ASSET PURCHASE AGREEMENT
among
MARYLAND WIRELESS COMMUNICATIONS, L.P.
(the "SELLER"),
▇▇▇▇▇ ▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇"),
▇▇▇▇▇▇ CELLULAR OF MARYLAND, INC.
("PURCHASER")
and
▇▇▇▇▇▇ COMMUNICATIONS CORPORATION
("DCC")
DATED AS OF SEPTEMBER 25, 1996
TABLE OF CONTENTS
Page
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ARTICLE I PURCHASE AND SALE ........................................1
ARTICLE II DESCRIPTION OF ASSETS; EXCLUDED ASSETS ...................2
Section 2.01 Assets ................................................. 2
Section 2.02 Excluded Assets ........................................ 3
ARTICLE III ASSUMPTION OF LIABILITIES .............................. 3
ARTICLE IV INSTRUMENTS OF TRANSFER ................................ 4
Section 4.01 Transfer Documents ..................................... 4
Section 4.02 Assumption Documents ................................... 4
ARTICLE V PURCHASE PRICE; ALLOCATION ............................. 4
Section 5.01 Purchase Price ......................................... 4
Section 5.02 Payment of Purchase Price .............................. 4
Section 5.03 Allocation of Purchase Price ........................... 4
Section 5.04 Purchase Price Adjustment .............................. 5
ARTICLE VI PURCHASE PRICE ADJUSTMENTS; CLOSING
STATEMENT ............................................. 6
Section 6.01 Prorations; Closing Statement .......................... 6
ARTICLE VII CLOSING ................................................ 6
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ARTICLE VIII SELLER'S REPRESENTATIONS ............................... 7
Section 8.01 Organization; Qualification ............................ 7
Section 8.02 Consents; Authorization; Execution and
Delivery of Agreement .................................. 7
Section 8.03 Title to Assets; Condition of Assets ................... 7
Section 8.04 Real Property-Owned .................................... 8
Section 8.05 Real and Personal Property-Leased ...................... 8
Section 8.06 Existing Contracts ..................................... 8
Section 8.07 Governmental Licenses .................................. 9
Section 8.08 Compliance with Law .................................... 9
Section 8.09 No Violation of Existing Agreements .................... 9
Section 8.10 Litigation and Legal Proceedings ....................... 9
Section 8.11 Environmental Compliance ............................... 10
Section 8.12 Labor Matters .......................................... 11
Section 8.13 Employee Benefits ...................................... 11
Section 8.14 Tax Matters ............................................ 11
Section 8.15 Financial Statements ................................... 11
Section 8.16 Customers .............................................. 12
Section 8.17 Insurance .............................................. 12
Section 8.18 Brokers ................................................ 12
Section 8.19 Disclosure of Material Information ..................... 13
Section 8.20 Assignment ............................................. 13
ARTICLE IX PURCHASER'S REPRESENTATIONS ............................ 13
Section 9.01 Organization; Qualification ............................ 13
Section 9.02 Consents; Authorization; Execution
and Delivery of Agreement .............................. 13
Section 9.03 Litigation and Legal Proceedings ....................... 13
Section 9.04 Brokers ................................................ 14
Section 9.05 Purchaser's Qualification .............................. 14
Section 9.06 Disclosure of Material Information ..................... 14
Section 9.07 Financial Statement of Purchaser's Parent .............. 14
ARTICLE X SELLER'S AND PURCHASER'S
AFFIRMATIVE COVENANTS .................................. 15
Section 10.01 Covenants Prior to Closing ............................. 15
Section 10.02 Interim Financial Statements ........................... 15
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Section 10.03 Governmental Approvals ................................. 16
Section 10.04 Third Party Consents; Closing Conditions ............... 16
Section 10.05 Line of Credit ......................................... 17
Section 10.06 Customer Information ................................... 17
Section 10.07 Required Notice; Certain Distributions ................. 17
ARTICLE XI CONDITIONS PRECEDENT TO PURCHASER'S
OBLIGATION TO CLOSE .................................... 18
Section 11.01 Accuracy of Representations and Warranties;
Performance of this Agreement .......................... 18
Section 11.02 Partner Resolutions .................................... 18
Section 11.03 Incumbency Certificate ................................. 18
Section 11.04 Delivery of Interim Financial Statements ............... 18
Section 11.05 Third Party Consents; FCC; ▇▇▇▇-▇▇▇▇▇ Act .............. 18
Section 11.06 Due Diligence .......................................... 19
Section 11.07 Necessary Financing .................................... 19
Section 11.08 No Material Adverse Change ............................. 19
Section 11.09 Opinion of Counsel to Seller ........................... 20
Section 11.10 Opinion of FCC Counsel to Seller ....................... 20
Section 11.11 Subscribers ............................................ 20
ARTICLE XII CONDITIONS PRECEDENT TO SELLER'S
OBLIGATION TO CLOSE .................................... 20
Section 12.01 Accuracy of Representations and Warranties;
Performance of this Agreement .......................... 20
Section 12.02 Directors' Resolutions ................................. 20
Section 12.03 Incumbency Certificate ................................. 21
Section 12.04 Third Party Consents; FCC; ▇▇▇▇-▇▇▇▇▇ Act .............. 21
Section 12.05 Opinion of Counsel to Purchaser ........................ 21
ARTICLE XIII CASUALTY LOSSES ........................................ 21
ARTICLE XIV INDEMNIFICATION ........................................ 21
Section 14.01 Indemnification by Seller and ▇▇▇▇▇▇▇ .................. 21
Section 14.02 Indemnification by Purchaser ........................... 22
Section 14.03 Notice of Claims; Defense of Third Party Claims ........ 23
Section 14.04 Escrow; Set-Off ........................................ 24
Section 14.05 Further Remedies ....................................... 24
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ARTICLE XV CONFIDENTIALITY AND PRESS RELEASES ..................... 24
Section 15.01 Confidentiality ........................................ 24
Section 15.02 Press Release .......................................... 24
Section 15.03 Disclosures Required By Law ............................ 25
ARTICLE XVI TERMINATION ............................................ 25
ARTICLE XVII BROKERS' FEES .......................................... 26
ARTICLE XVIII CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL .......... 26
ARTICLE XIX MISCELLANEOUS .......................................... 26
Section 19.01 Additional Instruments of Transfer ..................... 26
Section 19.02 Notices ................................................ 27
Section 19.03 Expenses ............................................... 28
Section 19.04 Transfer Taxes ......................................... 28
Section 19.05 Collection Procedures .................................. 28
Section 19.06 Specific Performance ................................... 28
Section 19.07 Governing Law .......................................... 28
Section 19.08 Assignment ............................................. 28
Section 19.09 Successors and Assigns ................................. 29
Section 19.10 Amendments; Waivers .................................... 29
Section 19.11 Standstill ............................................. 29
Section 19.12 Entire Agreement ....................................... 29
Section 19.13 Counterparts ........................................... 29
Section 19.14 Severability ........................................... 29
Section 19.15 Section Headings ....................................... 29
Section 19.16 Interpretation ......................................... 29
Section 19.17 Further Assurances ..................................... 30
Section 19.18 Third Parties .......................................... 30
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DEFINED TERMS
TERM SECTION CITE
AAA 6.01(b)
Adjustment Date 6.01(a)
Asserting Party 14.03
Assets 2.01
Assumed Contracts Article III
Assumption Agreement 4.02
Assumed Liabilities Article III
Authorizations 8.07
▇▇▇▇ of Sale 4.01
Buildout Assets 5.04(a)
Buildout Costs 5.04(a)
Business Recitals
Capitalized System Costs 5.04(a)
Cellular System Introduction
CERCLA 8.11(b)
Claims Article XIII
Closing Article VII
Closing Date Article VII
Closing Statement 6.01(a)
Code 8.13
▇▇▇▇▇▇▇ Introduction
Controlled Group Member 8.13
Deposit 1.02
DCC Introduction
Defending Party 14.03
Defined Benefit Pension Plan 8.13
Determination Date 5.04
Dispute Note 5.02
Employee Benefit Plans 8.13
Environmental Laws 8.11(c)
ERISA 8.13
ERISA Affiliate 8.13
Escrow Agent 5.02
Escrow Agreement 5.02
Escrow Payment 5.02
Excluded Assets 2.02
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Existing Contracts 8.06
FCC 2.01(b)
FCC Authorization Recitals
Final Order 11.06
Financial Statements 8.15
GAAP 9.07
General Partner 8.01
Governmental Consents 5.04(c)
Guaranty 10.07
▇▇▇▇-▇▇▇▇▇ Act 10.03(b)
Hazardous Substances 8.11(a)
Historical Financial Statements 9.07
Indemnified Purchase Parties 14.01(a)
Interest 10.04
Interim Financial Statements 10.02
Interim Financials 9.07
Interim Loan 10.05
JAJ 8.01
Management Agreement 10.01(a)
Multiemployer Plan 8.13
Necessary Financing 11.07
Other Assets 5.04(a)
Partners 8.01
Permitted Liens Article I
Purchase Price 5.01
Purchaser Introduction
RCLA 8.11(b)
RCRA 8.11(b)
SBC 5.04(a)
SBC Subscriber Costs 5.04(a)
Seller Introduction
Third Party Claim 14.03
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SCHEDULES
2.01(a) Contracts and Licenses
2.01(c) Tangible Asset List
2.01(d) Interests in Real Property
2.01(f) Intangible Personal Property
2.02 Excluded Assets
8.03 Liens
8.07 Governmental Licenses
8.08 Compliance with Laws
8.10 Litigation
8.11 Environmental Compliance
8.14 Tax Matters
8.15 Certain Transactions Since March 1, 1996
8.17 Insurance
8.18 Brokers
EXHIBITS
A. ▇▇▇▇ of Sale
B. Assumption Agreement
C. Escrow Agreement
D. Management Agreement
E Opinion of Counsel for Seller
i
F. Opinion of FCC Counsel for Seller
G. Opinion of Counsel for Purchaser
ii
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of September 25, 1996 by and
among MARYLAND WIRELESS COMMUNICATIONS, L.P., a Delaware limited partnership
("Seller"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ CELLULAR OF MARYLAND, INC.,
an Oklahoma corporation ("Purchaser"), and ▇▇▇▇▇▇ COMMUNICATIONS CORPORATION
("DCC"), as guarantor.
R E C I T A L S
WHEREAS, ▇▇▇▇▇▇▇ is the owner of that certain FCC license (the "FCC
Authorization") to provide Cellular Radiotelephone Service on Frequency Block A,
in Market 468, Kent County, Maryland (the "Cellular System"), which market area
is known as Maryland RSA #2 (the "RSA"); and
WHEREAS, not later than five (5) business days following the execution of
this Agreement, ▇▇▇▇▇▇▇ will make application to assign the FCC Authorization to
the General Partner and the General Partner shall simultaneously make
application to assign the FCC Application to Seller, and, thereafter, Seller
will own all right, title and interest in the FCC Authorization and all rights
to develop, construct, own and operate the Cellular System in the RSA (the
"Business"); and
WHEREAS, the Business will be managed by Purchaser on behalf of ▇▇▇▇▇▇▇
prior to the assignment of the FCC Authorization to Seller, and thereafter on
behalf of Seller, pursuant to the Management Agreement (as defined in Section
10.01(a));
WHEREAS, Purchaser desires to purchase from the Seller, and the Seller
desires to sell to Purchaser, substantially all of the assets of the Seller
relating to the Business, including assets acquired by Seller after the date
hereof from ▇▇▇▇▇▇▇ and as contemplated by the Management Agreement, all subject
to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein set forth and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE
Except as otherwise provided and subject to the terms and conditions set
forth in this Agreement, ▇▇▇▇▇▇▇ agrees to cause Seller, and the Seller agrees,
to sell, convey, assign, transfer and deliver to Purchaser, and Purchaser agrees
to purchase from the Seller at the Closing,
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all of Seller's right, title and interest in and to the Assets (as defined in
Section 2.01 hereof), free and clear of all security interests, liens,
pledges, charges, rights of third parties and encumbrances of every kind,
except those encumbrances in favor of Purchaser provided for in the
Management Agreement (the "Permitted Liens").
ARTICLE II
DESCRIPTION OF ASSETS; EXCLUDED ASSETS
SECTION 2.01. ASSETS. The assets to be conveyed to Purchaser shall
include all real and personal tangible and intangible assets, properties and
business owned by the Seller of whatever description, which relate in any way
to the ownership, use or operation of the Business, except assets excluded
pursuant to Section 2.02 hereof, but including all property and rights
acquired or obtained by Seller from the date hereof through the date of
Closing, to the end that, except as set forth herein, all of the Seller's
assets owned at the Closing and related in any way to the ownership, use or
operation of the Business, other than the assets excluded pursuant to Section
2.02 hereof, shall pass to Purchaser (collectively, the "Assets"). Such
Assets shall be free and clear of all debts, liabilities, obligations, taxes,
liens and encumbrances of any kind, character or description, except for the
Permitted Liens. Such Assets shall include, without limitation:
(a) The Seller's licenses (including the FCC Authorization),
leases, agreements, permits, consents and other contracts of any other nature
if any are in effect on the Closing Date, agreements for the reception or
transmission of signals by microwave, easements, appurtenances, rights-of-way
and construction permits, if any are in effect on the Closing Date, all
right, title and interest, if any, in and to all streets, roads and public
places, open or proposed, all agreements between the Seller, suppliers,
cellular telephone service companies, and subscribers (including subscriber
deposits), and all other similar rights and agreements (including so-called
roaming agreements), including all applications therefor, which in any way
may relate to or concern the operation by the Seller of the Business, as more
particularly described on SCHEDULE 2.01(a) attached hereto.
(b) All of the Seller's files of correspondence, lists, records and
reports concerning (i) customers and prospective customers of the Business
and (ii) all dealings with Federal, state and local regulatory agencies with
respect to the Business, including, but not limited to, all reports filed by
or on behalf of the Seller with the Federal Communications Commission (the
"FCC");
(c) All of the Seller's towers, tower equipment, antennas,
switching and cell site equipment and buildings, construction in progress,
microwave equipment, testing equipment, motor vehicles, office equipment,
furniture and fixtures, supplies, inventory and other physical assets, if
any, used in or relating to the Business, and all modifications, additions,
restorations or
2
replacements of the whole or any part thereof, substantially all of which
tangible assets as of the date hereof are described on SCHEDULE 2.01(c)
attached hereto;
(d) All interests in real property of Seller used in or relating to
the Business, as described on SCHEDULE 2.01(d) attached hereto;
(e) All of Seller's right, title and interest to engineering records,
files, data, drawings, blueprints, schematics, maps, reports, lists and plans
and processes intended for use in connection with the Business;
(f) All of the Seller's right, title and interest to intangible
personal property used in or relating to the Business, including all rights,
patents and copyrights used by the Seller, and all of the rights of the
Seller associated therewith (including any and all applications,
registrations, extensions and renewals thereof), and such rights, patents and
copyrights as of the date hereof are described on SCHEDULE 2.01(f) attached
hereto; and
(g) Any of the above-described Assets which are acquired, with the
prior written consent of the Purchaser, after the date hereof but prior to the
Closing.
SECTION 2.02. EXCLUDED ASSETS. (a) The properties and assets described in
SCHEDULE 2.02 attached hereto and in Section 2.02(b) of this Agreement which
relate to the Business shall be retained by the Seller and shall not be sold,
assigned or transferred to Purchaser (the "Excluded Assets").
(b) Anything in this Agreement to the contrary notwithstanding, the
Assets sold to the Purchaser pursuant to the terms of this Agreement shall not
include the Seller's partnership records, books of account, cash, accounts
receivable, bank deposits and cash equivalents of the Seller at the time of the
Closing.
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ARTICLE III
ASSUMPTION OF LIABILITIES
Purchaser shall assume and agree to perform and discharge as of the
Closing the following as they become due for all periods from and after the
Closing, to the extent not previously performed or discharged: (i) all
obligations of the Seller which accrue and are to be performed from and after
the Closing (x) under those permits, authorizations, licenses, leases, rights
of way, easements and other agreements, including, without limitation,
agreements with customers and suppliers in existence on the Closing set forth
on Schedules 2.01(a) AND (d) attached hereto and (y) under those permits,
authorizations, licenses, leases, rights of way, easements, subscriber and
other agreements related to the Business which Purchaser on behalf of Seller
entered into in accordance with the terms and conditions of the Management
Agreement; (ii) all other obligations of Seller entered into during the
period from the date hereof to the Closing by Seller and identified to and
consented by Purchaser (all of such permits, authorizations, licenses,
leases, rights of way, easements and other agreements referred to in items
(i) and (ii) being referred to hereinafter as the "Assumed Contracts"); and
(iii) all liabilities of Seller which are properly allocated to Purchaser as
part of the prorations pursuant to Section 6.01 hereof for which Purchaser
received a credit against the Purchase Price (such items (i) through (iii)
are collectively referred to herein as the "Assumed Liabilities"). Purchaser
shall not be liable for any liabilities, debts, contracts, agreements or
other obligations of Seller or ▇▇▇▇▇▇▇ other than the Assumed Liabilities.
ARTICLE IV
INSTRUMENTS OF TRANSFER
AND ASSUMPTION
SECTION 4.01. TRANSFER DOCUMENTS. At the Closing, Seller will deliver
to Purchaser (a) a ▇▇▇▇ of Sale in substantially the form attached hereto as
EXHIBIT A (the "▇▇▇▇ of Sale"), (b) all such other good and sufficient
instruments of sale, transfer and conveyance, including, without limitation,
assignments of leases, in such form and including such matters as Purchaser
shall reasonably request, as shall be effective to vest in Purchaser all of
the Seller's right and title to, and interest in, the Assets; and (c) all
contracts and commitments, instruments, books and records (except as
otherwise provided in Section 2.02 hereof) and other data relating to the
Assets, business and operations of the Seller.
SECTION 4.02. ASSUMPTION DOCUMENTS. At the Closing, Purchaser and
Seller will execute and deliver an Assumption Agreement in substantially the
form attached hereto as EXHIBIT B (the "Assumption Agreement") in order to
effect the assumption of the Assumed Liabilities by Purchaser.
4
ARTICLE V
PURCHASE PRICE; ALLOCATION
SECTION 5.01. PURCHASE PRICE. Subject to the adjustments, if any, to be
made in accordance with Section 5.04 hereof, the total purchase price for the
Assets shall be Seventy Million Dollars ($70,000,000) (as adjusted, the
"Purchase Price").
SECTION 5.02. PAYMENT OF PURCHASE PRICE. The Purchase Price, minus an
amount equal to $2 million (the "Escrow Payment"), shall be payable by wire
transfer of immediately available funds to the Seller at Closing. The Escrow
Payment shall be paid by the Purchaser to a national bank with capital in
excess of $500 million mutually acceptable to Purchaser and Seller (the
"Escrow Agent") at the Closing to be held, invested and disbursed pursuant to
the terms of the Escrow Agreement substantially in the form of EXHIBIT C
attached hereto (the "Escrow Agreement').
SECTION 5.03. ALLOCATION OF PURCHASE PRICE. Purchaser, Seller and
▇▇▇▇▇▇▇ agree that the fair market value of the FCC Authorization is Seventy
Million Dollars ($70,000,000) and that portion of the Purchase Price
allocable thereto shall be Seventy Million Dollars ($70,000,000). Within
thirty (30) days prior to the Closing, Purchaser and Seller in good faith
shall agree on an allocation of the Purchase Price in accordance with the
respective fair market value of the Assets being purchased other than the FCC
Authorization. Purchaser, Seller and ▇▇▇▇▇▇▇ each further agree to file
their income tax returns and their other tax returns reflecting the
allocation as determined in this Section 5.03. If no agreement on an
allocation of the Purchase Price with respect to the Assets other than the
FCC Authorization is reached within such thirty (30) day period, such
allocation of the Purchase Price to the Assets other than the FCC
Authorization shall be determined by a nationally recognized appraisal firm
mutually agreeable to Seller and Purchaser and the costs of such appraisal
shall be borne equally by Seller and Purchaser.
SECTION 5.04. PURCHASE PRICE ADJUSTMENT. The Purchase Price shall be
adjusted as follows:
(a) The Purchase Price shall be increased to the extent of any
amounts expended from the date hereof to the Closing for "Buildout Costs",
"SBC Subscribers Costs" and "Capitalized System Costs", as such terms are
hereinafter defined. As used in this Agreement "Buildout Costs" means (i)
the amount expended by Seller or ▇▇▇▇▇▇▇ at Purchaser's request after the
date hereof to the Closing in accordance with the Management Agreement to
purchase from Southwest ▇▇▇▇ Corporation ("SBC") or other parties cellsites
and other capital assets used or to be used in connection with the Business
in order to replace SBC's cellular system in the RSA ("Buildout Assets") and
(ii) the amount expended by ▇▇▇▇▇▇▇ or Seller for assets of the type referred
to in clause (i) after the date hereof until the Closing other than at
Purchaser's request ("Other Assets"); provided, however, that the Purchase
Price shall be increased with
5
respect to Other Assets only (A) if Purchaser agrees in writing after the
date hereof to purchase such Other Assets at the Closing and (B) only to the
extent of the reasonable direct cost incurred by Seller or ▇▇▇▇▇▇▇ for such
Other Assets as mutually agreed by Seller and Purchaser. The term Buildout
Costs shall not include the ordinary operating costs and expenses of the
Cellular System prior to the Closing, including, without limitation,
professional fees, billing and collection expenses, agent fees and other
subscriber acquisition costs, rents for retail and other locations, media and
other marketing expenses, personnel costs, payments to ▇▇▇▇▇▇▇ and Seller
under the Management Agreement, maintenance expenses, commissions, taxes, and
utility costs, all of which shall be borne by Seller for the period prior to
Closing. "SBC Subscriber Costs" means the amounts paid to SBC with funds
advanced under the Interim Loan to purchase SBC's subscribers active on the
Cellular System as of the effective date of such payment. The term
"Capitalized System Costs" means Purchaser's costs (exclusive of any Buildout
Costs and SBC Subscriber Costs) to construct and develop the Cellular System
pursuant to the Management Agreement and which (x) were paid to Purchaser
with funds provided under the Interim Loan or from Cellular System revenue
and (y) which are the type usually capitalized in accordance with generally
accepted accounting principles by a licensee of a cellular telephone system.
(b) In the event that the Closing pursuant to Article VII occurs
after the tenth (10th) business day following receipt of the Final Order, the
Purchase Price shall be decreased by an amount equal to $100,000 for each
30-day period up to the Closing Date after the later of (i) the tenth (10th)
business day following receipt of the Final Order or (ii) the receipt of any
governmental consent Purchaser is required to obtain as a condition to the
consummation of the transactions contemplated by this Agreement
("Governmental Consents"). In the event a period is less than thirty (30)
days, the purchase price adjustment for such period shall be prorated based
on the actual number of days elapsed in such period.
(c) The Purchase Price shall be increased to the extent of any
management fee payable to Purchaser pursuant to Section 12(b) of the
Management Agreement.
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ARTICLE VI
PURCHASE PRICE ADJUSTMENTS; CLOSING STATEMENT
SECTION 6.01. PRORATIONS; CLOSING STATEMENT. (a) The operation of the
Business and the income, expense and liabilities attributable thereto through
12:01 a.m. of the Closing Date (the "Adjustment Date"), determined on an
accrual basis in accordance with generally accepted accounting principles,
shall be for the account of Seller and thereafter for the account of
Purchaser. Prepaid expenses of the Seller relating to the Assumed Contracts
and all other customarily prorated items shall be prorated as of the
Adjustment Date in accordance with the foregoing principles. Five (5)
business days prior to the Closing, the Seller shall provide Purchaser with a
preliminary calculation of the prorations provided for in this Section
6.01(a) (the "Closing Statement"), together with any supporting documentation
reasonably requested by Purchaser. Purchaser, as part of its obligations
pursuant to the Management Agreement, shall make available to Seller all
information within its possession necessary to permit Seller to timely comply
with Seller's obligation in the immediately preceding sentence. If the
amounts set forth in the Closing Statement under reimbursements to Seller
exceed the reimbursements to Purchaser, then the difference between such
amounts shall be paid to Seller by Purchaser at the Closing. If the amounts
set forth in the Closing Statement under reimbursements to Purchaser exceed
the reimbursements to Seller, then the difference between such amounts shall
be paid to Purchaser by Seller at the Closing by way of a credit against the
Purchase Price. The Closing Statement shall be considered preliminary and
such Closing Statement shall not discharge either party from any obligation
it might otherwise have hereunder with respect thereto in the event that any
amounts reflected thereon subsequently prove to be incorrect. There shall be
a continuing duty on the parties to make appropriate credits and payments to
the other party once the amounts are finally determined in accordance
subsection (b) of this Section 6.01.
(b) Within sixty (60) days after the Closing, either party shall
notify the other in writing (the "Dispute Notice") of any disputes as to the
Closing Statement or any supporting documentation furnished therewith.
Purchaser and Seller shall provide one another with such additional
information relating to such Closing Statement as each party shall reasonably
request. Within fifteen (15) days after delivery of the Dispute Notice, the
Seller and Purchaser shall attempt to resolve such dispute in good faith. If
the parties cannot agree within thirty (30) days after the delivery of the
Dispute Notice such dispute shall be resolved by Price Waterhouse or another
independent accounting firm mutually acceptable to the parties. Any fees or
expenses payable to such an accounting firm shall be shared equally between
Seller and Purchaser.
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ARTICLE VII
CLOSING
Subject to the terms and conditions hereof, the Closing (the "Closing")
shall take place at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, on the later of (a) the tenth (10th)
business day after the FCC approved the transfer of the Assets from the
Seller to the Purchaser by a Final Order (as defined in Section 11.05 hereof)
or (b) March 3, 1997 (the "Closing Date"). If the Closing occurs after the
tenth (10th) business day of the issuance of the Final Order, the Purchase
Price shall be adjusted in accordance with Section 5.04(b).
ARTICLE VIII
SELLER'S REPRESENTATIONS
Seller and ▇▇▇▇▇▇▇ hereby jointly and severally represent, warrant,
covenant and agree, which representations, warranties, covenants and
agreements, together with all other representations, warranties, covenants
and agreements of Seller and ▇▇▇▇▇▇▇ in this Agreement, shall survive the
execution and delivery of this Agreement and the payment of the Purchase
Price hereunder for a period of 18 months from the Closing; PROVIDED,
HOWEVER, that any tax-related representation, warranty, covenant and
agreement shall survive until the expiration of the statute of limitations
for the assessment and collection of any such tax; and PROVIDED, FURTHER,
HOWEVER, that each representation, warranty, covenant and agreement relating
to good title to Assets and there being no lien or other encumbrance thereon
shall survive the execution and delivery of this Agreement and the payment of
the Purchase Price without any limitation as to time, that:
SECTION 8.01. ORGANIZATION, QUALIFICATION. (a) Seller is a limited
partnership duly organized, validly existing and in good standing under the
laws of the state of its organization and has all power and authority to own
and operate its properties and to carry on its business as now being
conducted or proposed to be conducted by Seller and to carry out the
transactions contemplated by this Agreement. Seller has the power and
authority to execute and deliver and, subject to obtaining the FCC's approval
to assign the FCC Authorization, perform its obligations under this Agreement
and to undertake the transactions contemplated hereby. Seller's general
partner is Maryland Communications Service, LLC (the "General Partner") and
Seller's sole limited partner is JAJ Cellular Communications General
Partnership ("JAJ") (collectively, the "Partners"). At least ninety-nine
percent (99%) of the General Partner's equity and voting securities are owned
by ▇▇▇▇▇▇▇.
SECTION 8.02. CONSENTS, AUTHORIZATION, EXECUTION AND DELIVERY OF
AGREEMENT. All necessary consents and approvals have been obtained by Seller
for the execution and delivery of this Agreement. The execution, delivery
and performance of this Agreement by Seller and the transfer of the Assets to
Purchaser have been duly and validly authorized and approved by all
8
necessary partnership and partner action of Seller. This Agreement is a
valid and binding obligation of the Seller and ▇▇▇▇▇▇▇, enforceable against
them in accordance with its terms.
SECTION 8.03. TITLE TO ASSETS; CONDITION OF ASSETS. Except as set forth
on SCHEDULE 8.03, Seller has full power, right and authority to sell and
convey to Purchaser good and marketable title to the Assets, free and clear
of all security interests, liens, pledges, charges and encumbrances of every
kind. Security interests, mortgages, equipment leases and other liens and
encumbrances in effect on the date hereof which are to be discharged at
Closing are listed on SCHEDULE 8.03 hereto. The tangible property included
among the Assets as of the date hereof, if any, are in good working order and
repair, reasonable wear and tear excepted. The Assets constitute all of the
assets owned by ▇▇▇▇▇▇▇ or Seller and used in connection with the operation
of the Business other than the Excluded Assets. No Partner owns, leases or
has any rights in any property, license or other assets related to the
Business, except on the date hereof ▇▇▇▇▇▇▇ owns the FCC Authorization. To
the best of Seller's knowledge, the Assets, together with the assets owned or
used by SBC in connection with its provision of cellular services in the RSA,
are technically sufficient and capable of providing cellular telephone
service in the RSA for which the Seller is licensed in accordance with
applicable FCC regulations.
SECTION 8.04. REAL PROPERTY - OWNED. Seller does not own any real
property or interests in real property in fee simple. ▇▇▇▇▇▇▇ does not own any
real property or interest in real property that is used in the Business.
SECTION 8.05. REAL AND PERSONAL PROPERTY - LEASED. Set forth on
SCHEDULE 2.01(d) (in the case of real property) and SCHEDULE 2.01(a) (in the
case of personal property), are true and accurate descriptions of all real
and personal property leased by ▇▇▇▇▇▇▇ and/ or Seller and used or useful in
the ownership or operation of the Assets and the Business setting forth (i)
the name of the lessor and (ii) a description of the property leased. Except
as set forth on SCHEDULE 2.01(d) (in the case of leased real property) and
SCHEDULE 2.01(a) (in the case of leased personal property), with respect to
such leases, the property described in such leases is presently used by
▇▇▇▇▇▇▇ and/or Seller as indicated in SCHEDULES 2.01(a) AND (d) as lessee
under the terms of such leases, and such leases are in full force and effect,
and will be free and clear of all liens and encumbrances at the Closing.
SECTION 8.06. EXISTING CONTRACTS. SCHEDULES 2.01(a) AND (d) hereto sets
forth all agreements in effect on the date hereof with Seller's or ▇▇▇▇▇▇▇'▇
customers, all leases to which Seller and/or ▇▇▇▇▇▇▇ is a party and which
relate to the ownership of the Assets or the operation of the Business, all
agreements, commitments and understandings to which ▇▇▇▇▇▇▇ or Seller is a
party with SBC (other than such agreements, commitments and understandings
subject to a confidentiality agreement with SBC and SBC has not released from
the provisions thereof) and all other agreements or commitments (written or
oral) to which ▇▇▇▇▇▇▇ or Seller is a party which relate to the ownership of
the Assets or the operation of the Business (the "Existing
9
Contracts"). No Partner or any person or entity (other than Seller)
controlled or affiliated with any Partner has any contractual relationship
relating to the ownership or operation of the Business. Seller has heretofore
delivered to Purchaser true and correct copies of the Existing Contracts.
Except as disclosed on SCHEDULES 2.01(a) AND (d), Seller has no knowledge of
any breach or anticipated breach by the other parties to any Existing
Contracts. The Existing Contracts are in full force and effect and ▇▇▇▇▇▇▇
and Seller, as applicable, is in compliance with the terms of such Existing
Contracts. Except for the Existing Contracts, neither ▇▇▇▇▇▇▇ nor Seller has
entered into any other agreements relating to the ownership of the Assets and
the operation of the Business, including, but not limited to, rights-of-way,
rights of entry, licenses, easements, leases (real property or equipment), or
guaranty agreements. To the best of Seller's and ▇▇▇▇▇▇▇'▇ knowledge, there
are no claims by third parties that Seller or ▇▇▇▇▇▇▇ are required to enter
into other agreements to enable it to continue owning the Assets and the
operation of the Business as it is presently being operated.
SECTION 8.07. GOVERNMENTAL LICENSES. Except as set forth on SCHEDULE
8.07, ▇▇▇▇▇▇▇ or Seller holds all necessary licenses, consents, permits,
approvals and authorizations of public or governmental bodies including,
without limitation, the FCC and the state, counties and municipalities served
by the Business, which are required in connection with the ownership of the
Assets (collectively referred to as the "Authorizations"). All
Authorizations are in full force and effect. Each of ▇▇▇▇▇▇▇ and Seller has
complied with the terms of the Authorizations and there are no pending
modifications, amendments or revocations of the Authorizations which would
adversely affect the ownership of the Assets and the operation of the
Business. ▇▇▇▇▇▇▇ will promptly transfer all of her interest in the
Authorizations to Seller upon receiving necessary approval therefor. All
fees of Seller and ▇▇▇▇▇▇▇ due and payable to governmental authorities
pursuant to the Authorizations have been paid. All reports required of
Seller or ▇▇▇▇▇▇▇ to be filed in connection with the Authorizations have been
timely filed and are accurate and complete. True and correct copies of the
Authorizations, and all amendments thereto to the date hereof, have been
delivered by Seller to Purchaser and are identified on SCHEDULE 2.01(a)
hereto. The ownership of the Assets and the operation of the Business by
Seller and/or ▇▇▇▇▇▇▇ are not subject to regulation or supervision by any
applicable state public utilities commission or other similar state
governmental instrumentality.
SECTION 8.08. COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE
8.08, each of ▇▇▇▇▇▇▇ and Seller is currently complying with and has so
complied with, and is not in default under or in violation of, and neither
the Business nor any of the Assets nor the operation or maintenance thereof,
contravenes in any respect any statute, law (including environmental or
employment laws), ordinance, decree, order, rule, regulation of any
governmental body applicable to the Assets or the Business, including,
without limitation, rules and regulations of the FCC, except for
noncompliance, defaults and violations which will not in the aggregate have a
material adverse effect on the Assets or the Business.
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SECTION 8.09. NO VIOLATION OF EXISTING AGREEMENTS. The execution,
delivery and performance of this Agreement by Seller and ▇▇▇▇▇▇▇ will not
violate any provisions of law and will not, with or without the giving of
notice or the passage of time, or both, conflict with or result in any breach
of any of the terms or conditions of, or constitute a default under any
Existing Contracts. Subject to the consents identified in SCHEDULE 2.01(a),
the execution, delivery and performance of this Agreement by Seller and
▇▇▇▇▇▇▇ will not result in the creation of any security interest, lien,
pledge, charge or encumbrance upon the Assets or the Business.
SECTION 8.10. LITIGATION AND LEGAL PROCEEDINGS. Except as set forth on
SCHEDULE 8.10, there is no outstanding judgment against Seller or any Partner
and there is no litigation, proceeding or investigation pending, or, to the
Seller's knowledge, threatened, against the Seller or the Partners affecting the
Business or the Assets which questions the validity of any action taken or to be
taken pursuant to or in connection with the provisions of this Agreement.
Except as set forth on SCHEDULE 8.10, there are no proceedings pending to which
▇▇▇▇▇▇▇, the Seller or any Partner is a party or, to Seller's or ▇▇▇▇▇▇▇'▇
knowledge, threatened, nor any demands by any governmental agency, utility or
other party, to terminate, modify or adversely change the terms and conditions
of Seller's rights with respect to the Authorizations or Existing Contracts
whereby such termination or modification would result in an adverse effect on
the Business or the Assets.
SECTION 8.11. ENVIRONMENTAL COMPLIANCE. (a) Except as set forth on
Schedule 8.11 hereto, (i) neither ▇▇▇▇▇▇▇ nor Seller has generated, used,
transported, treated, stored, released or disposed of, or has not suffered or
permitted anyone else to generate, use, transport, treat, store, release or
dispose of any Hazardous Substance (as hereinafter defined) with respect to
the Assets or the Business in violation of any Environmental Laws (as
hereinafter defined); (ii) there has not been any generation, use,
transportation, treatment, storage, release or disposal of any Hazardous
Substance in connection with their ownership of the Assets, the conduct of
the Business or the use of any property or facility which relates to their
ownership of the Assets, the Business, or, to the best of Seller's and
▇▇▇▇▇▇▇'▇ knowledge, any adjacent properties or facilities, which has created
or might reasonably be expected to create any liability under any
Environmental Laws or which would require reporting to or notification of any
governmental entity; (iii) no friable asbestos or polychlorinated biphenyl,
and no underground storage tank, is contained in or located at any facility
of Seller or ▇▇▇▇▇▇▇ relating to the Business in violation of any
Environmental Laws; and (iv) any Hazardous Substance handled or dealt with in
any way with respect to the Assets or the Business by the Seller or ▇▇▇▇▇▇▇,
or during Seller's or ▇▇▇▇▇▇▇'▇ ownership of the Assets or the Business
(except any actions taken directly or indirectly by Purchaser as "Manager"
under the Management Agreement or any omissions that were specifically
Purchaser's responsibility under the Management Agreement), has been and is
being handled or dealt with in compliance with any Environmental Laws.
11
(b) For purposes of this Agreement, the term "Hazardous Substance"
shall mean any substance which, as of the date of this Agreement, is listed
as hazardous or toxic in the regulations implementing the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended
("CERCLA"), the Response Compensation and Liability Act ("RCLA"), the
Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), or
listed as a hazardous substance under any applicable state environmental
laws, or any substance which has been determined by regulation, ruling or
otherwise by any agency or court to be a hazardous or toxic substance
regulated under federal or state law.
(c) For purposes of this Agreement, the term "Environmental Laws"
shall mean CERCLA, RCRA, RCLA and any applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, orders, approvals, plans,
authorizations, concessions, franchises and similar items of all governmental
authorities and all applicable judicial, administrative and regulatory
decrees, judgments and orders, any of which relate to the protection of human
health or the environment from the effects of Hazardous Substances, including
but not limited to those pertaining to reporting, licensing, permitting,
investigating and remediating emissions, discharges, releases or threatened
releases of Hazardous Substances into the air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances.
SECTION 8.12. LABOR MATTERS. Seller has no employees. ▇▇▇▇▇▇▇ has no
employees with respect to the Business.
SECTION 8.13. EMPLOYEE BENEFITS. Neither ▇▇▇▇▇▇▇ nor Seller has any
Employee Benefit Plans in which any one or more Partners or employees of the
Seller or ▇▇▇▇▇▇▇, with respect to the Business, participate or are eligible
to participate as of the date hereof and is not a party to any employment
contract. The term "Employee Benefit Plans" means all employee benefit plans
as that term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). No Partner or employee of the
Seller participates or is eligible to participate in a "defined benefit
pension plan" as defined in Section 3(35) of ERISA, maintained or made
available by Seller. Neither Seller nor any Controlled Group Member
maintains or contributes to, or ever maintained or contributed to, a plan
under which any employee of the Seller participates or is eligible to
participate subject to Section 412 of the Internal Revenue Code of 1986, as
amended (the "Code"). The term "Controlled Group Member" means any trade or
business (whether or not incorporated) which is, or was at any relevant time,
aggregated with the Seller pursuant to Section 414(b), (c), (m) or (o) of the
Code. Neither Seller, ▇▇▇▇▇▇▇ nor any ERISA Affiliate has participated in or
made contributions to any "multiemployer plan" as defined in Section
4001(a)(3) of ERISA. The term "ERISA Affiliate" means each trade or business
(whether or not incorporated) which is, or was at any relevant time, treated
as a single employer with Seller pursuant to Section 4001(b)(1) of ERISA.
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SECTION 8.14. TAX MATTERS. Except as disclosed on SCHEDULE 8.14
attached hereto, ▇▇▇▇▇▇▇, Seller and the General Partner has timely filed all
federal, state, county and local tax returns required to be filed as of the
date hereof and will file all such returns required to be filed from the date
hereof to the Closing, and has paid and will pay all taxes due and owing for
all such periods. There are no suits, actions, claims, investigations,
inquiries or proceedings pending or, to ▇▇▇▇▇▇▇'▇ or Seller's knowledge,
threatened against ▇▇▇▇▇▇▇ or Seller in respect of any taxes, interest,
assessments, governmental charges or penalties.
SECTION 8.15. FINANCIAL STATEMENTS.
(a) ▇▇▇▇▇▇▇ has delivered to Purchaser copies of the following
financial statements of the Business (the "Financial Statements") through the
periods indicated:
(i) The unaudited balance sheet of the Business as of
August 31, 1996; and
(ii) The unaudited statement of income setting forth the
results of the operation of the Business for the eight (8) months ended
August 31, 1996.
(b) The Financial Statements (i) are true and correct in all
material respects, (ii) present fairly the financial position of the Business at
the date indicated and the results of operations of the Business for the period
indicated and (iii) have been compiled in accordance with generally accepted
accounting principles consistently applied (subject to normal recurring
adjustments).
(c) Except as set forth on Schedule 8.15 attached hereto, since
March 1, 1996, neither ▇▇▇▇▇▇▇, with respect to the Business only, nor the
Seller has:
(i) sold, assigned or transferred any of its tangible
assets (except for the Excluded Assets ) or canceled any material debts or
material claims;
(ii) waived any rights, whether or not in the ordinary
course of business;
(iii) entered into any other transaction, except in the
ordinary course of business, or entered into any transaction with any of the
Partners, or any affiliate of any such Partner, except in the ordinary course of
business in accordance with past practices;
(iv) suffered any material damage, destruction or casualty
loss with respect to the Assets, whether or not covered by insurance;
13
(v) made any distribution of any of the Assets of Seller to
any Partner or any affiliate of a Partner;
(vi) except as disclosed in writing by Seller to
Purchaser, obligated itself or the Business to give free or reduced price
service to customers with respect to the Business or except as set forth on
SCHEDULE 2.01(b), entered into any agreement with any governmental or
regulatory authority granting the authorization to freeze fees charged to
customers of the Business; or
(vii) entered into any agreement or understanding to do any
of the foregoing.
SECTION 8.16. CUSTOMERS. As of the date hereof, the Business does not
have any subscribers.
SECTION 8.17. INSURANCE. SCHEDULE 8.17 attached hereto is an accurate
and complete list in all material respects of all insurance policies, bonds
and letters of credit which relate in any way to the ownership, use or
operation of the Assets and the Business.
SECTION 8.18. BROKERS. Except as set forth on SCHEDULE 8.18 attached
hereto, neither Seller nor ▇▇▇▇▇▇▇ has engaged any agent, broker or other
person acting pursuant to the express or implied authority of Seller or
▇▇▇▇▇▇▇ which is or may be entitled to a commission or broker or finder's fee
in connection with the transactions contemplated by this Agreement or
otherwise with respect to the sale of the Assets or the Business.
SECTION 8.19. DISCLOSURE OF MATERIAL INFORMATION. No representation or
warranty by Seller or ▇▇▇▇▇▇▇ hereunder or in the exhibits hereto, the ▇▇▇▇
of Sale, the Assumption Agreement, the Escrow Agreement, the Management
Agreement, in the exhibits thereto, or in any closing certificate delivered
to the Purchaser pursuant to Article XI hereof, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained therein not misleading.
SECTION 8.20. ASSIGNMENT. Within five (5) business days following the
execution of this Agreement, ▇▇▇▇▇▇▇ shall make application to assign to the
General Partner the FCC Authorization and all real and personal tangible and
intangible assets, properties and business currently owned by ▇▇▇▇▇▇▇ which
relate in any way to the ownership, use or operation of the Business, and the
General Partner shall simultaneously make application to assign to Seller the
FCC Authorization and all real and personal tangible and intangible assets,
properties and business which relate in any way to the ownership, use or
operation of the Business; and ▇▇▇▇▇▇▇ shall cause (i) at least ninety-nine
percent (99%) of the voting interests of the General Partner to be owned at
all times by ▇▇▇▇▇▇▇ and (ii) JAJ to be the sole limited partner of Seller
14
and (iii) the General Partner to have the only voting interests in the Seller
(except for voting rights required to be provided to limited partners under
applicable law).
ARTICLE IX
PURCHASER'S REPRESENTATIONS
Purchaser hereby represents, warrants, covenants and agrees, which
representations, warranties, covenants and agreements, together with all
other representations, warranties, covenants and agreements of Purchaser in
this Agreement, shall survive the execution and delivery of this Agreement
and the payment of the Purchase Price hereunder for a period of 18 months,
that:
SECTION 9.01. ORGANIZATION; QUALIFICATION. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Oklahoma. Purchaser has all power and authority to (i) own and
operate its properties, (ii) carry on its business as it is now being
conducted, and (iii) carry out the transactions contemplated by this
Agreement and to own and operate the Assets and the Business, subject to
obtaining all necessary consents required for the transfer by the Seller of
the Assets.
SECTION 9.02. CONSENTS; AUTHORIZATION; EXECUTION AND DELIVERY OF
AGREEMENT. The execution and delivery of this Agreement by Purchaser has
been duly and validly authorized and approved by all necessary corporate
action. The Purchaser has full power and authority to execute and deliver
and perform its obligations under this Agreement. This Agreement is a valid
and binding obligation of Purchaser, enforceable against it in accordance
with its terms.
SECTION 9.03. LITIGATION AND LEGAL PROCEEDINGS. There is no outstanding
judgment against Purchaser and there is no litigation, proceeding or
investigation pending, or, to Purchaser's knowledge, threatened, against
Purchaser or its assets which individually or in the aggregate would, if
adversely determined, result in a material adverse change in the business
condition (financial or otherwise), properties, prospects or assets of
Purchaser or which questions the validity of any action taken or to be taken
pursuant to or in connection with the provisions of this Agreement or the
consummation of the transactions contemplated hereby by the Purchaser.
SECTION 9.04. BROKERS. Purchaser has not engaged any agent, broker or
other person acting pursuant to the express or implied authority of Purchaser
which is or may be entitled to a commission or broker or finder's fee in
connection with the transactions contemplated by this Agreement or otherwise
with respect to the sale of the Assets or the Business.
SECTION 9.05. PURCHASER'S QUALIFICATION. Purchaser is qualified to hold
the FCC Authorization for the RSA.
15
SECTION 9.06. DISCLOSURE OF MATERIAL INFORMATION. No representation or
warranty by Purchaser hereunder, in the exhibits hereto, the ▇▇▇▇ of Sale,
the Assumption Agreement, the Escrow Agreement, the Management Agreement, in
the exhibits thereto, or in any closing certificate delivered to the
Purchaser pursuant to Article XII hereof, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading.
SECTION 9.07. FINANCIAL STATEMENTS OF PURCHASER'S PARENT. Purchaser has
provided ▇▇▇▇▇▇▇ and Seller with the following:
(i) the consolidated balance sheets of DCC and its
subsidiaries as of December 31, 1995 and December 31, 1994 and the related
consolidated statements of operations, stockholders' equity and cash flows
for the years then ended, as audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (the "Historical
Financial Statements"); and
(ii) the consolidated balance sheet of DCC and its
subsidiaries as of June 30, 1996 and the related consolidated statement of
operations for the six (6) month period ended June 30, 1996 (the "Interim
Financials").
DCC owns directly or indirectly all of the outstanding common stock of
Purchaser. The Historical Financial Statements are true and correct in all
material respects, were prepared in accordance with generally accepted
accounting principles ("GAAP") and fairly present, in all material respects,
the financial condition of DCC and its subsidiaries as of December 31, 1995
and 1994, and the results of its operations and its cash flows for the years
then ended. The Interim Financial Statements are true and correct in all
material respects, were prepared in accordance with GAAP (except for footnote
disclosure and year-end adjustments), and fairly present, in all material
respects, the financial condition of DCC and its subsidiaries as of June 30,
1996 and the results of operations for the six (6) month period ended June
30, 1996.
ARTICLE X
SELLER'S AND PURCHASER'S AFFIRMATIVE COVENANTS
SECTION 10.01. COVENANTS PRIOR TO CLOSING. Seller hereby covenants, and
▇▇▇▇▇▇▇ covenants to cause Seller and herself to comply with such covenants and
agreements, and agrees that from and after the execution and delivery of this
Agreement to and including the Closing:
(a) Simultaneously with the execution of this Agreement,
Purchaser and Seller shall enter into a Management Agreement in the form
attached hereto as Exhibit D (the "Management Agreement") pursuant to which
Purchaser or an affiliate of Purchaser shall provide management
16
services to Seller from the date hereof to the Closing in connection with the
operation of the Business pursuant to the terms of the Management Agreement.
(b) Seller shall give Purchaser and its counsel, accountants
and other representatives access during normal business hours to inspect all
of the properties, books and records of Seller as they pertain to the Assets
and the Business, wherever located, and furnish Purchaser with such available
and existing documentation concerning the Assets and the Business as
Purchaser may reasonably request, other than such documentation provided by
SBC to Seller under a confidentiality agreement and which SBC has not
released from the provisions thereof.
(c) Seller and ▇▇▇▇▇▇▇ shall use all reasonable efforts to
assist Purchaser in obtaining SBC's consent to permit Purchaser to conduct a
due diligence review of the properties owned or operated by SBC in connection
with SBC's provision of cellular services in the RSA.
(d) Seller shall use all reasonable efforts to preserve intact
the Assets and the Business, including, but not limited to, maintaining in
effect casualty and liability insurance coverage on the Assets and the
Business customary in the industry for similar cellular telephone businesses,
complying in all material respects with applicable Federal, state and local
laws, rules and regulations and pertinent provisions of all Existing
Contracts and Authorizations. ▇▇▇▇▇▇▇ and Seller shall use all reasonable
efforts to preserve the goodwill of the persons having business relations
with them in connection with the Business.
(e) None of the Assets shall be sold, transferred, conveyed or
otherwise disposed of without the prior written consent of Purchaser,
provided that, with respect to a sale, transfer, conveyance or disposition to
a person or entity controlled by ▇▇▇▇▇▇▇, Purchaser's written consent will
not be unreasonably withheld. None of the Assets shall be pledged or
otherwise encumbered without the prior written consent of Purchaser. Seller
shall not make any distribution of any Assets to any of its Partners or any
affiliate of any of its Partners.
(f) Without Purchaser's prior written consent, Seller shall
not hire any employees.
SECTION 10.02. FINANCIAL STATEMENTS. Seller covenants and agrees that
during the period after the execution of this Agreement and prior to the
Closing, Seller shall provide Purchaser, within 45 days of the end of each
calendar month, Seller's unaudited balance sheet and income statement for
such month ("Interim Financial Statements"). The Interim Financial
Statements will be true and correct in all material respects, will be
prepared using the same accounting methods and procedures as used in the
preparation of the Financial Statements except for the absence of footnotes,
subject to normal recurring adjustments, and will present fairly the
financial position of Seller at the date indicated and the results of
Seller's operations for such period.
17
SECTION 10.03. GOVERNMENTAL APPROVALS. (a) Purchaser covenants and
agrees that it will fully cooperate with Seller, and do all things reasonably
necessary to assist Seller to obtain all consents and approvals necessary for
assignment to Purchaser of the Authorizations, including the furnishing of
financial and other information specifically with respect to Purchaser
reasonably required by the person whose consent or approval is being sought.
Seller shall use all reasonable efforts to provide adequate prior written
notice to Purchaser of any meeting with governmental authorities the purpose
of which is to seek a consent or approval to the transactions contemplated
hereby, and Purchaser shall use all reasonable efforts to furnish a
representative to attend meetings with appropriate government authorities for
the purpose of obtaining such consents or approvals. Seller hereby agrees to
file the necessary Form(s) 490 with the FCC transferring or assigning control
of the FCC license for the Business to Purchaser and diligently pursue the
processing of the assignment of the FCC license to Purchaser and to file for
all other necessary regulatory approvals for the consummation of the
transactions contemplated by this Agreement within five business days of the
date of execution of this Agreement to the extent any such filings have not
been made prior to the date of execution of this Agreement. Seller shall be
responsible for all filing fees in connection with any filings pursuant to
this Section 10.03(a).
(b) Seller, ▇▇▇▇▇▇▇ and Purchaser shall each cooperate and use
their reasonable efforts to prepare and file with the Federal Trade
Commission and other regulatory authorities as promptly as possible after
October 23, 1996 all requisite applications and amendments thereto together
with related information, data and exhibits necessary to satisfy the
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act ("▇▇▇▇-▇▇▇▇▇
Act").
SECTION 10.04. THIRD PARTY CONSENTS; CLOSING CONDITIONS. (a) Each of
Purchaser, ▇▇▇▇▇▇▇ and Seller covenants and agrees that each of them will
reasonably cooperate with each other, and Purchaser will do all things
reasonably necessary to assist Seller, to obtain all consents and approvals
necessary for the transfer or assignment to Purchaser of the Assumed
Contracts, including the furnishing of financial and other information
specifically with respect to Purchaser, its affiliates, or Seller, as the
case may be, reasonably required by the person whose consent or approval is
being sought. Notwithstanding the foregoing, to the extent that any Assumed
Contracts listed on SCHEDULE 2.01(a) to be sold, assigned, transferred or
conveyed to Purchaser, or any claim, right or benefit arising thereunder or
resulting therefrom (individually, an "Interest" and collectively, the
"Interests"), is not capable of being sold, assigned, transferred or conveyed
without the approval, consent or waiver of the issuer thereof or the other
party thereto, or any third person (including a government or governmental
unit), and such approval, consent or waiver has not been obtained, or if such
sale, assignment, transfer or conveyance or attempted assignment, transfer or
conveyance would constitute a breach thereof, and such approval, consent or
waiver has not been obtained, this Agreement shall not constitute a sale,
assignment, transfer or conveyance thereof, or an attempted assignment,
transfer or conveyance thereof; provided Seller shall use its best efforts to
provide Purchaser the benefits of any such Interest as provided
18
in Section 19.01(b). Each of Purchaser and Seller shall use all reasonable
efforts to consummate the transactions contemplated hereby.
(b) Purchaser, ▇▇▇▇▇▇▇ and Seller hereby covenant and agree to
use all reasonable efforts to satisfy, or assist the other party in
satisfying, the closing conditions applicable to the Purchaser in Article XII
hereof and the Seller in Article XI hereof prior to the Closing Date.
SECTION 10.05. LINE OF CREDIT. Purchaser shall provide a line of credit
to Seller and ▇▇▇▇▇▇▇ in accordance with the terms of the Management
Agreement pursuant to which the Purchaser may provide advances to the Seller
from time to time up to a maximum of $5.0 million to be used only (i) to
purchase Buildout Assets, (ii) to pay SBC Subscriber Costs and Capitalized
System Costs, (iii) to reimburse Purchaser for any Operating Costs (as
defined in the Management Agreement) incurred by Purchaser and (iv) for other
purposes which Purchaser and Seller mutually agree (the "Interim Loan").
Such Interim Loan shall be secured by (i) a first priority security interest
in all Seller's Assets including, to the extent permitted by law, the
Authorizations, whether now owned or subsequently acquired, (ii) a first
priority security interest in all Assets now owned or subsequently acquired
by ▇▇▇▇▇▇▇ relating to the Business including, to the extent permitted by
law, the FCC Authorization and (iii) by a non-recourse guaranty of the
Partners, secured by pledges of their ownership interests in Seller.
SECTION 10.06. CUSTOMER INFORMATION. Within ten business days from the
date of this Agreement and monthly thereafter, Seller shall deliver to the
Purchaser a computer tape and/or other form of information having a list of
the Seller's customers, if any, and the existing billing and accounts
receivable aging information relating to each such customer to the extent
such information is not subject to a confidentiality agreement with SBC or
has not been released from the provisions of such confidentiality agreement.
SECTION 10.07. REQUIRED NOTICE; CERTAIN DISTRIBUTIONS.
(a) Purchaser covenants and agrees, from the date hereof until
payment of the Purchase Price, to provide ▇▇▇▇▇▇▇ and Seller written notice
at least thirty (30) business days prior to DCC effecting any reorganization
of its corporate structure, sale of assets, spin-off of assets, merger,
consolidation, acquisition or distribution to stockholders which,
individually or taken in the aggregate, would be reasonably likely to have a
materially adverse effect on DCC's ability to perform its obligations under
its guaranty of Purchaser's obligations under this Agreement (the "Guaranty").
(b) Purchaser covenants and agrees that prior to the Closing and
the payment of the Purchase Price, DCC will not make any distributions to its
stockholders which individually or in the aggregate will have a materially
adverse effect on DCC's ability to perform its obligations under the Guaranty.
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ARTICLE XI
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
The obligation of Purchaser under this Agreement with respect to the
purchase and sale of the Assets shall be subject to the fulfillment on or
prior to the Closing of each of the following conditions:
SECTION 11.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE
OF THIS AGREEMENT. All of the representations and warranties by Seller and
▇▇▇▇▇▇▇ contained in this Agreement shall be true and correct at and as of
the Closing in all material respects. Seller shall have complied with and
performed in all material respects all of the agreements and covenants
required by this Agreement to be performed or complied with by it on or prior
to the Closing. Purchaser shall have been furnished with a certificate or
certificates of ▇▇▇▇▇▇▇, as manager of the General Partner, dated as of the
Closing, certifying to the fulfillment of the foregoing conditions.
SECTION 11.02. PARTNER RESOLUTIONS. The Seller shall deliver to
Purchaser copies of the resolutions of the Partners of Seller authorizing the
execution, delivery and performance of this Agreement by Seller and all
instruments and documents to be delivered in connection herewith and the
transactions contemplated hereby, duly certified by ▇▇▇▇▇▇▇, as manager of
the General Partner.
SECTION 11.03. INCUMBENCY CERTIFICATE. Purchaser shall have received a
certificate or certificates of ▇▇▇▇▇▇▇, as manager of the General Partner,
certifying as to the genuineness of the signatures of officers or managers of
Seller authorized to take certain actions or execute any certificate,
document, instrument or agreement to be delivered pursuant to this Agreement,
which incumbency certificate shall include the true signatures of such
officers and managers.
SECTION 11.04. DELIVERY OF INTERIM FINANCIAL STATEMENTS. Seller shall
have delivered to Purchaser the Interim Financial Statements required of it
by Section 10.02 hereof.
SECTION 11.05. THIRD PARTY CONSENT; FCC; ▇▇▇▇-▇▇▇▇▇ ACT. Seller shall
have delivered to Purchaser such instruments, consents and approvals of third
parties (the form and substance of which shall be reasonably satisfactory to
Purchaser) as are necessary to assign to Purchaser without modification
thereof, as of the Closing, the Assets and the Assumed Contracts and
Purchaser shall have obtained all Governmental Consents necessary for the
consummation of the transactions contemplated by this Agreement. Prior to
assignment, the FCC shall have issued a Final Order granting the FCC's
consent to the assignment of the FCC Authorization and other Assets to
Purchaser without any material conditions, excepting conditions applied on an
industry-wide basis, which the Purchaser reasonably deems to be adverse.
Anything herein to the contrary notwithstanding, the Purchaser shall have the
right (in its sole discretion) to waive
20
the requirement set forth in the preceding sentence, except that Purchaser 's
waiver thereof shall not cause the adjustment to the Purchase Price under
Section 5.04(b) to be greater than if Purchaser had not waived receipt of the
Final Order. In addition, all applicable waiting periods under the
▇▇▇▇-▇▇▇▇▇ Act (if applicable to the transactions contemplated by this
Agreement) shall have expired or been terminated and no objection shall have
been made by the Federal Trade Commission. For the purposes of this
Agreement, the term "Final Order" shall mean action by the FCC as to which
(i) no request for stay by the FCC, as applicable, of the action is pending,
no such stay is in effect, and, if any deadline for filing any such request
is designated by statute or regulation, such deadline has passed; (ii) no
petition for rehearing or reconsideration of the action is pending before the
FCC, and the time for filing any such petition has passed; (iii) the FCC,
does not have the action under reconsideration on its own motion and the time
for such reconsideration has passed; and (iv) no appeal to a court, or
request for stay by a court, of the FCC's action, as applicable, is pending
or in effect, and, if any deadline for filing any such appeal or request is
designated by statute or rule, it has passed.
SECTION 11.06. DUE DILIGENCE. Purchaser and its agents and
representative shall have conducted a satisfactory legal, regulatory and
business due diligence review of the Assets, Business and Cellular System
(whether owned or operated by Seller or SBC), including, without limitation,
the Cellular System's properties, cellsites, customer base and revenue
potential, the results of which shall be satisfactory to the Purchaser.
Without limiting the generality of the foregoing, Purchaser shall be
satisfied (a) that the assets related to the Cellular System owned by SBC,
together with Seller's Assets, constitutes all assets, licenses and property
necessary to the operation of the Cellular System as contemplated to be
conducted by Purchaser, and (b) that SBC owns twenty (20) cellsites that are
legally and technically capable of continuing to generate the revenue that
they now generate with respect to the Cellular System; PROVIDED, HOWEVER,
that if the Purchaser has not advised Seller in writing prior to October 23,
1996 that the results of such due diligence review are not satisfactory, the
conditions set forth in this Section 11.06 shall no longer apply and shall
have been satisfied.
SECTION 11.07. NECESSARY FINANCING. Purchaser shall have arranged for
debt and equity financing in amounts and on terms and conditions satisfactory
to Purchaser in its discretion sufficient (a) to pay the Purchaser Price, (b)
provide Purchaser with working capital for Purchaser's operation of the
Cellular System after the Closing and (c) for the purchase of the assets and
business related to the Cellular System owned by SBC or to construct a
comparable self-sufficient cellular system (the "Necessary Financing"), and
the proceeds of the Necessary Financing shall be available to Purchaser at
the Closing; PROVIDED, HOWEVER, that if Purchaser has not advised Seller in
writing prior to October 23, 1996 that the Necessary Financing cannot be
obtained, the conditions set forth in this Section 11.07 shall no longer
apply and shall have been satisfied.
21
SECTION 11.08. NO MATERIAL ADVERSE CHANGE. There shall not have been
any material adverse change in the financial condition, assets, business,
properties or prospects of the Cellular System, whether owned or operated by
Seller or SBC, from March 1, 1996 to the Closing other than changes that
affect the cellular telephone industry generally and normal seasonal
fluctuations in the RSA and except for those matters addressed in Section
11.11.
SECTION 11.09. OPINION OF COUNSEL TO SELLER. Purchaser shall have been
furnished with an opinion of Lukas, McGowan, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel to
Seller, dated as of the Closing and addressed to Purchaser and to any
institution designated by Purchaser which has provided the Necessary
Financing in substantially the form of EXHIBIT E hereto.
SECTION 11.10. OPINIONS OF FCC COUNSEL TO SELLER. Purchaser shall have
been furnished with opinions of Lukas, McGowan, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, FCC counsel
for Seller, dated as of the Closing and addressed to Purchaser and to any
financial institution designated by Purchaser which has provided the
Necessary Financing in substantially the form of EXHIBIT F attached hereto.
SECTION 11.11. SUBSCRIBERS. Seller shall have at least 11,500
subscribers (as defined below) of the Cellular System as of October 23 ,1996;
PROVIDED, HOWEVER, that if Purchaser has not advised Seller in writing prior
to October 23, 1996 that the number of subscribers is less than 11,500, the
condition set forth in this Section 11.11 shall no longer apply and shall
have been satisfied. For purposes of this Section 11.11, a "subscriber" is a
person or entity (i) who has contracted for cellular telephone service on the
Cellular System for at least thirty (30) days at a prevailing rate for
service, (ii) whose account is no more than thirty (30) days past due, and
(iii) who has a telephone number from a local exchange company that is in the
Cellular System's market.
ARTICLE XII
CONDITIONS PRECEDENT TO
SELLER'S OBLIGATION TO CLOSE.
The obligations of Seller under this Agreement with respect to the
purchase and sale of the Assets shall be subject to the fulfillment on or
prior to the Closing of each of the following conditions:
SECTION 12.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE
OF THIS AGREEMENT. All of the representations and warranties by Purchaser
contained in this Agreement shall be true and correct in all material
respects at and as of the Closing. Purchaser shall have complied with and
performed in all material respects all of the agreements and covenants
required by this Agreement to be performed and complied with by it on or
prior to the Closing.
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Seller shall have been furnished with a certificate of an officer of
Purchaser, dated as of the Closing, certifying to the fulfillment of the
foregoing conditions.
SECTION 12.02. DIRECTORS' RESOLUTIONS. Purchaser shall deliver to
Seller copies of the resolutions of its Board of Directors authorizing the
execution, delivery and performance of this Agreement and all instruments and
documents to be delivered in connection herewith and the transactions
contemplated hereby, duly certified by an authorized officer of Purchaser.
SECTION 12.03. INCUMBENCY CERTIFICATE. Seller shall have received a
certificate of a secretary of Purchaser, certifying as to the genuineness of
the signatures of representatives of Purchaser authorized to take certain
actions or execute any certificate, document, instrument or agreement to be
delivered pursuant to this Agreement, which incumbency certificate shall
include the true signatures of such representatives.
SECTION 12.04. THIRD PARTY CONSENTS; FCC; ▇▇▇▇-▇▇▇▇▇ ACT. Seller shall
have obtained consents and approvals of third parties as are necessary to
assign to Purchaser without modification thereof, as of the Closing, the
Assets and the Assumed Contracts. Prior to assignment, the FCC shall have
issued a Final Order granting the FCC's consent to the assignment of the FCC
Authorization and other Assets to Purchaser. In addition, all applicable
waiting periods under the ▇▇▇▇-▇▇▇▇▇ Act (if applicable to the transactions
contemplated by this Agreement) shall have expired or been terminated and no
objection shall have been made by the Federal Trade Commission.
SECTION 12.05. OPINION OF COUNSEL TO PURCHASER. Seller shall have been
furnished with an opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to Purchaser, dated as
of the Closing and addressed to Seller in substantially the form of EXHIBIT G
hereto.
ARTICLE XIII
CASUALTY LOSSES
In the event that there shall have been suffered between the date hereof
and the Closing any casualty loss relating to the Assets or the Business
which does not materially and adversely affect the Business, then at the
Closing all claims to insurance proceeds or other rights of the Seller
against third parties arising from such casualty loss (the "Claims") shall
(to the extent assignable) be separately assigned by Seller to Purchaser. To
the extent any Claim is not assignable, such claim may be pursued by
Purchaser, for its own account and benefit, in the name of Seller.
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ARTICLE XIV
INDEMNIFICATION
SECTION 14.01. INDEMNIFICATION BY SELLER AND ▇▇▇▇▇▇▇. (a)
Notwithstanding the Closing, and regardless of any investigation made at any
time by or on behalf of Purchaser or any information Purchaser may have, but
subject to the terms of Section 14.03 each of the Seller and ▇▇▇▇▇▇▇ agrees
to indemnify and to hold Purchaser, its shareholders, officers, directors,
and employees (the "Indemnified Purchaser Parties") harmless from and against
and in respect of any losses (including lost revenues), damages, costs,
expenses (including costs of investigations), suits, demands, judgments and
diminution in value suffered or incurred by Purchaser arising from or related
to:
(i) Any liability, debt, obligation, tax, claim or
demand, whether or not known or asserted at or prior to Closing, relating to
or arising from the ownership, operation, control or sale of the Assets or
the Business other than the Assumed Liabilities, or any other state of facts
which existed at or prior to Closing, including fines or forfeitures imposed
or threatened to be imposed by the FCC for the operation, at or prior to
Closing, of the Business;
(ii) Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of ▇▇▇▇▇▇▇ or Seller
under this Agreement (such representations and warranties to be read without
regard to any materiality qualifications), the exhibits hereto, the
Management Agreement including exhibits thereto, the Escrow Agreement, the
▇▇▇▇ of Sale, the Assumption Agreement or in any closing certificate
delivered by Seller to Purchaser pursuant to Article XI hereof; and
(iii) All costs and expenses (including reasonable attorneys'
fees) incurred by Purchaser in connection with any action, suit, proceeding,
demand, assessment or judgment incident to any of the matters Purchaser is
indemnified against by the Seller in this Agreement.
(b) In addition and subject to the terms of Section 14.03, Seller
shall indemnify Purchaser against and hold it harmless from any and all
liabilities in respect of suits, proceedings, damages, expenses and costs
(including, without limitation, reasonable counsel fees) which Purchaser may
incur by reason of the failure (if any) of Seller to comply with the Bulk
Transfers Article of the Uniform Commercial Code of any state.
SECTION 14.02. INDEMNIFICATION BY PURCHASER. Notwithstanding the Closing,
and regardless of any investigation made at any time by or on behalf of ▇▇▇▇▇▇▇
or Seller or any information ▇▇▇▇▇▇▇ or Seller may have, but subject to the
terms of Section 14.03, Purchaser agrees to indemnify and to hold ▇▇▇▇▇▇▇ and
Seller, and its respective partners harmless from and against and in respect of
any losses (including lost revenues), damages, costs, expenses, suits, demands,
judgments and diminution in value incurred by Seller from:
24
(i) All liabilities and obligations of Purchaser, and all
claims and demands made in respect thereof relating to or arising from,
Purchaser's ownership, operation or control of the Assets or the Business
after the Closing, or any other state of facts which exist after the Closing,
including fines or forfeitures imposed or threatened to be imposed by the FCC
for the operation, after the Closing of the Business;
(ii) Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of Purchaser under
this Agreement (such representations and warranties to be read without regard
to any materiality qualifications), (including Purchaser's failure to perform
and discharge all of the liabilities and obligations assumed by Purchaser
under Article III hereof), the exhibits hereto, the Management Agreement
including exhibits thereto, the Escrow Agreement, the Assumption Agreement or
in any closing certificate delivered by Purchaser to Seller pursuant to
Article XII hereof; and
(iii) All reasonable costs and expenses (including reasonable
attorneys' fees) incurred by ▇▇▇▇▇▇▇ and Seller in connection with any
action, suit, proceeding, demand, assessment or judgment incident to any of
the matters ▇▇▇▇▇▇▇ or Seller is indemnified against by Purchaser in this
Agreement.
SECTION 14.03. NOTICE OF CLAIMS; DEFENSE OF THIRD PARTY. A party
claiming indemnification under this Article XIV (the "Asserting Party") must
promptly notify (in writing and in reasonable detail) the party from which
indemnification is sought (the "Defending Party") of the nature and basis of
such claim for indemnification not later than 18 months after the Closing,
or, with respect to any tax related claim, prior to the expiration of the
statute of limitations for the assessment and collection of the applicable
tax, or, with respect to each representation, warranty, covenant and
agreement relating to good title to Assets and there being no lien or other
encumbrance thereon, such claim may be brought at any time without any
expiration. If such claim relates to a claim, suit, litigation or other
action by a third party against the Asserting Party or any fixed or
contingent liability to a third party (a "Third Party Claim"), the Defending
Party may elect to assume and control the defense of the Third Party Claim at
its own expense with counsel selected by the Defending Party from and after
such time as the Defending Party unconditionally agrees in writing to accept,
as against the Asserting Party, all liabilities on account of such Third
Party Claim. Assumption of such liability, as against the Asserting Party,
shall not be deemed an admission of liability as against any such third
party. Notwithstanding the foregoing, the Defending Party may not assume or
control the defense if the named parties to the Third Party Claim (including
any impleaded parties) include both the Defending Party and the Asserting
Party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, in
which case the Asserting Party shall have the right to defend the Third Party
Claim and to employ counsel reasonably approved by the Defending Party, and
to the extent the matter is determined to be subject to indemnification
hereunder, the Defending Party shall reimburse the Asserting Party for
25
the reasonable costs of its counsel. If the Defending Party assumes
liability for the Third Party Claim as against the Asserting Party and
assumes the defense and control of the Third Party Claim pursuant to this
Section 14.03, the Defending Party shall not be liable for any fees and
expenses of counsel for the Asserting Party incurred thereafter in connection
with the Third Party Claim (except in the case of actual or potential
differing interests, as provided in the preceding sentence), but shall not
agree to any settlement of such Third Party Claim which does not include an
unconditional release of the Asserting Party by the third party claimant on
account thereof, PROVIDED that such requirement shall be deemed waived to the
extent that the Asserting Party does not undertake to provide and promptly
execute and, concurrently with the delivery of any such release, deliver a
corresponding release of the third party claimant with respect to such Third
Party Claim. If the Defending Party does not assume liability for and the
defense of the Third Party Claim pursuant to this Section 14.03, the
Asserting Party shall have the right (i) to control the defense thereof and
(ii), if the Asserting Party shall have notified the Defending Party of the
Asserting Party's intention to negotiate a settlement of the Third Party
Claim (at the Defending Party's expense to the extent the matter is
determined to be subject to indemnification hereunder), which notice shall
include the material terms of any proposed settlement in reasonable detail,
to settle the Third Party Claim (at the Defending Party's expense to the
extent the matter is determined to be subject to indemnification hereunder)
on terms not materially inconsistent with those set forth in such notice,
unless the Defending Party shall have notified the Asserting Party in writing
of the Defending Party's election to assume liability for and the defense of
the Third Party Claim pursuant to this Section 14.03 within ten days after
receipt of such notice, and the Defending Party promptly thereafter shall
have taken appropriate action to implement such defense. The Asserting Party
shall not be entitled to settle any such Third Party Claim pursuant to the
preceding sentence unless such settlement includes an unconditional release
of the Defending Party by the third party claimant on account thereof,
PROVIDED that such requirement shall be deemed waived to the extent that the
Defending Party does not undertake to provide and promptly execute and,
concurrently with delivery of any such release, deliver a corresponding
release of the third party claimant with respect to such Third Party Claim.
The Asserting Party and the Defending Party shall use all reasonable efforts
to cooperate fully with respect to the defense and settlement of any third
Party Claim covered by this Article XIV.
SECTION 14.04. ESCROW; SET-OFF. In addition to any other available
remedies, any Indemnified Purchaser Party shall be entitled to recover funds
pursuant to the Escrow Agreement in an amount equal to any losses to which it
is entitled under this Agreement. In addition, Purchaser shall have the
right, notwithstanding any other rights it might have against any other
person, to set-off against amounts Purchaser may owe Seller or ▇▇▇▇▇▇▇, any
unpaid indemnification obligation of Seller or ▇▇▇▇▇▇▇ to Purchaser to which
Purchaser has been deemed by appropriate tribunal to be entitled under this
Agreement.
SECTION 14.05. FURTHER REMEDIES. The remedies provided to Seller and
Purchaser by this indemnity shall be in addition to, and not in lieu of, any
other remedies to which the respective
26
party is entitled at law or in equity for any breach of or noncompliance with
the provisions of this Agreement by the other party; PROVIDED, HOWEVER that
the time period during which to assert a claim provided for in Articles VIII
and IX hereof shall apply in all instances.
ARTICLE XV
CONFIDENTIALITY AND PRESS RELEASES
SECTION 15.01. CONFIDENTIALITY. Each party shall hold in strict
confidence all documents and information concerning the other and its
business and properties and, if the transaction contemplated hereby should
not be consummated, such confidence shall be maintained, and all such
documents and information (in written form) shall immediately thereafter be
returned to the party originally furnishing the same.
SECTION 15.02. PRESS RELEASES. No press release or public disclosure,
either written or oral, of the existence or terms of this Agreement shall be
made by either Purchaser or Seller without the consent of the other subject
to the provisions of Section 15.03, and Purchaser and Seller shall each
furnish to the other advance copies of any release which it proposes to make
public concerning this Agreement or the transactions contemplated hereby and
the date upon which Purchaser or Seller, as the case may be, proposes to make
such press release.
SECTION 15.03. DISCLOSURES REQUIRED BY LAW. This Article XV shall not,
however, be construed to prohibit any party from making any disclosures to
any governmental authority that it is required to make by law or from filing
this Agreement with, or disclosing the terms of this Agreement to, any
institutional lender to such party, or prohibit Seller, Purchaser or any of
their affiliates from disclosing to its investors, partners, accountants,
auditors, attorneys, parent company and broker/dealers such terms of this
transaction as are customarily disclosed to them in connection with the sale
or acquisition of a cellular telephone system; PROVIDED, HOWEVER, that each
party shall provide to the other reasonable advance copies of any public
release except where the provision of such advance notice is not permissible.
ARTICLE XVI
TERMINATION
This Agreement may be terminated and the transactions contemplated herein
may be abandoned, by written notice given to the other party hereto, at any
time prior to the Closing:
(a) by mutual written consent of Seller and Purchaser;
(b) by either Purchaser or Seller, if any court of competent
jurisdiction in the United States or other United States governmental body
shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise permanently prohibiting the
sale
27
of the Assets to Purchaser (which Seller and Purchaser shall have used
all reasonable efforts to have lifted or reversed) and such order, decree,
ruling or other action shall have become final and nonappealable;
(c) by Purchaser, if Seller or ▇▇▇▇▇▇▇ shall have materially
breached any of their material covenants herein, and said breach is not cured
within 10 business days after written notice of the breach is received by
Seller, or if Seller or ▇▇▇▇▇▇▇ shall have made a material misrepresentation
herein;
(d) by Seller, if Purchaser shall have materially breached any
of its material covenants herein, and said breach is not cured within 10
business days after written notice of the breach is received by Purchaser, or
if Purchaser shall have made a material misrepresentation herein; or
(e) by the Seller or Purchaser if, on or before October 23,
1996, Purchaser (x) notifies Seller pursuant to Section 11.06 that its due
diligence review was not satisfactory to Purchaser or (y) notifies Seller
pursuant to Section 11.07 that the Necessary Financing cannot be arranged by
Purchaser.
(f) by either Seller or Purchaser if the Closing shall not
have occurred on or before October 1, 1997, unless the failure to have the
Closing shall be due to the failure of the party seeking to terminate this
Agreement to perform in any material respect its obligations under this
Agreement required to be performed by it at or prior to the Closing.
ARTICLE XVII
BROKERS' FEES
Each party represents and warrants to the other that it shall be solely
responsible for the payment of any fee or commission due to any broker or
finder it has engaged with respect to this transaction and the other party
hereto shall be indemnified for any liability with respect thereto pursuant
to Article XIV hereof.
ARTICLE XVIII
CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
Purchaser, Seller and ▇▇▇▇▇▇▇ hereby consent to the jurisdiction of the
Federal and State courts of the State of Maryland, as well as to the
jurisdiction of all courts from which an appeal may be taken from the
aforesaid courts, for the purpose of any suit, action or other proceeding
arising out of any of the transactions contemplated by this Agreement.
Purchaser, Seller and ▇▇▇▇▇▇▇ also waive trial by jury in any action brought
on or with respect to this Agreement.
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ARTICLE XIX
MISCELLANEOUS
SECTION 19.01. ADDITIONAL INSTRUMENTS OF TRANSFER. (a) From time to
time after the Closing, each party shall, if requested by another party,
make, execute and deliver such additional assignments, bills of sale, deeds
and other instruments, as may be reasonably necessary or proper to carry out
the specific provisions of this Agreement, including transfer to Purchaser
all of Seller's right, title and interest in and to the Assets. Such efforts
and assistance shall be without cost to any party.
(b) Anything in this Agreement to the contrary
notwithstanding, Seller is not obligated to sell, assign, transfer or convey
to Purchaser any of their rights and obligations in and to any Interest
without first obtaining all necessary approvals, consents or waivers. To the
extent any of the approvals, consents or waivers listed on Schedule 2.01(a)
have not been obtained by Seller as of the Closing and Purchaser elects to
proceed with the Closing, Seller and ▇▇▇▇▇▇▇ shall, for a period equal to the
longer of six months after the Closing, or the remaining term of such
Interest, use all reasonable efforts to (i) obtain the consent of any such
third party; (ii) cooperate with Purchaser in any reasonable and lawful
arrangements designed to provide the benefits (including, without limitation,
the payment to Purchaser of any monies received by Seller in connection
therewith) of such Interest to Purchaser so long as Purchaser performs all
obligations with respect to the Interest (and the payment of all expenses in
connection therewith); and (iii) enforce, at the request of Purchaser and at
the expense and for the account of Purchaser, any rights of Seller or ▇▇▇▇▇▇▇
arising from such Interest against such issuer thereof or the other party or
parties thereto (including the right to elect to terminate any such Interest
in accordance with the terms thereof upon the request of Purchaser);
provided, however, that none of Purchaser, ▇▇▇▇▇▇▇ or Seller shall be
obligated to pay any consideration or other sums therefor (except for filing
fees and other ordinary administrative charges and except as set forth above)
to the third party from whom such approval, consent or waiver is requested.
SECTION 19.02. NOTICES. All notices and other communications required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given if delivered, sent by telecopier, recognized overnight
delivery service or registered or certified mail, return receipt requested,
postage prepaid, to the following addresses:
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(i) If to Purchaser:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Seller:
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Lukas, McGowan, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Notices delivered personally shall be effective upon delivery. Notices
transmitted by telecopy shall be effective when received, provided that the
burden of proving notice when notice is transmitted by telecopy shall be the
responsibility of the party seeking such notice . Notices delivered by
overnight mail shall be effective when received. Notices delivered by
registered or certified mail shall be effective on the date set forth on the
receipt of registered or certified mail, or 72 hours after mailing, whichever
is earlier.
SECTION 19.03. EXPENSES. Each party shall bear its own expenses and
costs, including the fees of any corporate, FCC attorney retained by it,
incurred in connection with the preparation of
30
this Agreement and the consummation of the transactions contemplated hereby;
provided that Purchaser shall be responsible for the ▇▇▇▇-▇▇▇▇▇ Act filing
fee.
SECTION 19.04. TRANSFER TAXES. Purchaser and Seller shall each pay
one-half of the use, sales and transfer taxes, if any, imposed in connection
with the sale and delivery of that portion of the Assets acquired by
Purchaser under this Agreement which are purchased by Seller after the date
hereof with the proceeds of the Interim Loan. Purchaser shall pay the use,
sale and transfer taxes, if any, imposed in connection with the sale and
delivery of any other Assets acquired by Purchaser under this Agreement.
Notwithstanding anything else to the contrary set forth in this Section
19.04, Purchaser shall in no event be responsible in any manner for the
payment of any taxes on any income or gain which Seller or ▇▇▇▇▇▇▇ may
realize as a result of the sale of the Assets or otherwise related to the
transactions contemplated by this Agreement.
SECTION 19.05. COLLECTION PROCEDURES. From and after the Closing,
Purchaser shall have the right and authority, at its expense, to collect for
its account all items to which it is entitled as provided in this Agreement
and to endorse with the name of the Seller any checks or drafts received on
account of any such items. Purchaser agrees for a period of ninety (90) days
after the Closing that Purchaser will use commercially reasonable efforts to
collect for Seller's account all accounts receivable that accrued prior to
the time of the Closing and remit to Seller monthly any and all amounts
collected by Purchaser with respect to such accounts receivable. Collections
on the Seller's accounts receivable shall be maintained in a separate bank
account.
SECTION 19.06. SPECIFIC PERFORMANCE. The parties recognize and
acknowledge that in the event Seller shall fail to perform its obligations
under the terms of this Agreement, money damages alone will not be adequate
to compensate the Purchaser. The parties, therefore, agree and acknowledge
that in the event the Seller fails to perform its obligations under this
Agreement, the Purchaser shall be entitled, in addition to any action for
monetary damages, in addition to any other rights and remedies on account of
such failure, to specific performance of the terms of this Agreement and of
the covenants and obligations hereunder.
SECTION 19.07. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland (without
application of principles of conflicts of law).
SECTION 19.08. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto prior to Closing without the prior written consent of the
other parties, which consent will not be unreasonably withheld.
SECTION 19.09. SUCCESSORS AND ASSIGNS. All agreements made and entered
into in connection with this transaction shall be binding upon and inure to
the benefit of the parties hereto, their successors and assigns.
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SECTION 19.10. AMENDMENTS; WAIVERS. No alteration, modification or
change of this Agreement shall be valid except by an agreement in writing
executed by the parties hereto. No failure or delay by any party hereto in
exercising any right, power or privilege hereunder (and no course of dealing
between or among any of the parties) shall operate as a waiver of any such
right, power or privilege. No waiver of any default on any one occasion
shall constitute a waiver of any subsequent or other default. No single or
partial exercise of any such right, power or privilege shall preclude the
further or full exercise thereof.
SECTION 19.11. STANDSTILL. The Seller hereby agrees that it shall not
offer the Assets or any direct or indirect interest in the Assets or the
Business for sale to any other party until the earlier to occur of the
Closing or the termination of this Agreement. In addition, the Seller hereby
agrees that it shall take no action, directly or indirectly, to solicit
indications of interest in, or offers for the sale of, any interest in the
Assets or the Business until the earlier to occur of the Closing or the
termination of this Agreement.
SECTION 19.12. ENTIRE AGREEMENT. This Agreement merges all previous
negotiations and agreements between the parties hereto, either verbal or
written, and constitutes the entire agreement and understanding between the
parties with respect to the subject matter of this Agreement.
SECTION 19.13. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which when so executed shall be an original, but
all of which together shall constitute one agreement.
SECTION 19.14. SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by
law, but only as long as the continued validity, legality and enforceability
of such provision or application does not materially (a) alter the terms of
this Agreement, (b) diminish the benefits of this Agreement or (c) increase
the burdens of this Agreement, for any person.
SECTION 19.15. SECTION HEADINGS. The section headings contained in this
Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 19.16. INTERPRETATION. As both parties have participated in the
drafting of this Agreement, any ambiguity shall not be construed against
either party as the drafter.
SECTION 19.17. FURTHER ASSURANCES. Seller agrees to provide to
Purchaser from time to time any information that Seller possesses with
respect to the operation of the Business and
32
Assets prior to the Closing which the Purchaser requests in the future in
connection with the Purchaser's financing efforts now or in the future or in
connection with any FCC or other regulatory filing.
SECTION 19.18. THIRD PARTIES. Nothing herein, expressed or implied, is
intended to or shall confer on any person other than the parties hereto any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized representative as of the day
and year first above written.
SELLER:
MARYLAND WIRELESS COMMUNICATIONS, L.P.
By: Maryland Communications Service, LLC,
Its General Partner
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Manager
▇▇▇▇▇▇▇:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
PURCHASER:
▇▇▇▇▇▇ CELLULAR OF MARYLAND, INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
DCC hereby guarantees the performance of Purchaser's obligations under
this Agreement and, along with Purchaser, shall be jointly and severally
liable therefor, (including, without limitation, representations, covenants,
agreements and conditions as well as the provisions of Section 10.07 hereof)
and Seller and ▇▇▇▇▇▇▇ may jointly or severally, bring an action for
enforcement of this guaranty at the same time and in the same forum as an
action is commenced by Seller and/or ▇▇▇▇▇▇▇ for enforcement of Purchaser's
performance of any of its obligations under this Agreement.
34
▇▇▇▇▇▇ COMMUNICATIONS CORPORATION
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
35
