EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
BY AND AMONG
PACIFICORP HOLDINGS, INC.,
PACIFIC TELECOM, INC.,
CENTURY TELEPHONE ENTERPRISES, INC.
AND CENTURY CELLUNET, INC.
DATED AS OF JUNE 11, 1997
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TABLE OF CONTENTS
Page
SECTION 1
DEFINITIONS............................................................2
1.1 DEFINED TERMS....................................................2
1.2 SINGULAR AND PLURAL..............................................7
1.3 CAPITALIZED TERMS................................................7
SECTION 2
SALE OF STOCK..........................................................7
2.1 PURCHASE AND SALE OF STOCK.......................................7
2.2 PURCHASE PRICE; TERMS OF PAYMENT.................................7
2.3 THE CLOSING......................................................8
SECTION 3
REPRESENTATIONS AND WARRANTIES OF PHI..................................9
3.1 ORGANIZATION AND QUALIFICATION OF PHI............................9
3.2 ORGANIZATIONAL DOCUMENTS.........................................9
3.3 AUTHORIZATION OF AGREEMENT......................................10
3.4 PTI ENTITIES AND MINORITY OWNED ENTITIES........................10
3.5 CAPITAL STOCK AND EQUITY INTERESTS..............................10
3.6 ORGANIZATION AND QUALIFICATION OF THE PTI CORPORATE ENTITIES....11
3.7 PARTNERSHIPS....................................................12
3.8 FINANCIAL STATEMENTS OF PTI AND THE PTI ENTITIES................12
3.9 ABSENCE OF MATERIAL CHANGES.....................................13
3.10 INDEBTEDNESS....................................................15
3.11 LITIGATION AND CLAIMS...........................................16
3.12 TITLE TO PROPERTY AND LEASES....................................16
3.13 CONDITION OF ASSETS.............................................17
3.14 INSURANCE.......................................................17
3.15 CONTRACTS.......................................................18
3.16 NO VIOLATION....................................................18
3.17 COMPLIANCE WITH LAWS; PERMITS...................................19
3.18 ERISA...........................................................20
3.19 ENVIRONMENTAL MATTERS...........................................25
3.20 EMPLOYEES.......................................................27
3.21 TAX MATTERS.....................................................27
3.22 NO FINDER.......................................................29
3.23 LABOR RELATIONS.................................................30
3.24 PTI'S SEC REPORTS...............................................31
3.25 BOOKS AND RECORDS...............................................31
i
3.26 PENDING ACQUISITIONS............................................32
3.27 UNDISCLOSED LIABILITIES.........................................32
3.28 TELEPHONE OPERATIONS............................................32
3.29 INTELLECTUAL PROPERTIES.........................................33
3.30 RIGHTS TO TRADE NAMES...........................................34
3.31 NORTH PACIFIC CABLE WARRANTIES..................................34
SECTION 4
REPRESENTATIONS AND WARRANTIES OF CENTURY.............................35
4.1 ORGANIZATION OF CENTURY.........................................35
4.2 AUTHORIZATION OF AGREEMENT......................................35
4.3 CENTURY'S SEC REPORTS...........................................36
4.4 FINANCING COMMITMENT............................................36
SECTION 5
CONDUCT PENDING CLOSING...............................................36
5.1 CONDUCT OF BUSINESS PRIOR TO THE CLOSING DATE...................36
5.2 NOTIFICATION OF CERTAIN MATTERS.................................39
5.3 NOTICE OF LITIGATION............................................40
SECTION 6
ADDITIONAL AGREEMENTS.................................................41
6.1 GOVERNMENTAL, FCC, HSR AND PSC APPROVALS........................41
6.2 OTHER CONSENTS..................................................41
6.3 PUBLIC ANNOUNCEMENTS............................................42
6.4 INDEMNIFICATION BY PHI..........................................42
6.5 INDEMNIFICATION BY CENTURY......................................49
6.6 ACCESS TO INFORMATION...........................................52
6.7 AMENDMENT OF SCHEDULES..........................................54
6.8 MAINTENANCE OF INSURANCE........................................56
6.9 GABELLI SUIT....................................................56
6.10 SEVERANCE PAY FOR EMPLOYEES OF PTI ENTITIES.....................57
6.11 QUALIFIED PLAN ROLLOVERS........................................57
6.12 MAINTENANCE OF FINANCING COMMITMENTS............................58
6.13 MAINTENANCE OF MINIMUM EQUITY...................................58
6.14 NONCOMPETE; USE OF CUSTOMER LISTS...............................58
6.15 DEFERRED COMPENSATION PLANS.....................................59
6.16 PACIFIC TELECOM RETIREMENT PLAN.................................60
6.17 MULTIEMPLOYER PLANS.............................................60
6.18 CERTAIN SERVICES................................................61
6.19 SETTLEMENT OF SERP BENEFIT OBLIGATION...........................61
ii
SECTION 7
COVENANTS WITH RESPECT TO TAXES.......................................62
7.1 TAX SHARING AGREEMENTS..........................................62
7.2 RETURNS FOR PERIODS THROUGH THE CLOSING DATE....................63
7.3 AUDITS..........................................................63
7.4 CARRYBACKS......................................................64
7.5 RETENTION OF CARRYOVERS.........................................65
7.6 SECTION 338(H)(10)ELECTION......................................65
7.7 TAXABLE PERIODS ENDING ON OR BEFORE THE CLOSING DATE............66
7.8 TAXABLE PERIOD COMMENCING BEFORE THE CLOSING DATE AND
ENDING AFTER THE CLOSING DATE...................................66
7.9 PARTNERSHIPS....................................................67
7.10 COOPERATION ON TAX MATTERS......................................67
7.11 CONTESTS........................................................69
7.12 RESOLUTION OF DISAGREEMENTS BETWEEN PHI AND CENTURY.............69
7.13 SECTION 754 ELECTION FOR PARTNERSHIPS...........................70
7.14 ALLOCATION OF PURCHASE PRICE....................................70
SECTION 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF CENTURY........................71
8.1 REPRESENTATIONS AND WARRANTIES..................................71
8.2 COVENANTS.......................................................71
8.3 MATERIAL ADVERSE CHANGE.........................................71
8.4 CERTIFICATE.....................................................72
8.5 CERTIFIED COPY OF RESOLUTIONS...................................72
8.6 OPINION OF COUNSEL FOR PHI......................................72
8.7 CONSENTS AND APPROVALS..........................................73
8.8 HSR ACT.........................................................73
8.9 PROHIBITIONS....................................................73
8.10 INTERCOMPANY TRANSACTIONS.......................................73
8.11 RESIGNATIONS....................................................73
8.12 ACCOUNTANT'S LETTER.............................................73
SECTION 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF PHI............................74
9.1 REPRESENTATIONS AND WARRANTIES..................................74
9.2 COVENANTS.......................................................74
9.3 CERTIFICATE.....................................................74
9.4 CERTIFIED COPY OF RESOLUTIONS...................................74
9.5 OPINION OF COUNSEL FOR CENTURY..................................75
9.6 CONSENTS AND APPROVALS..........................................75
9.7 HSR ACT.........................................................75
9.8 PROHIBITIONS....................................................75
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SECTION 10
CLOSING DOCUMENTS.....................................................76
10.1 BY PHI..........................................................76
10.2 BY CENTURY......................................................76
SECTION 11
TERMINATION...........................................................77
11.1 RIGHT OF TERMINATION............................................77
11.2 EFFECT OF TERMINATION...........................................78
11.3 TERMINATION FEES................................................79
11.4 INCENTIVE FEES..................................................79
SECTION 12
MISCELLANEOUS.........................................................80
12.1 FEES AND EXPENSES...............................................80
12.2 RIGHTS OF THIRD PARTIES.........................................80
12.3 WAIVER..........................................................80
12.4 SPECIFIC PERFORMANCE............................................81
12.5 ENTIRETY OF AGREEMENT...........................................81
12.6 PROHIBITED NEGOTIATIONS.........................................82
12.7 SURVIVAL........................................................83
12.8 ATTORNEY FEES...................................................83
12.9 NOTICES.........................................................84
12.10 AMENDMENT.......................................................85
12.11 ADDITIONAL DOCUMENTS............................................85
12.12 GOVERNING LAW...................................................85
12.13 COUNTERPARTS....................................................85
12.14 BINDING EFFECT; ASSIGNMENT......................................86
12.15 HEADINGS........................................................86
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into
as of the 11th day of June, 1997, by and among PacifiCorp Holdings, Inc., a
Delaware Corporation ("PHI"), with offices located at ▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, Pacific Telecom, Inc., a Washington corporation ("PTI"),
with offices at ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Century Telephone Enterprises, Inc., a Louisiana corporation ("Century"), and
Century Cellunet, Inc., a Louisiana corporation ("CCI"), both Century and CCI
having offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WITNESSETH:
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WHEREAS, PTI owns all of the issued and outstanding shares of capital
stock of Pacific Telecom Cellular, Inc., a Wisconsin corporation ("PT
Cellular"), and of Pacific Telecom Cellular of Alaska, Inc., an Alaska
corporation (collectively, the "Cellular Stock"); and
WHEREAS, PTI desires to sell the Cellular Stock to CCI and CCI desires to
purchase the Cellular Stock; and
WHEREAS, PHI owns all the issued and outstanding shares of capital stock
(collectively, the "Stock") of PTI; and
WHEREAS, PHI desires to sell, and Century desires to purchase, the Stock;
and
WHEREAS,the Boards of Directors of PHI,Century and CCI have determined
that this Agreement is in the best interests of their respective corporations
and shareholders,
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein the parties hereto agree
as follows:
SECTION 1
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DEFINITIONS
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1.1 DEFINED TERMS. For all purposes of this Agreement,except as otherwise
expressly provided herein, terms defined above in the preamble and recitals
shall have the meanings set forth therein and the following terms shall have the
meanings set forth below:
"Affiliate" means (unless otherwise provided herein), with respect
to any Person, any other Person that, directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common
control with, such Person.
"Affiliated Group" means the PC affiliated group within the meaning
of Section 1504(a) of the Code or any similar PC group defined under a
similar provision of state, local or foreign law.
"Applicable Law" means any federal, state, or local (domestic or
foreign) statute, law, rule, regulation or ordinance or any judgment,
order, writ, injunction or decree of any Governmental Entity to which a
specified Person or property is subject.
"Cellular Purchase Price" means the amount payable by CCI to PTI for
the Cellular Stock as described in Section 2.2(a).
"Closing" means the closings of the transactions contemplated by
Sections 2.2(a) and 2.2(b) of this Agreement, to be scheduled and held in
accordance with Section 2.3.
"Closing Date" means the date on which the Closing occurs, as
determined in accordance with Section 2.3.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect on the Closing Date.
"Contract" means, with respect to any specified Person, any
contract, agreement, lease or commitment to which such Person or its
properties are legally bound, or under which such Person is legally
oblighted, whether on an absolute or contingent basis.
"DOJ" means the U.S. Department of Justice.
"Employee Benefit Plan" means each plan or agreement that a Party or
any Affiliate thereof maintains, administers, participates in, contributes
to, or has any absolute or contingent liability with respect to, or under
which any employees of a PTI Entity participate or benefit, that is (i) an
"employee welfare benefit plan," as defined in Section 3(1) of ERISA
("Employee Welfare Benefit Plan"), (ii) an "employee pension benefit
plan," as defined in Section 3(2) of ERISA, but excluding any
"multiemployer plans" ("Employee Pension Benefit Plan"), (iii) a
"multiemployer plan," as defined in Section 4001(a)(3) and 3(37) of ERISA
("Multiemployer Plan"), (iv) a voluntary employees' beneficiary
association and related trusts ("VEBA") or (v) a retirement or deferred
compensation plan, incentive compensation plan, profit sharing plan, stock
purchase plan, stock option plan, stock appreciation plan, restricted
stock, unemployment compensation plan, change in control plan, vacation
pay, sick pay, death benefit, severance pay, bonus or benefit arrangement,
medical, medical reimbursement, post retirement health, dental,
disability, insurance or hospitalization program or benefit or any other
fringe benefit arrangement for any director, officer, employee, consultant
or agent, whether active or retired, and whether pursuant to contract,
plan or any other legally binding arrangement, custom or understanding,
that does not constitute an Employee Welfare Benefit Plan, Employee
Pension Benefit Plan, Multiemployer Plan or VEBA.
"Encumbrances" means any and all liens, charges, pledges, options,
mortgages, rights of refusal, deeds of trust, security interests, claims,
transfer restrictions, easements, title defects, and other restrictions or
encumbrances of every type and description, whether ▇▇▇▇▇▇ or inchoate and
whether imposed by law, contract or otherwise of any kind whatsoever.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"FCC" means the Federal Communications Commission.
"FCC Licenses" means all licenses, permits, certificates and other
authorizations issued by the FCC, and all applications therefor, together
with any renewals, extensions or modifications thereof and additions
thereto.
"FTC" means the Federal Trade Commission.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with prior accounting periods.
"Gabelli Suit" means the suit commenced by PTI against certain of
its former minority shareholders, which is referred to as PACIFIC TELECOM,
INC. ▇. ▇▇▇▇▇▇▇ FUNDS, INC. ET AL., and which is described further in
PTI's Annual Report on Form 10-K for the year ended December 31, 1996, as
filed with the Securities and Exchange Commission.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any public, governmental,
legislative or regulatory body, agency, department, commission, board,
bureau, or other authority or instrumentality (domestic or foreign),
including but not limited to the DOJ, FCC, FTC, IRS or a Public Service
Commission.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Indebtedness" means all debt obligations (whether for principal,
interest, premium, fees or otherwise and whether classified as current or
long-term) for or arising under (i) borrowed money (including all notes
payable and all obligations evidenced by bonds, debentures, notes or other
similar instruments); (ii) unpaid reimbursement obligations arising in
connection with guaranties; or (iii) any lease obligations that would be
required to be capitalized in accordance with GAAP.
"IRS" means the U.S. Internal Revenue Service.
"Knowledge" means, with respect to any party, actual knowledge after
reasonable investigation, and, when used with respect to PHI, means actual
knowledge after reasonable investigation of a responsible officer of PHI;
when used with respect to PTI, means actual knowledge after reasonable
investigation of a participant in the PTI Executive Severance Plan; and,
when used with respect to PT Cellular, means actual knowledge after
reasonable investigation of any of the following individuals: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇.
"Material" means material to PTI and its Subsidiaries, taken as a
whole.
"Material Adverse Effect" means any effect that is materially
adverse to the business, financial condition or results of operations of
PTI and its Subsidiaries, taken as a whole.
"Material Contract" means any Contract of the type described in the
first sentence of Section 3.15 or any other Contract the termination of
which would be reasonably likely to have a Material Adverse Affect.
"Material Indebtedness" means Indebtedness in excess of $1,000,000
with a remaining term of one year or more.
"Minority Owned Entity" or "Minority Owned Entities" means,
individually, any one, or, collectively, all of, the entities in which 50%
or less of the outstanding capital stock or other equity interests are
owned directly or indirectly by a PTI Entity and which are not operated
directly or indirectly by a PTI Entity.
"Partnership" means any general or limited partnership in which any
PTI Entity owns 50% or more of the outstanding equity interests, as
identified on Exhibit "A" hereto.
"Party" or "Parties" means, individually, PHI, PTI, Century or CCI
and, collectively, PHI, PTI, Century and CCI.
"PC" means PacifiCorp, an Oregon corporation, the owner of 100% of
the outstanding capital stock of PHI.
"Pending Material Proceeding" means those matters identified on
Exhibit "B" hereto.
"Permits" mean permits, licenses, franchises, certificates,
consents, approvals, and other authorizations issued or granted by
Governmental Entities, including all FCC Licenses, all State Licenses and
all such other authorizations issued or granted by the FCC or a Public
Service Commission.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
enterprise, unincorporated organization, Governmental Entity, or other
entity.
"Proceedings" means any and all actions, suits, hearings,
investigations or other proceedings by or before any arbitrator, court or
Governmental Entity.
"PTI Audited Entities" means Northwestern Telephone Systems, Inc.,
Telephone Utilities of the Northland, Inc., North-West Telephone Company
and Subsidiary, Telephone Utilities of Wyoming, Inc., Gem State Utilities
Corporation, Pacific Telecom Cable, Inc., Inter Island Telephone Company,
and Telephone Utilities of Eastern Oregon, Inc.
"PTI Corporate Entity" or "PTI Corporate Entities" shall mean,
individually, any one of, or collectively, all of, PTI and any of its
Subsidiaries which are corporations.
"PTI Entity" or "PTI Entities" shall mean, individually, any one of,
or, collectively, all of, PTI and each Subsidiary of PTI. The term PTI
Entity shall not include a Minority Owned Entity.
"PTI Pending Acquisitions" shall mean those acquisitions set forth
under the heading "Executed Acquisitions" on SCHEDULE 3.26.
"PTI Telco Entity" or "PTI Telco Entities" shall mean, individually,
any one of, or collectively, all of, the entities identified as such on
Exhibit "C".
"Public Service Commission" or "Public Service Commissions" shall
mean, individually, a state public service or utility commission which
regulates the operations of a PTI Entity or, collectively, all of the
state public service or utility commissions which regulate the operations
of the PTI Entities.
"Purchase Price" means the amount payable by Century to PHI for the
Stock as described in Section 2.2(b).
"Stock Sale" means the purchase and sale of the Cellular Stock and
the Stock in accordance with Sections 2.1(a) and 2.1(b).
"Subsidiary" or "Subsidiaries" means, with respect to any entity,
any corporation at least 50% of whose outstanding voting securities are
directly or indirectly owned by such entity or any partnership, joint
venture or other entity at least 50% of whose total equity interest is
directly or indirectly owned by such entity.
"Tax(es)" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes
under Code Sec. 59A), customs, duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added, alternative or add on minimum, hearing impaired, 911 surcharge,
estimated, or other tax or levy, including any interest, penalty, or
addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
1.2 SINGULAR AND PLURAL. Defined terms in this Agreement shall also mean
in the singular number the plural, and in the plural number the singular.
1.3 CAPITALIZED TERMS. In addition to such terms as are defined in the
preamble and recitals to this Agreement and in Section 1.1, any other
capitalized term appearing herein shall have the meaning ascribed to it in the
Section in which it is defined.
SECTION 2
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SALE OF STOCK
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2.1 PURCHASE AND SALE OF STOCK.
(a) Subject to the terms and conditions hereof, and in reliance upon
the representations, warranties, covenants and agreements herein, at the
Closing, PTI agrees to sell and deliver to CCI and CCI agrees to purchase,
accept and pay for, all of PTI's right, title and interest in and to the
Cellular Stock, free and clear of all Encumbrances.
(b) Subject to the terms and conditions hereof, and in reliance upon
the representations, warranties, covenants and agreements herein, at the
Closing, PHI agrees to sell and deliver to Century and Century agrees to
purchase, accept and pay for, all of PHI's right, title and interest in and to
the Stock, free and clear of all Encumbrances.
2.2 PURCHASE PRICE; TERMS OF PAYMENT.
(a) As consideration for the Cellular Stock, CCI will pay to PTI on
the Closing Date, by wire transfer of immediately available funds to an account
specified by PTI, the sum of $240,000,000 (the "Cellular Purchase Price").
(b) Subject to the adjustments contemplated by Section 11.4, as
consideration for the Stock, Century will pay to PHI, on the Closing Date, by
wire transfer of immediately available funds to an account specified by PHI, the
sum of $1,283,000,000, less any amounts paid by PTI with respect to the Gabelli
Suit plus any and all litigation expenses incurred with respect to the Gabelli
Suit after the date hereof (including litigation expenses of PTI's former
minority shareholders), to the extent such amounts are not reimbursed by PHI
prior to Closing (the "Purchase Price").
2.3 THE CLOSING. The Closing will take place at the offices of ▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇ in Monroe, Louisiana beginning at 9:00 a.m. central time on a date
to be mutually agreed upon between the Parties, which shall be no later than the
third business day following the date upon which the last to occur of the
conditions to the obligations of the Parties set forth in Sections 8.7, 8.8, 9.6
and 9.7 is fulfilled or duly waived, or if no date has been agreed to, on any
date specified by one Party to the other upon three days' written notice
following satisfaction of the conditions to the obligations of the Parties set
forth in Sections 8.7, 8.8, 9.6 and 9.7; provided, however, that in no event
will any Party be obligated to consummate the Stock Sale unless all other
closing conditions applicable to such Party shall have been fulfilled or duly
waived as provided in Sections 8 and 9 on or prior to the Closing Date. The date
on which the Closing occurs shall be known as the Closing Date. The closing of
the sale of the Cellular Stock under Section 2.1(a) will occur prior to the
closing of the sale of the Stock under Section 2.1(b). After the closing of the
sale of the Cellular Stock, and prior to the closing of the sale of the Stock,
PTI shall pay to PHI a dividend in the amount of the Cellular Purchase Price.
SECTION 3
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REPRESENTATIONS AND WARRANTIES OF PHI
-------------------------------------
For the purpose of inducing Century to enter into this Agreement, PHI
hereby makes the following representations and warranties to Century.
3.1 ORGANIZATION AND QUALIFICATION OF PHI. PHI is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. PHI possesses full corporate power and authority to carry on the
business in which it is presently engaged, to own, lease and operate its
properties and to enter into and perform its obligations under this Agreement.
3.2 ORGANIZATIONAL DOCUMENTS. PHI has delivered or at least thirty days
subsequent to the date hereof will deliver to Century true, correct and complete
copies of: (i) the articles or certificate of incorporation of PHI and each PTI
Corporate Entity, together with all amendments thereto, as certified by the
Secretary of State of their respective corporate domiciles and certificates of
good standing or existence for each such entity, (ii) the bylaws of PHI and each
PTI Corporate Entity as currently in effect, as certified by the respective
Secretary of each such PTI Corporate Entity, (iii) the certificate of limited
partnership, articles of partnership or similar document on file in the
jurisdiction of formation of each Partnership for which such a filing is
required and, if available from the applicable jurisdiction, certificates of
existence or good standing for each Partnership, and (iv) the partnership
agreement for each Partnership and each Minority Owned Entity that is a
partnership, together with all amendments thereto, certified by a general or
managing partner of the Partnership or,
in the case of any Minority Owned Entity that is a partnership, by the Secretary
of the PTI Entity that owns the PTI Interest (as defined below).
3.3 AUTHORIZATION OF AGREEMENT. The respective Boards of Directors of PHI
and PTI have duly approved and authorized the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, and no
other corporate proceedings on the part of PHI and PTI are necessary to approve
or authorize the execution and delivery of this Agreement by PHI or PTI or the
consummation by PHI or PTI of the transactions contemplated hereby. Assuming due
execution, delivery and performance of this Agreement by Century or CCI, this
Agreement constitutes a valid and legally binding obligation of PHI and PTI,
enforceable in accordance with its terms, except as the enforceability hereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles in any action,
legal or equitable.
3.4 PTI ENTITIES AND MINORITY OWNED ENTITIES. SCHEDULE 3.4 sets forth a
listing of each of the PTI Entities and Minority Owned Entities, their
respective jurisdictions of incorporation or organization, the equity interest
of any PTI Entity therein (each a "PTI Interest" and, collectively, the "PTI
Interests") and, for each PTI Entity and, to the Knowledge of PTI and PT
Cellular, each Minority Owned Entity, the identity of any other partners or
shareholders in such entity.
3.5 CAPITAL STOCK AND EQUITY INTERESTS. PTI has authorized capital
consisting of 200,000,000 shares of Common Stock, no par value, of which 100
shares are issued and outstanding and owned of record and beneficially by PHI,
and 152,000 shares of Cumulative
Preferred Stock, par value $25, of which no shares are issued and outstanding.
All of the issued and outstanding shares of capital stock of each of the PTI
Corporate Entities have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable, and, except as indicated on SCHEDULE
3.5, are owned of record and beneficially by PHI, PTI or a PTI Corporate Entity
free and clear of any and all Encumbrances. Except as set forth on SCHEDULE 3.5
and except as set forth in Section 2.1 of this Agreement, there are no
outstanding options, warrants or other rights of any nature providing for the
purchase, issuance or sale of any stock or equity interests of any of the PTI
Corporate Entities, and there are no outstanding securities or debt obligations
of any of the PTI Corporate Entities convertible into or exchangeable for shares
of capital stock or other equity interests of any such PTI Corporate Entity.
Upon the consummation of the transactions contemplated hereby, Century will
acquire direct or indirect lawful title to the PTI Interests, free and clear of
all Encumbrances, except those disclosed on SCHEDULE 3.5.
3.6 ORGANIZATION AND QUALIFICATION OF THE PTI CORPORATE ENTITIES. Except
as disclosed on SCHEDULE 3.6, each of the PTI Corporate Entities is duly
incorporated and validly existing and, in jurisdictions that provide evidence of
good standing, in good standing under the laws of the jurisdiction of its
incorporation. Each PTI Corporate Entity possesses full corporate power and
authority to carry on the business in which it is presently engaged and to own,
lease and operate its properties. Except as disclosed on SCHEDULE 3.6, no PTI
Corporate Entity has failed to qualify as a foreign corporation in any state or
jurisdiction where the nature of its activities or the character or location of
its properties requires such qualification, except where the failure to so
qualify would not have a Material Adverse Effect.
3.7 PARTNERSHIPS. Except as disclosed on SCHEDULE 3.7, each Partnership is
duly formed and validly existing under the laws of the jurisdiction of its
formation, each interest of any PTI Entity in each Partnership and in each
Minority Owned Entity which is a partnership has been fully paid for, and no PTI
Entity is subject to any present or, to the Knowledge of PT Cellular, future
scheduled capital call with respect to its interest in any Partnership or
Minority Owned Entity which is a partnership. Except as set forth on SCHEDULE
3.7, there are no outstanding options, warrants or other rights of any nature
providing for the purchase, issuance or sale of any equity interests in any
Partnership. Except as disclosed on SCHEDULE 3.7, each interest in a Partnership
and a Minority Owned Entity which is a partnership owned by a PTI Entity is
owned free and clear of all Encumbrances. No Partnership is required by the
nature of its activities or the character or location of its properties to be
qualified to transact business as a foreign partnership in any state or
jurisdiction, except where such Partnership is so qualified or where the failure
to so qualify would not have a Material Adverse Effect.
3.8 FINANCIAL STATEMENTS OF PTI AND THE PTI ENTITIES. PTI has delivered to
Century true, correct and complete copies of the audited consolidated balance
sheets of PTI and the audited balance sheets of each of the PTI Audited Entities
as of December 31, 1996 and December 31, 1995, and the audited consolidated
statements of income, statements of cash flows and statements of changes in
shareholder's equity of PTI and the audited statements of income, statements of
cash flows and statements of changes in stockholder's equity of each of the PTI
Audited Entities for each of the years during the two year period ending
December 31, 1996, together with related notes thereto and the unqualified
opinion of Deloitte & Touche
LLP, certified public accountants, and have also delivered to Century true,
correct and complete copies of unaudited balance sheets and income statements
for the PTI Entities other than the Audited Entities for the periods specified
above and for each of the PTI Entities for the interim period ending March 31,
1997 (hereinafter referred to collectively as the "PTI Financial Statements").
The PTI Financial Statements were prepared in accordance with GAAP (except for
any changes in accounting methods referred to in the notes thereto and subject,
in the case of unaudited financial statements, to normal year-end adjustments,
absence of footnotes and other presentation items) and fairly present (i) the
financial condition of the PTI Entities as of the respective dates thereof, and
(ii) the results of operations of the PTI Entities for the periods therein set
forth. All such unaudited interim financial statements reflect all adjustments
that are necessary for a fair statement of the financial condition and results
of operations for the interim periods presented therein.
3.9 ABSENCE OF MATERIAL CHANGES. Except as disclosed on SCHEDULE 3.9,or
as expressly disclosed in the PTI SEC Reports (as defined below), since
December 31, 1996, no PTI Entity has:
(a) undergone any change in its business, financial condition, or
operations other than changes in the ordinary course of business, none of which
individually or in the aggregate has had a Material Adverse Effect;
(b) suffered any damage, destruction or loss, whether or not covered
by insurance, that was Material;
(c) issued or sold any stock or partnership interests or incurred
any Material Indebtedness;
(d) granted any options or warrants or entered into any Contract for
the issuance of stock, securities or other equity interests;
(e) mortgaged, pledged or subjected to any Encumbrance any of its
properties or assets valued in excess of $1,000,000;
(f) increased or altered the payment obligations on any Material
Indebtedness;
(g) acquired or disposed of any assets or properties not
contemplated in PTI's 1997 Capital Budget having a value in excess of $1,000,000
in the case of any single item;
(h) merged or consolidated with any other corporation;
(i) received notice of any dispute, claim, event or condition of any
character (including but not limited to any notices from any Governmental
Entity) that could reasonably be expected to have a Material Adverse Effect
(excluding events or conditions relating to general economic conditions, changes
in the regulatory environment or other changes affecting the telecommunications
industry generally);
(j) terminated or amended any Contract that is Material or, except
as contemplated in PTI's 1997 Capital Budget, entered into any Contract or
purchase order providing for payments by such entity in excess of $1,000,000;
(k) made any change in its accounting methods or practices other
than changes in estimates related to the determination of expense accruals for
health, pension and other post-retirement benefits.
(l) increased the bonuses, salaries or other compensation of any
officer or employee of any PTI Entity, except in the ordinary course of
business, consistent with past practices, or entered into any employment,
severance or similar Contract (except for the hiring of new employees whose
expected annualized compensation does not exceed $100,000), or adopted, amended
or terminated any Employee Benefit Plan;
(m) received any notice indicating that there exists any Material
labor unrest among its employees or that any group, labor union or similar
organization tried to organize any of its employees;
(n) in the case of PTI, declared or paid any dividend or made any
distribution with respect to the Stock except for regular quarterly dividends
paid to PHI, which have not exceeded $13,625,000 per quarter; or
(o) entered into any Contract or made any commitment to do or to
take any of the actions referred to in subsections (a) through (n) of this
Section 3.9.
3.10 INDEBTEDNESS. Except as disclosed on SCHEDULE 3.10, or as expressly
disclosed in the PTI SEC Reports, all Material Indebtedness of any PTI Entity is
prepayable at any time at the option of such entity without premium or penalty
and no such Material Indebtedness is subject to acceleration or a penalty upon a
change in control of PTI. No PTI Entity is in default under any Contract
evidencing any Material Indebtedness or in the performance, observance or
fulfillment of any covenant or condition relating thereto, and no event has
occurred and is continuing which with the giving of notice or lapse of time, or
both, would constitute a default, except where such a default would not have a
Material Adverse Effect.
3.11 LITIGATION AND CLAIMS. SCHEDULE 3.11 sets forth a list of each
Material Proceeding in which any PTI Entity is a party. Except as disclosed on
SCHEDULE 3.11, or as expressly disclosed in the PTI SEC Reports, there are no
decrees, judgments, fines, forfeitures, awards, orders or injunctions to which
any PTI Entity is subject and there is no Proceeding pending or, to the
knowledge of PTI or PT Cellular, threatened against or relating to any PTI
Entity that, if determined adversely to such PTI Entity, is reasonably likely to
have a Material Adverse Effect.
3.12 TITLE TO PROPERTY AND LEASES. Except as disclosed on SCHEDULE 3.12,
or as expressly disclosed in the PTI SEC Reports, each PTI Entity owns or leases
all of the property reflected in its December 31, 1996 balance sheet included in
the PTI Financial Statements except (i) property disposed of since said date for
fair and adequate consideration in the ordinary course of business or
dispositions which are not, in the aggregate, Material and (ii) leases which
have expired since said date and which are not, in the aggregate, Material.
Except as disclosed on SCHEDULE 3.12, title to all Material real and Material
personal property owned by each PTI Entity is, in each case, good and lawful,
and in the case of Material real property, marketable and free and clear of any
Encumbrances, except for (i) Encumbrances arising under indentures, security
interests, mortgages and/or deeds of trust securing Indebtedness disclosed in
the PTI Financial Statements, (ii) Encumbrances for Taxes or assessments not yet
delinquent or being contested in good faith, (iii) imperfections of title and
Encumbrances, if any, that do not materially detract from the value, or
materially interfere with the use or marketability of the property affected
thereby, and (iv) rights reserved to or vested in any Governmental Entity to
control or regulate any such entity's property or assets in
any manner and (v) Encumbrances which are otherwise not Material. Except as
disclosed on SCHEDULE 3.12, all Material real property leases to which any PTI
Entity is a party are legal, valid and enforceable in accordance with their
respective terms, except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other laws of
general application relating to or affecting enforcement of creditors' rights
and the application of equitable principles in any action, legal or equitable;
no PTI Entity is in default under any such Material lease, and, to the knowledge
of PTI, no event has occurred which, with notice or lapse of time, or both,
would constitute such a default. Each PTI Entity owns or leases all property and
assets necessary for the conduct of its present business in the ordinary course,
except where the failure to own or lease such property or assets would not have
a Material Adverse Effect.
3.13 CONDITION OF ASSETS. Except as disclosed on SCHEDULE 3.13 or as
expressly disclosed in the PTI SEC Reports, all buildings, equipment and other
assets owned by each PTI Entity are in good operating condition, reasonable wear
and tear excepted, and do not require any maintenance or repairs, except for
routine maintenance and repairs that arise in the ordinary course of business,
maintenance and repairs that are contemplated in PTI's 1997 Capital Budget or
maintenance and repairs that, in the aggregate, are not Material in nature or
cost.
3.14 INSURANCE. SCHEDULE 3.14 sets forth a list of all Material insurance
policies covering the businesses properties and assets of the PTI Entities. All
such policies are in full force and effect on the date hereof. All property of
any PTI Entity of an insurable nature and of a character usually insured by
companies carrying on similar businesses has been insured in
such amounts and against such losses as is customary for such companies. Since
January 1, 1995, neither PHI nor PTI has received notice of (a) any failure to
pay premiums, (b) any cancellation of any Material policy, (c) any insurer
denying any Material claim or (d) any insurer defending any Material claim with
a reservation of rights. Except as disclosed in SCHEDULE 3.14, no liability
policy has a deductible in excess of $100,000.
3.15 CONTRACTS. SCHEDULE 3.15 identifies all Contracts to which PTI or
any PTI Entity is a party that are not terminable by PTI within one year from
the date hereof and obligate such entity to make annual payments in excess of
$250,000. Except as set forth on SCHEDULE 3.15, each Material Contract to which
any PTI Entity is a party is valid, binding and enforceable in accordance with
its terms, except where enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and no PTI Entity is in default
under any such Material Contract, and, to the Knowledge of PTI, no event has
occurred which, with notice or lapse of time, or both, would constitute such a
default, except such defaults that would not have a Material Adverse Effect.
Except as set forth on SCHEDULE 3.15, none of the Material Contracts contains
any provision providing that it may be canceled, terminated or accelerated upon
a change in control of PTI or requires the consent to such a change in control.
Each PTI Entity has in effect all Material Contracts that are necessary for the
conduct of its business as presently conducted in the ordinary course.
3.16 NO VIOLATION. Except as set forth in SCHEDULE 3.16, with respect to
PHI and each PTI Entity, the execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not: (i) violate or result in a breach of or default or
acceleration under the articles or certificate of incorporation, bylaws or
comparable governing instruments of PHI or any PTI Entity, or any instrument or
Contract to which PHI or any PTI Entity is a party or by which it is bound; (ii)
violate any judgment, order, injunction, decree or award binding upon PHI or any
PTI Entity or upon the assets of PHI or any PTI Entity; (iii) result in the
creation of any Encumbrance upon the properties or assets of PHI or any PTI
Entity; or (iv) violate any Applicable Law relating to PHI, any PTI Entity or
their respective properties or assets, except, in the cases of (i) through (iv)
above, where such violation, breach, default or Encumbrance would not have a
Material Adverse Effect.
3.17 COMPLIANCE WITH LAWS; PERMITS. Except as disclosed on SCHEDULE 3.17,
or as expressly disclosed in the PTI SEC Reports, each of the PTI Entities has
complied with all Applicable Laws except where the failure to so comply would
not have a Material Adverse Effect. Each PTI Entity has obtained all Material
Permits required in order to conduct its business as presently conducted. The
present use by each PTI Entity of its properties and the conduct of its business
does not violate any Applicable Law or Permit, except where such violations, in
the aggregate, would not have a Material Adverse Effect. All Material Permits
are in full force and effect, have been legally and validly issued, and will
continue in full force and effect after the Closing Date without the consent,
approval or act of, or the making of any filing with, any Governmental Entity,
subject to the receipt of the approvals and the completion of the filings
described in Section 6.1 hereof. No PTI Entity is in default under the terms of
any Material Permit and no such entity has received written notice of any
default
thereunder. Except as disclosed on SCHEDULE 3.17, no Governmental Entity has
notified any PTI Entity of its intent to modify, revoke, terminate or fail to
renew any Material Permit.
3.18 ERISA.
(a) Set forth on SCHEDULE 3.18 hereto is a list identifying each
Employee Benefit Plan. Except for any plan that is a multiemployer plan, as
defined in Section 3(37) of ERISA (each a "Multiemployer Plan"), PHI has made
available to Century accurate and complete copies of all Employee Benefit Plans
maintained by any PTI Entity (and, if applicable, the related trust agreements)
and all amendments thereto, together with the three most recent annual reports
(Form 5500 including, if applicable, Schedule B thereto) prepared in connection
with any such Employee Benefit Plan. For purposes of this Section 3.18 only, an
"affiliate" of any person means any other person which, together with such
person, would be treated as a single employer under Section 414 of the Code.
(b) Except as disclosed on SCHEDULE 3.18, or as expressly disclosed
in the PTI SEC Reports, (i) no Employee Benefit Plan constitutes a Multiemployer
Plan, and (ii) no Employee Benefit Plan is subject to Title IV of ERISA or to
the minimum funding standards of ERISA and the Code. There are no accumulated
funding deficiencies as defined in Section 412 of the Code (whether or not
waived) with respect to any Employee Benefit Plan. No PTI Entity has incurred
any Material liability under Title IV of ERISA arising in connection with the
termination of, or complete or partial withdrawal from, any Employee Benefit
Plan covered or previously covered by Title IV of ERISA. Each PTI Entity has
paid and discharged promptly when due all liabilities and obligations with
respect to any Employee Benefit Plan arising under ERISA or the Code of a
character which if unpaid or unperformed
might result in the imposition of an Encumbrance against any of the assets of
PHI or any PTI Entity. Nothing done or omitted to be done and no transaction or
holding of any asset under or in connection with any Employee Benefit Plan has
made or will make any PTI Entity subject to any liability under Section 5.02(i)
or (l) of Title I of ERISA or liable for any tax pursuant to Section 4975 of the
Code that could have a Material Adverse Effect.
(c) Each Employee Benefit Plan which is designated on SCHEDULE 3.18
as being intended to be qualified under Section 401(a) of the Code is so
qualified, and each trust forming a part thereof is exempt from Tax pursuant to
Section 501(a) of the Code. PTI has made available to Century accurate and
complete copies of the most recent IRS determination letters with respect to any
such Employee Benefit Plans. Each Employee Benefit Plan is being maintained, in
all material respects, in compliance with its terms and with the requirements
prescribed by all Applicable Law, except where the failure to so maintain such
Employee Benefit Plan would not have a Material Adverse Effect.
(d) Except as set forth on SCHEDULE 3.18, since January 1, 1991, no
PTI Entity has maintained or contributed to a Multiemployer Plan. With respect
to each Multiemployer Plan in which any PTI Entity participates or has
participated, (i) since January 1, 1991, no PTI Entity has withdrawn, partially
withdrawn, or received any notice of any claim or demand for withdrawal
liability or partial withdrawal liability, and (ii) neither the transaction
contemplated by this Agreement, nor the 1995 sale by PTI of the stock of
Alascom, Inc. to AT&T Corp., constitutes a withdrawal or partial withdrawal
under any Multiemployer Plan maintained or previously maintained or contributed
to by any PTI Entity. Until the Closing, PTI will advise Century in the event
that any PTI Entity has received any
notice (i) that any Multiemployer Plan is in reorganization, (ii) that increased
contributions may be required to avoid a reduction in Multiemployer Plan
benefits or the imposition of any excise tax, (iii) that any Multiemployer Plan
is or may become insolvent, (iv) that any Multiemployer Plan is a party to any
pending merger or asset transfer, or (v) that any PBGC proceedings against or
affecting any Multiemployer Plan have been initiated. Until the Closing, PTI
shall notify Century promptly in the event that any PTI Entity becomes a
participant in a Multiemployer Plan.
(e) All contributions (including all employer contributions and
employee salary reduction contributions) that are due have been paid to each
such Employee Benefit Plan and all contributions for any period ending on or
before the Closing Date that are not yet due have been paid to each Employee
Benefit Plan or accrued in accordance with past custom and practice. All
premiums or other payments for all periods ending on or before the Closing Date
which have become due have been paid or will be paid prior to the Closing Date
with respect to each such Employee Benefit Plan which is an Employee Welfare
Benefit Plan. The DCP Payment Plan (as defined in Section 6.15) to be
established to deliver amounts deferred under the PHI Executive Deferred
Compensation Plan, effective January 1, 1996, and the PacifiCorp Compensation
Reduction Plan, effective December 1, 1994, shall be maintained for a select
group of management and highly compensated employees for purposes of ERISA.
(f) Except as set forth on SCHEDULE 3.18, or as expressly disclosed
in the PTI SEC Reports, no PTI Entity maintains or contributes to or is required
to contribute to any material Employee Welfare Benefit Plan or other program or
arrangement providing medical, health, or life insurance or other welfare-type
benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Section 4980B of the Code or Sections 601-607 of ERISA).
(g) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, Summary Plan Descriptions, and reports
required by Labor Department Regulation Section 2520.104-23) have been filed or
distributed appropriately with respect to each Employee Benefit Plan (other than
any Multiemployer Plan) except where failure to do so would not have a Material
Adverse Effect. The requirements of Part 6 of Subtitle B of Title I of ERISA and
of Section 4980B of the Code have been met in all material respects with respect
to each such Employee Benefit Plan (other than any Multiemployer Plan) which is
an Employee Welfare Benefit Plan. No claim, lawsuit, arbitration or Proceeding
is pending or has been threatened, asserted or instituted against PHI or any PTI
Entity, or any Employee Benefit Plan (other than any Multiemployer Plan), in
connection with or arising out of, directly or indirectly, Part 6 of Subtitle B
of Title I of ERISA and there are no facts that exist which could give rise to
any such claims or other Proceedings. To PTI's Knowledge, no claim, lawsuit,
arbitration or Proceeding is pending or has been threatened, asserted or
instituted against PHI or any PTI Entity, or any Multiemployer Plan, in
connection with or arising out of, directly or indirectly, Part 6 of Subtitle B
of Title I of ERISA, and, to PTI's Knowledge, there are no facts that exist
which could give rise to any such claims or other Proceedings.
(h) Except as set forth on SCHEDULE 3.18, consummation of the
transactions contemplated herein will not entitle any officer or employee of any
PTI Entity to severance
pay and will not increase, or accelerate the time of payment or vesting of, any
compensation due to any officer or employee of any PTI Entity under any Employee
Benefit Plan.
(i) Except as indicated on SCHEDULE 3.18, the fair market value of
the assets of each Employee Benefit Plan which is subject to Title IV of ERISA
or the minimum funding requirements of Section 412 of the Code exceeds the
amount of benefit liabilities for such plan, computed on a termination basis
utilizing Pension Benefit Guaranty Corporation ("PBGC") factors. Except as
indicated on SCHEDULE 3.18, to PTI's Knowledge, the fair market value of the
assets of each Multiemployer Plan which is subject to Title IV of ERISA or the
minimum funding requirements of Section 412 of the Code exceeds the amount of
benefit liabilities for such plan, computed on a termination basis utilizing
Pension Benefit Guaranty Corporation ("PBGC") factors.
(j) No Employee Benefit Plan which is subject to Title IV of ERISA
has been completely or partially terminated in the preceding six years. There
has been no reportable event (as such term is defined in Section 403(b) of
ERISA) with respect to an Employee Benefit Plan for which notice to the PBGC has
not, by rule or regulation, been waived or which, individually or in the
aggregate with other reportable events, has or may reasonably be expected to
have a Material Adverse Effect.
(k) The PTI Entities are in compliance with the Family and Medical
Leave Act of 1993, except with respect to any noncompliance that would not have
a Material Adverse Effect.
3.19 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE 3.19, or as
expressly disclosed in the PTI SEC Reports:
(a) Each PTI Entity possesses all Material Permits that are required
under Applicable Laws relating to pollution or the protection of the
environment, including, without limitation, all laws and regulations governing
the generation, use, collection, treatment, storage, transportation, recovery,
removal, discharge or disposal of all hazardous substances or wastes, as such
laws are in effect as of the date of this Agreement and as of the Closing Date
(collectively, "Environmental Laws"). Each PTI Entity is in Material compliance
with all Environmental Laws. For purposes of this Section 3.19, "hazardous
substances" and "hazardous wastes" are materials defined as "hazardous
substances", "hazardous wastes", "hazardous constituents", "pollutants" or
"contaminants" in (i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, and any amendments thereto and regulations
thereunder, (ii) the Resource Conservation and Recovery Act of 1976, as amended
by the Hazardous and Solid Waste Amendments of 1984, and any amendments thereto
and regulations thereunder, and (iii) any other Environmental Law regulating
gasoline, diesel fuel and other petroleum hydrocarbons, all as in effect as of
the date of this Agreement and as of the Closing Date, including without
limitation asbestos and polychlorinated biphenols ("PCBs").
(b) No PTI Entity has been subject to any enforcement actions or
lawsuits pursuant to, nor has it received any notice from any Governmental
Entity of any Material violations of, any Environmental Law, and, to the
Knowledge of PTI, there are no facts or
circumstances that it currently anticipates could reasonably form the basis of a
claim or citation against any PTI Entity for a violation of any such laws or
regulations, except for violations that, in the aggregate, would not have a
Material Adverse Effect.
(c) There are no hazardous substances or hazardous wastes (or any
asbestos, fuel oil or other petroleum compounds or PCBs) used, disposed of,
discharged or stored by any PTI Entity except in the ordinary course of their
business and in Material compliance with all Environmental Laws. At no time has
any PTI Entity caused, or, to the Knowledge of PTI, permitted, hazardous wastes,
hazardous substances or any other such materials to be treated, stored, disposed
of, released, discharged or deposited on, under, at or from premises owned or
operated by any PTI Entity, which materials if known to be present, would
reasonably be anticipated now to require the expenditures of a Material amount
for clean-up, removal, response, remediation or other obligations ("Response")
under any Environmental Law.
(d) To the Knowledge of PTI, there are no disposal sites for
hazardous substances, hazardous wastes or any other wastes located on or under
the real estate now owned or operated by any PTI Entity. Each Person retained by
any PTI Entity within the preceding four years to handle, transport or dispose
of hazardous substances, hazardous wastes or other wastes was, to PTI's
Knowledge, then duly licensed under all Applicable Laws to handle, transport or
dispose of such substances or wastes, and, in each instance in which the
hazardous substances or hazardous wastes of the PTI Entities were disposed of,
the disposal site was, to PTI's Knowledge, then duly licensed under all
Applicable Laws to receive such substances or wastes. To the Knowledge of PTI,
none of the disposal sites that in the past have been the recipient of hazardous
substances or hazardous wastes generated by any PTI
Entity are or have been listed on the US EPA National Priority List or are
Superfund or other sites subject to Response under any Environmental Law.
(e) PTI has provided Century with access to true and complete copies
of any reports, studies, analyses or tests currently in its possession
pertaining to hazardous substances or hazardous wastes or concerning compliance
with Environmental Laws in, on or under the real estate owned or operated by any
PTI Entity.
3.20 EMPLOYEES.
(a) PTI has provided to Century a list by job location or employing
entity of each employee of any PTI Entity, together with each such person's date
of hire, position or function, and annual base salary or wages, including any
incentive or bonus arrangement with respect to such person.
(b) PTI has provided to Century a list by bargaining unit of each
employee of any PTI Entity who is a member of any collective bargaining unit of
any PTI Entity, together with each such person's classification or position, job
location, and bargaining unit seniority date.
3.21 TAX MATTERS. Except as disclosed on SCHEDULE 3.21, or as expressly
disclosed in the PTI SEC Reports:
(a) Each of PHI and its Subsidiaries has filed or caused to be filed
all Tax Returns that it was required to file or which were required to be filed
with respect to it. All Taxes owed by any of PHI and its Subsidiaries and the
Affiliated Group shown on such Tax Returns have been paid. None of PHI and the
Affiliated Group or PTI and its Subsidiaries currently is the beneficiary of any
extension of time within which to file any Tax Return.
(b) Each of PTI and its Subsidiaries has withheld and paid all
Material Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(c) There is no Material dispute or claim concerning any Tax
Liability of PTI and its Subsidiaries claimed or raised by an authority in
writing.
(d) Each of PTI and its Subsidiaries have (and as of the Closing
Date will have) made all deposits required with respect to Taxes.
(e) No waiver of any statute of limitations as to any Tax assessment
or deficiency has been given by PHI, PTI, the Affiliated Group or any of their
Subsidiaries.
(f) None of PHI, its Subsidiaries or the Affiliated Group has filed
a consent under Section 341(f) of the Code.
(g) None of PTI or its Subsidiaries is obligated to make any
payments that will not be deductible under Section 280G of the Code.
(h) None of PTI or its Subsidiaries is a party to any Tax allocation
or sharing contract.
(i) Neither PTI nor any of its Subsidiaries has been a member of an
affiliated group filing a consolidated federal Tax Return (other than the
Affiliated Group) or has any liability for the Taxes of any person (other than
any of PHI or the Affiliated Group) under Treasury Regulation ss.1.1502-6 (or
any similar provision of state, local, or foreign law).
(j) On the date hereof there are, and on the Closing Date or as a
result of the Closing there will be, no deferred Tax liabilities based upon any
intercompany transactions between or among PTI or its Subsidiaries.
(k) The unpaid Taxes of PTI and its Subsidiaries (i) did not, as of
December 31, 1996, exceed by any Material amount the reserve for Tax liability
(rather than any reserve for deferred Taxes established to reflect timing
differences between book and tax income) set forth on the December 31, 1996
consolidated balance sheet of PTI (rather than in any notes thereto) and (ii)
will not exceed that reserve as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice of PTI and its
Subsidiaries in filing their Tax Returns.
(l) For both accounting and rate-making purposes in its regulated
books of account, each PTI Telco Entity has been using, and will continue to use
up to the Closing Date, a normalization method of accounting as described in
Sections 167(1) (as in effect at the time the related assets were placed in
service) and 168(i) of the Code for the federal Tax effect of the use of
accelerated depreciation.
(m) For both accounting and rate-making purposes in its regulated
books of account, each PTI Telco Entity has been using, and will continue to use
through the Closing Date, a method of accounting for investment credits which
conforms with the requirements of Section 46(f) of the Code, as in effect at the
time the related assets were placed in service.
(n) The regulated books of account of each PTI Telco Entity will
reflect the Tax payments made by each PTI Telco Entity through the Closing Date.
(o) Neither PTI nor any of its Subsidiaries is subject to any
foreign Tax.
3.22 NO FINDER. Except as disclosed in SCHEDULE 3.9, no PTI Entity has
paid or become obligated, nor will any PTI Entity upon consummation of the
transactions
contemplated herein become obligated, to pay any fee or any commission to any
broker, finder or intermediary for or on account of the transactions
contemplated herein.
3.23 LABOR RELATIONS. Except as disclosed on SCHEDULE 3.23, or as
expressly disclosed in the PTI SEC Reports, none of the following is presently
pending, or to the Knowledge of PHI or PTI, is contemplated or threatened,
against any PTI Entity (except for those items, which, in the aggregate, would
not have a Material Adverse Effect):
(a) Unfair labor practice charges, complaints or Proceedings, or
representation elections, petitions or demands;
(b) Grievances or arbitration demands arising pursuant to any
collective bargaining agreement or other Contract;
(c) Claims, charges, complaints or other Proceedings alleging
wrongful discharge, breach of any employment Contract or right, or breach of
public policy, unlawful retaliation, or employment discrimination of any nature
including but not limited to sex (including pregnancy, equal pay and sexual
harassment), race, color, national original or ancestry, age, religion,
disability or handicap, AIDS or HIV-positive status, sickle cell trait,
veterans' status, or the perception of any such characteristic, or any other
characteristic or condition protected under any Applicable Law or enactment;
(d) Work stoppages, strikes or other concerted action by employees
of any PTI Entity;
(e) Payments for or provisions for payments to any former employee
or person who retired from any PTI Entity of any post-retirement health
insurance or other health-care benefit (other than a benefit pursuant to an
Employee Benefit Plan disclosed in
SCHEDULE 3.18), or payments for or provisions for payments to any such former
employee or person of any retiree health insurance or other health-care benefit;
(f) Employment-related claims or investigations including but not
limited to those arising under the Occupational Safety and Health Act; the
Family and Medical Leave Act; the Fair Labor Standards Act; the Worker
Adjustment and Retraining Notification Act; the Rehabilitation Act of 1973; or
any corresponding or related Applicable Law or enactment; or
(g) Worker's compensation disability claims.
3.24 PTI'S SEC REPORTS.Each report filed with the Securities and Exchange
Commission ("SEC Report") pursuant to Sections 13, 14 or 15 of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), by PTI since January 1, 1994
complied as of the date of filing as to form in all material respects with each
applicable provision of the Exchange Act and the rules and regulations
promulgated thereunder, and did not as of the date of filing contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements contained therein, in light of the circumstances in which
they were made, not misleading.
3.25 BOOKS AND RECORDS. The minute books of the PTI Corporate Entities
contain, in all Material respects, accurate records of all meetings of and
corporate actions or written consents by the shareholders and directors of such
entities. All of the other books and records of the PTI Entities and all files,
data and other materials relating to the businesses of the PTI Entities have
been prepared and maintained in accordance with good business practices and
comply with all Applicable Laws, except where the failure to so comply would not
have a
Material Adverse Effect The PTI Entities do not have any of their records,
systems, controls, data or information recorded, stored, maintained, operated or
otherwise wholly or partly dependent upon or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
that are not under their control, either through direct ownership or rights of
use.
3.26 PENDING ACQUISITIONS. Except as set forth on SCHEDULE 3.26, no PTI
Entity has agreed to make any acquisition of a majority of the capital stock or
equity interests in or assets of any other Person, or agreed to any business
combination with any other Person, other than any such acquisitions that have
already been consummated or that involve consideration payable by PTI of less
than $5,000,000.
3.27 UNDISCLOSED LIABILITIES. Except as disclosed in this Agreement, as
set forth in SCHEDULE 3.27 or any of the other Schedules to this Agreement or
except for liabilities arising out of industry-wide changes in the regulatory
environment, no PTI Entity has any liability or obligation of any nature,
whether accrued, absolute, contingent, known, unknown or otherwise, and whether
due or to become due, which was not reflected in the PTI Financial Statements,
except for liabilities and obligations incurred by such PTI Entity in the
ordinary course of business since December 31, 1996, which, in the aggregate,
would not have a Material Adverse Effect.
3.28 TELEPHONE OPERATIONS. Except as set forth on SCHEDULE 3.28:
(a) No PTI Telco Entity has elected to file interexchange tariffs
under the FCC's price cap order.
(b) No PTI Telco Entity has any inventory, plant or equipment
reflected on the PTI Financial Statements that has been disallowed from the rate
base or excluded from the revenue calculations for any pool (unless such assets
are allocated to unregulated businesses) on the basis of used and useful, excess
capacity or prudency findings in any order issued by a Public Service Commission
or the FCC or in any determination by an administrator of an interstate or
intrastate pool, nor has any PTI Entity received notification that a Public
Service Commission or the FCC or any pool administrator proposes to exclude any
such assets from the rate base or revenue calculations for the pools.
(c) No PTI Telco Entity has received any interconnection or resale
request pursuant to Section 251(c) of the Communications Act of 1934, as
amended.
(d) No PTI Telco Entity is subject to the any pending or, to the
Knowledge of PTI, threatened earnings reduction Proceeding.
(e) No PTI Telco Entity has agreed to, or currently intends to agree
to, any reduction in its authorized revenues, except on a revenue neutral basis.
3.29 INTELLECTUAL PROPERTIES.
(a) The use by the PTI Entities of their respective patents,
trademarks, service marks, trade names, copyrights, design rights, computer
programs or data bases, or applications or registrations therefor (collectively,
"Intellectual Property"), does not infringe on the rights of any Person, except
for any such infringement that would not, in the aggregate, have a Material
Adverse Affect. No proceeding by or against any PTI Entity is pending, or to the
Knowledge of PTI or PT Cellular, threatened, that challenges the right of any
PTI Entity to use its Intellectual Property or challenges the right of any other
Person to use the
Intellectual Property of any PTI Entity, and no order, decree, judgment,
stipulation, injunction, restriction or agreement restricts the scope of the use
of the Intellectual Property of any PTI Entity, except for any such Proceeding
that would not have a Material Adverse Affect.
(b) To the Knowledge of PTI or PT Cellular, no PTI Entity has
infringed or violated any Intellectual Property of any Person, nor used without
permission any confidential information, trade secrets, patentable or
unpatentable inventions, technology, new ideas or know-how (collectively,
"Proprietary Information") of any Person, including without limitation any
former employer of an employee of any PTI Entity. To the Knowledge of PTI or PT
Cellular, no other Person is currently using any Intellectual Property or
Proprietary Information of any PTI Entity in an unauthorized manner.
3.30 RIGHTS TO TRADE NAMES. Each of the PTI Entities currently possesses
and at the Closing Date will possess all necessary rights to the use of their
respective trade names and service marks including the names "Cellulink,"
"Worldvox," "PTI Communications" and any trade marks, service marks or other
depiction relating thereto.
3.31 NORTH PACIFIC CABLE WARRANTIES. No PTI Entity has entered into any
Contract with any customer of the North Pacific Cable System, the related
satellite earth station or any related facilities under which any PTI Entity
warrants or guarantees the performance of such system, station or related
facilities.
SECTION 4
---------
REPRESENTATIONS AND WARRANTIES OF CENTURY
-----------------------------------------
For the purpose of inducing PHI to enter into this Agreement, Century
hereby makes the following representations and warranties to PHI.
4.1 ORGANIZATION OF CENTURY. Each of Century and CCI is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Louisiana with full corporate power and authority to carry on the business in
which it is presently engaged, to own, lease and operate its properties and to
enter into and perform its obligations under this Agreement.
4.2 AUTHORIZATION OF AGREEMENT. Each of Century and CCI has all requisite
corporate power and authority to execute and deliver this Agreement and to carry
out its obligations hereunder. This Agreement has been duly approved by all
requisite corporate action of Century and CCI, has been duly executed and
delivered by Century and CCI and, assuming due execution, delivery and
performance of this Agreement by PHI and PTI, constitutes a valid and legally
binding obligation of Century and CCI enforceable in accordance with its terms,
except as the enforceability hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable. Except as set forth on
SCHEDULE 4.2, the execution and delivery of this Agreement by Century and CCI
and the consummation by Century and CCI of the transactions contemplated hereby
will not conflict with or result in any violation of any provision of the
articles of incorporation or bylaws of Century or CCI, or under any
material mortgage, deed of trust, indenture, lease, agreement or other
instrument, permit, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Century or
CCI, except where such conflict or violation would not have a material adverse
effect on the business, financial condition or results of operations of Century
and its Subsidiaries, taken as a whole.
4.3 CENTURY'S SEC REPORTS. Each SEC Report filed by Century pursuant to
the Exchange Act since January 1, 1994 complied as of the date of filing as to
form in all material respects with each applicable provision of the Exchange Act
and the rules and regulations promulgated thereunder, and did not as of the date
of filing contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements contained therein, in light of
the circumstances in which they were made, not misleading.
4.4 FINANCING COMMITMENT. Century has obtained financing commitments
sufficient to enable it and CCI to finance the transactions contemplated hereby
and has delivered true and complete copies of such commitments to PHI.
SECTION 5
---------
CONDUCT PENDING CLOSING
-----------------------
5.1 CONDUCT OF BUSINESS PRIOR TO THE CLOSING DATE. Except as disclosed on
SCHEDULE 5.1, as otherwise permitted or required by this Agreement, or consented
to in writing by Century, from the date hereof until the Closing Date, each PTI
Entity will, and PHI will cause each PTI Entity to:
(a) carry on its business in the ordinary course in substantially
the same manner as heretofore conducted and, to the extent consistent with such
business, maintain its
existence and powers and all of its Material Permits, Material Contracts and
books of account and records necessary to the conduct of its business (it being
understood that each PTI Entity will be deemed to have maintained a Material
Permit or Material Contract if, in connection with the lapse of the normal term
of any such permit or contract, such entity promptly secures a replacement
permit or contract providing benefits to such entity substantially similar to
the lapsed permit or contract);
(b) not issue any additional capital stock or other equity interests
or any options, warrants or other rights to acquire any such securities, or
directly or indirectly redeem, purchase or otherwise acquire any shares of its
capital stock or equity interests;
(c) not hire any new employees (except new employees whose annual
compensation is not expected to exceed $100,000);
(d) not make any increase in the compensation (including bonuses,
commissions, fringe benefits, severance or retirement benefits) payable or to
become payable to any officer, director, employee, agent or representative,
except increases required by written Contracts or Employee Benefit Plans
disclosed on a Schedule and increases and bonuses in the ordinary course of
business and consistent with prior practices or required by mandated ERISA
changes, or adopt or amend in any material respect or terminate any Employee
Benefit Plan except as expressly permitted under this Agreement or as required
by Applicable Law;
(e) except in accordance with PTI's 1997 Capital Budget or in
connection with consummation of any PTI Pending Acquisition, incur any Material
Indebtedness or vary the terms of any existing Material Indebtedness, enter into
or terminate any Material lease of real estate or Material lease of personal
property, or create any Material Encumbrance;
(f) not make any expenditure in excess of $1,000,000 except pursuant
to a Material Contract disclosed on SCHEDULE 3.15 or in accordance with PTI's
1997 or 1998 Capital Budget, or enter into any Contract to make such an
expenditure;
(g) not dispose of any asset having a value in excess of $1,000,000
except pursuant to a Material Contract disclosed on SCHEDULE 3.15, other than
the sale of capacity in the North Pacific Cable in the ordinary course of
business;
(h) in the case of PTI, not pay any dividend or make any similar
distribution except for (i) quarterly dividends payable to PHI not to exceed
$13,625,000 for each of the second, third and fourth quarters of 1997 and not to
exceed $14,000,000 for any quarterly period in 1998, plus the pro rata portion
of such amount for any partial quarter prior to the Closing Date and (ii) the
dividend of the sale proceeds from the sale of the Cellular Stock, as described
in Section 2.3;
(i) not amend its certificate or articles of incorporation, bylaws,
or partnership agreements in any material respect or fail to make any required
capital contribution to any Partnership or any partnership which is a Minority
Owned Entity;
(j) advise and consult with Century on any material developments in
connection with the PTI Pending Acquisitions;
(k) advise and consult with Century with respect to (i) any material
developments with respect to any Pending Material Proceeding, (ii) development
of the 1998 operating or capital budgets for PTI, (iii) any material amendment
to PTI's 1997 or 1998 operating or capital budgets, or (iv) or any matter which
could have a Material Adverse Effect on any PTI Entity;
(l) consult with Century concerning labor relations issues prior to
establishing the bargaining agenda for any PTI Entity and advise Century on the
status of any collective bargaining with certified representatives of employees
of PTI Entities;
(m) use its reasonable best efforts to preserve intact the current
organization of its business, keep available the services of its current
officers and employees and maintain good relations with its suppliers,
customers, creditors and employees;
(n) maintain in effect insurance comparable in amount and scope of
coverage to such insurance now carried by a PTI Entity;
(o) deliver to Century true, correct and complete copies of its
monthly financial statements; and
(p) not take any action or omit to take any action that would result
in the breach of any representation or warranty made pursuant to Section 3
hereof.
5.2 NOTIFICATION OF CERTAIN MATTERS.
(a) PHI shall give prompt written notice to Century of (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which causes or would be reasonably likely to cause any representation or
warranty contained in Section 3 to be untrue or inaccurate in any material
respect at or prior to the Closing; and (ii) any failure of PHI or
PTI to comply in any material respect with any covenant or agreement to be
complied with at or prior to Closing.
(b) Century shall give prompt written notice to PHI of (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which causes or would be reasonably likely to cause any representation or
warranty contained in Section 4 to be untrue or inaccurate in any material
respect at or prior to the Closing; and (ii) any failure of Century to comply in
any material respect with any covenant or agreement to be complied with at or
prior to Closing.
(c) The delivery of any notice pursuant to this Section shall not be
deemed to (i) modify the representations or warranties hereunder of the party
delivering such notice; (ii) modify any condition to closing set forth in
Sections 8 or 9; or (iii) limit or otherwise affect the remedies available
hereunder to the party receiving such notice; provided, however, that if the
Closing shall occur, then all matters disclosed pursuant to this Section at or
prior to the Closing shall be waived and no party shall be entitled to make a
claim thereon pursuant to the terms of this Agreement.
5.3 NOTICE OF LITIGATION. Until the Closing, (i) Century, upon learning of
the same, shall promptly notify PHI of any Proceeding which is commenced or
threatened against Century or CCI and which seeks to enjoin or impede the
consummation of the transactions contemplated by this Agreement; and (ii) PHI,
upon learning of the same, shall promptly notify Century of any Proceeding which
is commenced or threatened against PHI or any PTI Entity and which seeks to
enjoin or impede the consummation of the transactions contemplated by this
Agreement.
SECTION 6
---------
ADDITIONAL AGREEMENTS
---------------------
6.1 GOVERNMENTAL, FCC, HSR AND PSC APPROVALS.
(a) HSR ACT FILINGS. The Parties shall, as promptly as practicable
after the date hereof but in any event no later than 30 days after the date
hereof, file all notification reports required under the HSR Act, and file, as
promptly as practicable after any request therefor, any additional information
required under the HSR Act.
(b) REGULATORY CONSENTS. The Parties shall cooperate and use their
respective best efforts (i) to obtain all of such consents, approvals or
statements of nonobjection of the FCC and the appropriate Public Service
Commissions as shall be necessary for the consummation of the transactions
contemplated by this Agreement, (ii) to defend such consents, approvals or
statements of non-objection in any administrative or judicial review proceeding,
(iii) to secure such consents, approvals or statements of non-objection free of
any condition on any PTI Entity and (iv) if such consents, approvals or
statements of nonobjection impose any condition on any PTI Entity, to use their
best efforts to comply with or, if appropriate, to attempt to remove such
condition. In furtherance thereof, the Parties shall submit to the FCC and the
appropriate Public Service Commissions, as promptly as practicable after the
date hereof but in no event later than 30 business days after the date hereof,
all correspondence, notifications, petitions, applications and other filings
necessary to obtain such consents, approvals or statements of non-objection.
6.2 OTHER CONSENTS. The Parties agree to cooperate in obtaining the
consents of any third parties (in addition to the FCC, the appropriate Public
Service Commissions, DOJ or
FTC, whose consents or approvals are covered elsewhere herein) required in
connection with the transactions contemplated hereunder.
6.3 PUBLIC ANNOUNCEMENTS. The Parties hereto covenant and agree that,
except as provided below, none of them will make, issue or release a public
announcement, press release, public statement or public acknowledgment of the
existence of, or reveal publicly the terms, conditions and status of, the
transactions provided for herein without the prior consent of PHI, in the case
of an announcement by Century, or the prior consent of Century in the case of an
announcement by PHI or PTI, as to the content and time of release of and the
media in which such statement or announcement is to be made; provided, however,
that in the case of announcements which outside counsel for any Party believes
such Party or its parent corporation is required by law or under applicable
stock exchange (or similar securities trading) rules to make, issue or release,
the making, issuing or releasing of any such announcement by such Party or its
parent corporation shall not constitute a breach of this Agreement if such Party
shall have given, to the extent reasonably possible, not less than twenty-four
(24) hours' prior notice to the other Parties and shall have attempted, to the
extent reasonably possible, to clear the content and time of such announcement,
statement, acknowledgment or revelation with the other Party. Each Party hereto
agrees that it will not unreasonably withhold any such consent or clearance.
6.4 INDEMNIFICATION BY PHI.
(a) If the Closing occurs, subject to the terms and conditions of
this Section 6.4, including without limitation the limits on indemnity set forth
in Section 6.4(e) hereof, PHI shall, on an after-tax basis, indemnify and hold
harmless Century and its
Affiliates (including the PTI Entities) and their respective officers, directors
and representatives (collectively, "Century Indemnitees") from, and will pay to
any Century Indemnitee the amount (net of any proceeds received by the Century
Indemnitee from any form of insurance, indemnity by prior owner or other source
of reimbursement, or other offsets or benefits, including tax benefits,
obtained) of, any loss, liability, claim, judgment, damage, cost or expense
(including, without limitation, interest, penalties, and the reasonable fees,
disbursements and expenses of attorneys, accountants and other professional
advisors) or diminution in value, whether or not involving a third-party claim
(collectively, "Losses"), arising directly or indirectly from or in connection
with:
(i) any breach or violation of any representation or warranty of
PHI contained in this Agreement (other than those contained in Section 3.19
hereof, which are covered by Section 6.4(b) below) or a material breach of any
agreement or covenant or any material failure of PHI to perform any of its
obligations under this Agreement; and
(ii) any Losses resulting from any liability of any of PTI and
its Subsidiaries (A) for any Taxes of PTI and its Subsidiaries with respect to
any tax year or portion thereof ending on or before the Closing Date (or for any
tax year beginning beforeand ending after the Closing Date to the extent
allocable (determined in a manner consistent with Section 7.8) to the portion of
such period beginning before and ending on the Closing Date), to the extent such
Taxes are not reflected in the reserve for Tax liability set forth on PTI's
December 31, 1996 balance sheet (rather than any reserve for deferred Taxes
established to reflect timing differences between book and tax income) shown on
the December 31, 1996 balance sheet (rather than in any notes thereto), as such
reserve is adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice of
PTI and its Subsidiaries in filing their Tax Returns and (B) for the unpaid
Taxes of any Person (other than any of PTI and its Subsidiaries) under Reg.
ss.1.1502-6 (or any similar provision of state, local, or foreign law). Claims
for Losses arising as a result of any audit adjustments with respect to the
pending audit of PTI for years 1991 through 1993 shall not be subject to the
limitations set forth in Section 6.4(e) except the $300,000,000 cap on the
maximum amount of indemnification payable by PHI pursuant to this Agreement.
(b) (i) After the Closing Date, PHI shall:
(A) reimburse the appropriate PTI Entity for the difference
between (i) the total cost incurred by such entity to remove or decommission all
underground storage tanks identified on SCHEDULE 6.4 (plus all associated
expenses to remediate such sites) and to remediate each of the 22 sites listed
on SCHEDULE 6.4 that PTI is obligated to remediate under the Stock Purchase
Agreement dated October 1, 1994 among PTI, Alascom, Inc. and AT&T Corp. relating
to the sale of the stock of Alascom, Inc. less (ii) the amount reserved by PTI
for such costs and expenses on its December 31, 1996 consolidated balance sheet
included in the PTI Financial Statements; and
(B) On an after-tax basis, indemnify and hold harmless each
Century Indemnitee for, and reimburse each Century Indemnitee against, any and
all Losses arising directly or indirectly from or in connection with any breach
or violation of any representation or warranty of PHI contained in Section 3.19
of this Agreement.
(ii) Except to the extent of the environmental indemnity in
Section 6.4(b)(i), Century covenants not to and to cause any Century Indemnitee
not to ▇▇▇, directly or indirectly, PHI, for damages, injunctive relief or any
other relief or remedy in any way related to any hazardous substance or
hazardous waste on, under, in or from the real property owned or operated by any
PTI Entity (the "Property") or any non-owned and operated disposal sites, and
Century releases and agrees to cause each Century Indemnitee to release PHI from
any and all claims or liability arising out of such hazardous substances or
hazardous wastes.
(iii) Century shall have no right to claim indemnity for or
relating to Losses pursuant to this Section 6.4(b) to the extent that such
Losses could have been avoided or reduced through the exercise of due care or
reasonable mitigation measures. Century shall also have no right to
indemnification for or related to any Losses for which payment is obtained from
insurance or from other third-party sources. Century shall not assert a claim
for indemnification or reimbursement until after it has asserted any claim for
recovery of the claimed amounts from all other sources from which recovery may
reasonably be expected, including Governmental Entities, third parties or
insurers. Any indemnity payment due under this Section 6.4(b) shall be subject
to the limitations set forth in Section 6.4(e); provided, however, that no
indemnity payment due under Section 6.4(b)(i)(A) shall be subject to such
limitations except the $300,000,000 cap on the maximum amount of indemnification
payable by PHI pursuant to this Agreement. PHI's environmental indemnity
obligation shall be extinguished and be of no further force and effect five
years after the
Closing Date, except with respect to claims against PHI for which Century has
provided notice to PHI in accordance with Section 6.4(c)(i).
(c) The following procedures will govern indemnification of all
claims against PHI under this Agreement.
(i) A Century Indemnitee seeking indemnification hereunder shall
give written notice to PHI of any matter with respect to which the Century
Indemnitee seeks to be indemnified (the "Century Indemnity Claim") prior to the
expiration of the applicable survival period specified in Section 12.7. Such
notice shall state the nature of the Century Indemnity Claim and, if known, the
amount of the Loss. If the Century Indemnity Claim arises from a claim of a
third party, the Century Indemnitee shall give such notice within a reasonable
period of time after the Century Indemnitee has actual notice of such claim, and
in the event that a suit or other proceeding is commenced, within 20 days after
receipt of written notice by the Century Indemnitee thereof. Notwithstanding
anything herein to the contrary, the failure of a Century Indemnitee to give
timely notice of a Century Indemnity Claim shall not bar such Century Indemnity
Claim except and to the extent that the failure to give timely notice has
materially impaired the ability of PHI to defend the Century Indemnity Claim.
(ii) Promptly after receipt by a Century Indemnitee of notice of
the commencement of any action, the Century Indemnitee shall, if a claim in
respect thereof is to be made against PHI under this Section, give written
notice to PHI of the commencement thereof. PHI shall be entitled to participate
in such action and, to the extent that PHI may wish, to assume the defense
thereof. If PHI elects to assume the defense of such action, the Century
Indemnitee shall have the right to employ separate counsel at its own expense
and to
participate in the defense thereof. If PHI does not elect to assume the defense
of such action, PHI shall have the right to instruct the Century Indemnitee in
writing to defend against such action at the expense of PHI. The Century
Indemnitee shall conduct any such defense actively and diligently, and shall not
settle any such action without the consent of PHI, which shall not be
unreasonably withheld. If PHI elects not to assume (or fails to assume) and does
not direct the Century Indemnitee to assume the defense of such action, the
Century Indemnitee shall be entitled to assume the defense of such action with
counsel of its own choice, at the expense of the Century Indemnitee, unless the
action results in the determination of a Loss which is indemnifiable hereunder.
If the action is asserted against PHI and a Century Indemnitee, and there is a
conflict of interest which renders it inappropriate for the same counsel to
represent PHI and the Century Indemnitee, PHI shall be responsible for the
reasonable expenses of separate counsel for the Century Indemnitee, if the
action results in the payment of a Loss which is wholly or primarily
indemnifiable under this Section 6.4. If PHI elects to assume the defense of an
action asserted against the Century Indemnitee or against the Century Indemnitee
and PHI, (A) no compromise or settlement thereof may be effected by PHI without
the Century Indemnitee's written consent (which shall not be unreasonably
withheld) unless the sole relief provided is monetary damages that are paid in
full by PHI and (B) the Century Indemnitee shall have no liability with respect
to any compromise or settlement thereof effected without its written consent
(which shall not be unreasonably withheld).
(d) For purposes of this Section 6.4, the representations and
warranties of PHI contained herein shall be deemed to have been made without the
modifying language "material," "Material" "Material Adverse Effect," "to the
Knowledge of PTI" or "to the
Knowledge of PT Cellular" (or modifying language of similar import).
Accordingly, (i) all determinations under Section 6.4 as to whether a
representation or warranty has been breached or violated shall be made as if
such representation contained no such modifying language, and (ii) the amount of
the Loss with respect to any claim arising from a breach or violation of any
representation or warranty of PHI contained in this Agreement shall be
determined without respect to any requirement of materiality contained in such
representation or warranty.
(e) Notwithstanding any other provision in this Agreement, no
indemnification shall be required to be made by PHI pursuant to this Section 6.4
with respect to any individual claim for Losses for which the amount claimed is
$10,000 or less. An individual claim for Losses greater than $10,000 shall be
indemnified (i) to the extent that the Losses for such claim exceed $250,000 and
(ii) to the extent that the aggregate amount of all Losses for such claims not
indemnified pursuant to subpart (i) of this Section 6.4(e) exceeds $5,000,000. A
claim for Losses that is less than $10,000 will not be considered in determining
whether the aggregate amount of all Losses exceeds $5,000,000. In addition, the
aggregate amount of indemnification payable by PHI pursuant to this Agreement
(other than any indemnity payable under Section 6.9) shall in no event exceed
$300,000,000, except with respect to a breach of Section 3.5 as it relates to
PHI's title to the Stock or to the title of PTI or one of its Subsidiaries to
the stock of any PTI Corporate Entity and except with respect to a breach of
Section 3.7 as it relates to the title of any PTI Entity to any interest held by
such entity in a Partnership or a Minority Owned Entity that is a partnership.
PHI's obligation to indemnify Century hereunder shall be extinguished and be of
no further force and effect upon expiration of the applicable survival period
specified in Section 12.7, except with respect to
claims against PHI for which Century has provided notice to PHI prior to such
expiration in accordance with Section 6.4(c)(i). Following the Closing, the sole
remedy of Century for any breach of a representation, warranty or covenant
(subject to Section 6.14 and Section 12.4) made by PHI pursuant to this
Agreement (except for a claim based on common-law fraud) is to assert an
indemnification claim pursuant to this Section 6.4 or any other provision of
this Agreement providing for indemnity.
6.5 INDEMNIFICATION BY CENTURY.
(a) If the Closing occurs, subject to the terms and conditions of
Section 6.5, Century shall, on an after-tax basis, indemnify and hold harmless
PHI and its Affiliates (and their respective officers, directors and
representatives) (collectively, "PHI Indemnitees") for and will pay to any PHI
Indemnitee the amount (net of proceeds received by the PHI Indemnitee from any
form of insurance, indemnity or other source of reimbursement, or other offsets
or benefits, including tax benefits, obtained) of any Losses arising directly or
indirectly from or in connection with:
(i) any breach or violation of any representation or warranty of
Century contained in this Agreement or a material breach of any agreement or
covenant or any material failure of Century to perform any of its obligations
under this Agreement; or
(ii) the presence of hazardous substances on, under, above or
from the Property after the Closing Date, to the extent that such Losses are
related to Century's use, operation or occupancy of the Property and to the
extent that such Losses were caused, contributed to or exacerbated by Century's
activities, operations or omissions.
(b) The following procedures will govern indemnification of all
claims against Century under this Agreement:
(i) A PHI Indemnitee seeking indemnification hereunder shall
give written notice to Century of any matter with respect to which the PHI
Indemnitee seeks to be indemnified (the "PHI Indemnity Claim") prior to the
expiration of the applicable survival period specified in Section 12.7. Such
notice shall state the nature of the PHI Indemnity Claim and, if known, the
amount of the Loss. If the PHI Indemnity Claim arises from a claim of a third
party, the PHI Indemnitee shall give such notice within a reasonable period of
time after the PHI Indemnitee has actual notice of such claim, and in the event
that a suit or other proceeding is commenced, within 20 days after receipt of
written notice by the PHI Indemnitee thereof. Notwithstanding anything herein to
the contrary, the failure of a PHI Indemnitee to give timely notice of a PHI
Indemnity Claim shall not bar such PHI Indemnity Claim except and to the extent
that the failure to give timely notice has materially impaired the ability of
Century to defend the PHI Indemnity Claim.
(ii) Promptly after receipt by a PHI Indemnitee of notice of the
commencement of any action, the PHI Indemnitee shall, if a claim in respect
thereof is to be made against Century under this Section 6.5, give written
notice to Century of the commencement thereof. Century shall be entitled to
participate in such action and, to the extent that Century may wish, to assume
the defense thereof. If Century elects to assume the defense of such action, the
PHI Indemnitee shall have the right to employ separate counsel at its own
expense and to participate in the defense thereof. If Century does not elect to
assume the defense of such action, Century shall have the right to instruct the
PHI Indemnitee in
writing to defend against such action at the expense of Century. The PHI
Indemnitee shall conduct any such defense actively and diligently, and shall not
settle any such action without the consent of Century, which shall not be
unreasonably withheld. If Century elects not to assume (or fails to assume) and
does not direct the PHI Indemnitee to assume the defense of such action, the PHI
Indemnitee shall be entitled to assume the defense of such action with counsel
of its own choice, at the expense of the PHI Indemnitee, unless the action
results in the determination of a Loss which is indemnifiable hereunder. If the
action is asserted against Century and the PHI Indemnitee, and there is a
conflict of interest which renders it inappropriate for the same counsel to
represent Century and the PHI Indemnitee, Century shall be responsible for the
reasonable expenses of separate counsel for the PHI Indemnitee, if the action
results in the payment of a Loss which is wholly or primarily indemnifiable
under this Section 6.5. If Century elects to assume the defense of an action
asserted against the PHI Indemnitee or against the PHI Indemnitee and Century,
(A) no compromise or settlement thereof may be effected by Century without the
PHI Indemnitee's written consent (which shall not be unreasonably withheld)
unless the sole relief provided is monetary damages that are paid in full by
Century and (B) the PHI Indemnitee shall have no liability with respect to any
compromise or settlement thereof effected without its written consent (which
shall not be unreasonably withheld).
(c) Notwithstanding any other provision in this Agreement, no
indemnification shall be required to be made by Century pursuant to this Section
6.5 with respect to any individual claim for Losses for which the amount claimed
is $10,000 or less. An individual claim for Losses greater than $10,000 shall be
indemnified (i) to the extent that
the Losses for such claim exceed $250,000 and (ii) to the extent that the
aggregate amount of all Losses for such claims not indemnified pursuant to
subpart (i) of this Section 6.5(c) exceeds $5,000,000. A claim for Losses that
is less than $10,000 will not be considered in determining whether the aggregate
amount of all Losses exceeds $5,000,000. In addition, the aggregate amount of
indemnification payable by Century pursuant to this Agreement shall in no event
exceed $300,000,000. Century's obligation to indemnify the PHI Indemnitee
hereunder shall be extinguished and be of no further force and effect upon
expiration of the applicable survival period specified in Section 12.7, except
with respect to claims against Century for which a PHI Indemnitee has provided
notice to Century prior to such expiration in accordance with Section 6.5(b)(i).
Following the Closing, the sole remedy of PHI for any breach of a
representation, warranty or covenant made by Century pursuant to this Agreement
is to assert an indemnification claim pursuant to Section 6.5.
6.6 ACCESS TO INFORMATION.
(a) Between the date hereof and the Closing Date, PHI shall afford
to the officers, employees and authorized representatives of Century (including
its independent public accountants, environmental consultants and attorneys),
reasonable access during normal business hours to (i) the offices, operations,
properties and business and financial records (including computer files,
retrieval programs and similar documentation, and including all FCC and Public
Service Commission records) of the PTI Entities and, to the extent reasonably
available, the Minority Owned Entities, and (ii) the respective employees of
PHI, the PTI Entities and, to the extent reasonably available, the Minority
Owned Entities, and shall furnish to Century or its authorized representatives
such additional information concerning the
operations, properties and business of the PTI Entities and, to the extent
reasonably available, the Minority Owned Entities, as Century shall reasonably
request. Within 30 days after written request from Century, PTI agrees to
provide true and correct copies of (i) all Permits under which the PTI Entities
provide or are authorized to provide local exchange telephone services, cellular
telephone services, cable television services, personal communication services,
or any of the services provided by the PTI Entities in connection with their
responsibilities for operating the North Pacific Cable System and (ii) all
Contracts between any PTI Entity and any union or collective bargaining unit.
Within 60 days after written request from Century, PTI agrees to provide a list
identifying all real property and buildings owned or leased by any PTI Entity.
Notwithstanding anything to the contrary herein, Century agrees that such
investigation shall be conducted in such manner as not to interfere unreasonably
with the operation of the businesses of PHI or the PTI Entities and in a manner
that will protect the attorney-client privilege and work product protection of
PHI and the PTI Entities for information related to anticipated or pending
litigation. No investigation made by Century or its authorized representatives
shall affect the representations and warranties of PHI hereunder.
(b) Century shall hold, and will cause its Affiliates, employees,
officers, directors, agents and representatives to hold, any non-public and
proprietary information obtained in connection with its review in accordance
with paragraph (a) in the strictest secrecy and confidence (unless such
information thereafter becomes generally available to the public through no
fault of any of them, is otherwise available to them on a non-confidential basis
from another source, or has been developed independently by them without
violating any of
their obligations hereunder). Century shall use, and cause its Affiliates to
use, all such information solely for the purpose of consummating the
transactions contemplated by this Agreement pursuant to the terms of this
Agreement. In the event the transactions contemplated by this Agreement are not
consummated for any reason pursuant to the terms of this Agreement, Century
shall return, and cause its Affiliates, agents and representatives to return,
all copies or summaries of all such information in their possession, and shall
destroy, or cause its Affiliates, agents and representatives to destroy all
copies of any notes, analyses, compilations, studies, calculations or other
documents prepared by it or for its internal use that include or are derived
from the non-public and proprietary information provided hereunder.
6.7 AMENDMENT OF SCHEDULES.
(a) For a period of 30 days following the date of this Agreement, PHI
shall have the right to supplement or amend (i) Schedules 3.9, 3.11, 3.13, 3.18
and 3.27 hereto with respect to any matter arising or discovered after the date
of this Agreement, which, if existing or known on the date of this Agreement,
would have been required to be set forth or described in the Schedules and (ii)
Schedule 3.12 (to disclose liens revealed by a UCC search) and Schedule 3.15 (to
disclose or identify (A) additional Material Contracts containing change in
control provisions for any PTI Entity or (B) additional Material Contracts for
PT Cellular and any of its Subsidiaries, to the extent such Material Contracts
were not previously disclosed). If such supplements or amendments include
information not previously disclosed, the effect of which would constitute a
Material Adverse Disclosure (as defined below), then Century shall have the
right to terminate this Agreement. With respect to Schedule 3.18, if any such
supplements or amendments include (i) information not previously disclosed, the
effect of
which would constitute a material economic impact, or (ii) previously
undisclosed amendments since January 1, 1997 to an Employee Benefit Plan that
would have a material economic impact, then, unless PHI elects to indemnify
Century for any resulting material economic impact, Century shall have the right
to terminate this Agreement. Century shall have 15 days following the expiration
of such 30-day period to accept such Schedules or to provide notice to PHI that
Century intends to terminate this Agreement pursuant to this Section 6.7(a). If
Century does not provide written notice within such 15-day period, Century shall
be deemed to have accepted such supplements or amendments and all matters
disclosed pursuant to such supplements or amendments shall be deemed included in
the Schedules at Closing (without necessity of a written waiver or other action
on the part of any party) and to modify the applicable representations and
warranties for all purposes. For purposes of this provision, "Material Adverse
Disclosure" means disclosure of information pursuant to this Section 6.7 in a
supplement or amendment to the Schedules, the impact of which is material to the
business, financial condition or results of operations of (i) the PTI Telco
Entities, (ii) PT Cellular and its Subsidiaries, (iii) Pacific Telecom Cable,
Inc. or (iv) all of the other PTI Subsidiaries, in each case, taken as a whole.
(b) Following the 30-day period specified above,each party hereto agrees
that, with respect to the representations and warranties of such party contained
in this Agreement, such party shall have the right until the Closing to
supplement or amend the Schedules hereto with respect to any matter arising or
discovered after the date of this Agreement which, if existing or known on the
date of this Agreement, would have been required to be set forth or described in
the Schedules. For all purposes of this Agreement, including without limitation
for
purposes of determining whether the conditions set forth in Sections 8 and 9
have been fulfilled, the Schedules hereto shall be deemed to include only that
information contained therein on the date of this Agreement and shall be deemed
to exclude all information contained in any supplement or amendment thereto;
provided, however, that if the Closing shall occur, then all matters disclosed
pursuant to any such supplement or amendment shall be deemed included in the
Schedules at Closing (without necessity of a written waiver or other action on
the part of any party) and to modify the applicable representations and
warranties for all purposes.
6.8 MAINTENANCE OF INSURANCE. From the Closing Date to the date of
expiration of the indemnity obligations of PHI under Section 6.4, Century shall,
with respect to property of any PTI Entity of an insurable nature and of a
character usually insured by companies carrying on similar businesses, maintain
insurance in such amounts and against such losses or casualties as is customary
for such companies.
6.9 GABELLI SUIT. From and after the Closing Date, PHI will assume and
hold PTI harmless from all obligations to make any and all future payments to
former minority shareholders of PTI with respect to the Gabelli Suit, including
any and all litigation expenses that PTI is required or agrees to pay (including
litigation expenses of PTI's former minority shareholders). PHI will assume sole
control of such litigation, including any settlement thereof. From and after the
Closing Date, Century agrees to, and agrees to cause PTI to, cooperate with PHI
in all respects with respect to the pursuit, settlement or other disposition of
such litigation. If any payments by PHI pursuant to the Gabelli Suit result in
any adverse tax
consequences to Century or its Affiliates, PHI shall pay to Century an amount
sufficient to indemnify Century on an after-tax basis for such consequences.
6.10 SEVERANCE PAY FOR EMPLOYEES OF PTI ENTITIES. From the day after the
Closing Date through the date two years after the Closing Date, Century will
provide employees of any PTI Entities who are terminated because of a reduction
in work force (layoff), job elimination, dismissal because the employee is not
properly qualified for the job, or other termination without good cause related
to the employee's conduct, with severance pay equal to or greater than the
termination allowance set forth in the Century Termination Allowance Policy
dated October 1, 1996, except that (i) the amount of severance for which an
employee shall be eligible will be based upon the employee's pre-Closing
adjusted service date which reflects the employee's service with PC, PHI and PTI
Entities, and (ii) the minimum amount of severance will be four (4) weeks
severance pay.
6.11 QUALIFIED PLAN ROLLOVERS. Century shall provide for a defined
contribution tax-qualified employee pension benefit plan (a "Replacement Plan")
to accept direct rollovers from the PacifiCorp K Plus Employee Savings and Stock
Ownership Plan and Trust or a spun off portion of such Plan ("K Plus") of
accounts of employees of PTI Entities who remain employed on the day after the
Closing Date, and the following shall apply:
(a) the direct rollover may include one or more loans to the
employee from K Plus; and
(b) the loan shall be maintained under the Replacement Plan
substantially in accordance with its terms.
6.12 MAINTENANCE OF FINANCING COMMITMENTS. Century shall maintain in
effect until the Closing Date the financing commitments described in Section
4.4 (the "Financing Commitments").
6.13 MAINTENANCE OF MINIMUM EQUITY. For a period of five years following
the Closing Date or, if earlier, the date that PHI has made aggregate indemnity
payments hereunder of at least $300,000,000, PHI or its successor shall maintain
minimum consolidated stockholder's equity, as reflected in its regularly
prepared balance sheets, of $600,000,000 and shall promptly notify Century if it
breaches any material covenant in its principal debt facilities.
6.14 NONCOMPETE; USE OF CUSTOMER LISTS.
(a) PHI agrees that, after the Closing Date, it will not, and will
cause its Affiliates not to, own, manage, operate, promote or have any interest
in any other corporation, entity or other Person engaged in the provision of
facilities based wire line local exchange telephone services for a period of
three years within the counties in which Century or any of its Affiliates
(including the PTI Entities subsequent to Closing) presently provide such
services. PHI agrees that such restrictive covenant is reasonable in scope both
in duration and geographic coverage. This covenant may be specifically enforced
by Century.
(b) PHI acknowledges and agrees that all customer information
(including but not limited to lists, call detail or billing information) of each
of the PTI Entities (the "Customer Information") is confidential and proprietary
to such entity. Following the Closing, PHI agrees to refrain from, and to cause
each PHI Affiliate to refrain from, utilizing any and all Customer Information
for any purpose involving competition with
Century or its Affiliates (including any PTI Entity), including without
limitation marketing or selling such information. PHI agrees that any violation
of this covenant would give rise to (i) irreparable harm to the PTI Entity
suffering such violation and (ii) Century's right to seek injunctive relief
against PHI and/or the PHI Affiliate causing such violation.
6.15 DEFERRED COMPENSATION PLANS. PHI and PTI shall take such action as is
necessary to establish a PTI nonqualified deferred compensation payment plan
(the "DCP Payment Plan") for employees of PTI Entities who are participants in
the PacifiCorp Compensation Reduction Plan and the PHI Executive Deferred
Compensation Plan and an associated Rabbi Trust to which all assets contributed
by the PTI participants to such plans and interest accruals thereon shall be
transferred. The following provisions shall apply with respect to the DCP
Payment Plan:
(a) Prior to Closing PHI shall calculate any "make-whole adjustment"
for PTI participants in the manner contemplated by Section 7 of the PHI
Executive Deferred Compensation Plan and PTI shall contribute to the appropriate
Rabbi Trust an amount equal to such adjustment or $100,000, whichever is less,
to fund the aggregate "make-whole adjustments." PHI will credit the PTI
participants' accounts with the applicable adjustment and the DCP Payment Plan
shall not provide for any additional "make-whole adjustment."
(b) Century shall maintain (but shall not be required to accept
deferrals under) such DCP Payment Plan with respect to those eligible
individuals employed before Closing by a PTI Entity who continue in the employ
of PTI, Century or their respective Affiliates after Closing so long as
necessary to distribute to such eligible individuals amounts
deferred before Closing by such participants in the PacifiCorp Compensation
Reduction Plan and the PHI Executive Deferred Compensation Plan.
6.16 PACIFIC TELECOM RETIREMENT PLAN. Century shall retain the Pacific
Telecom Retirement Plan and, within 60 days after the Closing Date, PHI shall
cause the Pacific Telecom Retirement Plan assets to be transferred to a trust to
be established by Century subject to the following conditions: Century agrees
(i) that, in the event Century freezes benefit accruals under the Pacific
Telecom Retirement Plan within three years after Closing, Century will enhance
the defined benefits of all participants affected by such freeze, and (ii) that
the enhancements to the Pacific Telecom Retirement Plan will be designed
primarily to benefit Plan participants who are at least 50 years of age and have
a minimum of ten (10) years of service on the Closing Date by means reasonably
selected by Century, including without limitation reducing the early retirement
reduction factors set forth in the Pacific Telecom Retirement Plan, increasing
the participants' credited years of service under the Pacific Telecom Retirement
Plan, or both. Century further agrees that in the event of Plan termination, any
excess assets shall be devoted to providing additional benefits for the
participants.
6.17 MULTIEMPLOYER PLANS. Prior to Closing, PTI agrees to use its best
efforts to ensure that no PTI Entity withdraws or partially withdraws from any
Multiemployer Plan. If either the transactions contemplated by this Agreement or
the 1995 sale by PTI of the stock of Alascom, Inc. to AT&T Corp., or both,
constitutes a withdrawal or partial withdrawal under any Multiemployer Plan
maintained or previously maintained by any PTI Entity, then the following
sentence shall apply. If it is determined that as of the day after the Closing
Century
would incur a "withdrawal liability" (within the meaning of Title IV of ERISA)
in excess of $650,000 as a result of its complete or partial withdrawal from any
of the Multiemployer Plans listed on SCHEDULE 3.18 on said day after the
Closing, then PHI shall pay to Century the amount by which such withdrawal
liability exceeds $650,000, such payment to be made in one lump sum 60 days
following receipt of the determination.
6.18 CERTAIN SERVICES. Prior to the Closing Date, PHI and Century will
negotiate in good faith for the continued provision after the Closing of certain
billing and mailing services currently being provided to PC by PTI. It PHI and
Century are unable to agree on such terms, Century agrees to permit PTI to
continue to provide such services to PC for a 90-day transition period following
the Closing, with the costs for such services being no greater than those
currently being charged by PTI.
6.19 SETTLEMENT OF SERP BENEFIT OBLIGATION. On the Closing Date, PTI will
assign to PHI (or at PHI's election to PC) any right, title and interest it may
have in the life insurance policies (reflected in the assets shown on PTI's
December 31, 1996 consolidated balance sheet) on the lives of certain PTI
executives or former PTI executives who are participants in or retirees under
the PacifiCorp Executive Severance Plan (the "PacifiCorp SERP") or the PHI
Executive Severance Plan (the "PHI SERP") purchased to fund the PacifiCorp or
PHI SERP obligations. The above-described insurance policies are referred to in
this section as the "Life Insurance Policies." On the Closing Date, PTI shall
pay PHI the lesser of (i) six million dollars ($6,000,000) or (ii) an amount
equivalent to the difference between (A) the cash surrender value of the Life
Insurance Policies as of December 31, 1997 and (B) the Benefit Obligation (as
defined below). The Benefit Obligation means the present value of the accrued
liability sufficient to fund existing and future obligations for (i) retirees
receiving PacifiCorp SERP or PHI SERP benefits paid for by PTI as of the date of
this Agreement and (ii) the PTI officers who, as of the date of this Agreement,
are participants in the PacifiCorp SERP or PHI SERP, assuming for purposes of
the calculation that benefit accruals are frozen as of December 31, 1997. The
Benefit Obligation shall be calculated on a purchase accounting basis assuming
for purposes of the calculation that a change in control will occur on December
31, 1997. Calculation of the Benefit Obligation will be made using customary and
reasonable actuarial assumptions consistent with PC's past practices, subject to
any necessary and appropriate changes in assumptions for purposes of a change in
control valuation. Prior to Closing, Century shall have the opportunity to
review the actuarial assumptions of the Benefit Obligation and consult with PHI
and PTI regarding its computation.
SECTION 7
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COVENANTS WITH RESPECT TO TAXES
-------------------------------
7.1 TAX SHARING AGREEMENTS. Any Tax sharing agreement between PHI and the
Affiliated Group and any of PTI and its Subsidiaries is terminated as of the
Closing Date and will have no further effect for any taxable year (whether the
current year, a future year, or a past year). All Taxes on the income of PTI and
its Subsidiaries through the end of the Closing Date (excluding (i) any deferred
income triggered into income by Reg. ▇▇.▇▇. 1.1502-13 and 1.1502-14 and Taxes on
any excess loss accounts taken into income under Reg. ss. 1.1502-19 and (ii)
income Taxes on gain from the sale of the Cellular Stock pursuant to Section
2.3) shall be paid to PHI by PTI at the Closing.
7.2 RETURNS FOR PERIODS THROUGH THE CLOSING DATE. PHI will include, or
cause to be included, the income of PTI and its Subsidiaries (including any
deferred income triggered into income by Reg. ▇▇.▇▇. 1.1502-13 and 1.1502-14 and
any excess loss accounts taken into income under Reg. ss. 1.1502-19) on the
consolidated federal and consolidated, unitary or combined state and local
income Tax Returns of PHI and the Affiliated Group for all periods through the
Closing Date and will pay or cause to be paid any federal and state income Taxes
attributable to such income. PTI and its Subsidiaries will furnish Tax
information to PHI for inclusion in the consolidated federal and state
consolidated, unitary or combined income Tax Returns for PHI and the Affiliated
Group for the period ending on the Closing Date in accordance with the past
custom and practice of PTI and its Subsidiaries. If no ss.338(h)(10) Election
(as defined below) is made, PHI will allow Century an opportunity to review and
comment upon the portions of such Tax Returns (including any amended Tax
Returns) that relate to PTI and its Subsidiaries. PHI will not take, or cause to
be taken, any position on such returns that relate to PTI and its Subsidiaries
that would adversely affect PTI and its Subsidiaries after the Closing Date,
unless such position would be reasonable in the case of a Person that owned PTI
and its Subsidiaries both before and after the Closing Date. The income of PTI
and its Subsidiaries will be apportioned to the period up to and including the
Closing Date and to the period after the Closing Date by closing the books of
PTI and its Subsidiaries as of the end of the Closing Date.
7.3 AUDITS. PHI will allow, or cause to be allowed, PTI (without counsel
present) to participate at PTI's own expense in any audits of the consolidated
federal and consolidated, unitary or combined income Tax Returns of PHI and the
Affiliated Group to the extent that
such audits relate to PTI and its Subsidiaries. PHI will not settle, or cause to
be settled, any such audit in a manner which would adversely affect PTI and its
Subsidiaries after the Closing Date unless (i) such settlement would be
reasonable in the case of a person that owned PTI and its Subsidiaries both
before and after the Closing Date, or (ii) PHI obtains the prior written consent
of Century, which consent shall not unreasonably be withheld.
7.4 CARRYBACKS. If no 338(h)(10) Election is made, PHI will immediately
pay, or cause to be paid, to Century any Tax refund (or reduction in Tax
liability) resulting from a carryback, as to which PTI and its Subsidiaries
cannot elect to waive a carryback, of a post-Closing Date Tax attribute of any
of PTI and its Subsidiaries into the consolidated Tax Return of PHI and the
Affiliated Group, when such refund or reduction is realized by PHI and the
Affiliated Group. For this purpose, Income Tax attributes carried back by PTI
and its Subsidiaries will be considered to produce a refund (or reduce
liability) only after all Income Tax attributes of PHI and other members of the
Affiliated Group have been used or deemed used (in the case of any such PHI
group attribute that could have been used in the absence of the carryback). PHI
will cooperate with PTI and its Subsidiaries in obtaining, at the expense of PTI
and its Subsidiaries, such refunds (or reductions in Tax liability), including
through the filing of amended Tax Returns or refund claims, provided that PHI
will not be required to cooperate in obtaining any refund (or reduction in Tax
liability) for which PHI, or its employee responsible for Taxes, believes in
good faith there is not substantial authority. Century agrees to indemnify PHI
for any Taxes, and all costs, resulting from either the disallowance of any such
post-acquisition Tax attribute on audit or otherwise, or from cooperation with
PTI and its Subsidiaries, for example, by filing an amended Tax Return.
7.5 RETENTION OF CARRYOVERS. If no ss.338(h)(10) Election is made, the
Affiliated Group will not elect retention of any net operating loss carryovers
or capital loss carryovers of PTI and its Subsidiaries under Reg. 1.1502-20(g).
7.6 SECTION 338(H)(10)ELECTION. At Century's option, PHI will join, and
will cause the Affiliated Group to join, with Century in making an election
under ss338(h)(10) of the Code (and any corresponding elections under state,
local, or foreign Tax law) (collectively a "ss338(h)(10) Election") with respect
to the purchase and sale of the stock of PTI hereunder; provided, however, that
if Century chooses to make a ss.338(h)(10) Election, then Century shall pay to
PHI an additional amount of Purchase Price (the "ss.338(h)(10) Consideration")
equal to the total Tax cost to PHI and the Affiliated Group of the ss.338(h)(10)
Election, including the Tax effect of receipt of the ss.338(h)(10)
Consideration, so that the net after-Tax position of PHI and the Affiliated
Group is the same after the ss.338(h)(10) Election as it would have been had the
ss.338(h)(10) Election not been made. The amount of the ss.338(h)(10)
Consideration shall be determined by PHI in good faith. PHI shall allow Century
an opportunity to review PHI's computation of the ss.338(h)(10) Consideration
and shall consider in good faith any comments that Century may provide with
respect to that computation. PHI and the Affiliated Group shall not be required
to join in the ss.338(h)(10) Election unless and until the ss.338(h)(10)
Consideration has been paid or arrangements acceptable to PHI have been made for
such payment. PHI will cause PC to make a good faith effort to receive a
favorable ruling from the IRS regarding PC's March 28, 1997 ruling request for
an extension of time for Regulation ss.1.1502-13(l)(3) election.
7.7 TAXABLE PERIODS ENDING ON OR BEFORE THE CLOSING DATE. Century shall
prepare or cause to be prepared and timely file or cause to be timely filed, all
Tax Returns for PTI, its Subsidiaries and other entities for which PTI and its
Subsidiaries are responsible for filing returns (each a "Responsible Entity")
for all periods ending on or prior to the Closing Date which are filed after the
Closing Date, other than income Tax Returns with respect to periods for which a
consolidated, unitary or combined income Tax Return of PHI and the Affiliated
Group will include the operations of PTI and its Subsidiaries. Century shall
permit PHI to review and comment on each such Tax Return described in the
preceding sentence prior to filing. PHI shall reimburse Century for Taxes of
PTI, its Subsidiaries and Responsible Entities with respect to such periods
within fifteen (15) days after payment by Century or PTI, its Subsidiaries and
Responsible Entities of such Taxes, to the extent such Taxes are not reflected
in the reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and tax income) shown on
the Closing Date balance sheet.
7.8 TAXABLE PERIOD COMMENCING BEFORE THE CLOSING DATE AND ENDING AFTER THE
CLOSING DATE. Century shall prepare or cause to be prepared and file or cause to
be filed any Tax Returns of PTI, its Subsidiaries and Responsible Entities for
taxable periods which begin before the Closing Date and end after the Closing
Date. At least 15 business days before filing any such Tax Returns with respect
to income Taxes, Century shall submit copies of such returns to PHI for PHI's
approval, which approval shall not be unreasonably withheld. PHI shall pay to
Century within fifteen (15) days after the date on which Taxes are paid by
Century with respect to such periods an amount equal to the portion of such
Taxes which relates to the
portion of such taxable period ending on the Closing Date, to the extent such
Taxes are not reflected in the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and tax income) shown on the Closing Date balance sheet. For purposes of
this Section, in the case of any Taxes that are imposed on a periodic basis and
are payable for a taxable period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such taxable
period ending on the Closing Date shall (i) in the case of any Taxes not based
upon or related to income or receipts, be deemed to be the amount of such Tax
for the entire taxable period multiplied by a fraction the numerator of which is
the number of days in the taxable period ending on the Closing Date and the
denominator of which is the number of days in the entire taxable period, and
(ii) in the case of any Tax based upon or related to income or receipts be
deemed to be the amount which would be payable if the relevant taxable period
ended on the Closing Date. Any credits relating to a taxable period that begins
before and ends after the Closing Date shall be taken into account as though the
relevant taxable period ended on the Closing Date. All determinations necessary
to give effect to the foregoing allocations shall be made in a manner consistent
with prior practice of PTI and its Subsidiaries.
7.9 PARTNERSHIPS. If no ss.338(h)(10) Election is made after the date of
this Agreement, there shall be no distributions from PT Cellular to PTI.
7.10 COOPERATION ON TAX MATTERS.
(a) Century, PTI and its Subsidiaries and PHI shall cooperate fully,
and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns pursuant to this Section and in connection with any
audit, litigation or other
Proceeding with respect to Taxes. Such cooperation shall include the retention,
and (upon the other party's request) the provision, of records and information
which are reasonably relevant to any such audit, litigation or other Proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. PTI
and its Subsidiaries and PHI, agree (i) to retain all books and records with
respect to Tax matters pertinent to PTI and its Subsidiaries relating to any
taxable period beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by Century or PHI, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (ii) to
give the other party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other party so requests,
PTI and its Subsidiaries or PHI, as the case may be, shall reasonably allow the
other party to take possession of such books and records in such circumstances.
(b) Century and PHI further agree, upon request, to use, or cause to
be used, best efforts to obtain any certificate or other document from any
Governmental Entity or any other Person as may be necessary to mitigate, reduce
or eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).
(c) Century and PHI further agree, upon request, to provide, or
cause to be provided, to the other party all information that either party may
be required to report pursuant to Section 6043 of the Code and all Treasury
Department Regulations promulgated thereunder.
7.11 CONTESTS. Whenever any taxing authority asserts a claim, makes an
assessment, or otherwise disputes the amount of Taxes for which PHI or the
Affiliated Group is or may be liable under this Agreement, Century shall, if
informed of such an assertion, promptly inform PHI. PHI shall have the right to
control any resulting Proceedings, to represent PTI's and the Subsidiaries'
interests therein, and to determine whether and when to settle any such claim,
assessment or dispute, except to the extent such Proceedings or determinations
affect the amount of Taxes for which Century or its Subsidiaries are liable
under this Agreement. Whenever any taxing authority asserts a claim, makes an
assessment or otherwise disputes the amount of Taxes for which Century is liable
under this Agreement, PHI shall, if informed of such an assertion, promptly
inform Century. Century shall have the right to control any resulting
Proceedings and to determine whether and when to settle any such claim,
assessment or dispute, except to the extent such Proceedings or determinations
affect the amount of Taxes for which PHI or the Affiliated Group are liable
under this Agreement; provided, however, that Century agrees, unless otherwise
required by law, not to take any position that is inconsistent with a position
taken by PHI and the Affiliated Group with respect to Taxes on or prior to the
Closing Date, which position could affect the Tax liability of PHI or the
Affiliated Group.
7.12 RESOLUTION OF DISAGREEMENTS BETWEEN PHI AND CENTURY. If PHI and
Century disagree as to the amount of Taxes for which each is liable under this
Agreement, or as to the amount of the ss.338(h)(10) Consideration, if any, PHI
and Century shall promptly consult each other in an effort to resolve such
dispute. If any such point of disagreement cannot be resolved within sixty (60)
days of the date of consultation, PHI and Century shall within ten
(10) days after such sixty (60)-day period jointly select a nationally
recognized independent public accounting firm which has not, except pursuant to
this Section 7.12, performed any services since January 1, 1995 for either PHI
or Century or their respective affiliated groups or Subsidiaries, to act as an
arbitrator to resolve, within sixty (60) days after their selection, all points
of disagreement concerning Tax matters with respect to this Agreement and
presented to such accounting firm at the time of its selection. If no nationally
recognized independent public accounting firm meets the aforementioned standard,
PHI and Century nonetheless shall attempt to agree on an accounting firm that is
satisfactory to both parties. If the parties cannot agree on the selection of an
accounting firm within such ten-day period, within two business days after such
ten-day period, the parties shall select an eligible nationally recognized
accounting firm by lot.
7.13 SECTION 754 ELECTION FOR PARTNERSHIPS. If a ss. 338(h)(10) Election
is made, each of PTI and its Subsidiaries which own an interest in a
Partnership, will, if requested by Century, use its best efforts to cause such
Partnership to make and file an election under Section 754 of the Code to adjust
the basis of the property of each such Partnership to reflect the direct or
indirect acquisition of an interest in the Partnership by Century.
7.14 ALLOCATION OF PURCHASE PRICE. If a ss.338(h)(10) Election is made,
the Parties agree that the Purchase Price and the liabilities of PTI and its
Subsidiaries (plus other relevant items) will be allocated to the assets of PTI
and its Subsidiaries for all purposes (including Tax and financial accounting
purposes) in a manner consistent with the requirements of Regulations ss.
1.338(h)-2T. Century, PTI and its Subsidiaries, and PHI will file, or cause to
be filed, all Tax Returns (including amended returns and claims for refund) and
information reports in a manner consistent with such allocation.
SECTION 8
---------
CONDITIONS PRECEDENT TO OBLIGATIONS OF CENTURY
----------------------------------------------
The obligation of Century to consummate the Closing under this Agreement
is subject to the fulfillment prior to or on the Closing Date of the following
conditions precedent, except such of the following conditions precedent as shall
have been expressly waived in writing by Century.
8.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of PHI contained in this Agreement shall be true and correct in all
material respects on and as of the date hereof and on the Closing Date.
8.2 COVENANTS. PHI shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by it on or before the
Closing Date.
8.3 MATERIAL ADVERSE CHANGE. From the date of this Agreement until the
Closing Date, there shall have been no material adverse change (whether or not
in the ordinary course of business) in the business, financial conditions or
results of operations of PTI and its Subsidiaries, taken as a whole ("Material
Adverse Change"); provided, however, that a Material Adverse Change shall not
include changes in accounting principles or interpretations adopted by the
Financial Accounting Standards Board, changes in general economic conditions,
including any change in the level of interest rates, or industry wide changes in
the regulatory environment or changes as a result of conditions imposed by any
Public Service
Commission with respect to approval of the transactions contemplated by this
Agreement and provided further, that the failure of PTI to consummate any or all
of the PTI Pending Acquisitions shall not constitute a Material Adverse Change.
8.4 CERTIFICATE. Century shall have received a certificate, dated the
Closing Date, signed by a duly authorized officer of PHI, in such officer's
representative capacity, without personal liability, certifying to the
fulfillment of the conditions set forth in Sections 8.1, 8.2 and 8.3.
8.5 CERTIFIED COPY OF RESOLUTIONS. PHI shall have delivered to Century (i)
copies, certified by the duly qualified and acting Secretary or Assistant
Secretary of PHI and PTI, of resolutions adopted by Boards of Directors of PHI
and PTI approving this Agreement and the consummation of the transactions
contemplated by this Agreement, and (ii) certificates of incumbency dated the
Closing Date of all officers of PHI and PTI who have been or will be authorized
to execute or attest to this Agreement, or any statement, certificate or other
instrument on behalf of PHI or PTI, each showing specimen signatures of each
such officer and executed by the President or a Vice President and the Secretary
or Assistant Secretary of PHI and PTI.
8.6 OPINION OF COUNSEL FOR PHI. Century shall have received an opinion of
Stoel Rives LLP, counsel for PHI, dated the Closing Date, in form and substance
reasonably satisfactory to Century. In expressing any opinions as to matters of
fact relevant to conclusions of law, such counsel may rely upon certificates of
PHI, the officers and agents of PHI, and of public officials. In expressing any
opinions as to matters involving the law of other jurisdictions such counsel may
rely on the opinion of other counsel.
8.7 CONSENTS AND APPROVALS. The parties shall have obtained all consents
and approvals required by the FCC and the appropriate Public Service Commissions
and any other Material consents, waivers and approvals of any Person required to
consummate the transactions contemplated hereby.
8.8 HSR ACT. The HSR Act waiting period shall have expired or
terminated.
8.9 PROHIBITIONS. There shall have been no statute, rule, injunction or
other order promulgated, enacted, entered or enforced by any Governmental Entity
which shall remain in effect which restrains, prohibits or delays the
performance of this Agreement.
8.10 INTERCOMPANY TRANSACTIONS. Subject to the exceptions set forth in
SCHEDULE 8.10, PHI shall cause all accounts maintained between any PTI Entity
and PHI or any Affiliate of PHI to be satisfied and canceled and shall release
and waive, in form and substance reasonably satisfactory to Century, all claims
of PHI or any Affiliate of PHI, against any PTI Entity.
8.11 RESIGNATIONS. Century shall have received from each director and
officer of each PTI Entity from whom such a resignation is requested a
resignation from all directorships and offices held by such directors and
officers in such entities. Absent mutual agreement between Century and an
officer to the contrary, any request for such a resignation from any such
officer shall constitute a termination of employment for purposes of the PTI
Executive Severance Plan.
8.12 ACCOUNTANT'S LETTER. PTI shall have received from Deloitte & Touche
LLP, independent accountants for PHI and PTI, and shall have delivered to
Century, either (i) a review report under Statement of Accounting Standards No.
71 of the consolidated financial
statements of PTI relating to the most recently completed quarter or (ii) a
customary report of agreed upon procedures, and, in either event, such report
shall be reasonably acceptable in form and substance to Century.
SECTION 9
---------
CONDITIONS PRECEDENT TO OBLIGATIONS OF PHI
------------------------------------------
The obligations of PHI under this Agreement are subject to the fulfillment
prior to or on the Closing Date of the following conditions precedent, except
such of the following conditions precedent as shall have been expressly waived
in writing by PHI.
9.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Century contained in this Agreement shall be true and correct in
all material respects on and as of the date hereof and on the Closing Date.
9.2 COVENANTS. Century shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by it on or before the
Closing Date.
9.3 CERTIFICATE.PHI shall have received a certificate, dated the Closing
Date, signed by a duly authorized officer of Century, in such officer's
representative capacity, without personal liability, certifying to the
fulfillment of the conditions set forth in Sections 9.1 and 9.2 hereof.
9.4 CERTIFIED COPY OF RESOLUTIONS.Century shall have delivered to PHI(i)
copies, certified by the duly qualified and acting Secretary or Assistant
Secretary of Century, of resolutions adopted by Century's Board of Directors
approving this Agreement and the consummation of the transactions contemplated
by this Agreement, and (ii) certificates of
incumbency dated the Closing Date of all officers of Century who have been or
will be authorized to execute or attest to this Agreement, or any statement,
certificate or other instrument on behalf of Century, each showing specimen
signatures of each such officer and executed by the President or a Vice
President and the Secretary or Assistant Secretary of Century.
9.5 OPINION OF COUNSEL FOR CENTURY. PHI shall have received an opinion of
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇, counsel for Century, dated the Closing Date, in form and
substance reasonably satisfactory to PHI. In expressing any opinion as to
matters of fact relevant to conclusions of law, such counsel may rely upon
certificates of Century, the officers and agents of Century, and of public
officials. In expressing its opinion as to matters involving the law of other
jurisdictions such counsel may rely on the opinion of other counsel.
9.6 CONSENTS AND APPROVALS. The parties shall have obtained the required
approvals of the FCC and the appropriate Public Service Commissions and any
other material consents, waivers and approvals of any Person required to
consummate the transactions contemplated hereby.
9.7 HSR ACT. The HSR Act waiting period shall have expired or
terminated.
9.8 PROHIBITIONS. There shall have been no statute, rule, injunction or
other order promulgated, enacted, entered or enforced by any Governmental Entity
which shall remain in effect which restrains, prohibits or delays the
performance of this Agreement.
SECTION 10
----------
CLOSING DOCUMENTS
-----------------
10.1 BY PHI. In addition to any other documents or instruments to be
delivered by PHI to Century, PHI shall, on the Closing Date:
(a) deliver to Century certificates representing all of the
outstanding capital stock of PTI, duly endorsed for transfer, either in blank on
the certificates or on separate stock powers (assignments) accompanying the
certificates;
(b) deliver all minute books and stock registers and other records
of the PTI Entities and, to the extent in possession of PTI Entity, the Minority
Owned Entities;
(c) deliver the certificates required by Section 8.4 and 8.5;
(d) deliver the legal opinion required by Section 8.6;
(e) deliver the documents evidencing the continued existence or good
standing of such PTI Entities for which such certificates were delivered
pursuant to Section 3.2;
(f) deliver any resignations required by Section 8.11; and
(g) deliver the letter from Deloitte & Touche LLP required by
Section 8.12;
(h) provide such other proof or indication of satisfaction of the
conditions set forth in Section 8 as Century may reasonably request.
10.2 BY CENTURY. In addition to any other documents or instruments to be
delivered by Century to PHI, Century shall, on the Closing Date:
(a) deliver the Purchase Price in immediately available funds;
(b) deliver the certificates required by Sections 9.3 and 9.4;
(c) deliver the legal opinion required by Section 9.5; and
(d) provide any such other proof or indication of satisfaction of
the conditions set forth in Section 9 as PHI may reasonably request.
SECTION 11
----------
TERMINATION
-----------
11.1 RIGHT OF TERMINATION.
(a) This Agreement may be terminated:
(i) at any time prior to the Closing Date by the mutual
written consent of PHI and Century;
(ii) by PHI by written notice to Century if the Closing shall
not have occurred on or before June 30, 1998; provided however, that the right
to terminate this Agreement under this Section 11.1(a)(ii) shall not be
available to PHI if PHI's or PTI's failure to fulfill or perform any obligation
under this Agreement has been a substantial cause of, or has substantially
resulted in, the failure of the Closing to occur on or before such date;
(iii) by PHI in the event there is a final and nonappealable
order of a Governmental Entity prohibiting the transactions contemplated hereby;
(iv) by Century if there has been a Material Adverse Change,
subject to the exceptions contained in Section 8.3;
(v) by Century if there has been a material breach by PHI or PTI
of a material covenant and such breach has not been cured within 30 days after
receipt of written notice thereof from Century;
(vi) by PHI if there has been a material breach by Century of a
material covenant and such breach has not been cured within 30 days after
receipt of written notice thereof from PHI, or
(vii) by Century in its sole discretion at any time prior to the
Closing Date for any reason other than those specified in items (i), (iv) or (v)
above or in Section 6.7(a).
(b) Century acknowledges that the commitment of PTI to sell the
Cellular Stock and the commitment of PHI to sell the Stock are contingent upon
PHI's public announcement that it intends to proceed with the acquisition of
Energy Group, PLC (the "Transaction") and that, if PHI determines not to
publicly announce its intention to proceed with the Transaction, PHI shall have
the option and right to terminate this Agreement on the terms set forth in this
Section 11.1(b), which rights are in addition to any rights it may have to
terminate this Agreement under Section 11.1(a), by written notice to Century of
PHI's intention to exercise such right on or before June 20, 1997.
11.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
pursuant to Section 11.1, except as provided in Section 6.6(b), this Section
11.2, Section 11.3 and Section 12.1 hereof, this Agreement shall forthwith
become void and have no effect, and there shall be no liability on the part of
Century, CCI, PHI, PTI, or their respective officers, directors or agents,
except any liability arising under Section 11.3 and except that nothing
contained in this provision shall relieve any party from liability for any
wilful and knowing breach of any covenant or any wilful and knowing breach of
any representation or warranty. The Parties acknowledge that the sole remedy for
any breach prior to the Closing Date (other
than a wilful and knowing breach) is to assert the failure of a condition under
Section 8 or Section 9 or to assert its rights under Sections 11.1(a)(v) or
(vi). The letter agreement dated the date hereof relating to the obligations of
PHI and Century to refrain from taking any action to acquire control of the
other (the "Standstill Agreement") shall survive the termination of this
Agreement.
11.3 TERMINATION FEES.
(a) Century shall pay to PHI by wire transfer the sum of $10,000,000
in immediately available funds (i) if Century terminates this Agreement pursuant
to Section 11.1(a)(vii) or fails to consummate the Stock Sale for any reason
(other than due to the failure of the conditions to the obligations of Century
set forth in Sections 8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.9, 8.10, 8.11 or 8.12) or
(ii) if PHI terminates this Agreement pursuant to Section 11.1(a)(ii), (iii) or
(vi).
(b) If PHI terminates this Agreement pursuant to Section 11.1(b),
PHI shall pay to Century in immediately available funds the amount of the bank
fees actually incurred by Century for the purpose of obtaining the Financing
Commitments, not to exceed $350,000.
11.4 INCENTIVE FEES.
(a) If the Closing Date occurs before March 31, 1998, PHI shall
reduce the Purchase Price in the amount of $166,667 per day for every day that
the Closing Date precedes March 31, 1998.
(b) If the Closing Date does not occur on or before March 31, 1998,
Century shall pay to PHI by wire transfer a fee in the amount of $5,000,000 on
the first day of each successive month for which this Agreement continues in
effect (April 1, May 1, June 1).
If the Closing Date occurs prior to the last day of any such month, PHI shall
return to Century at the Closing the amount of $166,667 for each day by which
the Closing Date precedes the last day of such month.
SECTION 12
----------
MISCELLANEOUS
-------------
12.1 FEES AND EXPENSES. Subject to Section 11.3(b), each Party shall pay
its own fees and expenses incident to this Agreement and the performance of
their respective obligations hereunder, including the fees of their respective
accountants, counsel and investment bankers.
12.2 RIGHTS OF THIRD PARTIES. Except for the rights contained in Sections
6.10, 6.11, 6.15 and 8.11, nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any Person other than the parties hereto and their respective
successors and permitted assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third person to any
party to this Agreement, nor shall any provision give any third person any right
of subrogation or action over or against any Party to this Agreement.
12.3 WAIVER. PHI, on the one hand, and Century, on the other hand, may, by
written instrument, (i) extend the time for the performance of any of the
obligations or other acts of the other, (ii) waive any inaccuracies of the other
in its representations and warranties, (iii) waive compliance with any of the
covenants or closing conditions of the other contained in this Agreement and
(iv) waive the other's performance of any of the obligations set out in this
Agreement, provided, however, that no party may unilaterally extend the time
period set
forth in Section 11.1(a)(ii) or grant any waiver, the effect of which would be
unlawful. No waiver by a party to this Agreement of a breach of any term or
condition hereof shall be construed to operate as a waiver of a subsequent
breach of any such term or condition or of any other term or condition hereof.
12.4 SPECIFIC PERFORMANCE. The parties acknowledge that their obligations
hereunder are unique, and that it would be extremely impracticable to measure
the resulting damages if any party should default in its obligations under this
Agreement. Accordingly, in the event of the failure by a party to consummate the
transactions contemplated hereby which failure constitutes a breach hereof by
such party, the nondefaulting party may, in addition to any other available
rights or remedies, ▇▇▇ in equity for specific performance.
12.5 ENTIRETY OF AGREEMENT.
(a) Except as otherwise provided in (b) below and except with
respect to the Standstill Agreement and except for the letter agreement dated
the date hereof relating to cooperation in hiring of certain employees and
nonsolicitation and the letter agreement dated the date hereof relating to the
definition of "Employee Benefit Plan," this Agreement, including the Exhibits
and Schedules hereto, states the entire agreement of the parties and supersedes
all prior negotiations, agreements and understandings, if any. The parties agree
that in dealing with third parties no contrary representations will be made.
Disclosure of any matter on any Schedule or Exhibit shall constitute disclosure
of such matter on all Schedules or Exhibits on which such disclosure is or could
be required.
(b) Notwithstanding anything to the contrary in the letter of intent
dated April 11, 1997 between Century and PTI, as amended, Century and PTI hereby
agree that
such letter of intent shall remain in full force and effect until consummation
of the Stock Sale hereunder, at which time such letter of intent will be deemed
to be automatically terminated; provided, however, that at no time shall any
party to such letter of intent have any obligation to pursue any of the
transactions contemplated thereunder unless and until this Agreement is duly
terminated in accordance with Section 11, at which time each such party will
once again continue to pursue such transactions on the terms and subject to the
conditions specified in such letter of intent. To give effect to the foregoing,
Century and PTI hereby agree that the last sentence of such letter of intent
shall be deemed amended hereby to provide that the letter of intent will
terminate (on the terms and conditions specified in such sentence) if a
Definitive Agreement (as defined in such letter of intent) has not been entered
into on or before forty-five (45) days after the termination of this Agreement
under Section 11 hereof.
12.6 PROHIBITED NEGOTIATIONS. Prior to the consummation of the Stock Sale
or the termination of this Agreement, PHI will not, and will cause its
respective Affiliates, directors, officers, employees and representatives not
to, solicit, encourage or respond to inquiries or proposals with respect to, or
furnish any information relating to or participate in any negotiations or
discussions concerning, any acquisition or purchase of all or substantially all
of the stock, the assets of, or of a substantial equity interest in, or any
business combination with, any of the PTI Entities, other than as contemplated
by this Agreement, and PHI shall notify Century immediately if any such
inquiries or proposals are received by, any such information is requested from,
or any such negotiations or discussions are sought to be initiated with either
PHI or any PTI Entity.
12.7 SURVIVAL.The representations and warranties made by or on behalf of
any party hereto in this Agreement shall survive for a period of two years after
the Closing Date, except for (a) the representations and warranties contained in
Sections 3.1, 3.3 and 3.5 (as the representations and warranties in Section 3.5
relate to title to the stock of any PTI Corporate Entity) or Section 3.7 (as the
representations and warranties in Section 3.7 relate to the title of any PTI
Entity to any interest held by such entity in a Partnership or a Minority Owned
Entity that is a partnership), which will survive for the applicable statute of
limitations; (b) the representations and warranties contained in Section 3.19,
which will survive for a period of five years after the Closing Date; and (c)
the representations and warranties contained in Section 3.21, which survive the
Closing Date for six months beyond the applicable statute of limitations. The
covenants and agreements set forth herein shall survive the Closing in
accordance with their terms. The parties hereto, in executing and carrying out
the provisions of this Agreement, are relying solely on the representations,
warranties, covenants and agreements contained or referred to herein and not
upon any representation, warranty, covenant, agreement, promise or information,
written or oral, made by any Person or entity other than as specifically set
forth herein.
12.8 ATTORNEY FEES. If any legal action or other proceeding is brought for
the enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
12.9 NOTICES. Any notices or other communications required or permitted
under this Agreement shall be deemed delivered if sent by commercial overnight
delivery, facsimile (followed by otherwise sufficient delivery within a
reasonable time), registered or certified mail, postage prepaid, addressed as
follows:
PHI OR PTI:
PacifiCorp Holdings, Inc.
▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Pacific Telecom, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
COPY TO:
Stoel Rives LLP
▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
CENTURY OR CCI:
Century Telephone Enterprises, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
COPY TO:
▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
General Counsel
Century Telephone Enterprises, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq. and
G. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr., Esq.
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as shall be furnished in writing by any Party.
12.10 AMENDMENT. This Agreement may be modified or amended only by an
instrument in writing, duly executed by the parties hereto.
12.11 ADDITIONAL DOCUMENTS. After the Closing Date, the Parties, without
further consideration, agree to execute such additional documents as may be
reasonably requested by the other Party to carry out the purposes and intent of
this Agreement and to fulfill their respective obligations hereunder.
12.12 GOVERNING LAW. This Agreement shall be construed and interpreted
and the rights of the parties governed by and enforced in accordance with the
laws of the State of Washington, exclusive of choice of law provisions.
12.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be one and the same Agreement.
12.14 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding on, and
shall inure to the benefit of, the parties hereto and their respective legal
representatives, successors and assigns; provided, however, that neither Century
nor CCI may assign its rights hereunder without the prior written consent of PHI
and neither PHI nor PTI may assign its rights hereunder without the prior
written consent of Century.
12.15 HEADINGS. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
IN WITNESS WHEREOF, the Parties have executed this Agreement this 11th day
of June, 1997.
PACIFICORP HOLDINGS, INC.:
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
ITS: President
PACIFIC TELECOM, INC.
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
ITS: Chairman, President and Chief Executive Officer
CENTURY TELEPHONE ENTERPRISES, INC.:
BY: /s/ ▇▇▇▇ ▇. Post, III
---------------------
ITS: President and Chief Executive Officer
CENTURY CELLUNET, INC.
BY: /s/ ▇▇▇▇ ▇. Post, III
---------------------
ITS: Chief Executive Officer
SIGNATURE PAGE TO THAT CERTAIN STOCK PURCHASE AGREEMENT BY
AND AMONG PACIFICORP HOLDINGS, INC., PACIFIC TELECOM, INC.,
CENTURY TELEPHONE ENTERPRISES, INC. AND CENTURY CELLUNET, INC.
DATED JUNE 11, 1997.
EXHIBITS
EXHIBIT A Partnerships in which PTI Entity has 50% or greater interest
EXHIBIT B Pending Material Proceedings
EXHIBIT C PTI Telco Entities
LIST OF SCHEDULES
TO STOCK PURCHASE AGREEMENT
SCHEDULE 3.4 PTI Entities and Minority Owned Entities.
SCHEDULE 3.5 Capital Stock and Equity Interests.
SCHEDULE 3.6 Organization and Qualification of the PTI Corporate Entities.
SCHEDULE 3.7 Partnerships.
SCHEDULE 3.9 Absence of Material Changes.
SCHEDULE 3.10 Material Indebtedness.
SCHEDULE 3.11 Litigation and Claims.
SCHEDULE 3.12 Title to Property and Leases.
SCHEDULE 3.13 Condition of Assets.
SCHEDULE 3.14 Insurance.
SCHEDULE 3.15 Contracts.
SCHEDULE 3.16 No Violation.
SCHEDULE 3.17 Compliance with Laws.
SCHEDULE 3.18 Employee Benefit Plans.
SCHEDULE 3.19 Environmental Matters.
SCHEDULE 3.21 Tax Matters.
SCHEDULE 3.23 Labor Relations.
SCHEDULE 3.26 Pending Acquisitions.
SCHEDULE 3.27 Undisclosed Liabilities.
SCHEDULE 3.28 Telephone Operations.
SCHEDULE 4.2 Authorization of Agreements.
SCHEDULE 5.1 Conduct of Business Prior to the Closing Date.
SCHEDULE 6.4 Environmental Indemnification
SCHEDULE 8.10 Intercompany Transactions.