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EXHIBIT 2.2
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EXCHANGE AGREEMENT
between
AT&T WIRELESS SERVICES, INC.
and
UNITED STATES CELLULAR CORPORATION
Dated as of March 7, 2003
================================================================================
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TABLE OF CONTENTS
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Page
ARTICLE 1 TRANSACTIONS............................................................................6
Section 1.1. Exchange of Assets............................................................6
Section 1.2. Assumption of Liabilities.....................................................9
Section 1.3. Like-Kind Exchange...........................................................12
Section 1.4. License Exchange Options.....................................................13
Section 1.5. License Call Options.........................................................14
Section 1.6. Working Capital Adjustment...................................................15
Section 1.7. Certain Agreements...........................................................17
ARTICLE 2 CLOSING................................................................................17
Section 2.1. Time and Place of Closing....................................................17
Section 2.2. Closing Actions and Deliveries...............................................18
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF AWS..................................................19
Section 3.1. Organization.................................................................19
Section 3.2. Authority....................................................................19
Section 3.3. Execution and Enforceability.................................................19
Section 3.4. No Conflict or Consents......................................................20
Section 3.5. No Broker....................................................................20
Section 3.6. FCC Matters..................................................................20
Section 3.7. Litigation Regarding the AWS Licenses........................................22
Section 3.8. AWS Entities.................................................................22
Section 3.9. Partnership Interests........................................................23
Section 3.10. Employee Plan and ERISA Liabilities and Liens................................23
Section 3.11. Tax Matters..................................................................23
Section 3.12. Compliance with Laws.........................................................24
Section 3.13. Agreements with Non-AWS Entities.............................................24
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF USCC.................................................25
Section 4.1. Organization.................................................................25
Section 4.2. Authority....................................................................25
Section 4.3. Execution and Enforceability.................................................25
Section 4.4. No Conflict or Consents......................................................26
Section 4.5. No Broker....................................................................26
Section 4.6. FCC Matters..................................................................26
Section 4.7. Litigation Regarding USCC Assigned Licenses..................................28
Section 4.8. Tax Matters..................................................................28
Section 4.9. Title and Sufficiency of USCC Assets.........................................29
Section 4.10. Real Property................................................................29
Section 4.11. Intellectual Property........................................................30
Section 4.12. Compliance with Laws.........................................................31
Section 4.13. Governmental Authorizations..................................................32
Section 4.14. Employee Benefit Plans.......................................................32
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Section 4.15. Employment Matters...........................................................34
Section 4.16. Labor Matters................................................................35
Section 4.17. Environmental Matters........................................................36
Section 4.18. Agreements, Contracts and Commitments........................................37
Section 4.19. Books of Account.............................................................38
Section 4.20. Financial Statements.........................................................38
Section 4.21. Absence of Undisclosed Liabilities...........................................38
Section 4.22. Absence of Changes or Events.................................................39
Section 4.23. Accounts Receivable..........................................................39
Section 4.24. Inventories..................................................................39
Section 4.25. Machinery and Equipment......................................................40
Section 4.26. Cell Sites...................................................................40
Section 4.27. Litigation Regarding USCC Systems, USCC Assets...............................40
Section 4.28. Liability to Affiliates......................................................41
Section 4.29. CALEA........................................................................41
Section 4.30. Insurance....................................................................41
Section 4.31. Business Activity Restriction................................................41
Section 4.32. USCC Entities................................................................41
ARTICLE 5 COVENANTS AND AGREEMENTS...............................................................42
Section 5.1. Commercially Reasonable Efforts and Other Agreements.........................42
Section 5.2. Consents of Third Parties....................................................43
Section 5.3. Prohibited Transactions......................................................44
Section 5.4. Confidentiality..............................................................45
Section 5.5. Access and Information.......................................................46
Section 5.6. Conduct of Business..........................................................47
Section 5.7. Negative Covenants...........................................................48
Section 5.8. Risk of Loss.................................................................49
Section 5.9. Casualty Insurance Proceeds..................................................49
Section 5.10. Tax Matters..................................................................50
Section 5.11. Post-Execution Contracts.....................................................50
Section 5.12. Buildout Requirements........................................................51
Section 5.13. Microwave Clearing...........................................................51
Section 5.14. Acquisition of Non-AWS Entity Licenses.......................................52
ARTICLE 6 EMPLOYEES AND EMPLOYEE BENEFIT PLANS...................................................52
Section 6.1. Transitioned Employees.......................................................52
Section 6.2. Health, Welfare and Retirement Benefit Plans.................................54
Section 6.3. Employment Taxes.............................................................55
Section 6.4. WARN Act.....................................................................55
ARTICLE 7 CLOSING CONDITIONS.....................................................................55
Section 7.1. Conditions to Obligations of AWS.............................................55
Section 7.2. Conditions to Obligations of USCC............................................57
ARTICLE 8 INDEMNIFICATION........................................................................58
Section 8.1. Survival.....................................................................58
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Section 8.2. Indemnification Obligation of USCC...........................................59
Section 8.3. Indemnification Obligation of AWS............................................60
Section 8.4. Limitations on Liability for Losses..........................................60
Section 8.5. Notice of Claims.............................................................62
Section 8.6. Third Party Claims...........................................................62
ARTICLE 9 TERMINATION............................................................................63
Section 9.1. Termination..................................................................63
Section 9.2. Effect of Termination........................................................64
ARTICLE 10 MISCELLANEOUS.........................................................................64
Section 10.1. Governing Law................................................................64
Section 10.2. Assignment...................................................................65
Section 10.3. Entire Agreement.............................................................65
Section 10.4. Amendments and Waivers.......................................................65
Section 10.5. Notices......................................................................66
Section 10.6. Headings.....................................................................67
Section 10.7. Severability.................................................................67
Section 10.8. No Third-Party Beneficiaries.................................................67
Section 10.9. Remedies Cumulative..........................................................67
Section 10.10. Expenses.....................................................................67
Section 10.11. Counterparts.................................................................68
Section 10.12. Specific Performance.........................................................68
Section 10.13. Further Assurances...........................................................68
Section 10.14. Retention of Assets Prior to Closing.........................................68
Section 10.15. Reformation..................................................................68
Section 10.16. Definitions..................................................................69
Section 10.17. No Set-Off...................................................................79
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EXHIBITS
Exhibit A - Form of License Exchange Agreement
Exhibit B - Form of License Acquisition Agreement
Exhibit C - Form of Instrument of Assignment (AWS Assigned Licenses)
Exhibit D1 - Form of Assumption Agreement (AWS Assumed Liabilities)
Exhibit D2 - Form of Assumption Agreement (USCC Assumed Liabilities)
Exhibit E - Form of Instrument of Assignment (USCC Assigned Licenses)
Exhibit F - Form of Bill of Sale and Assignment (USCC Assets)
Exhibit G - Form of Assignment and Assumption Agreement (Section 1.5 Licenses)
Exhibit H - Form of Instrument of Assignment (Partnership Interests)
Exhibit I - Form of Post-Closing Master Lease Agreement
Exhibit J - Form of USCC Brand License Agreement
SCHEDULES
Schedule I-A - AWS Entity Licenses
Schedule I-B - AWS Non-Entity Licenses
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Schedule II - Partnership Interests
Schedule III - USCC Assigned Licenses
Schedule IV - Knowledge (USCC)
Schedule V - Knowledge (AWS)
Schedule 1.1(a) - Certain USCC Assets
Schedule 1.1(c) - Excluded Assets
Schedule 1.2(a) - Non-Current Liabilities
Schedule 1.6 - Working Capital Adjustment
Schedule 1.7 - Certain Agreements
Schedule 5.10(b) - Tax Allocation
Schedule 6.1(a) - Designated Employees
AWS Disclosure Schedule
USCC Disclosure Schedule
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EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT, dated as of March 7, 2003, is made and entered
into by and between AT&T Wireless Services, Inc., a Delaware corporation
("AWS"), and United States Cellular Corporation, a Delaware corporation
("USCC"). Capitalized terms used but not defined in the provision in which they
first appear have the meanings ascribed thereto in Section 10.16(a).
WHEREAS, (a) AWS holds, through one or more wholly-owned subsidiaries
as set forth on SCHEDULE I-A, authorizations from the FCC to provide personal
communications services ("PCS") in certain BTAs/MTAs, all as such authorizations
(including the applicable point-to-point microwave licenses) are described on
Part 1 of SCHEDULE I-A (the "AWS ENTITY LICENSES"), (b) the Persons listed on
SCHEDULE I-B (each, a "NON-AWS ENTITY") hold authorizations from the FCC to
provide PCS in certain BTAs/MTAs, all as such authorizations (including the
applicable point-to-point microwave licenses) are described on SCHEDULE I-B (the
"NON-AWS ENTITY LICENSES" and, together with the AWS Entity Licenses, the "AWS
LICENSES"), and (c) AWS holds, directly or indirectly, the equity ownership
interests in certain partnerships as set forth on SCHEDULE II (the "PARTNERSHIP
INTERESTS");
WHEREAS, (a) USCC holds, through one or more wholly-owned subsidiaries
as set forth on SCHEDULE III, authorizations from the FCC to provide cellular
wireless communications services in certain RSAs/MSAs identified on SCHEDULE III
(the "USCC SERVICE AREA"), all as such authorizations (including the applicable
point-to-point microwave licenses) are described on SCHEDULE III (the "USCC
ASSIGNED LICENSES"), (b) utilizing the USCC Assigned Licenses, USCC operates
cellular wireless communications systems in each of the RSAs/MSAs set forth on
SCHEDULE III (the "USCC SYSTEMS"), and (c) utilizing the USCC Systems, USCC is
engaged in the business of marketing, selling and providing cellular wireless
communications services in each of the RSAs/MSAs set forth in SCHEDULE III (the
"USCC BUSINESS");
WHEREAS, as a condition to the consummation of the exchange, AWS shall
acquire from the Non-AWS Entities the Non-AWS Entity licenses at or prior to the
Closing such that one or more AWS Entities will deliver such Non-AWS Entity
licenses to USCC or a designated Affiliate in accordance with this Agreement;
and
WHEREAS, the parties wish to effect, or cause to be effected, an
exchange of (i) the AWS Assigned Licenses (as defined herein), the Partnership
Interests and cash consideration for (ii) the USCC Assigned Licenses and certain
assets of the USCC Systems and certain related liabilities, all to the fullest
extent possible as a like-kind exchange of property under Section 1031 of the
Code, and all on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
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ARTICLE 1
TRANSACTIONS
Section 1.1. EXCHANGE OF ASSETS
Upon the terms and subject to the conditions hereof, at Closing:
(a) AWS will, and will cause each AWS Entity to, assign, transfer,
deliver and convey to USCC, a designated Affiliate, or a "qualified
intermediary" (within the meaning of Treasury Regulation Section
1.1031(k)-1(g)(4)) designated by USCC, free and clear of all Liens (other than
Permitted Liens), and USCC or its designee will acquire, all right, title and
interest of the applicable AWS Entity in and to (i) subject to Section 5.14, the
AWS Assigned Licenses, (ii) the Partnership Interests and (iii) $30,750,000 in
cash (the "CASH PAYMENT"), provided, that the amount of the Cash Payment shall
be subject to adjustment at the Closing and after the Closing in accordance with
the terms of Section 1.6; and
(b) USCC will, and will cause each USCC Entity to, assign, transfer,
deliver and convey to AWS or a designated Affiliate, free and clear of all Liens
(other than Permitted Liens), and AWS (or its designee) will acquire, all right,
title and interest of the applicable USCC Entity in and to (i) the USCC Assigned
Licenses, and (ii) except for the Excluded Assets set forth in subsection (c)
below and the USCC Assigned Licenses, all of each USCC Entity's right, title and
interest in and to the following assets, principally used or held for use, in
connection with the operation of the USCC Systems, and, with respect to tangible
assets, that are located in the USCC Service Area (collectively, the "USCC
ASSETS"):
(i) (x) all Cell Sites, towers, transmitters, antennae,
generators, wireless switches and related components used or held for
use in connection with the operation of the USCC Systems and located in
the USCC Service Area, and (y) test equipment, technical facilities,
telephone handsets, computers and accessories to the extent principally
used or held for use in connection with the operation of the USCC
Systems and which are located in the USCC Service Area;
(ii) all electronic serial numbers and mobile numbers
associated with each subscriber of the USCC Systems, billing numbers,
if any, associated with each such subscriber, sales records, credit
data and other information and data relating to subscribers of the USCC
Systems, images of all subscriber bills from January 1, 2001 through
the Closing Date, any contracts with subscribers of the USCC Systems
and the applicable USCC Entity's right to receive payments from such
subscribers pursuant to any such contracts for service rendered on and
after the Closing Date, and all claims, deposits, prepayments, prepaid
assets, refunds, causes of action, rights of recovery, rights of setoff
and rights of recoupment with respect to subscribers of the USCC
Systems;
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(iii) engineering plans, surveys and related information and
data collected, held or owned by each USCC Entity, directly relating to
the operation of the USCC Systems that are located in the USCC Service
Area;
(iv) copies of all subscriber lists and other documentation
to the extent principally relating to subscribers of the USCC Systems;
(v) all System Permits;
(vi) copies of all information and data compiled by the
applicable USCC Entity's customer service center(s) with respect to
subscribers of the USCC Systems;
(vii) all machinery, equipment (both fixed and mobile,
including computer equipment), trucks and other vehicles, office
equipment, furniture, furnishings, and fixtures, in each case to the
extent principally used or held for use in connection with the
operation of the USCC Systems and which are located in the USCC Service
Area (collectively, the "MACHINERY AND EQUIPMENT");
(viii) all Inventory;
(ix) all accounts receivable relating to subscribers of the
USCC Systems, and rights to receive payment from such subscribers, in
each case to the extent directly relating to or arising in connection
with the operation of the USCC Systems (collectively, "ACCOUNTS
RECEIVABLE");
(x) all rights of the applicable USCC Entity under the USCC
System Contracts, together with all rights to assert claims and take
other actions in respect of breaches, defaults and other violations of
such USCC System Contracts;
(xi) all warranties, indemnities, guarantees and similar
rights to the extent principally relating to the operation of the USCC
Systems;
(xii) copies of all information, data and files to the extent
principally used or held for use in connection with the operation of
the USCC Systems, and copies of all Books and Records;
(xiii) all rights of each USCC Entity under covenants not to
compete or to solicit subscribers with respect to the USCC Systems, to
the extent transferable;
(xiv) all telephone and facsimile numbers to the extent
principally used or held for use in connection with the operation of
the USCC Systems;
(xv) all credits, prepaid expenses, prepaid property taxes,
prepaid rents, advances by each USCC Entity to its employees, deferred
charges, advance payments, security deposits and other prepaid items,
in each case to the extent principally used or held for use in
connection with the operation of the USCC Systems (collectively, "USCC
ADVANCE PAYMENTS");
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(xvi) all personnel records of the Transitioned Employees and
all quality control records, business procedures, test information and
technical information, in each case to the extent principally used or
held for use in connection with the operation of the USCC Systems;
(xvii) all of the goodwill as a going concern and other
intangible property relating solely and directly to the USCC Assets or
to the operation of the USCC Systems, with the exception of any
goodwill related to any trademark, service mark or trade name used by
USCC, to the extent transferable;
(xviii) all rights to causes of action, lawsuits, judgments,
claims and demands of any nature available to or being pursued by any
USCC Entity with respect to the ownership, use, function or value of
any USCC Asset, whether arising by way of counterclaim or otherwise, in
each case principally related to or arising in connection with the
operation of the USCC Systems;
(xix) all Real Property Leases and all owned Real Property set
forth on SCHEDULE 4.10(a);
(xx) all USCC System Contracts (other than any Non-Assigned
Contracts);
(xxi) all right, title and interest of each USCC Entity, as
lessee or sublessee, with respect to leased personal property (to the
extent principally used or held for use in connection with the
operation of the USCC Systems) and Leased Property;
(xxii) all Current Assets identified in the column labeled
"USCC Assets" on SCHEDULE 1.6; and
(xxiii) all assets identified in the column labeled "USCC
Assets" on SCHEDULE 1.1(a).
(c) Notwithstanding anything to the contrary in Section 1.1(b) or any
other provisions of this Agreement, the USCC Assets shall not include any of the
following assets, properties and rights of any USCC Entity (collectively, the
"EXCLUDED ASSETS"):
(i) all cash and cash equivalents of USCC on hand as of the
Closing Date, other than miscellaneous cash as indicated on SCHEDULE
1.6;
(ii) all Intellectual Property excluding USCC Intellectual
Property;
(iii) all insurance policies and rights thereunder;
(iv) all personnel and other records (originals or copies)
that any USCC Entity is required by Law to retain in its possession (it
being understood that (A) subject to the following clause (B), copies
of each shall have been provided to AWS prior to Closing and (B) to the
extent that copies may not be provided under applicable Law, USCC shall
use its Commercially Reasonable Efforts to obtain
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the Consent of its employees or former employees to the transfer of
such materials to AWS);
(v) all prepaid income Taxes and claims for refunds of Taxes
and other governmental charges of whatever nature, to the extent based
on revenues received or accrued during the period prior to Closing;
(vi) all rights in connection with, and assets of, any of the
System Employee Plans;
(vii) the corporate minute books, stock books and other
corporate and tax records of USCC and any Affiliate thereof, including
the USCC Entities;
(viii) interests in systems or businesses other than the USCC
Systems, including permits and assets used in the provision of wireless
service (cellular and PCS) to customers of USCC and its Affiliates
located outside the USCC Service Area;
(ix) all permits, assets, books, records, documents, written
materials and operations used by or related to USCC or one or more
Affiliates thereof, including the USCC Systems, that are located
outside the USCC Service Area or that are not principally used or held
for use in connection with the operation of the USCC Systems, including
but not limited to all assets, books, records, documents, lists and
written materials relating to any corporate or centralized services and
functions, including management, finance, accounting, billing, accounts
receivable, accounts payable, tax, information services, computer
services, engineering, marketing, operations, customer relations,
purchasing, inventory management, construction, insurance, human
resources, payroll, employee benefit, computer, call center and other
administrative services and functions;
(x) all Current Assets identified in the column labeled
"Excluded Assets" on SCHEDULE 1.6;
(xi) all assets identified in the column labeled "Excluded
Assets" on SCHEDULE 1.1(a); and
(xii) such other assets, if any, as are set forth on SCHEDULE
1.1(c).
Section 1.2. ASSUMPTION OF LIABILITIES
(a) Upon the terms and subject to the conditions hereof, at Closing
AWS will, or will cause the applicable AWS Entity (or an Affiliate thereof
designated by AWS) to, assume from each of the applicable USCC Entities, as of
the Closing Date, the payment, discharge and performance of the following
liabilities and obligations (collectively, the "USCC ASSUMED LIABILITIES"):
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(i) all Current Liabilities of each USCC Entity as of the
Closing Date to the extent included in the calculation of the Closing
Date Working Capital Amount;
(ii) all liabilities and obligations (including Taxes and
liabilities and obligations in connection with the matters disclosed in
items 1 and 2 on SCHEDULE 4.27) arising out of the use, ownership or
operation after the Closing Date of the USCC Business or the use,
ownership or operation after the Closing Date of the USCC Systems, the
USCC Assigned Licenses or USCC Assets, including the USCC System
Contracts (other than any Non-Assigned Contracts), the Real Property
Leases, the USCC Intellectual Property and the System Permits;
(iii) liabilities and obligations, not to exceed $25,000 in
the aggregate, arising in the ordinary course of the USCC Business out
of (x) the operation prior to the Closing Date of the USCC Business or
(y) the use, ownership or operation prior to the Closing Date of the
USCC Systems, the USCC Assigned Licenses or USCC Assets, including the
USCC System Contracts (other than any Non-Assigned Contracts), the Real
Property Leases, the USCC Intellectual Property and the System Permits;
(iv) all liabilities and obligations of AWS as provided in
Article 6 with respect to Transitioned Employees;
(v) all liabilities and obligations arising with respect to
deposits or prepayments by subscribers for service on the USCC Systems;
(vi) all liabilities and obligations (including, in
connection with the matters disclosed on Schedule 4.6(d)) arising after
the Closing Date out of any Law of the FCC or any other Governmental
Authority to which the USCC Assigned Licenses, USCC Systems and USCC
Assets are subject; and
(vii) the non-current liabilities of the USCC Entities
specified on SCHEDULE 1.2(a).
(b) Neither AWS nor any of its Affiliates shall assume or undertake
in any way to perform, pay, satisfy or discharge any liability or obligation of
USCC or any of its Affiliates of any nature whatsoever, whether known or
unknown, determined or undetermined, liquidated or unliquidated, direct or
indirect, contingent or accrued, matured or unmatured, and whether or not
relating to the USCC Assets, the USCC Systems or the USCC Business, other than
the USCC Assumed Liabilities (each such liability being a "USCC EXCLUDED
LIABILITY"), including the following:
(i) any liabilities and obligations (including Taxes and
liabilities and obligations in connection with the matters disclosed on
SCHEDULE 4.8(e) and in items 1 and 2 on SCHEDULE 4.27) arising out of
the operation prior to the Closing Date of the USCC Business or the
use, ownership or operation prior to the Closing Date of the USCC
Systems, the USCC Assigned Licenses or USCC Assets, including the USCC
System Contracts, the Real Property Leases, the
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USCC Intellectual Property and the System Permits, except for the
liabilities and obligations assumed by AWS pursuant to Section
1.2(a)(iii);
(ii) any liabilities and obligations (including in connection
with the matters disclosed on SCHEDULE 4.6(d)) arising prior to the
Closing Date out of any Law of the FCC or any other Governmental
Authority to which the USCC Assigned Licenses, USCC Systems and USCC
Assets are subject;
(iii) any non-current liabilities of the USCC Entities that
are not specified in SECTION 1.2(a);
(iv) any liabilities and obligations arising at any time out
of the matters disclosed in items 3 and 4 on SCHEDULE 4.27; or
(v) any liabilities and obligations arising at any time out
of any breach by any USCC Entity under this Agreement or any USCC
System Contract.
(c) Upon the terms and subject to the conditions hereof, at Closing
USCC will, or will cause the applicable USCC Entity (or an Affiliate thereof
designated by USCC) to, assume from each of the applicable AWS Entities, as of
the Closing Date, the payment, discharge and performance of the following
liabilities and obligations (collectively, the "AWS ASSUMED LIABILITIES"):
(i) all liabilities and obligations (including Taxes)
arising out of the use, ownership or operation after the Closing Date
of the AWS Assigned Licenses or the Partnership Interests; and
(ii) all liabilities and obligations arising after the
Closing Date out of any Law of the FCC or any other Governmental
Authority to which the AWS Assigned Licenses or the Partnership
Interests are subject, except with respect to (x) any obligations owed
to any Governmental Authority with respect to the purchase of the AWS
Assigned Licenses from the FCC (including interest and penalties for
late payment), and (y) any obligations owed with respect to AWS License
Cost Sharing Obligations arising as a result of any prior coordination
notice filed by any AWS Entity or any predecessor in interest in
respect of the AWS Licenses prior to Closing.
(d) Neither USCC nor any of its Affiliates shall assume or undertake
in any way to perform, pay, satisfy or discharge any liability or obligation of
AWS or any of its Affiliates of any nature whatsoever, whether known or unknown,
determined or undetermined, liquidated or unliquidated, direct or indirect,
contingent or accrued, matured or unmatured, and whether or not relating to the
AWS Assigned Licenses or the Partnership Interests, other than the AWS Assumed
Liabilities (each such liability being an "AWS EXCLUDED LIABILITY"), including
the following:
(i) any liabilities and obligations (including Taxes)
arising out of the use, ownership or operation prior to the Closing
Date of the AWS Licenses or the Partnership Interests;
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(ii) any liabilities and obligations arising prior to the
Closing Date out of any Law of the FCC or any other Governmental
Authority to which the AWS Assigned Licenses or the Partnership
Interests are subject; or
(iii) any liabilities and obligations arising at any time out
of any breach by any AWS Entity under this Agreement.
Section 1.3. LIKE-KIND EXCHANGE
(a) The parties shall cause the exchange of assets described in
Section 1.1 to be treated in such a manner that such exchange qualifies as an
exchange of multiple, like-kind assets to the maximum extent permitted by
Section 1031 of the Code. Notwithstanding any other provision in this Agreement,
including this Section 1.3, each party acknowledges and agrees that it (i) has
obtained its own, separate tax advice with respect to the characterization of
the exchanges hereunder as like-kind exchanges of property under Section 1031 of
the Code, and (ii) is not relying on any representations of the other party with
respect to the characterization of the exchanges hereunder as like-kind
exchanges of property under Section 1031 of the Code.
(b) In furtherance of Section 1.3(a) hereof, AWS shall cooperate, if
requested, in enabling USCC or any USCC Entity to effectuate a like-kind
exchange through the assignment of all or any portion of the rights of USCC or
any such entity pursuant to this Agreement to a "qualified intermediary" as
defined in Treasury Regulation Section 1.1031(k)-1(g)(4); provided, that none of
AWS's rights and none of USCC's obligations to AWS in respect of this Agreement
shall be diminished or otherwise affected by any such assignment.
(c) Within 60 days following the date hereof, USCC and AWS shall in
good faith negotiate and draft on a preliminary basis an allocation schedule
(the "ALLOCATION SCHEDULE") that will allocate the relative fair market values
of the assets to be exchanged pursuant to Section 1.1, which allocation shall
take into account the Cash Payment. Within 30 days following the final
determination of the Closing Date Working Capital Amount under Section 1.6, USCC
and AWS shall in good faith negotiate and finalize the Allocation Schedule. The
Allocation Schedule shall be reasonable and shall be prepared in accordance with
Section 1060 of the Code and the Treasury Regulations thereunder, and in
accordance with any appraisal that the parties mutually determine to obtain. If
the parties mutually determine to obtain an appraisal in connection with the
Allocation Schedule, USCC and AWS shall jointly appoint an independent appraiser
to conduct and to deliver to USCC and AWS, as promptly as practicable, but no
later than 60 days after the engagement of the appraiser, an appraisal of the
fair market value at the time of the Closing of the exchanged assets, taking
into account the Cash Payment, as adjusted under Section 1.6. The cost of any
appraisal commissioned by the parties in order to value such assets for purposes
of this paragraph shall be shared equally by the parties. AWS and USCC agree to
cause all tax returns and reports relating to the Transactions, including
Internal Revenue Service Form 8824 or Form 8594, as applicable, to be filed in
accordance with the values set forth on the final Allocation Schedule and not to
take any
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position inconsistent therewith unless required to do so pursuant to a
"determination" as such term is defined in Section 1313 of the Code.
Section 1.4. LICENSE EXCHANGE OPTIONS
(a) AWS shall have the right at any time during the period that
begins on the Closing Date and ends on the second anniversary of the Closing
Date (the "EXCHANGE OPTION PERIOD") to require USCC to exchange (i) (x) the ten
MHz of broadband PCS spectrum covering Oklahoma City, OK (BTA 329) to be
assigned by AWS to USCC hereunder (the "ORIGINAL OKLAHOMA SPECTRUM") for (y) ten
MHz of broadband PCS spectrum (in the 1850-1990 MHz frequency range) covering
Oklahoma City, OK (BTA 329), acquired by AWS during the Exchange Option Period,
if any (the "OKLAHOMA EXCHANGE OPTION") and/or (ii) (x) the ten MHz of broadband
PCS spectrum covering Portland, ME (BTA 357) to be assigned by AWS to USCC
hereunder (the "ORIGINAL MAINE SPECTRUM") for (y) ten MHz of broadband PCS
spectrum (in the 1850-1990 MHz frequency range) covering Portland, ME (BTA 357),
acquired by AWS during the Exchange Option Period, if any (the "MAINE EXCHANGE
OPTION" and, together with the Oklahoma Exchange Option, the "EXCHANGE
OPTIONS").
(b) Each Exchange Option shall be exercisable by notice of election
given to USCC within the Exchange Option Period. If AWS does not timely exercise
an Exchange Option, such Exchange Option will terminate upon expiration of the
Exchange Option Period. Promptly after receipt of a notice of election, AWS and
USCC shall (subject to any necessary cooperation by AWS and USCC) prepare and
file with the FCC one or more assignment applications in respect of the
applicable spectrum, AWS shall prepare and deliver to USCC a License Exchange
Agreement in substantially the form of EXHIBIT A hereto in respect of the
applicable spectrum, and each party shall deliver to the other a duly executed
counterpart thereof. USCC and AWS will cooperate and use Commercially Reasonable
Efforts to consummate any such exchange as promptly as possible. AWS will
reimburse USCC for its reasonable costs and expenses incurred in effecting any
such exchange, including USCC's engineering costs and capital expenditures.
(c) From the Closing Date until expiration of the Exchange Option
Period, USCC shall and shall cause the applicable USCC Entity to (i) maintain
the FCC Licenses for the Original Oklahoma Spectrum and the Original Maine
Spectrum in full force and effect and (ii) maintain in full force and effect all
Governmental Authorizations necessary to preserve the ability to construct and
operate such FCC Licenses, as and when such Governmental Authorizations are or
become necessary for such purposes; provided, that neither USCC nor such USCC
Entity shall make, cause or permit to be made, any material commitments to any
Governmental Authority relating to any Governmental Authorization affecting the
FCC Licenses for the Original Oklahoma Spectrum and Original Maine Spectrum,
without the AWS's prior written consent, which shall not be unreasonably
withheld or delayed. Prior to the expiration of the Exchange Option Period, USCC
shall not, and shall cause its Affiliates not to, Transfer (or enter into any
agreement to Transfer) the Original Oklahoma Spectrum or the Original Maine
Spectrum, except for Transfers (i) to a wholly-owned subsidiary or (ii) in
connection with the
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Transfer of all or substantially all of the assets of USCC in the State of
Oklahoma or the State of Maine, as applicable, provided, that prior to the
consummation of such Transfer, the purchaser or other transferee of such assets
assumes USCC's obligations under this Section pursuant to documentation in form
and substance reasonably satisfactory to AWS. USCC acknowledges that money
damages would not be sufficient to compensate AWS for a breach by USCC of this
paragraph, and accordingly agrees that AWS shall be entitled to seek specific
performance of USCC's obligations under this paragraph and an injunction against
any Transfer sought to be effected in violation of such provisions.
Section 1.5. LICENSE CALL OPTIONS
(a) Notwithstanding anything herein to the contrary, USCC may elect,
by notice given to AWS no more than five Business Days after the date hereof, to
defer assignment of one or more of the AWS Assigned Licenses designated as
"SECTION 1.5 LICENSES" on Schedules I-A and I-B, in which event assignment
applications relating to such Section 1.5 Licenses will not be filed with the
FCC pursuant to Section 5.2(a), but such Section 1.5 Licenses shall be subject
to the provisions of this Section 1.5.
(b) At any time, and from time to time, during the period that begins
on the Closing Date and ends on the fifth anniversary of the Closing Date (the
"SECTION 1.5 OPTION PERIOD"), USCC may elect, by written notice given to AWS
within the Section 1.5 Option Period (a "SECTION 1.5 EXERCISE NOTICE"), to
require AWS to assign to USCC any or all of the Section 1.5 Licenses in
accordance with this Section 1.5 (a "SECTION 1.5 OPTION"). If USCC fails to
exercise its Section 1.5 Option with respect to any Section 1.5 License in
compliance with this Section 1.5, AWS shall have no further obligation to USCC
in respect of such Section 1.5 License.
(c) Promptly after receipt of a Section 1.5 Exercise Notice in
respect of any Section 1.5 License, AWS shall (subject to any necessary
cooperation by USCC) prepare and file with the FCC an assignment application in
respect of such Section 1.5 License. Within ten Business Days after the FCC's
Consent to such assignment becomes a Final Order, AWS and USCC shall (or shall
cause the applicable AWS Entity or USCC Entity to) execute and deliver to each
other an instrument of assignment and assumption in substantially the form of
EXHIBIT G. USCC and AWS will cooperate and use Commercially Reasonable Efforts
to consummate any such assignment as promptly as possible.
(d) During the Section 1.5 Option Period: (i) AWS shall, and shall
cause the applicable AWS Entity to, maintain in full force and effect each
Section 1.5 License (or the original AWS License from which such Section 1.5
License will be disaggregated and/or partitioned), and all Governmental
Authorizations necessary to preserve the ability of USCC to construct and
operate such Section 1.5 License (or original AWS License), as and when such
Governmental Authorizations are or become necessary for such purposes; provided,
that neither AWS nor such AWS Entity shall make, cause or permit to be made, any
material commitments to any Governmental Authority relating to any Governmental
Authorization affecting any Section 1.5 License without USCC's prior written
consent, which shall not be unreasonably withheld or delayed; (ii) AWS shall
satisfy, or cause to
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be satisfied, the FCC's ten-year minimum build-out requirement, if any, and the
FCC's ten-year license renewal standards; provided that AWS shall not be
obligated to expend any funds to accomplish the same to the extent directly
related to such AWS Assigned License unless USCC agrees in writing to reimburse
AWS promptly for any reasonable out-of-pocket expenses that AWS may incur to
satisfy the FCC's ten-year minimum build-out requirement and/or the FCC's
ten-year license renewal standards directly related to an AWS Assigned License;
and (iii) AWS shall not, and shall cause its Affiliates not to, Transfer (or
enter into any agreement to Transfer) any Section 1.5 License, except for
Transfers (x) in accordance with this Section 1.5, (y) to a wholly-owned
subsidiary of AWS or (z) in connection with the Transfer of all or substantially
all of the assets or stock of AWS, provided, that prior to the consummation of
such Transfer, the purchaser or other transferee of such assets or stock assumes
AWS's obligations under this Section 1.5 pursuant to documentation in form and
substance reasonably satisfactory to USCC. AWS acknowledges that money damages
would not be sufficient to compensate USCC for a breach by AWS of this
paragraph, and accordingly agrees that USCC shall be entitled to seek specific
performance of AWS's obligations under this paragraph and an injunction against
any Transfer sought to be effected in violation of such provisions.
Section 1.6. Working Capital Adjustment
(a) USCC shall deliver to AWS no later than two Business Days prior
to the Closing Date a statement in the format attached as SCHEDULE 1.6 setting
forth amounts as of the most recent practicable date prior to the Closing Date,
of all Current Assets and Current Liabilities, allocated between USCC and AWS in
the manner set forth on such attachment, together with USCC's good faith
estimate of the amount by which the Current Assets (defined below) of the USCC
Business as of the Closing Date exceeds the Current Liabilities (defined below)
of the USCC Business as of the Closing Date based on the methodology set forth
on the attachment to this Schedule ("PRELIMINARY CLOSING DATE WORKING CAPITAL
AMOUNT"). (For illustrative purposes, SCHEDULE 1.6 is a completed statement
setting forth the Working Capital Amount as of January 31, 2003.) If the
Preliminary Closing Date Working Capital Amount is positive, AWS shall pay to
USCC, at the Closing, in addition to the Cash Payment, cash in an amount equal
to such Preliminary Closing Date Working Capital Amount. If the Preliminary
Closing Date Working Capital Amount is negative, the Cash Payment shall be
reduced by an amount equal to the absolute value of such Preliminary Closing
Date Working Capital Amount.
(b) Following Closing, the Cash Payment shall be adjusted (i)
downward, in the event the Closing Date Working Capital Amount (defined below)
is less than the Preliminary Closing Date Working Capital Amount and (ii)
upward, in the event that the Closing Date Working Capital Amount is greater
than the Preliminary Closing Date Working Capital Amount, all as finally
determined in accordance with the provisions set forth below. For purposes of
this Agreement, "CLOSING DATE WORKING CAPITAL AMOUNT" means the amount by which
the Current Assets (defined below) of the USCC Business as of the Closing Date
exceeds the Current Liabilities (defined below) of the USCC Business as of the
Closing Date based on the methodology set forth on the attachment to this
Schedule.
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(c) As promptly as practicable after the Closing Date (but in no
event later than 60 days thereafter), AWS shall prepare and deliver to USCC for
its review and comment a schedule of working capital dated as of the Closing
Date setting forth the proposed Closing Date Working Capital Amount (the
"WORKING CAPITAL SCHEDULE"). The Working Capital Schedule shall be prepared in
accordance with the procedures set forth in this Schedule. For purposes of
preparing the Working Capital Schedule, from and after the Closing Date, USCC
shall provide AWS and its agents and representatives upon reasonable notice with
access to the books and records of USCC relating to, and personnel of USCC
knowledgeable about, the USCC Assets, the USCC Systems and the USCC Business to
the extent reasonably necessary to permit AWS to prepare the Working Capital
Schedule. If USCC objects to any amounts reflected on the Working Capital
Schedule prepared by AWS, USCC must, within 60 days after its receipt of the
Working Capital Schedule, give written notice (the "OBJECTION NOTICE") to AWS
specifying in reasonable detail its objections. If USCC has not given such
Objection Notice with respect to the Working Capital Schedule prepared by AWS
within such time period, AWS's determination of the Closing Date Working Capital
Adjustment shall be final, binding and conclusive on the parties. With respect
to any disputed amounts concerning the Working Capital Schedule, the parties
shall meet in person and negotiate in good faith during the 20 Business Day
period (the "RESOLUTION PERIOD") after the date of AWS's receipt of the
Objection Notice to resolve any such disputes. If the parties are unable to
resolve all such disputes within the Resolution Period, then within five
Business Days after the expiration of the Resolution Period, all disputes shall
be submitted to a mutually acceptable Big-4 Accounting Firm other than
PricewaterhouseCoopers (the "INDEPENDENT ACCOUNTANT") who shall be engaged to
provide a final and conclusive resolution of all unresolved disputes within 45
days after such engagement. The determination of the Independent Accountant
shall be final, binding and conclusive on the parties hereto, and the fees and
expenses of the Independent Accountant shall be borne equally by the parties.
From and after the Closing Date, AWS shall provide USCC and its agents and
representatives upon reasonable notice with access to the books and records of
AWS relating to, and personnel of AWS knowledgeable about, the USCC Assets, the
USCC Systems and the USCC Business to the extent reasonably necessary to permit
USCC to review the results of the Working Capital Schedule.
(d) For purposes of preparing the Working Capital Schedule, "CURRENT
ASSETS" shall include only the current assets identified on the attachment
hereto in the column labeled "USCC Assets" and "CURRENT LIABILITIES" shall
include only the current liabilities identified on the attachment hereto in the
column labeled "USCC Assumed Liabilities".
(e) If the Closing Date Working Capital Amount, as finally determined
in accordance with the provisions set forth above, is less than the Preliminary
Closing Date Working Capital Amount, the Cash Payment shall be adjusted downward
and USCC shall promptly reimburse to AWS in cash the difference between the
Preliminary Closing Date Working Capital Amount and the Closing Date Working
Capital Amount plus interest on such difference from the Closing Date to the
date of payment at the Prime Rate on the Closing Date. If the Closing Date
Working Capital Amount, as finally determined in accordance with the provisions
set forth above, is greater than the
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Preliminary Closing Date Working Capital Amount, the Cash Payment shall be
adjusted upward and AWS shall promptly pay to USCC in cash the difference
between the Preliminary Closing Date Working Capital Amount and the Closing Date
Working Capital Amount plus interest on such difference from the Closing Date to
the date of payment at the Prime Rate on the Closing Date. For purposes hereof,
"Prime Rate" shall mean the annual interest rate set forth as the Prime Rate in
the Money Rates table of The Wall Street Journal.
(f) The parties agree that all USCC Assets that are current shall be
included in the amount of Current Assets for purposes of determining the
Preliminary Closing Date Working Capital Amount and the Closing Date Working
Capital Amount, and that USCC Assets shall not include any current assets that
are not included as Current Assets for purposes of determining the Preliminary
Closing Date Working Capital Amount and the Closing Date Working Capital Amount
(it being understood that Current Assets shall not include any Excluded Assets).
The parties further agree that all USCC Assumed Liabilities that are current
shall be included in the amount of Current Liabilities for purposes of
determining the Preliminary Closing Date Working Capital Amount and the Closing
Date Working Capital Amount, and that USCC Assumed Liabilities shall not include
any current liabilities that are not included as Current Liabilities for
purposes of determining the Preliminary Closing Date Working Capital Amount and
the Closing Date Working Capital Amount (it being understood that Current
Liabilities shall not include any USCC Excluded Liabilities).
(g) Consistent with the foregoing, the parties agree that any
accounts receivable or other current assets that have been written off by USCC
in the ordinary course of business consistent with prior practice and/or which
are not included in the amount of Current Assets for purposes of determining the
Preliminary Closing Date Working Capital Amount or the Closing Date Working
Capital Amount shall not be transferred to AWS and any recovery in respect
thereof after the Closing shall be for the benefit of USCC.
(h) Consistent with foregoing, (i) if either party receives or
collects any assets that are for the benefit of the other party, such party
shall hold such assets for the benefit of and promptly Transfer such assets to
the other party and (ii) if either party pays or performs any liabilities that
are for the account of the other party, such party shall promptly indemnify the
other party subject to the terms and conditions of Article 8.
Section 1.7. CERTAIN AGREEMENTS
USCC shall have the rights described in SCHEDULE 1.7 with respect to
certain spectrum held by AWS.
ARTICLE 2
CLOSING
Section 2.1. TIME AND PLACE OF CLOSING
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Upon the terms and subject to the satisfaction or waiver by the
appropriate party of the conditions set forth in Article 7, the closing of the
Transactions (the "CLOSING") shall take place at the offices of Sidley Austin
Brown & Wood, 10 South Dearborn Street, 55th Floor, Chicago, Illinois, 60603, at
10:00 a.m. Chicago time on the fifth Business Day after the date on which the
last applicable condition under Section 7.1(c), Section 7.1(d), Section 7.1(e),
Section 7.1(g), Section 7.2(c), Section 7.2(d), Section 7.2(e) and Section
7.2(g) has been satisfied or waived or at such other time and place as the
parties hereto may mutually agree. The date on which the Closing occurs is
called the "CLOSING DATE," and the Transactions shall be deemed to have closed
simultaneously at 11:59 p.m. Chicago time on the Closing Date.
Section 2.2. CLOSING ACTIONS AND DELIVERIES
Upon the terms and subject to the satisfaction or waiver by the
appropriate party of the conditions set forth in Article 7, the parties shall
take the following actions on the Closing Date:
(a) AWS shall, or shall cause the applicable AWS Entities to, execute
and deliver to USCC:
(i) one or more instruments of assignment, substantially in
the form attached hereto as EXHIBIT C, sufficient to assign the AWS
Assigned Licenses (other than the Section 1.5 Licenses and except as
otherwise provided in Section 5.14) and the Partnership Interests to
USCC or its designated Affiliate;
(ii) one or more instruments of assumption, substantially in
the form attached hereto as EXHIBIT D1, sufficient for the applicable
AWS Entities to assume the USCC Assumed Liabilities from each
applicable USCC Entity;
(iii) evidence that AWS has made the Cash Payment by wire
transfer to an account designated by USCC or by other delivery of
immediately available funds; and
(iv) the certificates and other documents required to be
delivered by AWS at or prior to Closing under Section 7.2.
(b) USCC shall, or shall cause the applicable USCC Entities to,
execute and deliver to AWS:
(i) one or more instruments of assignment, substantially in
the form attached hereto as EXHIBIT E, sufficient to assign the USCC
Assigned Licenses to AWS or its designated Affiliate;
(ii) one or more bills of sale and other instruments of
assignment and conveyance, substantially in the forms attached hereto
as EXHIBIT F, sufficient to assign and transfer all right, title and
interest of the applicable USCC Entities in and to the USCC Assets to
AWS or its designated Affiliate;
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(iii) one or more instruments of assumption, substantially in
the form attached hereto as EXHIBIT D2, sufficient for the applicable
USCC Entities to assume the AWS Assumed Liabilities from each
applicable AWS Entity; and
(iv) the certificates and other documents required to be
delivered by USCC at or prior to Closing under Section 7.1.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF AWS
AWS hereby represents and warrants to USCC as follows, except as set
forth in the disclosure schedule attached hereto (the "AWS DISCLOSURE
SCHEDULE"), which AWS Disclosure Schedule is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
3 (it being understood that any item disclosed in one paragraph of the AWS
Disclosure Schedule shall not be deemed to be disclosed with respect to any
other paragraph of the AWS Disclosure Schedule unless otherwise indicated
therein):
Section 3.1. ORGANIZATION
Each AWS Entity is a limited liability company or corporation, as the
case may be, and is duly organized, in good standing and validly existing under
the Laws of its jurisdiction of organization and has all requisite limited
liability company or corporate, as the case may be, power and authority to enter
into each Transaction Document to which it is or shall be a party and consummate
the Transactions to which it is a party. Each AWS Entity is duly qualified as a
foreign entity in each of the jurisdictions where such qualification is required
by Law, except where the failure to be so qualified would not materially impair
its ability to hold the applicable AWS Licenses or to consummate the
Transactions to which it is a party.
Section 3.2. AUTHORITY
With respect to each AWS Entity, the execution and delivery of each
Transaction Document to which such AWS Entity is or shall be a party, the
consummation by it of the Transactions to which it is a party and the
performance by it of each Transaction Document to which it is or shall be a
party have been duly authorized and approved by all necessary limited liability
company or corporate, as applicable, action, and no other proceedings on its
part which have not been taken are necessary to authorize the execution,
delivery and performance of the Transaction Documents to which it is or shall be
a party or to consummate the Transactions to which it is a party.
Section 3.3. EXECUTION AND ENFORCEABILITY
Each Transaction Document to which an AWS Entity is a party has been,
and each Transaction Document to which an AWS Entity shall be a party as of the
Closing Date shall have been, duly executed and delivered by it and constitutes
or shall constitute as of Closing, as applicable, its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except to the
extent enforcement may be limited by
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applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar Laws of general applicability affecting the rights of
creditors and general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
Section 3.4. NO CONFLICT OR CONSENTS
Neither the execution, delivery and performance by any AWS Entity of
the Transaction Documents to which it is or shall be a party, nor the
consummation of the Transactions to which it is a party, will (i) conflict with,
or result in a breach or violation of, or constitute a default under, any
provision of its organizational documents; (ii) constitute, with or without the
giving of notice or passage of time or both, a breach, violation or default by
it, create a Lien, or give rise to any right of termination, modification,
cancellation, prepayment or acceleration, or a loss of rights, under (A) any Law
or Governmental Authorization or (B) any note, bond, mortgage, indenture, lease,
agreement or other instrument, in each case which is applicable to or binding
upon it or any of its assets; or (iii) require any action in respect of, or
filing with, any Governmental Authority or any Consent, other than filings under
the HSR Act, the Consent of the FCC and any applicable AWS State Consents,
except, in the case of clauses (ii) and (iii), where such breach, violation,
default, Lien, right or the failure to obtain or give such Consent would not
have an AWS Material Adverse Effect.
Section 3.5. NO BROKER
Neither AWS nor any of its Affiliates has entered into any agreement,
arrangement or understanding with any Person which will result in an obligation
to pay any finder's fee, brokerage commission or similar payment in connection
with the Transactions.
Section 3.6. FCC MATTERS
(a) Each AWS Entity listed on SCHEDULE I-A is the exclusive holder
of, and has good title to, free and clear of all Liens (other than the options
specifically identified in SCHEDULE 1.7), the AWS Entity License(s) set forth
opposite its name on SCHEDULE I-A. Each Non-AWS Entity listed on SCHEDULE I-B is
the exclusive holder of, and has good title, free and clear of all Liens, to the
Non-AWS Entity License(s) set forth opposite its name on SCHEDULE I-B. No Person
other than the applicable AWS Entity or Non-AWS Entity has any right, title or
interest (legal or beneficial) in or to the AWS License(s) set forth opposite
its name on SCHEDULE I-A or SCHEDULE I-B. Each AWS Entity License has been
granted to the applicable AWS Entity by Final Order and is in full force and
effect; as of the date hereof, each Non-AWS Entity License has been granted to
the applicable Non-AWS Entity by Final Order and is in full force and effect; as
of the Closing Date, each Non-AWS Entity License shall have been granted to the
applicable AWS Entity by Final Order and shall be in full force and effect. No
person other than the applicable AWS Entity is licensed to use, or otherwise has
a right to use, the AWS Entity license(s) set forth opposite its name on
SCHEDULE I-A. No person other than the applicable Non-AWS Entity is licensed to
use, or otherwise has a right to use, the Non-AWS Entity
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license(s) set forth opposite its name on SCHEDULE I-B. No AWS Entity or any
Affiliate thereof has entered into any obligation, agreement, arrangement or
understanding to Transfer the AWS Licenses or that would adversely affect USCC's
ownership or use of the AWS Assigned Licenses after Closing. No Non-AWS Entity
or any Affiliate thereof has entered into any obligation, agreement, arrangement
or understanding to Transfer the Non-AWS Entity Licenses or that would adversely
affect USCC's ownership or use of the AWS Assigned Licenses after Closing. There
are no Interference Consents with respect to the AWS Licenses that are not
terminable by either party thereto on less than 60 days' advance notice.
(b) Except for proceedings affecting the wireless industry or
wireless licenses generally and as set forth on SCHEDULE 3.6(b), there is not
pending or, to the Knowledge of AWS, threatened against any AWS Entity, any
Non-AWS Entity or any of the AWS Licenses, nor does AWS have Knowledge of any
basis for, any application, action, complaint, claim, investigation, suit,
notice of violation, petition, objection or other pleading, or any proceeding
against any AWS Entity, the AWS Licenses, with the FCC or any other Governmental
Authority, which questions or contests the validity of, or seeks the revocation,
cancellation, forfeiture, non-renewal or suspension of, any of the AWS Licenses,
or which seeks the imposition of any modification or amendment thereof, or the
payment of a fine, sanction, penalty, damages or contribution in connection with
the use of any of the AWS Licenses by any AWS Entity holding such license,
except for any such application, action, complaint, claim, investigation, suit,
notice of violation, petition, objection, pleading, or proceeding that would not
have an AWS Material Adverse Effect.
(c) All material documents required to be filed at any time by any
AWS Entity or any Non-AWS Entity with the FCC or any other Governmental
Authority pursuant to FCC Law with respect to each of the AWS Licenses held
thereby have been timely filed or the time period for such filing has not
lapsed. All of such filings are complete and correct in all material respects.
None of the AWS Licenses is subject to any conditions other than those appearing
on its face and those imposed by FCC Law. All amounts owed to the FCC in
connection with the grant by the FCC of each of the AWS Licenses have been
timely paid and no further amounts are due to the FCC in respect of such AWS
Licenses. SCHEDULE 3.6(c) sets forth and describes all applications in respect
of the AWS Licenses pending or on file with a Governmental Authority; the
information contained in each such application is true and complete in all
material respects.
(d) No AWS Entity, any Affiliate of an AWS Entity, Non-AWS Entity or
any Affiliate of a Non-AWS Entity is in conflict with, or in default or
violation of, any Laws applicable to any AWS License (including, rules,
regulations and orders regarding implementation of CALEA, E911, number
portability, telephone service for the hearing impaired and other FCC Laws), and
each has complied in all material respects with the terms and conditions of the
AWS Licenses except where such conflict, default, violation or non-compliance
would not have an AWS Material Adverse Effect. No AWS Entity, any Affiliate of
an AWS Entity, Non-AWS Entity or any Affiliate of a Non-AWS Entity has received
written notice of any formal or informal complaint or order filed against it
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alleging any material non-compliance by it with respect to any such Laws, in
each case to the extent applicable to the AWS Licenses.
(e) No AWS Entity or Non-AWS Entity is in breach or otherwise in
violation of any FCC buildout requirements with respect to the AWS Licenses held
by it, and each of the AWS Licenses has been built out at least to the minimum
extent required by 47 C.F.R. 24.203 or 47 C.F.R. 24.714, as applicable.
Certification of such minimum buildouts has in each case been made to and
granted by the FCC.
(f) Each AWS Entity is legally qualified to acquire and hold the USCC
License(s) to be acquired by such AWS Entity pursuant to this Agreement and to
receive and hold any Governmental Authorization necessary for it to acquire and
hold any such USCC License(s).
(g) Attached as SCHEDULE 3.6(g) is a true and correct list of each
and every microwave relocation agreement in respect of the AWS Licenses to which
any AWS Entity is a party or in respect of the Non-AWS Entity Licenses to which
an Non-AWS Entity is a party, and with respect to which either (x) the
applicable AWS Entity or Non-AWS Entity has not fully completed performance or
(y) the incumbent microwave licensee has not filed with the FCC (and provided to
the applicable AWS Entity or Non-AWS Entity the ULS file numbers of)
Applications or Notifications on Form 601 to relinquish its rights to the
microwave path(s) that are the subject of such agreement. AWS has provided USCC
with a complete copy of each microwave relocation agreement on SCHEDULE 3.6(g).
AWS has paid all AWS License Cost-Sharing Obligations of which it has been
notified by either of the two FCC sanctioned microwave reimbursement
clearinghouses.
Section 3.7. LITIGATION REGARDING THE AWS LICENSES
There are no civil, criminal or administrative claims, actions, suits,
demands, proceedings or investigations pending or, to the Knowledge of AWS,
threatened against any AWS Entity or any of their respective Affiliates, or any
Non-AWS Entity, relating to any of the AWS Licenses or any other properties or
assets of any AWS Entity or any Non-AWS Entity, that would if determined
adversely to such AWS Entity or Affiliate or Non-AWS Entity have an AWS Material
Adverse Effect. There is no judgment, decree, injunction, rule or order
outstanding against any AWS Entity or any of their respective Affiliates, or any
Non-AWS Entity, relating to or involving any of the AWS Licenses, nor does AWS
have Knowledge of any reasonable basis therefor, and there are no unsatisfied
judgments against any AWS Entity or any of their respective Affiliates, or any
Non-AWS Entity, with respect to any of the AWS Licenses or any other properties
or assets of any AWS Entity or any Non-AWS Entity, in each case that could have
an AWS Material Adverse Effect.
Section 3.8. AWS ENTITIES
AWS beneficially owns all of the outstanding equity interests of each
AWS Entity.
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Section 3.9. PARTNERSHIP INTERESTS
Each AWS Entity is the exclusive holder of, and has good title, free
and clear of all Liens, to the Partnership Interests set forth opposite its name
on SCHEDULE II and, at the Closing, USCC (or its designated Affiliate) shall
acquire good title to the Partnership Interests, free and clear of all Liens.
Section 3.10. EMPLOYEE PLAN AND ERISA LIABILITIES AND LIENS
No event has occurred nor shall any event occur as a result of the
Transactions which could reasonably be expected to result in the imposition upon
USCC or any Affiliate or ERISA Affiliate of USCC of any liability or any Lien
against any of their assets, directly or indirectly attributable to any Employee
Plan maintained or sponsored by, or contributed to by, AWS or any Affiliate or
ERISA Affiliate of AWS, including any funding requirements under the Code or
liabilities under Title IV of ERISA with respect to any such AWS Employee Plan.
Section 3.11. TAX MATTERS
(a) All material Tax Returns that are required to be filed with
respect or relating to the AWS Licenses, and all material Tax Returns that are
required to be filed by AWS or any Affiliate with respect or relating to the
Partnership Interests, have been duly filed or, where not so filed, are covered
under an extension that has been obtained therefor.
(b) All Tax Returns referred to in Section 3.11(a) are accurate in
all material respects.
(c) All Taxes shown to be due on the Tax Returns referred to in
Section 3.11(a) and in respect of the AWS Licenses, the Partnership Interests
have been paid in full. With respect to all amounts in respect of Taxes imposed
upon an AWS Entity or a Non-AWS Entity, or for which an AWS Entity or Non-AWS
Entity, is or could be liable with respect to the AWS Licenses or the
Partnership Interests, whether to taxing authorities or to other Persons (as,
for example, under tax allocation agreements), and with respect to all taxable
periods or portions of periods ending on or before the Closing Date, all
applicable Tax Laws and agreements have been fully complied with, and all such
amounts required to be paid by such AWS Entity to taxing authorities or others
have been paid, or to the extent such Taxes or amounts are not yet payable, will
be duly and timely paid by such AWS Entity.
(d) All deficiencies asserted or assessments made as a result of the
examinations of any Tax Returns referred to in Section 3.11(a) have been paid in
full.
(e) No issues that have been raised by the relevant taxing authority
in connection with the examination of any of the Tax Returns referred to in
Section 3.11(a) are currently pending.
(f) No waivers of statutes of limitation have been given by or
requested with respect to any Tax Return referred to in Section 3.11(a).
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(g) There are no Liens (other than Permitted Liens) with respect to
Taxes upon any of the AWS Licenses.
(h) The applicable AWS Entity or Non-AWS Entity has withheld and paid
all Taxes 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 AWS Licenses or the Partnership Interest. All Taxes that
were required to be collected or withheld by such AWS Entity or Non-AWS Entity
with respect to the operation of the AWS Licenses or the Partnership Interests
have been duly collected or withheld, and all such amounts that were required to
be remitted to any taxing authority have been duly remitted.
(i) No Tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfer of the AWS Licenses contemplated hereby.
Section 3.12. COMPLIANCE WITH LAWS
None of AWS, any Affiliate thereof, any Non-AWS Entity or any Affiliate
thereof is in conflict with, or in default or violation of, any Laws applicable
to the AWS Licenses or the Partnership Interests, except where such conflict,
default or violation would not reasonably be expected to have a AWS Material
Adverse Effect. None of AWS, any Affiliate thereof, any Non-AWS Entity or any
Affiliate thereof has received notice of any formal or informal complaint or
order filed against AWS, any Affiliate, any Non-AWS Entity, or any Affiliate
thereof alleging any material non-compliance by AWS, any Affiliate thereof, any
Non-AWS Entity or any Affiliate thereof with respect to any such Laws, in each
case to the extent applicable to the AWS Licenses or the Partnership Interests.
Section 3.13. AGREEMENTS WITH NON-AWS ENTITIES
AWS or an AWS Entity has entered into agreements to acquire 100%
ownership of the Non-AWS Entity Licenses (the "NON-AWS LICENSE ACQUISITION
AGREEMENTS"). Each of the Non-AWS License Acquisition Agreements has been duly
executed and delivered by each of the parties thereto and constitutes their
legal, valid and binding obligation, enforceable against them in accordance with
its terms, except to the extent enforcement may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and
similar Laws of general applicability affecting the rights of creditors and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity). Each Non-AWS Entity that is a
party to a Non-AWS Entity License Acquisition Agreement is duly organized and
validly existing under the Laws of its jurisdiction of organization and has all
requisite power and authority to enter into and consummate such Non-AWS Entity
License Acquisition Agreement and is authorized to hold and assign to AWS the
applicable Non-AWS Entity License. The execution, delivery and performance of
each Non-AWS Entity License Acquisition Agreement has been duly authorized and
approved by all necessary action on the part of the Non-AWS Entity that is a
party thereto and does not and will not (i) constitute a breach, violation or
default by it, create a Lien, or give rise to any right of
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termination, modification, cancellation, prepayment or acceleration, or a loss
of rights, under any Law or Governmental Authorization or require any action in
respect of, or filing with, any Governmental Authority or any Consent, other
than the Consent of the FCC except where such breach, violation, default, Lien,
right or the failure to obtain or give such Consent would not have an AWS
Material Adverse Effect, or (ii) violate or conflict with its organizational
documents.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF USCC
USCC hereby represents and warrants to AWS as follows, except as set
forth in the disclosure schedule attached hereto (the "USCC DISCLOSURE
SCHEDULE"), which USCC Disclosure Schedule is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
4 (it being understood that any item disclosed in one paragraph of the USCC
Disclosure Schedule shall not be deemed to be disclosed with respect to any
other paragraph of the USCC Disclosure Schedule unless otherwise indicated
therein):
Section 4.1. ORGANIZATION
Each USCC Entity is a limited liability company or corporation, as the
case may be, and is duly organized, in good standing and validly existing under
the Laws of its jurisdiction of organization and has all requisite limited
liability company or corporate, as the case may be, power and authority to enter
into each Transaction Document to which it is or shall be a party and consummate
the Transactions to which it is a party. Each USCC Entity is duly qualified as a
foreign entity in each of the jurisdictions where such qualification is required
by Law, except where the failure to be so qualified would not materially impair
its ability to hold the applicable USCC Assigned Licenses or to consummate the
Transactions to which it is a party.
Section 4.2. AUTHORITY
With respect to each USCC Entity, the execution and delivery of each
Transaction Document to which such USCC Entity is or shall be a party, the
consummation by it of the Transactions to which it is a party and the
performance by it of each Transaction Document to which it is or shall be a
party have been duly authorized and approved by all necessary limited liability
company or corporate, as applicable, action, and no other proceedings on its
part which have not been taken are necessary to authorize the execution,
delivery and performance of the Transaction Documents to which it is or shall be
a party or to consummate the Transactions to which it is a party.
Section 4.3. EXECUTION AND ENFORCEABILITY
Each Transaction Document to which a USCC Entity is a party has been,
and each Transaction Document to which a USCC Entity shall be a party as of the
Closing Date shall have been, duly executed and delivered by it and constitutes
or shall constitute as of Closing, as applicable, its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except to the
extent enforcement may be limited by
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applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar Laws of general applicability affecting the rights of
creditors and general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
Section 4.4. NO CONFLICT OR CONSENTS
Except as disclosed on SCHEDULE 4.4, neither the execution, delivery
and performance by any USCC Entity of the Transaction Documents to which it is
or shall be a party, nor the consummation of the Transactions to which it is a
party, will (i) conflict with, or result in a breach or violation of, or
constitute a default under, any provision of its organizational documents; (ii)
constitute, with or without the giving of notice or passage of time or both, a
breach, violation or default by it, create a Lien, or give rise to any right of
termination, modification, cancellation, prepayment or acceleration, or a loss
of rights, under (A) any Law or Governmental Authorization or (B) any note,
bond, mortgage, indenture, lease, agreement or other instrument, in each case
which is applicable to or binding upon it or any of its assets; or (iii) require
any action in respect of, or filing with, any Governmental Authority or any
Consent, other than filings under the HSR Act, the Consent of the FCC, any
applicable USCC State Consents and USCC System Consents, except, in the case of
clauses (ii) and (iii), where such breach, violation, default, Lien, right or
the failure to obtain or give such Consent would not have a USCC Material
Adverse Effect.
Section 4.5. NO BROKER
Except for Falkenberg Capital Corporation, neither USCC nor any of its
Affiliates has entered into any agreement, arrangement or understanding with any
Person which will result in an obligation to pay any finder's fee, brokerage
commission or similar payment in connection with the Transactions.
Section 4.6. FCC MATTERS
(a) Each USCC Entity listed in SCHEDULE III is the exclusive holder
of, and has good title, free and clear of all Liens, to the USCC License(s) set
forth opposite its name on SCHEDULE III. No Person other than the applicable
USCC Entity has any right, title or interest (legal or beneficial) in or to the
USCC License(s) set forth opposite its name on SCHEDULE III. Each USCC License
has been granted to the applicable USCC Entity by Final Order and is in full
force and effect. No Person other than such USCC Entity is licensed to use, or
otherwise has a right to use, the USCC Assigned Licenses held by such USCC
Entity. No USCC Entity or any Affiliate thereof has entered into any obligation,
agreement, arrangement or understanding to Transfer the USCC Assigned Licenses
or that would adversely affect AWS's ownership or use of the USCC Assigned
Licenses after Closing. There are no Interference Consents with respect to the
USCC Assigned Licenses that are not terminable by either party thereto on less
than 60 days' advance notice.
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(b) Except for proceedings affecting the wireless industry or
wireless licenses generally and as set forth on SCHEDULE 4.6(b), there is not
pending or, to the Knowledge of USCC, threatened against any USCC Entity or any
of the USCC Assigned Licenses, nor does USCC have Knowledge of any basis for,
any application, action, complaint, claim, investigation, suit, notice of
violation, petition, objection or other pleading, or any proceeding against any
USCC Entity or the USCC Assigned Licenses, with the FCC or any other
Governmental Authority, which questions or contests the validity of, or seeks
the revocation, cancellation, forfeiture, non-renewal or suspension of, any of
the USCC Assigned Licenses, or which seeks the imposition of any modification or
amendment thereof, or the payment of a fine, sanction, penalty, damages or
contribution in connection with the use of any of the USCC Assigned Licenses by
any USCC Entity holding such license, except for any such application, action,
complaint, claim, investigation, suit, notice of violation, petition, objection,
pleading, or proceeding that would not have a USCC Material Adverse Effect.
(c) All material documents required to be filed at any time by any
USCC Entity with the FCC or any other Governmental Authority pursuant to FCC Law
with respect to each of the USCC Assigned Licenses held thereby have been timely
filed or the time period for such filing has not lapsed. All of such filings are
complete and correct in all material respects. None of the USCC Assigned
Licenses is subject to any conditions other than those appearing on its face and
those imposed by FCC Law. All amounts owed to the FCC in connection with the
grant by the FCC of each of the USCC Assigned Licenses have been timely paid and
no further amounts are due to the FCC in respect of such USCC Assigned Licenses.
SCHEDULE 4.6(c) sets forth and describes all applications in respect of the USCC
Assigned Licenses pending or on file with a Governmental Authority; the
information contained in each such application is true and complete in all
material respects.
(d) Except as set forth on SCHEDULE 4.6(d), no USCC Entity or any
Affiliate thereof is in conflict with, or in default or violation of, any Laws
applicable to any USCC License (including, rules, regulations and orders
regarding implementation of CALEA, E911, number portability, telephone service
for the hearing impaired and other FCC Laws), and each has complied in all
material respects with the terms and conditions of the USCC Assigned Licenses
except where such conflict, default, violation or non-compliance would not have
a USCC Material Adverse Effect. No USCC Entity or any Affiliate thereof has
received written notice of any formal or informal complaint or order filed
against it alleging any material non-compliance by it with respect to any such
Laws, in each case to the extent applicable to the USCC Assigned Licenses.
(e) Except as set forth on SCHEDULE 4.6(e), all buildout and coverage
requirements under 47 C.F.R. 22.946 and 47 C.F.R. 22.947 in respect of the USCC
Assigned Licenses have been satisfied in full and certification of such buildout
and coverage has been made to the FCC.
(f) Each USCC Entity is legally qualified to acquire and hold the AWS
Assigned License(s) to be acquired by such USCC Entity pursuant to this
Agreement and
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to receive and hold any Governmental Authorization necessary for it to acquire
and hold any such AWS Assigned License(s).
Section 4.7. LITIGATION REGARDING USCC ASSIGNED LICENSES
There are no civil, criminal or administrative claims, actions, suits,
demands, proceedings or investigations pending or, to the Knowledge of USCC,
threatened against any USCC Entity or any of their respective Affiliates
relating to any of the USCC Assigned Licenses or any other properties or assets
of any USCC Entity that could if determined adversely to such USCC Entity or
Affiliate have a USCC Material Adverse Effect. Except as set forth on SCHEDULE
4.7, there is no judgment, decree, injunction, rule or order outstanding against
any USCC Entity or any of their respective Affiliates relating to or involving
any of the USCC Assigned Licenses, nor does USCC have Knowledge of any
reasonable basis therefor, and there are no unsatisfied judgments against any
USCC Entity or any of their respective Affiliates with respect to any of the
USCC Assigned Licenses or any other properties or assets of any USCC Entity, in
each case that could have a USCC Material Adverse Effect.
Section 4.8. TAX MATTERS
(a) All material Tax Returns that are required to be filed with
respect or relating to the USCC Systems, the USCC Assets and the USCC Licenses
have been duly filed or, where not so filed, are covered under an extension that
has been obtained therefor.
(b) All Tax Returns referred to in Section 4.8(a) are accurate in all
material respects.
(c) All Taxes shown to be due on the Tax Returns referred to in
Section 4.8(a) and in respect of the USCC Systems, the USCC Assets and the USCC
Licenses have been paid in full. With respect to all amounts in respect of Taxes
imposed upon a USCC Entity, or for which a USCC Entity is or could be liable
with respect to the USCC Systems, the USCC Assets or USCC Licenses, whether to
taxing authorities or to other Persons (as, for example, under tax allocation
agreements), and with respect to all taxable periods or portions of periods
ending on or before the Closing Date, all applicable Tax Laws and agreements
have been fully complied with, and all such amounts required to be paid by such
USCC Entity to taxing authorities or others have been paid, or to the extent
such Taxes or amounts are not yet payable, will be duly and timely paid by such
USCC Entity.
(d) Except as disclosed on SCHEDULE 4.8(d), all deficiencies asserted
or assessments made as a result of the examinations of any Tax Returns referred
to in Section 4.8(a) have been paid in full.
(e) Except as disclosed on SCHEDULE 4.8(e), no issues that have been
raised by the relevant taxing authority in connection with the examination of
any of the Tax Returns referred to in Section 4.8(a) are currently pending.
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(f) Except as disclosed on SCHEDULE 4.8(f), no waivers of statutes of
limitation have been given by or requested with respect to any Tax Return
referred to in Section 4.8(a).
(g) There are no Liens (other than Permitted Liens) with respect to
Taxes upon any of the USCC Systems, the USCC Assets or the USCC Licenses.
(h) The applicable USCC Entity has withheld and paid all Taxes
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 USCC Systems, the USCC Assets or the USCC Licenses. All Taxes that were
required to be collected or withheld by such USCC Entity with respect to the
operation of the USCC Systems, the USCC Assets or the USCC Licenses have been
duly collected or withheld, and all such amounts that were required to be
remitted to any taxing authority have been duly remitted.
(i) No Tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfer of the USCC Systems, USCC Assets or USCC
Licenses contemplated hereby.
Section 4.9. TITLE AND SUFFICIENCY OF USCC ASSETS
The USCC Entities specified on SCHEDULE 4.9, collectively, are the
owners (whether by leasehold or fee simple interest) of, and have good title to,
all of the USCC Assets, free and clear of all Liens other than Permitted Liens.
The USCC Assets are in satisfactory repair and operating condition (subject to
normal wear and tear). The USCC Assets, together with the Excluded Assets and
the services to be provided and assets to be made available to AWS pursuant to
the Transition Services Agreement, constitute all of the rights, assets and
properties required to operate the USCC Systems in all material respects as they
are currently operated.
Section 4.10. REAL PROPERTY
(a) SCHEDULE 4.10(a) lists all Real Property owned by a USCC Entity
and principally used or held for use in connection with the operation of the
USCC Systems in the USCC Service Area, and specifies the address and/or legal
description sufficient to identify the property and contains a reasonable
description of the use of each property. With respect to each parcel of owned
Real Property included in the USCC Assets, except as set forth on SCHEDULE
4.10(a):
(i) the applicable USCC Entity has good title to the parcel
of Real Property, free and clear of all Liens, except for Permitted
Liens;
(ii) except as set forth on SCHEDULE 4.10(b), there are no
leases, subleases, licenses, concessions, or other agreements to which
a USCC Entity is a party and which relate to the operation of the USCC
Systems in the USCC Service Areas or, to the Knowledge of USCC, leases,
subleases, licenses, concessions or other
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agreements to which any USCC Entity is not a party, granting to any
person the right of use or occupancy of any portion of the parcel of
Real Property;
(iii) there are no outstanding options or rights of first
refusal to purchase the parcel of Real Property, or any portion thereof
or interest therein;
(iv) to the Knowledge of USCC, the applicable USCC Entity has
physical and legal ingress and egress to and from such parcel; and
(v) no USCC Entity has received any written notice of, and
USCC has no Knowledge of, any material non-compliance with applicable
building codes, zoning regulations, occupational health and safety Laws
or any other Laws, applicable to such parcel or the applicable USCC
Entity's use or occupancy thereof.
(b) SCHEDULE 4.10(b) lists all Real Property leases and occupancy
and/or use agreements (together with any amendments thereto) with respect to
which a USCC Entity is tenant, lessee, licensee or grantee (the "REAL PROPERTY
LEASES") and which cover Real Property principally used, or held for use, in
connection with the operation of USCC Systems in the USCC Service Area (the
"LEASED PROPERTY"). USCC has made available to AWS complete and correct copies
of each of the Real Property Leases (together with any subleases granted with
respect to the Real Property covered by the Real Property Leases). Each Real
Property Lease that has not expired in accordance with its terms is legal,
valid, binding and enforceable against the applicable USCC Entity in accordance
with its terms, except to the extent enforcement may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and
similar Laws of general applicability affecting the rights of creditors and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity). Neither the USCC Entity party
to any Real Property Lease nor, to the Knowledge of USCC, any other party
thereto is in default, violation or breach of any material term of such Real
Property Lease and no USCC Entity has received any written notice of default
thereunder. Except as set forth on SCHEDULE 4.10(b), no USCC Entity has
subleased, licensed or otherwise granted the right to use or occupy any Real
Property leased by any USCC Entity or any portion thereof to any other Person.
(c) No improvements on any Real Property owned by any USCC Entity
encroach upon adjoining real estate, and all such improvements have been
constructed in conformity with all "setback" lines, easements and other
restrictions, or rights of record, that have been established by any applicable
building or zoning ordinances, except those encroachments and violations which
would not reasonably be expected to interfere in any material respect with the
use, occupancy or operation of the USCC Assets as currently used, occupied or
operated.
Section 4.11. INTELLECTUAL PROPERTY
(a) Except for (i) Intellectual Property made available to AWS,
either directly or indirectly in connection with services provided to AWS,
pursuant to the USCC Brand
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License Agreement or the Transition Services Agreement, (ii) Intellectual
Property (if any) used by the USCC Entities pursuant to any USCC System
Contract, (iii) Intellectual Property (such as software) incorporated into
tangible USCC Assets (such as switches), freely transferable to the AWS Entities
without Consent of, or material payment to, any third party and (iv) incidental
Intellectual Property used in the operation of the USCC Systems (such as
standard shrink wrap licenses which typically accompany commercially available
software), there is no Intellectual Property that is required to operate the
USCC Systems in all material respects as they are currently operated.
(b) SCHEDULE 4.11(b) contains a complete and correct list of all
Intellectual Property to be transferred or otherwise made available by any USCC
Entity to an AWS Entity in connection with the Transactions (the "USCC
INTELLECTUAL PROPERTY"). The USCC Intellectual Property does not include any
Intellectual Property which is solely owned by USCC or an Affiliate thereof, or
any Intellectual Property owned or licensed by USCC or an Affiliate thereof
which has been developed or customized, either by USCC or an Affiliate thereof
or at its request. To the extent transferable, the USCC Entity which is the
licensee, lessee or user thereof has the right to use pursuant to license,
sublicense, agreement or permission, the USCC Intellectual Property set forth
opposite its name on SCHEDULE 4.11(b), free and clear of all liens and free from
any requirement of any past, present or future royalty payments, license fees,
charges or other payments, but subject to the terms of use and limitations in
such licenses.
(c) To the extent transferable by any USCC Entity, from and after
Closing, AWS will have the right to use all of the incidental intellectual
property used in the operation of the USCC Systems. In the case of any
incidental intellectual property used in the operation of the USCC Systems which
had been used by any USCC Entity as a licensee or lessee, AWS' use of said
incidental intellectual property shall be in accordance with the terms and
conditions of the applicable license or lease agreement free from any
pre-existing payment restriction or liens.
(d) Except as set forth on SCHEDULE 4.11(d), no claim or demand of
any Person has been made nor is there any proceeding that is pending, or to the
Knowledge of USCC, threatened, nor does USCC have Knowledge of any reasonable
basis therefor, which (A) challenges the rights of any USCC Entity in respect of
any USCC Intellectual Property, (B) asserts that any USCC Entity is infringing
or otherwise in conflict with, or is required to pay any royalty, license fee,
charge or other amount with regard to, any USCC Intellectual Property, or (C)
claims that any default exists under any agreement or arrangement listed in
SCHEDULE 4.11(d) with respect to USCC Intellectual Property which default would
reasonably be expected to have, individually or in the aggregate result in a
USCC Material Adverse Effect.
Section 4.12. COMPLIANCE WITH LAWS
Neither USCC nor any Affiliate thereof is in conflict with, or in
default or violation of, any Laws applicable to the operation of the USCC
Systems or the USCC Assets, except where such conflict, default or violation
would not reasonably be expected to have a USCC Material Adverse Effect. Neither
USCC nor any Affiliate thereof has
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received notice of any formal or informal complaint or order filed against USCC
or any Affiliate thereof alleging any material non-compliance by USCC or any
Affiliate thereof with respect to any such Laws, in each case to the extent
applicable to the operation of the USCC Systems or the USCC Assets.
Section 4.13. GOVERNMENTAL AUTHORIZATIONS
SCHEDULE 4.13 sets forth a true and complete list of all material
Governmental Authorizations (other than FCC Licenses) relating solely and
directly to the USCC Systems (collectively, the "SYSTEM PERMITS"). All System
Permits are validly held by the USCC Entity specified on SCHEDULE 4.13 and in
good standing and in full force and effect, such USCC Entity is in substantial
compliance with each System Permit granted to or held by it (except for such
instances of non-compliance that would not result in the loss or non-renewal of
the applicable System Permit or a USCC Material Adverse Effect), and, except as
set forth on SCHEDULE 4.13, the same are transferable to AWS pursuant to this
Agreement and will not be subject to suspension, modification or revocation as a
result of the consummation of the Transactions. No event has occurred with
respect to any of the System Permits which permits, or after notice, or lapse of
time (except for the expiration of a System Permit in accordance with its
terms), or both, would permit, revocation or termination thereof or would
reasonably be expected to have, individually or in the aggregate, a USCC
Material Adverse Effect.
Section 4.14. EMPLOYEE BENEFIT PLANS
(a) Each Employee Plan maintained or sponsored by, or contributed to
by, USCC or any ERISA Affiliate of USCC which covers any current or former
employee, director or independent contractor involved in the operation of the
USCC Systems (the "SYSTEM EMPLOYEE PLANS") has been in all material respects
maintained and operated by USCC or its ERISA Affiliates in conformity with all
applicable Laws, including but not limited to the Code and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and in accordance
with the terms of such System Employee Plan. For purposes of this Agreement, (A)
"EMPLOYEE PLAN" means any "employee benefit plan," as defined in Section 3(3) of
ERISA, and any other employee benefit plan, program, policy or arrangement,
including any bonus plan, incentive, stock option or other equity or
equity-based compensation, or deferred compensation arrangement, stock purchase,
severance pay, sick leave, vacation pay, salary continuation for disability,
hospitalization, medical insurance, life insurance, and scholarship program, and
(B) "ERISA AFFILIATE" means any entity which, together with another entity,
would be treated as a single employer under Section 414 of the Code or Section
4001 of ERISA.
(b) With respect to employees employed in operating the USCC Systems,
neither USCC nor any ERISA Affiliate thereof sponsors, has sponsored,
contributes to, has contributed to, or has or had an obligation to contribute to
(A) a multiemployer plan, as defined in Section 3(37) of ERISA or (B) a multiple
employer plan subject to Sections 4063 or 4064 of ERISA which could reasonably
result in any liability to any AWS Entity.
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(c) SCHEDULE 4.14(c) sets forth the name of each of the System
Employee Plans material to the operation of the USCC Systems and indicates
whether such System Employee Plan has been terminated.
(d) With respect to each such System Employee Plan that is intended
to be a qualified plan within the meaning of Section 401(a) of the Code, a
favorable determination letter has been received from the IRS or a request for a
determination letter has been or will be timely filed under applicable guidance
from the IRS and is currently pending with the IRS.
(e) All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under any of
the System Employee Plans or by law (without regard to any waivers granted under
Section 412 of the Code) to any funds or trusts established thereunder or in
connection therewith have been made by USCC or its ERISA Affiliates by the due
date thereof (including any valid extension), and all contributions for any
period which are not yet due will be paid by the required due date. No
accumulated funding deficiencies exist in any System Employee Plan subject to
Section 412 of the Code.
(f) No event has occurred nor shall any event occur as a result of
the Transactions which could reasonably be expected to result in the imposition
upon AWS or any Affiliate or ERISA Affiliate of AWS of any liability or any lien
against any of their assets, directly or indirectly, as a "successor employer"
or otherwise, attributable to or relating to the System Employee Plans or any
other Employee Plan maintained or sponsored by, or contributed to by, USCC or
its ERISA Affiliates, including, without limitation, any funding requirements
under the Code or liabilities under Title IV of ERISA with respect to any such
plans.
(g) There is no material violation of ERISA with respect to the
filing of applicable reports, documents and notices regarding the System
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
System Employee Plans which could reasonably result in any liability to any AWS
Entity.
(h) There are no pending actions, claims or lawsuits with respect to
the operation of the System Employee Plans (other than routine claims for
benefits) which have been asserted or instituted against USCC or any of its
ERISA Affiliates, the assets of any of the trusts under such plans or the plan
sponsor, plan administrator, or any fiduciary of the System Employee Plans, nor
does USCC or its ERISA Affiliates have Knowledge of any threatened litigation or
Knowledge of facts which could form the basis for any such claim or lawsuit and
which could reasonably result in any liability to any AWS Entity.
(i) Neither USCC nor, to USCC's Knowledge, any "party in interest" or
"disqualified person" with respect to the System Employee Plans has engaged in a
non-exempt "prohibited transaction" within the meaning of Section 4975 of the
Code or Section 406 of ERISA which could reasonably result in any liability to
any AWS Entity.
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(j) USCC and any ERISA Affiliate of USCC which maintains a "group
health plan" within the meaning of Section 5000(b)(1) of the Code that is a
System Employee Plan has complied in all material respects with the notice and
coverage continuation requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (and any similar state law), Section
4980B of the Code, and Part 6 of Subtitle B of Title I of ERISA and the
regulations thereunder.
(k) No USCC Entity nor any Affiliate thereof has any formal plan or
commitment, whether or not legally binding, to create any additional Employee
Plan or modify or change any existing System Employee Plan in a manner that
would impose liability on any AWS Entity or any Affiliate thereof, nor has any
intention to do so been communicated to any employees of USCC who perform
services for the USCC Systems or their dependents, survivors or beneficiaries.
Section 4.15. EMPLOYMENT MATTERS
(a) Each USCC Entity (A) is in compliance in all material respects
with all applicable foreign, federal, state and local Laws respecting
employment, employment practices, terms and conditions of employment and wages
and hours with respect to employees employed in operating the USCC Systems or
former employees employed in operating the USCC Systems; (B) has withheld all
amounts required by Law or by agreement to be withheld from the wages, salaries
and other payments to such employees; (C) is not liable for any arrears of
wages, any other compensation or benefits (including but not limited to vacation
or severance pay) or any taxes related to the USCC Systems or any penalty for
failure to comply with any of the foregoing; and (D) is not liable for any
payment to any trust or other fund or to any Governmental Authority, with
respect to unemployment compensation benefits, social security or other benefits
or obligations for such employees (other than routine payments to be made in the
normal course of business and consistent with past practice). To the best of
USCC's Knowledge, there are no pending claims, charges, actions or lawsuits
filed against any USCC Entity with any court or any Governmental Authority
involving the employment of or termination of any current or former employees of
any USCC Entity who were or are involved in the operation of the USCC Systems.
To the best of USCC's Knowledge: (i) there are no such claims, charges, actions
or lawsuits threatened, and (ii) no facts exist which could give rise to
liability to any current or former employees involved in the operation of the
USCC Systems.
(b) SCHEDULE 4.15(b) sets forth the name, position, date of hire,
current annual salary and/or hourly rate of pay (if applicable), service
credited for purposes of vesting and eligibility under any System Employee Plan,
the current status of the employee as either active or on leave and if on leave,
the type of leave, and the amount of the last salary or rate of pay increase and
the date thereof of all regular employees of each USCC Entity and all inactive
employees of such USCC Entity on leave or other inactive status. No USCC Entity
is a party to and no USCC Entity is bound by any contracts or employment
agreements with respect to employees or officers engaged, to any extent, in the
operation of the USCC Systems.
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(c) To the best of USCC's Knowledge: (i) any individual engaged by
any USCC Entity as an independent contractor in connection with the USCC Systems
has been accurately classified as an independent contractor for all purposes,
including payroll tax, withholding, unemployment insurance and benefits, and
(ii) no USCC Entity has notice of any pending or threatened inquiry from any
Governmental Authority concerning such independent contractor status, or any
pending or threatened claim by any party that any such independent contractor be
reclassified as an employee for any purpose.
(d) On or prior to the Closing Date, USCC shall provide AWS with a
list of the former employees of any USCC Entity who performed services for the
USCC Systems and have terminated employment due to lay-off or position
elimination during the 90 calendar day period preceding the Closing Date with
their work location at time of termination, except for terminations of
employment pursuant to Section 6.1(a).
(e) There are no employment or severance agreements which are binding
on AWS (as a successor employer or otherwise) or which will create any
obligation whatsoever on the part of AWS after the Closing in regard to any
employee, manager, agent, contractor or officer of USCC.
Section 4.16. LABOR MATTERS
No USCC Entity is presently a party to or bound by any collective
bargaining agreement or union contract, including but not limited to, a card
check, neutrality or other type of labor agreement with respect to employees
employed in operating the USCC Systems and no collective bargaining agreement
with respect to employees employed in operating the USCC Systems is being
negotiated by USCC. To the Knowledge of USCC, no union organizational campaign
or effort presently exists or is being threatened with respect to any employees
of the USCC Systems. To the Knowledge of USCC, no question concerning
representation presently exists with respect to any employees of the USCC
Systems. No charges with respect to or relating to, directly or indirectly, the
USCC Systems are pending before any Governmental Authority and no USCC Entity
has received, with respect to the USCC Systems, notice of the intent of any
federal, state or local agency responsible for the enforcement of labor or
employment Laws to conduct an investigation, audit or review and no such
investigation, audit or review is in progress. To the Knowledge of USCC, no wage
investigations have been made of any USCC Entity with respect to employees of
the USCC Systems, or its independent contractors and no USCC Entity has received
notice of the intent of any Governmental Authority to conduct such an
investigation, audit or review. To the Knowledge of USCC, there are no
controversies, grievances or arbitrations pending or threatened between any USCC
Entity and any of its current or former employees or any labor or other
collective bargaining unit representing any current or former employees, in each
case to the extent relating to employees who perform services for the USCC
Systems. To the Knowledge of USCC, no work stoppage, picketing, hand billing,
consumer boycott, labor strike, dispute or slow-down exists or has been
threatened against any USCC Entity with respect to the USCC Systems. Each USCC
Entity is in compliance in all material respects with all applicable federal,
state, and local Laws in respect of the USCC Systems respecting
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employment, fair employment practices and fair labor standards, including such
Laws that prohibit discrimination based on race, age, sex, religion, color,
national origin, disability and sexual orientation. Each USCC Entity is in
compliance with the requirements of the National Labor Relations Act, as such
Act relates to the USCC Systems, and to the Knowledge of USCC, no unfair labor
practice charges or complaints against any USCC Entity are pending or threatened
before the National Labor Relations Board in respect of the USCC Systems.
Section 4.17. ENVIRONMENTAL MATTERS
Except as would not have a USCC Material Adverse Effect:
(a) Each USCC Entity has obtained all environmental, health and
safety permits, licenses and other authorizations which are required under
Environmental Laws in connection with the USCC Assets or the operation of the
USCC Systems. Each of such permits, licenses and other authorizations is valid
and enforceable and in full force and effect, and each USCC Entity is in
compliance with the material terms and conditions of all such permits, licenses
and other authorizations and with each Environmental Law. Except as set forth on
SCHEDULE 4.17(a), there are no pending applications for any permits, licenses or
other authorizations under any Environmental Law in connection with the conduct
of the USCC Systems or the operation or ownership of the USCC Assets where
failure to grant or approve would have a material adverse affect on the
operation of the USCC Systems.
(b) (i) No Hazardous Substances generated by, used by, or originating
from activities of the USCC Systems or the USCC Assets have been Released or, to
the Knowledge of USCC, threatened to be Released into the environment, whether
by a USCC Entity, or to the Knowledge of USCC, third parties, at any site,
facility or location whether or not now or previously owned, operated, occupied,
utilized or leased by such USCC Entity and (ii) no oral or written notification
of a Release of a Hazardous Substance has been filed by or on behalf of any USCC
Entity with any Governmental Authority and no site or facility now or, to the
Knowledge of USCC, previously owned, operated, occupied, utilized or leased by
any USCC Entity relating to the USCC Systems is subject to investigation or
clean-up under any Environmental Law. USCC has provided AWS access to copies of
all material environmental investigations, studies, audits, tests, reviews and
other analyses conducted by or on behalf of, and that are in the possession of,
any USCC Entity in relation to any USCC Asset now or previously owned, operated,
occupied, utilized or leased by such USCC Entity. No USCC Entity has received
any notice of intention to commence suit under any Environmental Law with
respect to the USCC Systems or the USCC Assets (and to the Knowledge of USCC,
there is no reasonable basis for any such suit), nor has any USCC Entity
received any request for information from any Governmental Authority under any
Environmental Law with respect to the USCC Systems or the USCC Assets. With
respect to the USCC Systems, there is no existing, pending or, to the Knowledge
of USCC, threatened action, suit, investigation, inquiry or proceeding under
Environmental Laws by or before any Governmental Authority, nor any remedial
obligations, arising under any Environmental Laws.
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(c) Each USCC Entity has complied and is in compliance in all
material respects with all Environmental Permits and all applicable
Environmental Laws pertaining to the USCC Assets and the USCC Systems, and, to
the Knowledge of USCC, no USCC Entity has any liability, contingent or
otherwise, under any Environmental Law which, individually or in the aggregate
could have a USCC Material Adverse Effect. To the Knowledge of USCC, no Person
has alleged any violation by any USCC Entity of any applicable Environmental Law
relating to the operation of the USCC Systems or the use, ownership, operation
or transferability of any USCC Assets. No USCC Entity has caused or permitted
the use, management, generation, manufacture, refining, transportation,
treatment, storage, handling, disposal, production or processing of any
Hazardous Substances in connection with the operation of the USCC Systems or any
USCC Asset except in compliance with Environmental Law, and no USCC Entity has
caused or permitted, and USCC has no Knowledge of, the Release or threatened
Release of any Hazardous Substances generated, used or originating from the
operations of the USCC Systems or any USCC Asset.
(d) The assets, property and equipment of each USCC Entity and Real
Property now or previously owned, operated, occupied, utilized or leased by such
USCC Entity with respect to the USCC Systems transferred to AWS or an Affiliate
thereof in accordance with this Agreement are not subject to any Liens under any
Environmental Law, and to the Knowledge of USCC no basis exists for any such
Liens.
(e) To the extent applicable, each USCC Entity's operations of the
USCC Systems and the USCC Assets are in compliance in all material respects with
the applicable requirements of OSHA and any state and local occupational safety
and health Laws, and all regulations promulgated thereunder and there are no
pending or, to the Knowledge of USCC, threatened safety and/or health citations,
complaints, lawsuits or orders issued with respect to any of the foregoing Laws.
There have been no citations, notices or complaints issued to any USCC Entity or
any Affiliate thereof with respect to the USCC Systems or the USCC Assets by
OSHA or any state occupational safety and health administration which could
individually or in the aggregate result in a USCC Material Adverse Effect.
Section 4.18. AGREEMENTS, CONTRACTS AND COMMITMENTS
(a) USCC has made available to AWS a correct and complete copy of
each contract, agreement, arrangement, commitment, understanding, lease, license
or other instrument to which a USCC Entity or an Affiliate thereof is a party
(or in the case of (i) any oral USCC Contract, a true, complete, and correct
summary thereof, and (ii) each individual Subscriber Agreement between the
applicable USCC Entity and the applicable subscriber, true, complete and correct
copies of the standard forms of Subscriber Agreements), in each case principally
related and material to the operation of the USCC Systems, together with any and
all amendments or modifications thereto through and including the date hereof
(each, a "USCC CONTRACT"). Each USCC Contract is valid, binding, enforceable and
in full force and effect; the applicable USCC Entity or Affiliate is not in
breach or default under any such USCC Contract; and, to the Knowledge of USCC,
no event has occurred which, with notice or lapse of time or both, would
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constitute a breach or default, or permit termination, modification or
acceleration, under such USCC Contract, except where the failure to be so valid,
binding, enforceable or in full force and effect or such breach or default,
termination, modification or acceleration would not reasonably be expected to
have, individually or in the aggregate, a USCC Material Adverse Effect.
(b) SCHEDULE 4.18(b) sets forth each USCC Contract included in the
USCC Assets (the "USCC SYSTEM CONTRACTS"). SCHEDULE 4.18(b) also sets forth all
necessary Consents (including Consents to assignment) of parties to all USCC
System Contracts which are required in connection with the consummation of the
Transactions (collectively, the "USCC SYSTEM CONSENTS").
Section 4.19. BOOKS OF ACCOUNT
All financial, business and accounting books, ledgers, accounts and
official and other records relating to the USCC Systems and the USCC Assets
(collectively, the "BOOKS AND RECORDS") (i) have been properly and accurately
kept and maintained in accordance with applicable Law, (ii) are true, complete
and correct in all material respects and do not contain or reflect any material
inaccuracies or discrepancies and (iii) fairly reflect in reasonable detail the
material assets, liabilities and transactions relating to the USCC Systems.
Section 4.20. FINANCIAL STATEMENTS
USCC has delivered to AWS complete and correct copies of (i) the
unaudited financial statements of the USCC Systems as of, and for the periods
ended December 31, 2000 and December 31, 2001, each of which include balance
sheet and related statement of income for the year then ended (the "FINANCIAL
STATEMENTS") and (ii) the unaudited financial statements of the USCC Systems at
December 31, 2002 (the "BALANCE SHEET DATE") including a balance sheet and
related statements of income for the twelve (12) month period then ended (the
"INTERIM FINANCIAL STATEMENTS"). The Financial Statements and the Interim
Financial Statements fairly present in all material respects, in accordance with
GAAP, the financial position of the USCC Systems and the results of their
operations for the periods specified therein (subject to the absence of
footnotes and, in the case of the Interim Financial Statements, to normal year
end audit adjustments.)
Section 4.21. ABSENCE OF UNDISCLOSED LIABILITIES
No USCC Entity has any liabilities or obligations of any nature,
whether known or unknown, absolute, accrued, contingent or otherwise, and
whether due or to become due, arising out of or relating to the USCC Systems or
any of the USCC Assets, except as reflected or reserved for, and only to the
extent reflected or reserved for, in the Financial Statements and the Interim
Financial Statements and except (i) as set forth in SCHEDULE 4.21, (ii) for
liabilities incurred in the ordinary course of business consistent with past
practice since the Balance Sheet Date and in each case to the extent permitted
to be incurred in accordance with the terms hereof and (iii) executory
obligations under any USCC Contract.
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Section 4.22. ABSENCE OF CHANGES OR EVENTS
Since the Balance Sheet Date, there has not been any (i) USCC Material
Adverse Effect; and (ii) except as set forth in SCHEDULE 4.22, none of USCC or
any Affiliate thereof has (with respect to the USCC Business): (A) discharged or
satisfied any Lien or paid any liabilities other than in the ordinary course of
the operation of the USCC 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 any USCC Entity
purported to own as of the Balance Sheet Date or on any date since such date,
except in the ordinary course of the operation of the USCC Business consistent
with past practice; (C) incurred any indebtedness (or made any guaranties in
respect thereof) for which a AWS Entity will be liable following the Closing
Date or subjected any of the assets or properties owned by a USCC Entity to any
Lien other than a Permitted Lien; (D) made or suffered any amendment or
termination of any USCC 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 USCC Business
consistent with past practice; (E) changed any of the accounting principles
followed by any USCC Entity relating to the operation of the USCC Systems or the
methods of applying such principles or made or changed any Tax elections
relating to the operation of the USCC Systems; (F) entered into any transaction,
except in the ordinary course of the operation of the USCC Business consistent
with past practice; or (G) agreed, orally or in writing, or granted any other
person an option, to do any of the things specified in subparagraphs (A) through
(F) above.
Section 4.23. ACCOUNTS RECEIVABLE
The Accounts Receivable as of January 31, 2003 are set forth on
SCHEDULE 1.6, which sets forth a calculation of the reserves in respect of such
Accounts Receivable and the USCC methodology used in such calculation. All
Accounts Receivable, whether reflected on the Financial Statements, the Interim
Financial Statements or SCHEDULE 1.6 or subsequently created, have arisen from
bona fide transactions in the ordinary course of business. The reserves in
respect thereof reflected on the Financial Statements and the Interim Financial
Statements are appropriate in accordance with GAAP applied on a basis consistent
with prior periods. No USCC Entity has taken any actions with the intended
effect of accelerating and has not sought to accelerate the payment of any of
the Accounts Receivable in a manner inconsistent with USCC's practice during
prior periods. No USCC Entity has settled or compromised any Accounts Receivable
except in the ordinary course of business consistent with USCC's practice during
prior periods.
Section 4.24. INVENTORIES
The Inventories as of the Balance Sheet Date, together with the
locations thereof, are set forth in SCHEDULE 4.24. Except as set forth on
SCHEDULE 4.24, all Inventories are of good, usable and merchantable quality in
all material respects and, except to the extent adequately reserved for, do not
include items which have been discontinued or are off specification, damaged,
dormant, obsolete, non-salable, non-usable or not first quality.
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All Inventories are of such quality as to meet the quality control standards of
USCC. All Inventories are recorded on SCHEDULE 1.6 at the lower of cost or
market value determined in accordance with GAAP. No mobile phones included in
Inventory are system operator code (SOC) "locked" to search for a system
operator code on a preferred or exclusive basis, and the intercarrier roamer
data base (IRDB) for all mobile phones included in Inventory is reprogrammable
by any wireless carrier assuming such carrier has over the air programming
capabilities and uses time division multiple access (TDMA) technology.
Section 4.25. MACHINERY AND EQUIPMENT
Except as set forth on SCHEDULE 4.25, all items of Machinery and
Equipment are in good operating condition, ordinary wear, tear and natural
depreciation excepted. To the Knowledge of USCC, there are no material repairs
necessary with respect thereto other than routine maintenance in the ordinary
course.
Section 4.26. CELL SITES
SCHEDULE 4.26 lists each cell site (including each cell site on which a
USCC Entity has placed one or more antennas) (a "CELL SITE") currently operated
or used by each USCC Entity in respect of the USCC Systems as of the date
hereof, indicating the address of such Cell Site, whether such USCC Entity is
the owner of such Cell Site, and whether any other Person is permitted to
co-locate towers or antennas thereon or has any other rights with respect
thereto. SCHEDULE 4.26 also sets forth (i) each instance where a USCC Entity
co-locates its antennas relating to the USCC Systems on another Person's tower
or antenna structure and (ii) whether any antenna structure on which a USCC
Entity locates antennas is one which requires notification to the FAA under 47
C.F.R. 17.17 and, if so, the Antenna Structure Registration Number thereof. Each
of the Cell Sites has been constructed, and is operating, substantially in
compliance with the terms and conditions of the USCC Assigned Licenses and the
rules and regulations of all applicable Governmental Authorities, including the
FCC and the FAA, and each USCC Entity has made all filings, tower registrations
and reports relating to each Cell Site, except where the failure to make such
filings, tower registrations or reports would not reasonably be expected to
have, individually or in the aggregate, a USCC Material Adverse Effect, and all
such filings, reports and registrations are accurate in all material respects.
Section 4.27. LITIGATION REGARDING USCC SYSTEMS, USCC ASSETS
Except as set forth on SCHEDULE 4.27, there are no civil, criminal or
administrative claims, actions, suits, demands, proceedings or investigations
pending or, to the Knowledge of USCC, threatened against USCC or any Affiliate
thereof relating to the USCC Systems or any USCC Assets that would, if
determined adversely to USCC or such Affiliate, reasonably be expected to have a
USCC Material Adverse Effect. Except as set forth on SCHEDULE 4.27, there is no
judgment, decree, injunction, rule or order outstanding against USCC or any
Affiliate thereof relating to or involving the USCC Systems or any of the USCC
Assets, nor does USCC have Knowledge of any reasonable basis therefor, and there
are no unsatisfied judgments against USCC or any Affiliate
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thereof with respect to the USCC Systems or any of the USCC Assets, in each case
that would reasonably be expected to have a USCC Material Adverse Effect.
Section 4.28. LIABILITY TO AFFILIATES
Neither the USCC Assets nor the USCC Assumed Liabilities include any
agreements, arrangements or understandings with, or rights or obligations in
favor of, any USCC Entity, except (i) as expressly contemplated by this
Agreement or the other Transaction Documents, (ii) as disclosed on SCHEDULE 4.28
or (iii) as may be terminated at will or upon no more than 90 days' notice as of
the Closing Date without Consent of, or material payment to, any third party,
and without impairing in any material respect the operation of the USCC Assets
or the USCC Systems after the Closing.
Section 4.29. CALEA
Except as set forth in SCHEDULE 4.29 with respect to the USCC Systems,
there has been validly and timely filed a Flexible Deployment Submission with
the Federal Bureau of Investigation (the "FBI") in accordance with the FBI's
Flexible Deployment Assistance Guide, and a Petition for Extension with the FCC
requesting an extension of the current CALEA capability compliance deadline with
respect to the USCC Systems until the applicable dates set forth on SCHEDULE
4.29.
Section 4.30. INSURANCE
The USCC Assets will be covered until Closing by commercially
reasonable policies of casualty, liability, and other forms of insurance owned
or held by USCC or an Affiliate thereof. Such policies are in full force and
effect and will remain in full force and effect through the Closing Date in
accordance with their terms (and AWS acknowledges that no USCC Entity shall have
any obligation to continue any such insurance or self-funding arrangements
following Closing). No notice of cancellation has been received, and there is no
existing default, or event which, with the giving of notice or lapse of time or
both, would constitute a default thereunder by USCC or an Affiliate thereof. All
premiums to date have been, and all premiums due and payable as of the Closing
Date will be, paid in full.
Section 4.31. BUSINESS ACTIVITY RESTRICTION
Except as set on SCHEDULE 4.31, there is no non-competition or other
agreement, commitment, judgment, injunction, order or decree to which USCC or an
Affiliate thereof is a party or subject that does or would reasonably be
expected to interfere in any material respect with the use, occupancy or
operation of the USCC Assets.
Section 4.32. USCC ENTITIES
USCC directly, or indirectly, beneficially owns all of the outstanding
equity interests of each USCC Entity.
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ARTICLE 5
COVENANTS AND AGREEMENTS
Section 5.1. COMMERCIALLY REASONABLE EFFORTS AND OTHER AGREEMENTS
Each party covenants and agrees from and after the execution and
delivery of this Agreement until the Closing Date, as follows:
(a) It shall use its Commercially Reasonable Efforts to take, or
cause to be taken, promptly all actions and to do, or cause to be done, promptly
all things necessary, proper or advisable to consummate and make effective the
Transactions and to fulfill its obligations hereunder, including causing to be
satisfied at the earliest practical date all conditions contained in Article 7
to be satisfied by it.
(b) It shall, and shall cause its respective Affiliates to, refrain
from taking any action which could be reasonably expected to render any of its
representations or warranties contained in this Agreement or any other
Transaction Document incorrect or inaccurate in any material respect.
(c) It shall, and shall cause, in the case of AWS, each applicable
AWS Entity to and in the case of USCC, each applicable USCC Entity to, comply in
all material respects with all applicable Laws and Governmental Authorizations
relating to the USCC Assigned Licenses and the USCC Systems, in the case of
USCC, and the AWS Licenses and Partnership Interests, in the case of AWS.
(d) USCC shall, and shall cause each applicable USCC Entity to, in
the case of the USCC Assigned Licenses and the USCC Systems, and AWS shall, and
shall cause each applicable AWS Entity to, in the case of the AWS Licenses, (A)
maintain such FCC Licenses in full force and effect and (B) maintain in full
force and effect all Governmental Authorizations necessary to preserve the
ability to construct and operate such FCC Licenses and, in the case of USCC, the
USCC Systems, as and when such Governmental Authorizations are or become
necessary for such purposes; provided, that neither USCC, in the case of any
USCC Entity, nor AWS, in the case of any AWS Entity, shall make, cause or permit
to be made, any material commitments to any Governmental Authority relating to
any Governmental Authorization affecting, in the case of USCC, the USCC Assigned
Licenses or the USCC Systems, and in the case of AWS, the AWS Licenses, without
the other party's prior written consent, which shall not be unreasonably
withheld or delayed; provided, however, that the foregoing shall not prohibit
AWS from taking any action or omitting to take any action with respect to any
frequencies which are not included in any AWS Assigned License created by
disaggregating an AWS License, or any service areas which are not covered by any
AWS Assigned License created by partitioning an AWS License, so long as the
taking of such action or omission to take such action does not otherwise result
in a breach by AWS of this Section 5.1(d).
(e) It shall:
(i) Give written notice to the other party promptly upon the
commencement of, or upon obtaining Knowledge of any facts that would
give rise
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to a threat of, any claim, action or proceeding commenced against or
relating to it, its Affiliates or its or their properties or assets
which would reasonably be expected to have a USCC Material Adverse
Effect (in the case of USCC) or an AWS Material Adverse Effect (in the
case of AWS);
(ii) After obtaining Knowledge of the occurrence of any
event, or any occurrence which would reasonably be expected to give
rise to an event, which could cause or constitute a material breach of
any of its warranties, representations, covenants or agreements
contained in this Agreement or any other Transaction Document, promptly
give notice in writing of such occurrence or event to the other party
and use Commercially Reasonable Efforts to prevent or to promptly
remedy such breach; and
(iii) Advise the other party promptly in writing of (x) any
event, condition or state of facts known to it, which, after the date
hereof, would reasonably be expected to have a USCC Material Adverse
Effect (in the case of USCC) or an AWS Material Adverse Effect (in the
case of AWS) or (y) any claim, action or proceeding which seeks to
enjoin or otherwise challenge the consummation of the Transactions.
Notwithstanding the foregoing, no disclosure by a party pursuant to
this Section 5.1(e) shall be deemed to amend or supplement this Agreement or any
other Transaction Document or to cure any misrepresentation or breach of
warranty, representation, covenant or agreement contained in this Agreement or
any other Transaction Document.
Section 5.2. CONSENTS OF THIRD PARTIES
Each party covenants and agrees, from and after the execution and
delivery of this Agreement until the Closing Date, as follows:
(a) Promptly following execution of this Agreement (but in no event
later than 15 Business Days after the date hereof), it shall file or cause to be
filed with the FCC all appropriate applications for Consent to the assignment of
the FCC License(s) (other than the Section 1.5 Licenses) and the USCC Assets
contemplated hereby. It shall cooperate with the other party and use its
Commercially Reasonable Efforts to prosecute or cause to be prosecuted all such
applications to a favorable conclusion, and shall work with the other party to
file or cause to be filed all required notices of consummation with the FCC. No
party shall take or cause to be taken any action before the FCC which is
inconsistent with or intended to delay action on such applications or
consummation of the Transactions. Each AWS Entity and each USCC Entity,
respectively, shall bear its own costs associated with the preparation and
submission of such filings.
(b) AWS, on behalf of the AWS Entities, and USCC, on behalf of the
USCC Entities, shall use its Commercially Reasonable Efforts to secure before
the Closing Date any Consent (other than the Consent of the FCC), in form and
substance reasonably satisfactory to the other party, from any Governmental
Authority as is necessary to be obtained by it in order to consummate the
Transactions. AWS, on behalf of the AWS
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Entities, and USCC, on behalf of the USCC Entities, shall use its Commercially
Reasonable Efforts to cooperate with the other party, as reasonably requested,
to obtain such Consents.
(c) USCC shall use its Commercially Reasonable Efforts to obtain all
of the USCC System Consents prior to Closing. If any USCC System Consent is not
obtained prior to Closing, and Closing occurs, the applicable USCC System
Contract (a "NON-ASSIGNED CONTRACT") shall not be assigned, but (A) USCC shall
continue to use its Commercially Reasonable Efforts following Closing to obtain
such USCC System Consent, whereupon, once obtained, the applicable Non-Assigned
Contract shall be deemed automatically assigned to AWS without any further
action required of the parties hereto and (B) until such Non-Assigned Contract
is assigned to AWS or such Non-Assigned Contract's expiration, whichever occurs
first, USCC shall cause such Non-Assigned Contract to be kept in effect and
shall cause the benefit of such Non-Assigned Contract to be provided to the
applicable AWS Entity to the same extent as if it had been assigned including
(x) causing any rights of the applicable USCC Entity arising from such
Non-Assigned Contract to be enforced against the issuers thereof or the other
party or parties thereto; (y) causing to be taken all such actions and causing
to be done all such things at the request and (to the extent AWS would have been
responsible for such costs had the applicable Non-Assigned Contract been
assigned to AWS at Closing) cost of AWS as shall be reasonably necessary and
proper in order that the value of any Non-Assigned Contract shall be preserved
and shall inure to the benefit of AWS; and (z) causing to be paid over to AWS
all monies or other assets collected by or paid to the applicable USCC Entity in
respect of such Non-Assigned Contract. AWS shall be responsible for the
performance of all obligations under any such Non-Assigned Contract that AWS
would have been responsible therefor had Consent to assignment of the
Non-Assigned Contract been obtained, but only to the extent that AWS receives
the benefits under any such Non-Assigned Contract that AWS would have received
had Consent to assignment of the Non-Assigned Contract been obtained. Nothing in
this Agreement or any other Transaction Document shall be construed as an
attempt to assign any agreement or other instrument that is by its terms
non-assignable without the consent of the other party.
(d) USCC and AWS shall each cooperate and use their Commercially
Reasonable Efforts to prepare and file with the Federal Trade Commission ("FTC")
and the United States Department of Justice ("DOJ") within 10 Business Days
after the date hereof, all requisite applications and amendments thereto
together with related information, data and exhibits necessary to satisfy the
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT") (if applicable to the transactions contemplated by this
Agreement). USCC and AWS shall each pay their own filing fees in connection with
any filings pursuant to this Section 5.2(d).
Section 5.3. PROHIBITED TRANSACTIONS
The parties agree that between the date of execution of this Agreement
and the earlier to occur of the Closing or the termination of this Agreement
pursuant to Section 9.1, none of the parties, or their respective
Representatives, will directly or indirectly
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solicit, encourage or initiate the submission of proposals or offers from,
provide any confidential information to, or participate in discussions or
negotiations or enter into any agreement, arrangement or understanding with any
Person concerning the Transfer of, or create, incur or suffer to exist any Lien
of any nature whatsoever in respect of, in the case of (i) USCC, the USCC
Assigned Licenses or the USCC Assets (other than solely in the case of the USCC
Assets, Permitted Liens or as otherwise permitted by Section 5.6) and (ii) AWS,
the AWS Licenses; provided, that the foregoing shall not prohibit AWS from
taking any action or omitting to take any action with respect to any frequencies
which are not included in any AWS Assigned License created by disaggregating an
AWS License, or any service areas which are not covered by any AWS Assigned
License created by partitioning an AWS License, so long as the taking of such
action or omission to take such action does not otherwise result in a breach by
AWS of this Section 5.3. Notwithstanding the foregoing, nothing in this
Agreement shall limit or restrict a party from the Transfer of the assets which
are otherwise required to be conveyed by it at Closing to a third party,
provided, that any such Transfer must be pursuant to another transaction in
which (x) such assets, taken as a whole, constitute an immaterial or incidental
portion of the assets being transferred, assigned or disposed of pursuant to
such other transaction and (y) the acquirer or the assignee or transferee of
such assets (whether by operation of law or otherwise) expressly agrees and is
obligated to consummate or cause the consummation of the Transactions in
accordance with the terms hereof, without delay or impairment to the
Transactions.
Section 5.4. CONFIDENTIALITY
(a) Each party shall, and shall cause each of its Representatives to,
(A) retain in strictest confidence any and all Confidential Information relating
to the other party that it receives in connection with the negotiation or
performance of this Agreement and each other Transaction Document (whether
received prior to or after the date of this Agreement), and (B) not disclose
such Confidential Information to anyone except (x) the receiving party's
Affiliates and Representatives and (y) any other Person that needs to know such
Information for purposes of performance of this Agreement and each other
Transaction Document and who agrees to keep in confidence all Confidential
Information in accordance with the terms of this Section 5.4 as if it were the
receiving party hereunder. Each party agrees to use Confidential Information
received from the other party only in furtherance of the performance of this
Agreement, and not for any other purpose. All Confidential Information furnished
pursuant to this Agreement and each other Transaction Document shall either be
returned promptly to the party to whom it belongs, or destroyed and such
destruction certified, in either case upon request made prior to Closing by such
party.
(b) The obligations set forth in paragraph (a) above shall not apply
to Confidential Information that (A) is or becomes generally available to the
public other than as a result of disclosure by the receiving party or its
Affiliates or its Representatives in violation of this Section 5.4, (B) was
available to the receiving party on a non-confidential basis prior to its
disclosure to the receiving party, or (C) becomes available to the receiving
party on a non-confidential basis from a source other than the providing party
or its Representatives, provided, that such source is not known by the receiving
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party to be bound by a confidentiality agreement with the providing party or its
Representatives. Confidential Information with respect to the USCC Assets shall
be deemed to be Confidential Information of AWS, from and after the Closing.
(c) Anything else in this Agreement or any other Transaction Document
notwithstanding, each party shall have the right to disclose any information,
including Confidential Information of the other party or such other party's
Affiliates: (A) to its Representatives (such Representatives to acknowledge that
any such Confidential Information disclosed to them is subject to the provisions
hereof); (B) in any filing with any regulatory agency, court, or other authority
(in confidence where a procedure for confidential disclosure exists) or any
disclosure to a trustee of public debt of a party to the extent that the
disclosing party determines in good faith that it is required by Law or the
terms of such debt to do so; provided, that any such disclosure shall be as
limited in scope as possible and shall be made only after giving the other party
as much notice as practicable of such required disclosure and an opportunity to
contest such disclosure, or seek confidential treatment, if possible; (C) as
required by its existing or potential lending sources (such lending sources to
acknowledge that any such Confidential Information disclosed to them is subject
to the provisions hereof); or (D) as required to enforce its rights under this
Agreement or any Transaction Document.
(d) The parties agree that except as may be necessary to comply with
the requirements of applicable Law or the rules and regulations of any national
securities exchange upon which the securities of one of the parties or its
Affiliates is listed, no press release or similar public announcement or
communication will be made or caused to be made concerning the execution of this
Agreement or any other Transaction Document or the consummation of the
Transactions, provided, that in the case of any disclosure permitted under this
paragraph (d), the disclosing party shall (A) prior to the proposed disclosure,
permit the non-disclosing party to review and comment on such proposed
disclosure and (B) not publish or otherwise release to the public any proposed
disclosure unless the non-disclosing party has first approved the same, which
approval shall not be unreasonably withheld.
Section 5.5. ACCESS AND INFORMATION
(a) From the date hereof until Closing, USCC shall, and shall cause
the USCC Entities to, give AWS and its Representatives reasonable access, during
normal business hours and upon reasonable prior notice, to the USCC Assets, and
to records, books, contracts and documents related to the USCC Assets or the
USCC Systems, and to such other information related to the USCC Assets or the
USCC Systems as AWS may reasonably request, and in each case to the extent
reasonably necessary to Transfer to AWS the ownership of the USCC Assets and the
operation of the USCC Systems. Any such access shall be coordinated through Mark
Wierzbinski, USCC Director of Partner Relations (office telephone: (773)
399-4951) or another individual appointed by USCC to AWS in writing. Neither AWS
nor its Representatives shall contact any employees of the USCC Systems without
first obtaining the consent of Mr. Wierzbinski or any other appointed
individual. USCC shall cause the appropriate officers, employees, consultants,
agents, accountants and attorneys of the USCC Entities to cooperate with AWS and
its
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Representatives in connection with such access. This Section 5.5(a) shall not
entitle AWS to receive or review, or have access to, information that (x) is
subject to a confidentiality agreement with a third party, provided, that USCC
shall use Commercially Reasonable Efforts to obtain the Consent of any such
third party to permit AWS to receive and review such information or (y) USCC
reasonably believes to be competitively sensitive.
(b) From the date hereof until Closing, AWS shall, and shall cause
the AWS Entities to, give USCC and its Representatives reasonable access, during
normal business hours and upon reasonable prior notice, to the AWS Licenses, and
to records, books, contracts and documents related to the AWS Licenses, and such
other information related to the AWS Licenses as USCC may reasonably request,
and in each case to the extent reasonably necessary to Transfer to USCC the AWS
Assigned Licenses. Any such access shall be coordinated through Carol Dellecker
(office telephone: (425) 580-8007) or another individual appointed by AWS to
USCC in writing. Neither USCC nor its Representatives shall contact any
employees of AWS without first obtaining the consent of Ms. Dellecker or any
other appointed individual. AWS shall cause the appropriate officers, employees,
consultants, agents, accountants and attorneys of the AWS Entities to cooperate
with USCC and its Representatives in connection with such access. This Section
5.5(b) shall not entitle USCC to receive or review, or have access to,
information that (x) is subject to a confidentiality agreement with a third
party, provided, that AWS shall use Commercially Reasonable Efforts to obtain
the Consent of any such third party to permit USCC to receive and review such
information or (y) AWS reasonably believes to be competitively sensitive.
Section 5.6. CONDUCT OF BUSINESS
During the period from the date hereof until the earlier of the Closing
or the termination of this Agreement, except as otherwise expressly provided in
this Agreement, USCC covenants and agrees that it shall, and shall cause each
USCC Entity to, operate the USCC Systems in the ordinary course of business
consistent with past practice. In furtherance, but without limitation, of the
foregoing, USCC shall, and shall cause each USCC Entity to:
(a) maintain the USCC Assets and operate the USCC Systems in the
ordinary course of business consistent with past practice, including making all
repairs with respect thereto consistent with past practice and maintaining a
level of technical performance of the USCC Systems which is consistent with past
practice;
(b) with respect to the USCC Systems, use its Commercially Reasonable
Efforts to preserve its goodwill and maintain its relationships with the
suppliers, employees, agents, subscribers and others having material business
relations with it consistent with past practice;
(c) with respect to the USCC Systems, solicit new subscribers and
provide services to existing subscribers generally consistent with past
practice;
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(d) preserve in full force and effect, as necessary and consistent
with past practice, all Governmental Authorizations relating to the operation of
the USCC Systems, including the timely renewal thereof, in each case where the
failure to so preserve such Governmental Authorizations in full force and effect
would, individually or in the aggregate, be reasonably expected to have a USCC
Material Adverse Effect;
(e) use its Commercially Reasonable Efforts to preserve its
relationships with all parties to the USCC System Contracts, and perform in all
material respects all of its obligations thereunder, according to the terms and
conditions thereof;
(f) comply in all material respects with all Laws;
(g) maintain in accordance with past practice the Books and Records
related to the USCC Systems;
(h) (i) adhere to current practice with respect to bad debt of the
USCC Systems, collection of accounts and deactivation of delinquent account
service; and (ii) collect Accounts Receivable only in the ordinary course
consistent with past practices;
(i) maintain all Inventory and expendable supplies at levels
consistent with past practices, current business plans and reasonably expected
customer demand and maintain its working capital at reasonable levels necessary
to operate the USCC Systems in a commercially reasonable manner and consistent
with past practices; and
(j) maintain in full force and effect, and with existing coverage,
the existing insurance policies for the USCC Systems (or comparable policies),
except for any changes to such policies that are made in the ordinary course of
business; provided that nothing herein shall obligate USCC to obtain or to
continue any insurance coverage for any period after the Closing. USCC will
provide AWS with information and records that AWS may reasonably request that
are material to such claims now pending or made hereafter with respect to the
USCC Assets.
Section 5.7. NEGATIVE COVENANTS
With respect to the USCC Systems, during the period from the date
hereof until the earlier of the Closing or the termination of this Agreement,
except as otherwise contemplated by this Agreement, USCC shall not take, and
shall cause each USCC Entity not to take, any of the following actions relating
to the USCC Assets or USCC Systems without the prior written consent of AWS:
(a) enter into any agreement, arrangement or understanding involving
payments, projected revenues, assets, or liabilities with a value in excess of
$250,000 in the aggregate, or materially alter, amend, or modify or terminate,
or exercise any option under, any existing agreement involving payments,
projected revenues, assets, or liabilities with a value in excess of $250,000 in
the aggregate, other than in the ordinary course of business consistent with
past practice;
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(b) except in the ordinary course of business consistent with past
practice, dispose of assets for consideration in excess of $250,000 in the
aggregate;
(c) except in the ordinary course of business consistent with past
practice, incur or assume any indebtedness for borrowed money or guarantee any
such obligations;
(d) make or agree to make any material change in the employment
arrangements of any Designated Employee or enter into any new agreement with any
Designated Employee which would create or impose any liability or obligation on
the part of AWS (other than the customary annual increases in the base rate of
pay of Designated Employees);
(e) enter into any contracts with any Affiliate which will be binding
upon AWS after Closing;
(f) fail to pay when due any liability or obligations that, if
unpaid, would become a Lien upon any of the USCC Assets;
(g) with the exception of any changes required by Law or affecting
all or substantially all of the wireless systems owned by USCC nation-wide,
implement any material change in (x) the terms and conditions of any Subscriber
Agreements or (y) the types or quality of products and services provided to
subscribers;
(h) except as required by Law, enter into any collective bargaining
agreement, or make any commitment whatsoever to any union or other
representative or party which intends to represent any employees of the USCC
Systems;
(i) change its accounting practices except as required by GAAP or,
subject to contemporaneous written notice, affecting all or substantially all of
the wireless systems owned by USCC nationwide; or
(j) authorize or enter into an agreement in contravention of any of
the foregoing.
USCC shall use Commercially Reasonable Efforts to give AWS
contemporaneous notice of any material action relating to the USCC Assets or
USCC Systems taken prior to Closing pursuant to paragraph (g), (h) or (i) above.
Section 5.8. RISK OF LOSS
Risk of loss with respect to the USCC Assets shall not pass to AWS
until Closing has occurred.
Section 5.9. CASUALTY INSURANCE PROCEEDS
In the event that any of the USCC Assets have been damaged prior to the
Closing Date by a casualty covered by insurance ("DAMAGED ASSETS"), USCC shall
(prior to and following Closing) use Commercially Reasonable Efforts to collect
amounts due (if any)
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in respect of such Damaged Assets under applicable insurance policies, which
amounts, (i) if collected prior to Closing, will be used to repair or replace
the Damaged Assets and (ii) if collected following Closing, will be remitted to
AWS.
Section 5.10. TAX MATTERS
(a) At Closing or, if due thereafter, promptly when due, Taxes
arising out of or imposed upon the Transactions, other than income taxes and
franchise taxes ("TRANSACTION TAXES") shall be paid as follows: (i) USCC shall
pay, or cause to be paid, Transaction Taxes, if any, assessed on any USCC
Entity, as the seller of the USCC Assets, the USCC Systems or the USCC Business
and any Transaction Taxes, if any, assessed on any USCC Entity, as the buyer of
the AWS Assigned Licenses or the Partnership Interests; (ii) AWS shall pay, or
cause to be paid, Transaction Taxes, if any, assessed on any AWS Entity, as the
seller of the AWS Assigned Licenses and the Partnership Interests, and
Transaction Taxes, if any, assessed on any AWS Entity, as the buyer of the USCC
Assets, the USCC System or the USCC Business; and (iii) all other Transaction
Taxes, whether assessed on any USCC Entity or any AWS Entity, shall be paid
one-half by AWS, or a designated Affiliate, and paid one-half by USCC, or a
designated Affiliate. The parties agree to cooperate with each other to take
advantage of all applicable Transaction Tax exemptions and provide all
documentation and information reasonably necessary to obtain such exemptions.
(b) Except as set forth on SCHEDULE 5.10(b), all Taxes, including
real estate, personal property, public service company taxes and any special
taxes or assessments attributable to the USCC Assets for the fiscal year during
which the Closing Date occurs, that are by their nature attributable to the
entire fiscal year or a period that includes but does not end on the Closing
Date, shall be allocated proportionately to the portion of such fiscal year or
other period ending on the Closing Date and the portion of such fiscal year or
other period after the Closing Date. In the case of any Taxes attributable to
taxable periods beginning on or before and ending after the Closing Date (the
"STRADDLE PERIOD"), the amount of (A) personal, real and intangible property
Taxes for the pre-Closing period shall be equal to the amount of such property
Taxes attributable to the entire Straddle Period multiplied by a fraction, the
numerator of which is the number of days during the Straddle Period that are in
the pre-Closing period and the denominator of which is the number of days in the
entire Straddle Period, and (B) Taxes (other than property Taxes) for the
pre-Closing period shall be computed as if such period ended on the Closing
Date. Any such Taxes allocated to the pre-Closing period, to the extent such
Taxes remained unpaid as of the Closing Date shall be paid by USCC when and as
due. Any such Taxes allocated to the post-Closing period shall be paid by AWS
when and as due. The amount of any pre-payment by USCC in respect of such Taxes
shall be reimbursed promptly to USCC to the extent such pre-payment is allocated
to the post-Closing period.
Section 5.11. POST-EXECUTION CONTRACTS
In the event that, following the date hereof and prior to Closing, USCC
enters into a contract or other agreement material to the operation of the USCC
Systems (in each case, a "POST-EXECUTION CONTRACT"), USCC shall immediately
provide AWS with a fully
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executed copy of such Post-Execution Contract whereupon AWS may, in its
reasonable discretion, designate in writing such Post-Execution Contract as a
USCC System Contract to be included in the USCC Assets. In the event AWS does
not so designate such Post-Execution Contract a USCC System Contract it shall be
deemed an Excluded Asset for all purposes of this Agreement. For purposes of
clarification, AWS acknowledges and agrees that it would not be reasonable for
it to reject a Post-Execution Contract which contains commercially reasonable
terms.
Section 5.12. BUILDOUT REQUIREMENTS
Notwithstanding anything in Section 1.2 to the contrary, with respect
to the AWS Assigned Licenses that have been, or will be, established by
disaggregating and/or partitioning A and B block AWS Licenses (a) AWS shall
satisfy, or cause to be satisfied, the ten-year coverage requirement under 47
C.F.R. 24.203 or 47 C.F.R. 24.714, as applicable, for the entire A or B block
license area with respect to each A and B block AWS License, whether
disaggregated and/or partitioned prior to or after the date of this Agreement
(including the partitioned license area with respect to each AWS Assigned
License established by such disaggregating and/or partitioning; it being
understood, however, that AWS shall not have any obligation to construct any
facilities in, or provide any RF coverage to, the partitioned license area with
respect to any AWS Assigned License established by such disaggregating and/or
partitioning), and (b) with respect to each AWS Assigned License assigned to any
USCC Entity in accordance with this Agreement prior to the end of the initial
ten-year license term with respect to such AWS Assigned License, USCC shall
satisfy the substantial service requirement for license renewal expectancy for
the partitioned license area with respect to each such AWS Assigned License
prior to the end of such initial ten-year license term, and (c) AWS shall not,
and shall cause its Affiliates and each Non-AWS Entity not to, take any action
to establish a Section 1.5 License by disaggregating and/or partitioning A and B
block AWS Licenses, except in furtherance of the assignment of such Section 1.5
License to a USCC Entity pursuant to USCC's exercise of its Section 1.5 Option
with respect to such Section 1.5 License or unless AWS agrees to satisfy at
AWS's expense the substantial service requirement for license renewal expectancy
for the partitioned license area with respect to such Section 1.5 License until
the earlier of (x) the assignment of such Section 1.5 License to USCC in
accordance with Section 1.5 and (y) the expiration of the Section 1.5 Option in
respect of such Section 1.5 License. In furtherance of the foregoing, the
parties agree to select Option 2 in response to Question 6, and Option 3 in
response to Question 7, on Schedule B to each Form 603 filed with the FCC in
respect of each such AWS Assigned Licenses.
Section 5.13. MICROWAVE CLEARING
(a) AWS shall be entitled to receive and retain all cost-sharing
reimbursement payments made by third parties after Closing with respect to any
microwave relocation costs incurred in respect of the AWS Licenses by any AWS
Entity. USCC shall be entitled to receive and retain all cost-sharing
reimbursement payments made by third parties after Closing with respect to any
microwave relocation costs incurred in respect of the AWS Assigned Licenses by
any USCC Entity.
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(b) AWS agrees that it will promptly pay all AWS License Cost-Sharing
Obligations arising as a result of any prior coordination notice filed by any
AWS Entity or any predecessor in interest in respect of the AWS Licenses. USCC
agrees that it will promptly pay all AWS License Cost-Sharing Obligations
arising as a result of any prior coordination notice filed by any USCC Entity in
respect of the AWS Assigned Licenses.
(c) AWS will reimburse USCC promptly upon presentation by USCC of a
reasonably detailed invoice for (i) any reasonable out-of-pocket microwave
relocation costs incurred by any USCC Entity in respect of the AWS Assigned
Licenses during the period that begins on the Closing Date and ends on the fifth
anniversary of the Closing Date, and (ii) subject to the second sentence of
Section 5.13(b) above, for all cost sharing reimbursement payments incurred by
any USCC Entity in respect of the AWS Assigned Licenses during the period that
begins on the Closing Date and ends on the fifth anniversary of the Closing
Date.
Section 5.14. ACQUISITION OF NON-AWS ENTITY LICENSES
(a) Prior to the Closing Date, AWS or an AWS Entity shall use
Commercially Reasonable Efforts to acquire each of the Non-AWS Entity Licenses
pursuant to the Non-AWS Entity License Acquisition Agreements. If AWS is for any
reason unable to acquire any Non-AWS Entity License prior to the Closing Date,
AWS shall assign or cause to be assigned to USCC, in lieu of such Non-AWS Entity
License, alternate broadband PCS spectrum in the same market and with the same
bandwidth (in the frequency range of 1850-1990 MHz). In such event, AWS shall
prepare and promptly file with the FCC an assignment application in respect of
such alternate spectrum and AWS and USCC shall cooperate and use Commercially
Reasonable Efforts to consummate the assignment to USCC of such alternate
spectrum in accordance with this Agreement.
(b) SCHEDULE I-A identifies the AWS Assigned Licenses that will not
be assigned by AWS to USCC at the Closing, but will be assigned at a subsequent
closing, which shall take place no later than six months from the date of this
Agreement and shall be effected in accordance with the terms and conditions
provided in Section 2.2, to the same extent as if such assignment had been
effected on the Closing Date.
ARTICLE 6
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
Section 6.1. TRANSITIONED EMPLOYEES
(a) SCHEDULE 6.1(a) contains a list of all persons employed by USCC
in the operation of the USCC Systems as of the date of this Agreement. AWS will
be obligated to offer employment in accordance with the terms of this Article 6
to all of the persons listed on SCHEDULE 6.1(a) who are still employed as of the
Closing Date and any additional persons who are hired by USCC prior to the
Closing Date to replace any persons listed on Schedule 6.1(a) who are separated
from employment prior to the Closing Date and are still employed as of the
Closing Date (all of such persons herein
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referred to as the "DESIGNATED EMPLOYEES"). Effective as of the Closing Date,
USCC shall terminate the employment of, and AWS shall offer employment to, all
Designated Employees who are actively at work or ready to return to work as of
the Closing Date (an "ACTIVE EMPLOYEE"). Any Designated Employee who is not
actively at work and not ready to return to work as of the Closing Date (an
"INACTIVE EMPLOYEE") shall not be offered employment by AWS, nor be deemed to be
a Transitioned Employee as defined below, unless and until he or she is ready to
return to active work within 180 days of the Closing Date and gives notice to
AWS in writing thereof. AWS shall promptly offer such Inactive Employee
employment following receipt of such notice on substantially the same terms as
similarly situated Transitioned Employees, the start-date of such Inactive
Employee to be within ten work days (the actual start date to be at the
discretion of AWS) after AWS has received the Inactive Employee's acceptance of
AWS's employment offer. For purposes of this Agreement, all Active Employees who
accept an employment offer from AWS and all Inactive Employees who subsequently
become ready to return to active work within 180 days of the Closing Date who
accept AWS's employment offer are herein collectively referred to as the
"TRANSITIONED EMPLOYEES." Each such Transitioned Employee shall be employed by
AWS at substantially the same base rate of pay (which excludes, among other
types of pay, sales commissions, bonuses, extraordinary pay and any other type
of pay not included as part of the base salary rate or hourly rate of pay)
received by such Transitioned Employee immediately prior to the Closing Date or
immediately prior to becoming an Inactive Employee. The other terms and
conditions of employment of the Transitioned Employee shall be substantially
similar to the terms and conditions of employment provided to similarly situated
employees of AWS. Notwithstanding the above, nothing in this Agreement limits
the rights of AWS to eliminate or change the conditions of employment, for any
reason after hiring the Transitioned Employee, as AWS may, in its sole
discretion, unilaterally implement.
(b) The participation of each Transitioned Employee in the System
Employee Plans will terminate effective upon the Closing Date, except with
respect to compensation and benefits that remain payable or due under the terms
of such System Employee Plans, or except as otherwise required by Law or such
System Employee Plans. Nothing in this Agreement creates or is intended to
create any rights in third parties or third party beneficiaries, including,
without limitation, any rights to be employed or respecting the terms and
duration of employment.
(c) USCC shall be responsible for any and all salaries, wages,
benefits, notices and other compensation or payments (including commissions and
bonuses, if any) payable to each Designated Employee for services attributable
to, and claims and expenses incurred during, the period ending as of 11:59 p.m.
Chicago time on the Closing Date, in accordance with the terms and conditions of
the USCC compensation arrangements and policies and the System Employee Plans,
and AWS shall not be responsible for any such obligations as a "successor
employer" or otherwise. AWS shall be responsible for any and all salaries,
wages, benefits, notices and other compensation or payments payable to each
Transitioned Employee for services rendered to AWS for the period commencing as
of 11:59 p.m. Chicago time on the Closing Date.
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Section 6.2. HEALTH, WELFARE AND RETIREMENT BENEFIT PLANS
(a) For the period commencing as of 11:59 p.m. Chicago time on the
Closing Date, AWS will cover each Transitioned Employee under its own "employee
welfare benefit plans" (as defined in Section 3(1) of ERISA) and other fringe
benefit plans, programs or arrangements (collectively "AWS WELFARE PLANS"), so
that each such Transitioned Employee is entitled to benefits under such AWS
Welfare Plans comparable to those provided to similarly situated employees of
AWS, including specifically any applicable state mandated coverage for medical,
dental, vision, prescription drug and short-term disability. The AWS Welfare
Plans, as well as AWS's paid time off or vacation plans and programs, as the
case may be, shall provide that each Transitioned Employee's period of
employment recognized by USCC prior to the Closing Date shall be credited under
such AWS Welfare Plans and paid time off or vacation plans and programs, for
purposes of eligibility to participate, waiting periods, vacation or paid time
off accrual levels. AWS shall cause all Transitioned Employees to be credited
with any amounts paid under the System Employee Plans prior to the Closing Date
toward satisfaction of deductible amounts and copayments, coinsurance and out of
pocket maximums under any corresponding AWS Welfare Plans, but only to the
extent such payments would have been taken into account under the System
Employee Plans and such crediting is approved by AWS's insurers and service
providers, as reasonably needed. Nothing contained herein shall prevent AWS from
making changes to AWS Welfare Plans with respect to any Transitioned Employee
after the Closing Date. With respect to worker's compensation benefits, USCC
accepts continuing responsibility after the Closing Date for payment of all
benefits to or on behalf of workers for (a) claims accepted or in process on or
prior to the Closing Date, and (b) claims related to industrial injuries or
occupational diseases for which a right to file for worker's compensation
benefits existed or accrued on or prior to the Closing Date; provided that USCC
is provided notice of such claim and the opportunity to manage or defend such
claim.
(b) For the period commencing as of 11:59 p.m. Chicago time on the
Closing Date, AWS will cover each Transitioned Employee under the AT&T Wireless
401(k) Savings Plan, or a comparable plan, so that each such Transitioned
Employee is entitled to benefits under AWS Pension Plans comparable to those
provided to similarly situated employees of AWS.
(c) Nothing contained herein shall be construed to restrict AWS from
operating its existing employee benefit plans, including full authority to amend
or terminate such plans in accordance with their respective terms and applicable
Laws.
(d) USCC agrees to provide or cause to be provided to AWS all such
records and information as AWS may reasonably request in order to carry out the
intent of, and to meet AWS's obligations under, this Section 6.2.
(e) On or before the date required by Law, USCC shall cash out all
accrued and unused vacation days of Transitioned Employees. AWS shall use
Commercially Reasonable Efforts to allow each employee to utilize the equivalent
amount of such vacation days as paid out by USCC, on an unpaid basis, up to ten
working days
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maximum. The use of this unpaid vacation days shall be based on management
discretion and subject to business needs and normal scheduling practices.
(f) USCC shall remain solely responsible for any and all liabilities
relating to or arising in connection with the requirements of Section 4980B of
the Code, to provide continuation of health care coverage in respect of
Transitioned Employees and their covered dependents due to coverage under the
System Employee Plans.
(g) On or before the date required by Law, USCC shall contribute to
the accounts of the applicable Transitioned Employees under the applicable
System Employee Plan all amounts required by such System Employee Plan to be
contributed with respect to such Transitioned Employee on account of any period
prior to Closing.
Section 6.3. EMPLOYMENT TAXES
USCC and AWS will (i) treat AWS as a "successor employer" and USCC or
the applicable Affiliate thereof as a "predecessor" within the meaning of
Sections 3121(a)(1) and 3306(b)(1) of the Code with respect to Transitioned
Employees for purposes of taxes imposed under the United States Federal
Unemployment Tax Act or the United States Federal Insurance Contributions Act
and (ii) cooperate with each other to avoid, to the extent possible, the filing
of more than one IRS Form W-2 with respect to each Transitioned Employee for the
calendar year within which the Closing occurs.
Section 6.4. WARN ACT
USCC shall comply and cause compliance with the provisions of the WARN
Act and any other federal, state, or local Laws regarding "plant closings,"
"mass layoffs" (or similar triggering event), or change of control, with respect
to any employment loss (as defined in the WARN Act) to employees employed in
operating the USCC Systems that occurs on or before 11:59 p.m. Chicago time on
the Closing Date. AWS shall comply and cause compliance with the provisions of
the WARN Act and any other Laws regarding "plant closings," "mass layoffs" (or
similar triggering event), or change of control, as they relate to Transitioned
Employees with respect to any employment loss (as defined in the WARN Act) that
occurs after 11:59 p.m. Chicago time on the Closing Date. USCC further covenants
to comply and cause compliance with any notice obligations under any applicable
state unemployment insurance Law with respect to non-Transitioned Employees who
were employed in operating the USCC Systems whose employment is terminated by an
USCC Entity on or before the Closing Date.
ARTICLE 7
CLOSING CONDITIONS
Section 7.1. CONDITIONS TO OBLIGATIONS OF AWS
The obligation of AWS to consummate the Transactions shall be
conditioned upon the satisfaction or fulfillment, at or prior to Closing, of the
following conditions, unless waived in writing by AWS:
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(a) The representations and warranties of USCC set forth herein
(without duplication of any materiality qualifications included in such
representations for all purposes of this Section 7.1(a)) shall be true and
correct as of the Closing as if made as of the Closing Date (except that
representations and warranties that are made as of a specific date need be so
true and correct only as of such date), except as would not, individually or in
the aggregate, be reasonably expected to have a USCC Material Adverse Effect,
and AWS shall have received a certificate to such effect dated the Closing Date
and executed by a duly authorized officer of USCC.
(b) The covenants and agreements of USCC to be performed under this
Agreement on or prior to the Closing Date shall have been duly performed in all
material respects, and AWS shall have received a certificate to such effect
dated the Closing Date and executed by a duly authorized officer of USCC.
(c) The Consent of the FCC required for the consummation of the
Transactions to be consummated on the Closing Date (or thereafter pursuant to
Section 5.14(b)) shall have been obtained pursuant to a Final Order, free of any
conditions materially adverse to AWS or the AWS Entities (other than AWS) taken
as a whole or which would reasonably be expected to have a USCC Material Adverse
Effect.
(d) All applicable waiting periods under the HSR Act (if applicable
to the transactions contemplated by this Agreement) shall have expired or been
terminated and no objection shall have been made by the FTC or the DOJ.
(e) The USCC State Consents, if any, shall have been obtained free of
any conditions materially adverse to AWS or the AWS Entities (other than AWS)
taken as a whole or which would reasonably be expected to have a USCC Material
Adverse Effect.
(f) All Governmental Authorizations required to be obtained prior to
Closing by either party in order to consummate the Transactions (other than in
respect of the Consent of the FCC, the HSR Act and the USCC State Consents),
shall have been made or obtained free of any conditions materially adverse to
AWS or the AWS Entities (other than AWS) taken as a whole or which would
reasonably be expected to have a USCC Material Adverse Effect.
(g) No preliminary or permanent injunction or other order, decree or
ruling issued by a Governmental Authority, nor any Law promulgated or enacted by
any Governmental Authority, shall be in effect that as a result of the
Transactions would impose material limitations on, or impair in any material
respect, the operations of any AWS Entity or materially adversely affect AWS's
ownership and operation of the USCC Assigned Licenses or USCC Assets on and
after the Closing Date.
(h) USCC shall have executed and delivered, or caused to be executed
and delivered, to AWS the documents and instruments required pursuant to Section
2.2.
(i) Each Transaction Document to be executed and delivered in
connection with Closing (including each of the Transition Services Agreement,
the USCC Brand
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License Agreement and the Post-Closing Master Lease Agreement) shall have been
executed by the USCC Entities party thereto and delivered to AWS.
(j) USCC shall have obtained and furnished AWS with copies of
Consents from the applicable landlords to assign at least 80% of the cell site
Real Property Leases identified on SCHEDULE 4.10(b) as requiring Consent to
assignment, including the "Required Consents" identified as such on SCHEDULE
4.10(b);
(k) AWS shall have received copies of all USCC System Contracts to
the extent not previously delivered to AWS.
(l) AWS shall have received copies of all records and information
described in Section 6.2(d) and as otherwise reasonably necessary for AWS to
satisfy its obligations under ARTICLE 6. On or immediately before the Closing
Date, AWS shall have received (i) documents that contain the amounts paid under
the System Employee Plans prior to the Closing Date toward satisfaction of
deductible amounts and copayments, coinsurance and out of pocket maximums under
the terms of such Plans and (ii) any updates or changes to any information
contained in SCHEDULE 4.15(b) which is needed to bring the information in
SCHEDULE 4.15(b) current as of the Closing Date.
Section 7.2. CONDITIONS TO OBLIGATIONS OF USCC
The obligation of USCC to consummate the Transactions shall be
conditioned upon the satisfaction or fulfillment, at or prior to Closing, of the
following conditions, unless waived in writing by USCC:
(a) The representations and warranties of AWS set forth herein
(without duplication of any materiality qualifications included in such
representations for all purposes of this Section 7.2(a)) shall be true and
correct as of the Closing as if made as of the Closing Date (except that
representations and warranties that are made as of a specific date need be so
true and correct only as of such date), except as would not, individually or in
the aggregate, be reasonably expected to have an AWS Material Adverse Effect,
and USCC shall have received a certificate to such effect dated the Closing Date
and executed by a duly authorized officer of AWS.
(b) The covenants and agreements of AWS to be performed under this
Agreement on or prior to the Closing Date shall have been duly performed in all
material respects, and USCC shall have received a certificate to such effect
dated the Closing Date and executed by a duly authorized officer of AWS.
(c) The Consent of the FCC required for the consummation of the
Transactions to be consummated on the Closing Date (or thereafter pursuant to
Section 5.14(b)) shall have been obtained pursuant to a Final Order, free of any
conditions materially adverse to USCC, or the other USCC Entities taken as a
whole, or which would reasonably be expected to have an AWS Material Adverse
Effect.
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(d) All applicable waiting periods under the HSR Act (if applicable
to the transactions contemplated by this Agreement) shall have expired or been
terminated and no objection shall have been made by the FTC or the DOJ.
(e) The AWS State Consents, if any, shall have been obtained free of
any conditions materially adverse to USCC or the USCC Entities (other than USCC)
taken as a whole or which would reasonably be expected to have a AWS Material
Adverse Effect.
(f) All Governmental Authorizations required to be obtained prior to
Closing by either party in order to consummate the Transactions (other than in
respect of the Consent of the FCC, the HSR Act and the AWS State Consents),
shall have been made or obtained free of any conditions materially adverse to
USCC or the USCC Entities (other than USCC) taken as a whole or which would
reasonably be expected to have an AWS Material Adverse Effect.
(g) No preliminary or permanent injunction or other order, decree or
ruling issued by a Governmental Authority, nor any Law promulgated or enacted by
any Governmental Authority, shall be in effect that as a result of the
Transactions would impose material limitations on, or impair in any material
respect, the operations of any USCC Entity or materially adversely affect USCC's
ownership and operation of the AWS Licenses on and after the Closing Date.
(h) AWS shall have executed and delivered, or caused to be executed
and delivered, to USCC the documents and instruments required pursuant to
Section 2.2.
(i) Each Transaction Document to be executed and delivered in
connection with Closing (including each of the Transition Services Agreement,
the USCC Brand License Agreement and the Post-Closing Master Lease Agreement)
shall have been executed by the AWS Entities party thereto and delivered to
USCC.
ARTICLE 8
INDEMNIFICATION
Section 8.1. SURVIVAL
(a) All of the representations and warranties of the parties
contained in this Agreement, and in the certificates delivered pursuant to
Sections 7.1(a) and 7.2(a), shall survive the Closing Date and continue in full
force and effect for 18 months thereafter, except that:
(i) the representations and warranties set forth in Sections
3.6(a), 3.6(e), 3.6(f), 3.9, 4.6(a), 4.6(e), 4.6(f), and 4.9 (the first
sentence only) (each, a "TYPE 1 REPRESENTATION") shall survive the
Closing Date and continue in full force and effect for three years
thereafter; and
(ii) the representations and warranties set forth in Sections
3.2, 3.3, 3.11, 4.2, 4.3, 4.8 and 4.14 (each a "TYPE 2 REPRESENTATION")
shall survive the Closing Date and continue in full force and effect
until the 60th day following the
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expiration date of the relevant statute of limitations period (without
regard to any extension thereof by action or agreement of the party
seeking indemnification);
provided, that if any claim, action, suit or proceeding, arising out of facts or
circumstances constituting a breach of a Type 1 Representation, is brought or
commenced by any third party or Governmental Authority (including an FCC
enforcement action), whether before or after the third anniversary of the
Closing Date, such Type 1 Representation (solely with respect to such claim,
action, suit or proceeding) shall survive until the earlier to occur of the 60th
day following the expiration date of the relevant statute of limitations period
(without regard to any extension thereof by action or agreement of the party
seeking indemnification) and the fifth anniversary of the Closing Date.
(b) All indemnification obligations with respect to representations
and warranties under this Agreement shall terminate as of the expiration of the
survival period applicable to such representation and warranty, provided, that
the applicable survival period shall be extended automatically to include any
time period necessary to resolve a claim for indemnification that was made prior
to the expiration of such survival period and not resolved prior to such
expiration, but any such extension shall apply only as to such claims expressly
made in writing prior to such expiration.
(c) Except as otherwise expressly provided in Section 10.12,
following the Closing the indemnification provided for by this Article 8 shall
be the parties' sole and exclusive remedy in connection with any breach or
alleged breach of any representation or warranty contained herein.
Section 8.2. INDEMNIFICATION OBLIGATION OF USCC
From and after the Closing, USCC shall indemnify AWS and its
Affiliates, and its and their respective successors and assigns, and the
shareholders, members, directors, managers, officers, employees and agents of
any of the foregoing (each, an "AWS INDEMNITEE"), on an After-Tax Basis,
against, and hold each harmless from, any and all demands, claims, losses,
liabilities, actions or causes of action, assessments, damages, fines, taxes
(including excise and penalty taxes), penalties, reasonable costs and expenses
(including interest, reasonable expenses of investigation, reasonable fees and
disbursements of counsel, accountants and other experts, whether the same relate
to claims, actions or causes of action asserted by any indemnified Person
against the indemnitor or asserted by third parties) (collectively, "LOSSES")
incurred or suffered by any AWS Indemnitee arising out of:
(a) any misrepresentation or breach of warranty on the part of any
USCC Entity under this Agreement or any Transaction Document, or any
misrepresentation in or omission from any schedule (including without limitation
the USCC Disclosure Schedule), exhibit, certificate, instrument or other
document furnished to AWS pursuant hereto or thereto;
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(b) any breach of any agreement or covenant on the part of any USCC
Entity under this Agreement or any Transaction Document;
(c) any claims, actions, suits or proceedings by third parties or
Governmental Authority (including an FCC enforcement action) relating to or
arising out of or in connection with the ownership or operation by any USCC
Entity or any Affiliate thereof (i) prior to Closing, of the USCC Assigned
Licenses, the USCC Assets or the USCC Systems and (ii) after the Closing, of the
AWS Assigned Licenses and the Partnership Interests (other than, in respect of
this clause (ii), any of the foregoing in respect of which AWS has an
indemnification obligation under Section 8.3); or
(d) any AWS Assumed Liabilities, USCC Excluded Liabilities or
Excluded Assets (including the ownership or operation of such Excluded Assets at
any time by USCC or any Affiliate thereof).
Section 8.3. INDEMNIFICATION OBLIGATION OF AWS
From and after the Closing, AWS shall indemnify USCC and its
Affiliates, and its and their respective successors and assigns, and the
shareholders, members, directors, managers, officers, employees and agents of
any of the foregoing (each, a "USCC INDEMNITEE"), on an After-Tax Basis,
against, and hold each harmless from, any and all Losses incurred or suffered by
any USCC Indemnitee arising out of:
(a) any misrepresentation or breach of warranty on the part of any
AWS Entity under this Agreement or any Transaction Document, or any
misrepresentation in or omission from any schedule (including without limitation
the AWS Disclosure Schedule), exhibit, certificate, instrument or other document
furnished to USCC pursuant hereto or thereto;
(b) any breach of any agreement or covenant on the part of any AWS
Entity under this Agreement or any Transaction Document;
(c) any claims, actions, suits or proceedings by third parties or
Governmental Authority (including an FCC enforcement action) relating to or
arising out of or in connection with the ownership or operation by any AWS
Entity or any Affiliate thereof (i) prior to Closing, of the AWS Licenses or the
Partnership Interests, or (ii) after the Closing, of the USCC Assigned Licenses,
USCC Assets or the USCC Systems (other than, in respect of this clause (ii), any
of the foregoing in respect of which USCC has an indemnification obligation
under Section 8.2); or
(d) any USCC Assumed Liabilities or AWS Excluded Liabilities.
Section 8.4. LIMITATIONS ON LIABILITY FOR LOSSES
(a) In no event shall either party hereto be liable for indirect,
special, consequential or punitive damages arising out of this Agreement,
regardless of the form of action, whether in contract, warranty, strict
liability or tort, including negligence of
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any kind, whether active or passive, and regardless of whether the other party
knew of or was advised at the time of breach of the possibility of such damages.
(b) No indemnification under Section 8.2(a) for any Losses suffered
by the AWS Indemnitees shall be required to be made by USCC until the aggregate
amount of the Losses suffered by the AWS Indemnitees exceeds $1,250,000 (the
"DEDUCTIBLE"), and then indemnification shall be required to be made by USCC for
all such Losses in excess of the Deductible, but subject to the other provisions
of this Section 8.4; provided that the foregoing limitation shall not apply to
any intentional breach of a representation or warranty, or to any breach of a
Type 1 Representation or a Type 2 Representation.
(c) No indemnification under Section 8.3(a) for any Losses suffered
by the USCC Indemnitees shall be required to be made by AWS until the aggregate
amount of the Losses suffered by the USCC Indemnitees exceeds the Deductible,
and then indemnification shall be required to be made by AWS for all such Losses
in excess of the Deductible, but subject to the other provisions of this Section
8.4; provided that the foregoing limitation shall not apply to any intentional
breach of a representation or warranty, or to any breach of a Type 1
Representation or a Type 2 Representation.
(d) The maximum amount of Losses for which a party may be obligated
to provide indemnification with respect to any breach of a representation or
warranty shall be $65,000,000 in the aggregate; provided that the foregoing
limitation shall not apply to any intentional breach of a representation or
warranty, or to any breach of a Type 1 Representation or Type 2 Representation.
(e) USCC shall not be liable for any Losses pursuant to Section
8.2(a) or (c) arising from a USCC Material Adverse Effect, but only if USCC
discloses to AWS such USCC Material Adverse Effect in writing promptly after
USCC becomes aware of such USCC Material Adverse Effect, and AWS waives such
USCC Material Adverse Effect in writing and consummates the Closing; provided,
that the foregoing limitation shall not apply to any intentional breach of a
representation or warranty made by USCC on the date hereof.
(f) AWS shall not be liable for any Losses pursuant to Section 8.3(a)
or (c) arising from an AWS Material Adverse Effect, but only if AWS discloses to
USCC such AWS Material Adverse Effect in writing promptly after AWS becomes
aware of such AWS Material Adverse Effect, and USCC waives such AWS Material
Adverse Effect in writing and consummates the Closing; provided, that the
foregoing limitation shall not apply to any intentional breach of a
representation or warranty made by AWS on the date hereof.
(g) In connection with any claim for indemnification under this
Article 8, there shall be a presumption, as between the parties, that the
Indemnified Party did not, prior to Closing, have Knowledge of the facts giving
rise to such claim, which presumption may be rebutted only by clear and
convincing evidence to the contrary.
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Section 8.5. NOTICE OF CLAIMS
Any party (the "INDEMNIFIED PARTY") seeking indemnification under this
Article 8 shall give to the party obligated to provide indemnification to such
Indemnified Party (the "INDEMNITOR") a written notice (a "CLAIM NOTICE")
describing in reasonable detail the facts giving rise to any claim for
indemnification hereunder (a "CLAIM") and shall include in such Claim Notice (if
then known) the amount, or the method of computation of the amount, of such
Claim and a reference to the provision of this Agreement or any agreement,
document or instrument executed pursuant hereto or in connection herewith upon
which such Claim is based; provided, that a Claim Notice in respect of any
action at law or suit in equity by or against a third party as to which
indemnification will be sought must be given promptly after the action or suit
is commenced; provided, further that if such Claim Notice is given prior to the
expiration of the applicable survival period, failure to promptly give such
Claim Notice shall not relieve the Indemnitor of its obligations hereunder
except to the extent it shall have been materially prejudiced by such failure.
Section 8.6. THIRD PARTY CLAIMS
(a) If any claim, action or suit by a third party arises after
execution and delivery of this Agreement for which a Claim is made, then the
Indemnified Party shall notify the Indemnitor in accordance with Section 8.5 and
shall give the Indemnitor a reasonable opportunity (i) to conduct any
proceedings or negotiations in connection therewith and necessary or appropriate
to defend the Indemnified Party, (ii) to employ counsel to contest any such
claim, action or suit in the name of the Indemnified Party or otherwise and
(iii) to take all other required steps or proceedings to settle or defend any
such claim, action or suit.
(b) The expenses of all proceedings, contests or lawsuits with
respect to any claims, actions or suits for which a Claim is made shall be borne
by the Indemnitor. If the Indemnitor wishes to assume the defense of any such
claim, action or suit, then it shall give written notice to the Indemnified
Party within 30 days after delivery of the Claim Notice (unless the claim,
action or suit reasonably requires a response in less than 30 days after the
Claim Notice is given to the Indemnitor, in which event the Indemnitor shall
notify the Indemnified Party at least 10 days prior to such reasonably required
response date), and the Indemnitor shall thereafter assume the defense of any
such claim, action or suit, through counsel reasonably satisfactory to the
Indemnified Party; provided, that the Indemnified Party may participate in such
defense at its own expense. The Indemnified Party shall have the right to
control the defense of the claim, action or suit unless and until the Indemnitor
shall (i) assume the defense of such claim, action or suit, and (ii) acknowledge
in writing to the Indemnified Party that the Indemnitor shall be obligated under
the terms of its indemnity hereunder to the Indemnified Party in connection with
such claim, action or suit, in which event the Indemnitor shall have the right
to control such defense; provided, that the Indemnitor may not settle or
compromise such claim, action or suit without the Indemnified Party's prior
written consent unless the terms of such settlement or compromise
unconditionally discharge and release the Indemnified Party from any and all
liabilities and obligations thereunder and do not
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involve any remedy other than the payment of money solely by the Indemnitor.
Notwithstanding the foregoing, if (i) the defendants in any action shall include
both an Indemnitor and an Indemnified Party, and (ii) such Indemnified Party
shall have reasonably concluded that counsel selected by Indemnitor has a
material conflict of interest because of the availability of different or
additional defenses to such Indemnified Party, and (iii) either (A) counsel
shall have advised Indemnified Party that the conflict of interest cannot be
resolved by the consent of Indemnitor and Indemnified Party to the joint
representation, or (B) Indemnitor or Indemnified Party shall fail to give any
required consent, which consent will not be unreasonably withheld or delayed,
then such Indemnified Party shall have the right to select separate counsel to
participate in the defense of such action on its behalf, at the reasonable
expense of the Indemnitor.
(c) If the Indemnitor does not assume the defense of, or if after so
assuming, the Indemnitor fails to defend, any such claim, action or suit, then
the Indemnified Party may defend such claim, action or suit in such manner as
the Indemnified Party may deem appropriate (provided that the Indemnitor may
participate in such defense at its own expense), and the Indemnitor shall
promptly reimburse the Indemnified Party for the amount of all fees and
expenses, legal and other, reasonably incurred by the Indemnified Party in
connection with the defense and settlement of such claim, action or suit. If no
settlement of such claim, action or suit is made, the Indemnitor shall satisfy
any judgment rendered with respect to such claim, or in such action or suit,
before the Indemnified Party is required to do so, and pay all fees and
expenses, legal or other, reasonably incurred by the Indemnified Party in the
defense of such claim, action or suit.
(d) If a final and non-appealable decision or court order is rendered
against the Indemnified Party in any claim, action or suit covered by the
indemnification hereunder, or any Lien in respect of such decision or court
order attaches to any of the assets of the Indemnified Party, the Indemnitor
shall immediately upon such entry or attachment pay in full any amount required
by such decision or court order, or discharge such Lien, before the Indemnified
Party is compelled to do so.
ARTICLE 9
TERMINATION
Section 9.1. TERMINATION
Anything contained in this Agreement to the contrary notwithstanding,
this Agreement may be terminated:
(a) by the mutual written consent of the parties;
(b) by either party (provided that such party is not otherwise in
material breach) if the other party has breached a representation, warranty,
covenant or agreement set forth herein, and such breach could reasonably be
expected to have an AWS Material Adverse Effect (in the case of a breach by AWS)
or a USCC Material Adverse Effect (in the case of a breach by USCC), and the
breaching party fails to cure such breach within thirty (30) days of written
notice thereof;
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(c) by either party upon written notice to the other party, upon the
other party's filing, or the other party having filed against it and remaining
pending for more than thirty (30) days, a petition under Title 11 of the United
States Code or similar state law provision seeking protection from creditors or
the appointment of a trustee, receiver or debtor in possession;
(d) by either party upon written notice to the other party if a court
of competent jurisdiction or Governmental Authority shall have issued an order,
decree or ruling permanently restraining, enjoining or otherwise prohibiting the
Transactions, and such order, decree, ruling or other action shall have become
final and non-appealable; or
(e) by either party upon written notice to the other party if the
Closing shall not have occurred on or before the first anniversary of the date
hereof.
Section 9.2. EFFECT OF TERMINATION
In the event of termination of this Agreement in accordance with
Section 9.1, all rights and obligations of the parties under this Agreement
shall terminate without any liability to the other party except that (a) nothing
herein shall relieve a party from any liability for any breach of its covenants,
representations or warranties hereunder and (b) this Section 9.2 and the
provisions of Section 5.4 and Article 8 and Article 10 shall survive the
termination of this Agreement for any reason.
ARTICLE 10
MISCELLANEOUS
Section 10.1. GOVERNING LAW
(a) This Agreement shall be construed in accordance with, and
governed by, the internal Laws of the State of Delaware without giving effect to
principles of conflicts of law. Each party agrees that it shall bring any action
or proceeding in respect of any claim arising out of or related to this
Agreement or the Transactions, whether in tort or contract or at law or in
equity, exclusively in the United States District Court for the District of
Delaware or the courts of the State of Delaware (the "CHOSEN COURTS") and (i)
irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii)
waives any objection to laying venue in any such action or proceeding in the
Chosen Courts for purposes of any such action or proceedings, (iii) waives any
objection that the Chosen Courts are an inconvenient forum or do not have
jurisdiction over any party and (iv) agrees that service of process upon such
party in any such action or proceeding shall be effective if notice, including
the original or a copy of such process, is given and receipt thereof evidenced
in accordance with Section 10.5.
(b) The parties hereby irrevocably waive any and all right to trial
by jury in any legal proceeding arising out of or related to this Agreement or
the Transactions.
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Section 10.2. ASSIGNMENT
(a) Except as otherwise provided under Section 10.2(b) and Section
10.2(c), neither this Agreement nor any of the rights or obligations hereunder
may be assigned by either party without the prior written consent of the other
party, and any purported assignment without consent or not in accordance with
Section 10.2(b) and Section 10.2(c), as applicable, shall be null and void.
(b) Subject to its obligations under Section 1.3(a), AWS may without
USCC's consent assign its rights hereunder to receive all or any portion of the
USCC Assigned Licenses and all or any portion of the USCC Assets to any direct
or indirect wholly-owned subsidiary of AWS; provided, that (i) AWS furnishes
USCC with reasonably satisfactory assurance of performance of this Agreement by
AWS's assignee, (ii) the assignment will not materially delay the FCC's approval
of the Transactions and (iii) no such assignment shall relieve AWS of any of its
obligations to USCC hereunder.
(c) Subject to its obligations under Section 1.3(a), USCC may without
AWS' consent assign its rights hereunder to receive all or any portion of the
AWS Licenses to any direct or indirect wholly-owned subsidiary of USCC;
provided, that (i) USCC furnishes AWS with reasonably satisfactory assurance of
performance of this Agreement by USCC's assignee, (ii) the assignment will not
materially delay the FCC's approval of the Transactions and (iii) no such
assignment shall relieve USCC of any of its obligations to AWS hereunder.
(d) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
(e) Nothing in this Section 10.2 shall prohibit the Transfer by
either party of any assets received from the other party upon the consummation
of one or more of the Transactions.
Section 10.3. ENTIRE AGREEMENT
This Agreement (including the Schedules and Exhibits attached hereto),
the AWS Disclosure Schedule, the USCC Disclosure Schedule and the Transaction
Documents constitute the entire agreement between the parties pertaining to the
subject matter hereof and supersede all prior and contemporaneous agreements,
arrangements and understandings of the parties with respect to such subject
matter.
Section 10.4. AMENDMENTS AND WAIVERS
Any provision of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and signed (in the case of an
amendment) by both parties or (in the case of a waiver) by the party granting
the waiver. No failure or delay by any party in exercising any right, remedy,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.
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Section 10.5. NOTICES
All notices or other communications hereunder shall be in writing and
shall be deemed to have been duly given or made (a) upon delivery if delivered
personally (by courier service or otherwise), as evidenced by written receipt or
other written proof of delivery (which may be a printout of the tracking
information of a courier service that made such delivery), or (b) upon
confirmation of dispatch if sent by facsimile transmission (which confirmation
shall be sufficient if shown by evidence produced by the facsimile machine used
for such transmission), in each case to the applicable addresses or facsimile
numbers set forth below (or such other address or facsimile number which either
party may from time to time specify in accordance with this Section 10.5):
If to AWS, to:
AT&T Wireless Services, Inc.
7277 164th Avenue N.E.
Redmond, Washington 98052
Attention: Joshua M. King
Facsimile: (425) 580-8405
With a copy (which shall not constitute notice) to:
Friedman Kaplan Seiler & Adelman LLP
1633 Broadway, 46th Floor
New York, New York 10019
Attention: Matthew S. Haiken
Facsimile: (212) 833-1250
If to USCC:
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: (312) 630-9299
With a copy (which shall not constitute notice) to:
United States Cellular Corporation
8410 West Bryn Mawr Avenue
Chicago, Illinois 60631
Attention: Kenneth R. Meyers
Facsimile: (773) 399-8959
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And a copy (which shall not constitute notice) to:
Sidley Austin Brown & Wood
10 South Dearborn St.
Bank One Plaza
Chicago, Illinois 60603
Attention: William S. DeCarlo, Esq.
Facsimile: (312) 853-7036
Section 10.6. HEADINGS
The headings of the Articles and Sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
Section 10.7. SEVERABILITY
Each term or provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable Law, but in case any one or
more of the provisions contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such provision shall be
ineffective to the extent but only to the extent of such invalidity, illegality
or unenforceability, without rendering invalid or unenforceable the remainder of
such provision or provisions of this Agreement; provided, however, that if the
removal of such offending provision materially alters the burdens or benefits of
either of the parties under this Agreement, the parties agree to negotiate in
good faith such modifications to this Agreement, if any, as are appropriate to
ensure that the burdens and benefits of each party under such modified Agreement
are reasonably comparable to the burdens and benefits originally contemplated
herein.
Section 10.8. NO THIRD-PARTY BENEFICIARIES
With the exception of the parties to this Agreement and their
respective successors and permitted assigns, and any Indemnified Party, there
shall exist no right of any person to claim a beneficial interest in this
Agreement or any rights arising out of this Agreement.
Section 10.9. REMEDIES CUMULATIVE
Except as otherwise provided herein, all rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise or beginning
of the exercise of any right, power or remedy by a party shall not preclude the
simultaneous or later exercise of any other such right, power or remedy by such
party.
Section 10.10. EXPENSES
Except as otherwise expressly provided in this Agreement, whether or
not the Transactions are consummated, the parties shall bear their own expenses
(including all
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time and expenses of counsel, financial advisors, consultants, actuaries and
independent accountants) incurred in connection with this Agreement and the
Transactions.
Section 10.11. COUNTERPARTS
This Agreement may be executed in one or more counterparts, which may
be delivered by facsimile, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 10.12. SPECIFIC PERFORMANCE
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or any covenant set forth in this Agreement
is otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to enforce specifically the performance
of this Agreement in accordance with its terms and provisions and to prevent
breaches of covenants set forth in this Agreement. The foregoing right is in
addition to, and not in lieu of, any other rights a party hereto may have in
respect of a breach of this Agreement, whether at law or in equity.
Section 10.13. FURTHER ASSURANCES
At and following Closing, (a) USCC shall execute and deliver to AWS, or
cause to be executed and delivered to AWS, such other instruments of conveyance
and transfer as AWS may from time to time reasonably request or as may be
otherwise necessary to more effectively convey and transfer the USCC Assigned
Licenses and USCC Assets, and (b) AWS shall execute and deliver to USCC, or
cause to be executed and delivered to USCC, such other instruments of conveyance
and transfer as USCC may from time to time reasonably request or as may be
otherwise necessary to more effectively convey and transfer the AWS Assigned
Licenses and Partnership Interests.
Section 10.14. RETENTION OF ASSETS PRIOR TO CLOSING
Notwithstanding any other term hereof, until Closing each party shall
retain control over, in the case of USCC, the USCC Assigned Licenses and the
USCC Assets and, in the case of AWS, the AWS Licenses and the Partnership
Interests, at all times in accordance with FCC Law. Nothing in this Agreement
shall give USCC or AWS, prior to Closing, the right to control or direct the
other's exercise of ultimate authority over, in the case of USCC, the USCC
Assigned Licenses and the USCC Assets and, in the case of AWS, the AWS Licenses
and the Partnership Interests.
Section 10.15. REFORMATION
If the FCC should (a) change its rules in a manner that would adversely
affect the enforceability of this Agreement, (b) directly or indirectly reject
or take action to challenge the enforceability of this Agreement, or (c) take
any other steps whatsoever, on its own initiative or by petition from a third
party, to directly or indirectly challenge this Agreement or any provision
hereof, then the parties hereto shall promptly negotiate in
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good faith to attempt to reform and amend this Agreement so as to eliminate or
amend to make unobjectionable any portion that is the subject of any FCC action,
provided, that neither party shall be obligated to reform or amend this
Agreement under the foregoing circumstances if any such amendment or
modification, in the reasonable judgment of such party, would not provide to or
afford such party substantially the same rights, duties and obligations such
party has under this Agreement as of the date hereof.
Section 10.16. DEFINITIONS
(a) For purposes of this Agreement, the following terms shall have
the following meanings:
"ACCOUNTS RECEIVABLE" shall have the meaning set forth in item (ix) of
the definition of "USCC ASSETS" set forth in Section 1.1(b).
"ACTIVE EMPLOYEE" shall have the meaning set forth in Section 6.1(a).
"AFFILIATE" shall mean, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with that Person. For purposes of this
definition, "control" (including the terms "controlling" and "controlled") means
the power to direct or cause the direction of the management and policies of a
Person, directly or indirectly, whether through the ownership of equity
interests, by contract or otherwise.
"AFTER-TAX BASIS" means that, in determining the amount of the payment
necessary to indemnify any Person against, or reimburse any party for, Losses,
the amount of such Losses shall be determined net of any Tax detriment borne by
the indemnified Person as a result of receiving such payment and any Tax benefit
derived by the indemnified Person as the result of sustaining such Losses. Such
Tax consequences shall be computed assuming that the indemnified Person is
subject to taxation at the highest applicable marginal regular federal and state
tax rates.
"AGREEMENT" shall mean this Exchange Agreement, together with all of
the Schedules and Exhibits referred to herein, as amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof.
"ALLOCATION SCHEDULE" shall have the meaning set forth in Section
1.3(c).
"AWS" shall have the meaning set forth in the preamble.
"AWS ASSIGNED LICENSES" means, collectively, (i) the AWS Entity
Licenses that are being assigned in their entirety to the USCC Entities as set
forth on Part 1 of SCHEDULE I-A, (ii) the FCC Licenses created by disaggregating
certain of the AWS Entity Licenses as set forth on Part 2 of SCHEDULE I-A and
(iii) the Non-AWS Entity Licenses.
"AWS ASSUMED LIABILITIES" shall have the meaning set forth in Section
1.2(c).
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"AWS DISCLOSURE SCHEDULE" shall have the meaning set forth in the first
paragraph of Article 3.
"AWS ENTITIES" shall mean AWS and each Person listed on SCHEDULE I-A.
"AWS ENTITY LICENSES" shall have the meaning set forth in the first
recital.
"AWS EXCLUDED LIABILITIES" shall have the meaning set forth in Section
1.2(d).
"AWS INDEMNITEE" shall have the meaning set forth in Section 8.2.
"AWS LICENSE COST-SHARING OBLIGATIONS" shall mean microwave relocation
cost-sharing obligations in respect of the AWS Licenses within the meaning of 47
C.F.R. 24.239 through 24.253.
"AWS LICENSES" shall have the meaning set forth in the first recital.
"AWS MATERIAL ADVERSE EFFECT" shall mean any change, event, occurrence,
fact, condition, effect or development that is materially adverse to (i) the AWS
Licenses and the Partnership Interests, taken as a whole, (ii) the ability of
AWS to consummate, or cause the AWS Entities to consummate, the Transactions or
(iii) USCC's ownership and operation of the AWS Assigned Licenses or USCC's
ownership of the Partnership Interests, taken as a whole, following the Closing,
but (x) in each case shall exclude any change, event, occurrence, fact,
condition, effect or development resulting from changes affecting the wireless
communications industry generally or general economic conditions in the United
States, and (y) in the case of the Partnership Interests shall exclude any
change, event, occurrence, fact, condition, effect or development resulting from
any act or omission by USCC or any of its Affiliates.
"AWS STATE CONSENTS" shall mean the Consents, if any, listed on
SCHEDULE 3.4.
"AWS WELFARE PLANS" shall have the meaning set forth in Section 6.2(a).
"BALANCE SHEET DATE" shall have the meaning set forth in Section 4.20.
"BOOKS AND RECORDS" shall have the meaning set forth in Section 4.19.
"BTAS/MTAS" shall mean Basic Trading Areas/Major Trading Areas as
designated by the FCC.
"BUSINESS DAY" shall mean any day, other than a Saturday or Sunday, on
which commercial banks and foreign exchange markets are open for business in the
City of New York and Chicago, Illinois.
"CALEA" shall mean the Communications Assistance for Law Enforcement
Act of 1994, as amended.
"CASH PAYMENT" shall have the meaning set forth in Section 1.1(a).
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"CELL SITES" shall have the meaning set forth in Section 4.26.
"CHOSEN COURTS" shall have the meaning set forth in Section 10.1.
"CLAIM" shall have the meaning set forth in Section 8.5.
"CLAIM NOTICE" shall have the meaning set forth in Section 8.5.
"CLOSING" shall have the meaning set forth in Section 2.1.
"CLOSING DATE" shall have the meaning set forth in Section 2.1.
"CLOSING DATE WORKING CAPITAL AMOUNT" shall have the meaning set forth
in Section 1.6(b).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"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 effort of such Party.
"CONFIDENTIAL INFORMATION" of a Person shall mean any and all
non-public information regarding the business, finances, operations, products,
services and subscribers of the Person specified and its Affiliates in written
or oral form or in any other medium.
"CONSENTS" shall mean all Governmental Authorizations and consents,
approvals or waivers of other third parties.
"CURRENT ASSETS" shall have the meaning set forth in Section 1.6.
"CURRENT LIABILITIES" shall have the meaning set forth in Section 1.6.
"DAMAGED ASSETS" shall have the meaning set forth in Section 5.9.
"DEDUCTIBLE" shall have the meaning set forth in Section 8.4(b).
"DESIGNATED EMPLOYEES" shall have the meaning set forth in Section
6.1(a).
"DOJ" shall have the meaning set forth in Section 5.2(d).
"EMPLOYEE PLAN" shall have the meaning set forth in Section 4.14(a).
"ENVIRONMENTAL LAW" shall mean any and all statutes, regulations,
ordinances, rules, orders, directives, requirements, common law claims or
adjudications of any Governmental Authority, without limitation in time or
scope, which regulate or govern or are related in any way to the protection of
the environment, or are related in any way to Hazardous Substances, including
the following: the National Environmental Policy Act
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of 1999 and applicable FCC implementing regulations 42 U.S.C. Section 4321 et
seq. (NEPA), the Comprehensive Environmental Response Compensation and Liability
Act, as amended, 42 U.S.C. Section 9601 et seq. (CERCLA), the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq.
(RCRA), the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq. (CAA), the
Emergency Planning and Community Right to Know Act, as amended, 42 U.S.C.
Section 11001 et seq. (EPCRA), the Safe Drinking Water Act, as amended, 42
U.S.C. Section 300 et seq. (SDWA), the Pollution Prevention Act of 1990, as
amended, 42 U.S.C. Section 13101 et seq. (PPA), the Clean Water Act, as amended,
33 U.S.C. Section 1251 et seq. (CWA), the Federal Insecticide, Fungicide and
Rodenticide Act, as amended, 7 U.S.C. Section 136 et seq. (FIFRA), the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq. (TSCA), and
any and all state and local statutes, Laws, or ordinances corresponding to the
foregoing federal statutes.
"ENVIRONMENTAL PERMIT" shall mean all Governmental Authorizations
required by any Governmental Authority under any applicable Environmental Law.
"ERISA" shall have the meaning set forth in Section 4.14(a).
"ERISA AFFILIATE" shall have the meaning set forth in Section 4.14(a).
"EXCHANGE OPTIONS" shall have the meaning set forth in Section 1.4(a).
"EXCHANGE OPTION PERIOD" shall have the meaning set forth in Section
1.4(a).
"EXCLUDED ASSETS" shall have the meaning set forth in Section 1.1(c).
"FAA" shall mean the Federal Aviation Administration.
"FBI" shall have the meaning set forth in Section 4.29.
"FCC" shall mean the Federal Communications Commission.
"FCC LAW" shall mean the Communications Act of 1934, as amended,
including as amended by the Telecommunications Act of 1996, and the rules and
regulations adopted by the FCC thereunder.
"FCC LICENSES" shall mean, as the context requires, the AWS Licenses or
the USCC Assigned Licenses, or both.
"FINAL ORDER" shall mean an action or decision that has been granted by
the FCC as to which (i) no request for a stay or similar request is pending, no
stay is in effect, the action or decision has not been vacated, reversed, set
aside, annulled or suspended and any deadline for filing such request that may
be designated by statute or regulation has passed, (ii) no petition for
rehearing or reconsideration or application for review is pending and the time
for the filing of any such petition or application has passed, (iii) the FCC
does not have the action or decision under reconsideration on its own motion and
the time within which it may effect such reconsideration has passed, and (iv) no
appeal is
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pending, including other administrative or judicial review, or in effect and any
deadline for filing any such appeal that may be designated by statute or rule
has passed.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
4.20.
"FTC" shall have the meaning set forth in Section 5.2(d).
"GAAP" shall mean United States generally accepted accounting
principles in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall mean a Federal, state or local court,
legislature, governmental agency, commission or regulatory (including any state
public utilities commission) or administrative authority or instrumentality.
"GOVERNMENTAL AUTHORIZATION" shall mean any license, permit,
certificate of authority, waiver, variance, order, operating rights, approval,
certificate of public convenience and necessity, registration or other
authorization, consent or clearance to construct or operate a facility,
including any emissions, discharges or releases therefrom, or to transact an
activity or business, to construct a tower, or to use an asset or process, in
each case issued or granted by a Governmental Authority.
"HAZARDOUS SUBSTANCE" shall mean and includes any element, material,
compound, mixture, chemical, substance, toxic substance, hazardous substance,
toxic waste, hazardous waste, pollutant or contaminant, including asbestos,
defined as a hazardous substance, pollutant or contaminant (or words of similar
connotation, import or meaning) or otherwise regulated under or pursuant to any
Environmental Law, but shall exclude electromagnetic radiation, whether or not
it is determined to be hazardous.
"HSR ACT" shall have the meaning set forth in Section 5.2(d).
"INACTIVE EMPLOYEE" shall have the meaning set forth in Section 6.1(a).
"INDEPENDENT ACCOUNTANT" shall have the meaning set forth in Section
1.6(c).
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 8.5.
"INDEMNITOR" shall have the meaning set forth in Section 8.5.
"INTELLECTUAL PROPERTY" shall mean (i) any and all patents (including
without limitation design patents, industrial designs and utility models) and
patent applications (including docketed patent disclosures awaiting filing,
reissues, divisions, continuations, continuations-in-part and extensions),
patent disclosures awaiting filing determination, inventions and improvements
thereto, (ii) trademarks, service marks, certification marks, trade names, brand
names, trade dress, logos, business and product names, slogans, and
registrations and applications for registration thereof, (iii) copyrights
(including software) and registrations thereof, (iv) inventions, processes,
designs, formulae, trade secrets, know-how, industrial models, confidential and
technical information, manufacturing, engineering and technical drawings,
product specifications, domain names, discoveries
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and confidential business information, (v) mask work and other semiconductor
chip rights and registrations thereof, (vi) intellectual property rights similar
to any of the foregoing, (vii) computer software and (viii) copies and tangible
embodiments thereof (in whatever form or medium, including electronic media).
"INTERFERENCE CONSENT" shall mean any agreement or arrangement between
a party and any Person, including any present or proposed PCS, cellular, or
microwave system operator or any PCS, cellular, or microwave licensee,
conditional licensee or applicant with respect to co-channel and/or adjacent
channel interference, the coordination of adjacent market channel use or other
matters concerned with the operation of adjacent markets, allowing interference,
restricting station operations, licensing or location, or limiting transmission
time.
"INTERIM FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 4.20.
"INVENTORY" shall mean all inventory held by a USCC Entity for
consumption by or sale to the public, including, mobile phones, spare parts and
supplies, and reflected as a Current Asset on SCHEDULE 1.6.
"IRS" shall mean the Internal Revenue Service.
"KNOWLEDGE", "KNOWN", "TO THE KNOWLEDGE OF" (or similar words or
phrases) shall mean the actual knowledge of (i) in the case of USCC, each Person
set forth on SCHEDULE IV and (ii) in the case of AWS, each Person set forth on
SCHEDULE V.
"LAW" shall mean applicable common law and any statute, ordinance, code
or other law, rule, permit, permit condition, regulation, order enacted,
adopted, promulgated by any Governmental Authority.
"LEASED PROPERTY" shall have the meaning set forth in Section 4.10(b).
"LIEN" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, 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, or right of a third party or
other adverse claim of any kind or nature whatsoever (including any conditional
sale or other title retention agreement).
"LOSSES" shall have the meaning set forth in Section 8.2.
"MACHINERY AND EQUIPMENT" shall have the meaning set forth in paragraph
(vii) of the definition of the "USCC Assets" set forth in Section 1.1(b).
"MAINE EXCHANGE OPTION" shall have the meaning set forth in Section
1.4(a).
"NON-ASSIGNED CONTRACTS" shall have the meaning set forth in Section
5.2(c).
"NON-AWS ENTITY" shall have the meaning set forth in the first recital.
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"NON-AWS ENTITY LICENSES" shall have the meaning set forth in the first
recital.
"NON-AWS LICENSE ACQUISITION AGREEMENTS" shall have the meaning set
forth in Section 3.13.
"OBJECTION NOTICE" shall have the meaning set forth in Section 1.6(c).
"OKLAHOMA EXCHANGE OPTION" shall have the meaning set forth in Section
1.4(a).
"ORIGINAL MAINE SPECTRUM" shall have the meaning set forth in Section
1.4(a).
"ORIGINAL OKLAHOMA SPECTRUM" shall have the meaning set forth in
Section 1.4(a).
"OSHA" shall mean the Occupational Health and Safety Administration or
any successor agency or body having jurisdiction over the matters formerly
considered by such Administration.
"PARTNERSHIP INTERESTS" shall have the meaning set forth in the first
recital.
"PCS" shall have the meaning set forth in the first recital.
"PERMITTED LIENS" shall mean (i) statutory Liens for taxes, assessments
or other governmental charges not yet due or payable, or that are being
contested in good faith by appropriate proceedings; (ii) leases and subleases
disclosed on SCHEDULE 4.10(b) and landlord Liens arising thereunder; (iii)
statutory Liens of mechanics, materialmen, landlords, carriers, warehousemen,
repairmen and contractors and other Liens imposed by law and on a basis
consistent with past practice which are incurred in the ordinary course of
business for sums not yet due and payable; (iv) Liens and easements due to
zoning and subdivision laws and regulations; (v) with respect to Real Property
or Leased Property, defects of title, easements, rights-of-way, restrictions and
other similar charges or encumbrances that would not, individually or in the
aggregate, reasonably be expected to interfere in any material respect with the
use, occupancy or operation of the Real Property or Leased Property as currently
used, occupied or operated by USCC; (vi) Liens not created by any USCC Entity
that affect the underlying fee interest of any Leased Property; (vii) Liens
incurred in the ordinary course of business and on a basis consistent with past
practice securing obligations or liabilities that are not individually or in the
aggregate material to the relevant USCC Assets; (viii) with respect to Real
Property or Leased Property, any exceptions an accurate up-to-date survey would
show, provided such exceptions would not, individually or in the aggregate,
reasonably be expected to interfere in any material respect with the use,
occupancy or operation of the Real Property or Leased Property as currently
used, occupied or operated by USCC; and (ix) with respect to USCC Assets that
are not Real Property or Leased Property, any deficiencies in title which (x)
would not, individually or in the aggregate, reasonably be expected to interfere
in any material respect with the use, occupancy or operation of the USCC Assets
as currently used, occupied or operated by USCC and (y) will be curable by AWS
after the Closing without material payment to any third party.
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"PERSON" shall mean an individual, corporation, general partnership,
limited partnership, limited liability company, joint venture, trust, business
trust, association, joint stock company, Governmental Authority, unincorporated
organization, or other legal entity, and the heirs, executors, administrators,
legal representatives, successors and assigns of such Person as the context may
require.
"PRELIMINARY CLOSING DATE WORKING CAPITAL AMOUNT" shall have the
meaning set forth in Section 1.6(a).
"POST-CLOSING MASTER LEASE AGREEMENT" shall mean the Master Lease
Agreement to be dated as of the Closing Date between USCC and AWS, in
substantially the form attached hereto as EXHIBIT I.
"POST-EXECUTION CONTRACT" shall have the meaning set forth in Section
5.11.
"PRE-CLOSING MASTER LEASE AGREEMENT" shall mean the Master Lease
Agreement of even date herewith between USCC and AWS.
"REAL PROPERTY" shall mean all realty, fixtures, easements,
rights-of-way, leasehold, and other interests in Real Property, buildings and
improvements.
"REAL PROPERTY LEASES" shall have the meaning set forth in Section
4.10(b).
"RELEASE" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, or migration into
the environment.
"REPRESENTATIVES" shall mean, with respect to any Person, its
Affiliates, and its and their respective shareholders, members, managers,
directors, officers, employees, attorneys, auditors and agents.
"SECTION 1.5 LICENSES" shall have the meaning set forth in Section
1.5(a).
"SECTION 1.5 OPTION" shall have the meaning set forth in Section
1.5(b).
"SECTION 1.5 OPTION PERIOD" shall have the meaning set forth in Section
1.5(b).
"STRADDLE PERIOD" shall have the meaning set forth in Section 5.10(b).
"SUBSCRIBER AGREEMENT" shall mean, in respect of each subscriber for
service on the USCC Systems, a written agreement pursuant to which a USCC Entity
provides wireless service to such subscriber.
"SYSTEM EMPLOYEE PLAN" shall have the meaning set forth in Section
4.14(a).
"SYSTEM PERMITS" shall have the meaning set forth in Section 4.13.
"TAX" shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Section 59A of
the Code), customs duties,
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capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, Real Property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not.
"TAX RETURN" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TRANSACTIONS" shall mean the transactions contemplated by this
Agreement and each of the other Transaction Documents.
"TRANSACTION DOCUMENTS" shall mean, collectively, this Agreement, the
Transition Services Agreement, the Pre-Closing Master Lease Agreement, License
Exchange Agreement, License Acquisition Agreement, Instrument of Assignment (AWS
Assigned Licenses), Assumption Agreement (AWS Assumed Liabilities), Assumption
Agreement (USCC Assumed Liabilities), Instrument of Assignment (USCC Assigned
Licenses), Bill of Sale and Assignment (USCC Assets), Assignment and Assumption
Agreement (Section 1.5 Licenses), the Post-Closing Master Lease Agreement, the
USCC Brand License Agreement and the Instrument of Assignment of Partnership
Interests.
"TRANSACTION TAXES" shall have the meaning set forth in Section
5.10(a).
"TRANSFER" shall mean to sell, transfer, deliver, convey, assign or
otherwise dispose of the applicable asset.
"TRANSITIONED EMPLOYEES" shall have the meaning set forth in Section
6.1(a).
"TRANSITION SERVICES AGREEMENT" shall mean the Transition Services
Agreement of even date herewith between USCC and AWS.
"TYPE 1 REPRESENTATION" shall have the meaning set forth in Section
8.1.
"TYPE 2 REPRESENTATION" shall have the meaning set forth in Section
8.1.
"USCC" shall have the meaning set forth in the preamble.
"USCC ADVANCE PAYMENTS" shall have the meaning set forth in item (xv)
of the definition of "USCC Assets" set forth in Section 1.1(b).
"USCC ASSETS" shall have the meaning set forth in Section 1.1(b).
"USCC ASSIGNED LICENSES" shall have the meaning set forth in the second
recital.
"USCC ASSUMED LIABILITIES" shall have the meaning set forth in Section
1.2(a).
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"USCC BRAND LICENSE AGREEMENT" means the Brand License Agreement to be
dated the Closing Date between USCC and AWS in substantially the form attached
hereto as EXHIBIT J.
"USCC BUSINESS" shall have the meaning set forth in the second recital.
"USCC CONTRACTS" shall have the meaning set forth in Section 4.18(a).
"USCC DISCLOSURE SCHEDULE" shall have the meaning set forth in the
first paragraph of Article 4.
"USCC ENTITIES" shall mean USCC and each Person listed on SCHEDULE III.
"USCC EXCLUDED LIABILITIES" shall have the meaning set forth in Section
1.2(b).
"USCC INDEMNITEE" shall have the meaning set forth in Section 8.3.
"USCC INTELLECTUAL PROPERTY" shall have the meaning set forth in
Section 4.11(b).
"USCC MATERIAL ADVERSE EFFECT" shall mean any change, event,
occurrence, fact, condition, effect or development that is materially adverse to
(i) the USCC Assigned Licenses, the USCC Systems and the USCC Assets, taken as a
whole, (ii) the ability of USCC to consummate, or cause the USCC Entities to
consummate, the Transactions or (iii) AWS's ownership and operation of the USCC
Assigned Licenses, the USCC Systems or the USCC Assets following the Closing,
taken as a whole, but in each case shall exclude any change, event, occurrence,
fact, condition, effect or development resulting from changes affecting the
wireless communications industry generally or general economic conditions in the
United States.
"USCC SERVICE AREA" shall have the meaning set forth in the second
recital.
"USCC STATE CONSENTS" shall mean the Consents listed on SCHEDULE 4.4.
"USCC SYSTEM CONSENTS" shall have the meaning set forth in Section
4.18(b).
"USCC SYSTEM CONTRACTS" shall have the meaning set forth in Section
4.18(b).
"USCC SYSTEMS" shall have the meaning set forth in the second recital.
"WARN ACT" shall mean the Worker Adjustment and Retraining Notification
Act.
"WORKING CAPITAL SCHEDULE" shall have the meaning set forth in Section
1.6(c).
(b) When a reference is made in this Agreement to an Article or a
Section, such reference shall be to an Article or a Section of this Agreement
unless otherwise indicated. Unless the context otherwise requires, the terms
defined hereunder shall have the meanings herein specified for all purposes of
this Agreement, applicable to both the singular and plural forms of any of the
terms defined herein. The terms defined in the
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singular shall have comparable meaning when used in the plural, and vice versa.
The word "including" shall connote "including without limitation." All
references in Articles 3 and 4 to a "Schedule" are references to such Schedule
as contained in the AWS Disclosure Schedule and USCC Disclosure Schedule,
respectively.
(c) In determining whether a document, asset or system is
"principally used or held for use in connection with the operation of the USCC
Systems" or relates to the operation of the USCC Systems or the USCC Business,
the following factors shall be considered, among other factors: (1) whether or
not the asset is reflected in the balance sheet of any USCC Entity; (2) whether
or not the asset is located in the USCC Service Area; and (3) whether or not
more than a majority of the asset's use (or, in the case of a contract, the
contract's value or utility) is in connection with the USCC Systems or the USCC
Business relative to the asset's use (or contract's value or utility) in
connection with all of USCC's operations and business, and, if more than a
majority of the asset's use (or contract's value or utility) is in connection
with the USCC Systems or the USCC Business, the percentage of such use (or value
or utility), both currently and historically.
Section 10.17. NO SET-OFF
The obligations under this Agreement and any Transaction Document shall
not be subject to set-off for any claim by any party or any of their respective
Affiliates. Not in limitation of the foregoing, the parties hereto shall not,
and shall cause their respective Affiliates not to, withhold performance of any
of their respective obligations under this Agreement or the Transaction
Documents due to a monetary claim under this Agreement or any Transaction
Document, or due to any monetary or non-monetary claim under any other agreement
between the parties or any of their respective Affiliates.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
AT&T WIRELESS SERVICES, INC
By /s/ Joshua King
----------------------------
Name: Joshua King
Title: Vice President
UNITED STATES CELLULAR
CORPORATION
By /s/ LeRoy T. Carlson Jr.
----------------------------
Name: LeRoy T. Carlson, Jr.
Title: Chairman
Signature Page to Exchange Agreement dated as of March 7, 2003
between United States Cellular Corporation and AT&T Wireless Services, Inc.
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