article XI shall be subject to the
following limitations:
(a) No indemnification under Sections 11.01(a), 11.02(a) or the first
sentence of Section 7.04(a) or clause (i), (ii), (iii), (vi) or (xi) of Section
7.04(a) (but only to the extent GRT caused the Partnership to be in violation of
such covenants without Seller's knowledge or notwithstanding its objection) for
any Losses shall be required to be made by the Defending Party until the
aggregate amount of the Asserting Party's Losses exceeds two percent (2%) of the
Purchase Price (the "Basket"), and then indemnification shall only be required
to be made by the Defending Party to the extent of such Losses that exceed 50%
of the Basket, provided that the foregoing limitation shall not apply to any
intentional breach of a representation or warranty or to any breach of the
representations and warranties set forth in Section 5.01(c) (but, with respect
to the first, second, third and fifth sentences, only as they relate to the
Interest) or Section 5.03(a) (other than the second and fifth sentences of such
section).
(b) The aggregate liability of the Defending Party under Section 11.01(a),
11.02(a), or the first sentence of 7.04(a) or clauses (i), (ii), (iii), (vi) or
(xi) of Section 7.04(a) (but only to the extent GRT caused the Partnership to be
in violation of such covenants without Seller's knowledge or notwithstanding its
objection) as applicable, shall not exceed (i) thirty percent (30%) of the
Purchase Price for the first twelve months after the Closing Date, and (ii)
twenty percent (20%) of the Purchase Price thereafter, provided that the
foregoing limitation shall not apply to any intentional breach of a
representation or warranty or to any breach of the representations and
warranties set forth in Section 5.01(c) (but, with respect to the first, second,
third and fifth sentences, only as they relate to the Interest) or Section
5.03(a) (other than the second and fifth sentences of such section).
(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 XI 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
11.05(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) Notwithstanding anything to the contrary set forth in this Agreement,
Section 11.05(a) through (c) shall not apply to Purchaser's obligation to pay to
Seller the Purchase Price in accordance with Article III.
(e) From and after the Closing Date, the indemnification rights contained
in this Article XI 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.
Section 11.06. 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 or
in connection with the execution and performance of this Agreement shall survive
for a period lasting eighteen months after Closing, except that (a) any
intentional breach or misrepresentation or fraud shall survive Closing
indefinitely, (b) Section 5.01(c) and the first sentence of Section 5.03(a)
shall survive Closing indefinitely, (c) Section 5.17 shall survive for a period
lasting three years after Closing, and (d) Section 5.13, (i) with respect to
federal and state Taxes, shall survive for a period lasting two years after
Closing, and (ii) with respect to local, municipal and county Taxes, 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), if longer than the two-year period previously specified,
unless in each case survival is governed by the preceding clause (a). Any claim
by a party based upon breach of any such representation or warranty made
pursuant to Article XI or otherwise must be submitted to the other party prior
to or at the expiration of the applicable survival period. 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. Subject to the provisions of Section 7.09, 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 11.07. Payment.
(a) Upon a determination of Liability under this Article XI, 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 11.07(c).
(b) Any items as to which any Indemnified Purchaser Party is entitled to
payment under this Agreement shall first be paid to the Indemnified Purchaser
Party pursuant to the terms of the Escrow Agreement, to the extent that the then
outstanding amount of escrowed funds is sufficient to pay such items. If the
then outstanding amount of the escrowed funds is insufficient to pay any such
item in full (including if all escrowed funds have been released), the payment
of such item as to which the Indemnified Purchaser Party is entitled to payment
under this Agreement and which is not able to be paid from the escrowed funds
shall be the obligation of Seller and Seller shall make full payment of any and
all such items to the Indemnified Purchaser Party within 30 calendar days after
the date of determination of Liability.
(c) 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.
ARTICLE XII
CONFIDENTIALITY AND PRESS RELEASES
Section 12.01. Confidentiality. The Non-Disclosure Agreement dated August
31, 2000 between Seller and Purchaser (the "NDA") shall remain in effect in
accordance with its terms, except that it may only be terminated with respect to
information related to the Cellular System upon termination of this Agreement,
and except that the provisions of Section 7 thereof shall be subject to the
provisions of Section 7.07 of this Agreement. The obligations of Purchaser under
the NDA and under this Article XII shall terminate as of the Closing, except
with respect to Information (as defined in the NDA) of Seller that does not
relate to the Business that Purchaser is required by the NDA to keep
confidential.
Section 12.02. 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 Purchaser or Seller without the
consent of the other subject to the provisions of Section 12.03, and Purchaser
and Seller shall each furnish to the other advance copies of any release which
it proposes to make public concerning this Agreement or the transactions
contemplated hereby and the date upon which Purchaser or Seller, as the case may
be, proposes to make such press release.
Section 12.03. Disclosures Required By Law. This Article XII shall not,
however, be construed to prohibit any party from making any disclosures to any
governmental authority that it is required to make by Law or from filing this
Agreement with, or disclosing the terms of this Agreement to, any institutional
lender to such party, or prohibit Seller, Purchaser or any of their Affiliates
from disclosing to its investors, partners, accountants, auditors, attorneys,
parent company and broker/dealers such terms of this transaction as are
customarily disclosed to them in connection with the sale or acquisition of a
cellular telephone system; provided, however, that any such party shall be
informed of the confidential nature of such information and shall agree to keep
such information confidential in accordance with the terms of Section 12.01
hereof; and provided, however, that each party shall provide to the other
reasonable advance copies of any public release except where the provision of
such advance notice is not permissible.
ARTICLE XIII
TERMINATION
Section 13.01. Breaches and Defaults; Opportunity to Cure. Prior to the
exercise by a party of any termination rights afforded under this Agreement, if
either party (the "Non-Breaching Party") believes the other (the "Breaching
Party") to be in breach hereunder, the Non-Breaching Party shall provide the
Breaching Party with written notice specifying in reasonable detail the nature
of such breach, whereupon 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, Purchaser shall have no opportunity to cure the breach of its
obligations to deliver any required portion of the Purchase Price to be
delivered at Closing; and provided, further, however, that the cure period for a
breach shall in no event extend beyond the Outside Date (as defined in Section
13.02(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 13.02). This
right of termination shall be in addition to, and not in lieu of, any rights of
the Non-Breaching Party under Article XI of this Agreement. Notwithstanding
anything to the contrary set forth in this Section 13.01, the provisions of this
Section 13.01 shall not apply in the event Purchaser fails to deliver the
Purchase Price even though all of the closing conditions set forth in Article
VIII have been satisfied.
Section 13.02. Termination. This Agreement may be terminated and the
transactions contemplated herein may be abandoned, by written notice given to
the other party hereto, at any time prior to the Closing:
(a) by mutual written consent of Seller and Purchaser;
(b) by either Purchaser or Seller, if any court of competent jurisdiction
in the United States or other United States governmental body shall have issued
an order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise permanently prohibiting the transaction contemplated by
this Agreement (which Seller and Purchaser 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 13.01, by Purchaser, if, as of any date, Seller
shall have breached any of its representations, warranties or covenants such
that the condition set forth in Section 8.01 shall not be satisfied as of such
date;
(d) subject to Section 13.01, by Seller, if, as of any date, Purchaser
shall have materially breached any of its representations, warranties or
covenants such that the condition set forth in Section 9.01 shall not be
satisfied as of such date; or
(e) by either Seller or Purchaser if the Closing shall not have occurred on
or before the date that is nine months after the date of this Agreement (the
"Outside Date"), unless the failure to have the Closing shall be due to the
failure of the party seeking to terminate this Agreement to perform in any
material respect its obligations under this Agreement required to be performed
by it at or prior to the Closing.
ARTICLE XIV
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 XI
hereof.
ARTICLE XV
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 XV
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 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 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 XVI
MISCELLANEOUS
Section 16.01. Additional Instruments of Transfer. (a) From time to time
after the Closing, each party shall, if requested by another party, make,
execute and deliver such additional assignments, bills of sale, deeds and other
instruments, as may be reasonably necessary or proper to carry out the specific
provisions of this Agreement, including transfer to Purchaser of all of Seller's
or any Affiliate of Seller's right, title and interest in and to any assets used
primarily in the Business other than any assets set forth on Schedule 7.15. Such
efforts and assistance shall be at the cost of the requesting party.
Section 16.02. Notices. All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered, sent by telecopier, recognized overnight delivery
service or registered or certified mail, return receipt requested, postage
prepaid, to the following addresses:
If to Purchaser:
Cellco Partnership
000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Facsimile: 000-000-0000
with a required copy to:
Cellco Partnership
000 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: 000-000-0000
If to Seller:
Xxxxxx Cellular Systems, Inc.
00000 Xxxxxxxx Xxx
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Senior Corporate Counsel
Facsimile No.: (000) 000-0000
with a required copy to:
Xxxxxxx & Xxxxxx, LLP
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Notices delivered personally shall be effective upon delivery against
receipt. Notices transmitted by telecopy shall be effective when received,
provided that the burden of proving notice when notice is transmitted by
telecopy shall be the responsibility of the party providing such notice. Notices
delivered by overnight mail shall be effective when received. Notices delivered
by registered or certified mail shall be effective on the date set forth on the
receipt of registered or certified mail, or 72 hours after mailing, whichever is
earlier.
Section 16.03. Expenses. Each party shall bear its own expenses and costs,
including the fees of any corporate or FCC attorney retained by it, incurred in
connection with the preparation of this Agreement and the consummation of the
transactions contemplated hereby; provided that Purchaser shall bear the expense
of all FCC, Xxxx-Xxxxx-Xxxxxx Act (if applicable) and other governmental filing
fees.
Section 16.04. Transfer Taxes. Purchaser and Seller 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
Purchased Assets or the transfer of control of the Partnership from Seller to
Purchaser under this Agreement. Notwithstanding anything else to the contrary
set forth in this Section 16.04, Purchaser 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 Seller may realize as a result of the sale of the
Purchased Assets or otherwise related to the transactions contemplated by this
Agreement.
Section 16.05. 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, Seller and Purchaser
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. Seller
and Purchaser 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 16.06. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties, which consent
will not be unreasonably withheld or delayed.
Section 16.07. 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 16.08. 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 16.09. 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 16.10. 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 16.11. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law, but only
as long as the continued validity, legality and enforceability of such provision
or application does not materially (a) alter the terms of this Agreement, (b)
diminish the benefits of this Agreement or (c) increase the burdens of this
Agreement, for any person.
Section 16.12. 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 16.13. 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 16.14. Further Assurances. For a period of six (6) months after
Closing, Seller agrees to provide to Purchaser from time to time any information
that Seller possesses with respect to the operation of the Business prior to the
Closing which the Purchaser reasonably requests in the future in connection with
the Purchaser's financing efforts now or in the future or in connection with any
FCC or other regulatory filing.
Section 16.15. Third Parties. Nothing herein, expressed or implied, is
intended to or shall confer on any person other than the parties hereto any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
Section 16.16. Remedies. The parties acknowledge and agree that the
Purchased Assets are unique and that remedies at law, including monetary
damages, will be inadequate in the event of a breach by Seller in the
performance of its obligations under this Agreement. Accordingly, the parties
agree that in the event of any such breach by Seller prior to the Closing,
Purchaser shall be entitled, among other remedies, to a decree of specific
performance.
Section 16.17. Certain Defined Terms. For purposes of this Agreement
(including the Schedules hereto) the terms defined in this Agreement shall have
the respective meanings specified herein, and, in addition, the following terms
shall have the following meanings:
"Affiliate" or "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.
"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.
"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.
"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.
"Liens" means all security interests, liens, pledges, charges,
encroachments, defects of title, options, rights of first refusal, easements or
any other encumbrance or restriction on the use or exercise of any attribute of
ownership.
"Permitted Liens" means (i) any lien or other encumbrance for taxes and
assessments not yet past due, (ii) any lien or other encumbrance provided for
in, or arising out of, any Partnership Contract (other than those listed on
Schedule 7.15) and not related to any indebtedness for borrowed money, (iii) any
lien or other encumbrance not related to any indebtedness for borrowed money
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 Business (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 or other encumbrances), (iv) as to leaseholds, interests of the lessors
thereof and Liens affecting interests of such lessors and (v) any lien or other
encumbrance set forth on Schedule 16.17 attached hereto.
"Person" means any corporation, partnership, limited liability company,
joint venture, business association, other entity or individual.
"Seller's Knowledge" or "to the knowledge of Seller" or any similar phrase
means the actual knowledge of (i) Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxxxxx, Xxxxxx
Xxxxx, Xxxxxx Xxxxxx, Xxx Xxxxxx or Xxx Xxxxx after reasonable inquiry of the
network operations manager for the Cellular System, or (ii) Xxxxxx Xxxxxxx;
provided, however, that when the phrase "to Seller's knowledge, the Partnership"
is used (with or without the comma) in any representation or warranty, the sole
effect of such knowledge qualification shall be to prevent Seller from making
any representation or warranty with respect to actions or omissions that GRT or
any other partner of the Partnership other than the Seller caused the
Partnership to take or not to take without the knowledge of the persons named
above (after the inquiry provided for above).
"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.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Partnership Interest and Asset Purchase Agreement to be executed by its duly
authorized representative as of the day and year first above written.
SELLER:
XXXXXX CELLULAR SYSTEMS, INC.
By: XXXXXXX XXXXXX
Name: Xxxxxxx Xxxxxx
Title: Chief Executive Officer
PURCHASER:
CELLCO PARTNERSHIP
D/B/A VERIZON WIRELESS
By: XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
[Signature page of Partnership Interest and Asset Purchase Agreement, dated
as of December 6, 2001, by and between Xxxxxx Cellular Systems,
Inc. and Cellco Partnership D/B/A Verizon Wireless.]
