STOCK PURCHASE AGREEMENT
between
XXXXXX CELLULAR OF CALIFORNIA, INC.
and
THE SHAREHOLDERS OF CELLULAR 2000 TELEPHONE CO.
DATED AS OF NOVEMBER 17, 1997
TABLE OF CONTENTS
Page
----
ARTICLE I PURCHASE AND SALE OF STOCK . . . . . . . . . . . . . . 1
Section 1.01 Transfer of Stock. . . . . . . . . . . . . . . . . . . 1
ARTICLE II PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.01 Purchase Price . . . . . . . . . . . . . . . . . . . . 2
Section 2.02 Deposit. . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.03 Payment of Purchase Price. . . . . . . . . . . . . . . 2
Section 2.04 Purchase Price Adjustments . . . . . . . . . . . . . . 3
ARTICLE III CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE SELLERS . . . . . . . . . . . . . . . . . . . 7
Section 4.01 Organization; Qualification. . . . . . . . . . . . . . 8
Section 4.02 Consents; Authorization; Execution and
Delivery of Agreement. . . . . . . . . . . . . . . . . 8
Section 4.03 Subsidiaries and Interests in Other Companies. . . . . 8
Section 4.04 Capital Stock; Interests . . . . . . . . . . . . . . . 8
Section 4.05 Ownership of Shares. . . . . . . . . . . . . . . . . . 9
Section 4.06 Real Property-Owned. . . . . . . . . . . . . . . . . . 9
Section 4.07 Real and Personal Property-Leased. . . . . . . . . . . 9
Section 4.08 Existing Contracts . . . . . . . . . . . . . . . . . .10
Section 4.09 Governmental Licenses. . . . . . . . . . . . . . . . .12
Section 4.10 Compliance with Law. . . . . . . . . . . . . . . . . .13
Section 4.11 No Violation of Existing Agreements. . . . . . . . . .13
Section 4.12 Litigation and Legal Proceedings . . . . . . . . . . .13
Section 4.13 Environmental Compliance . . . . . . . . . . . . . . .13
Section 4.14 Employees. . . . . . . . . . . . . . . . . . . . . . .14
Section 4.15 Employee Benefits. . . . . . . . . . . . . . . . . . .15
Section 4.16 Tax Matters. . . . . . . . . . . . . . . . . . . . . .16
Section 4.17 Financial Statements . . . . . . . . . . . . . . . . .17
Section 4.18 Subscribers; Agents. . . . . . . . . . . . . . . . . .19
Section 4.19 Insurance. . . . . . . . . . . . . . . . . . . . . . .19
Section 4.20 Brokers. . . . . . . . . . . . . . . . . . . . . . . .20
Section 4.21 Undisclosed Liabilities; Guarantees. . . . . . . . . .20
Section 4.22 Pricing of Services. . . . . . . . . . . . . . . . . .20
Section 4.23 Proprietary Rights . . . . . . . . . . . . . . . . . .20
Section 4.24 Accounts Receivable and Bad Debts. . . . . . . . . . .21
Section 4.25 Product Information. . . . . . . . . . . . . . . . . .21
Section 4.26 Certain Business Relationships . . . . . . . . . . . .21
Section 4.27 Officers and Directors and Certain Authorized
Persons. . . . . . . . . . . . . . . . . . . . . . . .22
Section 4.28 Disclosure . . . . . . . . . . . . . . . . . . . . . .22
ARTICLE V PURCHASER'S REPRESENTATIONS . . . . . . . . . . . . . . . . .23
Section 5.01 Organization; Qualification. . . . . . . . . . . . . .23
Section 5.02 Consents; Authorization; Execution and Delivery of
Agreement. . . . . . . . . . . . . . . . . . . . . . .23
Section 5.03 Litigation and Legal Proceedings . . . . . . . . . . .23
Section 5.04 Brokers. . . . . . . . . . . . . . . . . . . . . . . .23
Section 5.05 No Distribution. . . . . . . . . . . . . . . . . . . .23
Section 5.06 Usury Rate . . . . . . . . . . . . . . . . . . . . . .23
ARTICLE VI THE COMPANY'S, SELLERS' AND PURCHASER'S COVENANTS . . . . . .24
Section 6.01 Financial Statements and Cellular System
Information. . . . . . . . . . . . . . . . . . . . . .24
Section 6.02 Governmental Approvals . . . . . . . . . . . . . . . .24
Section 6.03 Third Party Consents; Closing Conditions . . . . . . .25
Section 6.04 Access . . . . . . . . . . . . . . . . . . . . . . . .25
Section 6.05 Conduct of Business. . . . . . . . . . . . . . . . . .26
Section 6.06 No Shopping. . . . . . . . . . . . . . . . . . . . . .29
Section 6.07 Employees. . . . . . . . . . . . . . . . . . . . . . .29
Section 6.08 Supplemental Disclosure. . . . . . . . . . . . . . . .29
Section 6.09 Section 338(h)(10) Elections . . . . . . . . . . . . .29
ARTICLE VII CONDITIONS PRECEDENT TO PURCHASER'S
OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . .30
Section 7.01 Accuracy of Representations and Warranties;
Performance of this Agreement. . . . . . . . . . . . .30
Section 7.02 Directors' Resolutions . . . . . . . . . . . . . . . .31
Section 7.03 Incumbency Certificate . . . . . . . . . . . . . . . .31
Section 7.04 Third Party Consents; FCC; Xxxx-Xxxxx Act. . . . . . .31
Section 7.05 Due Diligence. . . . . . . . . . . . . . . . . . . . .31
Section 7.06 No Material Adverse Change . . . . . . . . . . . . . .32
Section 7.07 Normal Course of Business. . . . . . . . . . . . . . .32
Section 7.08 Section 338(h)(10) Elections . . . . . . . . . . . . .32
Section 7.09 Opinion of Counsel to Sellers. . . . . . . . . . . . .32
Section 7.10 Opinion of FCC Counsel to the Partnership. . . . . . .32
Section 7.11 Subscribers. . . . . . . . . . . . . . . . . . . . . .32
Section 7.12 Title Insurance; Estoppel. . . . . . . . . . . . . . .33
Section 7.13 Resignations of Officers and Directors . . . . . . . .33
Section 7.14 Payment of Indebtedness. . . . . . . . . . . . . . . .33
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ARTICLE VIII CONDITIONS PRECEDENT TO THE COMPANY'S
AND EACH SELLER'S OBLIGATION TO CLOSE . . . . . . . . . . . .33
Section 8.01 Accuracy of Representations and Warranties;
Performance of this Agreement. . . . . . . . . . . . .33
Section 8.02 Directors' Resolutions . . . . . . . . . . . . . . . .33
Section 8.03 Incumbency Certificate . . . . . . . . . . . . . . . .33
Section 8.04 FCC; Xxxx-Xxxxx Act. . . . . . . . . . . . . . . . . .34
Section 8.05 Opinion of Counsel to Purchaser. . . . . . . . . . . .34
ARTICLE IX CASUALTY LOSSES . . . . . . . . . . . . . . . . . . . . . . .34
ARTICLE X INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . .34
Section 10.01 Indemnification by Sellers . . . . . . . . . . . . . .34
Section 10.02 Indemnification by Purchaser . . . . . . . . . . . . .35
Section 10.03 Notice of Claims; Defense of Third Party Claims. . . .36
Section 10.04 Limitations. . . . . . . . . . . . . . . . . . . . . .37
ARTICLE XI CONFIDENTIALITY AND PRESS RELEASES. . . . . . . . . . . . . .38
Section 11.01 Confidentiality. . . . . . . . . . . . . . . . . . . .38
Section 11.02 Press Releases . . . . . . . . . . . . . . . . . . . .38
Section 11.03 Disclosures Required By Law. . . . . . . . . . . . . .38
ARTICLE XII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . .39
Section 12.01 Breaches and Defaults; Opportunity to Cure . . . . . .39
Section 12.02 Termination. . . . . . . . . . . . . . . . . . . . . .39
ARTICLE XIII BROKERS' FEES . . . . . . . . . . . . . . . . . . . . . . . .40
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ARTICLE XIV MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . .40
Section 14.01 Additional Instruments of Transfer . . . . . . . . . .40
Section 14.02 Notices. . . . . . . . . . . . . . . . . . . . . . . .40
Section 14.03 Expenses . . . . . . . . . . . . . . . . . . . . . . .41
Section 14.04 Sellers' Representatives . . . . . . . . . . . . . . .42
Section 14.05 Specific Performance . . . . . . . . . . . . . . . . .43
Section 14.06 Governing Law. . . . . . . . . . . . . . . . . . . . .43
Section 14.07 Assignment . . . . . . . . . . . . . . . . . . . . . .43
Section 14.08 Successors and Assigns . . . . . . . . . . . . . . . .44
Section 14.09 Amendments; Waivers. . . . . . . . . . . . . . . . . .44
Section 14.10 Entire Agreement . . . . . . . . . . . . . . . . . . .44
Section 14.11 Counterparts . . . . . . . . . . . . . . . . . . . . .44
Section 14.12 Severability . . . . . . . . . . . . . . . . . . . . .44
Section 14.13 Section Headings . . . . . . . . . . . . . . . . . . .44
Section 14.14 Interpretation . . . . . . . . . . . . . . . . . . . .44
Section 14.15 Further Assurances . . . . . . . . . . . . . . . . . .44
Section 14.16 Third Parties. . . . . . . . . . . . . . . . . . . . .45
Section 14.17 Waiver of Jury Trial . . . . . . . . . . . . . . . . .45
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DEFINED TERMS
Term Section Cite
---- ------------
Adjustment Amount Section 2.04(h)
Adjustments Section 2.04(g)
Adjustment Pool Section 2.03
Agreed Adjustment Amount Section 2.04(h)
Asserting Party Section 10.03
AT&T Section 7.08
Audited Historical Financial Statements Section 4.17(a)
Authorizations Section 4.09(b)
Balance Sheet Date Section 4.17(a)
Base Price Section 2.01
Breaching Party Section 12.01
Budgets Section 4.17(a)
Business Recitals
Capital Expenditures Adjustment Section 2.04(d)
Cellular Area Recitals
Cellular System Recitals
Cellular Authorizations Article III
CERCLA Section 4.13
Claims Article IX
Closing Article III
Closing Certificate Section 2.04(h)
Closing Date Article III
Code Section 4.15
Common Stock Recitals
Company Authorizations Section 4.09(a)
Company Tax Liability Section 2.04(e)
Contract Interests Section 6.03
Controlled Group Member Section 4.15
CPUC Section 4.09
Current Assets Section 2.04(a)
Current Liabilities Section 2.04(a)
Debt Adjustment Section 2.04(f)
Defending Party Section 10.03
Deposit Section 2.02
Deposit Escrow Agent Section 2.02
Deposit Escrow Agreement Section 2.02
Disclosing Party Section 11.01
DOJ Section 7.04
Elections Section 6.10(a)
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Employee Benefit Plan Section 4.15
Encumbrances Section 1.01
Environmental Laws Section 4.13
ERISA Section 4.15
Existing Contracts Section 4.08(b)
FCC Authorizations Article III
Final Adjustment Amount Section 2.04(h)
Final Order Section 7.04
Fleet Debt Section 4.05(b)
Form 8023-A Section 6.10(b)
FTC Section 7.04
GAAP Section 2.04(a)
Xxxx-Xxxxx Act Section 6.02(b)
Hazardous Substance Section 4.13
Indemnified Purchaser Parties Section 10.01
Independent Accountants Section 2.04(h)
Interim Financial Statements Section 6.01
Interests Section 4.04(b)
IRS Section 4.15
Liquidated Damages Amount Section 2.03
Loss Section 10.01
Material Adverse Effect Section 7.01
Material Loss Section 7.01
Microwave Authorizations Article III
Nine Month Income Statements Section 4.17(a)
Non-Breaching Party Section 12.01
Operating Budgets Section 6.01
Outside Date Section 12.02
Ownership Percentage Section 2.03
Partnership Recitals
Partnership Agreement Section 4.01(b)
Person Section 4.03
Phase I and II Assessments Section 6.04(b)
Purchase Orders Section 4.08(b)
Purchase Price Section 2.01
Purchaser's Estimate Section 2.04(g)
RCLA Section 4.13
RCRA Section 4.13
Recipient Party Section 11.01
Response Period Section 2.04(h)
Sellers' Estimate Section 2.04(f)
Sellers' Expense Reserve Section 14.04
Sellers' Representative Section 14.04
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September Balance Sheets Section 4.17(a)
Shares Recitals
Subordinated Note Amount Section 2.03
Subordinated Promissory Note Section 2.03
Subscriber Section 2.04(a)
Subscriber Adjustment Section 2.04(c)
Survival Period Section 10.05
Target Number of Subscribers Section 2.04(a)
Tentative Subscriber Section 2.04(a)
Third Party Claim Section 10.03
Unrelated and Tax Liabilities Adjustment Section 2.04(e)
Working Capital Adjustment Section 2.04(b)
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SCHEDULES
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1 Sellers
2.04(a) Promotional Plans
4.01(a) Charter of the Company
4.01(b) Partnership Agreement of the Partnership
4.04(a) Outstanding Shares of Company
4.04(b) Outstanding Partnership Interests
4.07(a) Real Property Leased by Partnership
4.07(b) Personal Property Leased by Partnership
4.08(a) Existing Contracts of Company
4.08(b) Existing Contracts of Partnership
4.09(a) Company Authorizations
4.09(b) Partnership Authorizations
4.10 Violation of Laws
4.11 Violation of Existing Contracts
4.12 Litigation
4.13 Environmental Noncompliance
4.14 Employees of Partnership
4.15 Employee Benefit Plans
4.16(a) Tax Noncompliance - The Company
4.16(b) Tax Noncompliance - The Partnership
4.17(a)(i) Audited Historical Financial Statements
4.17(a)(ii) Current Financial Statements
4.17(a)(iii) Budgets
4.17(c) Changes since Balance Sheet Date
4.18 Subscribers; Agents
4.21 Guarantees
4.22 Rate Plans
4.23 Proprietary Rights
4.24 Subscriber Receivables
4.25 Manufacturers of Handsets
4.26 Certain Business Relationships
4.27 Officers, Directors and Certain Authorized Persons
6.01 Operating Budgets
14.04 Certain Payments from Sellers' Expense Reserve
EXHIBITS
--------
A Deposit Escrow Agreement
B Form of Subordinated Note
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C Form 8023-A
D Opinion of Counsel for Sellers
E Opinion of FCC Counsel for the Partnership
F Opinion of Counsel for Purchaser
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of November 17, 1997 by and among XXXXXX CELLULAR OF CALIFORNIA, INC., an
Oklahoma corporation ("Purchaser"), CELLULAR 2000 TELEPHONE CO., a Delaware
corporation (the "Company") and THE SHAREHOLDERS OF THE COMPANY, as set forth
on SCHEDULE 1 hereto (individually, a "Seller" and collectively the
"Sellers").
R E C I T A L S
WHEREAS, Cellular 2000 (A Partnership), a general partnership formed
under the laws of the State of Michigan (the "Partnership") owns all right,
title and interest in those certain licenses granted by the Federal
Communications Commission ("FCC") to provide cellular radio telephone service
in the FCC's rural service area ("RSA") #4 in the State of California (the
"Cellular Area") and owns and operates the non-wireline cellular telephone
system (the "Business") in the Cellular Area (the "Cellular System"); and
WHEREAS, the Company owns 75.018 percent of the outstanding partnership
interests of the Partnership and thereby owns a controlling interest in the
Partnership;
WHEREAS, the Company has a capitalization consisting of 100,000
authorized shares of Common Stock, $1.00 par value per share (the "Common
Stock") of which 76,522 shares are issued and outstanding (collectively, the
"Shares"), of which Shares at least 93% thereof are owned by the Sellers in
the respective amounts set forth opposite each Seller's name on SCHEDULE
4.04(a) hereto;
WHEREAS, Purchaser desires to purchase the Shares from Sellers, and
Sellers desire to sell the Shares to Purchaser, all subject to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements herein set forth and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
SECTION 1.01. TRANSFER OF STOCK. Except as otherwise provided and subject
to the terms and conditions set forth in this Agreement, Sellers agree to sell,
convey, assign, transfer and deliver to Purchaser, and Purchaser agrees to
purchase from Sellers at the Closing, all of Sellers' right, title and interest
in and to the Shares, free and clear of all options, pledges, obligations,
security interests, liens, charges, rights of third parties, community property
rights and other encumbrances (collectively, "Encumbrances").
ARTICLE II
PURCHASE PRICE
SECTION 2.01. PURCHASE PRICE. The total unadjusted purchase price for
the Shares shall be Sixty-Five Million Two Hundred Sixty-Five Thousand Five
Hundred Fifty Dollars ($65,265,550) (the "Base Price"), as adjusted in
accordance with the provisions of Section 2.04 hereof (as adjusted, the
"Purchase Price").
SECTION 2.02. DEPOSIT. Simultaneously with the execution of this
Agreement, Purchaser is depositing as a good faith deposit $2.5 million (the
"Deposit") with CoreStates Bank, N.A. (the "Deposit Escrow Agent"), to be
held, invested and disbursed pursuant to the terms of the Deposit Escrow
Agreement substantially in the form of EXHIBIT A attached hereto (the
"Deposit Escrow Agreement"). If the Closing occurs, then the Deposit and all
earnings on the Deposit shall be paid to Sellers in accordance with each
Seller's Ownership Percentage (as defined herein) pursuant to the Deposit
Escrow Agreement and the full amount of the Deposit and the earnings thereon
shall be credited against and deducted from the Purchase Price to be paid at
the Closing by Purchaser for the Shares. If the Sellers terminate this
Agreement in accordance with the provisions of Section 12.02(d), and at the
time of such termination none of the Sellers nor the Company is then in
breach of any of its representations, warranties, covenants or agreements set
forth in this Agreement and the conditions set forth in Sections 7.04 and
7.06 shall have been satisfied, then Sellers shall be entitled to the Deposit
as liquidated damages (the "Liquidated Damages Amount"), which Liquidated
Damages Amount the parties agree is a fair and reasonable measure of the
damages that Sellers would sustain as a result of such termination.
Notwithstanding anything else set forth in this Section 2.02, Sellers' sole
and exclusive recourse in the event Sellers terminate this Agreement in
accordance with the provisions of Section 12.02(d), including as a result of
Purchaser's breach of its representations or obligations under this Agreement
prior to Closing, shall be to receive the Deposit. In any other case if the
Closing does not occur, then, pursuant to the Deposit Escrow Agreement, the
Deposit and all earnings thereon shall be paid to Purchaser. All payments by
the Deposit Escrow Agent shall be made in accordance with the procedures and
other provisions set forth in the Deposit Escrow Agreement.
SECTION 2.03. PAYMENT OF PURCHASE PRICE. On the Closing Date and
subject to the terms and conditions set forth in this Agreement, in reliance
on the representations, warranties, covenants and agreements of the parties
contained herein and in consideration of the sale, assignment, transfer and
delivery of the Shares, Purchaser shall pay to each Seller an amount equal to
the product of (a) the Purchase Price LESS (i) five percent of the Purchase
Price ("Adjustment Pool"), (ii) the Deposit and all earnings thereon which
are paid to Sellers at Closing, (iii) an amount equal to $4.5 million (the
"Subordinated Note Amount") and (iv) the Sellers' Expense Reserve provided
for in Section 14.04 and (b) the quotient determined by DIVIDING (i) the
number of Shares owned by such Seller by (ii) the number of outstanding
shares of Common Stock determined on a fully diluted basis (the "Ownership
Percentage"). In addition, the Purchaser shall deliver on the Closing Date
to Sellers' Representatives, as agents and trustees for Sellers as provided
in Section 14.04 hereof, a subordinated promissory note substantially in the
form attached as EXHIBIT B hereto (the "Subordinated Promissory Note") in the
principal amount of $4.5 million.
SECTION 2.04. PURCHASE PRICE ADJUSTMENTS.
(a) As used in this Section 2.04, the following terms shall have the
meaning set forth below:
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"CURRENT ASSETS" means the Partnership's (i) accounts receivable that
are current to less than 91 days past due, net of a reserve for bad debts,
which reserve shall equal the sum of the following amounts: zero percent (0%)
of such accounts receivable that are not past due or that are thirty (30) or
fewer days past due, ten percent (10%) of such accounts receivable that are
more than thirty (30) or fewer days past due, but less than sixty-one (61)
days past due and fifty percent (50%) of such accounts receivable that are
more than sixty (60) but less than ninety-one (91) days past due; (ii)
inventory of cellular telephone handsets and ancillary equipment held for
sale to subscribers and which is not obsolete and will reasonably be expected
based on past practices to be consumed in the normal course of business
within six months after the Closing (the "Inventory"); and (iii) prepaid
items which Purchaser will receive the benefit of after the Closing such as
prepaid rent, insurance, property taxes, utility charges, fees and deposits
paid, all determined as of 12:01 a.m. on the Closing Date in accordance with
GAAP. Refurbished cellular telephone handsets shall not be included in the
Inventory for purposes of calculating Current Assets.
"CURRENT LIABILITIES" means the Partnership's (i) subscriber deposits
received, (ii) deferred revenue, (iii) employee vacation and sick pay expense
(whether or not to be paid or time taken after the Closing), (iv) to the
extent not paid by the Partnership prior to Closing, salaries, bonuses,
fringe benefits and other remuneration payable to employees of the
Partnership, (v) all trade payables and accrued expenses including, without
limitation, taxes, utility charges, special assessments, commissions and
fees, all determined as of 12:01 a.m. on the Closing Date in accordance with
GAAP.
"GAAP" means generally accepted accounting principles consistently
applied.
"SUBSCRIBER" means a person or entity subscribing for cellular telephone
service on the Cellular System for at least the 30 consecutive day billing
cycle of the Cellular System ("Billing Cycle") ending on or prior to the
Closing Date who (i) pays for service under the Cellular System's normal rate
plan for that category of subscriber, (ii) has paid for at least one full
Billing Cycle's service and whose account is active within the normal
practices and procedures of the Cellular System and in no case is more than
90 days past due, (iii) was obtained as a subscriber in the normal course of
business of the Cellular System consistent with past practice and not as a
result of (A) marketing efforts that are not customary in the cellular
telephone industry generally or which were not utilized by the Partnership
during 1996 and 1997 on a regular basis or (B) any other plans for which the
Partnership failed to obtain Purchaser's prior written consent. SCHEDULE
2.04(a) attached hereto sets forth all marketing and promotional plans the
Partnership has used, is using or proposes to use, from September 30, 1996 to
the Closing to acquire subscribers; provided, however, that the Partnership
shall be free to alter, add to or delete any such plans, as it reasonably
determines may be appropriate to meet market conditions subject only to
Purchaser's approval, which approval shall not be unreasonably withheld or
delayed.
"TARGET NUMBER OF SUBSCRIBERS" means (i) on November 30, 1997, 14,600;
(ii) prior to November 30, 1997, 14,600 minus the product of (x) 170 and (y)
the number of 30-day periods that
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will elapse from the Closing Date to November 30, 1997 (pro rated for any
partial 30 day period; or (iii) 14,600 plus the product of (x) 170 and (y)
the number of 30-day periods elapsed from November 30, 1997 to the Closing
Date (pro rated for any partial periods of less than 30 days).
"TENTATIVE SUBSCRIBER" means a person or entity which as of the Closing
Date meets all of the requirements for being a "Subscriber" (as defined in
this Section 2.04(a)) except for the failure to have been a cellular
telephone service customer for the full Billing Cycle immediately prior to
the Closing Date.
(b) WORKING CAPITAL ADJUSTMENT. The Base Price shall be increased (or
decreased) by an amount equal to 75.018 percent of the amount by which
Current Assets exceeds (or is less than) Current Liabilities as of the
Closing Date (such increase or decrease in the Base Price being referred to
herein as the "Working Capital Adjustment").
(c) SUBSCRIBER ADJUSTMENT. The Base Price shall be decreased by 75.018
percent of the product of (i) $300.00 and (ii) the excess of the Target
Number of Subscribers over the number of Subscribers as of the Closing Date
(such decrease in the Base Price being referred to herein as the "Subscriber
Adjustment"); PROVIDED, HOWEVER, for purposes of determining the Subscriber
Adjustment, a Tentative Subscriber shall be counted as a Subscriber as of the
Closing Date if as of the end of the Partnership's normal Billing Cycle which
commences after the Closing Date such Tentative Subscriber is still an active
cellular telephone service customer of the Cellular System and has paid all
charges for service when due.
(d) CAPITAL EXPENDITURES ADJUSTMENT. If the Partnership has made the
capital expenditures reflected in the Partnership's 1997 Budget for the
period from January 1, 1997 to August 15, 1997 in amount of not less than
$4,814,000, then the Base Price shall be increased by 75.018 percent of the
dollar amount of capital expenditures incurred and paid for by the
Partnership during the period from August 29, 1997 to the Closing Date (such
increase in the Base Price being referred to herein as the "Capital
Expenditures Adjustment"); provided that Purchaser has given the Company its
prior written consent for the amount, type and purpose of each such capital
expenditure which consent shall not be withheld unreasonably, and shall
solely be for the purpose of determining the allowable amount of the Capital
Expenditure Adjustment.
(e) UNRELATED AND TAX LIABILITIES ADJUSTMENT. The Base Price shall be
decreased by 100 percent of the amount of any outstanding liabilities and
obligations of, and any claims against, the Company which are known by the
Company or the Sellers as of the Closing Date which (i) are not directly
related to the Company's ownership interest in the Partnership (the "Company
Unrelated Liabilities") or (ii) are for the payment of taxes, penalties and
interest with respect to the Company's or the Partnership's operations prior
to the Closing Date, including without limitation, liabilities resulting from
the Company's failure to qualify as an S corporation within the meaning of
Section 1361 of the Code for all periods prior to the Closing Date (the
"Company Tax Liabilities") (such decrease in the Base Price being referred to
herein as the "Unrelated and Tax Liabilities Adjustment").
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(f) DEBT ADJUSTMENT. The Base Price shall be decreased by (i) 100% of
the outstanding indebtedness of the Company for borrowed money (including
capitalized lease obligations and interest and prepayment premiums) as of the
Closing and (ii) 75.018 percent of the sum of (A) the amount of outstanding
indebtedness of the Partnership for borrowed money (including capitalized
lease obligations and interest and prepayment premiums) as of the Closing and
(B) the amount of accrued and unpaid management fees owed by the Partnership
as of the Closing (such decrease in the Base Price being referred to herein
as the "Debt Adjustment"); provided that prepayment premiums shall only be
treated as indebtedness for purposes of the Debt Adjustment to the extent
Purchaser pays same in connection with the payment at the Closing of
indebtedness of the Company and/or the Partnership.
(g) PURCHASER'S AND SELLERS' ESTIMATES. Sellers' Representative 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, Subscriber Adjustment, Capital Adjustment, Unrelated and
Tax Liabilities Adjustment and Debt Adjustment (collectively, the
"Adjustments") in accordance with this Section 2.04 and Sellers' estimate of
the Purchase Price resulting from the Adjustments ("Sellers' Estimate").
Sellers' Estimate shall be accompanied by detailed supporting documents, work
papers, subscriber records and other data supporting each Adjustment and
Sellers' Estimate. The Sellers' Estimate shall be based upon the books and
records of the Partnership and the Company. The Sellers' Estimate shall be
accompanied by a certificate signed by the Sellers' Representative certifying
that Sellers' Estimate was calculated in good faith and in accordance with
the provisions of this Section 2.04. After the delivery of Sellers' Estimate
and prior to the Closing, Purchaser and Sellers' Representative shall attempt
to resolve any disputes between Sellers' Representative and Purchaser with
respect to Sellers' Representative's proposed Adjustments. In connection
therewith, Purchaser shall have full access to all records of the Company and
the Partnership related to Sellers' Representative proposed Adjustments.
Prior to Closing, Purchaser shall advise Sellers' Representative in writing
as to any dispute Purchaser has with Sellers' Estimate and provide the
Sellers' Representative with Purchaser's calculation of the Adjustments and
the Purchase Price, accompanied by a certificate signed by the President or
Chief Financial Officer of Purchaser certifying that Purchaser's calculation
was made in good faith and shall be accompanied by supporting documents and
information, to the extent the same is available to Purchaser ("Purchaser's
Estimate"). In the event that (i) Purchaser's Estimate of the Purchase Price
is less than $25,000 less than Sellers' Estimate, the Closing shall proceed
with the Purchase Price based upon Sellers' Estimate; or (ii) the Purchaser's
Estimate of the Purchase Price is more than $25,000 less than Sellers'
Estimate, then the mid-point between Sellers' Estimate and Purchaser's
Estimate shall be used as the Purchase Price for purposes of the Closing.
(h) POST-CLOSING ADJUSTMENTS. Within 120 days after the Closing Date,
Purchaser shall deliver to the Sellers' Representative a certificate (the
"Closing Certificate") signed by the President or Chief Financial Officer of
Purchaser providing a compilation of the Adjustments to be made pursuant to
this Section 2.04, including any changes in the Adjustments used to determine
the Purchase Price at Closing, together with a statement of any additional
amount owing to either party
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(the "Adjustment Amount"), a copy of any supporting documents, work papers,
Subscriber records and other data relating to such Closing Certificate and
such other supporting evidence as the Sellers' Representative may reasonably
request either prior to or after delivery thereof. If the Sellers'
Representative shall conclude that the Closing Certificate does not
accurately reflect the Adjustments to be made to the Base Price in accordance
with this Section 2.04 and the Adjustment Amount, the Sellers' Representative
shall, within 30 days after his receipt of the Closing Certificate (such 30
day period being referred to as the "Response Period"), deliver to Purchaser
a written statement of any discrepancies believed to exist. If the Sellers'
Representative fails to so notify Purchaser of any discrepancies, then the
calculation of the Purchase Price set forth in the Purchaser's Closing
Certificate shall be controlling for all purposes hereof and, on or before
the fifth (5th) day following the expiration of the Response Period, (i) if
the Purchaser is obligated to pay the Sellers the Adjustment Amount, the
Purchaser shall pay each Seller the product of (x) the sum of (A) the
Adjustment Amount and (B) the Adjustment Pool; and (y) such Seller's
Ownership Percentage as determined on the Closing Date; (ii) if the Sellers
are obligated to pay the Purchaser the Adjustment Amount, and such Adjustment
Amount is less than the Adjustment Pool, the Purchaser shall pay each Seller
the product of (x) the difference between (A) the Adjustment Pool and (B) the
Adjustment Amount; and (y) such Seller's Ownership Percentage; (iii) if the
Sellers are obligated to pay the Purchaser the Adjustment Amount and such
Adjustment Amount is greater than the Adjustment Pool, then Sellers shall pay
the Purchaser the difference between the Adjustment Amount and the Adjustment
Pool and the Purchaser shall retain the Adjustment Pool. On or before the
fifth day following the earlier to occur of the expiration of the Response
Period and the date Purchaser receives Sellers' Representative's statement of
discrepancies, Purchaser or the Sellers, as the case may be, shall pay the
portion of the Adjustment Amount, if any, as to which there is no discrepancy
(the "Agreed Adjustment Amount") and in accordance with each Seller's
Ownership Percentage, if the Agreed Adjustment Amount is owing from the
Purchaser. Purchaser and the Sellers' Representative shall use good faith
efforts to jointly resolve their discrepancies within 15 days of Purchaser's
receipt of the Sellers' Representative's written statement of discrepancies,
which resolution, if achieved, shall be binding upon the Sellers and
Purchaser and not subject to further dispute or review. In the event
Purchaser and Sellers' Representative are unable to resolve their differences
within such fifteen (15) day period, then either party may request that the
matter be resolved by Price Waterhouse (the "Independent Accountants"). In
submitting a dispute to the Independent Accountants, each of the parties
shall furnish, at its own expense, the Independent Accountants and the other
party with such documents and information as the Independent Accountants may
reasonably request. 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 Sellers' Representative and Purchaser at which conference each party
shall have the right to present additional documents, material and other
evidence and to have present its advisors, accountants and counsel. The
Independent Accountants shall promptly render a decision on the issues
presented and shall provide the Purchaser and the Sellers' Representative
with a statement of the amount owing (the "Final Adjustment Amount"), and
such decision shall be final and binding on the parties. The fees and
expenses of the Independent Accountants shall be divided equally between
Purchaser, on the one hand, and Sellers,
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on the other hand. Within 5 days of receipt of the Independent Accountants'
decision with respect to such dispute, (i) if Purchaser is determined to owe
the Final Adjustment Amount to the Sellers, Purchaser shall pay each Seller
the product of (x) the sum of the Final Adjustment Amount and the Adjustment
Pool and (y) such Seller's Ownership Percentage; (ii) if the Sellers are
determined to owe an amount to Purchaser, (x) Sellers shall pay the Final
Adjustment Amount less the Adjustment Pool to Purchaser if the Final
Adjustment Amount is greater than the Adjustment Pool and the Purchaser shall
retain the Adjustment Pool or (y) Purchaser shall pay to each Seller the
product of (A) the excess of the Adjustment Pool over the Final Adjustment
Amount if the Adjustment Pool is greater than the Final Adjustment Amount and
(B) such Seller's Ownership Percentage. All amounts owed by Purchaser or
Sellers to the other in accordance with this Section 2.04(h) shall be paid by
wire transfer of immediately available funds and shall not bear any interest.
Any amount due Purchaser from Sellers under this Section 2.04(h) and not
paid when due may also be offset from the payments due to Sellers (or
Sellers' Representative as their agent) under the Subordinated Promissory
Notes.
ARTICLE III
CLOSING
Subject to the terms and conditions hereof, the closing (the "Closing")
shall take place at the offices of Xxxxxxx & Xxxxxx, 0000 Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000, on the date (the "Closing Date") which
is the latest of (a) the tenth (10th) day after the date that (i) the FCC
consents to the transfer of control of the Partnership's licenses to
Purchaser, including the FCC licenses, consents, permits and authorizations
to operate a cellular telephone system in the Cellular Area (the "Cellular
Authorizations") and microwave paths used in connection with such cellular
operations (the "Microwave Authorizations" and together with the Cellular
Authorizations, the "FCC Authorizations") to the Purchaser becomes a a Final
Order (as defined in Section 7.04) or (ii) if applicable, Sellers'
Representative receives from Purchaser the Final Waiver Notice (as defined in
Section 7.04), or (b) the fifth (5th) day after the expiration or early
termination of the waiting period under the Xxxx-Xxxxx Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally (severally and not jointly with
respect to Section 4.05(a) below), represent, warrant, covenant and agree
that:
SECTION 4.01. ORGANIZATION, QUALIFICATION. (a) The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all necessary power and authority to
own and operate its properties and to carry on its business as now being
conducted or proposed to be conducted. The Company is duly qualified or
licensed to do business as a foreign corporation in good standing in the
jurisdictions in which the ownership of property or the conduct of its
business requires such qualification. Attached hereto as SCHEDULE 4.01(a) is
a true and complete copy of the Certificate of Incorporation, as amended to
-7-
date, of the Company.
(b) The Partnership is a general partnership duly organized, validly
existing and in good standing under the laws of the State of Michigan and has
all necessary power and authority to own and operate its properties and to
carry on its business as now being conducted or proposed to be conducted.
The Partnership is duly qualified or licensed to do business as a foreign
partnership in good standing in the jurisdictions in which the ownership of
property or the conduct of its business requires such qualification.
Attached hereto as SCHEDULE 4.01(b) is a true and complete copy of the
Partnership Agreement (the "Partnership Agreement") of the Partnership.
SECTION 4.02. CONSENTS, AUTHORIZATION, EXECUTION AND DELIVERY OF
AGREEMENT. Each Seller has full power, authority and capacity, and the
Company has full corporate power, authority and capacity to execute and
deliver this Agreement and to carry out the transactions contemplated hereby.
The Board of Directors of the Company has duly approved and authorized the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and no other proceedings, corporate or
otherwise, on the part of Sellers or the Company are necessary to approve and
authorize the execution and delivery of this Agreement by Sellers and the
Company and the consummation by Sellers and the Company of the transactions
contemplated hereby, subject to the other governmental and third-party
consents referred to in Section 7.04. This Agreement constitutes a valid and
binding agreement of each Seller and the Company enforceable against Sellers
and the Company in accordance with its terms.
SECTION 4.03. SUBSIDIARIES AND INTERESTS IN OTHER COMPANIES. (a)
Other than its interest in the Partnership, the Company has no subsidiaries,
and does not own or control any shares or other securities of, or have any
other proprietary interest in, any individual, corporation, partnership,
limited liability company, joint venture, business association or other
entity (a "Person").
(b) The Partnership has no subsidiaries and does not own or control any
shares or other securities of, or have any other proprietary interest in, any
Person.
SECTION 4.04. CAPITAL STOCK; INTERESTS. (a) The authorized capital
stock of the Company consists of 100,00 shares of Common Stock, of which
76,522 shares are issued and outstanding. SCHEDULE 4.04(a) accurately sets
forth the record and beneficial owners of the Company's outstanding shares of
Common Stock and the number of shares owned by each shareholder. Except as
set forth on SCHEDULE 4.04(a), there are no subscriptions, options, warrants,
calls, rights, tag-along rights, drag-along rights, rights of first refusal,
contracts, commitments, voting trusts, proxies, understandings, restrictions
or arrangements relating to the issuance, voting, sale or transfer by the
Sellers or the Company of any shares of such capital stock, including rights
of conversion or exchange under any outstanding securities or other
instruments. All outstanding shares of capital stock of the Company have
been duly authorized, validly issued and are fully
-8-
paid, non-assessable and free of preemptive rights. There are no accrued
dividends or other amounts due and owing with respect to the Shares.
(b) SCHEDULE 4.04(b) accurately sets forth the record and beneficial
owners of the partnership interests (the "Interests") in the Partnership and
the percentage interest owned by each partner. All Interests have been duly
authorized, validly issued and are fully paid, nonassessable and free of
preemptive rights. With respect to the Interest held by the Company, the
Company has satisfied all capital calls, contribution requirements and
similar obligations to make contributions or investments. The Company is not
in default under the Partnership Agreement of the Partnership (the
"Partnership Agreement") or any other instrument setting forth the rights and
obligations of the Company as owner of an Interest in the Partnership.
Except as set forth on SCHEDULE 4.04(b), there are no subscriptions, options,
warrants, calls, rights, tag-along rights, drag-along rights, rights of first
refusal, contracts, commitments, voting trusts, proxies, understandings,
restrictions or arrangements relating to the Interests other than as set
forth in the Partnership Agreement, including without limitation, any
agreement or commitment of the Company to deliver or sell its Interest in the
Partnership.
(c) A true and correct copy of the Partnership Agreement together with
all amendments and supplements thereto is attached hereto as SCHEDULE 4.04(c).
SECTION 4.05. OWNERSHIP OF SHARES. (a) Each Seller is the record and
beneficial owner of the Shares set forth opposite its name on SCHEDULE
4.04(a). Each Seller has, and will convey to Purchaser at Closing, good and
marketable title to the Shares, free and clear of all Encumbrances of any
kind whatsoever.
(b) The Company is the record and beneficial owner of the Interest set
forth opposite its name on SCHEDULE 4.04(b), free and clear of all
Encumbrances of any kind whatsoever except for Encumbrances arising from the
Partnership's indebtedness to Fleet National Bank, a national banking
association ("Fleet Debt").
SECTION 4.06. REAL PROPERTY - OWNED. Neither the Company nor the
Partnership owns any real property. The real property leased by the
Partnership related to the Business has never been owned by the Company or
the Partnership.
SECTION 4.07. REAL AND PERSONAL PROPERTY - LEASED. The Company does
not own or lease any real or personal property. Set forth on SCHEDULE
4.07(a) (in the case of real property) and SCHEDULE 4.07(b) (in the case of
personal property), are true and accurate listings of all real and personal
property leases to which the Partnership is a party (other than personal
property leases with annual payments of less than $2,000 and which leases,
together with the other contracts and agreements not required to be disclosed
in the aggregate have annual payments of less than $25,000 or which are
terminable without penalty on one month or less notice) setting forth (i) the
name of the lessor and (ii) with respect to the real property leases, a
description of the property leased and its use. Except as set forth on
SCHEDULE 4.07(a) (in the case of leased real property)
-9-
and SCHEDULE 4.07(b) (in the case of leased personal property), all of the
leases set forth are in full force and effect and are valid, binding and
enforceable in accordance with their respective terms, (ii) all accrued and
currently payable rents and other payments required by such leases have been
paid, (iii) the Partnership and each other party thereto have complied with
all respective covenants and provisions of such leases, (iv) neither the
Partnership nor any other party is in default in any respect under any such
leases, (v) no party has asserted any defense, set off, or counter claim
thereunder, (vi) no waiver, indulgence or postponement of any obligations
thereunder have been granted by any party, and (vii) the validity or
enforceability of any such lease will be in no way affected by the sale of
the Shares to Purchaser.
SECTION 4.08. EXISTING CONTRACTS. (a) Except as set forth on SCHEDULE
4.08(a) hereto, the Company is not a party to any contract, commitment or
agreement (written or oral).
(b) SCHEDULE 4.08(b) hereto sets forth (i) all contracts, commitments
and other agreements (other than standard subscriber agreements for cellular
service) in effect on the date hereof with the Partnership's subscribers, all
leases to which the Partnership is a party (other than leases described on
SCHEDULES 4.06(a) or 4.07(a), and (ii) all other contracts, credit
agreements, notes, debentures, instruments, mortgages, trusts, commitments
and agreements (other than leases described on SCHEDULES 4.06(a) or 4.07(a)
and agreements with annual payments of less than $2,000 and which agreements,
together with the other leases and contracts not required to be disclosed, in
the aggregate have annual payments of less than $25,000 or which are
terminable without penalty on one month or less notice) or commitments
(written or oral) to which the Partnership is a party which relate to the
ownership or the operation of the Business (the "Existing Contracts")
including, without limitation, the following:
(i) all purchase orders, agreements and commitments, other than the
purchase orders that are included in the Budgets ("Purchase Orders"), for
the purchase or sale of advertising, services, materials, products or
supplies which (x) involve aggregate payments by the Partnership of more
than $2,000 or (y) involve aggregate payments to the Partnership of more
than $25,000, or (z) which were entered into other than in the ordinary
course of business of the Partnership;
(ii) all written employment contracts with any officer, consultant,
director or employee of the Company or any partner, consultant or employee
of the Partnership and any such oral contracts which are not terminable at
will by the Partnership;
(iii) all written and oral plans, contracts or arrangements providing
for stock options or share purchases, bonuses, pensions, deferred or
incentive compensation, retirement or severance payments, profit-sharing,
insurance or other benefit plans or programs for any officer, consultant,
director, shareholder or employee of the Company or any partner, consultant
or employee of the Partnership;
(iv) all contracts for construction or for the purchase of real
estate, improvements, fixtures, equipment, machinery and other items which
under GAAP constitute capital expenditures and which individually or in the
aggregate for any related group of items involve expenditures of the
Partnership in excess of $2,000;
-10-
(v) all contracts relating in any way to direct or indirect
indebtedness for borrowed money or evidenced by a bond, debenture, note or
other evidence of indebtedness (whether secured or unsecured) of or to the
Partnership, including but not limited to, indebtedness by way of lease or
installment purchase arrangement, guarantee, reimbursement obligations
pertaining to letters of credit, purchase price discount obligations,
undertakings on which others rely in extending credit, or otherwise, and
all mortgages, pledges, conditional sales contracts, chattel and
purchase-money mortgages and other security arrangements with respect to
any real estate, improvements, equipment, other personal property or
fixtures, used or owned by the Partnership, except in each case for
contracts individually involving less than $5,000 and in the aggregate
less than $25,000;
(vi) all agreements with agents, sales representatives, suppliers,
distributors, advertising agencies, insurance companies, manufacturers,
brokers and vendors involving the payment or receipt of more than $5,000
per year;
(vii) all licenses, sublicenses, franchises, and royalty, joint
venture, partnership, profit or expense sharing or similar agreements;
(viii) all agreements relating to the acquisition by the Partnership
of the assets, stock or business of another company including any
predecessor entity;
(ix) all material agreements related to the expansion of any current
product or service or the launch of any new product or service, including
those related to new markets;
(x) all material software license and servicing agreements relating
to the Partnership's data processing operations;
(xi) all contracts restricting the Partnership from engaging in any
line of business or competing with any Person or in any geographical area,
or from using or disclosing any information in its possession (other than
routine supplier and customer confidentiality agreements);
(xii) all contracts or commitments with any affiliate of the Company
or the Partnership and all contracts or commitments not made in the
ordinary course of its business;
(xiii) all commitments, contracts or agreements which are expected to
result in any loss upon completion of performance thereof in excess of
$5,000;
(xiv) all other contracts, except those which are (x) cancelable on
30 days' or less notice without any penalty or other financial obligation
or (y) if not so cancelable, involve annual aggregate payments by or to the
Partnership of $5,000 or less.
(c) The Sellers have heretofore delivered to Purchaser true and correct
copies of the Existing Contracts. Except as disclosed on SCHEDULE 4.08(b),
neither the Company nor any Seller has knowledge of any breach, anticipated
breach, or violation by the other parties to any Existing Contract. The
Existing Contracts are valid, binding, and in full force and effect and the
Partnership is in compliance with its obligations under such Existing
Contracts. Except for the Existing Contracts and the Purchase Orders, the
Partnership has not entered into any other
-11-
contract, commitment or agreement (other than agreements with annual payments
of less than $2,000 and which agreements, together with the other leases and
contracts not required to be disclosed, in the aggregate have annual payments
of less than $25,000 or which are terminable without penalty on one month or
less notice) relating to the ownership of or the operation of the Business,
including, but not limited to, rights-of-way, rights of entry, licenses,
easements, leases, or guaranty agreements. There are no claims by third
parties that the Partnership is required to enter into other agreements to
enable it to continue to own and operate the Business as it is presently
being operated.
SECTION 4.09. GOVERNMENTAL LICENSES. (a) Except as set forth on SCHEDULE
4.09(a), the Company holds all necessary licenses, consents, permits, approvals
and authorizations of public and governmental bodies which are required in
connection with the ownership and operation of the Company's business
(collectively referred to as the "Company Authorizations"). All Company
Authorizations are in full force and effect. The Company has complied with the
terms of the Company Authorizations which it holds and there are no pending
modifications, amendments or revocations of the Company Authorizations which
would adversely affect the ownership or the operation of its business. All fees
due and payable from the Company to governmental authorities pursuant to the
Company Authorizations have been paid. All reports required of the Company to
be filed in connection with the Company Authorizations have been timely filed
and are accurate and complete. True and correct copies of the Company
Authorizations, and all amendments thereto to the date hereof, have been
delivered by Sellers to Purchaser and are identified on SCHEDULE 4.09(a) hereto.
(b) Except as set forth on SCHEDULE 4.09(b), the Partnership holds all
necessary licenses, consents, permits, approvals and authorizations of public
and governmental bodies including, without limitation, the FCC Authorizations,
authorizations from the California Public Utilities Commission (the "CPUC") and
other state, counties and municipalities served by the Business, which are
required in connection with the ownership and operation of the Business
(collectively referred to as the "Authorizations"). All Authorizations are in
full force and effect. The Partnership has complied with the terms of the
Authorizations which it holds and there are no pending modifications, amendments
or revocations of the Authorizations which would adversely affect the ownership
or the operation of the Business. All fees due and payable from the Partnership
to governmental authorities pursuant to the Authorizations have been paid. All
reports required of the Partnership to be filed in connection with the
Authorizations have been timely filed and are accurate and complete. True and
correct copies of the Authorizations, and all amendments thereto to the date
hereof, have been delivered by Sellers to Purchaser and are identified on
SCHEDULE 4.09(b) hereto. The ownership and the operation of the Business by the
Partnership are not subject to regulation or supervision by any applicable state
public utilities commission or other similar state governmental instrumentality
other than the CPUC.
SECTION 4.10. COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE 4.10,
Sellers, the Company and the Partnership are currently complying with and have
so complied with, and are not in default under, in violation or contravention
of, any statute, law (including environmental
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or employment laws), ordinance, decree, order, rule, regulation of any
governmental body applicable to the business of the Company or the Business,
including, without limitation, the rules and regulations of the FCC and the
CPUC.
SECTION 4.11. NO VIOLATION OF EXISTING AGREEMENTS. Subject to the
consents for the Existing Contracts identified on SCHEDULE 4.11, the
execution, delivery and performance of this Agreement by the Sellers and the
Company and Sellers' transfer of the Shares to Purchaser (i) will not violate
any provisions of any law or any provision of the Company's certificate of
incorporation or by-laws (except with respect to the rights of first refusal
held by the Company and its shareholders, as set forth therein, which the
Company and Sellers hereby waive), or the Partnership Agreement, (ii) will
not, with or without the giving of notice or the passage of time, or both,
conflict with or result in any breach of any of the terms or conditions of,
or constitute a default under any Existing Contracts, and (iii) will not
result in the creation of any Encumbrance upon the assets of the Partnership.
SECTION 4.12. LITIGATION AND LEGAL PROCEEDINGS. Except as set forth on
SCHEDULE 4.12, there is no outstanding judgment against the Company, the
Partnership or any Seller or any director, officer or stockholder of the Company
or any officer or partner of the Partnership affecting the Business or the
Shares or which questions the validity of any action taken or to be taken
pursuant to or in connection with the provisions of this Agreement. Except as
set forth on SCHEDULE 4.12, there is no claim, litigation, proceeding or
investigation pending, or, to the Company's or any Seller's knowledge,
threatened, against the Company, the Partnership or any Seller or any director,
officer or stockholder of the Company or any officer or partner of the
Partnership affecting the Business or which questions the validity of any action
taken or to be taken pursuant to or in connection with the provisions of this
Agreement and there is no basis for any such claim, litigation, proceeding or
investigation. Except as set forth on SCHEDULE 4.12, there are no proceedings
pending to which the Company, the Partnership, any Seller or any director,
officer or stockholder of the Company or any officer or partner of the
Partnership is a party or, to the Company's or any Seller's knowledge,
threatened, nor any demands by any governmental agency, utility or other party,
to terminate, modify or adversely change the terms and conditions of the
Company's rights with respect to the Company Authorizations, the Partnership's
rights with respect to the Authorizations or Existing Contracts.
SECTION 4.13. ENVIRONMENTAL COMPLIANCE. (a) Except as set forth on
SCHEDULE 4.13 hereto, (i) none of the Sellers, the Company or the Partnership
has received any notice alleging any violation of any Environmental Law; (ii)
each of the Company and the Partnership is in compliance with all Environmental
Laws; (iii) each of the Company and the Partnership has obtained and complies
with all required governmental environmental permits with respect to its
business as presently conducted; (iv) neither the Company nor the Partnership
has generated, used, transported, treated, stored, released or disposed of, or
suffered or permitted anyone else to generate, use, transport, treat, store,
release or dispose of any Hazardous Substance (as hereinafter defined) with
respect to its business in violation of any Environmental Laws (as hereinafter
defined); (v) there has not been any generation, use, transportation, treatment,
storage,
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release or disposal of any Hazardous Substance in connection with
Partnership's ownership and conduct of the Business, the Company's ownership
and conduct of its business or on, in or under any property or facility used,
owned or leased by the Partnership or any adjacent properties or facilities,
which has created or might reasonably be expected to create any liability
under any Environmental Laws or which would require reporting to or
notification of any governmental entity; (vi) no friable asbestos or
polychlorinated biphenyl, and no underground storage tank, is contained in or
located on or under any property or facility owned, used or leased by the
Partnership or the Company; and (vii) any Hazardous Substance handled or
dealt with in any way with respect to the business of the Company or the
Partnership, or during the Partnership's or the Company's ownership of its
business, has been and is being handled or dealt with in compliance with all
Environmental Laws.
(b) For purposes of this Agreement, the term "Hazardous Substance"
shall mean any substance which, as of the date of this Agreement, is listed as
hazardous or toxic in the regulations implementing the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended
("CERCLA"), the Response Compensation and Liability Act ("RCLA"), the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), or listed as a
hazardous substance under any applicable state environmental laws, or any
substance which has been determined by regulation, ruling or otherwise by any
agency or court to be a hazardous or toxic substance regulated under federal or
state law, and shall include petroleum and petroleum products.
(c) For purposes of this Agreement, the term "Environmental Laws"
shall mean CERCLA, RCRA, RCLA and any applicable statutes, regulations, rules,
ordinances, codes, licenses, permits, orders, approvals, plans, authorizations,
concessions, franchises and similar items of all governmental authorities and
all applicable judicial, administrative and regulatory decrees, judgments and
orders, any of which relate to the protection of human health or the environment
from the effects of Hazardous Substances, including but not limited to those
pertaining to reporting, licensing, permitting, investigating and remediating
emissions, discharges, releases or threatened releases of Hazardous Substances
into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.
SECTION 4.14. EMPLOYEES. (a) The Company does not currently have, and
never had, any employees, and is not a party to any employment contract.
SCHEDULE 4.14 sets forth a true and complete list of the names and salaries of
all employees of the Partnership. Such employees are employees at will. The
Partnership has withheld all amounts required by law or agreement to be withheld
by it from the wages, salaries and other payments to its employees and is not
liable for any arrears of wages or any taxes for failure to comply with any of
the foregoing. There are no collective bargaining agreements covering any of
the employees of the Partnership. The Partnership has not breached or otherwise
failed to comply with any provision of any collective bargaining agreement or
other labor union contract applicable to any of its employees. No consent of
any union (or similar group or organization) is required in connection with the
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consummation of the transactions contemplated hereby. There are no pending, or,
to the Partnership's knowledge threatened or anticipated, and, there is no
factual basis for any (a) employment discrimination (including age, sex, racial
or handicap discrimination) charges or complaints against or involving the
Partnership, before any federal, state, or local board, department, commission
or agency or (b) unfair labor practice charges or complaints, disputes or
grievances affecting the Partnership. There are no pending, or, to the
Partnership's knowledge threatened or anticipated (a) union representation
petitions respecting the employees of the Partnership, (b) efforts being made to
organize any of the employees of the Partnership, or (c) strikes, slow downs,
work stoppages, or lockouts or threats affecting the Partnership.
SECTION 4.15. EMPLOYEE BENEFITS. Except as set forth on SCHEDULE 4.15
attached hereto, neither the Company nor the Partnership has any pension plan,
profit sharing plan, deferred compensation plan, stock option or stock bonus
plan, saving plan, or other benefit plan, policy, practice, or procedure or
contract concerning employee benefits or fringe benefits of any kind
(collectively, "Employee Benefit Plans"), whether or not governed by the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Except
as set forth on SCHEDULE 4.15, the Partnership is not a party to any employment
contract. Except as set forth on SCHEDULE 4.15 attached hereto, no officer,
director or employee of the Partnership participates or is eligible to
participate in a "defined benefit pension plan" as defined in Section 3(35) of
ERISA, maintained or made available by the Partnership. Except as set forth on
SCHEDULE 4.15 attached hereto, neither the Partnership nor any Controlled Group
Member maintains or contributes to, or ever maintained or contributed to, a plan
under which any employee of the Partnership participates or is eligible to
participate subject to Section 412 of the Internal Revenue Code of 1986, as
amended (the "Code"). The term "Controlled Group Member" means any trade or
business (whether or not incorporated) which is, or was at any relevant time,
aggregated with the Partnership pursuant to Section 414(b), (c), (m) or (o) of
the Code. Except as set forth on SCHEDULE 4.15 attached hereto, neither the
Partnership nor any ERISA Affiliate has participated in or made contributions to
any "multiemployer plan" as defined in Section 4001(a)(3) of ERISA. The term
"ERISA Affiliate" means each trade or business (whether or not incorporated)
which is, or was at any relevant time, treated as a single employer with the
Partnership pursuant to Section 4001(b)(1) of ERISA. The Sellers have furnished
Purchaser with true, complete and accurate copies of all Employee Benefit Plans
and related trust agreements as in effect on the date hereof, all summary plan
descriptions, and the latest annual reports filed with the Department of Labor
or the Internal Revenue Service (the "IRS").
Each of the Employee Benefit Plans is in compliance with all applicable
requirements of ERISA, the Code, and other applicable law. Each of the Employee
Benefit Plans has been administered in all material respects in accordance with
its terms and with applicable legal requirements. All "employee pension plans"
(within the meaning of Section 3(2) of ERISA) have been determined by the IRS to
be qualified under Section 401(a) of the Code, and no action or proceeding has
been instituted or threatened which would affect the qualification of any
pension plan of the Partnership. No unfunded liabilities, based upon the
Pension Benefit Guarantee Corporation (the "PBGC") rates currently in effect for
plan terminations, exist with
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respect to any Employee Benefit Plan which is a "defined benefit plan"
(within the meaning of Section 3(35) of ERISA). There has not been any
reportable event with respect to any pension plan of the Partnership. The
Partnership has not engaged in a "prohibited transaction" or breach of
fiduciary responsibility with respect to any Employee Benefit Plan which
could subject Purchaser or any affiliate of Purchaser to a penalty tax or
other liability under ERISA or the Code. Neither the Partnership nor any
ERISA Affiliate of the Partnership has ever incurred any liability under
Title IV of ERISA to the PBGC or to a multi-employer pension plan.
SECTION 4.16. TAX MATTERS. (a) Except as set forth on SCHEDULE 4.16(a)
attached hereto, (i) the Company and each Seller has timely filed all Tax (as
defined below) returns and statements which it is required to file with respect
to the Company; (ii) all such returns are complete and accurate and disclose all
Taxes required to be paid for the periods covered thereby; (iii) neither the
Company nor any Seller has waived any statute of limitations in respect of Taxes
or agreed to an extension of time with respect to a Tax assessment or
deficiency; (iv) no assessment of any additional Taxes for periods for which
returns have been filed has been asserted and no basis exists therefor; (v) to
the Company's and each Seller's knowledge, there are no unresolved questions or
claims raised by any Taxing authority concerning the Tax liability of the
Company, (vi) all Taxes which the Company is required by law to withhold or to
collect for payment have been duly withheld and collected, and have been paid
and (vii) the Company has made a valid election to be taxed as an "S
Corporation" (within the meaning of Section 1361 of the Code) and will be
classified for Federal income tax purposes as an S Corporation for the period
from the date of its incorporation through the Closing Date. The Company 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.
(b) Except as set forth on SCHEDULE 4.16(b) attached hereto, (i) the
Partnership has timely filed all Tax returns and statements which it is required
to file; (ii) all such returns are complete and accurate and disclose all Taxes
required to be paid for the periods covered thereby; (iii) the Partnership has
not waived any statute of limitations in respect of Taxes or agreed to an
extension of time with respect to a Tax assessment or deficiency; (iv) no
assessment of any additional Taxes for periods for which returns have been filed
has been asserted and no basis exists therefor; (v) to the Company's and each
Seller's knowledge, there are no unresolved questions or claims raised by any
Taxing authority concerning any Tax liability of the Partnership and (vi) all
Taxes which the Partnership is required by law to withhold or to collect for
payment have been duly withheld and collected, and have been paid; and
(c) For purposes of this Section 4.16, the term "Tax" or "Taxes" means all
taxes, charges, fees, levies, imposts and other assessments including all
income, sales, use, goods and services, value added, capital, capital gains,
alternative net worth, transfer, profits, withholding, payroll, employer health,
excise, real property and personal property taxes, and any other taxes, customs
duties, stamp duties, fees, assessments or similar charges in the nature of a
tax, together with any interest, fines and penalties imposed by any governmental
authority (including federal, state, provincial, municipal and foreign
governmental authorities), and whether disputed or not.
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SECTION 4.17. FINANCIAL STATEMENTS.
(a) The Purchaser has heretofore been furnished with the following:
(i) true and complete copies of the audited balance sheets of each of
the Partnership and the Company as of December 31, 1994, December 31, 1995
and December 31, 1996 and the related audited statements of income, cash
flows and stockholders equity or partner capital, as the case may be, for
the years then ended, each of such balance sheet and income statement being
attached hereto as SCHEDULE 4.17(a)(i) (collectively, the "Audited
Historical Financial Statements");
(ii) true and complete copies of the unaudited balance sheets (the
"September Balance Sheets") of each of the Company and the Partnership at
September 30, l997 (the "Balance Sheet Date") and the related unaudited
statements of income for the nine-month period then ended (the "Nine Month
Income Statements"; and together with the September Balance Sheets, the
"Current Financial Statements"), such balance sheets and income statements
being attached hereto as SCHEDULE 4.17(a)(ii);
(iii) the capital expenditure budget for each of the Company and the
Partnership providing for expenditure of capital items in each month for
the period from January 1, 1997 through December 31, 1997 and attached
hereto as SCHEDULE 4.17(a)(iii) (the "Budgets").
(b) Each of the Audited Historical and Current Financial Statements
delivered under Section 4.17(a)(i) and (ii) hereof was prepared in accordance
with GAAP applied on a basis consistent with prior periods and past practices
and, with respect to the Current Financial Statements, subject to normally
recurring year-end adjustments and except for the omission of certain footnotes
and other presentation items required by GAAP with respect to audited financial
statements; each of the balance sheets included in such Audited Historical and
Current Financial Statements fairly presents the financial condition of the
Company or Partnership, as applicable, as at the close of business on the date
thereof; and each of the statements of income included in such Audited
Historical and Current Financial Statements fairly presents the results of
operations of the Company or the Partnership, as applicable, for the fiscal
period then ended.
(c) Except as set forth on SCHEDULE 4.17(c) attached hereto, since the
Balance Sheet Date, neither the Company nor the Partnership has:
(i) sold, assigned or transferred any of its assets or
properties (except in the case of the Partnership pursuant to
existing contracts or commitments disclosed on any Schedule to
this Agreement or inventory in the ordinary course of business
consistent with past practice); or canceled any material debts or
material claims;
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(ii) waived any material rights, whether or not in the ordinary
course of business;
(iii) entered into any other transaction, except in the ordinary
course of business, or entered into any transaction with any
partner of the Partnership or any director, officer or
shareholder of the Company, or any affiliate or family member of
any such Person;
(iv) suffered any material damage, destruction or casualty loss
with respect to its assets or properties whether or not covered
by insurance;
(v) declared or paid any dividend, made any distribution of any
of its assets to any partner of the Partnership, any director,
officer or shareholder of the Company or any affiliate or family
member of any such Person or redeemed or purchased any of its
shares of capital stock or other equity interest;
(vi) except as disclosed in writing by the Sellers to
Purchaser, the Partnership has not obligated itself or the
Business to give free or reduced price service to customers with
respect to the Business other than promotions offered in the
ordinary course of business and set forth on SCHEDULE 2.04(a);
(vii) made any increases in the base compensation, bonuses,
paid vacation time allowed or material fringe benefits for its
partners, officers, employees or consultants, except for normal
periodic increases in base compensation for employees made
pursuant to established compensation policies of the Partnership
applied on a basis consistent with that of prior years;
(viii) suffered to its knowledge any material adverse
change in the business relationship of the Company or the
Partnership with any customer, advertiser, distributor or
supplier;
(ix) made any capital expenditures, additions or
improvements or commitments for the same, except those (A)
permitted by Section 2.04(d) hereof or (B) which do not exceed
$100,000 in the aggregate for the Company and the Partnership;
(x) entered into any contract, commitment or agreement
under which it has outstanding indebtedness for borrowed money or
for the deferred purchase price of property in excess of
$100,000, or has the right or obligation to incur any such
indebtedness or obligation, or made any loan or advance to any
Person other than advances to employees for business expenses not
exceeding $50,000 in the aggregate for the Company and the
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Partnership;
(xi) paid any bonuses, deferred or otherwise, or deferred
any compensation to any of its directors, officers or employees
in excess of $25,000 to any such person for the Company's 1996
and 1997 fiscal years, except as reflected in the Historical
Financial Statements;
(xii) made any material change in accounting procedures or
practices;
(xiii) mortgaged or pledged any of its properties or
assets, tangible or intangible, or subjected them to any
Encumbrances, except Encumbrances for current property taxes not
yet due and payable;
(xiv) except for the sale of inventory in the ordinary
course of business, entered into any agreement or arrangement
granting any rights to purchase or lease any of its assets,
properties or rights or requiring the consent of any Person to
the transfer, assignment or lease of any such assets, properties
or rights;
(xv) disposed of or permitted to lapse any rights to the
use of any patent, trademark, service xxxx, logo, trade name or
copyright identified on SCHEDULE 4.23 hereto, or disposed of or
disclosed to any Person (other than Persons subject to
confidentiality obligations in favor of the Company or the
Partnership) any trade secret, formula, process, method or know-how
not theretofore a matter of public knowledge;
(xvi) suffered any resignation or termination of any key
officer or key employee; or
(xvii) entered into any agreement or understanding to do
any of the foregoing.
SECTION 4.18. SUBSCRIBERS; AGENTS. SCHEDULE 4.18 attached hereto sets
forth (a) the number of customers who have subscribed for and who are receiving
service from Cellular System as of a date within 5 days prior to the date hereof
and (b) a list of all agents who sell cellular telephone equipment and/or
service on behalf of the Partnership as of the date hereof, together with such
agent's address and the number of gross activations produced by each agent from
October 1, 1996 to September 30, 1997.
SECTION 4.19. INSURANCE. Sellers have delivered previously to Purchaser
all policies of title, liability, fire, worker's compensation and other forms of
insurance (including bonds) of the Company or the Partnership which insure
against risks and liabilities to an extent and in a manner customary in the
cellular industry and which are adequate to provide coverage against risks of a
nature to which the Company or the Partnership would normally be exposed in the
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operation of its business. All such insurance policies and binders are in full
force and effect. Each of the Company and the Partnership has 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. There are no outstanding unpaid claims under any of such insurance
policies or binders and neither the Company nor the Partnership has received any
notice of cancellation or non-renewal of any such policy or binder. There is no
inaccuracy in any application for such policies or binders which would
reasonably be expected to materially adversely affect coverage thereunder. No
insurance carrier has canceled or reduced any insurance coverage for the Company
or the Partnership or has given any notice or other indication of its intention
to cancel or reduce any such coverage. All premiums due and payable under any
such insurance policies or binders of the Company or the Partnership have been
duly paid or accrued to the extent taken into account in the Working Capital
Adjustment.
SECTION 4.20. BROKERS. Except for Xxxxxxx & Associates, none of the
Sellers, the Company and the Partnership have engaged any agent, broker or other
person acting pursuant to its express or implied authority 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 Shares.
SECTION 4.21. UNDISCLOSED LIABILITIES; GUARANTEES. Neither the Company
nor the Partnership has any liabilities or obligations of any nature, whether
absolute, accrued, contingent, known or unknown, or otherwise, which are not
reflected in or reserved against the September Balance Sheets except for
liabilities and obligations that have arisen in the ordinary and usual course of
business and consistent with past practice (none of which results from, arises
out of, relates to, is in the nature of, or caused by any breach of contract,
breach of warranty, tort, infringement or violation of law). Except as
disclosed on SCHEDULE 4.21 or in the Audited Historical and Current Financial
Statements, there are no contracts or commitments by the Company or the
Partnership guaranteeing the payment or performance by others, or whereby,
except for the endorsement of checks in the regular and ordinary course of its
business, neither the Company nor the Partnership in any way is or will be
liable with respect to the obligations of any other Person.
SECTION 4.22. PRICING OF SERVICES. SCHEDULE 4.22 sets forth a description
of all rate plans currently offered to subscribers of the Cellular System.
SECTION 4.23. PROPRIETARY RIGHTS. The Partnership owns or has legal right
to use all patents, trademarks, tradenames, service marks and logos including
applications therefor, and all trade secrets, inventions and proprietary rights
and processes (all such items being hereinafter referred to as "Intangible
Property"), presently used in the conduct of the Business of the Partnership,
without any infringement upon the proprietary rights of others provided,
however, no representation is made as to the Partnership's or the Company's
entitlement to use the name "Cellular 2000" or "Cellular 2000 Telephone Co.".
All patents, registered trademarks, trademark applications, trade names, service
marks, and registered logos used or owned by or licensed to
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the Partnership in connection with its Business are set forth on SCHEDULE
4.23, and, in the case of any Intangible Property owned by the Partnership,
have been duly registered in, filed in, or issued by the United States Patent
and Trademark Office or the corresponding offices of other jurisdictions
(foreign or domestic) to the extent set forth on SCHEDULE 4.23. All material
licenses held by the Partnership, whether as licensee or licensor, are also
set forth on SCHEDULE 4.23. SCHEDULE 4.23 accurately sets forth with respect
to each patent, registered trademark, trademark application, trade name,
service xxxx, registered logo and material license owned or used by or
licensed by or to the Partnership in the conduct of its business, (i) the
owner thereof, (ii) the date of expiration, if any, (iii) whether such rights
are exclusive and (iv) any other licensee of the Partnership of such rights.
Except as otherwise set forth on SCHEDULE 4.23 hereto, no royalties or fees
are payable by the Partnership to any Person by reason of the ownership or
use of any of the Intangible Property. All items of Intangible Property
owned by the Partnership are, and all items of Intangible Property owned by a
third party and used by the Partnership are, (x) valid and in good standing,
(y) adequate and sufficient to permit the Partnership to conduct its Business
as presently conducted, and (z) no other rights of any kind in respect of the
Intangible Property are required by the Partnership for its operation as
presently conducted. Except as set forth on SCHEDULE 4.23, the Partnership
has not entered into any material licenses, sublicenses or agreements
relating to the use by any other Person of any Intangible Property now used
by the Partnership, and no infringement exists upon such Intangible Property
by any other Person. Except as disclosed on SCHEDULE 4.23, no charge or
claim is pending or threatened, nor has any charge or claim been made within
the past three years to the effect that, the sale of any of the services by
the Partnership infringe upon or conflict in any way with any rights or
properties of the type enumerated above owned or held by any other Person.
SECTION 4.24. ACCOUNTS RECEIVABLE AND BAD DEBTS. All notes and accounts
receivable of the Company or the Partnership shown on the September Balance
Sheets or thereafter acquired were or (to the extent not heretofore collected)
are valid and genuine, were acquired in the ordinary course of business, are
subject to no asserted counterclaims, defenses or setoffs and will be fully
collectible within 90 days of Closing (subject to reserves therefor as will be
taken into account in the determination of Current Assets at Closing in
accordance with Section 2.04). SCHEDULE 4.24 attached hereto sets forth a true,
complete and accurate list, as of the end of the most recent normal billing
cycle of the Cellular System, listing the total amounts of subscriber
receivables and the aging of such subscriber receivables based on the following
Schedule: 0-30 days, 31-60 days, 61-90 days and over 90 days, from the date
thereof.
SECTION 4.25. PRODUCT INFORMATION. The Partnership has not sold and does
not have in its inventory any refurbished telephone handsets. SCHEDULE 4.25
sets forth a list of manufacturers of telephone handsets presently in the
Partnership's inventory.
SECTION 4.26. CERTAIN BUSINESS RELATIONSHIPS. Except as set forth in
SCHEDULE 4.26 attached hereto, none of the officers, directors or partners of
the Partnership or officers, directors or stockholders of the Company and any of
their affiliates or family members have been involved in any business
arrangement or relationship with the Company or the Partnership within the past
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12 months.
SECTION 4.27. OFFICERS, DIRECTORS AND CERTAIN AUTHORIZED PERSONS.
Schedule 4.27 sets forth a complete and accurate list of:
(i) the names of all directors of the Company;
(ii) the names and offices of all officers of the Company;
(iii) the names of all Persons authorized to borrow money
or incur or guarantee indebtedness on behalf of the Company or
the Partnership;
(iv) all safes, vaults and safe deposit boxes maintained by
or on behalf of the Company or the Partnership or in which their
respective property is held, and the names of all Persons
authorized to have access thereto;
(v) all bank accounts of the Company and the Partnership
and the names of all Persons who are authorized signatories and
the terms of their authorizations; and
(vi) the names of all Persons to which either the Company
or the Partnership has granted its power of attorney and the
terms of any such powers of attorney.
SECTION 4.28. DISCLOSURE. No provision of this Agreement relating to any
of the Sellers, the Company, the Partnership, the Business or the Shares or any
other document, Schedule, Exhibit or other information furnished by Sellers to
Purchaser in connection with the execution, delivery and performance of this
Agreement, or the consummation of the transactions contemplated hereby, contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated in order to make the statement, in
light of the circumstances in which it is made, not misleading. In connection
with the preparation of this Agreement and the documents, descriptions,
opinions, certificates, Exhibits, Schedules or written material prepared by
Sellers and appended hereto or delivered or to be delivered hereunder, each
Seller agrees it will disclose to Purchaser any fact known to such Seller which
such Seller knows or believes would affect Purchaser's decision to proceed with
the execution of this Agreement. Except for facts affecting the cellular
telephone industry generally, there is no fact now known to any of the Sellers
relating to the Business which in such Seller's reasonable opinion adversely
affects the condition of the Shares, the status of the Authorizations or the
ownership, operation, financial condition or prospects of the Business which has
not been disclosed to Purchaser or set forth in the Exhibits or Schedules
attached hereto. All Schedules attached hereto are accurate and complete as of
the date hereof.
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ARTICLE V
PURCHASER'S REPRESENTATIONS
Purchaser hereby represents, warrants, covenants and agrees that:
SECTION 5.01. ORGANIZATION; QUALIFICATION. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Oklahoma. Purchaser has all power and authority to (i) own and operate
its properties, (ii) carry on its business as it is now being conducted, and
(iii) carry out the transactions contemplated by this Agreement and to own the
Shares and operate the Business, subject to obtaining all necessary consents
required for the transfer by Sellers of the Shares.
SECTION 5.02. CONSENTS; AUTHORIZATION; EXECUTION AND DELIVERY OF
AGREEMENT. All necessary consents and approvals have been obtained by Purchaser
for the execution and delivery of this Agreement. The execution and delivery of
this Agreement by Purchaser has been duly and validly authorized and approved by
all necessary corporate action. Purchaser has full power and authority to
execute and deliver and perform its obligations under this Agreement. This
Agreement is a valid and binding obligation of Purchaser, enforceable against it
in accordance with its terms.
SECTION 5.03. LITIGATION AND LEGAL PROCEEDINGS. There is no outstanding
judgment against Purchaser and there is no litigation, proceeding or
investigation pending, or, to Purchaser's knowledge, threatened, against
Purchaser or its assets which individually or in the aggregate would, if
adversely determined, result in a material adverse change in the business
condition (financial or otherwise), properties or assets of Purchaser or which
questions the validity of any action taken or to be taken pursuant to or in
connection with the provisions of this Agreement or the consummation of the
transactions contemplated hereby by the Purchaser.
SECTION 5.04. 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 Shares.
SECTION 5.05. NO DISTRIBUTION. The Shares will not be taken by Purchaser
with a view to the public distribution thereof and will not be transferred
except in a transaction registered or exempt from registration under the
Securities Act of 1933, as amended and any applicable state securities laws.
SECTION 5.06. USURY RATE. The usury rate in the State of Oklahoma
applicable to the Subordinated Promissory Note is greater than 9% per annum.
ARTICLE VI
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THE COMPANY'S, SELLERS' AND PURCHASER'S COVENANTS
SECTION 6.01. FINANCIAL STATEMENTS AND CELLULAR SYSTEM INFORMATION. The
Sellers and the Company covenant and agree that during the period after the
execution of this Agreement and prior to the Closing, they shall provide
Purchaser, within 21 days of the end of each calendar month, the unaudited
balance sheet and income statement for such month for each of the Company and
the Partnership ("Interim Financial Statements"). The Interim Financial
Statements will be true and correct in all material respects, will be prepared
using the same accounting methods and procedures as used in the preparation of
the Historical Financial Statements except for the absence of footnotes, subject
to normally recurring year-end adjustments, and will present fairly the
financial position of the Company and the Partnership at the date indicated and
the results of each of the Company and the Partnership's operations for such
period. The Sellers and the Company also shall provide Purchaser within 21 days
of the end of each calendar month (i) a comparison of the results of each of the
Company and the Partnership's income from operations for such month as reflected
in the Interim Financial Statements to the amount budgeted for such month and
the year to date (as reflected in the Budgets delivered to Purchaser, copies of
which are annexed hereto as SCHEDULE 6.01 (the "Operating Budgets"), (ii) the
number of subscribers on the Cellular System at the beginning and end of such
month with a comparison to the Operating Budget of the Partnership, (iii) an
accounts receivable aging report for the Cellular System and (iv) other reports
generated by the Partnership's billing system as reasonably requested by
Purchaser.
SECTION 6.02. GOVERNMENTAL APPROVALS. (a) Purchaser covenants and agrees
that it will cooperate with the Company and Sellers, and do all things
reasonably necessary to assist them, to obtain all consents and approvals
necessary for transfer of control to Purchaser of the Authorizations, including
the furnishing of financial and other information specifically with respect to
Purchaser reasonably required by the Person whose consent or approval is being
sought. The Company and Sellers shall use all reasonable efforts to provide
adequate prior written notice to Purchaser of any meeting with governmental
authorities the purpose of which is to seek a consent or approval to the
transactions contemplated hereby, and Purchaser shall use all reasonable efforts
to furnish a representative to attend meetings with appropriate government
authorities for the purpose of obtaining such consents or approvals. The
Purchaser, the Company and each Seller hereby agree to file and to cause the
Partnership to file the necessary Form(s) 490 and 702 with the FCC transferring
or assigning control of the FCC Authorizations for the Business to Purchaser and
diligently pursue the processing of the assignment of the FCC Authorizations to
Purchaser and to file for all other necessary regulatory approvals for the
consummation of the transactions contemplated by this Agreement within five
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.
Sellers, on the one hand, and Purchaser, on the other, shall share equally all
filing fees in connection with any filings pursuant to this Section 6.02(a).
(b) The Company, Sellers and Purchaser shall each cooperate and use their
reasonable best efforts to prepare and file with the Federal Trade Commission
and the Department of Justice
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and other regulatory authorities as promptly as possible all requisite
applications and amendments thereto together with related information, data
and exhibits necessary to satisfy the requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act ("Xxxx-Xxxxx Act"). Sellers, on the one hand, and
Purchaser, on the other, shall share equally all filing fees in connection
with any filings pursuant to this Section 6.02(b).
SECTION 6.03. THIRD PARTY CONSENTS; CLOSING CONDITIONS. (a) The Company
and the Sellers covenant and agree to do all things reasonably necessary to
obtain all consents and approvals necessary for the transfer or assignment to
Purchaser of the Existing Contracts requiring assignment as a result of the
Purchaser's purchase of the Shares. Purchaser covenants and agrees to cooperate
with the Company and Sellers and assist the Company and the Sellers in obtaining
such consents and approvals including the furnishing of financial and other
information, reasonably required by the Person whose consent or approval is
being sought.
(b) Purchaser, the Company and the Sellers hereby covenant and agree to
use all reasonable efforts to satisfy, or assist the other party in satisfying,
the closing conditions applicable to the Purchaser in Article VII hereof and the
Company and the Sellers in Article VIII hereof prior to the Closing Date.
SECTION 6.04. ACCESS. (a) Purchaser shall have the right, itself or
through its representatives, during normal business hours, after reasonable
notice (which may be oral) to Sellers' Representative, the Company and the
Partnership, and without undue disruption to the Company or the Partnership's
normal business activities, to inspect the assets and properties of the Company
and the Partnership and to inspect and make abstracts and reproductions of all
books and records of the Company and the Partnership including, without
limitation, applications and reports to the FCC and CPUC, all financial
information relevant to the Business, employee records, and engineering and
environmental reports and the Company shall furnish or cause the Partnership to
furnish Purchaser with such information respecting the assets, business and
financial records of the Company and the Partnership as Purchaser may, from
time to time, reasonably request.
(b) The Company and the Sellers acknowledge and agree, subject to any
restrictions placed thereon by an owner or lessor of any real property involved
that Purchaser may commission, at Purchaser's cost and expense, a so-called
"Phase I" environmental site assessment of the assets of the Partnership (the
"Phase I Assessment"). If the Phase I Assessment indicates that a so-called
"Phase II" assessment (the "Phase II Assessment") or other additional testing or
analysis of such assets is advisable, the Purchaser may elect to cause its
agents to conduct such testing and analysis at Purchaser's expense. The Company
and the Sellers will comply with any reasonable request for information made by
Purchaser or its agents in connection with any such investigation. The Company
and the Sellers covenant that any response to any such request for information
will be complete and correct in all material respects. The Company and the
Sellers will afford Purchaser and its agents access to all operations of the
Partnership at all reasonable times and in a reasonable manner in connection
with any such investigation subject to any
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required approval of the Partnership's landlords, which approval the Company
and the Sellers will use their best efforts to obtain. Should Purchaser
commission such an investigation, such investigation will have no effect upon
the representations and warranties made by the Company's and the Sellers to
Purchaser under this Agreement except that if any Phase I Assessment or Phase
II Assessment uncovers an environmental condition which then comprises a
breach of the Company and the Sellers' representations or warranties herein,
the Company and the Sellers shall not have breached such representation or
warranty if the Company and the Sellers cure such breach in accordance with
the provisions of this Agreement.
(c) The Company and the Sellers shall allow Purchaser the opportunity to
conduct an engineering review of the Cellular System to confirm that the
Cellular System complies with the FCC Authorizations and the regulations of the
FCC and is otherwise in good condition and repair, reasonable wear and tear
excepted.
SECTION 6.05. CONDUCT OF BUSINESS. From and after the date hereof the
Company and the Sellers shall, and shall cause the Partnership to:
(a) operate the Cellular System in accordance with the FCC
Authorizations and all other Authorizations, and comply with all laws,
rules and regulations applicable to the Company and the Partnership,
including the regulations of the FCC and CPUC;
(b) except for inventory sold in the ordinary course of business,
refrain from making any sale, lease, transfer or other disposition of any
of the assets of the Company or the Partnership other than in connection
with replacements with assets of like use and value, or with the prior
written approval of Purchaser;
(c) refrain from modifying, amending or altering or terminating any
of the Existing Contracts, and from waiving or canceling any default or
breach or modifying, altering or terminating any right or asset of the
Company or the Partnership without Purchaser's prior written approval,
which approval will not be unreasonably withheld;
(d) maintain insurance on the assets and properties of the Company
and the Partnership comparable to that maintained prior to the date
hereof, and use the proceeds of any claims for loss under such policies,
together with such other funds as may be required, to repair, replace, or
restore to their former condition any assets or properties which may be
damaged by fire or other casualty, all as soon as reasonably possible;
(e) maintain its books and records in accordance with prior practice;
maintain all of its property and assets in their present condition,
ordinary wear and tear excepted; maintain supplies of inventory and spare
parts consistent with past practice; and otherwise operate its business in
the ordinary course in accordance with past practices;
(f) refrain from changing the Cellular System's agents' commission
rate, sales
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practices (including the quality of the credit of subscribers contracting
for cellular telephone service) or marketing practices without Purchaser's
approval;
(g) refrain from increasing the compensation payable or to become
payable to any employee or agent of the Partnership without Purchaser's
approval;
(h) refrain from entering into any contract or renewal of any
existing contract for the employment of any employee or agent of the
Partnership other than "at-will" employees and agents;
(i) use its best efforts to (x) keep the business organization of the
Company and the Partnership intact, (y) retain the services of the key
employees of the Cellular System, and (z) maintain good relationships with
its employees, suppliers, advertisers, subscribers, agents and others
having business relations with it, in each case in accordance with past
practices;
(j) refrain from changing its Charter or by-laws of the Company, or
the Partnership Agreement of the Partnership;
(k) continue to advertise, promote and market the Cellular System and
its services in a manner consistent with past practice, and in any event
from the date hereof through the Closing, spend on advertising, marketing
and promotion, on an aggregate basis from the date hereof to the Closing,
the amounts set forth in the Operating Budgets.
(l) refrain from subjecting any of the assets or properties of the
Company or the Partnership to any new Encumbrance;
(m) refrain from doing or omitting to do any act which will cause a
breach of, or default under, or termination of (except in accordance with
its terms), any contract, agreement, lease, commitment, or obligation to
which the Company or the Partnership is a party or by which it is bound;
(n) provide to the Purchaser, concurrently with filing thereof,
copies of all reports to and other filings with the FCC;
(o) not permit any of the Authorizations to expire or to be
surrendered or voluntarily modified in a matter adverse to the Business, or
take any action which would reasonably be expected to cause the
Authorizations or any other governmental authority to institute proceedings
for the suspension, revocation or limitation of rights under any of the
Authorizations; or fail to prosecute with due diligence any pending
applications to any governmental authority;
(p) notify Purchaser in writing promptly after learning of the
institution or threat of
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any material action against the Company or the Partnership in any court,
or any action against the Company or the Partnership before the FCC or
the CPUC or any other governmental agency, and notify Purchaser in writing
promptly upon receipt of any administrative or court order relating to the
Business;
(q) if the Partnership deems it to be prudent promptly replace any
employee who leaves the employ of the Cellular System; notify Purchaser of
the hiring of any new employee, any material change in job function of an
employee, and the termination of any employee;
(r) pay or cause to be paid or provide for all Taxes of or relating
to the Company, the Partnership, the Shares and the employees required to
be paid to city, county, state, federal and other governmental units up to
the Closing Date;
(s) refrain from taking any action not in the Company's usual course
of business or the Partnership's usual course of business regarding the
Cellular System without Purchaser's prior approval;
(t) cooperate with Purchaser in connection with Purchaser's efforts
to identify the current employees of the Partnership that Purchaser would
like to continue to hire following the Closing consistent with all
applicable federal, state and/or local employment laws, rules and
regulations;
(u) refrain from declaring or paying any dividends or making any
distribution upon, or redeeming or repurchasing any shares of its capital
stock or partnership interests, as the case may be, provided, however, cash
distributions may be made to the Partnership's partners and the Company's
shareholders, in each case consistent with past practice;
(v) refrain from creating, incurring, assuming, guaranteeing, being
or remaining liable, contingently or otherwise, with respect to any
indebtedness, other than the Fleet Debt and indebtedness of the Company and
the Partnership not to exceed $100,000 in the aggregate;
(w) refrain from being a party to any merger or consolidation or
other transfer of any shares of the capital stock of the Company or
interests in the Partnership;
(x) refrain from prepaying any indebtedness for borrowed money (other
than repayments of advances under its existing lines of credit with
financial institutions in the ordinary course of its business) or prepaying
any lease or other contractual obligations;
(y) continue to make all capital expenditures in connection with the
operation of the Business when and as required by its capital expenditures
in the Budgets as set forth IN SCHEDULE 4.17(a)(iii) as are required prior
to the Closing Date; and
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(z) refrain from changing the rates charged to Subscribers except for
promotional programs of not more than sixty (60) days in duration provided
that if such promotional programs are not reasonably expected to terminate
before the Closing Date then such programs shall require Purchaser's
written approval, which approval shall not be unreasonably withheld.
SECTION 6.06. NO SHOPPING. None of the Sellers, the Company and any of
their affiliates, advisors or representatives shall, directly or indirectly,
solicit, encourage or initiate any contact with, negotiate with, or provide any
information to, endorse or enter into any agreement with respect to, or take any
other action to facilitate any person or group, other than Purchaser and its
representatives, concerning any inquiries or the making of any proposals
concerning any merger involving the Company or the Partnership, sale of all or
substantially all of the assets of the Company or the Partnership, acquisition
of the Shares or an equity interest in the Company or the Partnership or any
similar transaction involving the Company or the Partnership.
SECTION 6.07. EMPLOYEES. Nothing contained in this Agreement shall confer
upon any employee of the Partnership any right with respect to continued
employment by the Partnership or Purchaser. No provision of this Agreement
shall create any third-party rights in any such employee, or any beneficiary or
dependent thereof, with respect to the compensation, terms and conditions of
employment and benefits that may be provided to such employee by Purchaser or
under any benefit plan that Purchaser may maintain.
SECTION 6.08. SUPPLEMENTAL DISCLOSURE. The Company and the Sellers shall
promptly from time to time prior to the Closing Date supplement in writing the
Schedules hereto with respect to any matter hereafter arising that, if existing
or known as of the date of this Agreement, would have been required to be set
forth or described in the Schedules hereto; provided, however, that no such
supplemental disclosure shall be deemed to cure any breach of any representation
or warranty of the Company or the Sellers made in this Agreement unless
Purchaser fails to object in writing to the Company and the Sellers to any such
supplemental disclosure within ten (10) business days after Purchaser's receipt
thereof.
SECTION 6.09. SECTION 338(h)(10) ELECTIONS. (a) Sellers shall jointly
make timely and irrevocable elections under Section 338(h)(10) of the Code
thereby electing to treat the sale of the Shares as a sale by the Company of its
assets for Federal income tax purposes. Sellers, Company and Purchaser shall
report the transaction consistent with such elections (the "Elections") under
Section 338(h)(10) of the Code for federal income tax purposes and shall take no
position contrary thereto unless and to the extent required to do so pursuant to
a determination (as defined in Section 1313(a) of the Code).
(b) Purchaser shall be responsible for preparing drafts of all forms,
attachments and schedules necessary to effectuate the Elections (including,
without limitation, IRS Form 8023-A ("Form 8023-A") attached hereto as EXHIBIT
C). At least 5 days prior to the anticipated Closing
-29-
Date, Purchaser shall furnish Sellers' Representative with a copy of each
such draft Form 8023-A prepared by the Purchaser together with a copy of a
report (the "Allocation Report") of the proposed allocation pursuant to
Section 6.10(c) below.
(c) Purchaser agrees to prepare the Allocation Report so that the Sellers
are deemed to have sold their assets pursuant to Section 338(h)(10) of the Code
(i) to all Class I and II assets (within the meaning of Section 1.338(b)-2T of
the Treasury Regulations) in an amount equal to the face amount of such assets
or closing quoted market price thereof, as the case may be, as of the Closing
Date, and (ii) to all Class III assets (within the meaning of Section
1.338(b)-2T of the Treasury Regulations) in an amount equal to the fair
market value thereof as determined by the Purchaser. Any remaining amount
will be allocated to goodwill and going concern value; provided that Sellers
shall not be obligated to make such election, if the making of such election
would result in Sellers incurring a tax liability that would, in the
aggregate, exceed the sum of the tax liabilities to Sellers resulting from
the Company having sold its assets to Purchaser (on the same terms as
reflected in this Agreement) for federal income tax purposes and the Sellers
having sold Shares to Purchaser for California tax purposes. Any dispute
between Purchaser, on the one hand, and Sellers on the other shall be
determined by a written opinion of the Independent Accountant whose opinion
shall be binding on the parties.
(d) Sellers agree that none of them shall, or shall permit any of their
affiliates to, take any action to modify the Forms 8023-A following the
execution thereof, or to modify or revoke the Elections following the filing of
the Forms 8023-A, without the written consent of the Purchaser.
(e) Sellers shall, and shall cause their respective affiliates to, file
all tax returns in a manner consistent with the information contained in the
Forms 8023-A filed and the allocation provided pursuant to this Section 6.09.
ARTICLE VII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
The obligation of Purchaser under this Agreement with respect to the
purchase and sale of the Shares shall be subject to the fulfillment on or prior
to the Closing of each of the following conditions, any of which may be waived
in writing by Purchaser:
SECTION 7.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
THIS AGREEMENT. All of the representations and warranties made by the Company
and the Sellers in this Agreement shall be true and correct at and as of the
Closing except for such breaches and inaccuracies therein which, in the
aggregate, have not caused and would not reasonably be expected to cause
Purchaser to suffer a Loss (as defined in Section 10.01) in excess of $300,000
in the aggregate (a "Material Loss") or otherwise result in a Material Adverse
Effect. The Company and the Sellers shall have complied in all material
respects with and performed all of the agreements and covenants required by this
Agreement to be performed or complied with by
-30-
them on or prior to the Closing. Purchaser shall have been furnished with a
certificate or certificates of the Company's President, dated as of the
Closing, certifying to the fulfillment of the foregoing conditions. As used
in this Agreement, the term "Material Adverse Effect" means a material
adverse effect on the assets, properties, business operations or prospects of
the Business taken as a whole.
SECTION 7.02. DIRECTORS RESOLUTIONS. The Company shall deliver to
Purchaser copies of the resolutions of the board of directors of the Company
authorizing the execution, delivery and performance of this Agreement and all
instruments and documents to be delivered in connection herewith and the
transactions contemplated hereby, duly certified by an officer of the Company.
SECTION 7.03. INCUMBENCY CERTIFICATE. Purchaser shall have received a
certificate or certificates of an officer of the Company, certifying as to the
genuineness of the signatures of officers of the Company 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 7.04. THIRD PARTY CONSENTS; FCC; XXXX-XXXXX ACT. Sellers shall
have delivered to Purchaser such instruments, consents and approvals of third
parties (the form and substance of which shall be reasonably satisfactory to
Purchaser) as are necessary for the consummation of the transactions
contemplated by this Agreement and to assign to Purchaser without modification
thereof, as of the Closing, the Existing Contracts that require consent as a
result of Purchaser's purchase of the Shares and Purchaser shall have obtained
all Authorizations necessary for the consummation of the transactions
contemplated by this Agreement. Prior to Closing Date, the FCC shall have
issued a Final Order granting the FCC's consent to the transfer of control of
the FCC Authorizations to Purchaser without any material conditions, excepting
conditions applied on an industry-wide basis, which the Purchaser reasonably
deems to be adverse. In addition, all applicable waiting periods under the
Xxxx-Xxxxx Act (if applicable to the transactions contemplated by this
Agreement) shall have expired or been terminated and no objection shall have
been made by the Federal Trade Commission ("FTC") or the United States
Department of Justice ("DOJ"). For the purposes of this Agreement, the term
"Final Order" shall mean action by the FCC as to which (i) no request for stay
by the FCC, as applicable, of the action is pending, no such stay is in effect,
and, if any deadline for filing any such request is designated by statute or
regulation, such deadline has passed; (ii) no petition for rehearing or
reconsideration of the action is pending before the FCC and the time for filing
any such petition has passed; (iii) the FCC does not have the action under
reconsideration on its own motion and the time for such reconsideration has
passed; and (iv) no appeal to a court, or request for stay by a court, of the
FCC's action, as applicable, is pending or in effect, and, if any deadline for
filing any such appeal or request is designated by statute or rule, it has
passed.
SECTION 7.05. DUE DILIGENCE. Purchaser and its agents and representative
shall have conducted a satisfactory legal, regulatory, tax, engineering,
accounting and business due diligence review of the Company, the Partnership,
the Business and the Cellular Systems
-31-
including, without limitation, the Cellular System's properties, cellsites,
subscriber base and revenue potential, the results of which shall be
satisfactory to the Purchaser. Without limiting the generality of the
foregoing, Purchaser shall be satisfied that the Partnership possesses all
assets, licenses and property necessary to the operation of the Cellular
Systems as contemplated to be conducted by Purchaser, PROVIDED, HOWEVER, that
if Purchaser has not advised the Company and the Sellers in writing prior to
the close of business on January 2, 1998 that the results of such due
diligence review are not satisfactory, the conditions set forth in this
Section 7.05 shall no longer apply and shall have been satisfied.
SECTION 7.06. NO MATERIAL ADVERSE CHANGE. There shall not have been any
material adverse change in the financial condition, assets, business or
prospects of the Company, the Partnership or the Cellular System, from May 31,
1997 to the Closing; provided, however, that changes in the Partnership's
business prospects caused by or principally related to changes in governing law,
relevant regulations or the introduction of personal communication service
providers shall not be considered a material adverse change.
SECTION 7.07. NORMAL COURSE OF BUSINESS. Each of the Partnership and the
Company shall have operated its business in the normal course prior to Closing,
including without limitation the continuation by the Partnership of budgeted
capital improvements, and shall have continued to market the Cellular System's
services in the normal course of business and in accordance with past practices.
SECTION 7.08. SECTION 338(h)(10) ELECTIONS. Sellers shall each deliver an
executed Form 8023-A at the Closing authorizing the Section 338(h)(10) election
for federal income tax purposes.
SECTION 7.09. OPINION OF COUNSEL TO SELLER. Purchaser shall have been
furnished with an opinion of Xxxxx & Xxxxxx, P.L.C., counsel to Seller, dated as
of the Closing and addressed to Purchaser, and to any institution designated by
Purchaser which has provided financing in connection with the transactions
contemplated by this Agreement in substantially the form of EXHIBIT D hereto;
provided, however, opinions as to Sellers may be rendered by other counsel with
specific knowledge of or representational responsibilities as to matters to
which such opinions apply, and local counsel opinions of the Company's counsel
may be relied upon by Xxxxx & Xxxxxx P.L.C.
SECTION 7.10. OPINION OF FCC COUNSEL TO THE PARTNERSHIP. Purchaser shall
have been furnished with opinions of Xxxxx & Xxxxxx, P.L.C., FCC counsel for the
Company and the Partnership, dated as of the Closing and addressed to Purchaser,
and to any financial institution designated by Purchaser which has provided the
financing in connection with the transactions contemplated by this Agreement, in
substantially the form of EXHIBIT E attached hereto.
SECTION 7.11. SUBSCRIBERS. The aggregate number of "Subscribers" (as
defined in Section 2.04(a)) on the Partnership's Cellular System as of Closing
shall be at least 14,400.
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SECTION 7.12. TITLE INSURANCE; ESTOPPEL. The Company and Sellers shall
have obtained a consent from each lessor of the real property identified on
Schedule 4.07(b) consenting to the change in ownership of the Company or
Partnership (as applicable) if necessary in connection with the sale of the
Shares to Purchaser.
SECTION 7.13. RESIGNATIONS OF OFFICERS AND DIRECTORS. The Company and the
Sellers shall have provided to Purchaser, in a form satisfactory to Purchaser,
the resignations of each officer of the Company and each member of the Company's
Board of Directors other than those persons designated in writing by Purchaser
to the Company as persons who shall continue in office.
SECTION 7.14. PAYMENT OF INDEBTEDNESS. The Company and the Sellers shall
have provided to Purchaser, in a form satisfactory to Purchaser, a payoff letter
from every lender to the Partnership stating the outstanding principal balance
of all existing indebtedness, all interest accrued on such indebtedness and all
prepayment premiums and other amounts due in order to pay all such indebtedness
as of the Closing Date.
ARTICLE VIII
CONDITIONS PRECEDENT TO
THE COMPANY AND EACH SELLER'S OBLIGATION TO CLOSE.
The obligations of the Company and the Sellers under this Agreement with
respect to the sale of the Shares 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 the Company and the Sellers holding a majority of the
Shares:
SECTION 8.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
THIS AGREEMENT. All of the representations and warranties by Purchaser
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing. Purchaser shall have complied with and performed in
all material respects all of the agreements and covenants required by this
Agreement to be performed and complied with by it on or prior to the Closing.
The Company and the Sellers shall have been furnished with a certificate of an
officer of Purchaser, dated as of the Closing, certifying to the fulfillment of
the foregoing conditions.
SECTION 8.02. DIRECTORS' RESOLUTIONS. Purchaser shall deliver to the
Company and the Sellers copies of the resolutions of its Board of Directors
authorizing the execution, delivery and performance of this Agreement and all
instruments and documents to be delivered in connection herewith and the
transactions contemplated hereby, duly certified by an authorized officer of
Purchaser.
SECTION 8.03. INCUMBENCY CERTIFICATE. The Company and the Sellers shall
have received a certificate of a secretary of Purchaser, certifying as to the
genuineness of the signatures of representatives of Purchaser authorized to take
certain actions or execute any certificate,
-33-
document, instrument or agreement to be delivered pursuant to this Agreement,
which incumbency certificate shall include the true signatures of such
representatives.
SECTION 8.04. FCC; XXXX-XXXXX ACT. The FCC shall have issued an order
granting the FCC's consent to the transfer of control of the FCC Authorizations
to Purchaser. In addition, all applicable waiting periods under the Xxxx-Xxxxx
Act (if applicable to the transactions contemplated by this Agreement) shall
have expired or been terminated and no objection shall have been made by the FTC
or DOJ.
SECTION 8.05. OPINION OF COUNSEL TO PURCHASER. The Company and the
Sellers shall have been furnished with an opinion of Xxxxxxx & Xxxxxx, counsel
to Purchaser, dated as of the Closing and addressed to the Company and the
Sellers in substantially the form of EXHIBIT F hereto.
ARTICLE IX
CASUALTY LOSSES
In the event that there shall have been suffered between the date hereof
and the Closing any casualty loss relating to the assets or properties of the
Company or the assets, properties or the Business of the Partnership, the
Company and the Sellers will promptly notify Purchaser of such event. The
Sellers shall, at their option, cause the Company or the Partnership as
applicable to (i) repair, rebuild or replace the portion of the assets,
properties or Business damaged, destroyed or lost prior to the Closing Date, or
(ii) assign to Purchaser at Closing all claims to insurance proceeds or other
rights of the Company and the Partnership against third parties arising from
such casualty loss (the "Claims"); PROVIDED, HOWEVER that if such insurance
proceeds are or will not be sufficient in Purchaser's reasonable judgment to
cover the entire casualty loss, then the Sellers shall pay the difference at
Closing. 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 the Company and
the Sellers.
ARTICLE X
INDEMNIFICATION
SECTION 10.01. INDEMNIFICATION BY SELLERS. Notwithstanding the Closing,
and regardless of any investigation made at any time by or on behalf of
Purchaser or any information Purchaser may have, but subject to the terms of
this Article X, each Seller severally (and not jointly and severally) agrees to
indemnify and to hold Purchaser, its shareholders, officers, directors, and
employees (the "Indemnified Purchaser Parties") harmless from and against and in
respect of any losses (including lost revenues), damages, costs, expenses
(including costs of investigations and reasonable attorney fees), claims, suits,
demands, judgments and diminutions in value suffered or incurred (each a "Loss"
and collectively "Losses") by Purchaser arising from or related to:
(i) Any Company Unrelated Liability, whether or not known
or asserted at
-34-
or prior to Closing to the extent that such liability did not result
in a reduction in the Purchase Price at Closing pursuant to
Section 2.04 hereof;
(ii) Any Company Tax Liability, whether or not known or
asserted at or prior to the Closing, to the extent that such
liability did not result in a reduction in the Purchase Price at
the Closing pursuant to Section 2.04 hereof;
(iii) Any misrepresentation or breach of warranty in, or
omission from, any representation or warranty of the Company or
any Seller in this Agreement, the Schedules or Exhibits hereto,
or the Deposit Escrow Agreement, or in any closing certificate
delivered by the Company or any Seller to Purchaser pursuant to
Article VII hereof;
(iv) Any breach or non-fulfillment of any covenant or
agreement on the part of the Company or any Seller under this
Agreement to be performed on or following the Closing Date; and
(v) All costs and expenses (including reasonable attorneys'
fees) incurred by Purchaser in connection with any action, suit,
proceeding, demand, assessment or judgment incident to any of the
matters Purchaser is indemnified against by the Company and the
Sellers in this Agreement.
SECTION 10.02. INDEMNIFICATION BY PURCHASER. Notwithstanding the Closing,
and regardless of any investigation made at any time by or on behalf of the
Company or any Seller or any information the Company or any Seller may have, but
subject to the terms of this Article X, Purchaser agrees to indemnify and to
hold each of the Company and the Sellers, and their directors, officers,
stockholders, employees, representatives and agents harmless from and against
and in respect of any Losses incurred by the Company and the Sellers from:
(i) Any misrepresentation or breach of warranty in, or
omission from, any representation or warranty of Purchaser, in
this Agreement, the schedules or exhibits hereto, including the
Deposit Escrow Agreement or in any closing certificate delivered
by Purchaser to the Company and the Sellers pursuant to Article
VIII hereof;
(ii) Any breach or non-fulfillment of any covenant or
agreement on the part of Purchaser under this Agreement to be
performed on or following the Closing Date;
(iii) If any Seller's Election under Section 338(h)(10) of
the Code for Federal income tax purposes results in such Seller
recognizing taxable income in California, for all California
income taxes (including all related
-35-
interest and penalties) arising from such Seller's sale of Shares
in excess of the amount of California income taxes (if any) which
such Seller would have owed if the sale of the Shares were treated
as a sale of assets for Federal income tax purposes and as a sale
of stock for California income tax purposes.
(iv) All reasonable costs and expenses (including
reasonable attorneys' fees) incurred by the Company and the
Sellers in connection with any action, suit, proceeding, demand,
assessment or judgment incident to any of the matters for which
the Company and the Sellers are indemnified against by Purchaser
in this Agreement.
SECTION 10.03. NOTICE OF CLAIMS; DEFENSE OF THIRD PARTY. A party claiming
indemnification under this Article X (the "Asserting Party") must 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. If such claim relates to a claim, suit, litigation or other
action by a third party against the Asserting Party or any fixed or contingent
liability to a third party (a "Third Party Claim"), the Defending Party may
elect to assume and control the defense of the Third Party Claim at its own
expense with counsel selected by the Defending Party from and after such time as
the Defending Party unconditionally agrees in writing to accept, as against the
Asserting Party, all liabilities on account of such Third Party Claim.
Assumption of such liability, as against the Asserting Party, shall not be
deemed an admission of liability as against any such third party.
Notwithstanding the foregoing, the Defending Party may not assume or control the
defense if the named parties to the Third Party Claim (including any impleaded
parties) include both the Defending Party and the Asserting Party and
representation of both parties by the same counsel (in such counsel's reasonable
determination) would be inappropriate due to actual or potential differing
interests between them, in which case the Asserting Party shall have the right
to defend the Third Party Claim and to employ counsel reasonably approved by the
Defending Party, and to the extent the matter is determined to be subject to
indemnification hereunder, the Defending Party shall reimburse the Asserting
Party for the reasonable costs of its counsel. If the Defending Party assumes
liability for the Third Party Claim as against the Asserting Party and assumes
the defense and control of the Third Party Claim pursuant to this Section 10.03,
the Defending Party shall not be liable for any fees and expenses of counsel for
the Asserting Party incurred thereafter in connection with the Third Party Claim
(except in the case of actual or potential differing interests, as provided in
the preceding sentence), but shall not agree to any settlement of such Third
Party Claim which does not include an unconditional release of the Asserting
Party by the third party claimant on account thereof, PROVIDED that such
requirement shall be deemed waived to the extent that the Asserting Party does
not undertake to provide and promptly execute and, concurrently with the
delivery of any such release, deliver a corresponding release of the third party
claimant with respect to such Third Party Claim. If the Defending Party does
not assume liability for and the defense of the Third Party Claim pursuant to
this Section 10.03, the Asserting Party shall have the right (i) to control the
defense thereof and (ii), if the Asserting Party shall have notified the
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Defending Party of the Asserting Party's intention to negotiate a settlement of
the Third Party Claim (at the Defending Party's expense to the extent the matter
is determined to be subject to indemnification hereunder), which notice shall
include the material terms of any proposed settlement in reasonable detail, to
settle the Third Party Claim (at the Defending Party's expense to the extent the
matter is determined to be subject to indemnification hereunder) on terms not
materially inconsistent with those set forth in such notice, unless the
Defending Party shall have notified the Asserting Party in writing of the
Defending Party's election to assume liability for and the defense of the Third
Party Claim pursuant to this Section 10.03 within ten days after receipt of such
notice, and the Defending Party promptly thereafter shall have taken appropriate
action to implement such defense. The Asserting Party shall not be entitled to
settle any such Third Party Claim pursuant to the preceding sentence unless such
settlement includes an unconditional release of the Defending Party by the Third
party claimant on account thereof, PROVIDED that such requirement shall be
deemed waived to the extent that the Defending Party does not undertake to
provide and promptly execute and, concurrently with delivery of any such
release, deliver a corresponding release of the third party claimant with
respect to such Third Party Claim. The Asserting Party and the Defending Party
shall use all reasonable efforts to cooperate fully with respect to the defense
and settlement of any Third Party Claim covered by this Article X.
SECTION 10.04. LIMITATIONS. The Defending Party's obligations to
indemnify the Asserting Party pursuant to this Article X shall be subject to the
following limitations:
(a) No indemnification shall be required to be made by the Defending Party
until the aggregate amount of the Asserting Party's Losses exceeds $50,000
(the "Deductible") and then indemnification shall only be required to be made by
the Defending Party to the extent of such Losses that exceed the Deductible;
provided, however, the Deductible shall not be applicable to (i) Sellers'
obligation to indemnify Purchaser for Company Unrelated Liabilities and Company
Tax Liabilities to the extent that such Company Tax Liabilities did not result
in a Purchase Price adjustment at Closing, (ii) adjustments to the Purchase
Price provided for in Section 2.04, (iii) a breach by any Seller or the Company
of its representations set forth in Section 4.02, Section 4.04, Section 4.05 and
Section 4.16, (iv) losses resulting from fraud; or (v) Purchaser's obligation to
indemnify Sellers pursuant to Section 10.02(iii) hereof.
(b) All representations and warranties contained in this Agreement shall
survive the Closing until the third anniversary thereof; provided, however, that
notwithstanding the foregoing, (x) the representations and warranties contained
in Section 4.02, Section 4.04, Section 4.05 and Section 4.16 shall survive the
Closing for an unlimited duration and (y) the representations and warranties
contained in Sections 4.13 and 4.10 (as it may relate to Environmental Laws)
shall survive the Closing until the sixth anniversary thereof (the applicable
period of survival being referred to as the "Survival Period"). To the extent a
claim is made in respect of a representation or warranty within the applicable
Survival Period, such representation or warranty shall survive after the
Survival Period for purposes of such claim until such claim is finally
determined or settled.
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(c) Each Seller shall indemnify the Indemnified Purchaser Parties for such
Seller's pro rata share (based upon the number of Shares sold by such Seller to
Purchaser under this Agreement relative to the total number of Shares sold by
all Sellers to Purchaser under this Agreement) of the Losses for which the
Indemnified Purchaser Parties are entitiled to indemnity pursuant to Section
10.01 hereof. In the absence of fraud, the maximum liability of a Seller
relating to its oblgiation to indemnify the Indemnified Purchaser Parties for
Losses pursuant to this Agreement shall be limited to the portion of Purchase
Price payable to such Seller under Article II of this Agreement.
ARTICLE XI
CONFIDENTIALITY AND PRESS RELEASES
SECTION 11.01. CONFIDENTIALITY. Each party (in such capacity, a
"Recipient Party") shall hold in strict confidence all documents and information
concerning the other (in such capacity, a "Disclosing Party") and its business
and properties and, if the transaction contemplated hereby should not be
consummated, such confidence shall be maintained, and all such documents and
information (in written form) shall immediately thereafter be returned to the
Disclosing Party. In furtherance of the foregoing, without the express prior
written consent of the Disclosing Party, the Recipient Party shall not, directly
or indirectly, disclose, disseminate, publish, reproduce, retain, use (for its
benefit or for the benefit of others) or otherwise make available in any manner
whatsoever, any such documents or information to anyone except as provided in
Section 11.03. If the Recipient Party breaches, or threatens to commit a breach
of, any of the provisions of this Article XI, the Disclosing Party shall have
the right (in addition to any other rights and remedies available at law or in
equity) to equitable relief (including injunctions) against such breach or
threatened breach, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable harm to the Disclosing Party and that
money damages would not be an adequate remedy.
SECTION 11.02. PRESS RELEASES. No press release or public disclosure,
either written or oral, of the existence or terms of this Agreement shall be
made by either Purchaser or any Seller without the consent of each party subject
to the provisions of Section 11.03, and Purchaser, the Company and Sellers 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, the Company or any Seller, as the case may
be, proposes to make such press release.
SECTION 11.03. DISCLOSURES REQUIRED BY LAW. This Article XI 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 the Company, any 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
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customarily disclosed to them in connection with the sale or acquisition of a
cellular telephone system; PROVIDED, HOWEVER, that any such party shall be
informed of the confidential nature of such information and shall agree to
keep such information confidential; and PROVIDED, HOWEVER, that each party
shall provide to the other reasonable advance copies of any public release
except where the provision of such advance notice is not permissible.
ARTICLE XII
TERMINATION
SECTION 12.01. BREACHES AND DEFAULTS; OPPORTUNITY TO CURE. Prior to the
exercise by a party of any termination rights afforded under this Agreement, if
either party (the "Non-Breaching Party") believes the other (the "Breaching
Party") to be in breach hereunder, the Non-Breaching Party shall provide the
Breaching Party with written notice specifying in reasonable detail the nature
of such breach, whereupon the Breaching Party shall have 15 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 twenty (20) days to cure such breach, PROVIDED, HOWEVER, that the
cure period for a breach shall in no event extend beyond the Outside Date. If
the breach is not cured within such time period, then the Breaching Party shall
be in default hereunder and the Non-Breaching Party shall be entitled to
terminate this Agreement (as provided in Section 12.02). This right of
termination shall be in addition to, and not in lieu of, any legal or equitable
remedies available to the Non-Breaching Party.
SECTION 12.02. 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 written consent of each of the Company, Sellers holding a majority
of the Shares and Purchaser;
(b) by either Purchaser or Sellers, if any court of competent jurisdiction
in the United States or other United States governmental body shall have issued
an order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise permanently prohibiting the sale of the Shares to
Purchaser (which Sellers and Purchaser shall have used all reasonable efforts to
have lifted or reversed) and such order, decree, ruling or other action shall
have become final and nonappealable;
(c) subject to Section 12.01, by Purchaser, if either the Company or the
Sellers shall have breached any of their representations herein and such
breaches, in the aggregate, would reasonably be expected to have a Material
Adverse Effect or if the Company or the Sellers shall have materially breached
any of their covenants;
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(d) subject to Section 12.01, by the Sellers, if Purchaser shall have
materially breached any of its representations or covenants herein; or
(e) by either Sellers or Purchaser if the Closing shall not have occurred
on or before June 30, 1998 (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 XIII
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 X
hereof. Without limiting the foregoing, Sellers shall be solely responsible for
the brokerage fees and expenses of Xxxxxxx & Associates, Inc., which amount
shall be paid at Closing by Sellers from the Purchase Price.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. 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 stock assignments, other assignments, bills
of sale, deeds and other instruments, as may be reasonably necessary or proper
to carry out the specific provisions of this Agreement, including transfer to
Purchaser all of Sellers' right, title and interest in and to the Shares. Such
efforts and assistance shall be at the cost of the requesting party.
SECTION 14.02. NOTICES. All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered, sent by telecopier, recognized overnight delivery
service or registered or certified mail, return receipt requested, postage
prepaid, to the following addresses:
(i) If to Purchaser:
00000 X. Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
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with a required copy to:
Xxxxxxx & Xxxxxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx., Esq.
Facsimile No.: (000) 000-0000
(ii) If to Sellers to the addresses set forth on Schedule 1 with
copies to:
Xxxxxxx X. Xxxxxx
000 Xxxxxx Xxxxx
Xxxx Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
and
Xxxxxx Xxxxxx, Esquire
Hertz, Xxxxxx & Xxxxxxxx, P.C.
0000 X. Xxxxxxxxx Xx., Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000-0000
Facsimile No: (000) 000-0000
with a required copy to:
Xxxxx & Xxxxxx, P.L.C.
0000 Xxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Xx., 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 14.03. 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 Sellers and
Purchaser shall bear equally FCC, Xxxx-Xxxxx Act and other governmental filing
fees.
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SECTION 14.04. SELLERS' REPRESENTATIVES. Each of the Sellers hereby
designates Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xx. and Xxxx X. Xxxxxxxxx to be
the initial agents, attorneys in fact and representatives of all Sellers
(collectively, the "Sellers' Representatives" and individually, a "Sellers'
Representative"). Any Sellers' Representative may be removed, and a new
Sellers' Representative designated, at any time and from time to time, only by a
written notice to Purchaser and the then Sellers' Representatives from Sellers
whose Shares represent a majority of the outstanding capital stock of the
Company as of such date (or if after the Closing, as of the date immediately
prior to the Closing Date). In furtherance of the foregoing designation of
Sellers' Representatives, each of the Sellers, by his execution hereof, hereby
makes, constitutes and appoints the Sellers' Representatives (and any successor
Sellers' Representative designated in accordance with the terms hereof), to be
his true, sufficient and lawful attorney, for him and in his name, place and
xxxxx, for the purpose of (a) receiving and holding the Subordinated Promissory
Note on behalf of Sellers, collecting and disbursing to Sellers any and all
interest, principal and other amounts due and payable to Sellers thereunder and
enforcing, waiving and compromising any and all rights of Sellers under the
Subordinated Promissory Note, this Agreement and all other agreements,
instruments and documents contemplated by or required to be delivered in
connection with the transactions contemplated by this Agreement, (b) amending,
modifying and interpreting the provisions of this Agreement, the Subordinated
Promissory Note, the Deposit Escrow Agreement and all other instruments and
documents contemplated to be delivered in connection with the transactions
contemplated by this Agreement; provided that no such amendment or modification
shall disproportionately affect any Seller, (c) making, agreeing to,
compromising and otherwise dealing with the Adjustments to the Purchase Price as
contemplated by Article II hereof and claims for indemnifications (whether
asserted by or against Purchaser) under Article X hereof, (d) executing and
delivering on behalf of Sellers all stock powers, endorsements, assignments,
stock certificates, receipts and all other instruments, documents and agreements
as shall be necessary or appropriate, in the good faith judgment of the Sellers'
Representatives, to consummate and carry out the transactions contemplated by
this Agreement, the Deposit Escrow Agreement and the Subordinated Promissory
Note and (e) acting as Sellers' Representatives under this Agreement, the
Subordinated Promissory Note and the Deposit Escrow Agreement, and to do and
perform all necessary acts contemplated of the Sellers' Representative under
this Agreement, the Subordinated Promissory Note and the Deposit Escrow
Agreement both prior to, at and subsequent to the Closing Date (including the
performance and prosecution of this Agreement both prior to, at and subsequent
to the Closing Date), in as full and ample a manner as such Seller might do if
such Seller were personally present. The Purchaser shall not be responsible or
liable in any manner for any actions taken or omitted to be taken by the
Sellers' Representatives, including but not limited to, any actions with respect
to any amounts paid to the Sellers' Representatives pursuant hereto and the
Subordinated Promissory Note, and the Purchaser shall be indemnified and held
harmless against any loss, expense or damage arising therefrom. Upon the
execution of this Agreement, each Seller shall deliver to Sellers'
Representatives, to hold in escrow until the Closing pending satisfaction or
waiver by the Sellers' Representatives of the conditions precedent to Sellers'
obligations set forth in Article VIII hereof, original certificates evidencing
the Shares owned by him together with such executed stock powers or other
-42-
instruments of transfer and Form 8023-A as may be required pursuant to the terms
hereof. All action permitted to be taken by the Sellers' Representatives shall
require the approval of a majority of the Sellers' Representatives. The
Sellers' Representatives are authorized to receive at Closing, and the Sellers
hereby irrevocably direct Purchaser to pay to Sellers' Representatives at
Closing from the cash portion of the Purchase Price that would have otherwise
been paid to Sellers at Closing pursuant to the first sentence of Section 2.03,
the sum of $1.3 million (the "Sellers' Expense Reserve"). The Sellers'
Representatives are hereby authorized by Sellers to utilize the Sellers' Expense
Reserve for (w) the purposes of carrying out Sellers Representatives'
obligations and responsibilities under this Agreement, including, without
limitation, the expenses of accountants, attorneys and other professionals as
the Sellers' Representatives deem necessary or appropriate to hire, (x) paying
all out-of-pocket expenses of the Sellers' Representatives relating to the
performance of their duties, (y) paying reasonable compensation to the Sellers'
Representatives for their services and (z) paying the legal fees and expenses of
Xxxxx & Xxxxxx P.L.C., the brokers fee to Xxxxxxx & Associates and the bonuses
and other amounts specified on Schedule 14.04.
The Sellers' Representatives agree to faithfully perform their duties and
responsibilities to the Sellers, but shall have no personal liability to the
Sellers except for fraud or bad faith proven by clear and convincing evidence.
The Sellers' Representatives shall be indemnified and held harmless by Sellers
for any claim, loss or expense arising from or related to the performance of
their duties and responsibilities hereunder and any and all costs of
investigation and defense of any claim incurred by the Sellers' Representatives
shall be advanced from the Sellers' Expense Reserve.
At such time as the Sellers' Representatives determine that all or any
portion of the Sellers' Expense Reserve is no longer necessary, the Sellers'
Representatives will disburse such amounts to the Sellers pro rata in proportion
to their respective share of the Purchase Price.
SECTION 14.05. SPECIFIC PERFORMANCE. The parties recognize and
acknowledge that in the event Sellers shall fail to perform their obligations
under the terms of this Agreement, money damages alone will not be adequate to
compensate the Purchaser. The parties, therefore, agree and acknowledge that in
the event the Sellers fail to perform their obligations under this Agreement
prior to Closing, the Purchaser shall be entitled, in addition to any action for
monetary damages, in addition to any other rights and remedies on account of
such failure, to specific performance of the terms of this Agreement and of the
covenants and obligations hereunder.
SECTION 14.06. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma (without
application of principles of conflicts of law).
SECTION 14.07. 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
-43-
consent of the other parties, which consent will not be unreasonably withheld
except that Purchaser shall have the right to assign its rights under this
Agreement to any institutional lender.
SECTION 14.08. 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 respective successors, permitted assigns,
heirs and legal representatives.
SECTION 14.9. AMENDMENTS; WAIVERS. No alteration, modification or change
of this Agreement shall be valid except by an agreement in writing executed by
the parties hereto. 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 14.10. ENTIRE AGREEMENT. This Agreement merges all previous
negotiations and agreements between the parties hereto, either verbal or
written, and constitutes the entire agreement and understanding between the
parties with respect to the subject matter of this Agreement.
SECTION 14.11. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which when so executed shall be an original, but all
of which together shall constitute one agreement. Facsimile signatures shall be
deemed original signatures.
SECTION 14.12. SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law, but only
as long as the continued validity, legality and enforceability of such provision
or application does not materially (a) alter the terms of this Agreement, (b)
diminish the benefits of this Agreement or (c) increase the burdens of this
Agreement, for any person.
SECTION 14.13. SECTION HEADINGS. The section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
SECTION 14.14. INTERPRETATION. As both parties have participated in the
drafting of this Agreement, any ambiguity shall not be construed against either
party as the drafter.
SECTION 14.15. FURTHER ASSURANCES. For a period of twelve (12) months
after Closing, each Seller agrees to provide to Purchaser from time to time any
information that such Seller possesses with respect to the operation of the
Business and Shares prior to the Closing which the Purchaser reasonably requests
in the future in connection with the Purchaser's financing efforts
-44-
now or in the future or in connection with any FCC or other regulatory filing.
SECTION 14.16. THIRD PARTIES. Nothing herein, expressed or implied, is
intended to or shall confer on any person other than the parties hereto any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 14.17. WAIVER OF JURY TRIAL. THE PARTIES HERETO IRREVOCABLY WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, COUNTERCLAIM, OR
CROSS CLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized representative as of the day and year first
above written.
PURCHASER:
XXXXXX CELLULAR OF
CALIFORNIA, INC.
By: /s/ XXXXXXX XXXXXX
Xxxxxxx Xxxxxx
Chairman
THE COMPANY:
CELLULAR 2000 TELEPHONE CO.
By: /s/ XXXX X. XXXXXXXXX
Xxxx X. Xxxxxxxxx
Title: President
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Title: Chairman
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SELLERS' REPRESENTATIVES
THE UNDERSIGNED AGREE TO SERVE AS
SELLERS' REPRESENTATIVES IN ACCORDANCE
WITH SECTION 14.04.
/s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
/s/ XXXX X. XXXXXXXXX
Xxxx X. Xxxxxxxxx
/s/ XXXXXXX X. XXXXXX, XX.
Xxxxxxx X. Xxxxxx, Xx.
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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SELLERS:
/s/ XXXXXXX XXXX
Xxxxxxx Xxxx
/s/ XXXXXXXX XXXXXXXXXXX
Xx. Xxxxxxxx Xxxxxxxxxxx, individually
and as Trustee
/s/ XXXXX XXXXXXXX
Xxxxx Xxxxxxxx
/s/ XXXXXXX XXXXXX
Xxxxxxx Xxxxxx
/s/ XXXXX XXXXXXX
Xxxxx Xxxxxxx
/s/ XXXXX XXX XXXX
Xxxxx Xxx Xxxx
/s/ XXXXX X. XXXXXXX
Xxxxx X. Xxxxxxx
/s/ XXXXXXX X. XXXXXXX
Xxxxxxx Xxxxxxx Xxxxxxx
Xxxxxxx X. and Xxxxxx X. Xxxxxxx
Revocable Trust
By: /s/ W.E. XXXXXXX
Xxxxxxx X. Xxxxxxx
By: /s/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
/s/ XXXX XXX XXXXX
Xxxx Xxx Xxxxx
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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Xxxxx Xxxxxx FBO Xxxxxxxxx Xxx
Xxxxxx under the Florida UTMA
By: /s/ XXXXX XXXXXX
Xxxxx Xxxxxx
Xxxxx Xxxxxx FBO Xxxxxx Xxxx Xxxxxx
under Florida UTMA
By: /s/ XXXXX XXXXXX
Xxxxx Xxxxxx
/s/ XXXXX XXXXXX
Xxxxx Xxxxxx
/s/ XXXX X. LINK
Xxxx X. Link
/s/ XXXX XXXXXX
Xxxx Xxxxxx
/s/ XXXXXX XXXX
Xxx Xxxx
/s/ XXXXXXX XXXXXXXX
Xxxxxxx XxXxxxxx
/s/ XXXXXX XXXXX, JR.
Xxxxxx Xxxxx, Jr.
/s/ XXXX XXXXX
June Xxxxx
Xxxxx and Xxxxx Xxxxxxxx as Trustees of
the Xxxxx X. Xxxxxxxx Revocable Trust
dated 1/26/96
By: /s/ XXXXX XXXXXXXX
Xxxxx Xxxxxxxx, Trustee
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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By: /s/ XXXXX XXXXXXXX
Xxxxx Xxxxxxxx, Trustee
Xxxxx and Xxxxx Xxxxxxxx as Trustees of
the Xxxxx X. Xxxxxxxx Revocable Trust
dated 1/26/96
By: /s/ XXXXX XXXXXXXX
Xxxxx Xxxxxxxx, Trustee
By: /s/ XXXXX XXXXXXXX
Xxxxx Xxxxxxxx, Trustee
/s/ XXXX XXXXXX
Xxxx Xxxxxx
/s/ XXXX XXXX XXXXXX
Xxxx Xxxx Xxxxxx
/s/ XXXX XXXXX XXXXXX
Xxxx Xxxxx Xxxxxx
Xxxx Xxxxx Xxxxxx FBO Kira Xxxxx
Xxxxxx under the Florida UTMA
By: /s/ XXXX XXXXX XXXXXX
Xxxx Xxxxx Xxxxxx
/s/ XXXXXXX XXXXXX
Xxxxxxx Xxxxxx
/s/ XXXX XXXXXXXX XXXXXX
Xxxx Xxxxxxxx Xxxxxx
Xxxxxxx X. Xxxxxx, Trustee, or any
Successor Trustee of the Xxxxxxx X.
Xxxxxx Living Trust Agreement dated
July 29, 1996 as it may be hereafter
amended
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx, Trustee
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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Xxxx X. Xxxxxx, Trustee, or any Successor
Trustee of the Xxxxxxx X. Xxxxxx Living
Trust Agreement dated July 29, 1996 as it
may be hereafter amended
By: /s/ XXXX X. XXXXXX
Xxxx X. Xxxxxx, Trustee
/s/ XXXXXX XXXXXXXXX
Xxxxxx Xxxxxxxxx
/s/ XXXXX X. XXXXXXXXX
Xxxxx X. Xxxxxxxxx
/s/ XXXX X. XXXXXXXXX
Xxxx X. Xxxxxxxxx
/s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
/s/ XXXXXXXX XXXXXXXX
Xxxxxxxx Xxxxxxxx
/s/ XXXX XXXXXXXX
Xxxx Xxxxxxxx
/s/ XXXXXXX X. XXXXX
Xxxxxxx Xxxxx
Xxxxxx Xxxxxx, Trustee of the Xxxxxx X.
Xxxxxx Revocable Living Trust U.A.D.
September 13, 1995
By: /s/ XXXXXX XXXXXX
Xxxxxx Xxxxxx, Trustee
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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EXHIBIT A
DEPOSIT ESCROW AGREEMENT
THIS DEPOSIT ESCROW AGREEMENT is made and entered into as of November
, 1997, by and among Xxxxxx Cellular Of California, Inc., an Oklahoma
corporation ("Purchaser"); the Sellers' Representatives for the shareholders
of Cellular 2000 Telephone Co. (the "Sellers") listed on SCHEDULE 1 to that
certain Stock Purchase Agreement of even date herewith by and among
Purchaser, Sellers and Cellular 2000 Telephone Co. (the "Company") (the
"Stock Purchase Agreement"); and CORESTATES BANK, N.A., as escrow agent (the
"Escrow Agent").
RECITALS
WHEREAS, the Purchaser, Sellers and the Company have entered into the
Stock Purchase Agreement of even date herewith pursuant to which the
Purchaser has agreed to purchase the Shares of the Company;
WHEREAS, capitalized terms used herein and not otherwise defined have
the meaning given such terms in the Stock Purchase Agreement; and
WHEREAS, the Stock Purchase Agreement requires Purchaser to deposit the
sum of $2.5 million into escrow in accordance with the terms hereof, this
Agreement being the "Deposit Escrow Agreement" referred to in Section 2.02 of
the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and in the Stock Purchase Agreement, and for good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, it
is agreed as follows:
SECTION 1. ESCROW DEPOSIT. (a) The Escrow Agent acknowledges receipt
of $2.5 million (the "Deposit") from the Purchaser.
(b) The Escrow Agent agrees to hold, administer and disburse the
Deposit, together with all interest and other amounts earned thereon and on
all such interest and other earnings (collectively, all such interest and
earnings are referred to as "Escrow Earnings"; and the Deposit and the Escrow
Earnings are collectively referred to as the "Escrowed Funds") pursuant to
the terms of this Agreement.
SECTION 2. RIGHTS, DUTIES AND IMMUNITIES. (a) Acceptance by the
Escrow Agent of its duties under this Agreement is subject to the following
terms and conditions, which all parties to this Agreement hereby agree shall
govern and control the rights, duties and immunities of the Escrow Agent:
(i) The Escrow Agent undertakes to perform such duties and
only such duties as are expressly set forth herein; the Escrow
Agent shall not be liable except for the performance of such
duties and obligations as are expressly set forth herein; and the
Escrow Agent shall not be deemed to have any knowledge of or
responsibility for the terms of any other agreement between or
among the Sellers, the Sellers' Representatives, the Company and
the Purchaser or any other party, including, without limitation,
the Stock Purchase Agreement.
(ii) The Escrow Agent shall not be responsible in any
manner whatsoever for any failure or inability of any Seller, the
Sellers' Representatives, the Company, the Purchaser or any third
party, to deliver moneys to the Escrow Agent or otherwise to
honor any of the provisions of this Agreement, the Stock Purchase
Agreement or any other agreement.
(iii) The Sellers' Representatives (in their representative
capacity and not individually) and the Purchaser shall, within
ten (10) days following demand, reimburse and indemnify the
Escrow Agent for, and hold it harmless from and against, any
loss,
liability or expense, including but not limited to reasonable counsel
fees, arising out of or in connection with its acceptance of, or the
performance of its duties and obligations under this Agreement, except
for losses, liabilities and expenses caused by the willful misconduct
or gross negligence of the Escrow Agent. The Sellers' Representatives
(in their representative capacity and not individually) and the
Purchaser shall each be responsible for one-half of such expenses.
Without limiting the foregoing exculpation of the Escrow Agent, the
Escrow Agent shall in no event be liable in connection with its
investment or reinvestment of any cash held by it hereunder in
good faith in accordance with the terms hereof, including,
without limitation, any liability for any delays not resulting
from its bad faith, willful misconduct or gross negligence or any
loss of interest incident to any such delays. The provisions of
this Section 2(a)(iii) shall survive any termination of this
Agreement.
(iv) The Escrow Agent shall be fully protected in acting on
and relying upon any written notice, direction, request, waiver,
consent, receipt or other paper or document which the Escrow
Agent believes in good faith to have been signed or presented by
the proper party or parties.
(v) The Escrow Agent shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it in
good faith or for any mistake of fact or law, or for anything
which it may do or refrain from doing in connection herewith,
except its own willful misconduct or gross negligence.
(vi) The Escrow Agent may seek the advice of legal counsel
in the event of any dispute or question as to the construction of
any of the provisions of this Agreement or its duties hereunder,
and it shall incur no liability and shall be fully protected in
respect of any action taken, omitted or suffered by it in good
faith in accordance with the opinion of such counsel.
(vii) The Escrow Agent makes no representation as to the
validity, value, genuineness or collectibility of any security,
document or instrument held by or delivered to it.
(b) If a controversy or dispute arises between one or more of
the parties hereto, or between any of the parties hereto and any
person not a party hereto, as to whether or not or to whom the Escrow
Agent shall deliver the Escrowed Funds or any portion thereof or as to
any other matter arising out of or relating to the Escrowed Funds or
this Agreement, the Escrow Agent shall, in its sole discretion, have
the right to (but shall not be obligated to), commence interpleader or
similar actions or proceedings for determination of such controversy
or dispute; PROVIDED, HOWEVER, in no event shall the Escrow Agent
commence any interpleader or similar action or proceeding if it shall
have received written notice that such controversy or dispute shall
have been settled pursuant to a written agreement among the parties to
such controversy or dispute or by a final judgment of a court of
competent jurisdiction, not subject to further appeal.
(c) The Escrow Agent shall be entitled to receive an
administration fee at the rate of $2,500 per year, payable in advance
on the date hereof and on each anniversary of the date hereof. In
addition, the Escrow Agent shall also be entitled to reimbursement of
any other reasonable fees and expenses, including out-of-pocket costs
and expenses and reasonable attorney's fees incurred by the Escrow
Agent hereunder. The Sellers' Representatives (in their
representative capacity and not individually) and Purchaser shall each
be responsible for one-half of such fees and expenses.
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SECTION 3. INVESTMENT OF ESCROWED FUNDS; EARNINGS. Escrowed Funds
which are not disbursed by the Escrow Agent shall be invested by the Escrow
Agent in the CoreFund Treasury Reserve. The parties specifically recognize
that CoreStates Investment Advisers, Inc., an affiliate of CoreStates, serves
as adviser to the CoreFund Treasury Reserve and is compensated by the
CoreFund Treasury Reserve for services rendered to it. Investments in mutual
funds are not deposits of CoreStates Bank or any other bank; are not insured
by the FDIC or any other agency; and carry investment risk, including risk of
loss of principal.
SECTION 4. RELEASE OF ESCROWED FUNDS. The Escrow Agent shall disburse
the Escrowed Funds as follows:
(a) If the Closing under the Stock Purchase Agreement occurs,
then at the Closing upon receipt of joint written instructions from
Sellers' Representatives and Purchaser, the Escrow Agent shall pay the
Escrowed Funds in accordance with such instructions.
(b) If Escrow Agent receives written notice that the Stock
Purchase Agreement has been terminated by Sellers under Section
12.02(d) thereof, and provided at the time of such termination neither
the Company nor any Seller, is then in breach of any of its
representations, warranties, covenants or agreements set forth in the
Stock Purchase Agreement to such an extent that the Company's or
Sellers' breaches, in the aggregate, have caused or would reasonably
be expected to result in a Material Adverse Effect (as defined in the
Stock Purchase Agreement) and the conditions set forth in Sections
7.04 and 7.06 of the Stock Purchase Agreement shall have been
satisfied, then upon such claim for payment made by the Sellers'
Representatives and subject to Section 4(d) hereof, the Escrow Agent
shall pay out of the Escrowed Funds the Deposit as the Liquidated
Damages Amount in accordance with the instructions of Sellers'
Representatives. All claims and payments under this Section 4(b)
shall be made in accordance with the procedures set forth in Section
4(d) below.
(c) If the Stock Purchase Agreement is terminated pursuant to
its terms for any reason other than as described in Section 4(b)
above, then upon a claim for payment made by the Purchaser, the Escrow
Agent shall pay the Escrowed Funds to the Purchaser and Purchaser
shall retain any rights it may have against Sellers and the Company
for any breaches of their respective obligations under the Stock
Purchase Agreement. All claims and payments under this Section 4(c)
shall be made in accordance with the procedures set forth in Section
4(d) below.
(d) In the event of a claim for payment under this Agreement by
either the Sellers' Representatives or the Purchaser pursuant to
Section 4(b) or (c) above, the party claiming such payment (the
"Claiming Party") shall give written notice to the other party (the
"Other Party") and to the Escrow Agent stating that the Claiming Party
is entitled to payment of the Escrowed Funds (or any portion thereof)
in accordance with the provisions hereof and of the Stock Purchase
Agreement. If, within 10 days after receipt of such notice the Escrow
Agent has not received written notice from the Other Party disputing
the Claiming Party's right to payment of the Escrowed Funds (or any
portion thereof), then the Escrow Agent shall promptly pay the
Escrowed Funds or the claimed portion thereof to the Claiming Party or
its designees. If, within such 10-day period, the Escrow Agent
receives written notice from the Other Party disputing the Claiming
Party's right to payment of the Escrowed Funds (or any portion
thereof), then the Escrow Agent shall retain the Escrowed Funds until
(i) the Escrow Agent has received a written evidence satisfactory to
the Escrow Agent that the rights of Purchaser and Sellers have been
determined by a final judgment of a court of competent jurisdiction,
not subject to further appeal, at which time the
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Escrow Agent shall disburse the Escrowed Funds in accordance with such
judgment, or (ii) the Escrow Agent has received written instructions
signed by the Sellers' Representatives and Purchaser as to disposition of
the Escrowed Funds (or any portion thereof), at which time the Escrow
Agent shall promptly disburse the Escrowed Funds (or any portion
thereof) in accordance with such written instructions. Each of the
Purchaser and Sellers' Representatives (for the account of Sellers)
shall bear their own fees and expenses in connection with any
proceedings hereunder.
(e) The Escrow Agent shall, in addition, disburse the Escrowed
Funds in accordance with any joint written instructions of the
Purchaser and the Sellers' Representatives received by the Escrow
Agent.
(f) The party receiving the Escrowed Funds pursuant to the terms
hereof shall be responsible for any and all tax obligations imposed
now or hereafter by any applicable law with respect to the investment
and disbursement of the Escrowed Funds, and shall indemnify and hold
the Escrow Agent harmless from and against any taxes, additions to tax
for late payment, interest, penalties and other expenses, including,
without limitation, any liability for failure to obtain proper
certifications or properly to report to governmental authorities, that
may be assessed against the Escrow Agent on any such investment,
disbursement or other activities which arises under this Agreement.
SECTION 5. TERMINATION OF ESCROW AGREEMENT. This Agreement shall
terminate upon the distribution of all amounts held by the Escrow Agent in
accordance with the provisions hereof.
SECTION 6. SUCCESSOR ESCROW AGENT. (a) The Escrow Agent (and any
successor escrow agent) may at any time resign as such by delivering the
Escrowed Funds to any successor escrow agent jointly designated in writing by
the Purchaser and the Sellers' Representatives, or to any court of competent
jurisdiction, whereupon the Escrow Agent shall be discharged of and from any
and all further obligations arising in connection with this Agreement. The
resignation of the Escrow Agent shall take effect on the earlier of the
appointment of a successor escrow agent or the day which is 30 days after the
date of delivery of the Escrow Agent's written notice of resignation to the
other parties hereto. In the event that a successor escrow agent has not
been appointed at the expiration of such 30-day period, the Escrow Agent's
sole responsibility hereunder shall be the safekeeping of the Escrowed Funds
and to disburse such amount in accordance with the instructions signed by the
Purchaser and the Sellers' Representatives.
(b) If the Escrow Agent receives a written notice signed by the
Sellers' Representatives and the Purchaser stating that they have selected
another escrow agent, any portion of the Escrowed Funds invested by the
Escrow Agent shall be promptly liquidated, and the Escrow Agent shall deliver
the Escrowed Funds to the successor escrow agent named in the aforesaid
notice within 10 days of its receipt of such notice.
SECTION 7. GOVERNING LAW. This Agreement shall take effect as a sealed
instrument and be construed under and governed by and enforced in accordance
with the laws of the Commonwealth of Pennsylvania.
SECTION 8. NOTICES. All notices, requests, consents and other
communications under this Agreement shall be in writing and shall be mailed
by first class, registered or certified mail, postage prepaid, or sent via
overnight courier service, or delivered personally or sent by facsimile
machine:
If to the Escrow Agent: CoreStates Bank, N.A.
Corporate Trust Administration, FC 0-0-00-00
Xxxxx Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxx
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If to Purchaser: 00000 X. Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
with a required copy Xxxxxxx & Xxxxxx
(which shall not 2700 Hospital Trust Tower
constitute notice) to: Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx., Esq.
Facsimile: (000) 000-0000
If to the Sellers' Representatives to addresses set forth below:
Xxxxxxx X. Xxxxxx
000 Xxxxxx Xxxxx
Xxxx Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Xxxx X. Xxxxxxxxx
Harbour Village at Pitt Slip Marina
000 X. Xxxxxxxx #000
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
and
Xxxxx & Xxxxxx, P.L.C.
0000 Xxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Xx., Esq.
Facsimile: (000) 000-0000
or to such other address of which the addressee shall have notified the
sender in writing. 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 9. HEADINGS. The headings of the paragraphs of this Agreement
are inserted as a matter of convenience and for reference purposes only, are
of no binding effect, and in no respect define, limit or describe the scope
of this Agreement or the intent of any paragraph.
SECTION 10. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in any number of counterparts hereof, and by the different parties
hereto on separate counterparts hereof, each of which shall be deemed to be
an original and all of which together constitute one and the same agreement.
Facsimile signatures on this Agreement shall be deemed original signatures.
SECTION 11. ENTIRE AGREEMENT. This Agreement represents the entire
understanding and agreement among the parties hereto with respect to the
subject matter hereof, supersedes all prior negotiations between the parties,
and can be amended, modified, supplemented, extended, terminated, discharged
or changed only by an
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agreement in writing which makes specific reference to this Agreement and
which is signed by the party intended to be bound thereby.
SECTION 12. SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by
law, but only as long as the continued validity, legality and enforceability
of such provision or application does not materially (a) alter the terms of
this Agreement, (b) diminish the benefits of this Agreement or (c) increase
the burdens of this Agreement, for any person.
IN WITNESS WHEREOF, the undersigned have executed this Deposit Escrow
Agreement as of the date first written above.
XXXXXX CELLULAR OF CALIFORNIA, INC.
By: /s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx
Chairman
CORESTATES BANK, N.A.
By: /s/ X.X. Xxxx
Name: X.X. Xxxx
Title: Assistant Vice President
SELLERS' REPRESENTATIVES
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxxxxx
Xxxx X. Xxxxxxxxx
/s/ Xxxxxxx X. Xxxxxx, Xx.
Xxxxxxx X. Xxxxxx, Xx.
[SIGNATURE PAGE TO DEPOSIT ESCROW AGREEMENT]
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EXHIBIT B
SUBORDINATED PROMISSORY NOTE
$4,500,000 [ ] __, 1998
FOR VALUE RECEIVED, XXXXXX CELLULAR OF CALIFORNIA, INC., an Oklahoma
corporation, with its principal office at 00000 X. Xxxxxxxx Xxxxxxxxx, Xxxxx
000, Xxxxxxxx Xxxx, Xxxxxxxx 00000 ("Xxxxxx") hereby promises to pay to
Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xx. and Xxxx X. Xxxxxxxxx ("Holders")
in their capacity as Sellers' Representatives for the shareholders of
Cellular 2000 Telephone Co. (the "Company") listed on Schedule 1 to that
certain Stock Purchase Agreement dated November [ ], 1997 (as amended from
time to time, the "Purchase Agreement") among Xxxxxx, said shareholders and
the Company, at [Address], the principal sum of Four Million Five Hundred
Thousand Dollars ($4,500,000) on [18 months from the date of issuance] (the
"Maturity Date").
Xxxxxx hereby promises to pay to the Holders, on the first business day
of each January and July (each, an "Interest Payment Date") commencing on
January 1, 1998 and on the Maturity Date, interest on the outstanding
principal balance hereof from time to time from the date hereof until payment
in full at the rate of nine percent (9%) per annum.
All payments, as set forth above, will be applied first to accrued and
unpaid interest on the outstanding principal balance hereunder, calculated in
arrears and second, to the principal balance outstanding hereunder. All
amounts hereunder shall be due on or before the Maturity Date.
METHODS OF PAYMENT. Payments of amounts due hereunder shall be made in
lawful money of the United States of America in immediately available funds
at the office of Holders set forth above. If any payment shall become due on
a Saturday, Sunday, public holiday under the laws of the State of Oklahoma or
on any other day on which banking institutions are authorized or obligated by
law to close in Oklahoma City, Oklahoma, such payment shall be made on the
next succeeding business day and such extension of time shall in such case be
included in computing interest in connection with such payment. This Note
may be prepaid in whole or in part without penalty or premium.
RELATED DOCUMENTS. This Note is the "Subordinated Promissory Note"
referred to in, made pursuant to the terms of, and governed by, the Purchase
Agreement which Purchase Agreement is incorporated herein by reference. The
Purchase Agreement and all documents, certificates, reports, agreements and
instruments executed in connection therewith and with this Note are herein
referred to as the "Closing Documents". All terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Purchase
Agreement.
OFFSET RIGHTS. Notwithstanding any other provision contained herein,
Xxxxxx shall have the right to offset its obligation to pay outstanding
principal, accrued interest or any other amounts owed hereunder (the
"Obligations") against the amounts owed by the Sellers to Xxxxxx under or
pursuant to Articles II and X of the Purchase Agreement. Prior to making
any set off, Xxxxxx agrees to notify the Sellers' Representative (an "Offset
Notice"); provided that the failure to give such Offset Notice shall not
affect the validity of such set off.
EVENTS OF DEFAULT. This Note shall, at the option of Holders, become
immediately due and payable upon the occurrence of any of the following
events (herein an "Event of Default"):
(a) failure of Xxxxxx to pay any principal amount due hereunder when
the same shall become due and payable;
(b) failure of Xxxxxx to pay any interest due on any Interest Payment
Date within five business days after the same is due;
(c) Xxxxxx shall (i) apply for or consent to or suffer the appointment
of a receiver, trustee, custodian or liquidator of it or any of its property,
(ii) file a petition for relief under Title 11 of the United States Code, or
(iii) file a petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors or to take advantage of any
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute; or
(d) there shall be filed against Xxxxxx an involuntary petition seeking
reorganization of Xxxxxx or the appointment of a receiver, trustee, custodian
or liquidator of Xxxxxx or any material part of its assets, or in involuntary
petition under any bankruptcy, reorganization or insolvency law of any
jurisdiction whether now, or hereafter in effect, unless such petition shall
be dismissed or stayed within one hundred eighty (180) days after the filing
thereof;
REMEDIES AFTER DEFAULT. If an Event of Default as defined herein has
occurred and is continuing, the entire unpaid principal balance hereof,
together with unpaid interest thereon, shall at the option of Holders become
immediately due and payable, subject to Xxxxxx'x offset rights, and in such
case Holders may exercise the remedies available to Holders at law and in
equity; and no failure on the part of Holders to exercise any of Holders
rights hereunder shall be deemed a waiver of any such rights or of any
default.
WAIVERS. Xxxxxx hereby waives presentment for payment, protest and
demand, and notice of protest, demand and/or dishonor and nonpayment of this
Note, notice of any Event of Default except as otherwise specifically
provided herein, and all other notices or demands otherwise required by law
that Xxxxxx may lawfully waive.
GOVERNING LAW. The rights and obligations of Xxxxxx and Xxxxxx
Communications Corporation ("DCC") as guarantor hereof and all provisions
hereof shall be governed by and construed in accordance with the laws of the
State of Oklahoma applicable to contracts made and performed in said State.
CONSENT TO JURISDICTION. Xxxxxx and DCC hereby submit to the
jurisdiction of the courts of the State of Oklahoma and the United States
District Court for the District of Oklahoma, as well as to the jurisdiction
of all courts to which an appeal may be taken or other review sought from the
aforesaid courts, for the purpose of any suit, action or other proceeding
arising out of Xxxxxx and DCC's obligations under or with respect to this
Note, and expressly waives any and all objections they may have as to venue
in any of such courts.
SAVINGS CLAUSE. All agreements between Xxxxxx and Holders are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to Holders for the use,
forbearance or detention of the indebtedness evidenced hereby exceed the
maximum permissible under applicable law. Any interest received by Holders
which would exceed the maximum permissible under applicable law shall be
applied to the reduction of the principal balance evidenced hereby and not to
the payment of interest. This provision shall control every other provision
of all agreements between Xxxxxx and Holders including, without limitation,
the Purchase Agreement.
ATTORNEYS' FEES. If this Note shall not be paid when due and shall be
placed by the Holders hereof in the hands of any attorney for collection,
through legal proceedings or otherwise, Xxxxxx will pay all reasonable costs
and expenses of collection incurred, including reasonable attorneys fees.
SUBORDINATION.
(a) AGREEMENT TO SUBORDINATE. Holders by accepting this Note consent
and agree that the indebtedness evidenced by this Note and all other
obligations of Xxxxxx under this Note and all obligations of DCC to Holders
with respect to its guarantee of Xxxxxx'x obligations under this Note
(collectively the "Subordinated Obligations") are subordinated in right of
payment, to the extent and in the manner provided in these subordination
provisions ("these Provisions"), to the prior payment in full of all Senior
Debt, and that the subordination is for the benefit of the holders of Senior
Debt and they and/or each of them may enforce such subordination.
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(b) CERTAIN DEFINITIONS. "Representative" means the indenture trustee
or other trustee, agent or representative for the Senior Debt selected by the
holders of a majority of the principal amount of the Senior Debt as their
representative for purposes of these Provisions.
"Payment or Distribution" means any direct or indirect payment or
distribution of any kind on account of any obligations with respect to the
Subordinated Obligations, whether in cash, securities or other property, by
set-off or otherwise, including without limitation any payment or
distribution by redemption, purchase or other acquisition of this Note and
any payment or distribution from or by way of collateral.
"Senior Debt" means the principal amount of all indebtedness for
borrowed money now or hereafter created, incurred, guaranteed or assumed by
Xxxxxx or DCC, or for which Xxxxxx or DCC is otherwise liable, under any note
agreement, indenture, loan agreement, guaranty or other document and which
Xxxxxx or DCC expressly designates in writing as "Senior Debt" under this
Note or which refunds or refinances any then outstanding Senior Debt, in each
case, as from time to time amended, modified or supplemented, interest
accrued thereon (including, without limitation, Xxxxxx'x and DCC's guarantee
of the indebtedness and other obligations of Xxxxxx Operating Company ("DOC")
under that certain Second Amended and Restated Credit Agreement dated
February 28, 1997 among DOC, CoreStates Bank, N.A. ("CoreStates"), First
Union National Bank of North Carolina ("First Union"), Nationsbank of Texas,
N.A. ("Nationsbank") and the additional banks listed on Schedule 1 attached
thereto (the "Credit Agreement"), as amended by Amendment No. 1 to the Credit
Agreement dated as of April 22, 1997 among DOC, CoreStates, First Union,
Nationsbank and the additional banks listed on Schedule 1 to the Credit
Agreement ("Amendment No. 1, and together with the Credit Agreement, the
"Amended Credit Agreement"), interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, relating to Xxxxxx, DOC or DCC, whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding),
prepayment charges, if any, payable with respect thereto, fees, costs,
expenses, indemnities, reimbursements, damages and all other sums payable
under or in connection with the Senior Debt.
For the purpose of this Note, all Senior Debt shall not be deemed
to have been paid in full unless the holders thereof shall have received
payment in full in cash.
(c) LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any distribution to
creditors of Xxxxxx or DCC in a total or partial liquidation or dissolution
of Xxxxxx or DCC in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to Xxxxxx, DCC or their property or in an
assignment for the benefit of creditors, or an arrangement, adjustment,
composition or relief of Xxxxxx, DCC or their debts or any marshaling of the
assets and liabilities of Xxxxxx or DCC:
(1) holders of Senior Debt shall be entitled to receive payment in
full of all obligations due or to become due with respect to the Senior Debt
(including interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt) before the Holders shall be entitled
to receive any Payment or Distribution; and
(2) until all obligations with respect to Senior Debt (as provided
in paragraph (1) above) are paid in full, any Payment or Distribution to
which the Holders would be entitled but for these Provisions shall be made to
the holders of Senior Debt, as their interests may appear, for application
(in the case of cash) to, or as collateral (in the case of non-cash property
or securities) for the payment or prepayment of, the Senior Debt to the
extent necessary to pay all such Senior Debt in full after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Debt, except that pursuant to a plan of reorganization under applicable
bankruptcy law, the Holders may receive securities ("Permitted Subordinated
Distribution Securities") that are subordinated to at least the same extent
as this Note to (i) Senior Debt and (ii) any securities issued in exchange
for Senior Debt.
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(d) NO PAYMENTS WITH RESPECT TO SUBORDINATED OBLIGATIONS IN CERTAIN
CIRCUMSTANCES.
(1) No Payment or Distribution in respect of the Subordinated
Obligations or any judgment with respect thereto shall be made by or on
behalf of Xxxxxx or DCC if, at the time of such payment or immediately after
giving effect thereto:
(i) an event of default involving a default in the payment
when due (whether at the maturity thereof, or upon acceleration of maturity
or otherwise) of all or any portion of the Senior Debt shall have occurred,
and such event of default shall not have been cured or waived in accordance
with the terms of the relevant agreements and instruments; or
(ii) subject to the last sentence of this clause (1) of
paragraph (d), Xxxxxx or DCC shall have received notice from a holders of
Senior Debt of the occurrence of one or more events of default in respect of
the Senior Debt (other than an event of default of the type referred to in
clause (i) above), each such default shall not have been cured or waived in
accordance with the terms of the documents governing the Senior Debt, and 180
days shall not have elapsed since the date such notice was received (any
period during which no payment in respect of the Subordinated Obligations or
any judgment with respect thereto may be made by reason of the application of
this clause (ii) being hereinafter called a "Payment Bar Period").
To the extent otherwise permitted under this Note, Xxxxxx or DCC may
resume permitted payments under this Note (and may make any permitted
payments missed due to the application of this paragraph (d)) in respect of
the Subordinated Obligations or any judgment with respect thereto:
(A) in the case of an event of default referred to in
clause (i) of this paragraph (d), upon the cure or waiver thereof in
accordance with the terms of the Note; or
(B) in the case of an event of default referred to in
clause (ii) of this paragraph (d), upon the earlier to occur of (1) the cure
or waiver of such event of default in accordance with the terms of documents
governing the Senior Debt, or (2) the expiration of such period of 180 days.
Notwithstanding any provision of this paragraph (d) to the contrary, only one
Payment Bar Period may be implemented during any 360-day period.
(2) Upon the maturity of all or any part of any Senior Debt by
lapse of time, acceleration (unless waived in writing) or otherwise, all
amounts due or to become due in respect of all Senior Debt shall first be
paid in full, or provision for such payment shall be made in a manner
satisfactory to the holders of the Senior Debt, before any Payment or
Distribution is made on account of or applied on the Subordinated Debt,
except that the Holders may receive Permitted Subordinated Distribution
Securities.
(3) Xxxxxx and DCC shall give prompt written notice to the Holders
of any default in respect of Senior Debt referred to in clause (1) of this
paragraph (d) and any notice of the type described in clause (1)(ii) of this
paragraph (d) from a Holders of Senior Debt.
(e) ACCELERATION OF SECURITIES. If payment of this Note is accelerated
because of an Event of Default, Xxxxxx and DCC shall promptly notify the
Holders of Senior Debt and the Representative of the acceleration.
(f) WHEN DISTRIBUTION MUST BE PAID OVER. If a Payment or Distribution
is made to the Holders that because of these Provisions should not have been
made to it, such Holders shall segregate such Payment or Distribution from
its other funds and property and hold it in trust for the benefit of, and,
upon written request, pay it over (in the same form as received, with any
necessary endorsement) to, the holders of Senior Debt as their interests may
appear, or their Representatives, as their respective interests may appear,
for application (in the case of cash)
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to, or as collateral (in the case of non-cash property or securities) for the
payment or prepayment of, all obligations with respect to Senior Debt
remaining unpaid to the extent necessary to pay such obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
(g) SUBROGATION. After all Senior Debt is paid in full and the holders
of the Senior Debt have no further obligation to extend credit to Xxxxxx, DCC
or DOC and until this Note is paid in full, the Holders shall be subrogated
to the rights of holders of Senior Debt to receive payments and distributions
applicable to Senior Debt to the extent that payments and distributions
otherwise payable to the Holders have been applied to the payment of Senior
Debt. A payment or distribution made under these Provisions to holders of
Senior Debt which otherwise would have been made to the Holders is not, as
among Xxxxxx, DCC and the Holders, a payment by Xxxxxx or DCC on this Note.
(h) RELATIVE RIGHTS. These Provisions define the relative rights of
the Holders and holders of Senior Debt. Nothing in this Note shall: (1)
impair, as between Xxxxxx and the Holders, the obligation of Xxxxxx, which is
absolute and unconditional, to pay principal of and interest on the Note in
accordance with their terms; (2) impair, as among Xxxxxx, DCC and the
Holders, the obligation of DCC with regard to its guarantee of Xxxxxx'x
obligations under this Note; (3) affect the relative rights of the Holders
and creditors of Xxxxxx or DCC other than their rights in relation to holders
of Senior Debt.
(i) SUBORDINATION MAY NOT BE IMPAIRED. No right of any present or
future holders of any Senior Debt to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure
to act in good faith by any such holders, or any noncompliance by Xxxxxx, DCC
or the Holders with the terms and provisions and covenants herein, regardless
of any knowledge thereof any such Holders may have or otherwise be charged
with. Without in any way limiting the generality of the foregoing paragraph,
the holders of the Senior Debt may at any time and from time to time, without
the consent of or notice to the Holders, without incurring responsibility to
the Holders and without impairing or releasing the subordination provided in
these Provisions or the obligations hereunder of the Holders to the holders
Senior Debt, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or
alter, all or any of the Senior Debt (including any change in the rate of
interest thereon), or otherwise amend or supplement in any manner, or grant
any waiver or release with respect to, Senior Debt or any instrument
evidencing the same or any agreement under which Senior Debt is outstanding;
(ii) sell, exchange, release, not perfect or otherwise deal with any property
at any time pledged, assigned or mortgaged to secure or otherwise securing,
Senior Debt, or amend, or grant any waiver or release with respect to, or
consent to any departure from any guarantee for all or any of the Senior
Debt; (iii) release any person liable in any manner under or in respect of
Senior Debt; and (iv) exercise or refrain from exercising any rights against,
and release from obligations of any type, Xxxxxx, DCC, DOC and any other
person; and (v) apply any sums from time to time received to the Senior Debt.
All rights and interests under this Note of the Representative and the
holders of Senior Debt, and all agreements and obligations of the Holders,
Xxxxxx and DCC under these Provisions shall remain in full force and effect
irrespective of (i) any lack of validity or enforceability of any promissory
notes evidencing the Senior Debt, or any other agreement or instrument
relating thereto or to any other Senior Debt, or (ii) any other circumstances
that might otherwise constitute a defense available to, or a discharge of,
the Holders, Xxxxxx or DCC.
These Provisions constitute a continuing agreement and shall (i) be and
remain in full force and effect until payment in full of all Senior Debt at
such time when no holders of Senior Debt shall have any obligation to extend
credit to Xxxxxx, DOC or DCC in respect of the Senior Debt, (ii) be binding
upon Holders, Xxxxxx, DCC and their respective successors, transferees and
assigns, and (iii) inure to the benefit of, and be enforceable directly by,
the holders of the Senior Debt and their respective successors, transferees
and assigns.
The Representative is hereby authorized to demand specific performance
of these Provisions, whether or not Xxxxxx or DCC shall have complied with
any of these Provisions applicable to it, at any time when the Holders
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shall have failed to comply with any of these provisions. The Holders hereby
irrevocably waives any defense based on the adequacy of a remedy at law that
might be asserted as a bar to such remedy of specific performance.
(j) DISTRIBUTION. Upon any payment or distribution of assets of Xxxxxx
or DCC referred to in these Provisions, the Holders shall be entitled to rely
in good faith upon any ordered decree made by any court of competent
jurisdiction or upon any certificate of the Representative or of the
liquidating trustee or agent or other person making any distribution to the
Holders for the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of the Senior Debt and other indebtedness
of Xxxxxx or DCC, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or
to these Provisions.
(k) MISCELLANEOUS. The agreement contained in these Provisions shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment or distribution with respect to any of the Senior Debt is
rescinded or must otherwise be returned by any holders of Senior Debt upon
the insolvency, bankruptcy or reorganization of Xxxxxx or otherwise, all as
though such payment had not been made.
NO DISPOSITION OF NOTE. The Holders of the Note may not sell, assign,
transfer, pledge, encumber or otherwise dispose of the Note or any portion of
the Subordinated Obligations.
SELLERS. Neither Xxxxxx nor DCC shall have any obligation to Sellers by
virtue of this Note, and Xxxxxx shall make payments due hereunder only to
Holders.
SECTION HEADINGS. Any section headings in this Note are included herein
for convenience of reference only and shall not constitute a part of this Note
for any other purpose.
IN WITNESS WHEREOF, Xxxxxx has caused this Note to be executed by its
duly authorized officer as of the day and year first above written.
WITNESS: XXXXXX CELLULAR OF CALIFORNIA, INC.
--------------------------------- By:
------------------------------------
Title:
------------------------------
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GUARANTEE
The undersigned parent corporation of Xxxxxx does hereby covenant and
guarantee, absolutely and unconditionally, to Holders that Xxxxxx shall fully
and faithfully perform its obligations under this Note according to its terms
or, if not so performed by Xxxxxx, shall be so performed or cause to be
performed by the undersigned corporation, without any notice of default to
Xxxxxx (except as provided in this Note) or demand upon the undersigned.
Notwithstanding any other provision contained herein, the undersigned
may offset any payment obligation regarding its guarantee of Xxxxxx'x
obligations under this Note or any other amount owed hereunder against
amounts owed by the Sellers to Xxxxxx to the same extent as Xxxxxx may offset
its payment obligations under the Note.
XXXXXX COMMUNICATIONS CORPORATION
By:
-------------------------------------
Xxxxxxx Xxxxxx, Chairman of the Board
President and Chief Executive Officer
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FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT dated as of March 18, 1998
by and among Xxxxxx Cellular of California, Inc. ("Xxxxxx") and Xxxxxxx X.
Xxxxxx ("Xxxxxx"), Xxxxxxx X. Xxxxxx, Xx. ("Xxxxxx") and Xxxx X. Xxxxxxxxx
("Valentino"; and together with Xxxxxx and Xxxxxx, the "Sellers'
Representatives"), in their capacities as Sellers' Representatives.
W I T N E S S E T H:
WHEREAS, Xxxxxx, the Sellers' Representatives and the shareholders (the
"Sellers") of Cellular 2000 Telephone Co. (the "Company") have entered into
that certain Stock Purchase Agreement dated November 17, 1997 (the "Purchase
Agreement") pursuant to which Xxxxxx has agreed to purchase from the Sellers
all of the outstanding shares of Common Stock of the Company; and
WHEREAS, pursuant to Section 14.04 of the Purchase Agreement, the
Sellers' Representatives have the right to enter into amendments to the
Purchase Agreement on behalf of the Sellers; and
WHEREAS, the parties hereto wish to amend the Purchase Agreement as
hereinafter provided.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. The definition of "Current Assets" in Section 2.04(a) of the
Purchase Agreement is hereby amended to read in its entirety as follows:
"'Current Assets' means the Partnership's (i) cash on hand, bank
deposits and cash equivalents, (ii) accounts receivable that are current to
less than 91 days past due, net of a reserve for bad debts, which reserve
shall equal the sum of the following amounts: zero percent (0%) of such
accounts receivable that are not past due or that are thirty (30) or fewer
days past due, ten percent (10%) of such accounts receivable that are more
than thirty (30) or fewer days past due, but less than sixty-one (61) days
past due and fifty percent (50%) of such accounts receivable that are more
than sixty (60) but less than ninety-one (91) days past due; (iii) inventory
of cellular telephone handsets and ancillary equipment held for sale to
subscribers and which is not obsolete and will reasonably be expected based
on past practices to be consumed in the normal course of business within six
months after the Closing (the 'Inventory'); and (iv) prepaid items which
Purchaser will receive the benefit of after the Closing such as prepaid rent,
insurance, property taxes, utility charges, fees and deposits paid, all
determined as of 12:01 a.m. on the
Closing Date in accordance with GAAP. Refurbished cellular telephone
handsets shall not be included in the Inventory for purposes of calculating
Current Assets."
2. The words "or the Partnership's" on line 6 of Section 2.04(e) of
the Purchase Agreement are hereby deleted.
3. Subsections (g) and (h) of Section 2.04 of the Purchase Agreement
are hereby redesignated Subsections (h) and (i), respectively, of Section
2.04 and a new Subsection (g) of Section 2.04 is hereby added to read as
follows:
"(g) COMPANY CASH ADJUSTMENT. The Base Price will be increased
by 100% of the Company's cash on hand, bank deposits and cash
equivalents as of the Closing Date (such increase in the Base Price
being referred to as the "Company Cash Adjustment")."
4. The definition of "Adjustments" in Section 2.04(h) of the Purchase
Agreement is hereby amended to include in such definition the Company Cash
Adjustment.
5. A new clause (vi) is hereby added to Section 10.01 of the Purchase
Agreement to read as follows:
"(vi) any liability or obligation of, and any claims
against, the Partnership which are for the payment of Taxes with
respect to the Partnership's operations for the period up to the
Closing Date, whether or not known or asserted at or prior to the
Closing, but only to the extent such liability did not result in
a reduction in the Purchase Price at the Closing pursuant to
Section 2.04 hereof and only to the extent of 75.018 percent of
such liabilities or obligations."
6. Except as otherwise amended herein, the terms of the Purchase
Agreement shall remain in full force and effect as of the date hereof.
7. Except as otherwise defined herein, all defined terms shall have
those meanings as set forth in the Purchase Agreement.
8. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the date first above written.
XXXXXX CELLULAR OF CALIFORNIA, INC.
By:
-------------------------------------
Title:
SELLERS' REPRESENTATIVES:
----------------------------------------
Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx, Xx.
----------------------------------------
Xxxx X. Xxxxxxxxx
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