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PURCHASE AND SALE AGREEMENT
Between
PrimeCo Wireless Communications LLC, as Seller
and
United States Cellular Corporation, as Buyer
dated as of
May 9, 2002
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ARTICLE 1 CERTAIN DEFINITIONS.............................................................................1
1.1 Defined Terms...................................................................................1
1.2 Other Definitional Provisions..................................................................10
ARTICLE 2 THE TRANSACTION................................................................................10
2.1 Purchase and Sale..............................................................................10
2.2 Purchase Price.................................................................................11
2.3 Purchase Price Adjustments.....................................................................11
2.3.1 Net Working Capital Adjustment........................................................11
2.3.2 [Left Blank]..........................................................................15
2.3.3 [Left Blank]..........................................................................15
2.3.4 Acquisition and Contribution of Certain Assets Adjustment.............................15
2.3.5 EMF Insurance.........................................................................15
2.4 Closing........................................................................................15
2.5 Deliveries and Proceedings at Closing..........................................................16
2.6 Sale of C20 Spectrum by Buyer..................................................................18
ARTICLE 3 REPRESENTATIONS AND WARRANTIES.................................................................19
3.1 Representations and Warranties of Seller.......................................................19
3.1.1 Seller Existence......................................................................20
3.1.2 The Company's and Subsidiaries' Existence and Qualification...........................20
3.1.3 Compliance with Law; Authorizations...................................................20
3.1.4 Litigation............................................................................21
3.1.5 Contracts and Other Agreements........................................................22
3.1.6 Validity of Contemplated Transactions, Etc............................................24
3.1.7 Taxes.................................................................................25
3.1.8 Environmental Matters.................................................................26
3.1.9 Title; Real and Personal Property; Sufficiency of Assets..............................27
3.1.10 Condition of Tangible Assets..........................................................28
3.1.11 Accounts Receivable...................................................................29
3.1.12 Inventory.............................................................................29
3.1.13 Material Changes......................................................................29
3.1.14 Intellectual Property Matters.........................................................30
3.1.15 Books of Account; Financial Statements................................................30
3.1.16 No Interest in Other Entities.........................................................31
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3.1.17 Availability of Documents.............................................................31
3.1.18 Brokers or Finders....................................................................31
3.1.19 Form of Agreements; Rate Plans........................................................31
3.1.20 Labor Relations.......................................................................32
3.1.21 Employee Benefit Plans................................................................33
3.1.22 Insurance.............................................................................36
3.1.23 No Undisclosed Liabilities............................................................37
3.1.24 Prior Divestitures and Reorganizations................................................37
3.1.25 Accounts, Safe Deposit Boxes, Locations and Officers..................................37
3.1.26 Microwave.............................................................................37
3.1.27 Affiliate Transactions................................................................37
3.1.28 Operations............................................................................37
3.1.29 Spare Parts...........................................................................38
3.1.30 Communications Towers.................................................................38
3.1.31 V-V PCS L.P. National Service Agreements..............................................38
3.1.32 Guard Band............................................................................38
3.1.33 Future Credits to Customers...........................................................38
3.2 [Left Blank]...................................................................................38
3.3 Representations and Warranties of Buyer........................................................38
3.3.1 Buyer Existence, Etc..................................................................39
3.3.2 Litigation............................................................................39
3.3.3 Validity of Contemplated Transactions, Etc............................................39
3.3.4 Financing.............................................................................39
3.3.5 Brokers or Finders....................................................................40
3.3.6 Communications Act....................................................................40
3.3.7 CMRS Spectrum Aggregation Limits......................................................40
3.4 Survival of Representations and Warranties.....................................................40
3.5 No Representations or Warranties Implied.......................................................40
3.6 Schedules......................................................................................41
ARTICLE 4 COVENANTS AND AGREEMENTS.......................................................................41
4.1 Agreements of Seller Pending the Closing.......................................................41
4.1.1 Conduct of the Company Business in the Ordinary Course................................41
4.1.2 Distributions.........................................................................43
4.1.3 Access................................................................................43
4.1.4 Asset Sale Proceeds...................................................................43
4.1.5 Casualty Insurance Proceeds...........................................................44
4.1.6 Exclusivity...........................................................................44
4.1.7 Financial Information.................................................................44
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4.1.8 Assignment of Non-Disclosure Agreements...............................................44
4.1.9 Schedule Updates......................................................................45
4.1.10 Liabilities...........................................................................45
4.1.11 Marketing Services Agreement..........................................................46
4.1.12 [Left Blank]..........................................................................46
4.1.13 EMF Insurance.........................................................................46
4.1.14 [Left Blank]..........................................................................47
4.1.15 Sales and Marketing Expenditures......................................................47
4.2 Agreements of Buyer............................................................................47
4.2.1 Approvals and Disapprovals............................................................47
4.2.2 Control of Systems Pending Closing....................................................47
4.2.3 [Left Blank]..........................................................................47
4.2.4 Retention of Books and Records........................................................47
4.2.5 Communications Act....................................................................48
4.2.6 CMRS Spectrum Limits..................................................................48
4.2.7 Reimbursement of Attorneys' Fees and Costs............................................48
4.2.8 Microwave.............................................................................48
4.2.9 Cooperation Regarding IMF Litigation..................................................48
4.2.10 Employment Agreements.................................................................48
4.2.11 Buyer Efforts to Obtain Financing.....................................................49
4.3 Agreements of Seller Pending the Closing.......................................................49
4.3.1 Agreement Regarding Certain Assets....................................................49
4.3.2 Closing Date Operating Statistics.....................................................49
4.3.3 Consents..............................................................................49
4.3.4 Alternative Arrangements..............................................................49
4.3.5 Other Assets..........................................................................51
4.4 Covenants of Seller and Buyer..................................................................51
4.4.1 FCC and State Commission Authorizations...............................................51
4.4.2 HSR Act Matters.......................................................................51
4.4.3 Copies of Regulatory Filings..........................................................52
4.4.4 Publicity and Confidentiality.........................................................52
4.4.5 Additional Post-Closing Confidentiality Undertakings..................................52
4.4.6 Cooperation...........................................................................53
4.4.7 Other Regulatory Requirements.........................................................53
4.4.8 Company Litigation....................................................................53
4.4.9 Retention and Delivery of Books and Records...........................................54
4.4.10 Purchase Price Allocation.............................................................54
4.4.11 Cooperation in Indemnity Claims.......................................................55
4.4.12 Failure to Obtain Certain Consents and Assignments....................................55
4.4.13 Company Agreement and Subsidiary Agreements...........................................55
4.4.14 [Left Blank]..........................................................................55
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4.4.15 Liabilities under Certain Contracts Retained by Seller................................55
4.4.16 Payment and Accrual of Bonuses........................................................55
4.4.17 Transition Incentive Plan.............................................................56
ARTICLE 5 CONDITIONS PRECEDENT TO CLOSING................................................................56
5.1 Conditions Precedent to Obligations of Buyer...................................................56
5.1.1 Representations and Warranties True as of Closing.....................................56
5.1.2 Compliance with this Agreement........................................................56
5.1.3 Closing Certificates..................................................................56
5.1.4 No Material Adverse Change............................................................57
5.1.5 Approvals.............................................................................57
5.1.6 Required Consents; Notices; Assignment of Leases......................................57
5.1.7 Amendment of Certain Employment Agreements and Other Matters..........................57
5.2 Conditions Precedent to Obligations of Seller..................................................57
5.2.1 Representations and Warranties True as of Closing.....................................57
5.2.2 Compliance with this Agreement........................................................57
5.2.3 Closing Certificate...................................................................57
5.3 Conditions Precedent to the Obligations of Buyer and Seller....................................57
5.3.1 Regulatory and Other Approvals........................................................58
5.3.2 No Pending Governmental Litigation....................................................58
ARTICLE 6 INDEMNIFICATION................................................................................58
6.1 General Indemnification Obligation of Seller...................................................58
6.2 General Indemnification Obligation of Buyer....................................................60
6.3 Limitations on Claims for Certain Losses.......................................................61
6.4 Indemnification Procedure as to Third-Party Claims.............................................62
6.5 Adjustment For Insurance.......................................................................63
6.6 Payment........................................................................................63
6.7 Other Rights and Remedies......................................................................63
6.8 Treatment of Indemnity Payments................................................................64
6.9 Apportionment of Taxes Indemnified Against.....................................................64
ARTICLE 7 MISCELLANEOUS..................................................................................64
7.1 Termination....................................................................................64
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7.2 Expenses.......................................................................................67
7.3 Further Assurances.............................................................................67
7.4 Buyer Termination Fee Rights...................................................................67
7.5 Non-Solicitation...............................................................................68
7.6 Contents of Agreement..........................................................................68
7.7 Assignment and Binding Effect..................................................................68
7.8 Waiver.........................................................................................69
7.9 Notices........................................................................................69
7.10 Remedies.......................................................................................71
7.11 Applicable Law; Consent to Jurisdiction........................................................71
7.12 No Benefit to Others...........................................................................71
7.13 Headings.......................................................................................71
7.14 Severability...................................................................................71
7.15 Counterparts...................................................................................71
EXHIBITS
Exhibit A - Assignment and Assumption of Company Interest
Exhibit B - Document Assignment and Assumption Agreements
Exhibit B-1 - Transition Services Agreement and Verizon Agreement
Exhibit B-2 - Employee Transfer Agreement
Exhibit C - Employee Transfer Agreement
Exhibit D - Roaming Agreement, as amended Exhibit E - Transition Services Agreement
Exhibit F - Trademark Assignment
Exhibit G - Escrow Agreement
SCHEDULES
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Schedule 2.5(a)(viii) Form of FCC Opinion
Schedule 3.1.3(a) Compliance with Law
Schedule 3.1.3(b) Company Authorizations
Schedule 3.1.4 Litigation
Schedule 3.1.5(a) Company Contracts
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SCHEDULES
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Schedule 3.1.5(c) Notices of Modification of Relationship by a
Supplier of the Company Business
Schedule 3.1.5(d) Related Agreements
Schedule 3.1.6 Seller Consents
Schedule 3.1.6(c) Lease Assignments
Schedule 3.1.7 Taxes
Schedule 3.1.8 Environmental Matters
Schedule 3.1.8(b) Underground Storage Tanks
Schedule 3.1.9(a) Permitted Company Liens
Schedule 3.1.9(b) Real Property
Schedule 3.1.9(c) Title Exceptions
Schedule 3.1.10 Third-Party Owned Property
Schedule 3.1.11 Accounts Receivable
Schedule 3.1.13 Material Changes
Schedule 3.1.14 Intellectual Property Matters
Schedule 3.1.15 Financial Statements
Schedule 3.1.16 Subsidiaries
Schedule 3.1.17 Contracts Subject to Confidentiality Provisions
Schedule 3.1.19 Standard Rate Plans, Products and Services; Forms of
Customer/Subscriber Agreements
Schedule 3.1.20(b) Unfair Practices Complaints
Schedule 3.1.20(i) Employment Not Terminable at Will and Severance Arrangements
Schedule 3.1.20(k) Leave Recipients
Schedule 3.1.20(l) List of Employees, Job Titles and Compensation
Schedule 3.1.21(c) Company Employee Plans
Schedule 3.1.21(f) Change of Control and Excess Parachute Payments
Schedule 3.1.21(j) Post-Employment Benefits
Schedule 3.1.21(m) Notice and Penalties
Schedule 3.1.22 Insurance
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Schedule 3.1.23 Certain Liabilities
Schedule 3.1.24 Indemnification Obligations
Schedule 3.1.25 Accounts, Safe Deposit Boxes, Locations and Officers
Schedule 3.1.27 Affiliate Transactions
Schedule 3.1.28 Definitions for Section 3.1.28 and Operating Statistics
Schedule 3.1.33 Future Credits to Customers
Schedule 3.3.3 Buyer Consents
Schedule 3.3.4 Commitment and Engagement Letters
Schedule 4.1.1 Transition Planning
Schedule 4.1.1(g) Changes in Marketing and Promotions
Schedule 4.1.1(k) Compensation Increases
Schedule 4.1.10(a) Buyer Assumed Liabilities
Schedule 4.1.15 Sales and Marketing
Schedule 4.2.10 Buyer Assumed Employment Agreements
Schedule 4.2.11 Buyer Efforts to Obtain Financing
Schedule 4.4.10 Purchase Price Allocation
Schedule 4.4.12 Failure to Obtain Certain Consents and Assignments
Schedule 4.4.15 Liabilities under Certain Contracts Retained by Seller
Schedule 5.1.7 Amendment of Certain Agreements
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of May 9,
2002, is entered into by and between PrimeCo Wireless Communications LLC, a
Delaware limited liability company ("Seller"), and United States Cellular
Corporation, a Delaware corporation ("Buyer").
R E C I T A L S
WHEREAS, Seller owns 100% of the outstanding membership
interests (the "Company Interest") in Chicago 20MHz, LLC, a Delaware
limited liability company (the "Company");
WHEREAS, the Company is the holder of certain licenses,
through a wholly owned subsidiary, granted by the United States Federal
Communications Commission (the "FCC"), including a 20 MHz Personal
Communications Services license for the Chicago Metropolitan Trading
Area (other than the county of Kenosha, Wisconsin, the "Company MTA");
WHEREAS, the Company, directly and through its wholly owned
subsidiaries, is the owner of wireless telecommunications systems in
the Company MTA and, in connection therewith, is engaged in the
business of marketing, selling and providing Personal Communications
Services in the Company MTA (the "Company Business"); and
WHEREAS, on the terms and conditions contained in this
Agreement, Buyer desires to purchase the Company Interest from Seller.
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants, agreements and
conditions herein contained, and intending to be legally bound, the
parties hereto agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement (including the Schedules
hereto), the terms defined in this Agreement shall have the respective meanings
specified herein, and, in addition, the following terms shall have the following
meanings:
"2001 Purchase Agreement" is defined in Section 4.3.5.
"Action" means any claim, action, suit, litigation, arbitration,
investigation or other proceeding.
"Affiliate" or "affiliate" means, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. The term "control" (including, with
correlative meanings, the terms "controlled by" and "under
common control with"), as applied to any Person, means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
other ownership interest, by contract or otherwise. Without limiting the
foregoing, prior to consummation of the purchase and sale of the Company
Interest contemplated hereby, Seller shall for all purposes of this Agreement be
deemed an Affiliate of the Company and the Subsidiaries until the Closing.
"Agreement" means this Purchase and Sale Agreement, and all Schedules
and Exhibits hereto, as amended, modified or supplemented from time to time in
accordance with the terms hereof.
"Agreement Schedules" has the meaning set forth in Section 3.6.
"Alternative Arrangement" is defined in Section 4.3.4(f).
"Assumed Closing Date Net Working Capital" is defined in Section
2.3.1(a).
"ARPU" is defined in Section 3.1.28.
"Assignment and Assumption" is defined in Section 2.5(a)(i).
"Authorizations" means, as to any Person, all licenses, permits,
franchises, orders, approvals, concessions, registrations, qualifications and
other authorizations with or under all federal, state, local or foreign laws and
Governmental Authorities and all industry or other non-governmental
self-regulatory organizations that are issued to such Person and including, with
regard to the Company, all Company Authorizations and Company FCC
Authorizations.
"BTAs" means Basic Trading Areas.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banks in the City of New York are authorized or required to close.
"Buyer" is defined in the first paragraph of this Agreement.
"Buyer Assumed Liabilities" is defined in Section 4.1.10(b).
"Buyer Consents" is defined in Section 3.3.3.
"Buyer Indemnitee" is defined in Section 6.1.
"Cap" is defined in Section 6.3(a).
"Claim" is defined in Section 6.4(a).
"Closing" and "Closing Date" are defined in Section 2.4.
"Closing Date Net Working Capital" is defined in Section 2.3.1(c).
"Closing Date Net Working Capital Schedule" is defined in Section
2.3.1(d).
2
"Closing Schedules" has the meaning set forth in Section 3.6.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Commercially Reasonable Efforts" means a Party's efforts in accordance
with reasonable commercial practices and without the payment of any money to any
third party except the incurrence of reasonable costs and expenses that are not
material in the context of the commercial objectives to be achieved by the
subject efforts of such Party.
"Commitment Letters" is defined in Section 3.3.4.
"Communications Act" is defined in Section 3.3.6.
"Company" is defined in the Recitals.
"Company Advance Payments" means payments with respect to the assets of
the Company made by the Company or the Subsidiaries (other than in connection
with capital expenditures) for goods or services prior to the Closing Date
relating to the Company Business, to the extent such goods or services are not
fully used or received by the Company or the Subsidiaries as of the Closing
Date, including prepaid rent, prepaid insurance, prepaid Taxes and prepaid
advertising.
"Company Agreement" means the Limited Liability Company Agreement dated
March 31, 2000, including any and all amendments to the date hereof, and other
instruments, if any, between the parties to such agreement governing the
Company.
"Company Auditors" means Arthur Andersen LLP, unless Arthur Andersen
LLP is dismissed or resigns as the Company's auditor, in which case the
Company's auditor shall be PricewaterhouseCoopers LLP (if it is willing to
accept such engagement) or such other internationally recognized accounting firm
that is mutually acceptable to Buyer and Seller.
"Company Authorizations" means all Authorizations relating to the
Company Business including the Company FCC Authorizations.
"Company Business" is defined in the Recitals.
"Company Contracts" is defined in Section 3.1.5(b).
"Company Current Balance Sheet" is defined in Section 3.1.15.
"Company Customer Deposits" means deposits received by the Company or
the Subsidiaries from customers and subscribers prior to the Closing Date
relating to the Company Business, including deposits by customers whose
creditworthiness requires payments in advance.
"Company Customer Prepayments" means payments received by the Company
or the Subsidiaries for goods or services relating to the Company Business from
customers and subscribers where such goods or services are not fully delivered
or performed by the Company
3
as of the Closing Date, including advance payments for debit cards for a
specified number of minutes, determined in a manner consistent with the Company
Current Balance Sheet.
"Company Deposits" means deposits paid by the Company or the
Subsidiaries to third parties prior to the Closing Date relating to the Company
Business, including deposits with respect to property leased by the Company or
the Subsidiaries as tenant.
"Company Employee Plans" is defined in Section 3.1.21(a).
"Company FCC Authorizations" means all Authorizations issued by the FCC
to the Company or any Subsidiary to construct, own and operate Personal
Communications Services in the Company MTA, including all associated microwave
facilities, and all construction permits that have been applied for to the FCC
or issued by the FCC to the Company or any Subsidiary with respect to
construction of Personal Communications Services systems and related stations
and facilities, including 20MHz of the 30 MHz B-block Personal Communications
Services spectrum for the Company MTA (Market MTA 003, Submarket 3, frequency
range 1870-1880 lower band, 1950-1960 upper band) licensed to the Company or any
Subsidiary by the FCC, but not including the license for 10 MHz of Personal
Communications Services spectrum which has been disaggregated from such license
and is not owned by the Company or any Subsidiary, and not including the license
to operate Personal Communications Services in Kenosha County, Wisconsin, which
has been partitioned from such license and is not owned by the Company or any
Subsidiary.
"Company Financial Statements" is defined in Section 3.1.15.
"Company Interest" is defined in the Recitals.
"Company Litigation" is defined in Section 4.4.8.
"Company MTA" is defined in the Recitals.
"Company Promotional Item" is defined in Section 4.4.8.
"Confidential Agreements" is defined in Section 3.1.17(a).
"Convergys" means Convergys Information Management Group, Inc.
"Convergys Agreement" means the Master Services Agreement dated March
__, 2002 between the Company and Convergys relating to the implementation of
billing and related systems for the Company by Convergys.
"Convergys Contract Amount" means an aggregate of $1,250,000, less any
payment of such amount on or prior to the Closing Date, that becomes payable by
the Company to Convergys under Section 6 of Work Order No. 2002-01 entered into
between Convergys and the Company pursuant to the Convergys Agreement following
the payment of $2,000,000 by Convergys to the Company pursuant to Section 4 of
the Convergys Agreement; provided that the Convergys Contract Amount shall be
zero if such $2,000,000 payment has not been made on or prior to the Closing
Date.
4
"C20 Spectrum" means the 20MHz of the 30 MHz B-block Personal
Communications Services spectrum for the Company MTA (Market MTA 003, Submarket
3, frequency range 1870-1880 lower band, 1950-1960 upper band) licensed to the
Company or any Subsidiary by the FCC as of the Closing Date.
"Current Assets" is defined in Section 2.3.1(b)(i).
"Current Liabilities" is defined in Section 2.3.1(b)(ii).
"Deductible" is defined in Section 6.3(a).
"Damaged Assets" is defined in Section 4.1.5.
"Dispute Resolution Request" is defined in Section 2.3.1(e).
"Distribution" means the payment or other direct or indirect
distribution of cash or any other assets by the Company to any of its members or
their Affiliates in respect of their membership interests in the Company, and
"Distribute" has a correlative meaning.
"Document Assignment and Assumption Agreements" is defined in Section
2.5(b)(vii) and attached hereto as Exhibit B.
"DOJ" means the United States Department of Justice.
"DOJ Final Judgment" means the Final Judgment entered by the United
States District Court for the District of Columbia on April 18, 2000 in United
States of America v. Bell Atlantic Corporation, GTE Corporation and Vodafone
AirTouch Plc.
"Due Date" is defined in Section 6.6(a).
"Employee Plan" is defined in Section 3.1.21(a).
"Employee Transfer Agreement" is defined in Section 2.5(b)(vii).
"Environmental Claims" is defined in Section 3.1.8(b).
"Environmental Laws" is defined in Section 3.1.8(b).
"Environmental Permits" is defined in Section 3.1.8(b).
"ERISA" is defined in Section 3.1.21(a).
"ERISA Affiliate" is defined in Section 3.1.21(a).
"Escrow Agent" means the escrow agent under the Escrow Agreement.
"Escrow Account" means the escrow account established by the Escrow
Agreement.
5
"Escrow Agreement" means the Escrow Agreement in substantially the form
attached hereto as Exhibit G to be entered into among Buyer, Seller and Escrow
Agent.
"Excess Proceeds" means, for purposes of Section 2.6 only, proceeds
from the sale of C20 Spectrum in excess of $1.75 per MHz pop, from which
proceeds will be subtracted the transaction costs and any taxes incurred in
connection with such sale.
"FCC" is defined in the Recitals.
"FCC Application" is defined in Section 4.4.1.
"FCC Construction Requirements" is defined in Section 3.1.3(b).
"FTC" means the United States Federal Trade Commission.
"Final Order" means an action by the FCC or other applicable
Governmental Authority that is not reversed, stayed, enjoined, set aside,
annulled or suspended, and with respect to which no request for stay, motion or
petition for reconsideration or rehearing, application or request for review, or
notice of appeal or other judicial petition for review filed within the
deadline, if any, provided by applicable law is pending, and as to which the
deadline, if any, for filing any such request, motion, petition, application,
appeal or notice, and for entry of orders staying, reconsidering or reviewing on
the FCC's or any other applicable Governmental Authority's own motion has
expired.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof or any entity (including a court) exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government (other than a taxing authority).
"Governmental Order" means, as to any Person, any judgment, injunction,
decree, order or other determination of an arbitrator or a Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property or assets is subject.
"Guard Band Arrangement" is defined in Section 3.1.32.
"Hazardous Material" is defined in Section 3.1.8(b).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indebtedness" is defined in Section 3.1.5(a)(x).
"Indemnitee" is defined in Section 6.4(a).
6
"Indemnitor" is defined in Section 6.4(a).
"Intellectual Property" means all copyrights, patents, trademarks,
trade names, service marks, URLs and applications for the foregoing and all
software, firmware, trade secrets, and proprietary technologies, know-how,
inventions, discoveries, improvements, processes and formulas (secret or
otherwise) and all other forms of intellectual property.
"Inventory" means all inventory held by the Company or the Subsidiaries
for consumption by or sale to the public, including phones, accessories, spare
parts and supplies, whether or not obsolete. Inventory does not include spare
parts and supplies held by the Company or the Subsidiaries for the construction,
maintenance or installation of capital assets, including switch cards and
software used in the Company's business systems.
"Knowledge" means, with respect to the Seller, only those facts,
circumstances or events actually known by Rich Cane - Chief Operating Officer;
Gary Burge - Chief Financial Officer; Patrick Joggerst - President; John Bradley
- - Director of Finance; Ken Borner - Technical Director; Mark Zaccone - Director
of Network Engineering; Kevin Parzyck - Director of Business Operations; Paul
Crane - Director of Customer Care; Debbie Zelinski - Director of Human
Resources; Steve Greenberg; Barry Porter; and Jack Scanlon; and, with respect to
the Buyer, only those facts, circumstances or events actually known by the Chief
Executive Officer, the Chief Financial Officer of the Buyer, the Senior Vice
President - Acquisitions and Corporate Development of Telephone and Data
Systems, Inc. and the Vice President and Treasurer of Telephone and Data
Systems, Inc.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement (other than with landlords), encumbrance, lien (statutory or other),
charge or other security interest, preemptive right, existing or claimed right
of first refusal, right of first offer, right of consent, put right, default or
similar right or other adverse claim of any kind or nature whatsoever (including
any conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing) other
than those for Taxes not yet due and payable or being contested in good faith by
appropriate proceedings.
"Losses" is defined in Section 6.1(a).
"Marketing Services Agreement" is defined in Section 4.1.11.
"Material Adverse Change" and "Material Adverse Effect" means any
change, effect or circumstance that is or would reasonably be expected to be
materially adverse to the business, assets, liabilities, properties, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole, but shall not include any change, effect or
circumstance involving liabilities that are not to be transferred pursuant to
this Agreement or any change, effect or circumstance (i) occurring by reason of
any actions taken by Buyer following the date of this Agreement (other than
actions required by this Agreement) or (ii) that is generally applicable in (A)
the wireless telecommunications industry generally including the adoption or
implementation of regulatory changes or the issuance of additional licenses for
the provision of wireless telecommunications services in the Company MTA, (B)
the United States economy or (C) the United States or global financial or
capital markets.
7
"Minor Consents" is defined in Section 3.1.6(a).
"MTA" means a Major Trading Area.
"Operating Results Determination Date" is defined in Section 4.3.2.
"Party" or "party" means a party to this Agreement.
"Percentage Interest" means the portion allocated to a relevant Person
of the earnings, profits, losses and Distributions of the Company pursuant to
the Company Agreement or of any Subsidiary pursuant to any Subsidiary Agreement.
"Permitted Company Liens" is defined in Section 3.1.9(a).
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity or enterprise
of whatever nature.
"Personal Communications Services" means radio communications that
encompass mobile and ancillary fixed communication that provide services to
individuals and businesses and can be integrated with a variety of competing
networks, as such term is defined in 47 C.F.R. ss. 24.5.
"Post-Closing Partial Period" is defined in Section 6.2(d).
"Pre-Closing Partial Period" is defined in Section 6.1(e).
"Prime Rate" means the annual interest rate set forth as the Prime Rate
in the "Money Rates" table of The Wall Street Journal.
"Property Taxes" means ad valorem, real and personal property Taxes.
"Purchase Price" is defined in Section 2.2.
"Related Agreements" means, collectively, the Employee Transfer
Agreement, and the Transition Services Agreement and, to the extent assignable
without the consent of Verizon Wireless, the Verizon Agreement.
"Requirement of Law" means, as to any Person, any permit, license,
judgment, order, decree, statute, law, ordinance, rule, regulation or
arbitration award in each case applicable to or binding upon such Person or any
of its property or assets or to which such Person or any of its property or
assets is subject.
"Roaming Agreement" means the Intercarrier Roaming Service Agreement
dated as of October 31, 2001 between Seller and Cellco Partnership d/b/a Verizon
Wireless, assigned to the Company on February __, 2002, as amended by Amendment
No. 1 to the Intercarrier Roaming Agreement dated as of May 2, 2002 between the
Company and CellCo Partnership d/b/a Verizon Wireless, copies of which are
attached to this Agreement as Exhibit D.
8
"Sale" means, for purposes of Section 2.6 only, any sale of stock,
merger, consolidation, reorganization, exchange of stock or similar transaction
involving a change in control of Buyer.
"Schedule Changes" means any corrections, updates, additions, deletions
and other changes to the Schedules.
"Seller" is defined in the first paragraph of this Agreement.
"Seller Consents" is defined in Section 3.1.6(a).
"Seller Group" means the Seller, the members of the Seller and the
general partner or managing member of any member of the Seller.
"Seller Indemnitee" is defined in Section 6.2.
"Seller Objection Notice" is defined in Section 2.3.1(d).
"Seller Required Consents" is defined in Section 3.1.6(a).
"State Commission" means any applicable state public service, public
utility or commerce commission.
"Subsidiaries" means all subsidiaries of the Company, including PrimeCo
Spectrum Holdings LLC and PrimeCo Real Estate Holdings LLC.
"Subsidiary Agreements" means the limited liability operating
agreements pursuant to which the Subsidiaries are organized, including any and
all amendments to the date of this Agreement, and other instruments, if any,
between the parties to such agreements governing the Subsidiaries.
"Subsidiary Interests" means 100% of the outstanding membership
interests in each of the Subsidiaries.
"Tax Return" means any return, declaration, report, claim for refund or
information return or statement filed or required to be filed with any taxing
authority relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"Taxes" or "Tax" means all taxes of any kind, including any federal,
state, local and foreign income, profits, license, severance, occupation,
windfall profits, capital gains, capital stock, transfer, registration, social
security (or similar), production, franchise, gross receipts, payroll, sales,
employment, use, property, real property, personal property, excise, value
added, estimated, stamp, alternative or add-on minimum, withholding and any
other tax or assessment, together with all interest, penalties and additions
imposed with respect to such amounts.
"Trademark Assignment" means the Trademark Assignment dated as of the
Closing Date between the Seller and the Company substantially in the form of
Exhibit F hereto.
"Transaction Documents" is defined in Section 3.1.1(c).
9
"Transition Services Agreement" is defined in Section 2.5(b)(vii).
"Verizon Agreement" means the Verizon Wireless Agreement dated October
31, 2001 between Seller and Verizon Wireless.
"Wireless System Assets" means all types of assets, tangible and
intangible (including all of the Company's right, title and interest in one or
more entities that hold such assets), used by the Company, the Subsidiaries, the
Seller or other members of the Seller Group in the operation of the Company
Business, including, without limitation, all types of real and personal
property, monies and financial instruments, accounts receivable, customer
deposits, equipment, inventory, office furniture, fixed assets and furnishings,
supplies and materials, contracts, agreements, leases, commitments, spectrum
licenses issued by the FCC (including 20MHz of the Company MTA B-block Personal
Communication Services license) and all other licenses, permits and
authorizations, operational support systems, customer support and billing
systems, interfaces with other service providers, business and customer records
and information, customer lists, credit records, accounts, and historic and
current business plans, as well as any patents, licenses, sub-licenses, trade
secrets, know-how, drawings, blueprints, designs, technical and quality
specifications and protocols, quality assurance and control procedures, manuals
and other technical information as the Company, the Subsidiaries, the Seller or
other members of the Seller Group supply to their own employees, customers,
suppliers, agents, or licensees, and trademarks, trade names and service marks
or other intellectual property, including all intellectual property rights under
third party licenses that are capable of being transferred to a purchaser either
in their entirety or through a license obtained through or from the Company, the
Subsidiaries, the Seller or other members of the Seller Group; provided,
however, that ownership of name "PrimeCo" and related names and marks (including
service marks, domain names and toll-free numbers) shall not be included as
Wireless System Assets.
1.2 Other Definitional Provisions. (a) The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(b) Unless the context otherwise requires, the words "include,"
"includes" and "including" and words of similar import when used in this
Agreement shall be deemed to be followed by the phrase "without limitation."
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
ARTICLE 2
THE TRANSACTION
2.1 Purchase and Sale. Subject to the terms and conditions hereinafter
set forth and on the basis of and in reliance upon the representations,
warranties, covenants, agreements and conditions set forth herein, at the
Closing, Seller shall grant, sell, convey, assign, transfer and deliver to Buyer
(or, subject to Section 7.7, Buyer's designee for purposes of facilitating a
10
deferred like-kind exchange under Section 1031 of the Code), and Buyer shall
purchase from Seller, all of Seller's right, title and interest in and to the
Company Interest, free and clear of all Liens other than restrictions imposed by
federal and state securities laws.
2.2 Purchase Price. The aggregate purchase price to be paid by Buyer to
Seller for the Company Interest shall be Six Hundred Seven Million Six Hundred
Fifty Thousand Dollars ($607,650,000) (as it is adjusted pursuant to Section
2.3.1, Section 2.3.4, and Section 2.3.5, the "Purchase Price"), provided that
10% of the Purchase Price payable at Closing (after any such adjustments to be
made at the Closing), shall be payable by wire transfer in immediately available
funds to the Escrow Agent for deposit into the Escrow Account pursuant to the
terms of the Escrow Agreement, and the balance of the Purchase Price payable at
Closing shall be payable by wire transfer of immediately available funds to such
account(s) as Seller shall designate in writing prior to the Closing Date.
2.3 Purchase Price Adjustments
2.3.1 Net Working Capital Adjustment. (a) The amount of the
Purchase Price set forth in Section 2.2 was determined, in part, based upon the
assumption that the Closing Date Net Working Capital will be Zero (-0-) (the
"Assumed Closing Date Net Working Capital"). Following the Closing, in
accordance with this Section 2.3.1, the Purchase Price shall be adjusted dollar
for dollar (i) upward by the amount by which the Closing Date Net Working
Capital, as determined in accordance with the provisions set forth below,
exceeds the Assumed Closing Date Net Working Capital or (ii) downward by the
amount by which the Assumed Closing Date Net Working Capital exceeds the Closing
Date Net Working Capital. If the Purchase Price is adjusted upward from the
amount paid at Closing, then, within ten (10) Business Days after such final
determination of the Closing Date Net Working Capital, Buyer shall pay to Seller
an amount equal to the adjustment in immediately available funds, plus interest
on such amount from the Closing Date until the date of payment at the Prime Rate
on the Closing Date. If the amount of the Purchase Price is adjusted downward
from the amount paid at Closing, then, within ten (10) Business Days after such
final determination of the Closing Date Net Working Capital, Seller shall pay to
Buyer an amount equal to the adjustment in immediately available funds, plus
interest on such amount from the Closing Date until the date of payment at the
Prime Rate on the Closing Date.
(b) As used herein, the following terms shall have the
respective meanings assigned to them below.
(i) "Current Assets" shall consist, without duplication, of
the following current assets (less any associated reserves) of the
Company and the Subsidiaries, on a consolidated basis, each
determined as of the date of determination in accordance with GAAP
consistent with the practice used in preparing the Company's
financial statements as of, and for the period ended, December 31,
2001:
(A) all cash and cash equivalents, except for cash reserves
described in Section 2.3.1(b)(iii);
11
(B) all accounts receivable which have been outstanding for
less than 121 days (whether billed or unbilled), net of reserves,
including a reserve for returns, sales allowances and
uncollectibility; provided such reserve shall be verified by the
Company Auditors by appropriate audit procedures (or such other
procedures as are reasonably satisfactory to the Buyer and Seller)
to be adequate in amount and any reserve with respect to accounts
receivable outstanding (i) for more than 30 days and less than 61
days shall be at least 20 percent of the amount of such accounts
receivable; (ii) for more than 60 days and less than 91 days shall
be at least 70 percent of the amount of such accounts receivable;
(iii) for more than 90 days and less than 121 days shall be at
least 90 percent of the amount of such accounts receivable; and
(iv) for more than 120 days shall be 100 percent of the amount of
such accounts receivable.
(C) all Inventory, new, unused and available for resale (but
not including factory refurbished units) net of reserves,
including a reserve for slow movement, obsolescence and
non-functionality; provided such reserve shall be verified by the
Company Auditors by appropriate audit procedures (or such other
procedures as are reasonably satisfactory to the Buyer and Seller)
to be adequate in amount, including taking into consideration the
particular items of inventory (e.g. phones, accessories, spare
parts, supplies);
(D) all Company Deposits and Company Advance Payments that
can reasonably be expected to be recovered (in cash or by the
reduction or offset of a liability in the same amount) by the
Company in less than one year, net of reserves, to the extent such
deposits and advance payments are verified by the Company Auditors
by appropriate audit procedures (or such other procedures as are
reasonably satisfactory to the Buyer and Seller); and
(E) any reimbursement or other award of attorneys' fees and
other litigation costs actually received by the Company in respect
of fees or expenses previously paid by the Company or V-V PCS,
L.P. (f/k/a PrimeCo PCS, L.P.) or any prior owner of the Company
in connection with PrimeCo PCS, L.P., et al. v. Illinois Commerce
Commission, et al., Case No. 98 CH 5500 (Cook County, CH Div.),
except to the extent such fees or expenses are otherwise reflected
as a Current Asset in accordance with a different subsection of
this Section 2.3.1(b)(i).
(ii) "Current Liabilities" shall consist, without duplication,
of all of the current liabilities of the Company and the Subsidiaries, on a
consolidated basis, that are Buyer Assumed Liabilities, each determined as of
the date of determination in accordance with GAAP consistent with the practice
used in preparing the Company's financial statements as of, and for the period
ended, December 31, 2001, and any changes, increases or decreases thereto
permitted pursuant to the terms of this Agreement including, but not limited to,
the following liabilities; provided that the accrual relating to federal
universal service fund charges, which in the past has been accrued at 150% of
the anticipated liability, shall be accrued at 100% of the anticipated liability
for purposes of calculating Current Liabilities; provided, further, that any of
the following that are owing to Seller or any other member of Seller Group shall
not be included in Current Liabilities
12
to the extent cancelled without liability on the part of the Company as of the
Closing Date:
(A) all accounts payable and other current liabilities;
(B) all Company Customer Deposits;
(C) all Company Customer Prepayments;
(D) all accrued expenses (including accrued vacation, and
other similar accrued expenses), and to the extent accrued
consistent with past practices, sick leave and personal time;
(E) the current portion of all capital lease obligations (if
any);
(F) all accrued Taxes; and
(G) all monetary obligations to the FCC that are current
liabilities, including any fines or penalties.
Notwithstanding anything to the contrary, Current Liabilities shall
also include the amount of the Convergys Contract Amount (without duplication).
(iii) Notwithstanding anything to the contrary in this
Agreement, the Closing Date Net Working Capital shall not reflect
or take into account (A) any proceeds from insurance recoveries
since October 31, 2001 or any application thereof, except to the
extent that such recoveries are in respect of Current Assets (any
such proceeds from insurance recoveries not reflected or taken
into account for calculating Closing Date Net Working Capital
shall be held in a reserve and not distributed by the Company or
used for any purpose except the purchase of fixed assets or other
capital expenditures); or (B) any proceeds from the sale of assets
since October 31, 2001 or any application thereof, except to the
extent that such sale proceeds are in respect of Current Assets
(any such proceeds from the sale of assets not reflected or taken
into account for calculating Closing Date Net Working Capital
shall be held in a reserve and not distributed by the Company or
used for any purpose except the purchase of fixed assets or other
capital expenditures); or (C) any amounts received by the Company
that the Company or V-V PCS, L.P. or any prior owner of the
Company is obligated to refund to the Company's current or former
customers, or any liability relating to any such refund
obligation, in connection with the litigation, decision,
settlement or implementation of the judgment in PrimeCo PCS, L.P.,
et al. v. Illinois Commerce Commission, et al., Case No. 98 CH
5500 (Cook County, CH Div.).
(c) As used in this Agreement, the term "Closing Date Net
Working Capital" shall mean the Company's Current Assets less Current
Liabilities as of 11:59 p.m., Chicago time, on the Closing Date.
13
(d) Within 60 calendar days following the Closing Date, Buyer
shall prepare and deliver to Seller (i) a schedule (the "Closing Date Net
Working Capital Schedule") setting forth in reasonable detail (including
appropriate supporting documentation) Buyer's good faith determination of the
Closing Date Net Working Capital and (ii) a Closing Date trial balance and
balance sheet of the Company as of the Closing Date. If Seller objects to any
amount reflected on the Closing Date Net Working Capital Schedule, Seller must,
within 45 calendar days after receipt thereof, give written notice (the "Seller
Objection Notice") to Buyer specifying in reasonable detail Seller's objections.
Any item included on the Closing Date Net Working Capital Schedule to which
Seller does not object in a Seller Objection Notice shall be deemed to be
accepted by Seller and any amounts included within such item shall be deemed to
be final, binding and conclusive. If Seller does not give a Seller Objection
Notice within such time period, Buyer's determinations of the amounts on the
Closing Date Net Working Capital Schedule shall be final, binding and conclusive
on the parties.
(e) With respect to any disputed amounts concerning the
Closing Date Net Working Capital Schedule, Buyer and Seller shall meet in person
and negotiate in good faith to resolve any such disputes during the 10-Business
Day period after Buyer's receipt of a Seller Objection Notice. If Buyer and
Seller are unable to resolve all such disputes within such period, then, at the
written request of either party delivered to the other party (a "Dispute
Resolution Request"), each of Buyer and Seller shall appoint a knowledgeable,
responsible representative to meet and negotiate in good faith to resolve the
objections raised in the Seller Objection Notice. Buyer and Seller intend that
these negotiations be conducted by experienced business representatives
empowered to decide the issues. The business representatives will meet and
attempt to resolve the objections raised in the Seller Objection Notice within
10 Business Days after the date on which the Dispute Resolution Request is
delivered. If the business representatives resolve the dispute, such resolution
will be memorialized in a written settlement and release agreement, executed
within five Business Days thereafter. If the business representatives do not
resolve the dispute, Buyer and Seller hereby agree to submit the items remaining
in dispute for resolution to an independent auditor, which shall be an
internationally recognized accounting firm mutually acceptable to Buyer and
Seller. The independent auditor shall, within 30 Business Days after such
submission, determine and report to Buyer and Seller upon such remaining
disputed items, and such determination shall be final, binding and conclusive on
the parties hereto. Following the retention of the independent auditor and prior
to the issuance of the independent auditor's report, the parties agree to
promptly provide the independent auditor with any and all documents and
information, financial or otherwise, reasonably requested by the independent
auditor. Buyer and Seller shall bear equally the fees, costs and expenses of the
independent auditor.
(f) After delivery of the Closing Date Net Working Capital
Schedule, Buyer shall provide Seller and its authorized representatives
reasonable access during normal business hours and without significant
disruption to the Company Business or the business of Buyer or its Affiliates to
(1) all books, records and employees of Buyer and its Affiliates having
information directly related to the Closing Date Net Working Capital Schedule to
the extent such information was used in preparing the Closing Date Net Working
Capital Schedule and (2) all of Buyer's and its Affiliates' accountants, agents
and representatives who assisted Buyer in preparing the Closing Date Net Working
Capital Schedule and all relevant supporting work papers (subject to such
reasonable arrangements regarding confidentiality as may be required by
14
such accountants). Seller shall provide Buyer and its representatives reasonable
access during normal business hours and without significant disruption to the
Seller to all books and records and employees of Seller and its Affiliates
having information directly relevant to the Closing Date Net Working Capital
Schedule and/or the trial balance and balance sheet required to be prepared
pursuant to paragraph (d) of this Section 2.3.1 and reasonable cooperation and
assistance with the preparation of the Closing Date Net Working Capital Schedule
and/or such trial balance and balance sheet.
2.3.2 [Left Blank].
2.3.3 [Left Blank].
2.3.4 Acquisition and Contribution of Certain Assets Adjustment.
(a) In the event that the Company does not complete the acquisition of assets
contemplated by Section 4.3.1 prior to the Closing Date and Buyer, the Company
or any Subsidiary becomes obligated to complete such acquisition after the
Closing Date, the Purchase Price shall be adjusted downward by the amount of
Three Million Five Hundred Thousand Dollars ($3,500,000), which adjustment shall
be the sole consequence of any failure to complete such acquisition under this
Agreement.
(b) In the event that the Company does not complete the
acquisition of assets contemplated by Section 4.3.1 prior to the Closing Date
and none of the Buyer, the Company nor any Subsidiary becomes obligated to
complete such acquisition after the Closing Date, the Purchase Price shall be
adjusted downward by Two Million Four Hundred Thousand Dollars ($2,400,000),
which adjustment shall be the sole consequence of any failure to complete such
acquisition under this Agreement.
(c) In the event that the Company does not complete the
acquisition of assets contemplated by Section 4.3.1 prior to the Closing Date
and none of the Buyer, the Company nor any Subsidiary becomes obligated to
complete such acquisition after the Closing Date, as an alternative to the
Purchase Price adjustment referred to in Section 2.3.4(b), Seller may or may
cause the Company to acquire and receive delivery of prior to the Closing Date
assets that are substantially similar in function to the assets identified in
Section 4.3.1, subject to the approval of the Buyer, which approval shall not be
unreasonably withheld.
2.3.5 EMF Insurance. If for any reason the Seller shall not obtain
the electro-magnetic frequency radiation exposure coverage contemplated by
Section 4.1.13 prior to or at the Closing, the Purchase Price shall be adjusted
downward by the amount of Five Hundred Thousand Dollars ($500,000), which
adjustment shall be the sole consequence of any failure to obtain such insurance
under this Agreement.
2.4 Closing. Unless this Agreement shall have been earlier terminated
in accordance with the provisions of this Agreement, the closing of the purchase
of the Company Interest (the "Closing") shall take place (a) at the Chicago,
Illinois offices of Sidley Austin Brown & Wood at 10:00 a.m. Chicago time, on a
date mutually agreed by Buyer and Seller, but not later than five Business Days
after the day on which the conditions precedent set forth in Article 5 hereof
have been satisfied or waived in writing (other than the conditions precedent
that are not capable of being satisfied until the Closing, but subject to the
satisfaction or waiver of those conditions), or
15
(b) on such other date as may be mutually agreed upon in writing by the parties;
provided, however, that in the event of any disruption resulting in the closure
or suspension of banks or financial markets in the United States on the date
that is or otherwise would be scheduled for the Closing Date, the Closing Date
shall be rescheduled automatically to take place on the date which is two
Business Days after both banks and financial markets reopen in the United
States. The date of the Closing is referred to herein as the "Closing Date." If
the Closing extends over more than one consecutive day, the Closing Date shall
be deemed to have occurred on the last day of the Closing. If the Closing
occurs, for purposes of this Agreement, the Closing shall be deemed to have
occurred at 11:59 p.m. on the Closing Date.
2.5 Deliveries and Proceedings at Closing. At the Closing and subject
to the terms and conditions herein contained:
(a) Deliveries by Seller (with respect to the Company). Seller
shall deliver (or cause to be delivered) to Buyer:
(i) an executed instrument or instruments for the assignment
and assumption of the Company Interest in the form attached hereto
as Exhibit A, duly executed by Seller (the "Assignment and
Assumption");
(ii) a certificate of the Seller, dated the Closing Date,
certifying as set forth in Section 5.1.3;
(iii) a certificate of the Seller, dated the Closing Date,
certifying that all of the conditions precedent to the obligations
of Seller hereunder have been waived by Seller or satisfied;
(iv) the Company Agreement and the Subsidiary Agreements in
effect as of the Closing Date and certified as complete and
correct as of the Closing Date by the sole or managing member of
the Company;
(v) the original membership interest book(s) and minute
book(s) of the Company and the Subsidiaries, if any;
(vi) written evidence of FCC approval by Final Order of
Seller's and Buyer's application to transfer control of the
Company FCC Authorizations from Seller to Buyer or, subject to
Section 7.7, one of Buyer's Affiliates, or subject to Section 7.7,
Buyer's designee for purposes of facilitating a deferred like-kind
exchange under Section 1031 of the Code;;
(vii) certified copies of any and all actions of the members
of the Company approving the transactions contemplated hereby and
incumbency certificates;
(viii) releases and/or satisfaction pieces, duly executed by
any creditor of the Company having a Lien upon any of the
Company's or Subsidiaries' assets (other than Permitted Company
Liens), each in form and substance satisfactory to Buyer;
16
(ix) the resignations, effective as of the Closing Date, of
each officer of the Company and the Subsidiaries, if any;
(x) written evidence of approval by Final Order of Seller's
and Buyer's application to each applicable Governmental Authority
to transfer control of the Company or the Company's Business or
the Company Authorizations (other than the Company FCC
Authorizations) from Seller to Buyer or, subject to Section 7.7,
one of Buyer's Affiliates, or subject to Section 7.7, Buyer's
designee for purposes of facilitating a deferred like-kind
exchange under Section 1031 of the Code;
(xi) a good standing certificate for the Company and the
Subsidiaries dated not more than five Business Days prior to the
Closing Date as issued by the Secretary of State of the State of
Delaware;
(xii) a good standing certificate for the Company and its
Subsidiaries dated not more than five Business days prior to the
Closing Date as issued by the Secretary of State of each of
Illinois and Indiana and, with respect to PrimeCo Real Estate
Holdings, LLC, by the Secretary of State of Michigan; and
(xiii) the opinion of Seller's FCC counsel substantially in
the form attached hereto as Schedule 2.5(a)(xiii).
(b) Deliveries by Seller (with respect to the Seller). Seller
shall deliver (or cause to be delivered) to Buyer:
(i) a good standing certificate for Seller, dated not more
than five Business Days prior to the Closing Date, as issued by
the Secretary of State of the State of Delaware;
(ii) a certificate of an authorized officer of Seller
attesting to (A) the resolutions adopted by the appropriate
constituencies duly authorizing the execution, delivery and
performance of this Agreement by Seller and the execution and
delivery by Seller of all instruments and documents contemplated
hereby, and (B) the signatures of the individuals who have been
authorized to execute and deliver this Agreement and any other
agreement executed or to be executed in connection herewith on
behalf of Seller;
(iii) the Seller Required Consents and, to the extent
obtained, the Minor Consents, each in form and substance
reasonably satisfactory to Buyer;
(iv) a FIRPTA certificate as required by Section 1445 of the
Code;
(v) copies of the Confidential Agreements, if any;
(vi) the Trademark Assignment, duly executed by the Seller;
and
(vii) assignment and assumption agreements, duly executed by
the Seller and accepted by the Company, or the Buyer, as
applicable, substantially in the
17
forms attached to this Agreement as Exhibit B (the "Document
Assignment and Assumption Agreements"): (a) providing for the
assignment to Buyer by Seller, and assumption by Buyer, of the
Seller's rights and obligations to the extent provided by this
Agreement pursuant to an Employee Transfer Agreement dated as of
October 31, 2001 between Seller and PrimeCo Personal
Communications, L.P., a copy of which is attached to this
Agreement as Exhibit C (the "Employee Transfer Agreement"); and
(b) providing for the assignment to Company by Seller, and
assumption by Company, of all of the Seller's rights and
obligations to the extent provided by this Agreement pursuant to
(i) a Transition Services Agreement dated as of October 31, 2001
between Seller, PrimeCo Personal Communications, L.P. and Cellco
Partnership d/b/a Verizon Wireless, a copy of which is attached to
this Agreement as Exhibit E (the "Transition Services Agreement");
and (ii) the Verizon Agreement to the extent such agreement is
assignable without the consent of Verizon Wireless
(c) Deliveries by Buyer. Buyer shall deliver (or cause to be
delivered) to Seller:
(i) the Assignment and Assumption, duly executed by Buyer;
(ii) the Purchase Price in accordance with Section 2.2;
(iii) the Trademark Assignment, duly executed by the Company;
(iv) a certificate of an authorized officer of Buyer, dated
the Closing Date, certifying that all of the conditions precedent
to the obligations of Buyer hereunder have been waived by Buyer or
satisfied;
(v) a good standing certificate for Buyer, dated as of a date
not more than five Business Days prior to the Closing Date, as
issued by the Secretary of State of the State of Delaware.
(vi) a certificate of an authorized officer of Buyer attesting
to (A) the resolutions adopted by the appropriate constituencies
duly authorizing the execution, delivery and performance of this
Agreement by Buyer and the execution and delivery by Buyer of all
instruments and documents contemplated hereby, and (B) the
signatures of the individuals who have been authorized to execute
and deliver this Agreement and any other agreement executed or to
be executed in connection herewith on behalf of Buyer; and
(vii) a certificate of Buyer, dated the Closing Date,
certifying as set forth in Section 5.2.3.
(d) Other Deliveries. The parties hereto shall also deliver to
each other any other agreements, closing certificates and other documents and
instruments required to be delivered pursuant to this Agreement.
2.6 Sale of C20 Spectrum by Buyer. (a) In the event that Buyer shall,
or shall cause Company (or its Subsidiaries or any of their successors, if an
Affiliate of Buyer at the time of
18
sale) to, sell or enter into a definitive agreement to sell its interest in
less than all of the C20 Spectrum within 18 months of the Closing Date, Buyer
shall remit, or cause to be remitted to Seller on the closing date of such sale
10% of the Excess Proceeds. The preceding sentence shall not be applicable to an
indirect sale of the C20 Spectrum by way of the Sale of Buyer or a sale of all
or substantially all of the assets of Buyer.
(b) In the event that Buyer shall, or shall cause Company (or
its Subsidiaries or any of their successors, if an Affiliate of Buyer at the
time of sale) to, sell or enter into a definitive agreement to sell all of the
C20 Spectrum within 12 months of the Closing Date, Buyer shall remit, or cause
to be remitted, to Seller on the closing date of such sale, 10% of the excess of
the purchase price for such sale (less the transaction costs and any taxes
incurred in connection with such sale) over $610,650,000. The preceding sentence
shall not be applicable to an indirect sale of the C20 Spectrum by way of the
Sale of Buyer or a sale of all or substantially all of the assets of Buyer.
(c) The following shall not be deemed or considered to be a
sale of the C20 Spectrum for purposes of this Section 2.6:
(i) the sale, transfer or other disposition of all or any
portion of the C20 Spectrum to Buyer or to one or more Affiliates
of Buyer;
(ii) the sale, transfer or other disposition to a divestiture
trustee of all or any portion of the C20 Spectrum as is necessary
for Buyer to comply with Section 4.2.6 of this Agreement,
(provided that any sale, transfer or other disposition by a
divestiture trustee to any other Person that is not an Affiliate
of the Buyer shall be deemed to be a sale of the C20 Spectrum for
purposes of this Section 2.6);
(iii) the sale, transfer or other disposition of all or any
portion of the C20 Spectrum by Seller to Buyer's designee as
replacement property for purposes of facilitating a deferred
like-kind exchange under Section 1031 of the Code or subsequently
by Buyer's designee back to Buyer; and
(iv) any mortgage, pledge, hypothecation, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security
interest, preemptive right, right of first refusal, right of first
offer, right of consent, default or similar right or other adverse
claim of any kind or nature whatsoever (provided that the
consummation of any sale, transfer or other disposition pursuant
to a foreclosure or similar action or pursuant to the exercise of
a preemptive right, right of first refusal, right of first offer
or similar right to any Person that is not an Affiliate of the
Buyer shall be deemed to be a sale of the C20 Spectrum for
purposes of this Section 2.6).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller. Seller represents and
warrants to Buyer as follows:
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3.1.1 Seller Existence. (a) Seller is a limited liability company,
duly formed, validly existing and in good standing under the laws of Delaware;
(b) Seller has the requisite power, authority and legal right
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby;
(c) the execution, delivery and performance by Seller of this
Agreement and all other Transaction Documents to which Seller is a party have
been duly authorized by all necessary action on the part of Seller. As used
herein, the term "Transaction Documents" means this Agreement, the Assignment
and Assumption Agreement, the Escrow Agreement, the Trademark Assignment, the
Document Assignment and Assumption Agreement and, if applicable, the Marketing
Service Agreement, and all other agreements, documents and instruments executed
by Seller or Buyer in connection with this Agreement; and
(d) this Agreement has been, and the other Transaction
Documents to which Seller is a party have been, or when executed will be, duly
executed and delivered by Seller and this Agreement constitutes, and the other
Transaction Documents to which Seller is a party do or will when executed and
delivered constitute, the legal, valid and binding obligations of Seller,
enforceable against it in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy laws and other similar laws
affecting creditors' rights generally, and except that the remedy of specific
performance and injunctive relief and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
3.1.2 The Company's and Subsidiaries' Existence and Qualification.
(a) The Company is a limited liability company duly formed, validly existing,
and in good standing under the laws of Delaware and has all power and authority
to carry on the Company Business as now conducted. The Company is duly qualified
to do business as a foreign limited liability company in the State of Illinois
and the State of Indiana which are the only jurisdictions where such
qualification is required.
(b) Each Subsidiary is a limited liability company duly
formed, validly existing, and in good standing under the laws of Delaware and
has all power and authority to own its assets and carry on its business as now
conducted. Each Subsidiary is duly qualified to do business as a foreign limited
liability company in the State of Illinois and the State of Indiana and, with
respect to PrimeCo Real Estate Holdings, LLC, in the State of Michigan, which
are the only jurisdictions where such qualification is required.
3.1.3 Compliance with Law; Authorizations. (a) Except as disclosed
on Schedule 3.1.3(a), each Seller Group member has complied with, and is not in
violation of, any Requirement of Law applicable to the Company or the Company's
Business, including rules, regulations or orders of the FCC, any applicable
State Commission and any other Governmental Authority or Governmental Order.
(b) The Company Authorizations, including the Company FCC
Authorizations, which are necessary for the Company and the Subsidiaries to own,
operate or construct the Company Business are disclosed on Schedule 3.1.3(b).
Each of such Company
20
Authorizations is in full force and effect, is validly and exclusively held by
the Company, is free and clear of any legal disqualifications, conditions or
other restrictions (other than those routinely imposed in conjunction with such
Authorizations), and is free and clear of all Liens except for Permitted Company
Liens. The five-year construction requirements set forth in Section 24.203(a) of
the FCC's rules (the "FCC Construction Requirements") have been satisfied in a
timely fashion for each of the Company FCC Authorizations set forth on Schedule
3.1.3(b) and the documentation concerning compliance with the five year
construction requirements required by Section 24.203 of the FCC's rules has been
timely filed. Schedule 3.1.3(b) accurately sets forth the five-year construction
date applicable to each Company FCC Authorization. Except as set forth on
Schedule 3.1.4, there are no existing applications, petitions to deny or
complaints or proceedings pending before the FCC or any other Governmental
Authority relating to the Company Authorizations or the Company Business (other
than proceedings affecting the wireless telecommunications industry generally).
No member of the Seller Group is in default, nor has any such member received
any notice of any claim of default, with respect to any of the Company
Authorizations, and no event has occurred with respect to any of the Company
Authorizations which permits, or after notice or lapse of time or both would
permit, revocation or termination thereof or would result in any impairment of
the rights of the holder of any Company Authorization. All state and federal
fees, charges and assessments (to the extent due) relating to the Company FCC
Authorizations have been paid, or to the extent not paid, properly accrued by
the Company and/or the Subsidiaries and, if unpaid on the Closing Date, included
in Current Liabilities in Closing Date Net Working Capital.
3.1.4 Litigation. Except as set forth in Schedule 3.1.4, and
except for proceedings affecting the wireless telecommunications industry
generally, there is no Action of or before any Governmental Authority pending
against the Company, the Subsidiaries or the Company Business, or to the
Knowledge of Seller, is any such Action threatened against the Company, the
Subsidiaries or the Company Business. There is no Action pending against any
member of the Seller Group relating to the Company, the Subsidiaries or the
Company Business, or to the Knowledge of Seller, is any such Action threatened
against any member of the Seller Group the result of which, alone or in the
aggregate, would reasonably be expected to adversely affect the ability of the
Seller to perform this Agreement. Except for proceedings affecting the wireless
telecommunications industry generally, there is no Action, or Governmental Order
relating thereto, pending nor, to the Knowledge of Seller, threatened against
the Company, the Subsidiaries, the Company Business or any member of the Seller
Group, before any Governmental Authority, including the FCC or any other
Governmental Authority, in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and, to the Knowledge of
Seller, no investigation that might result in any such Action is pending or
threatened. None of the Company, the Subsidiaries, the Company Business or any
member of the Seller Group is a party to or subject to the provisions of any
Governmental Order which, individually or in the aggregate, would reasonably be
expected to adversely affect the ability of the Seller to perform this
Agreement. Except as set forth on Schedule 3.1.4, there is no Action of or
before any Governmental Authority pending or, to the Knowledge of Seller,
threatened against the Company, the Subsidiaries, the Company Business or any
member of the Seller Group that would reasonably be expected to result in the
Company being required to offer Company Promotional Items.
21
3.1.5 Contracts and Other Agreements. (a) Except as listed and
briefly described in Schedule 3.1.5(a), neither the Company nor any Subsidiary
is a party, and no member of the Seller Group is a party, or subject to any of
the following agreements, whether written or oral, express or implied, relating
to the operation of the Company Business, which will continue to bind, or impose
any liability or other obligation on, the Company or any Subsidiary after the
Closing Date (or on any member of the Seller Group, but only to the extent that
such agreement relates primarily to the Company Business or has a direct
economic impact on the Company Business after the Closing Date):
(i) agreement, contract, lease or commitment, or series of
related agreements, contracts, leases or commitments, other than
roaming agreements, which involves an amount in excess of $100,000
on an annualized basis;
(ii) agreement, contract or commitment limiting or restraining
the Company, any Subsidiary or, to the Knowledge of Seller, any
employee of the Company (but only to the extent that such employee
agreement, contract or commitment relates primarily to the Company
Business or has a direct economic impact on the Company Business),
from engaging in any business or pursuing any strategic initiative
or competing in any manner;
(iii) license or other agreement which relates in whole or in
part to any Intellectual Property, other than non-material
licenses for software programs which are generally commercially
available;
(iv) contour extension agreement or interconnection agreement;
(v) management agreement;
(vi) confidentiality or non-disclosure agreement pursuant to
which the Company has agreed to keep confidential and/or not to
use or disclose information obtained from any other Person, other
than confidentiality or nondisclosure agreements included in other
agreements, contracts, leases or commitments listed on Schedule
3.1.5(a) and other non-material agreements entered into in the
ordinary course of business;
(vii) agreements with employees for a term;
(viii) commission, reseller, distributorship or sales agency
agreement, contract or commitment;
(ix) agreement, contract, lease or commitment with respect to
the ownership or leasing of cell sites, space on towers, switches,
office or store (including kiosk) locations;
(x) any trust indenture, mortgage, promissory note, loan
agreement or other contract for the borrowing of money, any
currency exchange, commodities or other hedging arrangement or any
leasing transaction of the type required to be capitalized as a
liability in accordance with GAAP ("Indebtedness");
22
(xi) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any similar commitment with
respect to, the obligations, liabilities (whether accrued,
absolute, contingent or otherwise) or Indebtedness of any other
Person; except guarantees by the Company of obligations of
Subsidiaries entered into in the ordinary course of the Company
Business, including operating leases of such Subsidiaries and
indemnification provisions or agreements entered into in the
ordinary course of the Company Business; or
(xii) other agreement, contract or commitment not made in the
ordinary course of operation of the Company Business.
(b) Each of the agreements, contracts, commitments, leases,
plans and other instruments, documents and undertakings required to be listed in
Schedule 3.1.5(a) in response to the foregoing, and all other agreements,
contracts, commitments and leases of the Company or any Subsidiary entered into
in the ordinary course of business (collectively, "Company Contracts") is valid
and enforceable against the Company, the Subsidiaries or the member of the
Seller Group party thereto, as applicable, and, to the Knowledge of Seller,
against any other party thereto in accordance with its terms except to the
extent that such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law). None
of the Company, any Subsidiary or any member of the Seller Group is, and to the
Knowledge of Seller no other party thereto is, in default in the performance,
observance or fulfillment of any obligation, covenant or condition contained in
the Company Contracts, and no event caused by, relating to or affecting the
Company, a Subsidiary or any member of the Seller Group has occurred which with
or without the giving of notice or lapse of time, or both, would constitute a
default by the Company, a Subsidiary or a Seller Group member thereunder, and to
the Knowledge of Seller, no event caused by, relating to or affecting any other
party thereto has occurred which with or without the giving of notice or lapse
of time, or both, would constitute a default by such other party thereunder.
(c) With the exception of agreements with any of the parties
listed on Schedule 3.1.5(c), none of the Seller, the Company or any Subsidiary
has received notification that any supplier of the Company Business or party to
any Company Contract (including agreements, contracts, or commitments with
agents, dealers, distributors or similar relationships) intends to cancel or
otherwise adversely modify its relationship with the Company Business or to
decrease or limit its purchases, services, supplies or materials from or to the
Company Business other than in the ordinary course of business.
(d) Each Related Agreement (other than the Verizon Agreement
as to which Seller makes no representation) can be assigned to the Company
and/or the Buyer, as the case may be, at the Closing without the consent of the
other party thereto. As of the date hereof, each Related Agreement is valid and
enforceable against the member of the Seller Group that is a party thereto and,
to the Knowledge of Seller, against the other party thereto and (other than with
respect to the Verizon Agreement as to which Seller makes no representation),
upon the Closing, will become valid and enforceable against the Company and/or
the Buyer, as the case may be, and, to the Knowledge of Seller, will continue to
be valid and enforceable against the other party
23
thereto, in accordance with its terms except to the extent that such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other similar laws affecting creditors' rights generally and by general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law). Except as disclosed on Schedule 3.1.5(d), no
member of the Seller Group is, and to the Knowledge of Seller, the other party
thereto is not, and (other than with respect to the Verizon Agreement as to
which Seller makes no representation) upon the Closing, none of the Company, any
Subsidiary or Buyer will be, in default in the performance, observance or
fulfillment of any obligation, covenant or condition contained in the Related
Agreements, and no event caused by, relating to or affecting the Company, a
Subsidiary or any member of the Seller Group has occurred or, upon the Closing,
will occur, which with or without the giving of notice or lapse of time, or
both, would constitute a default by the Buyer, the Company, a Subsidiary or a
Seller Group member thereunder, and to the Knowledge of Seller, no event caused
by, relating to or affecting the other party thereto has occurred which with or
without the giving of notice or lapse of time, or both, would constitute a
default by such other party thereunder. Except as disclosed on Schedule
3.1.5(d), Seller has not received notification that the other party to any
Related Agreement intends to cancel or otherwise adversely modify its
relationship thereunder.
(e) Except for the Convergys Agreement, neither the Company
nor any Subsidiary is a party to any agreement that provides for a cash signing
bonus or similar cash payment to the Company, any Subsidiary, the Seller or any
member of the Seller Group.
3.1.6 Validity of Contemplated Transactions, Etc. (a) Upon the
receipt of requisite consents, approvals and Authorizations from the FCC and
other Governmental Authorities as described in Section 4.4 and the receipt of
the consents set forth on Schedule 3.1.6 (the "Seller Consents"), the execution,
delivery and performance by Seller of this Agreement and the other Transaction
Documents to which Seller is a party do not and will not violate, conflict with
or result in the breach of any term, condition or provision of, or require the
consent of any other Person under, (i) the charter and other organizational
documents of the Company, the Subsidiaries and the Seller, including the Company
Agreement and the Subsidiaries Agreements, (ii) any existing Requirement of Law
to which the Company, a Subsidiary or any member of the Seller Group is subject
that relates to the Company Business, (iii) any Governmental Order which is
applicable to the Company, a Subsidiary or any member of the Seller Group, or
(iv) any Company Contract, any of the Related Agreements or any Company
Authorization to which the Company or a Subsidiary is a party, or to which any
member of the Seller Group is a party or held by any member of the Seller Group
until the date of the assignment or other transfer of such contract or
authorization to the Company or a Subsidiary, or give any party with rights
thereunder the right to terminate, modify, accelerate or otherwise change the
existing rights or obligations of the Company, a Subsidiary or any member of the
Seller Group thereunder. The Seller Consents set forth on Schedule 3.1.6 are
segregated into two groups as follows: (i) those Seller Consents that the
Parties have deemed to be necessary and required to be obtained by Seller for
consummation of the transactions contemplated by this Agreement (the "Seller
Required Consents") and (ii) all other Seller Consents (the "Minor Consents").
(b) Except as aforesaid, and the notices required to be sent
pursuant to Section 5.1.6(b), no Authorization and no filing or notification
with any Governmental Authority or any counterparty to any Company Contract to
which the Company or any Subsidiary
24
is a party, or to which any member of the Seller Group is a party or held by any
member of the Seller Group until the date of the assignment or other transfer of
such contract to the Company, or any other Person is required to be made by the
Company, a Subsidiary or any member of the Seller Group in connection with the
execution, delivery or performance by Seller of this Agreement or the
Transaction Documents, or the consummation of the transactions contemplated
hereby by Seller, other than post-Closing notifications required by the FCC.
(c) Schedule 3.1.6(c) sets forth certain leases that have
heretofore not been assigned to the Company. Upon the assignment of the leases
identified in Schedule 3.1.6(c) to the Company, all leases identified on
Schedules 3.1.5(a), 3.1.6, and 3.1.9(b) shall be transferred to the name of the
Company or one of its Subsidiaries.
3.1.7 Taxes. Except as listed and described in Schedule 3.1.7,
with respect to the Company Business:
(a) The Company and each of the Subsidiaries has filed all
material Tax Returns required to be filed by it, and all such Tax Returns are
correct and complete.
(b) All Taxes due and payable by the Company and each of its
Subsidiaries have been timely paid in full and Seller has no Knowledge of any
delinquency in the payment of Taxes due and payable on any real property upon
which are located any of the assets or properties of the Company or any of the
Subsidiaries.
(c) There are no Liens with respect to Taxes upon any of the
assets or properties of the Company or any of the Subsidiaries.
(d) Neither Company nor any Subsidiary is a party to, is bound by or has any
obligation under any Tax indemnity or Tax sharing agreement or any similar
contract or arrangement.
(e) None of the assets of the Company or any Subsidiary is
property that (i) is required to be treated as being owned by any Person
pursuant to the "safe harbor" lease provisions of former Section 168(f)(8) of
the Internal Revenue Code of 1954, as amended or (ii) is tax-exempt use property
within the meaning of Section 168(h) of the Code.
(f) The Company and each Subsidiary has withheld and paid all
Taxes in respect of the operation of the Company Business required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party involved with the Company
Business.
(g) No Tax is required to be withheld pursuant to Section 1445
of the Code as a result of the purchase and sale of the Company Interest
contemplated by this Agreement.
(h) Since the formation of the Company, or the Subsidiaries,
as the case may be, neither Company or any Subsidiary has, and the Seller has
not, made any election for the Company or any Subsidiary to be taxed as a
corporation for any United States federal, state or local income Tax purposes
(or any similar provisions of foreign law).
25
3.1.8 Environmental Matters. (a) Except as set forth in Schedule
3.1.8:
(i) All Environmental Permits required pursuant to any
Environmental Law for operation of the Company Business (A) have
been obtained by or on behalf of the Company or its Subsidiaries
and (B) are in full force and effect. The Company, each Subsidiary
and each member of the Seller Group is in compliance with all
Environmental Permits required pursuant to any Environmental Law
for operation of the Company Business.
(ii) The Company, each Subsidiary and each member of the
Seller Group is in compliance with all Environmental Laws
affecting the Company Business. To the Knowledge of Seller there
are no events, conditions, circumstances, activities, practices,
incidents, actions or plans in any way related to the Company
Business or the Company's or Subsidiaries' properties which will,
or would reasonably be expected to, give rise to any Environmental
Claim against the Company or the Subsidiaries or their properties
or otherwise relating to the Company Business.
(iii) There is no civil, criminal or administrative action,
suit, demand, Environmental Claim, hearing, notice or demand
letter, notice of violation, investigation or proceeding pending
against the Company, any Subsidiary or any member of the Seller
Group with respect to the Company or the Subsidiaries or their
properties or relating to the Company Business or, to the
Knowledge of Seller, threatened against the Company, any
Subsidiary or any member of the Seller Group with respect to the
Company or the Subsidiaries and their properties or relating to
the Company Business relating in any way to any Environmental
Permit or any applicable Environmental Law or any plan, order,
decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder affecting the Company
Business.
(b) Set forth in Schedule 3.1.8(b) is a list of the locations
of each underground storage tank owned, leased, or operated by the Company or
any Subsidiary. Each underground storage tank leased, owned or operated by the
Company, any Subsidiary or any member of the Seller Group in connection with the
Company Business is in compliance with Environmental Law.
(c) As used herein:
"Environmental Claims" means any and all administrative or judicial
actions, suits, orders, claims, liens, notices, violations or proceedings
brought, issued or asserted by: (i) a Governmental Authority for compliance,
damages, penalties, removal, response, remedial or other action pursuant to any
applicable Environmental Law or Environmental Permit; or (ii) a third party
seeking damages, contribution, remediation or other action for personal injury
or property damage resulting from the release of a Hazardous Material.
"Environmental Laws" means all applicable federal, state and local
laws, statutes, ordinances, codes, rules and regulations related to protection
of the environment and/or the handling, presence, use, generation, treatment,
storage, transportation, release, discharge, emission or disposal of Hazardous
Materials as in effect on or before the Closing Date.
26
"Environmental Permits" means all permits, licenses, approvals,
authorizations, or consents required by any Governmental Authority under any
applicable Environmental Law and includes any and all orders, consent orders or
binding agreements issued or entered into by a Governmental Authority under any
applicable Environmental Law.
"Hazardous Material" means any hazardous or toxic substance, material
or waste which is regulated as of the Closing Date by any Governmental
Authority, including any material or substance that is: (i) defined as a
"hazardous substance" under applicable state law; (ii) petroleum; (iii)
asbestos; (iv) designated as a "hazardous substance" pursuant to Section 311 of
the Federal Water Pollution Control Act, as amended, 33 U.S.C.ss.1251 et seq.
(33 U.S.C.ss.1321); (v) defined as a "hazardous waste" pursuant to Section 1004
of the Federal Resource Conservation and Recovery Act, as amended, 42
U.S.C.ss.6901 et seq. (42 U.S.C.ss.6903); (vi) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C.ss.9601 et seq.; (vii)
defined as a "regulated substance" pursuant to Section 9001 of the Federal
Resource Conservation and Recovery Act, as amended, 42 U.S.C.ss.6901 et seq. (42
U.S.C. ss.6991); or (viii) otherwise regulated under the Toxic Substances
Control Act, 15 U.S.C.ss.2601, et seq., the Clean Air Act, as amended, 42
U.S.C.ss.7401, et seq., the Hazardous Materials Transportation Act, as amended,
49 U.S.C. ss.1801, et seq., or the Federal Insecticide, Fungicide and
Rodenticide Act, as amended, 7 U.S.C.ss.136, et seq.
3.1.9 Title; Real and Personal Property; Sufficiency of Assets.
(a) The Company and the Subsidiaries have good, valid and marketable or saleable
title, as applicable, to all of the Wireless Systems Assets, including but not
limited to all of their properties and assets, real, personal and mixed, which
they purport to own (other than leased properties that they do not purport to
own), including all properties and assets reflected in the Company Current
Balance Sheet and not sold, retired or otherwise disposed of since the date
thereof in the ordinary course of the Company Business consistent with the
practice used in preparing the Company's financial statements as of, and for the
period ended, December 31, 2001, free and clear of all Liens, and other
encumbrances and defects of title of any nature whatsoever, except for Liens
disclosed in Schedule 3.1.9(a) attached hereto (and Liens, such as utility
easements, mechanics' liens, landlord liens and the like, that were immaterial
in character, amount and extent and which do not detract from the value or
interfere with the then present use of the assets or properties they affected
(collectively, "Permitted Company Liens")).
(b) Schedule 3.1.9(b) lists all real property and interests in
real property (including all real property upon which any communications tower,
office space or any retail store is located), owned, leased (either as landlord
or tenant) or otherwise held by the Company or any Subsidiary or owned, leased
(either as landlord or tenant) or otherwise held by any member of the Seller
Group for use primarily in the Company Business, and such Schedule indicates
whether the real property is owned, leased or otherwise held by the Company, any
Subsidiary or by any member of the Seller Group. Schedule 3.1.9(b) also lists,
to the extent not covered by the previous sentence, all other locations at which
communications towers, office space or retail stores used in the Company
Business are located.
(c) Except as set forth on Schedule 3.1.9(c), Seller has good,
valid and marketable or saleable title to the Company Interest and the Company
has good, valid and
27
marketable or saleable titles to the Subsidiary Interests, free and clear of all
Liens, and no current or former member or any other Person has contested the
Percentage Interest relating to the Company Interest or Subsidiary Interest, or
any Distributions or contributions relating thereto or the validity of Seller's
title to the Company Interest or the Company's title to the Subsidiary
Interests. The Company Interest represents (i) Seller's entire right, title and
interest in and to the Company and (ii) all of the outstanding equity securities
of the Company. Each of the Subsidiary Interests represents (i) the Company's
entire right, title and interest in and to the respective Subsidiary and (ii)
all of the outstanding equity securities of such Subsidiary. Neither the Company
Interest nor Subsidiary Interests issued in violation of the terms of any
agreement or other understanding binding on the Company, the Subsidiaries, the
Seller or any other member of the Seller Group, and the Company Interest and
each Subsidiary Interest was issued in compliance with all applicable federal
and state securities or "blue sky" laws. There are no authorized or outstanding
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, redemption rights or other contracts or commitments that could
require the Company, a Subsidiary or any member of the Seller Group to issue,
sell, purchase or otherwise cause to become outstanding or redeemed any of the
Company Interest or any Subsidiary Interest. There are no outstanding equity
appreciation, or phantom equity, profit participation, or similar rights with
respect to the Company or Company Interest or any Subsidiary or Subsidiary
Interest, nor are there any voting trusts, proxies, powers of attorney or other
agreements or understandings with respect to the voting of the Company Interest,
or the voting of Subsidiary Interests, other than those that will be
extinguished or otherwise terminated on or prior to the Closing Date.
(d) The Wireless Systems Assets, including but not limited to,
(i) assets owned by the Company, or the Subsidiaries (ii) assets which the
Company and Subsidiaries used pursuant to a lease, license or right to use which
will remain in effect immediately after the Closing for the benefit of the
Company or the Subsidiaries in accordance with the terms thereof, and (iii)
rights, assets, properties, services and arrangements transferred or otherwise
made available to the Company or the Subsidiaries pursuant to the Document
Assignment and Assumption Agreement, taken together, constitute all of the
assets, services and arrangements required to conduct the Company Business as
conducted on and after November 1, 2001, provided, however, it is understood
that, notwithstanding anything to the contrary contained in this Agreement,
Seller is not transferring, and is not required hereunder to transfer, to the
Company or the Subsidiaries, the 2001 Purchase Agreement, or the "Mark Transfer
Agreement" or "Verizon Guaranty" referred to therein or, except to the extent
assignable without the consent of Verizon Wireless, the Verizon Agreement.
3.1.10 Condition of Tangible Assets. The buildings, structures,
facilities, equipment and other items of tangible property and assets (excluding
Inventory) of the Company and the Subsidiaries, taken as a whole, are in
satisfactory operating condition and repair, subject to normal wear and
maintenance, are useable in the regular and ordinary course of the Company
Business consistent with past practice, and conform to all applicable
Requirements of Law. No Person other than the Company and the Subsidiaries owns
any equipment or other tangible assets or properties situated on the premises of
the Company and the Subsidiaries except for the leased and other items disclosed
on Schedule 3.1.10.
28
3.1.11 Accounts Receivable. Except as set forth in Schedule
3.1.11, (a) the accounts receivable as set forth on the Company Current Balance
Sheet or arising since the date thereof, arose only in the ordinary course of
business out of performance of services or bona fide sales and deliveries of
goods; (b) such accounts receivable reflect valid claims of the Company or the
Subsidiaries against debtors for sales, performance of services or other
transactions in the ordinary course of business; (c) there exist no facts or
circumstances (other than general economic conditions and events that arise in
the ordinary course of the Company Business) that are likely to result in any
increase in the uncollectibility of accounts and notes receivable; and (d) to
the Knowledge of Seller, such accounts receivable are subject to no defenses,
counterclaims or rights of set-off not reflected in the uncollectibility reserve
for such accounts receivables. Adequate reserves for returns, sales allowances
and uncollectibility have been provided for on the Company Current Balance Sheet
and other Company Financial Statements in accordance with GAAP and consistent
with the practice used in preparing the Company's consolidated financial
statements as of, and for the period ended, December 31, 2001 and, except as
disclosed on Schedule 3.1.11, is consistent with the practice used in preparing
the Company's balance sheet as of September 30, 2001. Schedule 3.1.11 also sets
forth a correct and complete listing, as of March 31, 2002, of accounts and
notes receivable due the Company or any Subsidiary which had been outstanding
for: (i) 30 days or less; (ii) more than 30 but less than 61 days; (iii) more
than 60 days but less than 91 days; (iv) more than 90 days but less than 121
days; and (v) more than 120 days.
3.1.12 Inventory. The Inventory of the Company and the
Subsidiaries (a) has been acquired and maintained in accordance with regular
business practices in the ordinary course of the Company Business consistent
with past practice; (b) consists substantially of items of a quality useable or
saleable in accordance with regular business practices in the ordinary course of
the Company Business consistent with past practice; and (c) is owned by the
Company and the Subsidiaries free and clear of all Liens other than Permitted
Company Liens. Reserves for conditions of slow movement, obsolescence and
non-functionality have been provided for on the Company Current Balance Sheet
and other Company Financial Statements in accordance with GAAP consistently
applied with past practices.
3.1.13 Material Changes. Except as disclosed on Schedule 3.1.13,
since October 31, 2001, (i) there has been no Material Adverse Change and (ii)
none of the Company, any Subsidiary or any member of the Seller Group has (with
respect to the Company Business):
(a) discharged or satisfied any Lien or paid any liabilities
other than in the ordinary course of the operation of the Company Business
consistent with past practice, or failed to pay or discharge when due any
liabilities;
(b) sold, encumbered, assigned, transferred or otherwise
disposed of any assets or properties (including rights or interests with respect
to such assets or properties) which the Company or any Subsidiary purported to
own as of the date of the Company Current Balance Sheet or on any date since
such date, except in the ordinary course of the operation of the Company
Business consistent with past practice;
(c) incurred any Indebtedness (or guarantees in respect
thereof) for which the Company is or will be liable following the Closing Date
or subjected any of the assets or
29
properties owned by the Company or any Subsidiary to, or required to be
transferred to the Company or any Subsidiary pursuant hereto, any Lien except
for Permitted Company Liens;
(d) made or suffered any amendment or termination of any
Company Contract, or canceled, modified or waived any substantial debts or
claims held by it or waived any rights of substantial value, except in the
ordinary course of the operation of the Company Business consistent with past
practice;
(e) changed any of the accounting principles followed by it or
the methods of applying such principles or made or changed any Tax elections, in
each case with respect to the Company or any Subsidiary;
(f) entered into any transaction, except than in the ordinary
course of the operation of the Company Business consistent with past practice;
(g) admitted any member or partner to the Company or any
Subsidiary or Distributed or otherwise conveyed any of the Company's or
Subsidiaries' property to any of its members or any member of the Seller Group
or declared an intention to do so;
(h) dissolved the Company or any Subsidiary or taken any
action to do so; or
(i) agreed, orally or in writing, or granted any other Person
an option, to do any of the things specified in subparagraphs (a) through (h)
above.
3.1.14 Intellectual Property Matters. Except as set forth in
Schedule 3.1.14, (a) all Intellectual Property used by the Company or any
Subsidiary in the Company Business consists solely of items and rights which are
(i) owned by the Company or any Subsidiary, (ii) in the public domain, or (iii)
rightfully used by the Company or any Subsidiary pursuant to a license or other
valid right, and (b) with respect to Intellectual Property owned by the Company
or any Subsidiary, the Company or a Subsidiary owns the entire right, title and
interest in and to such Intellectual Property free and clear of any Liens. There
are no Actions pending or, to the Knowledge of Seller, threatened alleging that
the activities of the Company or any Subsidiary or the conduct of the Company
Business infringes upon the Intellectual Property of a third party, or
challenging the ownership, validity or enforceability of any Intellectual
Property necessary for the conduct of the Company Business. To the Knowledge of
Seller, no Person is infringing upon any Intellectual Property of the Company or
any Subsidiary.
3.1.15 Books of Account; Financial Statements. The books of
account and related records of the Company and its Subsidiaries fairly reflect
in reasonable detail the assets, liabilities and transactions of the Company and
the Subsidiaries. Neither the Company or any Subsidiary nor any member of the
Seller Group (in respect of the Company Business), has engaged in any
transaction or used funds of the Company, except for transactions and funds
which are reflected in the Company's or Subsidiaries' normally maintained books
and records. Schedule 3.1.15 sets forth for the Company Business: (i) audited
balance sheets as of December 31, 1999, December 31, 2000 and December 31, 2001
and statements of operations and changes in cash flows for each of the three
years in the period ended December 31, 2001 and (ii) unaudited balance sheet as
of March 31, 2002 and a statement of operations for March 31,
30
2002 and the three-month period ended March 31, 2002, respectively. The
financial statements set forth on Schedule 3.1.15 (i) are in accordance with the
books and records of the Company and its Subsidiaries and (ii) fairly present
the financial position of the Company and its Subsidiaries as of their
respective dates and the results of operations and changes in cash flows for the
periods covered thereby and have been prepared in accordance with GAAP applied
on a basis consistent with the practice used in preparing the Company's
consolidated financial statements as of, and for the period ended, December 31,
2001 and, except as disclosed on Schedule 3.1.11, is consistent with the
practice used in preparing the Company's balance sheet as of September 30, 2001
(except, in the case of the interim financial statements set forth on Schedule
3.1.15, for the absence of year-end adjustments, footnotes and other items
required by GAAP to be included in audited financial statements). The financial
statements described in this section are referred to herein as the "Company
Financial Statements" and the balance sheet as of December 31 is referred to
herein as the "Company Current Balance Sheet."
3.1.16 No Interest in Other Entities. Except for the Subsidiary
Interests owned by the Company and as set forth in Schedule 3.1.16, no shares of
any corporation or any ownership or other investment interest, either of record,
beneficially or equitably, in any association, partnership, joint venture or
other Person are included in the assets of the Company or the Subsidiaries.
3.1.17 Availability of Documents. (a) Except for the contracts
listed on Schedule 3.1.17 hereto which are subject to confidentiality provisions
in favor of third parties (the "Confidential Agreements"), the Seller has made
available to Buyer copies of all documents listed in Seller's Schedules hereto.
Such copies are complete and accurate and include all amendments, supplements
and modifications thereto or waivers in effect thereunder; and
(b) Schedule 3.1.17 sets forth, with respect to each
Confidential Agreement and to the extent permitted under the terms of each such
agreement, its significant business terms, and the maximum amount of liability
to, or payments required by, the Company and the Subsidiaries with respect
thereto. All of the contracts set forth on such schedule were entered into by
the Company and the Subsidiaries in the ordinary course of business on
commercially reasonable terms and do not contain any provisions that have or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or adversely effect the ability of Seller to perform
this Agreement.
3.1.18 Brokers or Finders. Neither the Company or any Subsidiary
nor any member of the Seller Group has incurred any obligation or liability,
contingent or otherwise, for brokers' or finders' fees or agents commissions or
other similar payments in connection with this Agreement or the transactions
contemplated hereby, for which the Company or any Subsidiary will have any
liability.
3.1.19 Form of Agreements; Rate Plans. Schedule 3.1.19 sets forth
(a) a listing of the standard rate plans being offered by the Company and the
Subsidiaries; (b) a description of the products and services being provided to
customers or subscribers of the Company and the Subsidiaries; and (c) copies of
the standard forms of customer or subscriber agreements in use at the Company's
and Subsidiaries' retail stores located in the Company MTA.
31
3.1.20 Labor Relations. (a) No employee of the Company or any
Subsidiary was, or is, represented by any labor union or other labor
organization;
(b) except as set forth in Schedule 3.1.20(b), there are no
unfair practice complaints against the Company or any Subsidiary or against any
member of the Seller Group affecting the Company Business pending or, to the
Knowledge of Seller, threatened before the National Labor Relations Board;
(c) there is no labor strike, dispute, slowdown, or stoppage
actually pending or, to the Knowledge of Seller, threatened against or involving
the Company, any Subsidiary or against any member of the Seller Group affecting
the Company Business;
(d) there is no grievance pending or, to the Knowledge of the
Seller, threatened against the Company, any Subsidiary or against any member of
the Seller Group affecting the Company Business regarding unfair labor practices
or collective bargaining;
(e) no agreement expressly prohibits the Company, any
Subsidiary or any member of the Seller Group from reducing the number of
employees of the Company or its Subsidiaries;
(f) Neither the Company nor any Subsidiary has in the prior
three years experienced any organized labor strike, dispute, shutdown work
stoppage or other similar labor difficulty;
(g) no organizational effort is being made or, to the
Knowledge of Seller, is threatened by or on behalf of any labor union with
respect to employees of the Company and the Subsidiaries;
(h) the Company and each Subsidiary has complied with all
applicable laws, rules and regulations relating to (i) the payment and
withholding of taxes, including income and social security taxes, and has
withheld (and paid over to the appropriate authorities) all amounts required by
local, state or federal law or by other agreement to be withheld from the wages
or salaries of its employees and (ii) wages, hours, discrimination in
employment, collective bargaining, unfair labor practices, employment
agreements, family and medical leave, occupational safety and health and the
Workers Adjustment and Retraining Notification Act. Neither the Company nor any
Subsidiary has any liability or obligation for any arrears of wages or benefits
or any taxes or penalties for failure to comply with any of the foregoing;
(i) except as set forth on Schedule 3.1.20(i), the employment
of all persons presently employed or retained by the Company or any Subsidiary
is terminable at will, and neither the Company nor any Subsidiary will be,
pursuant to any current contract, arrangement or understanding, applicable law,
or otherwise, obligated to pay any severance pay or other benefit by reason of
the voluntary or involuntary termination of employment of any present or former
officer, employee or consultant, prior to, on or after the Closing Date;
(j) no claims are pending or, to the Knowledge of the Seller,
threatened between the Company or any Subsidiary and any of its employees; and
32
(k) Seller and the Company and the Subsidiaries have complied
in all respects with the terms, conditions and provisions of the Employee
Transfer Agreement and on and after the Closing the only obligations of the
Company, the Subsidiaries and the Buyer with respect to the Employee Transfer
Agreement are the following:
(i) to offer employment to any person identified on Schedule
3.1.20(k) as a "LTD Recipient," "WC Recipient," "STD Recipient,"
"Military Leave Recipient," "Maternity/Paternity Leave Recipient,"
"Approved Leave of Absence Recipient," or "Layoff with Recall
Rights Recipient" (collectively, the "Leave Recipients") who
recovers from his or her condition, returns from leave, or is
recalled, as applicable, on or before October 31, 2002 in
accordance with Section 6.6 of the Employee Transfer Agreement;
and
(ii) to provide severance benefits to any "PrimeCo L.P.
Transferred Employee" described in Section 1.2 of the Employee
Transfer Agreement who is terminated by the Company, any
Subsidiary or the Buyer after the Closing Date and on or before
December 31, 2002 in accordance with Section 5.1 of the Employee
Transfer Agreement.
Except as provided in subsections 3.1.20(k)(i) and (ii), the assumption of the
Employee Transfer Agreement by Buyer under the terms of the Document Assignment
and Assumption Agreement does not require Buyer, the Company or any Subsidiary
to continue any Company Employee Plan after the Closing or to provide employees
of the Company or any Subsidiary with salaries, bonuses, employee benefits or
employee policies after the Closing that are comparable to the salaries,
bonuses, employee benefits and employee policies provided by the Company or any
Subsidiary immediately prior to the Closing.
(l) Schedule 3.1.20(l) sets forth a list of all of the
employees of the Company and the Subsidiaries with their job title, current
salary or wages and, with respect to employees who are on a leave of absence,
the reason for such leave of absence and an expected date of return which,
unless they have terminated employment after October 31, 2001, includes all of
the "PrimeCo L.P. Transferred Employees" described in Section 1.2 of the
Employee Transfer Agreement. Seller shall provide Buyer with an updated Schedule
five business days prior to the Closing Date, which shall satisfy the obligation
with respect to such schedule under Section 4.1.9. Such updated schedule shall
reflect any newly hired employees and any terminated employees. In hiring any
new employees, the Company and the Subsidiaries shall comply with Section 4.1.1.
The Seller shall designate on Schedule 3.1.20(l) which of the listed employees
are "PrimeCo L.P. Transferred Employees."
3.1.21 Employee Benefit Plans. Through the date of this Agreement
and the Closing Date:
(a) Each Employee Plan maintained or sponsored by, or
contributed to by, the Company, any Subsidiary, Seller or any of their ERISA
Affiliates which covers any employee or former employee of the Company or any
Subsidiary (the "Company Employee Plans") has been maintained and operated, in
all material respects, in conformity with all applicable laws, including the
Code and the Employee Retirement Income Security Act of 1974,
33
as amended ("ERISA"), and in accordance with the terms of such Plan. For
purposes of this Agreement, (x) "Employee Plan" means any "employee benefit
plan," as defined in Section 3(3) of ERISA, and any other employee benefit
arrangement, contract or payroll practice, written or oral, including, without
limitation, any bonus plan, consulting, independent contractor, employment or
other compensation agreement, incentive, equity or equity-based compensation, or
deferred compensation arrangement, stock purchase, stock option, severance pay,
sick leave, vacation pay, salary continuation for disability, hospitalization,
medical insurance, life insurance, scholarship program, retirement savings,
pension, profit sharing plan, fringe benefit plan, and incentive plan, and (y)
"ERISA Affiliate" means any entity which, together with the subject Person, is
required to be treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA and any general partnership of which any such entity is or
has been a general partner;
(b) None of the Company, any Subsidiary or Seller has ever
sponsored, contributed to, or had an obligation to contribute to (i) a
multiemployer plan, as defined in Section 3(37) of ERISA, (ii) a multiple
employer plan subject to Sections 4063 or 4064 of ERISA; or (iii) a plan subject
to Section 412 of the Code or Title IV of ERISA;
(c) Schedule 3.1.21(c) sets forth the name and general
description of each of the Company Employee Plans in effect within three years
preceding the Closing Date. Seller has delivered to Buyer true, complete and
correct copies of the following documents (if and as applicable to such Company
Employee Plan) with respect to each Company Employee Plan:
(i) all documents embodying or governing such Company Employee
Plan, as they may have been amended to the date hereof;
(ii) the most recent IRS determination letter with respect to
such Company Employee Plan, the application submitted with respect
to such letter and any applications for determination subsequently
filed with the IRS;
(iii) the three most recently filed IRS Forms 5500, with all
applicable schedules attached thereto;
(iv) the three most recent actuarial valuation reports
completed with respect to such Company Employee Plan;
(v) the current summary plan descriptions of such Company
Employee Plan (or other descriptions of such Company Employee Plan
provided to employees) and all modifications thereto;
(vi) any insurance policy (including any fiduciary liability
insurance policy) or trust agreement related to such Company
Employee Plan; and
(vii) all correspondence with the IRS, the Department of Labor
and Pension Benefit Guaranty Corporation concerning any
controversy relating to such Company Employee Plan.
There are no unwritten Company Employee Plans.
34
(d) The Company Employee Plans intended to qualify under
Section 401 of the Code have received favorable determination letters from the
Internal Revenue Service that such Company Employee Plans are so qualified and
the trusts maintained pursuant thereto are exempt from federal income taxation
under Section 501 of the Code. Nothing has occurred with respect to the
operation of such Company Employee Plans which could cause the loss of such
qualification, in form or operation, or exemption or the imposition of any
liability, penalty or tax under ERISA or the Code;
(e) All contributions (including all employer contributions
and employee salary reduction contributions), premium payments and plan benefit
payments required to have been made or for which an obligation has accrued under
any of the Company Employee Plans or by law to any funds or trusts established
thereunder or in connection therewith have been made or paid by the due date
thereof (including any valid extension) or accrued as a Current Liability
included in Closing Date Net Working Capital;
(f) Except as disclosed on Schedule 3.1.21(f), none of the
Company, any Subsidiary or Seller is a party to any agreement, contract or
arrangement that
(i) requires it to make any bonus, severance or other payment,
or requires it to accelerate the vesting or timing of payment of
any compensation or benefit payment to any of its officers,
employees or consultants solely by reason of the change in control
of the Company effected by the consummation of the transactions
provided in this Agreement or
(ii) could result, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of
Section 280G of the Code.
(g) There is no violation of ERISA with respect to the filing
of applicable reports, documents and notices regarding the Company Employee
Plans with the Secretary of Labor and the Secretary of the Treasury or the
furnishing of such documents to the participants or beneficiaries of the Company
Employee Plans;
(h) There are no pending actions, claims or lawsuits or
governmental administrative proceedings or investigations which have been
asserted or instituted against the Company Employee Plans, the assets of any of
the trusts under such plans or the plan sponsor or the plan administrator, or
against any fiduciary of the Company Employee Plans with respect to the
operation of such plans (other than routine benefit claims), nor are there, to
the Knowledge of Seller or any of its ERISA Affiliates, any threatened actions,
claims or lawsuits or governmental administrative proceedings or investigations
or facts which could form the basis for any such actions, claims or lawsuits or
governmental administrative proceedings or investigations against the Company
Employee Plans;
(i) None of the Company, any Subsidiary, Seller or any "party
in interest" or "disqualified person" with respect to the Company Employee Plans
has engaged in a non-exempt "prohibited transaction" within the meaning of
Section 4975 of the Code or Section 406 of ERISA with respect to any Company
Employee Plans. No fiduciary has any liability for
35
breach of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any Company Employee
Plan;
(j) Except as set forth in Schedule 3.1.21(j), no Company
Employee Plans provide for post-employment life or health insurance, or other
retiree welfare benefits or coverage for any participant or any beneficiary of a
participant, and none of Seller, the Company, any Subsidiary or Buyer has or at
the Closing will have any obligation or liability to provide such benefits or
coverage under the Employee Transfer Agreement or any other document or
commitment, written or oral. Each of the Company, any Subsidiary and Seller
which maintains a "group health plan" within the meaning of Section 5000(b)(1)
of the Code has complied in all material respects with all of the requirements
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (and
any similar state law), Section 4980B of the Code, and Parts 6 and 7 of Subtitle
B of Title I of ERISA and the regulations thereunder;
(k) None of the Company, any Subsidiary, any member of the
Seller Group or any of their ERISA Affiliates has incurred any cost, fee,
expense, liability, claim, suit, obligation or other damage under Title IV of
ERISA that could give rise to the imposition of any liability on the part of the
Company, any Subsidiary, Buyer or any of its ERISA Affiliates, and, to the
Knowledge of Seller, no facts or circumstances exist that could give rise to any
such cost, fee, expense, liability, claim, suit, obligation, or other damage,
that could reasonably be expected to become a liability of the Company, any
Subsidiary, Buyer or any of its ERISA Affiliates; and
(l) Benefits under all Company Employee Plans are as
represented to Buyer pursuant to Section 3.1.21(c) hereof and have not been
increased subsequent to the date as of which documents have been provided to
Buyer pursuant to such Section and there have been no promised improvements,
increases or changes to the benefits provided under any Company Employee Plan.
(m) Except as set forth in Schedule 3.1.21(m), all Company
Employee Plans, administrative services agreements, insurance contracts and
other agreements and contracts with vendors relating to the Company Employee
Plans can be terminated at any time in 2002 and on any later date by the Company
without any penalties or special payments or assessments payable to such
vendors. Schedule 3.1.21(m) sets forth with respect to any such contract or
agreement (i) any required notice period prior to termination thereof and (ii)
an estimate of any penalties or special payments or assessments applicable upon
termination thereof.
(n) All of the Company Employee Plans listed on Schedule
3.1.21(c) are currently, and will as of the Closing be, sponsored by the Company
or any Subsidiary.
3.1.22 Insurance. The Company's and Subsidiaries' assets,
business, equipment, property and operations are insured against loss or damage
and all other hazards or risks as set forth on Schedule 3.1.22 (name of insurer,
insured event, amount of coverage and limits, annual premium amount, expiration
date of policy, policy number). All insurance policies set forth on Schedule
3.1.22 are in full force and effect in accordance with their terms, no notice of
cancellation of such polices has been received, all premiums due have been paid
in full and there has been no casualty since October 31, 2001.
36
3.1.23 No Undisclosed Liabilities. Except as set forth in Schedule
3.1.23, neither the Company nor any Subsidiary has any liabilities, whether
accrued, contingent, absolute, determined, determinable or otherwise, except:
(a) liabilities in respect of Company Authorizations and
Company Contracts (none of which arose from a breach thereof);
(b) liabilities disclosed on the Company Current Balance Sheet
and not paid or discharged since the date thereof; and
(c) liabilities incurred, consistent with past practice, in
the ordinary course of the operation of Company Business since the date of the
Company Current Balance Sheet.
For purposes of this Section 3.1.23, the term "liabilities" shall include any
direct or indirect Indebtedness, cost, expense or obligation.
3.1.24 Prior Divestitures and Reorganizations. Except as set forth
in Schedule 3.1.24, neither the Company nor any Subsidiary is liable, whether
absolutely, contingently or otherwise, with respect to any indemnification or
other similar provision under any contract and other agreement or by operation
of law relating to any sale, divestiture or other disposition of any assets or
operations of the Company or any Subsidiary (or its predecessors) or in
connection with any previous reorganization of the Company or any Subsidiary (or
its predecessors).
3.1.25 Accounts, Safe Deposit Boxes, Locations and Officers.
Schedule 3.1.25 sets forth (a) a true and correct list of all bank and savings
accounts, certificates of deposit and safe deposit boxes of the Company and the
Subsidiaries and those persons authorized to draw on these accounts or deposits
or to have access to these boxes, (b) true and correct copies of all corporate
borrowing and depository resolutions and those persons entitled to act
thereunder, (c) the headquarters addresses of the Seller, the Company and the
Subsidiaries, and (d) a true and correct list of all officers of the Company and
the Subsidiaries (if any).
3.1.26 Microwave. The Company has no obligation to pay any Person
under any microwave clearing agreements (whether written or oral, express or
implied).
3.1.27 Affiliate Transactions. Other than the Document Assignment
and Assumption Agreements and the Trademark Assignment, (i) except as disclosed
on Schedule 3.1.27, there are no agreements, arrangements and understandings
between the Company or any Subsidiary and any member of the Seller Group and
(ii) following the Closing, none of the Company, any Subsidiary or Buyer shall
have any obligations or liability under any of such agreements, arrangements or
understandings, whether or not disclosed on Schedule 3.1.27 except to the extent
included in the calculation of Closing Date Net Working Capital.
3.1.28 Operations. (a) As of the end of each month set forth in
the table below, (a) the Company (including for all purposes of this Section
3.1.28, if applicable, its Subsidiaries) had at least the number of active
subscribers indicated below for such month, including at least the number of
prepaid and postpaid subscribers indicated below for such month, (b) the
Company's churn rate for such month was not greater than as indicated below and
(c) the
37
Company's average revenue per subscriber ("ARPU") for such month was not less
than as indicated on Schedule 3.1.28.
(b) Schedule 3.1.28 also sets forth certain information as of
the day immediately preceding the date of this Agreement regarding, (i) the
total net subscriber statistics of the Company since April 30, 2002, (ii) active
subscribers on rate plans providing for unlimited minutes of use per month as of
April 30, 2002, and (iii) the number of Company-owned distribution outlets and
indirect distribution outlets as of April 30, 2002.
3.1.29 Spare Parts. The Company and the Subsidiaries own spare
parts for use in the Company Business sufficient to meet the operating needs of
the Company Business.
3.1.30 Communications Towers. The Company and the Subsidiaries own
at least 230 communications towers for use in the Company Business.
3.1.31 V-V PCS L.P. National Service Agreements. On or prior to
October 31, 2001, V-V PCS L.P. transferred to the Company and/or the
Subsidiaries:
(a) all rights and obligations under national service
agreements between V-V PCS L.P. and Persons relating to the provision of
Personal Communications Services to individual end users with mobile telephone
numbers originating in the Company MTA and covered by such national services
agreements, and
(b) the responsibility for overall account management and
billing coordination under such national services agreements and the books,
records and other assets necessary to provide such account management and
billing coordination, if the national account customer is headquartered in the
Company MTA and a majority of the individual customer accounts of such national
account customer is located in the Company MTA.
3.1.32 Guard Band. The Company has coordinated the use of its
licensed spectrum (frequency range 1870-1880, lower band, 1950-1960 upper band)
with CellCo Partnership (dba Verizon Wireless) to avoid interference in
accordance with FCC Regulations. Such coordination includes the establishment of
a guard band at frequency range 1879.375-1880.625 lower band, 1959.375-1960.625
upper band (defined as channel 600 in IS-95) between the Company and CellCo
Partnership (dba Verizon Wireless) for the operation of CDMA technology.
3.1.33 Future Credits to Customers. Seller's good faith estimate
of the obligations of the Company and the Subsidiaries to issue credits to
customers for periods after March 31, 2002 are set forth on Schedule 3.1.33,
which estimate shall be updated at the Closing pursuant to Section 4.1.9.
3.2 [Left Blank]
3.3 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
38
3.3.1 Buyer Existence, Etc. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
Buyer has the requisite power, authority and legal right to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance by Buyer of this Agreement and all other
Transaction Documents to which Buyer is a party have been duly authorized by all
necessary action on the part of Buyer. This Agreement has been, and the other
Transaction Documents to which Buyer is a party have been or when executed will
be, duly executed and delivered by Buyer, and this Agreement constitutes, and
the other Transaction Documents to which Buyer is a party do or will when
executed and delivered constitute, the legal, valid and binding obligations of
Buyer, enforceable against it in accordance with their respective terms, except
as such enforceability may be limited by bankruptcy laws and other similar laws
affecting creditors' rights generally, and except that the remedy of specific
performance and injunctive relief and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
3.3.2 Litigation. Except for proceedings affecting the wireless
telecommunications industry generally, there is no Action or Governmental Order
relating thereto, pending, or to the Knowledge of Buyer, threatened against
Buyer, before any Governmental Authority the result of which, alone or in the
aggregate, would reasonably be expected to adversely affect the ability of Buyer
to perform this Agreement or in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and to the Knowledge of
Buyer, no investigation that might result in any such Action is pending or
threatened.
3.3.3 Validity of Contemplated Transactions, Etc. Upon the receipt
of requisite consents, approvals and Authorizations from the FCC and other
Governmental Authorities, as described in Section 4.4, and the receipt of the
consents set forth on Schedule 3.3.3 (the "Buyer Consents"), the execution,
delivery and performance of this Agreement and the other Transaction Documents
to which Buyer is a party by Buyer do not and will not violate, conflict with or
result in the breach of any term, condition or provision of, or require the
consent of any other Person under, (a) the certificate of incorporation, by laws
and other organizational documents of Buyer, (b) any existing Requirement of Law
to which Buyer or any of its Affiliates is subject, (c) any Governmental Order
which is applicable to Buyer or any of its Affiliates, or (d) any contract or
agreement to which Buyer or any of its Affiliates is a party. Except as
aforesaid, no Authorization and no filing or notification with any Governmental
Authority or any counterparty to any contract or agreement to which Buyer or any
of its Affiliates is a party or any other Person is required by Buyer in
connection with the execution, delivery or performance by Buyer of this
Agreement or the Transaction Documents, or the consummation of the transactions
contemplated hereby by Buyer, other than post-Closing notifications required by
the FCC.
3.3.4 Financing. Buyer has received (a) commitment letters from
Toronto Dominion (Texas), Inc., Wachovia Bank, N.A., LaSalle Bank, N.A. and
Citibank, N.A., to provide at least $250 million of senior bank financing and
(b) an engagement letter from Salomon Smith Barney (the "Lead Underwriter"), to
underwrite at least $250 million aggregate principal amount of notes, true and
correct copies of which letters are attached as Schedule 3.3.4(a) and Schedule
3.3.4(b) (together, the "Letters"). Upon satisfaction of all conditions
precedent to Buyer's obligations set forth in Section 5.1 other than such
conditions precedent
39
that are not capable of being satisfied until the Closing, and Buyer's receipt
of funds as contemplated by the Letters, Buyer will have sufficient cash and/or
cash equivalents to pay the entire Purchase Price at the Closing and to make all
other necessary payments of fees and expenses in connection with the
transactions contemplated by this Agreement.
3.3.5 Brokers or Finders. Neither Buyer nor any of its Affiliates
has incurred an obligation or liability, contingent or otherwise, for brokers'
or finders' fees or agents commissions or other similar payments in connection
with this Agreement or the transactions contemplated hereby.
3.3.6 Communications Act. Buyer is qualified under the
Communications Act of 1934, as amended, and all applicable rules and regulations
thereunder (the "Communications Act") to be a transferee of control of the
Company FCC Authorizations.
3.3.7 CMRS Spectrum Aggregation Limits. Buyer's acquisition of the
Company Interest and control of the Company FCC Authorizations will not cause
Buyer to be in excess of the FCC's CMRS spectrum aggregation limits as defined
in 47 C.F.R. section 20.6, as modified in 2000 Biennial Regulatory Review
Spectrum Aggregation Limits for Commercial Mobile Radio Services, Report and
Order, WT Docket No. 01-14, FCC 01-328, released December 18, 2001, except with
respect to the following areas within the Company MTA: Fountain and Warren
Counties, Indiana, within the Danville, Illinois, BTA; Knox and Warren Counties,
Illinois within the Galesburg, Illinois BTA and Fulton, McDonough, Peoria,
Schuyler, Tazwell and Woodford Counties, Illinois, within the Peoria, Illinois
BTA.
3.4 Survival of Representations and Warranties. All representations and
warranties made by the parties in this Agreement or in the certificates
delivered pursuant to Sections 5.1.3 or 5.2.3 shall survive until April 30,
2003, except that (a) any intentional misrepresentation shall survive Closing
without limitation, (b) any representation or warranty contained in Sections
3.1.1, 3.1.2, 3.1.6 (except to the extent that it relates to Company Contracts),
3.1.9(c), 3.1.16, 3.1.18, 3.3.1, 3.3.3 or 3.3.5 shall survive the Closing
without limitation and (c) any representation or warranty contained in Sections
3.1.7, 3.1.8 and 3.1.21 shall survive until the expiration of 60 calendar days
after the expiration date of the relevant statute of limitations period
(including any applicable extensions thereof). Any claim by a party based upon
breach of any such representation or warranty made pursuant to Article 6 below
must be submitted to the breaching party prior to or at the expiration of the
applicable survival period.
3.5 No Representations or Warranties Implied. The representations and
warranties contained herein constitute the only representations and warranties
made by the parties with respect to this Agreement and the transactions
contemplated hereby, and no other representations or warranties shall be
implied. Without limiting the foregoing, except as expressly set forth herein,
Seller makes no representation or warranty concerning the Company Interest, the
Company Business or the assets owned or used by the Company or Subsidiaries, and
there are no implied warranties of any kind, including warranties of
merchantability or fitness for a particular purpose.
40
3.6 Schedules. The Schedules delivered pursuant hereto as of the date
hereof are referred to as the "Agreement Schedules" and the Schedules to be
delivered as of the Closing Date are referred to as the "Closing Schedules".
ARTICLE 4
COVENANTS AND AGREEMENTS
4.1 Agreements of Seller Pending the Closing. Seller covenants and
agrees that from the date of this Agreement through the Closing Date or the
earlier termination of this Agreement in accordance with its terms and except as
otherwise consented to in writing by Buyer (which consent shall not be
unreasonably withheld or delayed):
4.1.1 Conduct of the Company Business in the Ordinary Course.
Subject to applicable Requirements of Law and except as otherwise contemplated
by this Article 4, except as disclosed on Schedule 4.1.1, Seller shall cause the
Company and the Subsidiaries to conduct the Company Business in the ordinary
course of business consistent with past practice, except as may be necessary in
order to implement and perform this Agreement and the other Transaction
Documents. Without limiting the generality of the foregoing, Seller shall, and
shall cause the Company and the Subsidiaries to:
(a) use Commercially Reasonable Efforts to keep available the
services of the Company's and Subsidiaries' present employees and agents (and
upon departure of any such employees or agents, use Commercially Reasonable
Efforts to hire appropriate replacement employees or agents of comparable skill
and experience), provided that this clause creates no requirement to pay
additional compensation or give promotions outside of the ordinary course of
business;
(b) not sell, lease, license, or otherwise dispose of any of
the Company's or Subsidiaries' assets or rights other than in the ordinary
course of the Company Business consistent with past practice;
(c) use Commercially Reasonable Efforts to maintain the
Company's and Subsidiaries' relations and goodwill with the suppliers,
customers, distributors, employees and any others having business relations with
the Company and the Subsidiaries;
(d) use Commercially Reasonable Efforts to maintain the
Company's and Subsidiaries' equipment, systems and other fixed assets as
necessary to maintain the Company's and Subsidiaries' reliability standards,
footprint coverage and network capacity;
(e) comply in all material respects with all Requirements of
Law applicable to the Company and the Subsidiaries;
(f) keep in full force and effect the insurance policies held
by the Company or Subsidiaries and covering the Company, the Subsidiaries and
the Company Business as of the date hereof (or obtain replacement policies
providing substantially the same coverage);
41
(g) except as set forth in Schedule 4.1.1(g), continue in
accordance with past practice all marketing and promotional practices relating
to the maintenance and growth of subscribers conducted by the Company and the
Subsidiaries;
(h) continue in accordance with past practice to collect the
Company's accounts receivable and pay its trade payables;
(i) with the exception of changes necessary in the reasonable
business judgment of Seller to respond to actions of competitors, refrain from
implementing any change in (i) the terms and conditions of the Company's or
Subsidiaries' forms of customer and subscriber agreements or (ii) the types or
quality of products and services being provided by the Company or Subsidiaries
to subscribers;
(j) not make or change any Tax elections, settle any audit or
examination of Taxes, or apply to change any method of accounting for Tax
purposes if, in any such case, it would adversely affect the Company or the
Subsidiaries or the assets of the Company or the Subsidiaries after Closing;
(k) except as set forth in Schedule 4.1.1(k), not grant or
otherwise commit to make any increase in the compensation of employees of the
Company or the Subsidiaries, except merit or promotional increases in the
ordinary course of the Company Business consistent with past practice;
(l) not enter into any employment agreement or severance
agreement with any employee of the Company or the Subsidiaries, or agreement
with a consultant, without Buyer's written consent (other than retention
agreements for which the Seller retains all obligations and liabilities), unless
such agreement terminates prior to the Closing Date and, if so terminated, would
not impose any liability or obligation on Buyer or the Company or the
Subsidiaries following the Closing;
(m) not establish, amend or terminate any Employee Plan or any
plan, program or agreement that would be an Employee Plan if it were in
existence as of the date of this Agreement, other than as required by law;
(n) not enter into, terminate or modify any Company Contract
without the written consent of Buyer except in the ordinary course of the
Company Business consistent with past practice;
(o) not incur any Indebtedness (or guarantees in respect
thereof) other than Indebtedness or guarantees in respect thereof which will be
paid in full or otherwise extinguished on or before the Closing Date;
(p) not enter into any agreement or transaction with any
member of the Seller Group, unless such agreement or transaction is in the
ordinary course of the Company Business, consistent with past practice, is on
terms that are no less advantageous to the Company and the Subsidiaries than
could be obtained in an arm's-length agreement or transaction with an
independent third party and is consented to by Buyer in writing, which consent
shall not be unreasonably withheld or delayed;
42
(q) unless such leave of absence is required to be granted
pursuant to any Requirement of Law or is granted in accordance with the
Company's Short Term Disability policy as set forth in the Company's HR Policies
and Procedures Guide or Long Term Disability Plan pursuant to a determination of
medical necessity by CIGNA, not grant any paid leave of absence to any employee
of the Company or any Subsidiary which could extend more than thirty days after
the Closing Date unless such leave of absence is consented to by the Buyer in
writing, which consent shall not be unreasonably withheld or delayed; and
(r) not enter into any agreement or transaction that (i) may
not be terminated by the Company or the Subsidiaries on 60 days or less notice,
(ii) provides for a fee or penalty for early termination of $100,000 or more or
(iii) provides for the payment of a cash signing bonus or similar cash
arrangement to the Company, its Subsidiaries, the Seller or any members of the
Seller Group.
4.1.2 Distributions. Seller shall not permit the Company or any
Subsidiary to make any Distributions to its members, without the written consent
of Buyer. In furtherance of the foregoing, Seller shall cause the Company and
the Subsidiaries, not later than at the Closing on the Closing Date, to
discharge any Indebtedness of the Company and the Subsidiaries to any members of
the Seller Group (except to the extent credited as a Current Liability), it
being understood that all Indebtedness of the Company or any Subsidiary (except
capital lease obligations set forth on Schedule 4.1.10(a)).will be repaid in
full on the Closing Date by Seller from the proceeds of the Purchase Price.
4.1.3 Access. Seller shall cause the Company and the Subsidiaries
to permit Buyer and its authorized representatives to have reasonable access,
during regular business hours and upon reasonable advance notice, to the books
and records of the Seller (with respect to the Company and the Company Business)
and the Company and the Subsidiaries (including all financial analyses and
external reports relating to the management of the Company Business and the
reports from the Company's and Subsidiaries' billing vendor and roaming
clearinghouse (if any)), facilities and assets, and to the officers and key
managers of the Company, the Subsidiaries and Seller, to the extent that such
access does not interfere with the conduct of the Company Business; provided
that Buyer and any such representatives comply with the confidentiality and
nondisclosure obligations set forth in this Agreement. Seller also agrees to
grant or cause the Company to grant to Buyer, Buyer's auditors and other
representatives, such access to the Company's and Seller's books, records and
personnel as may be reasonably requested by Buyer to complete any audits and
Seller agrees to use its Commercially Reasonable Efforts to cause to be made
available to such persons access to accountants relevant supporting working
papers (to the extent permitted by such accountants); provided that Buyer,
Buyer's auditors and representatives are informed of and comply with the
confidentiality and nondisclosure obligations set forth in this Agreement (it
being agreed that Buyer shall be responsible for any breaches of the foregoing
confidentiality and nondisclosure obligation by such persons). Buyer will bear
the costs and expenses associated with such audits, including the reasonable
out-of-pocket expenses incurred by Seller and the Company in providing access in
connection therewith.
4.1.4 Asset Sale Proceeds. In the event that any of the assets of
the Company or the Subsidiaries that are not Current Assets are sold, leased,
licensed or otherwise disposed of
43
prior to the Closing Date, whether or not in the ordinary course of business,
the Seller will cause the Company or the Subsidiaries, at the written election
of Buyer, (i) to use the proceeds of any such sale, lease, license or other
disposition, to purchase like-kind or other similar assets for the Company or
the Subsidiaries to be used in the Company Business, or (ii) to retain the
proceeds of any such sale, lease, license or other disposition in the Company or
the Subsidiaries(and not Distribute the same to the Company's member). The
amount of such proceeds shall not be included as Current Assets in the
calculation of Closing Date Net Working Capital.
4.1.5 Casualty Insurance Proceeds. In the event that any of the
assets of the Company or the Subsidiaries that are not Current Assets are
damaged prior to the Closing Date by a casualty covered by insurance ("Damaged
Assets"), the Seller will cause the Company and the Subsidiaries to use
Commercially Reasonable Efforts to collect amounts due (if any) in respect of
such Damaged Assets under the Company's and Subsidiaries' insurance policies,
which amounts if collected, at the written election of Buyer, (i) will be used
to repair or replace the Damaged Assets or (ii) will be retained in the Company
or the Subsidiaries (and not Distribute the same to the Company's member). The
amount of such insurance proceeds shall not be included as Current Assets in the
calculation of Closing Date Net Working Capital.
4.1.6 Exclusivity. None of Seller, its owners, subsidiaries or
agents shall solicit, respond to (other than in the negative) or in any manner,
directly or indirectly (including through Affiliates or otherwise), engage in
discussions or negotiations with respect to a possible transaction relating to
the Company, the Subsidiaries or the Company Business or the Company's or
Subsidiaries' assets or properties with any person other than Buyer for a period
of eight months following the date of filing an FCC Application (as defined in
Section 4.4.1).
4.1.7 Financial Information. From the date hereof until the
Closing, Seller shall cause the Company and the Subsidiaries to deliver to Buyer
as soon as possible, but in any event within 30 calendar days after the end of
each month, (i) a balance sheet, statement of operations and cash flow statement
for such month and for the portion of the fiscal year ending with such month
that fairly present in accordance with GAAP (except for such requirements of
GAAP that are not typically included in unaudited interim financial statements)
the financial position and results of operations of the Company and the
Subsidiaries as of the end of such month and for such period on a consistent
basis with the December 31, 2001 Company financial statements, (ii) an accounts
and notes receivable aging schedule in the form of (and utilizing the
methodology used to prepare) Schedule 3.1.11 and (iii) the subscriber
information, churn rate and average monthly revenue per subscriber described in
Section 3.1.28, updated for such month.
4.1.8 Assignment of Non-Disclosure Agreements. At the Closing,
Seller shall assign to Buyer all of Seller's rights and obligations under any
non-disclosure or confidentiality agreements that Seller or any prior owner of
the Company and any Subsidiary (to the extent assigned to the Seller by such
prior owner) has entered into with potential buyers of the Company Interest, the
Subsidiary Interests, the Company Business or the Wireless System Assets, to the
extent permitted by the terms of such agreements, and Seller shall deliver
copies of the assigned agreements to Buyer at the Closing.
44
4.1.9 Schedule Updates. (a) At the Closing, the Seller shall
deliver the Closing Schedules, which shall reflect Schedule Changes from the
Agreement Schedules as may be necessary to update and correct the Agreement
Schedules.
(b) Any and all changes referred to in paragraph (a) that
update the Agreement Schedules for matters that are permitted or not prohibited
by the terms of this Agreement including, but not limited to, Section 4.1.1
hereof, shall not represent a breach of any of the applicable representations
and warranties of Seller under this Agreement as of the Closing Date.
(c) Any and all changes referred to in paragraph (a) that
represent the correction of errors or omissions to the Agreement Schedules as of
the date of this Agreement shall be taken into consideration in determining
whether there has occurred a breach of any applicable representation and
warranty of Seller as of the date of this Agreement.
(d) Any and all changes referred to in paragraph (a) that
represent actions taken in breach of the Seller's obligations under this
Agreement between the date of this Agreement and the Closing, including, but not
limited to, Section 4.1.1 hereof, shall be taken into consideration in
determining whether there has occurred a breach of any applicable representation
or warranty (as well as the applicable covenant) of Seller.
(e) Any and all changes referred to in paragraph (a),
including changes referred to in paragraphs (b), (c) and (d) of this Section
4.1.9 to the extent applicable, shall be taken into consideration in determining
whether there has occurred a Material Adverse Change; provided that a Material
Adverse Change shall not include any action or consequence of any action which
Buyer has agreed in writing that Seller may take.
(f) Nothing in paragraphs (a) through (e) of this Section
4.1.9 is intended to authorize Seller to take, or to cause the Company or any
Subsidiary to take, any action that is not otherwise permitted by this Agreement
that would render any representation or warranty of Seller contained in this
Agreement to be inaccurate as of the Closing Date as if made as of the Closing
Date.
4.1.10 Liabilities. (a) At Closing, the Buyer shall not assume and
neither the Company nor any Subsidiary shall have any liabilities except for
such liabilities as are set forth in Schedule 4.1.10(a), as adjusted for changes
permitted by this Section 4.1.10(a) that are identified on the Schedule
4.1.10(a) to be updated as of the Closing Date. The Schedule 4.1.10(a) delivered
as of the date of this Agreement (reflecting information as of March 31, 2002)
shall be updated as of the Closing Date pursuant to Section 4.1.9 hereof to
include the following Schedule Changes in liabilities in the related Schedule
4.1.10(a) to be delivered as of the Closing Date:
(i) changes to liabilities in respect of changes to Company
Authorizations and Company Contracts (including new Company
Authorizations and new Company Contracts) that are permitted or
not prohibited pursuant to the terms of this Agreement;
45
(ii) changes in liabilities that are permitted or not
prohibited pursuant to the terms of this Agreement, including but
not limited to Section 4.1.1; and
(iii) such other changes in liabilities that are agreed to by
Buyer in writing.
On the Closing Date, Seller shall deliver to Buyer an update of Schedule
4.1.10(a) that includes the Buyer Assumed Liabilities as of the Closing Date
(the amount of Current Liabilities included in such update shall be estimated in
good faith, subject to the following sentence). With respect to Current
Liabilities such Schedule 4.1.10(a) shall be finalized using the procedures set
forth in Section 2.3 relating to the Closing Date Net Working Capital Schedule.
(b) The liabilities referred to in paragraph (a) of this
Section 4.1.10 that will be set forth on the final Schedule 4.1.10(a) to be
prepared as of the Closing Date are referred to as the "Buyer Assumed
Liabilities." The inclusion of liabilities relating to Company Authorizations
and Company Contracts within the "Buyer Assumed Liabilities" definition shall
not limit the representations and warranties contained in Section 3.1 (or
indemnification rights in respect of a breach thereof, if any) with respect to
Company Authorizations and Company Contracts. Notwithstanding the foregoing or
anything to the contrary herein, the Buyer Assumed Liabilities shall not include
the following liabilities:
(i) any and all liabilities that arise on or after the date of
this Agreement as a result of any breach of Seller's obligations
under this Agreement including, but not limited to, Section 4.1.1
(unless Buyer agrees in writing to expressly assume such
liabilities); and
(ii) any and all liabilities that were outstanding as of March
31, 2002 but that were not disclosed on Schedule 4.1.10(a) as of
the date of this Agreement, whether due to an omission of a
liability in its entirety or due to an error in the amount of the
liability disclosed on such schedule (unless Buyer agrees in
writing to expressly assume such liabilities).
Notwithstanding anything to the contrary, the Buyer Assumed Liabilities shall
not include any Indebtedness, except capital lease obligations disclosed on
Schedule 4.1.10(a).
4.1.11 Marketing Services Agreement. At the request of Buyer at
any time after the date hereof and prior to the Closing, the Seller shall
cooperate with Buyer to negotiate a mutually acceptable agreement relating to
sales and marketing (the "Marketing Services Agreement").
4.1.12 [Left Blank]
4.1.13 EMF Insurance. Seller shall use Commercially Reasonable
Efforts to obtain insurance for electro-magnetic frequency radiation exposure,
with a policy limit of at least Fifty Million Dollars ($50,000,000), from AIG
Corp. or another insurance carrier rated at least A-IX by A.M. Best, which
policy shall be retroactive to 11:59 p.m. Eastern time October 31, 2001; such
insurance coverage, if obtained, shall be in effect as of the Closing and the
premium
46
for such insurance coverage shall be paid by Seller or the Company prior to the
Closing for the period from such date through the Closing Date.
4.1.14 [Left Blank].
4.1.15 Sales and Marketing Expenditures. Between the date of this
Agreement and the Closing Date, Seller shall cause the Company to continue to
market its wireless services in accordance with past practices, provided, Seller
shall be deemed to have complied with this obligation if the Company takes the
action set forth on Schedule 4.1.15.
4.2 Agreements of Buyer. Buyer covenants and agrees that from the date
of this Agreement until the Closing (and following Closing to the extent
expressly set forth herein) or the earlier termination of this Agreement in
accordance with its terms and except as otherwise consented to in writing by
Seller (which consent shall not be unreasonably withheld or delayed):
4.2.1 Approvals and Disapprovals. Buyer agrees to approve or
disapprove in writing any action that requires its approval under Section 4.1
within seven Business Days following its receipt of written notice to Buyer from
Seller requesting such approval, and Buyer agrees not to unreasonably withhold
any such approval. If Buyer fails to approve or disapprove of any such action in
writing within seven Business Days after receipt of such written notice from
Seller, then Buyer shall be deemed to have approved of such action and the
taking of such action shall not be deemed to constitute a breach of Section 4.1.
4.2.2 Control of Systems Pending Closing. Buyer shall not,
directly or indirectly, control, supervise or direct, or attempt to control,
supervise or direct, the operations of the Company Business in any manner that
is prohibited by FCC rules or policies. The foregoing is not intended to limit
Buyer's ability to exercise its rights under this Agreement or, if applicable,
the Marketing Services Agreement, to the extent permitted by FCC rules or
policies.
4.2.3 [Left Blank]
4.2.4 Retention of Books and Records. Buyer shall cause the
Company and its Subsidiaries to retain, for seven years after the Closing Date,
all books, records and other documents pertaining to the Company Business that
relate to the period prior to the Closing Date that are required to be retained
under current retention policies of Buyer and its Affiliates and to make the
same available after the Closing Date for inspection at Buyer's offices and
copying by Seller or its agents at Seller's expense, and shall provide access to
Buyer's personnel at Seller's expense, in each case during regular business
hours without significant disruption to the Company Business and upon reasonable
request and upon reasonable advance notice. At and after the expiration of such
period, if Seller or any of its Affiliates has previously requested in writing
that such books and records be preserved, Buyer shall either preserve such books
and records for such reasonable period as may be requested by Seller or any of
its Affiliates or transfer such books and records to Seller or its designated
Affiliate. Seller agrees that such records will be kept strictly confidential
and used only for purposes of accounting, Taxes or litigation, or as required by
any Governmental Authority.
47
4.2.5 Communications Act. Buyer has not taken and shall not take
prior to the Closing any action to disqualify itself under the Communications
Act or other applicable laws, rules and regulations from acquiring control of
the Company FCC Authorizations.
4.2.6 CMRS Spectrum Limits. Buyer agrees to divest, sell, transfer
or dispose of such portion of any Personal Communications Services license(s) it
holds and controls or the C20 Spectrum, if such divestiture, sale, transfer or
disposition by Buyer is necessary in order for Buyer to acquire control of the
Company FCC Authorizations consistent with the FCC's CMRS spectrum aggregation
limits as defined in 47 C.F.R. section 20.6, as modified in 2000 Biennial
Regulatory Review Spectrum Aggregation Limits for Commercial Mobile Radio
Services, Report and Order, WT Docket No. 01-14, FCC 01-328, released December
18, 2001 and effective January 1, 2002. Buyer agrees not to request a waiver of
such rule for the purpose of avoiding any necessary divestiture as specified
herein prior to the Closing Date.
4.2.7 Reimbursement of Attorneys' Fees and Costs. Following the
Closing, Buyer hereby agrees to remit to Seller, for the benefit of V-V PCS,
L.P., promptly any amounts of attorneys' fees or other litigation costs received
by Buyer or the Company in respect of fees or expenses previously paid by the
Company or V-V PCS, L.P. or any prior owner of the Company in connection with
PrimeCo PCS, L.P., et al. v. Illinois Commerce Commission, et al., Case No. 98
CH 5500 (Cook County, CH Div.), except to the extent such amounts are reflected
as a Current Asset on the Closing Date Net Working Capital Schedule.
4.2.8 Microwave Buyer acknowledges and agrees that Seller, for the
benefit of V-V PCS, L.P., shall be entitled to receive any reimbursements that
may be paid under any microwave clearing agreements in effect prior to November
1, 2001, to which the Company is a party or relating to the Company Business,
and Buyer covenants and agrees that it will promptly remit to Seller, for the
benefit of V-V PCS, L.P., any payments that the Company, Buyer or its Affiliates
receives in respect of any such reimbursement obligation after the Closing,
except to the extent such amounts are reflected as a Current Asset on the
Closing Date Net Working Capital Schedule.
4.2.9 Cooperation Regarding IMF Litigation. Following the Closing,
Buyer hereby agrees to use Commercially Reasonable Efforts cooperate with the
Seller to comply with any order of a Governmental Authority or to fulfill any
other obligation of the Seller in connection with PrimeCo PCS, L.P., et al. v.
Illinois Commerce Commission, et al., Case No. 98 CH 5500 (Cook County, CH Div.)
relating to current or former customers of the Company Business, including
providing any information regarding such customers to a third party for purposes
of facilitating the refund to such customers of any amounts, providing a notice
to such customers in the required form, at the required time and in the required
manner regarding the case cited above, or receiving from a third party and
refunding to such customers in the manner prescribed any amounts to be refunded
to such customers, provided that the out-of-pocket costs and actual expenses of
Buyer and/or the Company or any Subsidiary in complying with this Section 4.2.9
shall be borne by Seller.
4.2.10 Employment Agreements. Schedule 4.2.10 contains a list of
those employment agreements set forth on Schedule 3.1.21(c) that Buyer shall
assume upon Closing,
48
which assumption shall be subject to the execution of the amendments to such
agreements required under Section 5.1.7 hereof.
4.2.11 Buyer Efforts to Obtain Financing. The agreements of Buyer
with respect to financing are set forth in Schedule 4.2.11.
4.3 Agreements of Seller Pending the Closing. Seller covenants and
agrees that from the date of this Agreement until the Closing or the earlier
termination of this Agreement in accordance with its terms and except as
otherwise consented to in writing by Buyer (which consent shall not be
unreasonably withheld):
4.3.1 Agreement Regarding Certain Assets. Prior to the Closing
Date, subject to Section 2.3.4, Seller hereby agrees (i) to buy or cause the
Company to buy from V-V PCS, L.P. or one of its Affiliates pursuant to Section
4.4.15 of the 2001 Purchase Agreement, for the approximate aggregate purchase
price of $3,500,000, the Signal Transfer Point, Signal Control Point and
Over-the-Air Transmission Functionality equipment used in the Company Business
as of June 22, 2001 free and clear of all Liens, subject to normal wear and tear
and (ii) if the Seller buys such equipment, to contribute such Signal Transfer
Point, Signal Control Point and Over-the-Air Transmission Functionality
equipment so purchased to the Company without any cost or obligation on the part
of the Company or Buyer.
4.3.2 Closing Date Operating Statistics. Seller shall disclose to
Buyer on or prior to the Closing Date the following information (i) number of
active subscribers (including prepaid subscribers and postpaid subscribers) as
of the close of business on the earlier of the day immediately preceding the
Closing Date and the day immediately preceding the effective date of the
Marketing Services Agreement (the "Operating Results Determination Date"); and
(ii) the service revenues of the Company for the most recent two calendar months
for which such financial information is available next preceding the month in
which the earlier of the Closing or the effective date of the Marketing Services
Agreement occurs. Schedule 3.1.28 sets forth the method of determination of
active subscribers, active postpaid subscribers, active prepaid subscribers, and
service revenues as used by the Company and the Subsidiaries for determining the
same for all periods referred to in this Section 4.3.2. Such Schedule 3.1.28
also sets forth the date(s), if any, on which each and any such definition was
changed and an explanation of each and any such change.
4.3.3 Consents. Seller shall use Commercially Reasonable Efforts
to obtain prior to Closing the Seller Consents.
4.3.4 Alternative Arrangements. (a) Notwithstanding anything
contained herein to the contrary, unless waived by Buyer, it is a condition to
the obligations of Buyer under Section 2 of this Agreement that Seller shall
have obtained all of the Seller Required Consents prior to the Closing.
(b) With respect to any Company Contract for which a Minor
Consent of a third party is required, Seller shall use Commercially Reasonable
Efforts to obtain prior to the Closing Date the consent of such third party.
49
(c) With respect to any Company Contract for which a Minor
Consent of a third party is required but which Seller does not obtain prior to
the Closing and does not expect to obtain within 18 months after the Closing
Date, Seller shall use Commercially Reasonable Efforts to obtain a replacement
contract for the Company and/or a Subsidiary on terms substantially similar to
those of such Company Contract which shall be reasonably satisfactory to Buyer.
(d) Buyer may elect to inform Seller in writing that it does
not desire Seller to obtain a consent or replacement contract for the Company
and/or a Subsidiary with respect to any particular Company Contract. In such
event no Person shall be in breach of this Agreement as a result of the failure
to obtain, or use Commercially Reasonable Efforts to obtain, such consent or
replacement contract and no party shall have any further obligation to seek any
third party consent or to provide any Alternative Arrangement (as defined in
Section 4.3.4(e) below) with respect to the such Company Contract.
(e) In the event any Minor Consents are not obtained prior to
the Closing Date for Company Contracts referred to in paragraph (b) above (other
than Company Contracts addressed by the procedures in paragraphs (c) or (d)
above), Seller shall (i) continue to use their Commercially Reasonable Efforts
to obtain such consents until the earlier of (A) the expiration of a period of
18 months following the Closing Date or (B) a replacement contract has been
arranged for the Company by Seller that is reasonably satisfactory to Buyer and
(ii) create an alternative arrangement on terms substantially similar to the
subject Company Contract that is reasonably satisfactory to Buyer ("Alternative
Arrangement").
(f) With respect to any Alternative Arrangements created by
Seller pursuant to paragraph (e) above, the Company and/or the Subsidiaries
shall pay or satisfy the corresponding liabilities for the enjoyment of the
benefits thereunder to the extent the Company and/or the Subsidiaries would have
been responsible therefor had such consent been obtained and (ii) such
Alternative Arrangements shall continue until the earlier of (A) the arrangement
by the Seller for the Company and/or the Subsidiaries of a replacement agreement
reasonably satisfactory to Buyer, (B) the receipt of the required Minor Consent
with respect to such Company Contract, or (C) the expiration of the stated term
of the Company Contract to which it relates (including any renewal terms of
right by the Company or Seller); provided that with respect to a renewal term of
any Company Contract the term of which expires within the first 12 months after
the Closing and for which the renewal term is not of right, Seller will be
obligated, upon the written request of Buyer, to use Commercially Reasonable
Efforts to effect such renewal and, if successful, to keep such Alternative
Arrangement in place through such renewal term, provided, further, that the
Company and/or the Subsidiaries will pay or satisfy any amounts payable or
liabilities accruing during such renewal term.
(g) Buyer shall use Commercially Reasonable Efforts to
cooperate with Seller in Seller's efforts to comply with the obligations of this
Section 4.3.4.
(h) The obligations under this Section 4.3.4 shall survive the
Closing in accordance with the terms set forth above.
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4.3.5 Other Assets. Subject to the provisions of Section 4.3.4,
prior to the Closing Date, Seller and each other member of the Seller Group
shall transfer to the Company and/or the Subsidiaries (to the extent Seller or
such members have them) (i) all tangible assets used exclusively in the Company
Business, (ii) all tangible assets which are severable and used in the Company
Business, but only to the extent that the severable part is used exclusively in
the Company Business, (iii) all assets if not so severable used primarily in the
Company Business, (iv) all property listed on Schedule 3.1.9(b) that is not
owned, leased or otherwise held by the Company or the Subsidiaries; (v) all
licenses, permits and authorizations pertaining to the Company Business; and
(vi) all warranties received from suppliers and manufacturer warranties in
connection with equipment owned by the Company or the Subsidiaries or required
to be transferred to the Company or the Subsidiaries. To the extent that any
assets relating to the Company Business are transferred from Verizon or its
Affiliates to any member of the Seller Group, or otherwise come into the
possession or under the control of, any member of the Seller Group pursuant to
Section 4.3.4, 4.3.5 or 7.3 of the purchase and sale agreement among Joseph J.
Simons, Esq., trustee of the PrimeCo PCS, L.P. Wireless Assets Trust (Chicago)
and V-V PCS, L.P. (formerly PrimeCo PCS, L.P.) and Seller (formerly PrimeCo
Acquisition LLC) dated June 22, 2001 as amended (the "2001 Purchase Agreement"),
Seller shall promptly notify Buyer in writing and, if such assets are desired by
Buyer, shall transfer such assets to Buyer for no additional consideration
(unless such assets are Current Assets and Buyer desires such assets, in which
case, the consideration therefor shall be equal to the amount that would have
been reflected on the Closing Date Net Working Capital Schedule had such assets
been on the Company's books and records on the Closing Date).
4.4 Covenants of Seller and Buyer. Seller and Buyer further covenant
and agree that, except as otherwise agreed to in writing by Seller and Buyer:
4.4.1 FCC and State Commission Authorizations. Within five
Business Days after the date hereof, to the extent required by the rules of the
FCC, Seller and Buyer shall file an application with the FCC for its consent to
the transfer of control of the Company and the Subsidiaries by Seller to Buyer
(an "FCC Application"). As soon as practicable thereafter, Seller and Buyer
shall file such other applications for all consents and approvals of, and
notifications to, each applicable State Commission and other regulatory consents
and approvals necessary for the consummation of the transactions contemplated
hereby, if any. Seller and Buyer shall diligently and jointly prosecute all such
applications.
4.4.2 HSR Act Matters. In the event filings pursuant to the HSR
Act are required, the parties promptly will complete all documents required to
be filed with the FTC and the DOJ in order to comply with the HSR Act and,
promptly (as reasonably practicable) after the date hereof, together with the
Persons, if any, who are required to join in such filings, shall file such
documents with the appropriate governmental entities. The parties shall promptly
furnish all materials thereafter required by any of the governmental entities
having jurisdiction over such filings. Buyer will promptly, and in any event
within 10 days, notify Seller if the DOJ or the FTC advises Buyer or its
Affiliates that (i) the DOJ will not approve Buyer as the transferee of the
Company Interest except subject to terms and conditions (within the meaning of
Section 7.1(a)(vi)) that are not reasonably acceptable to Buyer in its sole
discretion or (ii) the DOJ or the FTC will challenge the transaction in court as
a violation of the antitrust laws (the "DOJ/FTC Notice").
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4.4.3 Copies of Regulatory Filings. Except to the extent
prohibited by Requirements of Law, each of the Parties hereto shall provide to
the other copies of all filings and material correspondence with all
Governmental Authorities with respect to the filings and consents described in
this Section 4.4.
4.4.4 Publicity and Confidentiality. (a) Publicity. Until the
Closing, neither Buyer nor Seller shall issue any press release or make any
public statement with respect to this Agreement or the transactions contemplated
hereby without the approval of the other, except as may be required by law or by
the rules of any national securities exchange to which the disclosing Party is
subject. In the event that any press release or any such public statement is
required to be made or issued by law or by the rules of any national securities
exchange, the Party required to make or issue such press release or public
statement shall (to the extent possible) consult with the other Party before
making or issuing such press release or other public statement.
(b) Confidentiality. Except as may otherwise be required by
law, no Party or any Affiliate of a Party shall disclose to any third party any
information with respect to the other Party, its Affiliates or the business,
operations and affairs of such other Party or its Affiliates not in the public
domain obtained in the course of negotiating or consummating the transactions
contemplated by this Agreement without the prior written consent of such other
parties; provided, however, that each Party hereto may disclose such
information:
(i) to its respective Affiliates and representatives that have
a need to know such information,
(ii) in accordance with applicable laws, regulations or court
orders (if the other party is notified prior to such disclosure
and such disclosure is limited to those matters required by such
laws, regulations or court orders to be disclosed), or
(iii) as is necessary in connection with the filing or
prosecution of any applications with any Governmental Authority
necessary or appropriate to consummating the transactions
contemplated by this Agreement.
4.4.5 Additional Post-Closing Confidentiality Undertakings. From
and after the Closing Date, the Seller shall not use or take any action
whatsoever which would result in disclosure to any third party of any
information about the Company, the Subsidiaries or the Company Business,
provided the Seller shall not be required to maintain confidential any
information which: (a) is generally known or available to the public prior to
the date hereof or becomes known or available to the public after the date
hereof through no fault of the Seller; (b) is obtained from a third party which
had the right to disclose such information; (c) is subsequently disclosed or
made public by Buyer or any of its Affiliates, or a Governmental Authority; or
(d) is disclosable pursuant to a Requirement of Law; provided, further, that
Seller may disclose such information to its members and their partners,
accountants and advisors to the extent required for purposes of accounting,
litigation and taxes, subject to the following conditions: (i) Seller shall
disclose in writing to such Persons the confidentiality obligations set forth in
this Section 4.4.5 and (ii) advise such Persons that they are subject to such
confidentiality obligations to the same extent as Seller.
52
4.4.6 Cooperation. Seller and Buyer shall use Commercially
Reasonable Efforts to cooperate and cause all of the conditions precedent to the
obligations of Buyer and Seller under this Agreement to be satisfied on or prior
to the Closing Date.
4.4.7 Other Regulatory Requirements. Seller and Buyer agree to use
Reasonable Commercial Efforts to cooperate with each other in connection with
the other party's efforts to satisfy applicable regulatory requirements in
connection with the transactions contemplated by this Agreement, each at its own
cost and expense except as expressly provided otherwise in this Agreement.
4.4.8 Company Litigation. Under this Agreement, Seller shall
retain responsibility and liability for any and all Actions (whether or not now
existing) and all Losses arising therefrom, that relate to the Company, any
Subsidiary or the Company Business that are brought by third parties against the
Company, any Subsidiary or any of the Buyer Indemnitees, to the extent the event
giving rise thereto occurred prior to the Closing Date or which result from or
arise out of the necessity or failure to obtain consent of any Person required
under any Company Authorization or Company Contract in connection with the
transfer of the Company Interest by Seller to Buyer or out of any action or
inaction prior to the Closing Date of Seller, any other member of the Seller
Group, the Company, any Subsidiary or any of their respective directors,
officers, managers, members, partners, employees, agents or subcontractors;
provided that the foregoing shall not apply to any actions, claims, proceedings
or investigations and all Losses therefrom, that constitute Buyer Assumed
Liabilities or arise from the failure after the Closing Date to satisfy such
Buyer Assumed Liabilities. Actions, claims, proceedings or investigations
described in the preceding sentence prior to the proviso contained therein
(whether or not disclosed on any Schedules hereto) are collectively referred to
as the "Company Litigation" in this Agreement. Buyer shall use Commercially
Reasonable Efforts to cooperate with Seller in its response, defense and
settlement of the Company Litigation. Without limiting the generality of the
foregoing, so long as no significant disruption of the Company Business would
reasonably be expected to result therefrom, Buyer shall make available to Seller
(a) such personnel of Buyer and its Affiliates who, by reason of their prior
employment by the Company or an Affiliate or Subsidiary of the Company, have
knowledge of facts relevant to the Company Litigation, and (b) such documents
and records of Buyer and its Affiliates that are relevant to the Company
Litigation, provided that Buyer and its Affiliates will not be required to
provide access to any documents or records to the extent that either (i) doing
so is prohibited by contract and Buyer, after making Commercially Reasonable
Efforts, is unable to obtain a waiver or consent from the other party to such
contract or (ii) doing so would constitute a waiver of an attorney-client or
similar privilege, provided that Seller and Buyer shall, if feasible, enter into
a joint defense or similar agreement in order to provide such access without
waiving such privilege. Seller shall make all requests for access to such
personnel, documents and records in a writing sent to Buyer in accordance with
the terms of Section 7.9 (or such other Person designated by Buyer) reasonably
in advance of the desired access. Seller shall promptly reimburse Buyer for the
out-of-pocket costs and expenses (including reasonable attorneys' fees and
expenses) incurred by Buyer and its Affiliates in providing such access to such
personnel, documents and records. If Seller is required to provide any Company
Promotional Items in settlement or resolution of any Company Litigation, Buyer
shall use Commercially Reasonable Efforts to cooperate with Seller in
implementing the Company Promotional Items and shall honor and provide the
Company Promotional Items; provided that the Company shall not be
53
obligated to honor and provide Company Promotional Items (x) to Persons that are
no longer subscribers of the Company at the time of such settlement or
resolution or (y) if in Buyer's reasonable judgment to do so would materially
adversely affect its operation of the Company Business. The out-of-pocket cost
and actual expense incurred by Buyer or its Affiliates in implementing, honoring
and providing the Company Promotional Items shall be borne by Seller. For such
purposes, such cost and expense of providing the product, good or service
constituting the Company Promotional Item shall not be deemed to include any
profit or markup which might be obtained if such product, good or service were
sold to a customer of Buyer or its Affiliates. As used in this Agreement, the
term "Company Promotional Item" means any non-monetary product, good or service
provided in settling or resolving any action, claim, proceeding or investigation
or as the result of an adjudication of any litigation, and shall include
certificates for free minutes of use of wireless telecommunications services,
discounts on minutes of use of wireless telecommunications services, discounts
on handsets, discounts on other products sold by the Company or the
Subsidiaries, and other products, goods, services or rights to obtain any
products, goods or services. For the sake of clarity, the provisions of Section
6.4 shall apply to the Company Litigation.
4.4.9 Retention and Delivery of Books and Records. Seller shall
until October 31, 2008 retain and refrain from destroying any books and records
in its possession or under its control relating to the Company, the Subsidiaries
or the Company Business even if their current document retention policy would
permit such destruction. Promptly following the Closing, Seller shall deliver or
cause to be delivered to Buyer all agreements, documents, books, records and
files entered into by or created on behalf of the Company or the Subsidiaries
(including a list of the Company's and Subsidiaries' subscriber accounts dated
as of the most recent date prior to the Closing Date as shall be reasonably
practicable) (collectively, "Records"), if any, in the possession of Seller and
any other member of the Selling Group relating to the Company Business to the
extent not then in the possession of the Company, subject to the following
exceptions: (i) Buyer recognizes that certain Records may contain certain
incidental information relating to the Company or the Subsidiaries or may relate
primarily to Seller and any other member of the Selling Group and that Seller
and other members of the Selling Group may retain such Records and Seller shall
provide or cause to be provided to Buyer copies of such retained Records, only
to the extent that they relate to the operation of the Company, the Subsidiaries
or the Company Business; provided, however, that, except as otherwise expressly
provided in this Agreement, no Records relating to the business or operations of
the Company, the Subsidiaries or the Company Business may be used by Seller or
any other member of the Selling Group for any purpose other than for purposes of
accounting, litigation or Taxes, or as required by any Governmental Authority.
4.4.10 Purchase Price Allocation. (a) Seller shall report the sale
of the Company Interest, and Buyer shall report the purchase of the Company
Interest, as a sale and purchase of assets for federal, state and local income
tax purposes to the extent permissible by applicable law.
(b) The aggregate Purchase Price (including the assumption by
Buyer of Current Liabilities and Buyer Assumed Liabilities) shall be allocated
among the purchased assets in accordance with Section 1060 of the Code. The
Purchase Price Allocation based on the March 31, 2002 balance sheet is embodied
in Schedule 4.4.10, which schedule shall be updated
54
on a consistent basis at Closing by an amendment to this Agreement (the
"Purchase Price Allocation"). Seller and Buyer agree to act in accordance with
the allocations of the Purchase Price among the assets attributable to the sale
of the Company Interest and the consideration set forth in such schedule for all
purposes, including for purposes of any Tax Return, unless otherwise required
pursuant to a final determination. In the event that Buyer and Seller are unable
to reach an agreement with respect to the schedule to be updated at Closing,
then the disputed items shall be resolved within the next 30 days by an
independent accounting firm that is mutually acceptable to both parties and
whose fees shall be borne equally by Buyer, on the one hand, and Seller, on the
other hand. Such determination by the accounting firm shall be binding on the
parties and shall be based solely upon written submissions by Buyer and Seller,
and not upon any independent investigation by the accounting firm.
(c) The Purchase Price Allocation shall be adjusted if the
Purchase Price is adjusted under any provision of this Agreement. Within 30 days
after payment or receipt of any adjustment, Buyer shall deliver to Seller a
revised Purchase Price Allocation. Seller will have a period of 15 days after
the delivery of the Purchase Price Allocation to present in writing to Buyer any
objections to the allocation. Approval shall not be unreasonably withheld.
Unless Seller timely objects, the Purchase Price Allocation shall be binding
upon both parties without further adjustment. Seller and Buyer will follow and
use the Purchase Price Allocation in all tax returns (including, without
limitation, filing Form 8594 with its Federal income tax return for the taxable
year that includes the date of Closing) and in the course of any tax audit, tax
review, or tax litigation, unless otherwise required by law.
4.4.11 Cooperation in Indemnity Claims. Following the Closing,
Buyer shall use Commercially Reasonable Efforts to cooperate, and cause the
Company and the Subsidiaries to cooperate, with Seller in Seller's prosecution
of any indemnity claims under the 2001 Purchase Agreement, including providing
Seller reasonable access (subject to Section 4.2.4) to the books and records and
officers and employees of the Company and the Subsidiaries.
4.4.12 Failure to Obtain Certain Consents and Assignments. Certain
agreements of the parties with respect to the failure to obtain certain consents
and assignments on or prior to the Closing are set forth in Schedule 4.4.12.
4.4.13 Company Agreement and Subsidiary Agreements. Seller shall
not amend (or cause to be amended) the terms of the Company Agreement or any
Subsidiary Agreement in any manner which is adverse to the Buyer or to the
ability of the Parties to consummate this Agreement.
4.4.14 [Left Blank].
4.4.15 Liabilities under Certain Contracts Retained by Seller.
Certain agreements of the parties with respect to liabilities under certain
contracts to be retained by Seller are set forth in Schedule 4.4.15.
4.4.16 Payment and Accrual of Bonuses. Buyer shall assume the
obligation to pay to the employees of the Company or any Subsidiary bonuses with
respect to the calendar year in which the Closing occurs, such bonuses to be
paid in the ordinary course; provided,
55
however, that a pro rata amount of such bonuses (determined based on the
Company's bonus program in effect prior to the Closing Date and the bonus
provisions in the employment and consulting agreements that are amended pursuant
to Section 5.1.7, as applicable, and, solely for purposes of determining the
amount of pro rata bonuses to be accrued under Section 4.4.16, assuming the
maximum bonus that could be payable for such calendar year) applicable to the
portion of the calendar year prior to the Closing Date shall be accrued as a
liability on Current Liabilities in the Closing Date Net Working Capital and
provided further that nothing in this Section 4.4.16 shall require the Company
or any Subsidiary to pay to any of its employees the maximum bonus that could be
payable for the calendar year in which the Closing occurs.
4.4.17 Transition Incentive Plan. Seller or the Company shall
either (i) pay all amounts due under the Company's Transition Incentive Plan
prior to the Closing or (ii) if all amounts due under the Company's Transition
Incentive Plan have not been paid prior to the Closing, accrue all such amounts
not paid prior to the Closing as a Current Liability included in Closing Date
Net Working Capital, in which case Seller shall instruct Buyer in writing at
Closing as to the amount that Seller recommends should be paid to each
participant in the Company's Transition Incentive Plan.
ARTICLE 5
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions Precedent to Obligations of Buyer. All obligations of
Buyer under Article 2 of this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent, which may be waived in writing in whole or in part by Buyer:
5.1.1 Representations and Warranties True as of Closing. All of
the representations and warranties of Seller contained in this Agreement
(without duplication of any materiality qualifications included in such
representations and warranties for all purposes of this Section 5.1.1) shall
have been true and correct as of the date hereof and shall be true and correct
as of the Closing Date, with the same effect as though all such representations
and warranties had been made on and as of the Closing Date (considering any
Schedule Changes made to the Schedules and the effects thereof as provided
pursuant to Section 4.1.9), other than any such representations and warranties
made as of a specified date prior to the Closing Date, which shall be true and
correct as of such date, and except to the extent that any and all failures of
such representations and warranties to be true and correct, individually or in
the aggregate, shall not have had a Material Adverse Effect.
5.1.2 Compliance with this Agreement. Seller shall have performed
and complied in all material respects with all agreements and conditions
required by this Agreement to have been performed or complied with by it prior
to or at the Closing.
5.1.3 Closing Certificates. Buyer shall have received a
certificate from an authorized officer of Seller, dated the Closing Date,
certifying that the conditions specified in Sections 5.1.1 and 5.1.2 have been
fulfilled.
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5.1.4 No Material Adverse Change. There shall have been no
Material Adverse Change since the date of the Company Current Balance Sheet.
5.1.5 Approvals. All required consents and approvals from the FCC
shall have been obtained, and each such consent or approval shall have become a
Final Order and shall be in full force and effect in accordance with its terms
unless the failure to be in full force and effect is a result of a breach or
default by Buyer or any of its Affiliates.
5.1.6 Required Consents; Notices; Assignment of Leases. (a) Seller
shall have obtained the Seller Required Consents, other than the Seller Required
Consents referenced in Section 4.4.12.
(b) Seller shall have sent to the party specified in the
applicable agreement or lease within the requisite time period, if any, the
notices specified in Schedule 3.1.6, which shall be in form and substance
reasonably acceptable to Buyer.
5.1.7 Amendment of Certain Employment Agreements and Other
Matters. Certain agreements of the parties with respect to the amendment of
certain employment agreements and other matters set forth in Schedule 5.1.7.
5.2 Conditions Precedent to Obligations of Seller. All obligations of
Seller under Article 2 of this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent, which may be waived in writing in whole or in part by Seller:
5.2.1 Representations and Warranties True as of Closing. All of
the representations and warranties of Buyer contained in this Agreement (without
duplicating any materiality qualifications included in such representations and
warranties for all purposes of this Section 5.2.1) shall have been true and
correct as of the date hereof and shall be true and correct as of the Closing
Date, with the same effect as though all such representations and warranties had
been made on and as of the Closing Date, other than representations and
warranties made as of a specified date, which shall be true and correct as of
such date, and except to the extent that any and all failures of such
representations and warranties to be true and correct, individually or in the
aggregate, shall not have had a material adverse effect on Buyer's ability to
consummate the transactions contemplated by this Agreement.
5.2.2 Compliance with this Agreement. Buyer shall have performed
and complied in all material respects with all agreements and conditions
required by this Agreement to be performed or complied with by it prior to or at
the Closing.
5.2.3 Closing Certificate. Seller shall have received a
certificate from an authorized officer of Buyer, dated the Closing Date,
certifying that the conditions specified in Section 5.2.1 and 5.2.2 have been
fulfilled.
5.3 Conditions Precedent to the Obligations of Buyer and Seller. All
obligations of Buyer and Seller under this Agreement are subject to the
fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent, which may be waived in writing in whole or in
part by Buyer and Seller.
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5.3.1 Regulatory and Other Approvals. All required consents and
approvals from the FCC, and, depending upon which agency reviews the
transaction, the DOJ or the FTC, and any other required consents and approvals
from other Governmental Authorities, including the expiration or termination of
the waiting period under the HSR Act, shall have been obtained or occurred free
of any conditions (except as contemplated by Section 4.2.6) other than those
routinely imposed in conjunction with such consents and approvals that are not
specifically directed at the Company, the Subsidiaries, Buyer, Seller or their
respective Affiliates, or the assets or properties owned by any of such Persons,
or the transactions contemplated by this Agreement or the Transaction Documents,
and no stay of any such consent or approval shall be in effect.
5.3.2 No Pending Governmental Litigation. On the Closing Date, no
suit, action or other proceeding brought by any Governmental Authority shall be
pending in which it is sought to restrain or prohibit the consummation of the
transactions contemplated hereby.
ARTICLE 6
INDEMNIFICATION
6.1 General Indemnification Obligation of Seller. From and after the
Closing, Seller shall reimburse, indemnify and hold harmless Buyer, its
Affiliates (including the Company and the Subsidiaries), and their respective
directors, managers, officers, members, partners, employees, agents, successors
and assigns (each, a "Buyer Indemnitee" and collectively, the "Buyer
Indemnitees"), against and in respect of any and all damages, losses,
deficiencies, liabilities, costs and expenses (collectively, "Losses") incurred
or suffered by any Buyer Indemnitee that result from, relate to or arise out of
and any and all actions, suits, claims, proceedings, investigations, demands,
assessments, audits, fines, judgments, costs and other expenses (including
reasonable fees and expenses of attorneys, accountants and other professional
advisors) incident to any of the following matters or to the enforcement of this
Section 6.1:
(a) any and all liabilities and obligations of any nature
whatsoever (other than Taxes) with respect or related to the Company Business or
the Company Interest that arise on or prior to the Closing Date (which for
purposes of this Article 6 only shall be deemed to have occurred upon the
completion of the transactions contemplated by Section 2.5 hereof), except for
the Buyer Assumed Liabilities;
(b) any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of Seller under this
Agreement (other than a breach of any representation or warranty set forth in
Section 3.1.7 which shall be covered by Section 6.1(e) below), or any
misrepresentation in or omission from any certificate, schedule, exhibit,
document or instrument furnished to Buyer pursuant to this Agreement, the other
Transaction Documents or the Related Agreements, or in connection with the
execution or performance of this Agreement (including the Schedules hereto and
the certificate of Seller delivered pursuant to Section 5.1.3 hereof), the other
Transaction Documents or the Related Agreements;
58
(c) any representation or warranty of Seller contained in this
Agreement (other than any representation or warranty that is expressly made as
of a specified date prior to the Closing Date that was true and correct as of
such date) not being true and correct as of the Closing Date as if made as of
the Closing Date (considering any Schedule Changes made to the Schedules and the
effects thereof as provided pursuant to Section 4.1.9);
(d) any and all actions, suits, claims, proceedings or
investigations brought by a third party against any Buyer Indemnitee that relate
to the Company, the Subsidiaries, the Related Agreements, Seller, any other
member of the Seller Group or the Company Business to the extent the event
giving rise thereto occurred on or prior to the Closing Date or which result
from or arise out of any action or inaction on or prior to the Closing Date of
the Company, the Subsidiaries, Seller or any other member of the Seller Group,
or any of their respective directors, managers, officers, members, partners,
employees, agents, subcontractors or successors and assigns, including the
Company Litigation, but excluding the Buyer Assumed Liabilities;
(e) all Taxes (other than Taxes reflected in the Closing Date
Net Working Capital Schedule) (A) that relate to Seller, other members of the
Seller Group or their Affiliates or (B) that relate to the Company or the
Subsidiaries, the assets of the Company or the Subsidiaries or arise out of the
Company Business (i) with respect to all periods of the Company and the
Subsidiaries ending on or prior to the Closing Date or (ii) with respect to any
taxable period beginning before the Closing Date and ending after the Closing
Date, but only with respect to the portion of such period up to and including
the Closing Date and as determined pursuant to Section 6.9 hereof (such portion,
a "Pre-Closing Partial Period") or (iii) payable as a result of a breach of any
representation or warranty set forth in Section 3.1.7 hereof;
(f) any obligation or liability, contingent or otherwise,
incurred by the Company, the Subsidiaries, the Seller or any other member of the
Seller Group for brokers' or finders' fees or agents' commissions or similar
payments in connection with this Agreement or the transactions contemplated
hereby;
(g) any obligation or liability incurred by the Company, the
Subsidiaries, the Seller or any other member of the Seller Group with respect or
related to the litigation, decision, settlement or implementation of the
judgment of PrimeCo PCS, L.P., et al. v. Illinois Commerce Commission, et al.,
Case No. 98 CH 5500 (Cook County, CH Div.);
(h) any and all liabilities and obligations of any nature
whatsoever incurred by the Company, the Subsidiaries or Buyer with respect to or
related to the termination of the employment and any related agreement as
provided under Section 5.1.7 and the amendment of any agreement to exclude any
provisions of such agreement entitling any such employee to profits interests in
Seller and/or any long-term incentive arrangement under Section 5.1.7 (other
than any such liabilities or obligations that arise after the Closing pursuant
to the terms of such agreements as so amended);
(i) any and all liabilities and obligations incurred by the
Company, the Subsidiaries, the Seller, other members of the Seller Group or
their Affiliates of any nature whatsoever to Verizon Wireless or any of its
Affiliates, and any and all actions, suits, claims, proceedings or
investigations made or taken by Verizon Wireless or any of its Affiliates
against
59
(A) the Seller or any member of the Seller Group relating to any periods prior,
on or after the Closing, (B) the Company or any Subsidiaries to the extent
relating to any periods prior to and including the Closing, or (C) Buyer or any
of its Affiliates to the extent relating in any way to the 2001 Purchase
Agreement or the consummation by the Seller, the Company or the Subsidiaries of
the transactions contemplated by this Agreement, other than the following:
(i) the Buyer Assumed Liabilities,
(ii) obligations (other than obligations that are not
expressly assumed by the Buyer or the Company) that arise after
the Closing under the:
(A) Transition Services Agreement,
(B) Employee Transfer Agreement,
(C) Verizon Agreement, and
(D) Roaming Agreement.
6.2 General Indemnification Obligation of Buyer. From and after the
Closing, Buyer shall reimburse, indemnify and hold harmless Seller, its
Affiliates, and their respective directors, managers, officers, members,
partners, employees, agents, successors and assigns (each, a "Seller Indemnitee"
and collectively, the "Seller Indemnitees"), against and in respect of any and
all Losses incurred or suffered by any Seller Indemnitee that result from,
relate to or arise out of and any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including reasonable fees and expenses of attorneys, accountants and
other professional advisors) incident to any of the following matters or to the
enforcement of this Section 6.2:
(a) any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of Buyer under this
Agreement, or any misrepresentation in or omission from any certificate,
schedule, exhibit, document or instrument furnished to Seller pursuant to this
Agreement, the other Transaction Documents or the Related Agreements, or in
connection with the execution or performance of this Agreement (including the
Schedules hereto and the certificate of Buyer delivered pursuant to Section
5.2.3 hereof), the other Transaction Documents or the Related Agreements;
(b) any representation or warranty of Buyer contained in this
Agreement (other than any representation or warranty that is expressly made as
of a specified date prior to the Closing Date that was true and correct as of
such date) not being true and correct as of the Closing Date as if made as of
the Closing Date;
(c) any and all actions, suits, claims, proceedings or
investigations brought by any third party against any Seller Indemnitee that
relate to (A) the Company, the Subsidiaries, the Related Agreements to the
extent that the event giving rise thereto occurred after the Closing Date or
which result from or arise out of any action or inaction after the Closing Date
of Buyer or any of its Affiliates or any of their respective directors,
managers, officers, members, partners,
60
employees, agents, subcontractors or successors and assigns, or (B) the Buyer
Assumed Liabilities;
(d) all Taxes (i) that are reflected in the Closing Date Net
Working Capital Schedule, or (ii) that relate to the Company or the
Subsidiaries, the assets of the Company or the Subsidiaries or arise out of the
Company Business (A) with respect to all periods beginning after the Closing
Date, or (B) with respect to any taxable period beginning before the Closing
Date and ending after the Closing Date and as determined pursuant to Section 6.9
hereof but only with respect to the portion of such period beginning on the day
immediately following the Closing Date (such portion, a "Post-Closing Partial
Period"); and
(e) any obligation or liability, contingent or otherwise,
incurred by Buyer or its Affiliates for brokers' or finders' fees or agents'
commissions or similar payments in connection with this Agreement or the
transactions contemplated hereby.
6.3 Limitations on Claims for Certain Losses. Claims for Losses caused
by or arising out of breach of warranty or representation under Section 6.1(b)
or Section 6.2(a) or the inaccuracy of any representation or warranty under
Section 6.1(c) or Section 6.2(b) may be made only pursuant to Article 6 hereof
and only by written notice within the period provided for survival of such
representation and warranty in Section 3.4. Anything to the contrary contained
herein notwithstanding:
(a) Seller shall not be liable for any Losses with respect to
any breach of warranty or representation (but not on account of the
nonfulfillment of any agreement or covenant referred to therein) under Section
6.1(b) or the inaccuracy of any representation or warranty (but not on account
of the nonfulfillment of any agreement or covenant referred to therein) under
Section 6.1(c) unless and until the total of all claims for indemnity or damages
with respect thereto exceeds Four Million Dollars ($4,000,000) (the
"Deductible"), and then Seller shall be liable for all such claims in excess of
the Deductible. The aggregate liability of Seller for misrepresentations or
breaches of warranty or the inaccuracy of representations and warranties under
Section 6.1 hereof shall not exceed One Hundred Fourteen Million Dollars
($114,000,000) (the "Cap"). Notwithstanding anything to the contrary contained
herein or otherwise, the limitation imposed by the Deductible and Cap shall not
apply to any of the following: (i) breaches or nonfulfillment of any agreements
or covenants, (ii) breaches of the representations and warranties specifically
referenced in Section 3.4(b), (iii) breaches of the representations and
warranties set forth in Sections 3.1.7, 3.1.13 (to the extent that the actions
underlying any breach of the representations and warranties in such section, if
disclosed prior to the Closing Date, would have been reflected as a Current
Liability in the determination of the Closing Date Net Working Capital), 3.1.21
and 3.1.27 and (iv) intentional misrepresentation or fraud. The parties agree
that the covenants of Seller in Section 4.1.9 and Section 4.1.10 shall not be
deemed to result in having any event that would otherwise be treated as a breach
of a representation or warranty that is subject to the Deductible and Cap to be
treated as a breach of a covenant that is not subject to the Deductible and Cap.
(b) In no event shall either party hereto be liable for
indirect, special, consequential or punitive damages arising out of a breach of
this Agreement, even if advised at the time of breach of the possibility of such
damages; provided, however, that a party shall be
61
entitled to seek consequential damages arising out of a breach of this Agreement
if such breach is determined by a court of competent jurisdiction to have
constituted fraud.
(c) Seller shall not be liable for any Losses pursuant to
Section 6.1 to the extent that adequate provision or reserve has been made in
the Closing Date Net Working Capital for the event or circumstance giving rise
to such Losses.
(d) Seller shall not be liable for any Losses pursuant to
Section 6.1 as a result of any failure of Seller to satisfy or fulfill the
obligations under Section 4.1.13 or 4.3.1.
(e) Seller shall not be liable for any Losses pursuant to
Section 6.1 arising from a Material Adverse Change under Section 3.1.13 to the
extent that at the Closing, Seller discloses to Buyer such Material Adverse
Change in writing, and Buyer waives such Material Adverse Change in writing and
consummates the Closing following such disclosure and waiver.
6.4 Indemnification Procedure as to Third-Party Claims. (a) Promptly
after a Buyer Indemnitee or a Seller Indemnitee (individually, an "Indemnitee")
obtains Knowledge of the commencement of any third-party claim, action, suit or
proceeding or of the occurrence of any event or the existence of any state of
facts which may become the basis of a third-party claim (any such claim, action,
suit or proceeding or event or state of facts being hereinafter referred to in
this Section 6.4 as a "Claim"), in respect of which an Indemnitee is entitled to
indemnification under this Agreement, such Indemnitee shall promptly notify the
indemnitor under this Agreement (the "Indemnitor") of such Claim in writing
setting forth in reasonable detail the specific facts and circumstances relating
to such Claim and the amount of Losses subject to the Claim (or an estimate
thereof if the actual amount is not known or not capable of reasonable
calculation); provided, however, that any failure to give such notice will not
waive any rights of the Indemnitee except to the extent that the rights of the
Indemnitor are actually prejudiced thereby. With respect to any Claim as to
which such notice is given by the Indemnitee to the Indemnitor, the Indemnitor
shall, subject to the provisions of Section 6.4 (b) below, be entitled to
participate in and, if it desires, to assume the defense and settlement of such
Claim with counsel reasonably satisfactory to the Indemnitee at the Indemnitor's
sole risk and expense, provided, however, that the Indemnitee (i) shall be
permitted to join in the defense and settlement of such Claim and to employ
counsel at its own expense, (ii) shall use Commercially Reasonable Efforts to
cooperate with the Indemnitor in the defense and any settlement of such Claim in
any manner reasonably requested by the Indemnitor and (iii) shall have the right
to pay or settle such Claim at any time, in which event the Indemnitee shall be
deemed to have waived any right to indemnification therefor by the Indemnitor.
Following written notice from the Indemnitor to the Indemnitee of its election
to assume the defense of a Claim pursuant to this Section 6.4(a), the Indemnitor
will not be liable to the Indemnitee for any other expenses subsequently
incurred by the Indemnitee in connection with the defense of the Claim, other
than costs and expenses of the Indemnitee incurred at the request of the
Indemnitor or incurred pursuant to Section 6.4(b). The Indemnitor may not assume
the defense of any Claim unless it acknowledges to the Indemnitee, in writing,
its liability for such Claim.
(b) If the Indemnitor fails to assume the defense of such
Claim or, having assumed the defense and settlement of such Claim, fails
reasonably to contest such Claim in good faith, the Indemnitee, without waiving
its right to indemnification, may assume the defense
62
and settlement of such Claim, provided, however, that (x) the Indemnitor shall
be permitted to join in the defense and settlement of such Claim and to employ
counsel at its own expense, (y) the Indemnitor shall use Commercially Reasonable
Efforts to cooperate with the Indemnitee in the defense and settlement of such
Claim in any manner reasonably requested by the Indemnitee, and (z) the
Indemnitee shall not settle such Claim without soliciting the views of the
Indemnitor and giving them due consideration. If the remedy sought by the
claimant with respect to such Claim is not solely for money damages, and would
affect the Company Business or any other business of the Buyer after the
Closing, the Indemnitor (if the Seller) shall not settle such Claim without the
prior written consent of Buyer. If the Indemnitee provides the Indemnitor with
written consent, the Indemnitee agrees to be bound by the settlement of such
Claim.
(c) As used in this Section 6.4, the term Indemnitee shall be
deemed to include the plural thereof where the rights or obligations of more
than one Indemnitee may be involved.
6.5 Adjustment For Insurance. Any indemnification payable pursuant to
this Article 6 shall be net of any amounts actually recovered (after deducting
related costs and expenses) by the Indemnitee for the Losses for which such
indemnification payment is made, under any insurance policy, warranty or
indemnity from any third party.
6.6 Payment.
(a) Upon a determination of liability in respect of Article 6
of this Agreement by mutual agreement of the Indemnitor and the Indemnitee or by
a court of competent jurisdiction, the appropriate Indemnitor shall pay the
Indemnitee the amount so determined (subject to the limitations of Section 6.3)
within 10 Business Days after the date of determination (such tenth Business
Day, the "Due Date"). If there should be a dispute as to the amount or manner of
determination of any indemnity obligation owed under this Agreement following
the Due Date, the Indemnitor shall nevertheless pay the obligation not later
than the Due Date whether or not subject to dispute. Notwithstanding such
payment of the full amount of the obligation (including the disputed portion),
the Indemnitor shall be free to contest the disputed portion and seek
reimbursement of the disputed portion by appropriate legal proceedings. Upon the
payment in full of any claim, either by setoff or otherwise, the Indemnitor
shall be subrogated to the rights of the Indemnitee against any Person with
respect to the subject matter of such claim.
(b) If all or part of any indemnification obligation under
this Agreement is not paid when due, then the Indemnitor shall pay the
Indemnitee interest on the unpaid amount of the obligation for each day from the
Due Date until payment in full, payable on demand, at the Prime Rate on the Due
Date.
6.7 Other Rights and Remedies. Following the Closing, the sole and
exclusive remedy at law (other than with respect to claims involving intentional
misrepresentation or fraud) for Seller or Buyer for any claim (whether such
claim is framed in tort, contract or otherwise) arising out of a breach of any
representation, warranty, covenant or other agreement in this Agreement shall be
a claim by Seller or Buyer, as applicable, for indemnification pursuant
63
to this Article 6, which claims are independent of and in addition to any
equitable rights or remedies.
6.8 Treatment of Indemnity Payments. Buyer and Seller agree that any
indemnity payments made pursuant to this Article 6 will be treated by the
parties as an adjustment to the Purchase Price.
6.9 Apportionment of Taxes Indemnified Against
(a) For purposes of Section 6.1(e) and Section 6.2(d), any
Taxes for a period including a Pre-Closing Partial Period and a Post-Closing
Partial Period shall be apportioned between such Pre-Closing Partial Period and
such Post-Closing Partial Period, based, in the case of real and personal
Property Taxes, on a per diem basis and, in the case of other Taxes, on the
actual activities, taxable income or taxable loss of the Company and the
Subsidiaries during such Pre-Closing Partial Period and such Post-Closing
Partial Period determined as though the books for the Company had been closed on
the Closing Date. For purposes of clarity, Federal universal service fund
charges shall be considered to be Taxes which are described in Section 6.1(e)
and Section 6.2(d), and (i) Seller shall be responsible to pay and shall
indemnify any Buyer Indemnitee for any billed Federal universal service fund
charge with respect to the Company Business for every month that ends prior to
the Closing Date and for the pro rata portion of any month (based on the number
of days of the month elapsed) during which the Closing Date occurs, except to
the extent that such amounts are reflected in the Closing Date Net Working
Capital Schedule; and (ii) Buyer shall be responsible to pay and shall indemnify
any Seller Indemnitee for any billed Federal universal service fund charge with
respect to the Company Business for every month that ends after the Closing Date
and for the pro rata portion (based on the number of days of the month elapsed)
of any month during which the Closing Date occurs.
(b) Seller shall be entitled to (i) any refund of a Tax which
is described in Section 6.1(e) reduced by any unreimbursed expenses with respect
to such amounts including Taxes actually incurred by Buyer with respect to such
amounts (net of any actual tax deductions, credits or offsets available and
actually utilized by Buyer), and (ii) interest actually received by Buyer from a
Taxing authority with respect to any such refund. Buyer and the Company shall
cooperate, at Seller's expense, with all reasonable requests made by Seller in
writing with respect to pursuing any such refund, including the filing of refund
claims and of amended Tax Returns.
ARTICLE 7
MISCELLANEOUS
7.1 Termination.
(a) Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated at any time before the Closing
Date only as follows:
(i) by mutual written consent of Seller and Buyer;
64
(ii) by Seller, if there has been a breach by Buyer at any
time before the Closing of any representation or, warranty,
(without duplication of any materiality qualifications in such
representations and warranties) or covenant or agreement contained
in this Agreement that has had a material adverse effect on the
ability of Buyer to perform this Agreement in accordance with the
express terms of this Agreement that is not curable or, if
curable, is not cured within 10 calendar days after the date of
notice of such breach by Seller to Buyer;
(iii) by Buyer, if there has been a breach by Seller at any
time before the Closing of any representation or, warranty,
(without duplication of any materiality qualifications in such
representations and warranties) or covenant or agreement contained
in this Agreement that has had a Material Adverse Effect on the
Company and its Subsidiaries or a material adverse effect on the
ability of Seller to perform this Agreement in accordance with the
express terms of this Agreement that is not curable or, if
curable, is not cured within 10 calendar days after the date of
notice of such breach by Buyer to Seller;
(iv) by Buyer or Seller, upon notice given to the other, if
the Closing shall not have taken place on or before 11:59 p.m.
Chicago, Illinois time on November 30, 2002; provided that the
right to terminate this Agreement under this Section 7.1(a)(iv)
shall not be available to the Seller or Buyer if such Party's
failure to fulfill any of its obligations under this Agreement has
been the cause of or resulted in the failure of the Closing to
occur on or before the date the passage of which has given rise to
the termination right pursuant to this Section 7.1(a)(iv);
(v) by Buyer or Seller, upon notice given to the other, if any
Governmental Authority (i) shall have issued an order, decree or
ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated
by this Agreement, and such order, decree, ruling or other action
shall have become final and nonappealable or (ii) shall have
failed to issue an order, decree or ruling or to take any other
action, as applicable, which is necessary to fulfill the
conditions set forth in Article 5, and such denial of a request to
issue such order, decree, ruling or take such other action shall
have become final and nonappealable; provided, however, that the
right to terminate this -------- ------- Agreement under this
Section 7.1(a)(v) shall not be available to any Party whose
failure to comply with Section 4.4 has been the cause of such
action or inaction;
(vi) (A) by Buyer, upon notice given to the Seller, if the DOJ
or the FTC advises Buyer or its Affiliates that (i) the DOJ will
not approve Buyer as the transferee of the Company Interest except
subject to terms and conditions that are not reasonably acceptable
to Buyer in its sole discretion; provided that for purposes of
this Section 7.1(a)(vi) the phrase "terms and conditions" not
reasonably acceptable to Buyer in its sole discretion shall
include terms and conditions that require Buyer or one or more of
its Affiliates to divest, sell, transfer or otherwise dispose of
wireless licenses issued by the FCC other than the divestiture,
sale, transfer or disposition of portions of Personal
Communication Services licenses as are necessary to bring Buyer
into compliance with the FCC's CMRS spectrum aggregation limits as
defined in 47 C.F.R. section 20.6 as
65
modified in 2000 Biennial Regulatory Review Spectrum Aggregation
Limits for Commercial Mobile Radio Services, Report and Order, WT
Docket No. 01-14, FCC 01-328, released December 18, 2001 and
effective January 1, 2002, or (ii) the DOJ or the FTC will
challenge the transaction in Court as a violation of the antitrust
laws;
(B) by Seller, upon notice given to the Buyer, if the Buyer
provides the Seller with the DOJ/FTC Notice pursuant to Section
4.4.2;
(vii) by Buyer (on any date which is 110 days or more after
the date hereof), or Seller (on any date which is 110 days or more
after the date hereof), upon written notice to the other, if Buyer
has been unable to obtain financing on terms and conditions
acceptable to Buyer in its sole discretion such that the gross
proceeds from such financing are at least $500 million; provided
that, in the event of a termination pursuant to this Section
7.1(a)(vii) (and as a condition to the effectiveness of any
termination by Buyer pursuant to this Section 7.1(a)(vii)), Buyer
shall make a payment of immediately available funds to Seller in
the amount of $10 million (x) on the date of termination if the
Buyer terminates pursuant to this Section 7.1(a)(vii) or (y)
within three Business Days of the date on which the Buyer receives
the Seller's notice of termination pursuant to this Section
7.1(a)(vii); provided further, that, subject to the last sentence
of paragraph (a) of Schedule 4.2.11, Buyer may not terminate
pursuant to this Section 7.1(a)(vii) in the event that the Seller
shall have agreed with the Buyer in writing on a date concurrent
with the final pricing of the Buyer Debt Securities contemplated
by the Letter attached as Schedule 3.3.4(b) to accept (a) the
portion of the Purchase Price in an amount equal to the portion of
the $250 million of financing contemplated by the Letters attached
as Schedule 3.3.4(a) that the Buyer was unable to obtain pursuant
to such Letters at the same effective interest rate and other
terms and conditions provided by such Letters, or on such other
terms and conditions that are as or more favorable to the Buyer
(provided that the bank lenders of the senior bank financing shall
have given their prior written approval to such participation in
the senior bank financing by the Seller), and (b) the portion of
the Purchase Price in an amount equal to the portion of the $250
million of Buyer Debt Securities contemplated by the Letter
attached as Schedule 3.3.4(b) that the Buyer was unable to obtain
pursuant to such Letter at the same effective interest rate and
other terms and conditions that the Buyer Debt Securities were
issued and sold to investors, or on such other terms and
conditions that are as or more favorable to the Buyer.
Notwithstanding anything in this Agreement to the contrary, the payment by Buyer
to Seller of $10 million upon the termination of this Agreement pursuant to
Section 7.1(a)(vii) shall represent liquidated damages and shall be in full and
complete satisfaction of any and all Losses incurred or suffered by any Seller
Indemnitee that result from, relate to or arise out of any and all actions,
suits, claims, proceedings, investigations, demands, assessments, audits, fines,
judgments, costs and other expenses (including reasonable fees and expenses of
attorneys, accountants and other professional advisors) incident to any breach
or alleged breach by Buyer of its representations set forth in Section 3.3.4 or
its agreements set forth in Schedule 4.2.11.
(b) In the event of the termination of this Agreement as
provided in Section 7.1(a), this Agreement shall forthwith become wholly void
and of no further force and
66
effect (except as set forth in this Section 7.1, Section 4.4.4, Section 7.2 and
Section 7.4). Notwithstanding the foregoing, nothing herein shall relieve a
party from liability for any breach of the representations, warranties,
covenants or agreements set forth in this Agreement prior to such termination
where such breach has independently caused Losses to the other party hereto.
7.2 Expenses. Except as otherwise provided in this Agreement, Seller
and Buyer shall share equally the filing fees associated with making all
requisite applications with the FCC (and the State Commissions, if any) for
consent to the transactions contemplated by this Agreement, but shall pay their
own expenses incidental to the preparation of this Agreement, the carrying out
of the provisions of this Agreement and the consummation of the transactions
contemplated hereby. Seller shall pay any and all transfer Taxes arising out of
or resulting from the sale of the Company Interest.
7.3 Further Assurances. Seller and Buyer shall from time to time after
the Closing Date, at the request of the other party, execute, acknowledge and
deliver to such other party such other instruments of conveyance and transfer or
assumption and will take such other actions and execute and deliver such other
documents, certifications and further assurances as such other party may
reasonably require in order to vest more effectively in Buyer, or to put Buyer
more fully in possession of, the Company Interest and other rights to be
transferred to it pursuant to the provisions of this Agreement. Each of the
parties hereto will use Commercially Reasonable Efforts to cooperate with the
other and execute and deliver to the other party such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by such other party as necessary to carry out, evidence and confirm the
intended purposes of this Agreement. Each of the parties will cause their
respective Affiliates to comply with this Section 7.3 to the extent necessary or
desirable to fulfill the purposes thereof.
7.4 Buyer Termination Fee Rights.
(a) In the event that within three years following a
termination of this Agreement pursuant to Section 7.1(a)(vii), a
Liquidation/Sale Event (defined below) shall occur or a definitive agreement
with respect thereto shall be entered into, Seller shall (provided that payment
of the Termination Fee contemplated in Section 7.1(a)(vii) shall have been made
in accordance therewith) be obligated on the closing date thereof with respect
to any cash portion of such event, to promptly remit or cause to be remitted to
Buyer the Buyer Portion (defined below) of the Net Liquidation/Sale Proceeds
(defined below) from such Liquidation/Sale Event or, with respect to any
non-cash portion of such event, on the Liquidity Date (as defined below).
(b) For purposes of this Section: (i) "Buyer Portion" shall
mean that fraction, the numerator of which shall initially be $5 million and
shall be increased at a rate of 5 percent per annum (prorated for a portion of a
year based on the number of days of the year elapsed) following the date of
termination, and the denominator of which is equal to the Target Amount (defined
below); (ii) "Liquidation/Sale Event" shall mean (1) any liquidation,
dissolution or winding up of Seller, either voluntary or involuntary, (2) in one
transaction or a series of related transactions, any direct or indirect
acquisition of Seller by means of a merger, consolidation or other form of
reorganization, unless the direct and indirect holders of membership interests
of Seller immediately prior to such merger, consolidation or reorganization
collectively hold more than 50% of the voting power and equity interests of the
surviving or
67
resulting entity immediately following such merger, consolidation or
reorganization or (3) in one transaction or a series of related transactions, a
direct or indirect sale of all or substantially all of the assets of Seller
(including the Company) or the Company; (iii) "Net Liquidation/Sale Proceeds"
shall mean the amount by which the value of the gross cash and non-cash proceeds
to Seller or to Seller's members (in each case, directly or indirectly), net of
transaction costs and any taxes, exceeds the Target Amount, measured as of the
closing date of the Liquidation/Sale Event; (iv) "Liquidity Date" shall mean the
first date on which non-cash consideration from a Liquidation/Sale Event is
freely tradable or otherwise convertible into cash without discount for lack of
liquidity; and (v) "Target Amount" shall mean $617,650,000, minus the aggregate
amount of distributions by Seller to members of Seller (other than tax
distributions) following the date of this Agreement, plus the aggregate amount
of capital contributions by members of Seller to Seller (for funding
acquisitions or otherwise made to develop the value of the Company, the Company
Business or other Seller businesses) following the date of this Agreement.
(c) Prior to the completion of any Liquidation/Sale Event,
Seller shall notify Buyer in writing of the Target Amount.
7.5 Non-Solicitation. For a period of twenty-four (24) months following
the Closing Date, none of Seller, its owners, subsidiaries or Affiliates
actively involved in the business of the Company prior to the Closing shall:
(a) solicit any employee known to Seller to be working for
Buyer or any of its subsidiaries or Affiliates in connection with the provision
of wireless service in the Company MTA unless such individual's employment with
the Buyer or its subsidiary or Affiliate has been terminated; provided, however,
that this paragraph shall not apply to Jack Scanlon or Patrick Joggerst; and
shall not apply to a general solicitation of employees through the media that is
not directed specifically at employees working for Buyer or any of its
subsidiaries or Affiliates; and
(b) knowingly solicit from Buyer or any of its subsidiaries or
Affiliates any Company MTA wireless customer unless it is a general solicitation
for customers that is not directed specifically at Buyer's or any of its
subsidiaries' or Affiliates' customers in the Company MTA.
7.6 Contents of Agreement. This Agreement and the other Transaction
Documents, including their respective Schedules and Exhibits, which are
specifically incorporated herein, set forth the entire understanding of the
parties hereto with respect to the transactions contemplated hereby and
supersede any and all previous agreements and understandings, oral or written,
between or among the parties regarding the transactions contemplated hereby, and
shall terminate the consulting letter agreement dated January 17, 2002 between
Buyer and Seller. This Agreement shall not be amended or modified except by
written instrument duly executed by each of the parties hereto which, in the
case of Buyer, shall require the signature of the Chairman of Buyer or other
person so authorized by the Chairman of Buyer or Buyer's Board of Directors.
7.7 Assignment and Binding Effect. This Agreement may not be assigned
prior to the Closing by Seller or by Buyer without the prior written consent of
the other party; provided that, notwithstanding anything to the contrary herein,
Buyer may assign this Agreement, or the right
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to acquire all or parts of the Company Interest, at any time to one or more
Affiliates of Buyer, provided in each such case that such assignee agrees in
writing with the other party to be bound hereby as if such assignee were the
assigning party and to assume all of the liabilities and obligations of the
assigning party, and provided further that the assigning party shall not be
released from any of its liabilities or obligations under this Agreement and the
assigning party shall remain liable for all of the assigning party's liabilities
and obligations hereunder. Buyer may, at its sole discretion, assign its rights
under this Agreement to an entity for purposes of facilitating a deferred
like-kind exchange under Section 1031 of the Code, provided, that such assignee
agrees in writing with Seller to be bound hereby as if such assignee were the
assigning party and; provided, further, that Buyer shall remain liable for all
of Buyer's liabilities and obligations. Notwithstanding anything to the contrary
herein, Buyer hereby agrees that Seller shall have the right to prohibit any
assignment of this Agreement or any rights hereunder if such assignment would be
reasonably likely to result in a delay of greater than 20 calendar days in the
FCC's or depending on which agency reviews the transaction, the DOJ's or the
FTC's granting of approval of the transactions contemplated by this Agreement or
in the finality of any such approval or in the expiration or termination of the
waiting period under the HSR Act. Any purported assignment in violation of this
Section 7.7 shall be void.
7.8 Waiver. No waiver of any term or provision of this Agreement shall
be effective unless in writing, signed by the Party against whom enforcement of
the same is sought which, in the case of Buyer, shall require the signature of
the Chairman of Buyer or other person so authorized by the Chairman of Buyer or
Buyer's Board of Directors. The grant of a waiver in one instance does not
constitute a continuing waiver in all similar instances. No failure to exercise,
and no delay in exercising, by any Party, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof.
7.9 Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by registered or
certified mail or by Federal Express or other overnight mail service, postage
prepaid, e-mail or by telefacsimile, with written confirmation to follow, as
follows:
If to Seller, to:
PrimeCo Wireless Communications LLC
c/o Clarity Partners, L.P.
100 North Crescent Drive
Beverly Hills, CA 90210
Attention: Barry Porter
Facsimile Number: (310) 432-5000
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With a required copy to (which shall not itself constitute notice):
Clarity Partners, L.P.
100 North Crescent Drive
Beverly Hills, CA 90210
Attention: Barry Porter
Facsimile Number: (310) 432-5000
With a required copy to (which shall not itself constitute notice):
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: William E. Curbow, Esq.
Facsimile Number: (212) 455-2502
If to Buyer, to:
United States Cellular Corporation
c/o Telephone and Data Systems, Inc.
30 North LaSalle St., 40th Floor
Chicago, Illinois 60602
Attention: Scott H. Williamson
Facsimile Number: (312) 630-9299
With a required copy to (which shall not itself constitute notice):
United States Cellular Corporation
8410 West Bryn Mawr Avenue
Chicago, Illinois 60631
Attention: Kenneth R. Meyers
Facsimile Number: (773) 399-8959
With a required copy to (which shall not itself constitute notice):
Sidley Austin Brown & Wood
10 South Dearborn St.
Bank One Plaza
Chicago, Illinois 60603
Attention: William S. DeCarlo, Esq.
Facsimile Number: (312) 853-7036
or to such other address or facsimile numbers as the addressee may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, demand, waiver, consent, approval or other communication will be deemed
to have been given as of the date so delivered or, if such date is not a
Business Day, on the next Business Day.
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7.10 Remedies. Notwithstanding the provisions of Section 6.7, the
Parties acknowledge and agree that the Company Interest is unique and that,
prior to Closing, remedies at law, including monetary damages, will be
inadequate in the event of a breach or threatened breach by Seller or Buyer,
respectively, in the performance of its obligations under this Agreement.
Accordingly, the Parties agree that in the event of any such breach, or
threatened breach, prior to Closing, any non-breaching Party shall be entitled
to a decree of specific performance pursuant to which the breaching Party is
ordered to affirmatively carry out its pre-closing obligations under this
Agreement. The foregoing shall not be deemed to be or construed as a waiver or
election of remedies by any non-breaching Party and any non-breaching Party
expressly reserves any and all rights and remedies available to it at law or in
equity in the event of any breach or default by the breaching Party under this
Agreement prior to Closing.
7.11 Applicable Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
without giving effect to such State's laws and principles regarding the conflict
of laws. Each of the Parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in connection with any dispute that arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal court sitting
in the State of Delaware or a Delaware state court unless venue would not be
proper under rules applicable in such courts.
7.12 No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
Parties hereto and, in the case of Article 6 hereof, the other indemnified
parties, and their respective heirs, executors, administrators, legal
representatives, successors and permitted assigns, and they shall not be
construed as conferring any rights on any other Persons.
7.13 Headings. All section headings contained in this Agreement are for
convenience of reference only, do not form a part of this Agreement and shall
not affect in any way the meaning or interpretation of this Agreement.
7.14 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provisions in any
other jurisdiction.
7.15 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by all of the parties. It
shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of May 9, 2002.
PRIMECO WIRELESS COMMUNICATIONS LLC,
as Seller
By: /s/ BARRY PORTER
------------------------------------------------------------
Barry Porter
Authorized Representative
UNITED STATES CELLULAR CORPORATION,
as Buyer
By: /s/ JOHN E. ROONEY
------------------------------------------------------------
John E. Rooney
President
[Signature page to Purchase and Sale Agreement relating to Chicago 20 MHz, LLC]