<PAGE> 1
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Quarterly Period Ended March 31, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition Period
From to .
--------------- ---------------
Commission file number 33-71002
33-71002-01
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
HORIZON FINANCE CORPORATION
Exact name of registrant as specified in its charter
23-2617703
Delaware 23-2741164
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Lindenwood Drive
Suite 125
Malvern, PA 19355
(Address of principal offices) (Zip Code)
(610) 651-5900
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
As of May 10, 1996, 100 shares of Horizon Finance Corporation Common Stock, par
value $0.01 per share, were outstanding.
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HORIZON CELLULAR TELEPHONE COMPANY, L.P.
HORIZON FINANCE CORPORATION
FIRST QUARTER REPORT ON FORM 10-Q
INDEX
Part I. Financial Information
<TABLE>
<S> <C>
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995................................................... 1
Consolidated Statements of Operations -
Three months ended March 31, 1996 and 1995............................................. 2
Consolidated Statement of Partners' Equity -
Three months ended March 31, 1996...................................................... 3
Consolidated Statements of Cash Flows -
Three months ended March 31, 1996 and 1995............................................. 4
Notes to Consolidated Financial Statements - March 31, 1996................................ 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................................. 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.......................................................... 10
Signatures.................................................................................................. 12
Exhibit Index............................................................................................... 13
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
(Unaudited) (Note)
<S> <C> <C>
Current assets:
Cash and cash equivalents..................................... $ 2,121,535 $ 1,626,815
Accounts receivable, less allowance for doubtful
accounts of $703,338 and $636,227........................... 11,009,697 11,736,236
Inventory..................................................... 760,700 770,734
Prepaid expenses.............................................. 1,032,980 776,292
------------ ------------
Total current assets............................................ 14,924,912 14,910,077
Property and equipment:
Cellular systems.............................................. 65,980,810 63,394,251
Other......................................................... 7,242,074 6,479,176
------------ ------------
73,222,884 69,873,427
Accumulated depreciation...................................... (19,943,151) (17,446,935)
------------ ------------
53,279,733 52,426,492
Licenses, net of accumulated amortization of
$16,065,390 and $14,490,949 .................................. 223,509,467 225,082,036
Advances to affiliates.......................................... 991,341 579,887
Other assets, net of accumulated amortization
of $15,717,850 and $14,047,654................................ 20,135,196 21,700,279
------------ ------------
Total assets.................................................... $312,840,649 $314,698,771
============ ============
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accounts payable.............................................. $ 3,330,623 $ 3,750,814
Accrued expenses.............................................. 4,930,691 5,947,192
Deferred revenue.............................................. 1,991,932 1,746,712
Current portion of revolving credit agreement................. 4,875,000 1,000,000
------------ ------------
Total current liabilities....................................... 15,128,246 12,444,718
Revolving credit agreement...................................... 73,125,000 77,500,000
11 3/8% senior subordinated notes............................... 174,182,769 169,431,376
Minority interest............................................... 2,840,138 2,837,809
Partners' equity:
Partners' contributions....................................... 127,197,323 127,197,323
Cumulative net loss........................................... (79,632,827) (74,712,455)
------------ ------------
Total partners' equity.......................................... 47,564,496 52,484,868
------------ ------------
Total liabilities and partners' equity.......................... $312,840,649 $314,698,771
============ ============
</TABLE>
Note: The consolidated balance sheet at December 31, 1995 has been derived
from the audited financial statements at that date but does not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See accompanying notes.
1
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HORIZON CELLULAR TELEPHONE COMPANY, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Revenues and sales:
Subscriber revenues........................................... $ 9,100,112 $ 5,768,711
Roaming revenues.............................................. 6,931,860 4,362,010
Toll revenue.................................................. 1,232,417 723,520
Equipment sales............................................... 764,268 648,633
----------- -----------
Total revenues and sales........................................ 18,028,657 11,502,874
Costs and expenses:
Cost of services.............................................. 2,447,051 1,830,446
Cost of equipment sales....................................... 1,516,642 1,214,842
General and administrative.................................... 3,845,802 3,038,574
Selling....................................................... 2,962,849 2,346,433
Depreciation and amortization................................. 5,354,326 4,199,604
----------- -----------
16,126,670 12,629,899
----------- -----------
Income (loss) from operations................................. 1,901,987 (1,127,025)
Interest expense, net of interest
income, totaling $13,178, and $8,583, respectively............ 6,819,220 6,026,495
----------- -----------
Loss before minority interest................................... (4,917,233) (7,153,520)
Minority interest............................................... (3,139) 27,099
----------- -----------
Net loss ....................................................... $(4,920,372) $(7,126,421)
=========== ===========
</TABLE>
See accompanying notes.
2
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HORIZON CELLULAR TELEPHONE COMPANY, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
LIMITED GENERAL
PARTNERS PARTNER TOTAL
------------ --------- ------------
<S> <C> <C> <C>
Partners' equity at December 31, 1995.............. $51,640,002 $844,866 $52,484,868
Net loss .......................................... (4,821,965) (98,407) (4,920,372)
----------- -------- -----------
Partners' equity at March 31, 1996................. $46,818,037 $746,459 $47,564,496
=========== ======== ===========
</TABLE>
See accompanying notes.
3
<PAGE> 6
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------
1996 1995
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss ....................................................... $(4,920,372) $(7,126,421)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization................................. 5,354,326 4,199,604
Provision for bad debts....................................... 136,152 115,574
Minority share of operating loss.............................. 3,139 (27,099)
Deferred interest............................................. 4,751,393 4,859,800
Amortization of deferred financing costs...................... 401,520 358,371
Changes in operating assets and liabilities:
Accounts receivable....................................... 590,387 346,024
Inventory................................................. 10,034 (37,193)
Prepaid expenses and other................................ (113,285) (163,967)
Accounts payable and accrued expenses..................... (1,620,581) (1,439,033)
Deferred revenue.......................................... 245,220 164,176
----------- -----------
Net cash provided by operating activities..................... 4,837,933 1,249,836
INVESTING ACTIVITIES
Purchases of property and equipment,
net of $531,500, and $128,967, purchased on account
or financed................................................... (3,082,852) (3,915,435)
License and systems acquisitions................................ -- (36,892)
Cash placed in escrow for license and system acquisition........ -- (2,001,496)
Change in other assets.......................................... -- (114,314)
----------- -----------
Net cash used in investing activities........................... (3,082,852) (6,068,137)
FINANCING ACTIVITIES
Repurchase of partner's equity.................................. -- (168,237)
Proceeds from revolving credit agreement........................ 2,500,000 5,000,000
Repayments of revolving credit agreement........................ (3,000,000) --
Repayment of advances from affiliate, net of $846,601
noncash minority investment in consolidated
partnerships in 1995.......................................... (760,361) (512,693)
----------- -----------
Net cash (used in) provided by financing activities............. (1,260,361) 4,319,070
----------- -----------
Net increase (decrease) in cash and cash equivalents............ 494,720 (499,231)
Cash and cash equivalents at beginning
of period..................................................... 1,626,815 2,069,889
----------- -----------
Cash and cash equivalents at end of period...................... $ 2,121,535 $ 1,570,658
=========== ===========
</TABLE>
See accompanying notes.
4
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HORIZON CELLULAR TELEPHONE COMPANY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Horizon
Cellular Telephone Company, L.P., a Delaware limited partnership, its
majority-owned subsidiary partnerships (the local operating companies and
Digital Radio, L.P.) and Horizon Finance Corporation, a wholly-owned subsidiary
of the Company which has no material assets (collectively referred to as "HCTC"
or the "Company"). Digital Radio, L.P. has had no operations since its inception
in 1993. All significant intercompany accounts and transactions have been
eliminated.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three-month period ended March 31,
1996 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1995.
Certain amounts in the consolidated financial statements have been
reclassified to conform to current year presentation.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates
3. NEW ACCOUNTING STANDARDS
In March 1995, The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of," which requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS 121 also addresses the accounting for long-lived assets
that are expected to be disposed of. The Company adopted SFAS in the first
quarter of 1996, and the effect of the adoption was not material.
SFAS No. 123, "Accounting for Stock-Based Compensation," is effective
for fiscal years beginning after December 15, 1995. SFAS 123 provides companies
with a choice to follow the provisions of SFAS 123 in determining stock-based
compensation expense or to continue with the provisions of APB 25, "Accounting
for Stock Issued to Employees." The Company will continue to follow APB 25 with
respect to the Override and LPAR Plan and will provide disclosures as required
by SFAS 123 in the December 31, 1996 notes to the consolidated financial
statements.
4. RECENT DEVELOPMENTS
On March 22, 1996, two of the Company's subsidiaries entered into
definitive agreements to sell the FCC Operating Licenses, together with
certain operating assets and liabilities, of the Georgia RSA #2 and the
Georgia RSA #6 (known collectively as the "Georgia Cluster") for a combined
sales price of approximately $90 million.
The Georgia Cluster covers approximately 474,000 pops and served
approximately 10,900 subscribers as of March 31, 1996. For the quarter ended
March 31, 1996, the Georgia Cluster generated approximately $3.0 million of
5
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HORIZON CELLULAR TELEPHONE COMPANY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
total revenues and sales, $1.5 million of earnings before depreciation and
amortization and interest expense, and $.15 million of net income, and accounted
for approximately $60.4 million of the Company's total consolidated assets at
March 31, 1996.
On May 9, 1996, one of the Company's subsidiaries entered into a
definitive agreement to sell the FCC Operating License, together with certain
operating assets and liabilities, of West Virginia RSA #3 ("Monongalia") for
approximately $35 million.
Monongalia covers approximately 269,000 pops and served approximately
7,300 subscribers as of March 31, 1996. For the quarter ended March 31, 1996,
Monongalia generated approximately $1.1 million of total revenues and sales, $.4
million of earnings before depreciation and amortization and interest expense,
and $.4 million of net loss, and accounted for approximately $16.5 million of
the Company's total consolidated assets at March 31, 1996.
The financial statements do not reflect either the estimated gain, or
any expenses incurred or expected to be incurred related to the sale of the
Georgia Cluster or Monongalia.
The sales of the Georgia Cluster and Monongalia are subject to certain
regulatory and other approvals.
The Company expects each of the above transactions to close during the
third quarter of 1996.
[The remainder of this page intentionally left blank.]
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company owns and operates cellular telephone systems which have
generated positive consolidated earnings before interest, depreciation, and
amortization (EBITDA) since 1993. Although there can be no assurance, EBITDA is
expected to continue to increase as growth in subscriber and roaming revenues
outpace variable cost increases.
Industry experience has shown that cellular systems typically incur net
losses and negative cash flow after capital expenditures in their initial years
of operations. Consistent with this experience, the Company has incurred net
losses since inception and expects to continue to incur net losses for the next
several years. As such, there can be no assurance that the Company's future
operations will generate operating or net income or sufficient cash flow to fund
debt service requirements and continued capital expenditures.
The consolidated results of operations include the revenues and
expenses of all the Systems since their respective dates of acquisition. The
following table sets forth the Systems, the date acquired, date operations
commenced, and total pops:
<TABLE>
<CAPTION>
DATE COMMENCEMENT TOTAL
SYSTEM ACQUIRED OF OPERATIONS POPS
------ -------- ------------- -----
<S> <C> <C> <C>
MID-ATLANTIC CLUSTER:
MD-3 (Frederick)........................... September 1991 January 1991 166,061
PA-6 (Lawrence)............................ August 1991 September 1991 374,989
PA-10-W (Bedford).......................... October 1991 January 1992 49,094
PA-1 (Crawford)............................ December 1992 April 1992 197,858
WV-3 (Monongalia).......................... December 1992 January 1991 268,755
NY-3 (Chautauqua).......................... March 1994 October 1991 492,406
MSA #257A (Hagerstown)..................... April 1994 August 1989 127,026
MSA #269A (Cumberland)..................... April 1994 November 1988 67,871
PA-7 (Indiana)............................. June 1995 July 1991 216,758
PA-2 (McKean).............................. June 1995 February 1994 N/A (1)
---------
Total 1,960,818
KENTUCKY CLUSTER:
KY-4 (Spencer)............................. November 1992 April 1993 232,030
KY-5 (Central Kentucky - Barren)........... October 1993 March 1992 155,384
KY-6 (Central Kentucky - Madison).......... October 1993 March 1991 251,085
KY-8 (Central Kentucky - Mason)............ October 1993 March 1992 117,540
---------
Total 756,039
GEORGIA CLUSTER:
GA-6 (Spalding)............................ March 1993 April 1993 196,029
GA-2 (Dawson).............................. August 1994 April 1991 277,635
---------
Total 473,664
---------
COMPANY TOTAL 3,190,521
=========
</TABLE>
(1) Operated under Interim Operating Authority.
As discussed in Item 5 below, in March 1996 and May 1996, several of
the Company's subsidiaries entered into definitive agreements to sell the FCC
Operating Licenses, together with certain operating assets and liabilities, of
its Georgia Cluster and Monongalia, respectively. Further, the Company
continues to consider and evaluate all previously disclosed strategic
alternatives available with regard to its remaining assets. Consummation of
the sales of the Georgia Cluster and
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Monongalia, and consummation of any of the other alternatives under
consideration will have a material effect on the Company's results from
operations, liquidity and capital resources. Accordingly, the following
discussion should be read in light of the uncertainty regarding future events
and requirements created by the sales of the Georgia Cluster and Monongalia and
the possible consummation of any other strategic transaction involving the
Company.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
The comparability of the historical quarterly financial data is
significantly impacted by the timing of the Company's acquisitions. Accordingly,
any fluctuation between periods may not necessarily be proportionate to the
level of operating activity.
Total revenues and sales increased approximately 57% to $18,029,000 for
the three months ended March 31, 1996 from $11,503,000 for the comparable period
in 1995. Of this increase, $3,331,000 was due to an increase in subscriber
revenues, $2,570,000 was due to an increase in roaming revenues, $510,000 was
due to an increase in toll revenue, and $115,000 was due to an increase in
equipment sales. Subscriber revenues increased approximately 58% to $9,100,000
(51% of total revenues and sales) for the three months ended March 31, 1996 from
$5,769,000 (50% of total revenues and sales) for the comparable period in 1995.
The growth in subscriber revenues was due primarily to the growth in the number
of subscribers associated with continued internal expansion as well as the
acquisition of Indiana: 89,918 subscribers in 15 Systems (2.8% penetration) at
March 31, 1996 versus 52,266 subscribers in 14 Systems (1.8% penetration) at
March 31, 1995. Roaming revenues increased approximately 59% to $6,932,000 (38%
of total revenues and sales) for the three months ended March 31, 1996 from
$4,362,000 (38% of total revenues and sales) for the comparable period in 1995.
The growth in roaming revenues was due primarily to increased coverage of the
licensed service area through the construction of additional cell sites. Toll
revenue increased approximately 71% to $1,233,000 (7% of total revenues and
sales) for the three months ended March 31, 1996 from $723,000 (6% of total
revenues and sales) for the comparable period in 1995. The growth in toll
revenue was due primarily to the increase in the number of subscribers and
growth in roaming revenues as noted above. Equipment sales increased
approximately 18% to $764,000 (4% of total revenues and sales) for the three
months ended March 31, 1996 from $649,000 (6% of total revenues and sales) for
the comparable period in 1995. The growth in equipment sales was due primarily
to the increase in the number of subscriber additions, somewhat offset by
continued decreases in cellular telephone equipment prices. Consistent with
industry practices, the Company frequently sells cellular equipment at
significant discounts, resulting in a negative gross margin. Such practices are
designed to attract and retain subscribers to allow the Company to focus on its
primary business of selling airtime, access, and other cellular services.
Total monthly revenues per average subscriber (excluding equipment
sales) decreased 7%, to $68 for the three months ended March 31, 1996 from $73
for the comparable period in 1995. A decline in total monthly revenues per
average subscriber is consistent with industry trends and reflects, among other
things, (i) the distribution of roaming revenues over a much larger subscriber
base noted above, and (ii) the fact that initial subscribers in a market tend to
use more cellular service than those who subscribe after a system has been in
operation for a period of time.
Cost of services increased approximately 34%, to $2,447,000 (14% of
total revenues excluding equipment sales) for the three months ended March 31,
1996 from $1,830,000 (17% of total revenues excluding equipment sales) for the
comparable period in 1995. The growth in the Company's subscriber base and the
expansion of its cellular coverage areas has led to greater cost of services,
primarily in the areas of system network, billing and administration. The
decrease in cost of services as a percentage of total revenues excluding
equipment sales resulted from continued operational efficiencies as well as the
fact that certain costs are fixed in nature and are being spread out over an
increasing revenue base.
Cost of equipment sales increased approximately 25%, to $1,517,000 for
the three months ended March 31, 1996 from $1,215,000 for the comparable period
in 1995. The increase was due primarily to the increase in the number of
subscriber additions, and their associated equipment purchases, as noted above.
General and administrative expenses increased approximately 27%, to
$3,846,000 (21% of total revenues and sales) for the three months ended March
31, 1996 from $3,039,000 (26% of total revenues and sales) for the comparable
period in 1995. The increase was due primarily to the overall growth of the
Company as well as the acquisition of Indiana. The decrease in general and
administrative expenses as a percentage of total revenues and sales resulted
from continued
8
<PAGE> 11
efficiencies in the Company's operations, as well as the fact that general and
administrative expenses tend to be somewhat fixed in nature and are being spread
over an increasing revenue base.
Selling expenses increased approximately 26%, to $2,963,000 (16% of
total revenues and sales) for the three months ended March 31, 1996 from
$2,346,000 (20% of total revenues and sales) for the comparable period in 1995.
The increase was due primarily to the increase in the number of subscribers
added. Average acquisition cost (marketing costs plus equipment subsidy) per
gross subscriber addition decreased approximately 14% to $314 for the three
months ended March 31, 1996 from $364 for the comparable period in 1995, due
primarily to continued expansion of the retail distribution channel and improved
margin on equipment costs.
EBITDA increased approximately 136% to $7,256,000 (40% of total
revenues and sales) for the three months ended March 31, 1996 from $3,073,000
(27% of total revenues and sales) for the comparable period in 1995, primarily
as a result of increased subscriber and roaming revenue and efficiencies in cost
of services and general and administrative expenses, as previously discussed.
Depreciation and amortization increased approximately 27%, to
$5,354,000 for the three months ended March 31, 1996 from $4,200,000 for the
comparable period in 1995. The increase was primarily the result of amortization
of license costs associated with the acquisition in 1995 of Indiana, as well as
an increase in depreciation related to additional cellular equipment placed into
service throughout 1995 and the first quarter of 1996.
Interest expense, net of interest income increased approximately 13%,
to $6,819,000 for the three months ended March 31, 1996 from $6,026,000 for the
comparable period in 1995. Average debt outstanding for the three months ended
March 31, 1996 was approximately $250.0 million at an average interest rate of
10.9%, compared to $205.0 million at an average interest rate of 11.7% for the
comparable period in 1995. The increase in interest expense was due primarily to
accretion related to the Notes and borrowings under the revolving credit
agreement, offset somewhat by the lower overall average interest rate on
borrowings.
LIQUIDITY AND CAPITAL RESOURCES
The cellular telephone business requires substantial capital to
acquire, construct, and expand cellular telephone systems and to fund
operations. The Company has incurred approximately $3.1 million for capital
expenditures through March 31, 1996 to construct additional cell sites to
improve and expand signal coverage and to purchase additional radio equipment to
increase system capacity. The Company anticipates it will continue to require
substantial capital for such expenditures throughout the remainder of 1996. The
Company may also consider purchasing and retiring additional notes as market
conditions may allow, subject to certain covenants as set forth under the
Company's revolving credit facility.
The Company anticipates that the net proceeds generated from the sale
of the Georgia Cluster and Monongalia will be used to reduce borrowings under
the Credit Agreement, to fund future capital expenditures and for general
working capital purposes. The Company anticipates that the remaining borrowings
available under the revolving credit agreement along with cash flow generated
from operations and remaining proceeds from the sales of the Georgia Cluster and
Monongalia will provide sufficient liquidity to satisfy the Company's financial
obligations for the foreseeable future. The indenture governing the Notes and
the revolving credit agreement contain covenants and restrictions relating to,
among other things (i) disposing of certain subsidiaries, (ii) future
acquisitions, unless future ratios are fulfilled, (iii) dividend declarations or
payments, (iv) maintenance of certain financial ratios, and (v) the incurrence
of additional indebtedness. There were $76.5 million of borrowings outstanding
($13.5 million available) under the revolving credit agreement as of May 10,
1996, at an average interest rate of 8.2 %.
The Company's EBITDA has been positive since 1993. A continuation of
positive EBITDA would be consistent with the historical operating performance of
more established industry operators with longer operating histories. Although
there can be no assurances, management believes the Company's operations will
result in operating cash flow which, along with borrowings available under the
revolving credit agreement and remaining proceeds from the sales of the Georgia
Cluster and Monongalia, will be sufficient to meet debt service and capital
expenditure requirements. If the Company does not achieve the anticipated cash
flow, the Company will have to either reduce capital expenditures or raise funds
through other measures such as refinancings or asset sales.
9
<PAGE> 12
CHANGES IN FINANCIAL CONDITION
March 31, 1996 compared with December 31, 1995. Current assets and net
working capital (deficit) amounted to $14.9 million and $(.2) million,
respectively, at March 31, 1996 as compared to $14.9 million and $2.5 million,
respectively, at December 31, 1995. Compared to December 31, 1995, accounts
receivable decreased $.7 million, due primarily to efforts undertaken to
improve customer and roamer payment cycles. Compared to December 31, 1995,
current liabilities increased by $2.7 million, primarily the result of an
increase in the current portion of the revolving credit facility, offset
somewhat by a seasonal decrease in year-end accounts payable and accrued
expenses. The Company generated approximately $4.8 million and $1.2 million in
cash from operations for the three month periods ended March 31, 1996 and
1995, respectively.
Long-term debt increased to $252.2 million at March 31, 1996 from
$247.9 million at December 31, 1995 as a result of continuing accretion of the
senior subordinated notes throughout the first quarter of 1996, offset by $.5
million of repayments of borrowings under the revolving credit agreement.
[The remainder of this page intentionally left blank.]
10
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PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On May 9, 1996, one of the Company's subsidiaries entered into a
definitive agreement to sell the FCC Operating License, together with certain
operating assets and liabilities, of Monongalia to an affiliate of PriCellular
Corporation for approximately $35 million. The sale is subject to certain
regulatory and other approvals. The Company expects the transaction to close
during the third quarter of 1996.
Monongalia covers approximately 269,000 pops and served approximately
7,300 subscribers as of March 31, 1996. For the quarter ended March 31, 1996,
Monongalia generated approximately $1.1 million of total revenue and sales, $.4
million of earnings before depreciation and amortization, interest expense and
income taxes, and $.4 million of net loss, and accounted for approximately $16.5
million of the Company's total consolidated assets at March 31, 1996.
The Company continues to evaluate the previously disclosed strategic
alternatives available with regard to its remaining assets and no definitive
decision has been made as to whether the Company will pursue any such strategic
alternatives.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.1 Asset Acquisition Agreement dated as of March 22,
1996 between Horizon Cellular Telephone Company of
Spalding, L.P. and Columbus Cellular Telephone
Company and Macon Cellular Telephone Systems Limited
Partnership.
10.2 Asset Acquisition Agreement dated as of March 22,
1996 between Horizon Cellular Telephone Company of
Dawson, L.P. and Cellco Partnership.
10.3 Fifth Amendment to Credit Agreement dated as of
February 26, 1996 among Horizon Cellular Telephone
Company, L.P., Horizon Finance Corporation, the
lenders listed therein, Bankers Trust Company (as
Arranging and Administrative Agent), Citicorp North
America, Inc. (as Arranging and Collateral Agent),
and the subsidiaries of Horizon Cellular Telephone
Company, L.P. listed therein.
10.4 Letter Agreement dated March 22, 1996 between Horizon
Cellular Telephone Company of Dawson, L.P. and Cellco
Partnership.
27 Financial Data Table.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three month
period ended March 31, 1996.
11
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
HORIZON CELLULAR TELEPHONE
COMPANY, L.P.
By: KCCGP, L.P., its general partner
By: HORIZON, G.P., INC., its corporate general
partner
Date: May 14, 1996 By: /s/ Bruce M. Hernandez
----------------------------------------------
Bruce M. Hernandez, Vice President and
Chief Financial Officer
Date: May 14, 1996 By: /s/ Steven B. Figard
----------------------------------------------
Steven B. Figard, Vice President - Chief
Accounting Officer
HORIZON FINANCE CORPORATION
Date: May 14, 1996 By: /s/ Bruce M. Hernandez
----------------------------------------------
Bruce M. Hernandez, Vice President
Date: May 14, 1996 By: /s/ Steven B. Figard
----------------------------------------------
Steven B. Figard, Vice President - Assistant
Treasurer and Chief Accounting Officer
12
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
- ------- ----
<S> <C>
10.1 Asset Acquisition Agreement dated as of March 22, 1996 between Horizon
Cellular Telephone Company of Spalding, L.P. and Columbus Cellular
Telephone Company and Macon Cellular Telephone Systems Limited
Partnership.......................................................................... 12
10.2 Asset Acquisition Agreement dated as of March 22, 1996 between Horizon
Cellular Telephone Company of Dawson, L.P. and Cellco Partnership.................... __
10.3 Fifth Amendment to Credit Agreement dated as of February 26, 1996 among
Horizon Cellular Telephone Company, L.P., Horizon Finance Corporation,
the lenders listed therein,Bankers Trust Company (as Arranging and
Administrative Agent), Citicorp North America, Inc. (as Arranging
and Collateral Agent), and the subsidiaries of Horizon Cellular Telephone
Company, L.P. listed therein......................................................... __
10.4 Letter Agreement dated March 22, 1996 between Horizon Cellular Telephone
Company of Dawson, L.P. and Cellco Partnership....................................... __
27 Financial Data Table................................................................. __
</TABLE>
13
<PAGE> 1
================================================================================
ASSET ACQUISITION AGREEMENT
BETWEEN
HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.
AND
COLUMBUS CELLULAR TELEPHONE COMPANY and
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
March 22, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Certain Definitions; Purchase and Sale of Assets; Assumption of Liabilities . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 Assumption of Liabilities by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.5 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.6 Assets Not Assignable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. Escrows, Acquisition Price and Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Escrow Amount; Indemnification Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Acquisition Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Acquisition Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Allocation of Acquisition Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.6 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.7 Closing Costs; Transfer Taxes and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3. Representations and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1 Organizational Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3 Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.5 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.6 Permits; FCC Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.8 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.9 Personal Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.10 Contracts and Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.11 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.12 Title; Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.13 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.17 ERISA Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.18 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4. Representations and Warranties of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1 Organizational Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3 Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
4.7 FCC Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.8 Financial Ability to Close . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5. Covenants of Seller and Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1 Continuance of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Access to Information; Notice of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3 Governmental Permits and Approvals; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.4 Employees; Employee Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.5 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.6 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.7 Restrictions on Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.8 Casualty or Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.9 Supplemental Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.10 Disclaimer of Other Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 22
5.11 Environmental Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.12 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.13 Release of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.14 Other Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.15 Terminated Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.16 Installation of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.17 Securities Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.18 Agent Chargeback Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.19 Unserved Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.20 North Griffin Contour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.21 Microwave Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.22 Deferred Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6. Conditions Precedent to Purchaser's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.1 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2 Premerger Notification Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.3 Representations and Warranties on Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.4 Terms, Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.6 Absence of Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.7 Environmental Audits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.8 Closing Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7. Conditions Precedent to Seller's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.1 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Premerger Notification Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.3 Representations and Warranties on Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.4 Terms, Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.5 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.6 Closing Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C>
8. Deliveries at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.1 Seller's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 Purchaser's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.1 Obligation to Indemnify by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.2 Obligation to Indemnify by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.3 Procedures for Claims Between the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.4 Defense of Third-Party Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.5 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12. Breaches and Defaults; Termination; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.1 Breaches and Defaults; Opportunity to Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.1 Resolution of Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.4 Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.5 Indemnification of Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.9 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.11 Assignment; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.12 Non-Recourse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.13 Beneficiaries of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.14 Counterparts; Facsimile Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.15 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.16 Computation of Days; Holidays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.17 Joint and Several . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.18 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
-iii-
<PAGE> 5
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
2.1 Form of Escrow Agreement
2.3(a) Form of Instrument of Assumption
8.1(a)(i) Form of General Assignment and Instrument of Conveyance
8.1(a)(ii) Form of Assignment of Leases and Assumption of Obligations
8.1(a)(iii) Form of Assignment of Contracts and Assumption of Obligations
8.1(b)(i) Form of Opinion of Seller's Corporate Counsel
8.1(b)(ii) Form of Opinion of Seller's FCC Counsel
8.2(f) Form of Opinion of Purchaser's Counsel
SCHEDULES
1.2(c) Personal Property
1.3(g) Certain Affiliate Assets Not Used Exclusively for the System
1.3(i) Other Excluded Assets
2.4 Capital Expenditures
2.4(a)(iii) System Revenue Adjustment Components
3.6(b) FCC Licenses
3.8 Real Property Leases
3.9 Material Personal Property Leases
3.10 Material Contracts
3.11 Seller's Required Consents
3.14 Taxes
3.17 ERISA
3.18 Personnel
4.6 Purchaser's Consents
5.15 Terminated Contracts
-iv-
<PAGE> 6
ASSET ACQUISITION AGREEMENT
THIS ASSET ACQUISITION AGREEMENT (this "Agreement") is made as of March
22, 1996 between HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P., a
Delaware limited partnership ("Seller"), and COLUMBUS CELLULAR TELEPHONE
COMPANY, a Georgia general partnership ("Columbus"), and MACON CELLULAR
TELEPHONE SYSTEMS LIMITED PARTNERSHIP, a New Hampshire limited partnership
("Macon", and collectively with Columbus, "Purchaser").
W I T N E S S E T H
WHEREAS, Seller is the sole holder of certain licenses, including cellular
and microwave licenses, granted by the Federal Communications Commission (the
"FCC") for the Georgia Non-Wireline Cellular Rural Service Area Number 6
("RSA");
WHEREAS, Seller is the owner and operator of the cellular telephone
communication system in the RSA (the "System") and, in connection therewith, is
engaged in the business of marketing, selling and providing cellular telephone
service in the RSA (the "Business");
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
acquire from Seller, all of the Purchased Assets (as hereinafter defined) in
accordance with the terms and conditions hereinafter set forth; and
WHEREAS, the parties acknowledge that the terms and conditions set forth
in this Agreement and the performance by the parties of their respective
obligations hereunder are subject to and are intended to be in compliance with
all FCC and other state and local governmental rules and regulations governing
the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Certain Definitions; Purchase and Sale of Assets; Assumption of
Liabilities.
1.1 Certain Definitions. As used in this Agreement, the following
terms have the following meanings:
(a) "affiliate", with respect to any person, means any other
person controlling, controlled by or under common control with such person.
(b) "business day" means any day other than a Saturday, Sunday,
legal holiday in the Commonwealth of Pennsylvania or other day of the year on
which banks are authorized or required by law to close.
(c) "Closing Date Balance Sheet" shall mean the closing balance
sheet for Seller prepared by Seller as of the Closing Date (as hereinafter
defined) reported in accordance with GAAP. Such Closing Date Balance Sheet
shall be used for purposes of Section 2.4, and the
<PAGE> 7
components of the Net Working Capital element of the Closing Statement shall be
taken from the Closing Date Balance Sheet.
(d) "Closing Statement" shall mean the statement provided to
Purchaser by Seller pursuant to Section 2.4(c).
(e) "Environmental Requirements" shall mean all applicable
present and former statutes, regulations, rules, ordinances, codes, licenses,
permits, orders, approvals, plans, authorizations, concessions, franchises,
criteria and similar items of all governmental or regulatory bodies and all
applicable judicial, administrative, and regulatory decrees, judgments and
orders relating to the protection of human health or the environment,
including:
(i) requirements, including those pertaining to
reporting, licensing, permitting, investigation and remediation of emissions,
discharges, releases or threatened releases of Hazardous Substances, chemical
substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes whether solid, liquid or gaseous in nature, into the air,
surface water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
chemical substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, liquid, or gaseous in nature; and
(ii) all requirements pertaining to the protection of the
health and safety of employees of Seller or the public.
(f) "Executive Officers" shall mean Messrs. Michael E.
Kalogris, Steven R. Skinner, Bruce M. Hernandez, and Stefan C. Karnavas.
(g) "GAAP" shall mean generally accepted accounting principles
consistently applied.
(h) "governmental or regulatory body" means any government or
political subdivision thereof, whether federal, state, local or foreign, or any
agency or instrumentality of any such government or political subdivision.
(i) "Hazardous Substances" shall mean any material:
(i) the presence of which requires remediation under
any Environmental Requirements;
(ii) that is defined as a "hazardous waste", "hazardous
substance", "pollutant or contaminant", "toxic substance" or any other similar
designation or is otherwise subject to regulation under any Environmental
Requirements, including the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA"), as amended by the Superfund Amendments and
Reauthorization Act of 1986 (SARA), (42 U.S.C. 9601, et seq.); the Clean Air
Act (42 U.S.C. 7401, et seq.); the Clean Water Act (33 U.S.C. 1251, et seq.),
the Toxic
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Substances Control Act (15 U.S.C. 2601, et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. 6901, et seq.), the Oil Pollution Act of 1990 (33
U.S.C. 2701, et seq.), and the Safe Drinking Water Act (42 U.S.C. 300(f) et
seq.);
(iii) that is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is
regulated by any governmental or regulatory body;
(iv) the presence of which on the Real Property (as
hereinafter defined) causes or threatens to cause a nuisance upon the Real
Property or to adjacent properties or poses or threatens to pose a hazard to
the health or safety of persons on or about the Real Property;
(v) the presence of which on adjacent properties could
constitute a trespass;
(vi) that contains gasoline, diesel fuel, petroleum, or other
petroleum hydrocarbons;
(vii) that contains polychlorinated biphenyls, asbestos or
urea formaldehyde foam insulation; and
(viii) that contains radon gas that is present in the Real
Property.
(j) "herein", "hereby", "hereunder", "hereof" or other
equivalent words refer to this Agreement and not solely to the particular
section or portion of this Agreement in which any such word is used.
(k) "includes", "including" or other equivalent words mean
"including, without limitation".
(l) "lien or other encumbrance" means any lien, pledge,
mortgage, security interest, claim, lease, charge, option, right of first
refusal, easement, servitude, transfer restriction under any stockholder or
similar agreement, encumbrance or any other restriction or limitation
whatsoever.
(m) "Material Adverse Change" means a material adverse change
in the Business, taken as a whole; provided, however, that neither (i) the
effects of any events, circumstances or conditions resulting from changes,
developments or circumstances in worldwide or national conditions (political,
economic, regulatory or otherwise) that adversely affect the markets where the
System is operated or affect industries related to the telecommunications
business generally (including proposed legislation or regulations by any
governmental or regulatory body or the introduction of any technological
changes in the telecommunications industry), or adversely affect a broad group
of industries generally, nor (ii) any effects of competition (including
competition resulting from personal communication services or the introduction
of any new technological changes in the telecommunications industry, but
excluding competition from the
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wireline cellular telephone communication system in the markets in which the
System is operated), shall be deemed to give rise to a Material Adverse Change.
(n) "Material Adverse Effect" means an effect that would result
in a Material Adverse Change; provided, however, that neither (i) the effects
of any events, circumstances or conditions resulting from changes, developments
or circumstances in worldwide or national conditions (political, economic,
regulatory or otherwise) that adversely affect the markets where the System is
operated or affect industries related to the telecommunications business
generally (including proposed legislation or regulation by any governmental or
regulatory body or the introduction of any technological changes in the
telecommunications industry), or adversely affect a broad group of industries
generally, nor (ii) any effects of competition (including competition resulting
from personal communication services or the introduction of any new
technological changes in the telecommunications industry, but excluding
competition from the wireline cellular telephone communication system in the
markets in which the System is operated), shall constitute a Material Adverse
Effect.
(o) "Net Working Capital" shall mean the accounts receivable,
net of allowance for doubtful accounts, plus inventory (net of allowance for
obsolete inventory), plus prepaid expenses (excluding prepaid insurance
premiums), less trade payables, accrued expenses and all other current
liabilities (except (i) Advances from Affiliates and (ii) current maturities of
debt), as all such amounts are reflected on the Closing Date Balance Sheet; in
particular, the accounts receivable and inventory are to be reported in a
manner consistent with the accounts receivable (net of allowance for doubtful
accounts) and inventories (net of allowance for obsolete inventory) as to which
representations are made herein; provided, however, that intercompany account
balances with Horizon Cellular Telephone Company of Dawson, L.P., an affiliate
of Seller, shall be disregarded in the calculation of Net Working Capital.
(p) "Permitted Encumbrances" means (i) any lien or other
encumbrance for taxes and assessments, not yet past due or otherwise being
contested in good faith, (ii) any lien or other encumbrance arising out of
deposits made to secure leases, and (iii) any lien or other encumbrance that
does not materially interfere with the use by Seller (or its successors in
interest, assuming such use is substantially similar to that of Seller) of the
property subject thereto or affected thereby, including easements, rights of
way, public utilities, reservations in land patents or zoning ordinances.
(q) "person" means any individual, corporation, limited
liability company, partnership, limited liability partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
governmental or regulatory body or other entity.
(r) "to Seller's knowledge" or any similar phrase means the
actual knowledge of one of the Executive Officers after due inquiry of James
Price, the general manager of the System.
1.2 Purchased Assets. On the terms and subject to the conditions
contained in this Agreement, Seller agrees to sell, assign, transfer and
deliver to Purchaser all of the right, title
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and interest of Seller in or to all of the assets used or useful in the
operation of the Business as it is currently being conducted, including the
following (collectively referred to herein as the "Purchased Assets"):
(a) all accounts receivable billed and unbilled, and all
negotiable instruments or other instruments and chattel paper generated in the
conduct of the Business;
(b) all inventory, including cellular mobile telephones and
related accessories (collectively, the "Inventory");
(c) all furniture, fixtures, cellular systems and other
equipment and machinery, cellular switches, cell site equipment, electrical
power units, antennas, transmission lines, microwave equipment, test equipment,
tools, vehicles, office equipment, improvements, parts and other tangible
personal property other than Inventory, as described on Schedule 1.2(c);
(d) all fee simple parcels, together with the buildings,
structures and improvements erected thereon, and together with all easements,
rights and privileges appurtenant thereto (the "Owned Real Property");
(e) all leasehold interests created by all leases of personal
property, including those as described on Schedule 3.9 (the "Personal Property
Leases"), or all real property leases as described on Schedule 3.8 (the "Real
Property Leases") under which Seller is a lessee or lessor;
(f) all of Seller's interest in all buildings, towers,
facilities and other structures and improvements located on the Owned Real
Property and the real property subject to a Real Property Lease (the "Leased
Real Property", and together with the Owned Real Property, the "Real
Property"), together with Seller's interest in all fixtures, furnishings,
installations, machinery, equipment and appliances used in connection with the
operation, maintenance or occupancy of the Real Property and Seller's interest
in all leasehold improvements;
(g) all prepaid expenses, advance payments, deferred charges,
security and other deposits deposited by Seller with third parties, including
deposits with respect to Leased Real Property or other Purchased Assets;
(h) all licenses, authorizations, waivers, permits, franchises,
registrations, certificates of public convenience and necessity, approvals and
operating rights to the extent transferable under applicable law or with any
required consent, including all licenses, permits and authorizations issued by
the FCC and required by the FCC for the operation of the System as it is
currently being operated as described on Schedule 3.6(b) (the "FCC Licenses")
and pending applications with the FCC, any interim operating authority, or
other regulatory authority, in connection with the Business and the
construction and operation of the System, and all planning, zoning, building,
environmental, occupancy and other permits and licenses used in connection with
the System (collectively, and including the FCC Licenses, the "Permits");
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(i) all rights of Seller under all contracts and agreements
relating to the Business except as otherwise provided in Section 5.15
(collectively, and including the Personal Property Leases and the Real Property
Leases, the "Contracts"); and
(j) originals or copies (at the option of Seller) of all books
and records, manuals, files and operating data relating exclusively to the
Business.
1.3 Excluded Assets. Notwithstanding anything to the contrary
contained herein or otherwise, the Purchased Assets do not include the
following:
(a) all cash on hand and in financial institutions, cash
equivalents, marketable securities and bonds;
(b) all federal, state and local income and franchise tax
credits and tax refund claims;
(c) the minute books, partnership record books and tax returns
of Seller;
(d) any insurance policies maintained by Seller with respect to
the Business;
(e) all claims, causes of action and rights of recovery arising
out of, or relating to, events or occurrences prior to the Closing Date
relating to the System or the Business, whether asserted or commenced before,
on or after the Closing Date;
(f) Seller's rights under this Agreement;
(g) those assets set forth on Schedule 1.3(g), which assets are
owned by affiliates of Seller and are not necessary for the operation of the
System as it is currently being operated;
(h) all prepaid insurance premiums; and
(i) the personal effects, memorabilia and other assets described
on Schedule 1.3(i).
1.4 Assumption of Liabilities by Purchaser. On the Closing Date,
Purchaser shall only assume and agree to discharge as and when due (a) the
liabilities of Seller that are reflected on the Closing Date Balance Sheet as
current liabilities except for the Excluded Liabilities (as hereinafter
defined), and (b) all obligations of Seller pursuant to the Contracts and the
Terminated Contracts (in accordance with Section 5.15), but only to the extent
such obligations either relate to periods or goods or services provided to
Purchaser on or after the Closing Date or they are included within the
obligations assumed pursuant to the immediately preceding clause (a)
(collectively, the "Assumed Liabilities"). It is expressly understood that
Purchaser shall not be liable for and shall not assume any of Seller's
obligations or liabilities (whether known, or unknown, matured or unmatured, or
fixed or contingent) other than the Assumed Liabilities.
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1.5 Excluded Liabilities. Purchaser shall not assume any of the
following liabilities or obligations of Seller (collectively, the "Excluded
Liabilities"):
(a) any obligations and liabilities of Seller to any of
Seller's affiliates for advances or otherwise;
(b) any liabilities for legal, accounting and audit fees, for
environmental audit fees (as contemplated by Section 2.7), and any other
expenses incurred by Seller in connection with the preparation of, negotiation
of, and performance under, this Agreement (and the transactions and other
agreements contemplated hereby);
(c) any liabilities for Seller's federal, state or local income
taxes or any sales tax imposed upon the consummation of this transaction;
(d) any liabilities of Seller to pay severance benefits, if
any, to any employees of Seller whose employment is terminated by Seller prior
to or in connection with the sale of the Business; and
(e) any liabilities of Seller as a borrower under any loan
agreements, subordinated debt agreements or other credit facilities.
1.6 Assets Not Assignable. To the extent that any interest in the
Contracts, Terminated Contracts (subject to Section 5.15), Permits or other
Purchased Assets is not capable of being assigned, transferred or conveyed
without the consent, waiver or authorization of a third person (including a
governmental or regulatory body), or if such assignment, transfer or conveyance
or attempted assignment, transfer or conveyance would constitute a breach of
any of the Contracts, Terminated Contracts, Permits or other Purchased Assets,
or a violation of any law, statute, decree, rule, regulation or other
governmental edict or is not immediately practicable, this Agreement shall not
constitute an assignment, transfer or conveyance of such interest, or an
attempted assignment, transfer or conveyance of such interest (any such
interest being referred to herein as a "Restricted Interest"). Anything in
this Agreement to the contrary notwithstanding, Seller shall not be obligated
to transfer to Purchaser any Restricted Interest without first having obtained
the required consent, waiver or authorization necessary for such transfer.
2. Escrows, Acquisition Price and Closing.
2.1 Escrow Amount; Indemnification Escrow.
(a) Concurrently with the execution of this Agreement,
Purchaser has delivered to CoreStates Bank, N.A., Philadelphia, Pennsylvania,
as escrow agent (the "Escrow Agent"), the amount of One Million Seven Hundred
Fifty Thousand Dollars ($1,750,000), which amount (including, unless otherwise
stated herein, any interest earned on such sum thereafter, the "Escrow Amount")
shall be held by the Escrow Agent pursuant to the terms of a certain escrow
agreement of even date herewith (the "Escrow Agreement") in the form of Exhibit
2.1. In the
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event of a termination of this Agreement by Seller in accordance with the terms
of Section 12.2(c)(ii), in addition to any other remedies available to Seller,
Seller shall be entitled to retain the entire Escrow Amount. Nothing in this
Section 2.1(a) or in the Escrow Agreement shall be construed as limiting the
liability of Purchaser under this Agreement to the amount of the Escrow Amount.
(b) As security for the indemnification covenants of Seller
contained in this Agreement, on the Closing Date, Escrow Agent shall retain One
Million Seven Hundred Fifty Thousand Dollars ($1,750,000), which amount
(including, unless otherwise stated herein, any interest earned thereon, the
"Indemnification Escrow") shall be held by the Escrow Agent pursuant to the
terms of the Escrow Agreement. Purchaser shall be entitled to draw upon the
Indemnification Escrow for payment of all indemnification claims made by
Purchaser to the extent, but only to the extent, provided in the Escrow
Agreement. Notwithstanding anything to the contrary contained herein or in
the Escrow Agreement, the Indemnification Escrow shall constitute Purchaser's
sole recourse for recovery of Seller's indemnification covenants contained in
this Agreement.
2.2 Acquisition Price. The aggregate acquisition price for the
Purchased Assets shall be Thirty-Five Million Dollars ($35,000,000) (the
"Preliminary Acquisition Price"), subject to adjustment as provided herein (as
so adjusted, the "Acquisition Price").
2.3 Manner of Payment. Subject to adjustment as provided in this
Agreement, at Closing:
(a) Purchaser shall assume the Assumed Liabilities by written
instrument of assumption in the form of Exhibit 2.3(a) (the "Instrument of
Assumption");
(b) Purchaser and Seller shall provide joint written
instructions to Escrow Agent (the "Escrow Agent Instructions") instructing
Escrow Agent to retain One Million Seven Hundred Fifty Thousand Dollars
($1,750,000) of the Escrow Amount as the Indemnification Escrow and to deliver
the balance thereof (i.e., the interest earned thereon) to Purchaser;
(c) Purchaser shall pay to Seller (or to any other person as
Seller may direct in writing to fulfill Seller's covenant under Section 5.13)
by wire transfer of immediately available funds to such banks and accounts
thereat as shall be specified in writing by Seller, the following:
(i) the amount of Thirty-Three Million Two Hundred
Fifty Thousand Dollars ($33,250,000) (the "Closing Cash Payment"), representing
the difference between the Preliminary Acquisition Price and the
Indemnification Escrow; plus
(ii) if the Closing Date is after December 31, 1996, the
amount obtained (the "Accretion Factor Payment") by multiplying (A) the
Preliminary Acquisition Price times (B) twelve percent (0.12) times (C) the
number of days in the period from and including September 1, 1996 until the
Closing Date divided by 365; plus or minus
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(iii) the Initial Adjustments Amount (as hereinafter
defined).
2.4 Acquisition Price Adjustment.
(a) The Preliminary Acquisition Price shall be increased or
decreased (the "Acquisition Price Adjustment") on a dollar-for-dollar basis for
the cumulative net adjustment required by the following:
(i) Set forth on Schedule 2.4(a)(i) is a summary of
Seller's budgeted capital expenditures ("Budgeted Capital Expenditures") for
calendar year 1996. The Preliminary Acquisition Price shall be increased to
the extent that as of the Closing Date (A) Seller makes any such capital
expenditures during 1996 (i.e., Seller makes such capital expenditures in
excess of those that would have been made had the Budgeted Capital Expenditures
been made pro-rata on a daily basis throughout 1996) or (B) Seller makes any
other capital expenditures that are made with the consent of Purchaser (such
consent not to be unreasonably withheld, conditioned or delayed) and the
Preliminary Acquisition Price shall be decreased to the extent that, as of the
Closing Date, Seller has not made capital expenditures equal to the capital
expenditures that would have been made through the Closing Date had the
Budgeted Capital Expenditures been made pro-rata on a daily basis throughout
1996. At least ten (10) business days prior to Closing, Seller will deliver to
Purchaser a schedule (the "Capital Expenditures Summary") detailing the capital
expenditures made by Seller during 1996 and detailing the aggregate amount, if
any, of the capital expenditures for which Seller or Purchaser is entitled to
payment pursuant to this section. The determination of whether an expenditure
constitutes a capital expenditure shall be made in accordance with GAAP, and
shall include capital expenditures for which payment has not yet been made by
Seller but for which a current liability has been established in Seller's books
and records; provided, however, that any such capital expenditures shall not
include any expenditures for temporary cell site facilities.
(ii) The Preliminary Acquisition Price shall be further
adjusted by the dollar amount (positive or negative) of the Net Working Capital
of Seller on the Closing Date.
(iii) In the event that Seller fails to produce, during the
Subscriber Period (as hereinafter defined), at least ninety percent (90%) of
the Budgeted Average Subscribers for the System, there shall be a reduction in
the Preliminary Acquisition Price equal to the product of Nine Hundred Dollars
($900) times the difference between ninety percent (90%) of the Budgeted
Average Subscribers for the System at the end of the Subscriber Period and the
Actual Average Subscribers (as hereinafter defined) at the end of the
Subscriber Period. In the event that Seller produces, during the Subscriber
Period, more than one hundred ten percent (110%) of the Budgeted Average
Subscribers for the System, there shall be an increase in the Preliminary
Acquisition Price equal to the product of Nine Hundred Dollars ($900) times the
difference between the Actual Average Subscribers at the end of the Subscriber
Period and one hundred ten percent (110%) of the Budgeted Average Subscribers
for the System at the end of the Subscriber Period.
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As used herein:
(A) the term "Subscriber Period" shall mean the period from
January 1, 1996 through the end of the month last completed prior to the
Closing Date, provided that if such period would be longer than twelve (12)
months such period shall be the twelve (12) month period ending on the month
last completed on or prior to the Closing Date;
(B) the term "Actual Average Subscriber" shall mean, with
respect to the System, a measurement of the average basic subscriber base of
the System obtained by dividing (I) the System Revenue (as hereinafter defined)
at the end of the Subscriber Period by (II) the product obtained by multiplying
the Average Revenue Per Subscriber for the last month of the Subscriber Period
(as defined and reflected on Schedule 2.4(a)(iii)) times the number of months
in the Subscriber Period;
(C) the term "Budgeted Average Subscribers" for the
Subscriber Period shall be reflected on Schedule 2.4(a)(iii); and
(D) the term "Promotional Airtime Charges" shall mean
Seller's charge of $.12 per minute for free access and airtime to its
subscribers which charge shall be recognized in accordance with Seller's
accounting policies and procedures in effect as of the execution of the
Agreement.
(E) the term "System Revenue" shall mean Seller's
subscriber access and airtime charges (less credits and adjustments), each as
reflected on Seller's income statements for the relevant period determined in
accordance with Seller's past practices; provided, however, that System Revenue
shall not include Promotional Airtime Charges in excess of (i) two percent (2%)
of Seller's access and airtime charges (less credits and adjustments) from the
date hereof through and including June 30, 1996 and (ii) five percent (5%) of
Seller's access and airtime charges (less credits and adjustments) after June
30, 1996; provided further that System Revenue shall not include any
Promotional Airtime Charges after June 30, 1996 for purposes of calculating any
increase in the Preliminary Acquisition Price.
(b) The initial adjustments to the Preliminary Acquisition
Price described in Section 2.4(a) will be made at the Closing based upon a good
faith estimate by Seller of the dollar amounts of such adjustments (the
"Initial Adjustments Amount"), such estimates to be delivered by Seller to
Purchaser at least ten (10) business days prior to Closing ("Initial Adjustment
Amount Statement").
(c) As promptly as practicable after the Closing Date (but in
no event later than sixty (60) days thereafter) Seller shall prepare and
deliver to Purchaser for its review and comment (i) the Closing Date Balance
Sheet and (ii) the Closing Statement reasonably detailing as of the opening of
business on the Closing Date (or other time period contemplated by this
Agreement) Seller's determination of each element of the Acquisition Price
Adjustment described in Section 2.4(a). If Purchaser objects to any amounts
reflected on the Closing Date Balance Sheet or the Closing Statement, Purchaser
must, within fifteen (15) business days after
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Purchaser's receipt of the Closing Date Balance Sheet and Closing Statement,
give written notice (the "Notice") to Seller specifying in reasonable detail
its objections, or Seller's determination of the Acquisition Price Adjustment
shall be final, binding and conclusive on the parties. With respect to any
disputed amounts, the parties shall meet in person and negotiate in good faith
during the fifteen (15) business day period (the "Resolution Period") after
the date of Seller's receipt of the Notice to resolve any such disputes. If
the parties are unable to resolve all such disputes within the Resolution
Period, then within five (5) business days after the expiration of the
Resolution Period, all disputes shall be submitted to Deloitte and Touche LLP
in Washington, D.C. (the "Independent Accountant") who shall be engaged to
provide a final and conclusive resolution of all unresolved disputes within
forty-five (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
by the party who, in the Independent Accountant's determination, submitted a
disputed amount that differs more significantly from the amount finally
determined by the Independent Accountant. From and after the Closing Date,
Purchaser will provide Seller with access to the books, records and personnel
of Purchaser that Seller reasonably determines is necessary to prepare the
Closing Date Balance Sheet and the Closing Statement.
(d) If the Acquisition Price Adjustment (as finally determined
in accordance with the provisions set forth above) less the Initial Adjustments
Amount is a positive (negative) amount, then, within five (5) business days
after such final determination, Purchaser (Seller) shall pay to Seller
(Purchaser) such amount in immediately available funds.
(e) The limitations imposed by the Deductible (as defined in
Section 11.5(a)) and the limitations imposed by the Indemnification Cap (as
defined in Section 11.5(b)) shall not apply with respect to the calculation of
the Acquisition Price Adjustment.
2.5 Allocation of Acquisition Price. On the Closing Date,
Purchaser and Seller shall mutually agree in writing upon the allocation of the
Acquisition Price among the Purchased Assets. Such allocation shall be
adjusted as necessary in connection with the final determination of the
Acquisition Price Adjustment. The parties agree that such allocation shall be
made based upon the relative fair market values of the Purchased Assets as of
the Closing Date conforming with the requirements of Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code"). If the parties are
unable to reach agreement on such allocations, they shall participate in good
faith negotiations in an attempt to resolve the dispute. If the parties fail
to resolve the dispute within five (5) business days after the Closing Date,
the parties shall engage the appraisal firm of Deloitte & Touche LLP in
Washington D.C., whose determination on allocation of the Acquisition Price
among the Purchased Assets shall be final and binding on the parties. The
parties shall share equally in the expense of the appraisal firm. The parties
agree to file with their respective federal income tax returns for the tax year
in which the Closing occurs IRS Form 8594 containing the information agreed
upon by the parties pursuant to this Section 2.5. Seller and Purchaser agree
not to assert for income tax purposes (including in connection with any tax
return, tax audit or similar proceeding) any allocation of the Acquisition
Price that differs from that determined pursuant to this section and contained
in IRS Form 8594.
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2.6 The Closing. Unless this Agreement shall have been earlier
terminated in accordance with the terms hereof, the transactions contemplated
by this Agreement shall be consummated (the "Closing") at the offices of
Kleinbard, Bell & Brecker, 1900 Market Street, Philadelphia, Pennsylvania
19103, on the tenth (10th) business day after receipt of the Regulatory
Approvals (as hereinafter defined) in accordance with Section 5.6, or at such
other place or on such other date as Purchaser and Seller may agree in writing.
The date on which the Closing shall occur is referred to in this Agreement as
the "Closing Date". The Closing shall be deemed to have occurred as of 12:01
a.m. on the Closing Date.
2.7 Closing Costs; Transfer Taxes and Fees. Seller shall be
responsible for (i) any documentary and transfer taxes and any sales, use or
other taxes imposed by reason of the transfers of Purchased Assets provided
hereunder and any deficiency, interest or penalty asserted with respect
thereto, (ii) any fees and costs of recording or filing all applicable
conveyancing instruments described in Section 8.1(a) or otherwise, and (iii)
the costs and expenses of the environmental audits to be performed pursuant to
the provisions of Section 5.11. Purchaser shall be responsible for the filing
fee required under the HSR Act (as hereinafter defined). Purchaser and Seller
shall bear equally all costs of applying for new Permits and obtaining the
transfer of existing Permits that may be lawfully transferred.
3. Representations and Warranties of Seller. Seller represents and
warrants to Purchaser that:
3.1 Organizational Status. Seller is a limited partnership duly
organized, vaexisting and in good standing under the laws of the State of
Delaware. Seller has all requisite partnership power and authority to own,
lease and operate its assets, properties, and its Business, and to carry on its
Business as now being conducted.
3.2 Qualification. Seller is duly qualified to do business and is
in good standing as a foreign partnership in all jurisdictions where such
qualification is required except for those jurisdictions where the failure to
be so qualified would not reasonably be expected to have a Material Adverse
Effect.
3.3 Authorization; No Conflict. Seller has the full legal right
and all partnership power and authority required to enter into, execute and
deliver this Agreement and the documents and other agreements required to be
executed and delivered hereunder and to perform fully its respective
obligations hereunder and thereunder. The execution, delivery and performance
of this Agreement by Seller have been duly and validly authorized by all
necessary partnership action on the part of Seller. This Agreement has been
duly and validly executed and delivered and constitutes, and each of the other
agreements and documents to be delivered by Seller hereunder when executed and
delivered by Seller will constitute, the valid, legal and binding obligation of
Seller, enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting creditors' rights generally. The execution,
delivery and performance of this Agreement and the documents and other
agreements to be delivered hereunder by Seller and
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<PAGE> 18
the consummation of the transactions contemplated hereby and thereby by Seller
will not (i) violate any provision of Seller's certificate of limited
partnership or partnership agreement, (ii) to Seller's knowledge, violate,
conflict with or result in the breach of any of the terms of, result in a
modification of the effect of, otherwise give any other contracting party the
right to terminate, or constitute (or with notice or lapse of time or both
constitute) a default under, any material contract to which Seller is a party
or by or to which it or any of its assets or properties may be bound or
subject, excluding in any case such violations, conflicts, breaches or defaults
that would not reasonably be expected to have a Material Adverse Effect, (iii)
violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body by which Seller, or the assets,
properties or Business of Seller are bound, (iv) to Seller's knowledge, violate
in any material respect any statute, law or regulation, excluding in any case
such violations that would not reasonably be expected to have a Material
Adverse Effect, or (v) violate or cause any revocation of or limitation on any
Permit (A) that is necessary to the lawful conduct of the Business and (B) the
violation, revocation or limitation of which could reasonably be expected to
have a Material Adverse Effect.
3.4 Financial Statements.
(a) Seller has delivered to Purchaser true and complete copies
of the audited annual financial statements of Horizon Cellular Telephone
Company, L.P. ("Horizon") as of December 31, 1994 and 1993 and for the years
then ended (collectively, the "Financial Statements"). The Financial
Statements (i) have been prepared from and in accordance with the books and
records of the companies to which they pertain, (ii) fairly present the
financial condition of Horizon as of such dates and the results of its
operations and changes in its cash flows for the periods covered thereby, and
(iii) were prepared in accordance with GAAP. Seller has also delivered to
Purchaser true and complete copies of Horizon's and Seller's unaudited
financial statements as of December 31, 1995 (the "Balance Sheet Date") and for
the period then ended (collectively with the financial statements to be
delivered pursuant to Section 5.12(a) and the Closing Date Balance Sheet to be
delivered pursuant to Section 2.4(c), the "Unaudited Financial Statements").
The Unaudited Financial Statements (i) have been (or will be, as the case may
be) prepared from and in accordance with the books and records of the companies
to which they pertain, (ii) fairly present the financial condition of Horizon
and Seller, as applicable, as of the date provided therein and the results of
their respective operations, as applicable, for the period covered thereby,
and, with respect to Horizon, the changes in its cash flows for the period
covered thereby, and (iii) were prepared in accordance with GAAP (subject to
year-end adjustments and except for the omission of certain footnotes and other
presentation items required by GAAP with respect to audited financial
statements). The financial condition and results of operations of Seller to be
reflected in the Audited Financial Statements to be delivered pursuant to
Section 5.12(b) will not differ materially in the aggregate from the financial
condition and results of operations of Seller reflected in the Unaudited
Financial Statements as of December 31, 1995 and for the year then ended.
(b) All of the accounts receivable reflected in the Unaudited
Financial Statements, or that arose since January 1, 1996, reflect actual
transactions that arose in the ordinary and usual course of business and
represent valid obligations, subject to established allowances for
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doubtful accounts, as set forth in the Unaudited Financial Statements, and are
not subject to any valid counterclaim or right to set-off as to which Seller
has received notice and reflect credit terms consistent with the practices of
the Seller reflected in the Unaudited Financial Statements.
3.5 Compliance with Laws. Seller is in, and has operated in,
compliance in all material respects with all applicable federal (including the
Communications Act of 1934, as amended, and the rules, regulations, orders,
policies and procedures of the FCC promulgated thereunder (the "Communications
Act")), state, county and local laws, regulations and ordinances and any
applicable requirements of any governmental or regulatory body, court or
arbitrator affecting its Business or its assets, except for noncompliance that
has not and would not reasonably be expected to have a Material Adverse Effect.
3.6 Permits; FCC Licenses.
(a) To Seller's knowledge, Seller has all of the Permits
(except for the FCC Licenses) necessary to operate the System as now operated,
except for those Permits the absence of which would not reasonably be expected
to have a Material Adverse Effect. To Seller's knowledge, such Permits are in
full force and effect, and are unimpaired by any acts or omissions of Seller.
(b) Seller has all the FCC Licenses necessary to operate the
System and conduct the Business in the manner it is presently being conducted.
Seller applied for and obtained the FCC Licenses in compliance with the
Communications Act, and Seller is, and on the Closing Date will be, the
exclusive holder of the FCC Licenses. The consents of the FCC to the
assignment or transfer of control of the FCC Licenses to Seller have been
granted by Final Order (as hereinafter defined). A true and complete list of
the FCC Licenses is set forth on Schedule 3.6(b). The FCC Licenses are in full
force and effect. There are no existing or, to the Seller's knowledge,
threatened proceedings by or before the FCC that could reasonably be expected
to result in the revocation, cancellation, suspension, or material adverse
modification of the FCC Licenses, except for proceedings that affect the
cellular industry generally. Subject to obtaining the Regulatory Approvals,
Seller will transfer to Purchaser at Closing all of Seller's right, title and
interest in and to the FCC Licenses free and clear of any lien or other
encumbrance. The cellular geographic service area ("CGSA") for the System, as
depicted in Seller's filings with the FCC, has been calculated in accordance
with the FCC's rules and policies. All of cell sites specified in the current
FCC Licenses for the System are currently operating in accordance with their
authorized parameters (subject to any tolerances permitted under the FCC's
rules).
(c) A "Final Order", as used in this Agreement, means an action
by the FCC (i) that is not reversed, stayed, enjoined, set aside, annulled or
suspended within the deadline, if any, provided by applicable statute or
regulation, (ii) with respect to which no request for stay, motion or petition
for reconsideration or rehearing, application or request for review, or notice
of appeal or other judicial petition for review that is filed within such
period is pending, and (iii) as to which the deadline, if any, for filing any
such request, motion, petition, application,
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appeal or notice, and for the entry of orders staying, reconsidering or
reviewing on the FCC's own motion have expired.
3.7 Litigation. Except for legal or administrative proceedings
affecting the cellular telephone industry generally, there is no action, suit,
claim, arbitration, investigation or other legal or administrative proceeding
(collectively, "Actions") pending or, to Seller's knowledge, threatened against
Seller with respect to the Business or any of the Purchased Assets, excluding
in any case such Actions that would not reasonably be expected to have a
Material Adverse Effect.
3.8 Real Property.
(a) Seller owns no Owned Real Property.
(b) Schedule 3.8 sets forth a list of all of the Real Property
Leases. There have been made available to Purchaser true and complete copies
of all of the Real Property Leases. All of the Real Property Leases are valid,
in full force and effect and binding upon Seller, and to Seller's knowledge,
the other parties thereto, enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect affecting creditors' rights generally. Seller
is not in default under any of them, nor does any condition exist that, with
notice or lapse of time or both, would constitute such a default, excluding in
any case such defaults that would not reasonably be expected to have a Material
Adverse Effect.
3.9 Personal Property Leases. Set forth on Schedule 3.9 is a list of
all material Personal Property Leases, copies of which have been previously
made available to Purchaser. Each Personal Property Lease is valid, binding
and enforceable against Seller in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting creditors' rights generally. Seller is not in
default of any Personal Property Lease nor, to Seller's knowledge, has any
event occurred that constitutes, or with notice or lapse of time or both may
constitute, a default under any Personal Property Lease, excluding in any case
such defaults that would not reasonably be expected to have a Material Adverse
Effect.
3.10 Contracts and Other Agreements.
(a) Schedule 3.10 lists all contracts and other agreements to
which Seller is a party that involve the receipt or payment after the date
hereof by Seller of more than $25,000 annually.
(b) There have been made available to Purchaser true and
complete copies of all of the contracts and other agreements set forth on
Schedule 3.10. Except as disclosed on Schedule 3.10, all of such contracts and
other agreements are valid, in full force and effect, binding upon Seller, and,
to Seller's knowledge, the other parties thereto and enforceable in accordance
with their respective terms, subject to bankruptcy, insolvency, reorganization,
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moratorium or similar laws now or hereafter in effect affecting creditors'
rights generally. Seller is not in default under any of them, nor, to Seller's
knowledge, does any condition exist that, with notice or lapse of time or both,
would constitute such a default, excluding in any case such defaults that would
not reasonably be expected to have a Material Adverse Effect.
3.11 Consents. Except for (i) the consent of such governmental or
regulatory body or third parties as are separately identified on Schedule 3.11
(the "Required Consents"), (ii) a Final Order of the FCC to the assignment of
the FCC Licenses from Seller to Purchaser, and (iii) the expiration of the
waiting period under the HSR Act, no consent, approval or authorization of, or
registration or filing with any person is required by Seller in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby. The Required Consents identified on Schedule
3.11 are segregated into two groups: (A) those designated by the parties as
material and necessary for consummation of the transactions contemplated herein
(the "Material Consents") and (B) all other Required Consents.
3.12 Title; Condition.
(a) Seller does not own or lease any assets or property used in
connection with or necessary for the operation of the System or the Business
other than the Purchased Assets and the Excluded Assets. Seller has good and
marketable title to all of the Purchased Assets. Notwithstanding anything to
the contrary contained herein or otherwise, Seller confirms that the Purchased
Assets are generally subject to security interests (the "Security Interests")
that have been granted by Seller and its affiliates to Citicorp North America,
as collateral agent ("Lender"), which Security Interests will be released
promptly at or following Closing upon payment to Lender of certain amounts owed
thereto. Seller will at Closing convey to Purchaser good and marketable
title to all Purchased Assets, in each case free and clear of any lien or other
encumbrance other than Permitted Encumbrances, subject to the recording after
Closing of the Releases (as defined in Section 5.13) to be delivered by Lender
upon payment thereto.
(b) At Closing Seller shall transfer to Purchaser, and
Purchaser shall acquire from Seller, the Purchased Assets in good and operating
condition.
3.13 No Material Adverse Change. Since the Balance Sheet Date,
there has been no Material Adverse Change in the Business. Except as set forth
in the Financial Statements (with respect to the matters contained in clauses
(a), (b), (c), (d) and (f)) and the Unaudited Financial Statements (with
respect to the matters contained in clause (e)), Seller has conducted the
Business in the ordinary course and consistent with its past practices and has
not (a) except in the ordinary course of business, incurred, or become subject
to, any material obligation or liability of a nature required or appropriate to
be reflected in the Financial Statements or Unaudited Financial Statements,
other than the advances from affiliates and the indebtedness to Lender; (b)
made any change in any accounting principle, except as required by GAAP; (c)
made, materially amended or terminated any bonus, stock option, pension,
retirement, profit-sharing, or other employee benefit plan or arrangement, or
withdrawn from any "multi-
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employer plan" (as defined in Section 414(f) of the Code), so as to create any
liability under Article IV of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to any entity; (d) except to the extent reflected
on Schedule 3.6(b), amended, renewed or experienced a termination of any
material FCC License related to the conduct of the System; (e) suffered any
material damage, destruction, or loss (whether or not covered by insurance) to
any of the Purchased Assets, (f) experienced any strike, slow down, or demand
for recognition by a labor organization by or with respect to any of the
employees of the Business.
3.14 Taxes. Except as set forth on Schedule 3.14, since the date of
Seller's ownership of the System, (i) Seller has timely filed or caused to be
filed with the appropriate taxing authorities all true, correct and complete
tax returns for federal, state, and local taxes (collectively, "Taxes"), (ii)
all Taxes, in respect of periods beginning before the Closing Date, have been
timely paid or an adequate reserve has been established therefor in the
Financial Statements and (iii) there are no pending or, to Seller's knowledge,
threatened audits, investigations or claims for or relating to any additional
liability in respect of Taxes. There are no unpaid fees, penalties, interest
or assessments due from Seller or from any affiliate of Seller that are, or
could become, a lien on any asset of Seller or would otherwise reasonably be
expected to have a Material Adverse Effect on the Business or the Purchased
Assets.
3.15 Environmental Matters. To Seller's knowledge, Seller has
complied in all material respects with all Environmental Requirements.
3.16 Insurance. The insurance currently held by Seller is in such
amounts and is of such types and scope as is customary in the cellular
industry.
3.17 ERISA Plans. Except as set forth on Schedule 3.17, Seller has
no employee benefit plans subject to ERISA.
3.18 Personnel. Attached hereto as Schedule 3.18 is a list of the
names, position held and annual rates of compensation for 1996 (including base
salary, bonuses, commissions and incentive pay) expected to exceed $50,000.
Schedule 3.18 also includes a list of all current employment agreements.
Copies of all employment agreements have been delivered to Purchaser.
4. Representations and Warranties of Purchaser. Purchaser represents and
warrants to Seller as follows:
4.1 Organizational Status. Columbus is a general partnership duly
organized and validly existing under the laws of the State of Georgia, and
Macon is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of New Hampshire. Purchaser has all
requisite power and authority to own, lease and operate its assets, properties,
and its business, and to carry on its business as now being and as heretofore
conducted.
4.2 Qualification. Purchaser is duly qualified to do business and
is in good standing as a foreign partnership in all jurisdictions where such
qualification is required except for those
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jurisdictions where the failure to be so qualified would not reasonably be
expected to have a material adverse effect on Purchaser's ability to perform
its obligations hereunder.
4.3 Authorization; No Conflict. Purchaser has the full legal right
and all power and authority required to enter into, execute and deliver this
Agreement and the documents and other agreements required to be executed and
delivered hereunder and to perform fully its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement by
Purchaser have been duly authorized by all necessary action on the part of
Purchaser. This Agreement has been duly executed and delivered and
constitutes, and each of the other agreements and documents to be delivered by
Purchaser hereunder when executed and delivered by Purchaser will constitute,
the valid and binding obligation of Purchaser, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect affecting creditors'
rights generally. The execution, delivery and performance of this Agreement
and the documents and other agreements to be delivered hereunder by Purchaser
and the consummation of the transactions contemplated hereby and thereby by
Purchaser will not (i) violate any provision of Purchaser's partnership
agreement and, in the case of Macon, its certificate of limited partnership,
(ii) to Purchaser's knowledge, violate, conflict with or result in the breach
of any of the terms of, result in a modification of the effect of, otherwise
give any other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default under, any contract to
which Purchaser is a party or by or to which it or any of its assets or
properties may be bound or subject, excluding in any case such violations,
conflicts, breaches or defaults that would not reasonably be expected to have a
material adverse effect on Purchaser's ability to perform its obligations
hereunder, (iii) violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body by which Purchaser, or
the assets, properties or business of Purchaser are bound, (iv) to Purchaser's
knowledge, violate in any respect any statute, law or regulation, excluding in
any case such violations that would not reasonably be expected to have a
material adverse effect on Purchaser's ability to perform its obligations
hereunder, (v) violate or cause any revocation of or limitation on any permit
(A) that is necessary to the lawful conduct of Purchaser's business and (B) the
violation, revocation or limitation of which could reasonably be expected to
have a material adverse effect on Purchaser's ability to perform its
obligations hereunder.
4.4 Compliance with Laws. To Purchaser's knowledge, Purchaser is
in, and has operated in, compliance in all material respects with all
applicable federal (including the Communications Act), state and local laws,
regulations and ordinances and any applicable requirements of any governmental
or regulatory body, court or arbitrator affecting its business or its assets,
except for noncompliance that has not and would not reasonably be expected to
have a material adverse effect on Purchaser's ability to perform its
obligations hereunder.
4.5 Litigation. Except for legal or administrative proceedings
affecting the cellular telephone industry generally, there is no Action pending
or, to Purchaser's knowledge, threatened against Purchaser with respect to its
business, excluding in any case such Actions that would not reasonably be
expected to have a material adverse effect on Purchaser's ability to perform
its obligations hereunder.
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<PAGE> 24
4.6 Consents. Except for (i) a Final Order of the FCC to the
assignment of the FCC Licenses from Seller to Purchaser, (ii) the expiration of
the waiting period under the HSR Act, and (iii) the consent of such other
governmental or regulatory body or third parties as are separately identified
on Schedule 4.6, no approval, consent or authorization of, or registration or
filing with any person is required by Purchaser in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
4.7 FCC Matters. Purchaser is fully qualified under the
Communications Act to be an FCC licensee and to be approved as the assignee of
the FCC Licenses. Purchaser knows of no reason why the FCC will not grant its
consent to the assignment of the FCC Licenses from Seller to Purchaser.
Neither Purchaser, nor any "real party in interest" (as defined by Section
22.13 of the FCC's rules) (i) has had the FCC deny an application for an
authorization, (ii) has had the FCC revoke an authorization granted to it, or
(iii) has been the subject of an investigation by the FCC.
4.8 Financial Ability to Close. Purchaser specifically represents and
warrants to Seller that Purchaser presently has and at Closing will have the
financial ability to perform Purchaser's obligations under this Agreement.
5. Covenants of Seller and Purchaser. Seller and Purchaser covenant and
agree with the other as follows:
5.1 Continuance of Business. From the date hereof until the
Closing Date (or the earlier termination hereof), Seller agrees that it will:
(a) use commercially reasonable efforts to carry on the
Business in the usual, regular and ordinary course in substantially the same
manner as heretofore carried on; preserve intact all material Permits and the
present business organization of the Business; use commercially reasonable
efforts to preserve its relationships with customers, suppliers and others
having business dealings with the Business to the end that its goodwill and
ongoing business shall be conducted on substantially the same basis on the
Closing Date as on the date hereof; and use reasonable efforts, consistent with
past practices, to maintain subscriber growth.
(b) keep in full force and effect insurance comparable to that
carried by Seller with respect to the Business and the Purchased Assets on the
date hereof unless otherwise consented to in writing by Purchaser, which
consent will not be unreasonably withheld, conditioned or delayed;
(c) perform in all material respects all of Seller's
obligations under all contracts and other agreements relating to the Business,
including the discharge of all accounts payable of the Business in accordance
with past practices, except when the amount thereof is being contested in good
faith;
(d) not amend, terminate or waive any rights under any material
Contracts or enter into any material Contracts relating to the Business, except
in the ordinary course of
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business unless otherwise consented to in writing by Purchaser, which consent
will not be unreasonably withheld, conditioned or delayed;
(e) not to provide pay increases to employees in excess of the
aggregate pay increases in the 1996 budget for the Business unless otherwise
consented to in writing by Purchaser, which consent will not be unreasonably
withheld, conditioned or delayed ;
(f) not voluntarily take any action to reduce its CGSA coverage
as shown in filings with the FCC unless required by the Communications Act;
(g) not amend its Revenue Recognition Policy (Policy No. 150,
Last Revised January 11, 1996); and
(h) consult with Purchaser on at least a monthly basis with
respect to material marketing, construction and operational issues.
5.2 Access to Information; Notice of Breach. From the date hereof
until the Closing Date (or the earlier termination hereof), at reasonable times
and upon reasonable advance written notice to the Executive Officers, Purchaser
shall be entitled, through its employees and representatives, to make such
investigation of the assets, properties, facilities, personnel, business and
operations of the Business and such examination of the books, records and
financial condition of the Business as Purchaser reasonably requests; provided,
however, that any such inspection shall be done in such a manner so as not to
unreasonably disrupt Seller's conduct of the Business and shall be subject to
any restrictions imposed by the Executive Officers. Purchaser agrees to
provide Seller with prompt written notice if Purchaser determines that, based
upon information provided to Purchaser or through its own investigation, any of
the Seller is in breach of any representation, warranty or covenant of Seller
set forth in this Agreement. If this Agreement is terminated, Purchaser agrees
to return or cause to be returned all such information provided to Purchaser or
its representatives within five (5) days after the date of such termination.
5.3 Governmental Permits and Approvals; Consents. Seller and
Purchaser shall use commercially reasonable efforts to obtain promptly all
permits and approvals (including Material Consents) from any governmental or
regulatory body or third-party necessary for lawful consummation of the
Closing. In furtherance of the foregoing, Purchaser agrees to provide all
information (including financial information) that is reasonably requested by
any person from whom any approval or consent (including any Material Consent)
is necessary for lawful consummation of the Closing.
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5.4 Employees; Employee Compensation. In connection with the Closing,
Purchaser may extend offers of employment to employees of Seller. At least
thirty (30) days prior to the Closing Date, Purchaser shall provide written
notice to Seller identifying any employees of Seller to whom Purchaser does not
intend to extend offers of employment. Purchaser shall have no liability to
Seller for any losses of Seller as a result of any discharges of employees by
Seller as a result of the transaction contemplated hereunder or otherwise. In
addition, Purchaser shall not assume any liability for any of Seller's employee
benefit plans other than accruals for compensation or benefits included as
current liabilities on the Closing Date Balance Sheet. Nothing contained in
this Agreement shall confer upon any such employee any right with respect to
continued employment by Seller or Purchaser. No provision of this Agreement
shall create any third-party rights in any such employee, or any beneficiary or
dependent thereof, with respect to the compensation, terms and conditions of
employment and benefits that may be provided to such employee by Purchaser or
under any benefit plan that Purchaser may maintain. Purchaser agrees to
indemnify Seller (in accordance with the provisions contained in Section 11)
for any Losses (as hereinafter defined) of Seller as a result of any wrongful
discharge claims of employees hired by Purchaser and discharged by Purchaser.
5.5 HSR Act. Promptly (but in any event within ten (10) business
days) after the date hereof, the parties shall file all information and
documents required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act").
5.6 Regulatory Approvals.
(a) The parties agree that in order to consummate the
transactions contemplated hereby, the FCC shall have given its consent to the
assignment of the FCC Licenses from Seller to Purchaser and to the transactions
contemplated hereby, and the consents of the FCC shall have become Final Orders
(collectively, the "Regulatory Approvals").
(b) Promptly (but in any event within five (5) business days)
after the execution hereof, the parties shall submit for filing to the FCC all
information and documents required in connection with obtaining the approvals
of the FCC to the transactions contemplated by this Agreement.
5.7 Restrictions on Certain Actions. From the date hereof until the
earlier to occur of the Closing Date or the termination of this Agreement,
Purchaser will not, and Purchaser will use its best efforts to ensure that all
persons whose actions or ownership interests would be attributable to Purchaser
under the Communications Act will not, in any manner, directly or indirectly,
solicit, initiate, encourage or participate in applications, bids, purchases or
negotiations with respect to the acquisition of any interest in an FCC license
that, if consummated, would have the effect under the Communications Act of
preventing or delaying Purchaser from consummating the acquisition of the
Purchased Assets as contemplated by this Agreement.
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5.8 Casualty or Condemnation. The risk of loss or damage to any of
the Purchased Assets shall be upon Seller prior to Closing and upon Purchaser
thereafter. If, after the date hereof but prior to the Closing Date, a
material portion of the Purchased Assets is damaged, destroyed or lost by fire
or other casualty, or if condemnation or eminent domain proceedings are
proposed, threatened or commenced against a material portion of the Purchased
Assets, Seller will promptly notify Purchaser of such event. Seller shall
repair, rebuild or replace the portion of the Purchased Assets damaged,
destroyed or lost prior to the Closing Date to substantially the same condition
that such Purchased Assets were in immediately prior to such damage,
destruction or loss, and the parties agree to extend the date for Closing as
reasonably necessary to allow Seller comply with such obligation.
5.9 Supplemental Disclosure. Seller shall have the right from time to
time prior to the Closing Date to supplement the Schedules hereto with respect
to any matter hereafter arising that, if existing or known as of the date of
this Agreement, would have been required to be set forth or described in the
Schedules hereto. For purposes of the rights and obligations of the parties
hereunder, any such supplemental disclosure shall be deemed to cure any breach
of any representation or warranty of Seller made in this Agreement and to have
been disclosed by Seller as of the date of this Agreement; provided, however,
such supplemental disclosure by Seller shall not (unless otherwise contemplated
by this Agreement) alter, amend or otherwise expand the scope of the Assumed
Liabilities as described herein on the date hereof, cause any material change
in the Purchased Assets, as described on the date hereof, nor change any of the
financial terms hereof.
5.10 Disclaimer of Other Representations and Warranties. Purchaser
acknowledges and agrees that Seller does not make, and has not made, any
representations or warranties relating to Seller, the Business or the Purchased
Assets other than the representations and warranties of Seller expressly set
forth in this Agreement. Without limiting the generality of the disclaimer set
forth in the preceding sentence, Seller does not make, and Seller, its
officers, employees and agents have not made, and shall not be deemed to have
made any representations or warranties in the Confidential Offering Memorandum
dated September 1995, and any supplements or addenda thereto (collectively, the
"Offering Memorandum"), any presentation relating to Seller, the Business or
the Purchased Assets given in connection with the transactions contemplated by
this Agreement, in any filing made by or on behalf of Seller with any
governmental agency or in any other information provided to or made available
to Purchaser, and no statement contained in the Offering Memorandum, made in
any such presentation, made in any such filing or contained in any such other
information shall be deemed to be a representation or warranty of Seller
hereunder or otherwise. No person has been authorized by Seller to make any
representation or warranty in respect of Seller, the Business or the Purchased
Assets in connection with the transactions contemplated by this Agreement that
is inconsistent with or in addition to the representations and warranties of
Seller expressly set forth in this Agreement.
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5.11 Environmental Audits.
(a) As a condition precedent to Closing, Seller will cause to
be conducted preliminary environmental site assessments (Phase Ones) and if
recommended by the environmental consultant, environmental testing and
laboratory evaluation (Phase Twos), of each parcel of its Real Property. Phase
Ones and Phase Twos (if required) shall be: (i) conducted in accordance with
current ASTM standards; (ii) certified to both Seller and Purchaser; (iii)
performed by licensed environmental professionals mutually acceptable to both
parties; and (iv) conducted at the sole expense of Seller. Copies of the
reports of each Phase One and Phase Two (if required) conducted will be
provided to Purchaser within sixty (60) days after execution of this Agreement,
but in no event less than thirty (30) days prior to the Closing.
(b) If any Phase One or Phase Two reveals any condition that
would be likely to require remediation under applicable state or federal law,
then Seller shall agree either to (i) complete such remediation prior to
Closing, or (ii) permit Purchaser to have such remediation completed after
Closing and granting Purchaser a credit at Closing against the Acquisition
Price for the approximate costs to be incurred by Purchaser in completing such
remediation (it being understood that the limitations imposed by the Deductible
shall not apply to any such remediation costs). If the approximate remediation
cost referred to in the preceding sentence is an amount in excess of $300,000
(the "Environmental Threshold"), then Seller shall have the right, at its
option, by written notice to Purchaser to terminate this Agreement unless
Purchaser and Palmer (as hereinafter defined) agree by written instrument
acceptable to Seller to indemnify and hold harmless Seller and its affiliates
from and against all Losses in excess of the Environmental Threshold.
(c) Notwithstanding any other term hereof, if any Phase One or
Phase Two uncovers an environmental condition of which Seller does not have
knowledge on the date hereof and that due to Seller's then-gained knowledge of
such condition, then comprises a breach of Seller's representations or
warranties herein (which were qualified as to Seller's knowledge), Seller shall
not have breached such a representation or warranty of this Agreement.
5.12 Financials.
(a) Seller shall furnish to Purchaser monthly unaudited balance
sheets and income statements reported in accordance with GAAP (subject to
year-end adjustments and except for the omission of certain footnotes and other
presentation items required by GAAP with respect to audited financial
statements) and consistent with prior periods for Seller, as soon as
practicable after the end of each month (commencing with January, 1996).
(b) Prior to the Closing Date, and subject to Purchaser's
compliance with the provisions contained in Section 5.17, Seller will obtain
and deliver to Purchaser, at the expense of Purchaser up to a maximum of
$30,000, (i) the unqualified report of Ernst & Young LLP ("Seller's
Accountant") on the audited balance sheet of Seller as of December 31, 1994 and
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December 31, 1995 and the related statements of income and cash flows for the
years then ended (collectively, "Audited Financial Statements"), prepared in
accordance with the Rules and Regulation S-X of the Securities and Exchange
Commission ("SEC"), and (ii) the consent of Seller's Accountant, consenting to
the inclusion of the Audited Financial Statements in both an 8-K Statement and
an S-1 Registration Statement of Purchaser.
5.13 Release of Liens. Seller will deliver to Purchaser at Closing
(a) all documents, executed by Lender that are necessary to release the
Security Interests on the Purchased Assets ("Releases") or (b) in the
alternative and at the option of Seller, pay-off letters from Lender ("Pay-Off
Letters"), in a form reasonably acceptable to Purchaser, wherein Lender agrees
to release the Security Interests in the Purchased Assets, and Seller shall
deliver to Purchaser proof, reasonably satisfactory to Purchaser, of the full
payment to Lender of the amounts described in the Pay-Off Letters.
5.14 Other Negotiations. Seller shall not, and shall not permit or
authorize any partner, officer, employee or other agent of Seller, directly or
indirectly, to:
(a) take any action to solicit, initiate or encourage the
submission of any proposal, offer or indication of interest from any person,
entity or group relating to any acquisition or purchase of all or (other than
in the ordinary course of business) any portion of the assets of, or any equity
in, Seller or any business combination with Seller, or
(b) participate in any negotiations regarding, or furnish to
any other person, entity or group any non-public information with respect to,
or otherwise cooperate in any way with, or assist or participate in,
facilitate, or encourage, any effort or attempt by any other person, entity or
group to do or seek any of the foregoing.
In addition, Seller shall instruct any financial adviser engaged by
Seller for any purpose within the past twelve (12) months to refrain from
taking any actions referred to in clause (a) or (b) of the immediately
preceding sentence. Seller shall immediately cease and cause to be terminated
any existing discussions or negotiations with any parties (other than
Purchaser) conducted heretofore with respect to any of the foregoing.
5.15 Terminated Contracts.
(a) Prior to Closing, Seller shall, in consultation with
Purchaser, terminate the contracts set forth on Schedule 5.15 (the "Terminated
Contracts") in accordance with the terms of any Terminated Contract (including
any advance notice provisions), provided that the effect of any such
termination shall be no earlier than the Closing Date. If term of any
Terminated Contract extends beyond the Closing Date, such Terminated Contract
shall constitute an Assumed Liability pursuant to and in accordance with
Section 1.4.
(b) In the event of a termination of this Agreement by Seller
in accordance with the terms of Section 12.2(c)(ii), in addition to any other
remedies available to Seller, Purchaser
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shall indemnify, defend and hold harmless Seller and its affiliates from and
against all Losses sustained by Seller or such affiliates as a result of the
termination of any Terminated Contract.
5.16 Installation of Equipment. Prior to the Closing Date, Purchaser
may install and maintain, at its sole expense, Northern Telecom equipment,
microwave dishes and local telco transport facilities at the Real Property cell
sites for transition to Purchaser's switch, provided that (a) Purchaser
provides Seller with reasonable advance notice of any such installation, (b)
such installation and maintenance is technically feasible in its current
condition in Seller's reasonable determination, (c) such installation and
maintenance does not adversely interfere in any respect with Seller's conduct
of the Business, (d) such installation and maintenance is permitted by any
applicable Real Property Lease (if not permitted Seller will assist Purchaser
in attempting to obtain consent of Lessor without any cost to Seller), (e)
Purchaser pays directly any and all incremental costs, if any, associated with
any such installation and maintenance, and (f) Purchaser shall indemnify,
defend and hold harmless Seller and its affiliates from and against all Losses
sustained by Seller or such affiliates as a result of any such installation or
maintenance or the presence of such equipment at the Real Property.
5.17 Securities Filings. Palmer Wireless, Inc., a Delaware
corporation ("Palmer"), intends to prepare and file with the SEC certain
securities filings in accordance with its public disclosure obligations
required by law (the "Securities Filings"). Purchaser agrees that no
information (financial or otherwise) concerning Seller, its financial condition
or results of operations, the Purchased Assets or the System (collectively,
"Seller Information") may be included in any Securities Filings unless Seller
agrees in writing that any such information may be included therein or unless
otherwise required by law in the reasonable opinion of Purchaser's legal
counsel. Moreover, Purchaser shall furnish to Seller and its counsel for their
review and approval (which approval shall not be unreasonably withheld), in
advance of any filing thereof, any Securities Filings containing any Seller
Information, and Purchaser agrees to indemnify, defend and hold harmless Seller
and its affiliates from and against any and all Losses sustained by Seller or
such affiliates as a result of the inclusion of any Seller Information in any
Securities Filings.
5.18 Agent Chargeback Information. From and after the date hereof
until the Closing Date, Seller shall deliver to Purchaser monthly statements
reflecting all chargebacks for that month with respect to Seller's agents.
5.19 Unserved Areas. In the event the Closing has not occurred by
September 1, 1996 and the unserved area in the RSA is greater than 49
contiguous square miles, the Seller shall take all reasonable actions to extend
Seller's CGSA throughout the RSA such that there remains no unserved areas in
the RSA greater than 49 contiguous square miles and such CGSA extensions shall
be completed prior to the expiration of the five-year fill-in period for the
RSA. Purchaser and its affiliates will provide Seller reasonable incursions
into Purchaser's markets to allow such CGSA extensions, on terms and conditions
reasonably acceptable to Purchaser.
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5.20 North Griffin Contour. Within fifteen (15) business days after
the execution of the Agreement, Seller shall file a Form 489 Application with
the FCC accurately depicting the 32-DBU contour of the cell site serving North
Griffin.
5.21 Microwave Licenses. Within fifteen (15) business days after
the execution of the Agreement, Seller shall apply for all necessary FCC
licenses for microwave facilities currently serving the RSA. All microwave
facilities shall be licensed prior to Closing.
5.22 Deferred Exchange. Purchaser acknowledges that Seller may
elect to effect a like-kind exchange under Section 1031 of the Code and the
regulations promulgated thereunder with respect to the Purchased Assets to be
transferred to Purchaser in accordance with the terms of this Agreement. It is
anticipated that the exchange shall be a delayed exchange (the "Deferred
Exchange") using a qualified intermediary (the "Intermediary") complying with
the requirements of Section 1031 of the Code and the regulations promulgated
thereunder. Upon Seller's direction to Purchaser in writing, Purchaser shall
pay at Closing all or any portion of the Closing Cash Payment to the
Intermediary for use in acquiring, for conveyance to Seller, the assets of
other cellular communications systems and/or cellular communications equipment.
Seller shall bear the fees and expenses of the Intermediary. Notwithstanding
the provisions of Section 13.11 of the Acquisition Agreement, Seller may assign
its rights hereunder to the Intermediary as required to effectuate the Deferred
Exchange. Purchaser will not incur any liability or obligation to any party in
connection with the Deferred Exchange (other than liabilities and obligations
to Seller as set forth herein) and Seller shall indemnify and hold Purchaser
harmless against any such liabilities and obligations (other than liabilities
and obligations to Seller as set forth herein).
6. Conditions Precedent to Purchaser's Obligations. The obligation of
Purchaser to consummate the transactions contemplated hereby is subject to the
satisfaction on or prior to the Closing Date of the following conditions, any
of which may be waived in writing by Purchaser (provided that if any condition
shall not have been satisfied due primarily to the action or inaction of
Purchaser or any of its affiliates, such condition shall be deemed to have been
satisfied or waived by Purchaser):
6.1 Regulatory Approvals. All Regulatory Approvals shall have been
received in accordance with the provisions of Section 5.6.
6.2 Premerger Notification Compliance. All requirements under the HSR
Act and the rules promulgated thereunder applicable to the transactions
contemplated hereby shall have been met, including all necessary filing and
waiting requirements, and neither the United States Department of Justice nor
the Federal Trade Commission shall have raised an objection to the transactions
contemplated hereby.
6.3 Representations and Warranties on Closing Date. All
representations and warranties of Seller made in this Agreement shall be true
and correct on and as of the Closing Date with the same force and effect as
though such representations and warranties were made on and as of the Closing
Date, except for (i) inaccuracies that have not resulted in a Material
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Adverse Effect, (ii) changes contemplated by this Agreement, (iii) changes that
occur as a result of the operation of the Business in the ordinary course
subsequent to the date hereof and prior to the Closing Date, (iv)
representations and warranties that are made as of a specific date, and (v)
inaccuracies that have been waived in writing by Purchaser.
6.4 Terms, Covenants and Conditions. All the terms, covenants and
conditions of this Agreement to be complied with and performed by Seller on or
prior to the Closing Date shall have been complied with and performed in all
material respects unless waived in writing by Purchaser.
6.5 No Material Adverse Change. There shall have been no Material
Adverse Change since the date of this Agreement.
6.6 Absence of Litigation. No Action shall have been instituted
before any court or governmental or regulatory body by any person (other than
Purchaser or any of its affiliates), or instituted or threatened by any
governmental or regulatory body, to prevent the carrying out of the
transactions contemplated hereby.
6.7 Environmental Audits. All environmental Phase Ones and Phase Twos
(if required) shall have been conducted by Seller and the reports thereof shall
have been delivered to Purchaser in accordance with the terms of Section 5.11.
6.8 Closing Deliveries. Seller shall have delivered or caused to be
delivered to Purchaser at Closing those items specified in Section 8.1.
The decision of Purchaser to consummate the transactions contemplated
hereby without satisfaction of any of the preceding conditions shall not
constitute a waiver of any of Seller's representations, warranties, covenants
or indemnities herein.
7. Conditions Precedent to Seller's Obligations. The obligation of
Seller to consummate the transactions contemplated hereby is subject to the
satisfaction on or prior to the Closing Date of the following conditions, any
of which may be waived in writing by Seller (provided that if any condition
shall not have been satisfied primarily due to the action or inaction of Seller
or any of its affiliates, such condition shall be deemed to have been satisfied
or waived by Seller):
7.1 Regulatory Approvals. All Regulatory Approvals shall have been
received in accordance with the provisions of Section 5.6.
7.2 Premerger Notification Compliance. All requirements under the HSR
Act and the rules promulgated thereunder applicable to the transactions
contemplated hereby shall have been met, including all necessary filing and
waiting requirements, and neither the United States Department of Justice nor
the Federal Trade Commission shall have raised an objection to the transactions
contemplated hereby.
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7.3 Representations and Warranties on Closing Date. All
representations and warranties of Purchaser contained in this Agreement shall
be true and correct on and as of the Closing Date with the same force and
effect as though such representations and warranties were made on and as of the
Closing Date, except for (i) representations and warranties that are made as of
a specific date, (ii) inaccuracies that have been waived in writing by Seller,
and (iii) inaccuracies that have not had a material adverse effect upon its
ability to deliver the Preliminary Acquisition Price to Seller at Closing.
7.4 Terms, Covenants and Conditions. All the terms, covenants and
conditions of this Agreement to be complied with and performed by Purchaser on
or prior to the Closing Date shall have been complied with and performed in all
material respects unless waived in writing by Seller.
7.5 Absence of Litigation. No Action shall have been instituted
before any court or governmental or regulatory body by any person (other than
Seller or any of its affiliates) or instituted or threatened by any
governmental or regulatory body, to prevent the carrying out of the
transactions contemplated hereby.
7.6 Closing Deliveries. Purchaser shall have delivered or caused to
be delivered to Seller at Closing those items specified in Section 8.2.
The decision of Seller to consummate the transactions contemplated
hereby without satisfaction of any of the preceding conditions shall not
constitute a waiver of any of Purchaser's representations, warranties,
covenants or indemnities herein.
8. Deliveries at the Closing. The following deliveries shall be made at
the Closing, each of which shall be conditional on completion of all the others
and all of which shall be deemed to have taken place simultaneously:
8.1 Seller's Deliveries. At the Closing, Seller shall deliver or
cause to be delivered to Purchaser all of the following:
(a) all conveyances, deeds, assignments, bills of sale, and
other appropriate conveyancing instruments transferring to Columbus and/or
Macon (as specified in writing by Purchaser) the Purchased Assets, including a
General Assignment and Instrument of Conveyance (substantially in the form of
Exhibit 8.1(a)(i)); an Assignment of Leases and Assumption of Obligations
(substantially in the form of Exhibit 8.1(a)(ii)), and an Assignment of
Contracts and Assumption of Obligations (substantially in the form of Exhibit
8.1(a)(iii));
(b) the opinions of Kleinbard, Bell & Brecker, corporate
counsel to Seller, and Latham & Watkins, FCC counsel to Seller, substantially
in the forms of Exhibits 8.1(b)(i) and 8.1(b)(ii), respectively;
(c) the Capital Expenditures Summary and the Initial Adjustment
Amount Statement delivered ten (10) business days prior to Closing;
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(d) a certificate executed by an executive officer of Horizon
G.P., Inc., a Delaware corporation ("Horizon Corporate") that is the general
partner of KCCGP, L.P., a Delaware limited partnership ("KCCGP") that is the
general partner of Seller, confirming the matters contained in Sections 6.3 and
6.4;
(e) a certificate of the secretary of Horizon Corporate
attesting to (i) the resolutions adopted by the board of directors of Horizon
Corporate duly authorizing the execution, delivery and performance of this
Agreement by Seller and the execution and delivery by Seller of all instruments
and documents contemplated hereby, and (ii) the signatures of the officers of
Horizon Corporate who have been authorized to execute and deliver this
Agreement and any other agreement executed or to be executed in connection
herewith;
(f) good standing certificates of Seller, KCCGP and Horizon
Corporate from the Secretary of State of Delaware;
(g) the Escrow Agent Instructions;
(h) the Material Consents; and
(i) the Releases or Pay-off Letters from Lender.
8.2 Purchaser's Deliveries. At the Closing, Purchaser shall deliver
or cause to be delivered to Seller (or to any other person as directed by
Seller in writing) all of the following:
(a) the Instrument of Assumption;
(b) the Closing Cash Payment;
(c) the Accretion Factor Payment, if any;
(d) the Initial Adjustments Amount, if any;
(e) the Escrow Agent Instructions;
(f) the opinion of K. Patrick Meehan, general counsel to
Palmer, substantially in the form of Exhibit 8.2(f);
(g) a certificate executed by an executive officer of Purchaser
confirming the matters contained in Sections 7.3 and 7.4; and
(h) a certificate of the secretary of Palmer, attesting to (i)
the resolutions adopted by the board of directors of Palmer duly authorizing
the execution, delivery and performance of this Agreement by Purchaser (through
Palmer Wireless Holdings, Inc. ("Palmer Wireless"), with respect to Columbus,
and CEI Communications, Inc. ("CEI"), with respect to Macon, each
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of which corporations is owned 100% by Palmer) and the execution and delivery
by Purchaser of all instruments and documents contemplated hereby, and (ii) the
signatures of the officers of Purchaser who have been authorized to execute and
deliver this Agreement and any other agreement executed or to be executed in
connection herewith; and
(i) good standing certificates of Palmer, Palmer Wireless
and CEI from the Secretary of State of Delaware and of Macon from the Secretary
of State of New Hampshire.
9. Confidentiality. Except as otherwise provided in this Section 9, from
and after the date hereof, Purchaser shall keep secret and retain in strictest
confidence, and shall not, without the express prior written consent of one of
the Executive Officers, directly or indirectly, disclose, disseminate, publish,
reproduce, retain, use (for its benefit or for the benefit of others) or
otherwise make available in any manner whatsoever, any Confidential Information
(as hereinafter defined) regarding Seller (or this Agreement or the
transactions contemplated hereby) to anyone except (i) to Purchaser's
representatives (who shall be informed of the confidential nature of such
information and who shall agree to keep such information confidential), (ii) as
otherwise required by law, or (iii) as required to obtain the Regulatory
Approvals. As used in this Agreement, the term "Confidential Information"
shall mean all confidential and proprietary knowledge and information not
readily available to the public heretofore or hereafter conceived, learned or
disclosed (including all documents, writings, memoranda, business plans,
computer software, reports, pricing, cost and sales information, financial
statements, customer and supplier lists, trade secrets, discoveries, ideas,
concepts, models, prototypes, diagrams and marketing strategies, plans and
techniques). If Purchaser breaches, or threatens to commit a breach of, any of
the provisions of this Section 9, Seller shall have the right (in addition to
any other rights and remedies available to Seller at law or in equity) to
equitable relief (including injunctions) against such breach or threatened
breach, it being acknowledged and agreed that any such breach or threatened
breach will cause irreparable harm to Seller and that money damages would not
be an adequate remedy to Seller. Purchaser agrees that it will not seek, and
hereby waives any requirement for, the securing or posting of a bond or proving
actual damages in connection with Seller's seeking or obtaining such relief.
Notwithstanding the foregoing, Purchaser may, following execution of this
Agreement, issue a joint statement with Seller for public dissemination
describing this Agreement, the financial terms hereof and the transactions
contemplated herein. Furthermore, from and after the Closing Date, the
restrictions contained in this Section 9 shall continue to apply with respect
to Confidential Information concerning Seller, but shall not apply to any
Confidential Information concerning the Purchased Assets or the System.
10. Survival of Representations and Warranties. Unless this Agreement
is terminated as provided herein, the representations and warranties of Seller
and Purchaser contained herein shall survive the consummation of the
transactions contemplated hereby and the Closing Date and shall expire twelve
(12) months after the Closing Date.
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11. Indemnification.
11.1 Obligation to Indemnify by Seller. Subject to the terms of
Section 10, from and after the Closing Date, Seller agrees to indemnify, defend
and hold harmless Purchaser (and its affiliates, and their directors, officers,
stockholders and employees), from and against all losses, Taxes, liabilities,
damages, lawsuits, deficiencies, claims, demands, costs or expenses, including
interest, penalties and reasonable attorneys' fees and disbursements
(collectively, "Losses"), based upon (i) any breach of any representation or
warranty of Seller contained in this Agreement, or (ii) any breach of any
covenant or agreement of Seller contained in this Agreement.
11.2 Obligation to Indemnify by Purchaser. Subject to the terms of
Section 10, from and after the Closing Date, Purchaser agrees to indemnify,
defend and hold harmless Seller (and its partners, affiliates, and their
directors, officers, stockholders and employees) from and against all Losses
based upon (i) any breach of any representation or warranty of Purchaser
contained in this Agreement, or (ii) any breach of any covenant or agreement of
Purchaser contained in this Agreement.
11.3 Procedures for Claims Between the Parties. If a claim (a
"Claim") is to be made by the party claiming indemnification (the "Claimant")
against the other party (the "Indemnifying Party"), the Claimant shall give
written notice (a "Claim Notice") to the Indemnifying Party as soon as
practicable after the Claimant becomes aware of the facts, condition or event
that gave rise to Losses for which indemnification is sought under this Section
11, provided that in no event shall such notice be effective if given after the
date that is twelve (12) months after the Closing Date. Following receipt of
the Claim Notice from the Claimant, the Indemnifying Party shall have thirty
(30) days to make such investigation of the Claim as the Indemnifying Party
deems necessary or desirable. For the purposes of such investigation, the
Claimant agrees to make available to the Indemnifying Party and/or its
authorized representative(s) the information relied upon by the Claimant to
substantiate the Claim. If the Claimant and the Indemnifying Party agree at or
prior to the expiration of said thirty (30) day period to the validity and
amount of such Claim, the Indemnifying Party shall pay to the Claimant the
amount of such Claim. If the Claimant and the Indemnifying Party do not agree
within said period, the Claimant may seek appropriate legal remedy in
accordance with the provisions of Section 13.1.
11.4 Defense of Third-Party Actions. If any lawsuit or enforcement
action (a "Third Party Action") is filed against a Claimant entitled to the
benefit of indemnity hereunder, written notice thereof (the "Third-Party Action
Notice") shall be given by the Claimant to the Indemnifying Party as promptly
as practicable (and in any event within ten (10) business days after the
service of the citation or summons or other manner of process), provided that
in no event shall such notice be effective if given after the date that is
twelve (12) months after the Closing Date. After such notice, if the
Indemnifying Party shall acknowledge in writing to the Claimant that the
Indemnifying Party shall be obligated under the terms of its indemnity
hereunder in connection with such Third-Party Action, then the Indemnifying
Party shall be entitled, if it so elects, (i) to take control of the defense
and investigation of such Third-Party
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Action, (ii) to employ and engage attorneys of its choice to handle and defend
the same, at the Indemnifying Party's cost, risk and expense, and (iii) to
compromise or settle such Third-Party Action, which compromise or settlement
shall be made only with the written consent of the Claimant (such consent not
to be unreasonably withheld, conditioned or delayed) unless such compromise or
settlement involves only the payment of money damages and does not impose an
injunction or other equitable relief upon the Claimant. If the Indemnifying
Party fails to assume the defense of such Third-Party Action within fifteen
(15) days after receipt of the Third-Party Action Notice, the Claimant will
(upon delivering notice to such effect to the Indemnifying Party) have the
right to undertake the defense, compromise or settlement of such Third-Party
Action; provided, however, that such Third-Party Action shall not be
compromised or settled without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld, conditioned or
delayed. In the event the Claimant assumes the defense of the Third-Party
Action, the Claimant will keep the Indemnifying Party timely informed of the
progress of any such defense, compromise or settlement.
11.5 Limitations. The Indemnifying Party's obligations to indemnify
the Claimant pursuant to this Section 11 shall be subject to the following
limitations:
(a) No indemnification shall be required to be made by the
Indemnifying Party until the aggregate amount of the Claimant's Losses exceeds
Two Hundred Thousand Dollars ($200,000) (the "Deductible") and then
indemnification shall only be required to be made by the Indemnifying Party to
the extent of such Losses that exceed the Deductible. Notwithstanding the
foregoing, the Deductible shall not apply to any indemnification obligation of
Seller in connection with Seller's failure to perform the covenants set forth
in Section 5.19, Section 5.20 or Section 5.21.
(b) No indemnification shall be required to be made by the
Indemnifying Party for the amount of the Claimant's Losses that is in excess of
One Million Seven Hundred Fifty Thousand Dollars ($1,750,000) (the
"Indemnification Cap").
(c) The indemnification obligation of an Indemnifying Party
shall be reduced so as to give effect to any net reduction in federal, state,
local or foreign income or franchise tax liability realized at any time by the
Claimant in connection with the satisfaction by the Indemnifying Party of a
Claim with respect to which indemnification is sought hereunder. The
indemnification obligation of an Indemnifying Party shall also be reduced to
the extent of any available insurance proceeds. Additionally, the Claimant
shall refund to the Indemnifying Party any amount of the Claimant's Losses that
are subsequently recovered by the Claimant pursuant to a settlement or
otherwise.
(d) In no event shall the term "Losses" include any
consequential, incidental, indirect or any loss or damage to Claimant, whether
or not based upon events giving rise to indemnification hereunder, including
claims brought by third parties in connection with any public offering or
damages based on a multiple of earnings formula.
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(e) From and after the Closing Date, the indemnification rights
contained in this Section 11 shall constitute the sole and exclusive remedies
of the parties hereunder and shall supersede and displace all other rights that
either party may have under statute or common law.
12. Breaches and Defaults; Termination; Remedies.
12.1 Breaches and Defaults; Opportunity to Cure. Prior to the
exercise by a party of any termination rights afforded under this Agreement, if
either party (the "Non-Breaching Party") believes the other (the "Breaching
Party") to be in breach hereunder, the Non-Breaching Party shall provide the
Breaching Party with written notice specifying in reasonable detail the nature
of such breach, whereupon the Breaching Party shall have thirty (30) days from
the receipt of such notice to cure such breach; provided, however, that if such
breach is not capable of being cured within such period and if the Breaching
Party shall have commenced action to cure such breach within such period and is
diligently attempting to cure such breach, then the Breaching Party shall be
afforded an additional thirty (30) days to cure such breach; provided, further,
however, Purchaser shall have no opportunity to cure the breach of its
obligation to deliver any required portion of the Acquisition Price to be
delivered to Seller at Closing. If the breach is not cured within such time
period, then the Breaching Party shall be in default hereunder and the
Non-Breaching Party shall be entitled to terminate this Agreement (as provided
in Section 12.2). This right of termination shall be in addition to, and not
in lieu of, any legal remedies available to the Non-Breaching Party.
12.2 Termination. This Agreement may be terminated at any time
prior to the Closing as follows:
(a) by mutual written agreement of the parties hereto;
(b) by Purchaser, provided Purchaser is not then in breach of
this Agreement, pursuant to a written notice to Seller, (i) if any one or more
of the conditions to Purchaser's obligation to close has not been fulfilled in
any material respect as of the Closing Date, (ii) subject to Section 12.1, if
Seller has breached in any material respect any representation, warranty,
covenant or agreement contained in this Agreement, or (iii) if the Closing
shall not have taken place by the date that is twelve (12) months after the
date of the execution of this Agreement (the "Outside Date") (unless any of the
foregoing events shall have resulted primarily from Purchaser breaching any
representation, warranty, covenant or agreement contained in this Agreement);
and
(c) by Seller, provided Seller is not then in breach of this
Agreement, pursuant to a written notice to Purchaser, (i) if any one or more of
the conditions to Seller's obligation to close has not been fulfilled in any
material respect as of the Closing Date, (ii) subject to Section 12.1, if
Purchaser has breached in any material respect any representation, warranty,
covenant or agreement contained in this Agreement, (iii) if the Closing shall
not have taken place by the Outside Date, or (iv) in accordance with Section
5.11 (unless any of the foregoing
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events shall have resulted primarily from Seller's breach of any
representation, warranty, covenant or agreement contained in this Agreement).
12.3 Effect of Termination. In the event of any termination of this
Agreement, all obligations of the parties hereto under this Agreement (except
for the obligations contained in Sections 9, 13.1, 13.2 and 13.5) shall
terminate as of such date of termination and this Agreement shall thereafter
become void and be of no further force and effect, and upon such termination no
party hereto shall be liable to the other party, except for damages and
expenses (including attorneys', accounting and other professional fees and
expenses) resulting from breaches of this Agreement prior to such termination.
13. Miscellaneous.
13.1 Resolution of Disputes.
(a) Any controversy, dispute or claim (collectively, a
"Dispute") between the parties arising out of or relating to this Agreement, or
the breach, termination or validity thereof, shall be finally settled by
arbitration in accordance with the commercial arbitration rules of the American
Arbitration Association ("AAA") then obtaining. However, in all events, these
arbitration provisions shall govern over any conflicting rules that may now or
hereafter be contained in the AAA rules. The arbitration shall be held in
Philadelphia, Pennsylvania unless the parties mutually agree to have the
arbitration held elsewhere, and judgment upon the award made therein may be
entered by any court having jurisdiction in Philadelphia, Pennsylvania;
provided, however, that nothing contained in this Section 13.1 shall be
construed to limit or preclude a party from bringing any action in any court of
competent jurisdiction for injunctive or other provisional relief to compel
another party to comply with its obligations under this Agreement during the
pendency of the arbitration proceedings. Any judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction over the
subject matter hereof. The arbitrator shall have the authority to grant any
equitable and legal remedies that would be available in any judicial proceeding
instituted to resolve any claim hereunder, including specific performance of
the matters set forth in this Agreement.
(b) Any such arbitration will be conducted before three (3)
arbitrators, one of which shall be chosen by Seller, one of which shall be
chosen by Purchaser, and the third chosen by the other two arbitrators. The
decision of a majority of the arbitrators will be the decision of the
arbitrators. The arbitrators shall permit such discovery as they shall
determine is appropriate in the circumstances, taking into account the needs of
the parties and the desirability of making discovery expeditious and
cost-effective. Any such discovery shall be limited to information directly
related to the controversy or claim in arbitration and shall be concluded
within sixty (60) days after appointment of the third arbitrator.
(c) The prevailing party in any arbitration hereunder shall be
entitled to an award of its reasonable costs incurred in connection therewith,
including attorneys' fees.
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(d) For any Dispute submitted to arbitration, the burden of
proof will be as it would be if the claim were litigated in a judicial
proceeding.
(e) Upon the conclusion of any arbitration proceedings
hereunder, the arbitrators will render findings of fact and conclusions of law
and a written opinion setting forth the basis and reasons for any decision
reached and will deliver such documents to each party to this Agreement along
with a signed copy of the award.
(f) The arbitrators chosen in accordance with these provisions
will not have the power to alter, amend or otherwise affect the terms of these
arbitration provisions or the provisions of this Agreement.
13.2 Expenses. The parties to this Agreement shall, except as
otherwise specifically provided herein, bear their respective expenses incurred
in connection with the preparation, negotiation, execution and performance of
this Agreement and the transactions contemplated hereby, including all fees and
expenses of agents, representatives, consultants, counsel and accountants.
13.3 Further Assurances. Each of the parties shall execute such
agreements and documents and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall use its best efforts (which shall
not include the payment of money) to fulfill or obtain the fulfillment of the
conditions to the Closing, including the execution and delivery of any other
agreement or document, the execution and delivery of which are conditions
precedent to the Closing.
13.4 Access to Records. From and after the Closing Date, Seller
shall allow Purchaser, and its counsel, accountants and other representatives,
such access to Seller's records that after the Closing are in the custody or
control of Seller as Purchaser reasonably requires in order to comply with its
obligations under law or under contracts constituting Assumed Liabilities.
From and after the Closing Date, Purchaser shall allow Seller, and its counsel,
accountants and other representatives, such access to records that after the
Closing are in the custody or control of Purchaser as Seller reasonably
requires in order to comply with its obligations under law (including with
respect to tax matters and the preparation of the Closing Date Balance Sheet
and the Closing Statement).
13.5 Indemnification of Brokerage. Seller agrees to indemnify and
save Purchaser harmless from any claim or demand for commissions or other
compensation by any broker, finder, agent or similar intermediary claiming to
have been employed by or on behalf of Seller or any affiliate (including Morgan
Stanley & Co. Incorporated), and to bear the cost of reasonable legal fees and
expenses incurred in defending against any such claim. Purchaser agrees to
indemnify and save Seller harmless from any claim or demand for commissions or
other compensation by any broker, finder, agent or similar intermediary
claiming to have been employed by or on behalf of Purchaser or any affiliate
and to bear the cost of reasonable legal fees and expenses incurred in
defending against such claim.
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<PAGE> 41
13.6 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any court
determines that any covenant, or any part of any covenant is invalid or
unenforceable, such covenant shall be enforced to the extent permitted by such
court, and all other covenants shall not thereby be affected and shall be given
full effect, without regard to the invalid portions.
13.7 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when received if delivered personally against receipt; when transmitted
if transmitted by telecopy, electronic or digital transmission method; the next
day if sent for next day delivery by a nationally recognized overnight courier
service; or upon receipt if sent by certified, registered or express mail,
return receipt requested, postage prepaid. In each case notice shall be sent
as follows:
(a) if to Seller, to:
Horizon Cellular Group
101 Lindenwood Drive / Suite 125
Malvern, PA 19355
Telecopy No.: 610-993-2683
Attention: Mr. Bruce M. Hernandez
with a required copy to:
Kleinbard Bell & Brecker
1900 Market Street / Suite 700
Philadelphia, Pennsylvania 19103
Telecopy No.: 215-568-0140
Attention: Howard J. Davis, Esquire
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<PAGE> 42
(b) if to Purchaser, to:
Palmer Wireless, Inc.
12800 University Drive / Suite 500
Fort Myers, FL 33907-5337
Telecopy No.: 941-433-8210
Attention: Mr. William J. Ryan
with a required copy to:
Palmer Wireless, Inc.
12800 University Drive / Suite 500
Fort Myers, FL 33907-5337
Telecopy No.: 941-433-8210
Attention: K. Patrick Meehan, Esquire
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
13.8 Entire Agreement. This Agreement (including the Schedules and
Exhibits) and the agreements (including the Escrow Agreement), certificates and
other documents delivered hereunder contain the entire agreement between the
parties with respect to the transactions described herein, and supersede all
prior agreements, written or oral, with respect thereto including that certain
Confidentiality Agreement dated October 4, 1995 between Purchaser and Horizon.
13.9 Amendments and Waivers. This Agreement may be modified or
amended, and the terms hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of any party of any such right, power or privilege, nor any single
or partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
13.10 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without regard to
principles of conflicts of law or any rule of interpretation or construction as
to which party drafted this Agreement, except with respect to matters of law
concerning the internal corporate affairs of any corporate entity that is a
party to or the subject of this Agreement (as to those matters of law, the
jurisdiction under which the respective entity derives its powers shall
govern).
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<PAGE> 43
13.11 Assignment; Binding Effect. Neither this Agreement nor any of
the rights or obligations hereunder may be assigned (including by operation of
law) by any party without the prior written consent of the other party, except
that Purchaser may assign this Agreement to an affiliate of Purchaser without
such consent, provided that Purchaser shall remain liable for all of its
obligations hereunder. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
13.12 Non-Recourse. Notwithstanding anything to the contrary
contained herein or otherwise, this Agreement and all of the agreements and
documents executed in connection herewith shall be non-recourse to the
partners, affiliates and officers of Seller and its partners, affiliates,
officers, directors and stockholders, and if Seller is in default hereof or
under such other agreements or documents, Purchaser's recourse shall be limited
solely to Seller and Seller's equity in its assets.
13.13 Beneficiaries of Agreement. The representations, warranties,
covenants and agreements expressed in this Agreement are for the sole benefit
of the other party hereto and are not intended to benefit, and may not be
relied upon or enforced by, any other party as a third-party beneficiary or
otherwise.
13.14 Counterparts; Facsimile Signatures. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. Each counterpart may consist
of a number of copies hereof each signed by less than all, but together signed
by all of the parties hereto. Facsimile signatures on this Agreement and any
of the agreements and documents executed in connection herewith shall be deemed
original signatures.
13.15 Exhibits and Schedules. The Exhibits and Schedules are a part
of this Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
13.16 Computation of Days; Holidays. Whenever this Agreement
provides for a period of time that is expressed in terms of a numbers of days
prior to or within which actions or events are to occur or not occur, such time
period shall be measured in calendar days unless otherwise expressly provided.
Whenever this Agreement provides for a date, day or period of time on or prior
to which actions or events are to occur or not occur, and if such date, day or
last day of such period of time falls on a Saturday, Sunday, or legal holiday,
then the same shall be deemed to fall on the immediately following business
day.
13.17 Joint and Several. The obligations of each Purchaser hereunder
shall be joint and several.
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<PAGE> 44
13.18 Headings. The headings in this Agreement are for reference
only, and shall not affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HORIZON CELLULAR TELEPHONE COMPANY OF SPALDING, L.P.
By: KCCGP, L.P., its general partner
By: HORIZON G.P., INC., its general partner
By: /s/ M. E. KALOGRIS
--------------------------------------------------
Name: MICHAEL E. KALOGRIS
Title: PRESIDENT
COLUMBUS CELLULAR TELEPHONE COMPANY
By: PALMER WIRELESS HOLDINGS, INC., its managing
general partner
By: /s/ WILLIAM J. RYAN
--------------------------------------------------
Name: WILLIAM J. RYAN
Title: PRESIDENT
MACON CELLULAR TELEPHONE SYSTEMS,
LIMITED PARTNERSHIP
By: CEI COMMUNICATIONS, INC., its general partner
By: /s/ WILLIAM J. RYAN
--------------------------------------------------
Name: WILLIAM J. RYAN
Title: PRESIDENT
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<PAGE> 45
JOINDER
Palmer Wireless, Inc., a Delaware corporation that is the ultimate parent
entity of each Purchaser ("Palmer"), to induce Seller to enter into the
foregoing Agreement with Purchaser and to consummate the transactions
contemplated thereby, irrevocably and unconditionally guarantees to Seller, and
becomes surety to Seller for, the prompt and due performance of Purchaser's
obligations (including payment of the Acquisition Price) under the Agreement
when and as due to the same extent as if Palmer were the principal obligor.
Palmer represents and warrants to Seller that (a) Palmer has the full
legal right and all power and authority required to enter into, execute and
deliver this Joinder and to perform fully its obligations hereunder, (b) the
execution, delivery and performance of this Joinder by Palmer have been duly
authorized by all necessary action on the part of Palmer, (c) this Joinder has
been duly executed and delivered and constitutes the valid and binding
obligation of Palmer, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting creditors' rights generally, or (d) the
execution, delivery and performance of this Joinder will not (i) violate any
provision of its certificate of incorporation or by-laws, (ii) violate,
conflict with or result in the breach of any of the terms of, or constitute (or
with notice or lapse of time or both constitute) a default under, any contract
to which Palmer is a party or by or to which it or any of its assets or
properties may be bound or subject, excluding in any case such violations,
conflicts, breaches or defaults that would not reasonably be expected to have a
material adverse effect on Palmer's ability to perform its obligations
hereunder, or (iii) violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body by which Palmer, or
the assets, properties or business of Palmer are bound.
Intending to be legally bound, the undersigned has executed this Agreement
as of the date first above written.
PALMER WIRELESS, INC.
By: /s/ WILLIAM J. RYAN
--------------------------------
Name: WILLIAM J. RYAN
Title: PRES. C.E.O
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<PAGE> 1
================================================================================
ASSET ACQUISITION AGREEMENT
BETWEEN
HORIZON CELLULAR TELEPHONE COMPANY OF DAWSON, L.P.
AND
CELLCO PARTNERSHIP
March 22, 1996
================================================================================
<PAGE> 2
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
2.3(b) Form of Escrow Agreement
2.4(a)(iii) Net Working Capital Components
8.1(b)(i) Form of Opinion of Seller's Corporate Counsel
8.1(b)(ii) Form of Opinion of Seller's FCC Counsel
8.2(d) Form of Opinion of Purchaser's Counsel
SCHEDULES
1.1(l) Certain Permitted Encumbrances
1.2(c) Personal Property
1.2(d) Owned Real Property
1.3(e) Causes of Action
1.3(g) Certain Affiliate Assets Not Used Exclusively for the System
1.3(h) Other Excluded Assets
2.4(a)(i) Capital Expenditures
2.4(a)(ii) Subscribers
3.2 Jurisdictions
3.4(b) Financial Statements
3.6(c) FCC Licenses
3.7(b) Penalties
3.8(a) Title Exceptions
3.8(b) Real Property Leases
3.9 Material Personal Property Leases
3.10 Contracts
3.11 Required Consents
3.13(a) Taxes
3.14 Environmental
3.16 Receivables
3.17 Existing Conditions
3.19 Labor Relations
3.20 Related Parties
3.21 Compensation
3.25 Employee Benefit Plans
3.27 Subscriber Accounts
4.6 Purchaser's Consents
-ii-
<PAGE> 3
ASSET ACQUISITION AGREEMENT
THIS ASSET ACQUISITION AGREEMENT (this "Agreement") is made as of March
22, 1996 between HORIZON CELLULAR TELEPHONE COMPANY OF DAWSON, L.P., a Delaware
limited partnership ("Seller"), and CELLCO PARTNERSHIP, a Delaware general
partnership ("Purchaser").
W I T N E S S E T H
WHEREAS, Seller is the sole holder of certain licenses, including cellular
and microwave licenses, granted by the Federal Communications Commission (the
"FCC") for the Georgia Non-Wireline Cellular Rural Service Area Number 2
("RSA");
WHEREAS, Seller is the owner and operator of the cellular telephone
communication system in the RSA (the "System") and, in connection therewith, is
engaged in the business of marketing, selling and providing cellular telephone
service in the RSA (such business as presently conducted, the "Business");
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
acquire from Seller, all of the Purchased Assets (as hereinafter defined) in
accordance with the terms and conditions hereinafter set forth; and
WHEREAS, the parties acknowledge that the terms and conditions set forth
in this Agreement and the performance by the parties of their respective
obligations hereunder are subject to and are intended to be in compliance with
all FCC and other state and local governmental rules and regulations governing
the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Certain Definitions; Purchase and Sale of Assets; Assumption of
Liabilities.
1.1 Certain Definitions. As used in this Agreement, the following
terms have the following meanings:
(a) "affiliate", with respect to any person, means any other
person controlling, controlled by or under common control with such person.
(b) "business day" means any day other than a Saturday, Sunday,
legal holiday in the Commonwealth of Pennsylvania or the States of New Jersey
or New York or other day of the year on which banks in Pennsylvania, New Jersey
or New York are authorized or required by law to close.
(c) "Executive Officers" shall mean Michael E. Kalogris,
Steven R. Skinner, Bruce M. Hernandez, Stefan C. Karnavas, Steven B. Figard
and Patricia Gallagher.
<PAGE> 4
(d) "governmental or regulatory body" means any government or
political subdivision thereof, whether federal, state, local or foreign, or any
agency or instrumentality of any such government or political subdivision.
(e) "herein", "hereby", "hereunder", "hereof" or other
equivalent words refer to this Agreement and not solely to the particular
section or portion of this Agreement in which any such word is used.
(f) "Horizon Corporate" means Horizon G.P., Inc., a Delaware
corporation and the general partner of KCCGP, L.P., a Delaware limited
partnership and the general partner of Seller ("KCCGP").
(g) "Horizon Corporate Controlled Affiliate" means Horizon
Corporate or any Horizon Corporate affiliate controlled by Horizon Corporate.
(h) "includes", "including" or other equivalent words mean
"including , without limitation".
(i) "lien or other encumbrance" means any lien, pledge,
mortgage, security interest, claim, lease, charge, option, right of first
refusal, easement, servitude, transfer restriction under any stockholder or
similar agreement, encumbrance or any other restriction or limitation
whatsoever.
(j) "Material Adverse Change" means in relation to any
representation, warranty or covenant to which such phrase relates a material
adverse change in the Business, taken as a whole which involves more than
$10,000; provided, however, that neither (i) the effects of any events,
circumstances or conditions resulting from changes, developments or
circumstances in worldwide or national conditions (political, economic,
regulatory or otherwise) that adversely affect the markets where the System is
operated or affect industries related to the telecommunications business
generally (including proposed legislation or regulations by any governmental or
regulatory body or the introduction of any technological changes in the
telecommunications industry), or adversely affect a broad group of industries
generally, nor (ii) any effects of competition (including competition resulting
from personal communication services or the introduction of any new
technological changes in the telecommunications industry), shall be deemed to
give rise to a Material Adverse Change.
(k) "Material Adverse Effect" means in relation to any
representation, warranty or covenant to which such phrase relates an effect
that would result in a Material Adverse Change which involves more than
$10,000; provided, however, that neither (i) the effects of any events,
circumstances or conditions resulting from changes, developments or
circumstances in worldwide or national conditions (political, economic,
regulatory or otherwise) that adversely affect the markets where the System is
operated or affect industries related to the telecommunications business
generally (including proposed legislation or regulation by any governmental or
regulatory body or the introduction of any technological changes in the
telecommunications industry), or adversely affect a broad group of industries
generally, nor (ii) any effects of competition (including competition resulting
from personal communication
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<PAGE> 5
services or the introduction of any new technological changes in the
telecommunications industry), shall constitute a Material Adverse Effect.
(l) "Permitted Encumbrances" means (i) any lien or other
encumbrance for real or personal property taxes and assessments, not yet past
due or otherwise being contested in good faith, (ii) any lien or other
encumbrance arising out of deposits made to secure leases or other obligations
of a like nature arising in the ordinary course of business, (iii) liens which,
individually or in the aggregate, are immaterial in character, amount and
extent, and which do not detract from the value or interfere with the present
or proposed use of the assets or properties they affect and (iv) any lien or
other encumbrance set forth on Schedule 1.1(l).
(m) "person" means any individual, corporation, limited
liability company, partnership, limited liability partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
governmental or regulatory body or other entity.
(n) "to Seller's knowledge" or any similar phrase means the
actual knowledge of one of the Executive Officers and James Price, the general
manager of the System.
(o) "material" means, in relation to any representation,
warranty or covenant contained in Sections 3, 4 or 5, any condition, fact,
contingency, obligation, right, event, occurrence or development that would
reasonably be expected to involve or have an effect on the identified item of
more than $10,000, unless, (i) the context otherwise provides or (ii) when used
in the phrases "Material Adverse Change" or "Material Adverse Effect."
1.2 Agreement to Sell; Purchased Assets. On the terms and subject to
the conditions contained in this Agreement, Seller agrees to sell, assign,
transfer and deliver to Purchaser at the Closing all of the right, title and
interest of Seller in or to the following assets in existence as of the Closing
Date (as hereinafter defined) wherever such assets are located, and whether
real, personal, tangible or intangible, and whether or not any such assets have
any value for accounting purposes or are carried or reflected on, or
specifically referred to in Seller's books or financial statements
(collectively referred to herein as the "Purchased Assets"):
(a) all notes and other accounts receivable whether billed or
unbilled (including all proceeds of such receivables other than cash or cash
equivalents), including all other negotiable instruments or other instruments
and chattel paper and other evidences of indebtedness and rights to receive
payment of, Seller generated in the conduct of, or otherwise relating to, the
Business (collectively, the "Receivables");
(b) all supplies and inventories (including cellular phones,
pagers, accessories, spare parts and supplies, if any) used directly or
indirectly in the operation of the Business, whether or not obsolete or carried
on Seller s books of account (collectively, the "Inventory");
(c) all furniture, fixtures, cellular systems and other
equipment and machinery, cellular switches, cell site equipment, electrical
power units, antennas, transmission lines, microwave equipment, test equipment,
tools, vehicles, office equipment, improvements, parts and other tangible
personal property relating to, or used directly or indirectly, in the Business
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<PAGE> 6
other than Inventory, whether or not obsolete, including all those items listed
on Schedule 1.2(c) (the "Personal Property");
(d) all those certain lots and pieces of ground together with
the buildings, structures and other improvements erected thereon, and together
with all easements, rights of way and appurtenances relating to or used,
directly or indirectly in the Business, including such as are more particularly
described on Schedule 1.2 (d) (the "Owned Real Property");
(e) all leasehold interests created by all leases of personal
property (the "Personal Property Leases") or real property (the "Real Property
Leases") under which Seller is a lessee or lessor;
(f) all of Seller's interest in all buildings, towers,
facilities and other structures and improvements located on the Owned Real
Property and the real property subject to a Real Property Lease (the "Leased
Real Property", and together with the Owned Real Property, the "Real
Property"), together with Seller's interest in all fixtures, furnishings,
installations, machinery, equipment and appliances used in connection with the
operation, maintenance or occupancy of the Real Property and Seller's interest
in all leasehold improvements;
(g) all prepaid expenses, advance payments, deferred charges,
security and other deposits deposited by Seller with third parties with respect
to Leased Real Property or other Purchased Assets;
(h) all licenses, certificates of occupancy, permits,
franchises, registrations, certificates of public convenience and necessity,
approvals and operating rights to the extent transferable under applicable law
or with any required consent, including all licenses, permits and
authorizations issued by the FCC (the "FCC Licenses") and pending applications
with the FCC, any interim operating authority, or other regulatory authority,
used in the conduct of the Business or the construction and operation of the
System or necessary to the ownership of the Purchased Assets, and all planning,
zoning, building, environmental, occupancy and other permits and licenses used
in connection with the System (collectively, and including the FCC Licenses,
the "Permits");
(i) to the extent permitted by applicable law or with any
required consent, all rights of Seller under all written or oral contracts,
agreements, licenses, or other documents, commitments, arrangements,
undertakings, practices or authorizations relating to the Business, including
all contracts to provide services to customers in the RSA and orders received
which have not yet been filled, and to the extent permitted thereunder the
Acquisition Agreement under which Seller acquired the Business (the
"Acquisition Agreement") and all contracts, undertakings and commitments
delivered to Seller in connection therewith (collectively, and including the
Personal Property Leases and the Real Property Leases the "Contracts"); and
(j) all rights under any patent, trademark, service mark, trade
name or copyright, whether registered or unregistered, and any applications
therefor relating to or used, directly or indirectly, in the operation of the
Business;
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<PAGE> 7
(k) all technologies, methods, formulations, data bases, trade
secrets, know-how, engineering inventions and other intellectual property used
in the Business or under development and all related documentation;
(l) all computer software owned by Seller (including
documentation and related object and source codes) relating to or used,
directly or indirectly, in the operation of the Business;
(m) except as set forth on Schedule 1.3(e), all rights or
choses in action relating to the Business arising out of occurrences before or
after the Closing, including all rights under express or implied warranties
relating to the Purchased Assets; and
(n) all information, files, records, books of account, data,
plans, contracts, recorded knowledge, including customer and supplier lists and
leads related to the Business.
1.3 Excluded Assets. Notwithstanding anything to the contrary
contained herein or otherwise, the Purchased Assets do not include the
following:
(a) all cash on hand and in financial institutions, cash
equivalents, marketable securities and bonds ("Cash and Cash Equivalents");
(b) all federal, state and local income and franchise tax
credits and tax refund claims;
(c) the minute books, partnership record books and tax returns
of Seller;
(d) any insurance policies maintained by Seller with respect to
the Business;
(e) all claims, causes of action and rights of recovery arising
out of, or relating to, events or occurrences prior to the Closing Date
relating to the System or the Business, whether asserted or commenced before,
on or after the Closing Date set forth on Schedule 1.3(e);
(f) Seller's rights under this Agreement;
(g) those assets set forth on Schedule 1.3(g), which assets are
used by affiliates of Seller and do not relate exclusively to the operation of
the System;
(h) the personal effects, memorabilia and other assets
described on Schedule 1.3(h);
(i) intercompany accounts receivable from any affiliate of
Seller; and
(j) the trade names "Horizon", "Horizon Cellular Telephone
Company," "Horizon Cellular Group" and "Horizon Cellular Telephone Company of
Dawson, L.P."
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<PAGE> 8
1.4 Shared Assets. If any Related Party (as hereinafter defined)
owns any assets (other than the excluded Related Party assets set forth on
Schedule 1.3(g) that (i) are located in the State of Georgia and used or useful
in the operation of the Business, or (ii) are located elsewhere, used primarily
in the operation of the Business and necessary to allow Purchaser to continue
to operate the Business as it is presently operated, Seller shall cause its
Related Parties to transfer such assets to Seller prior to the Closing (at no
cost to Purchaser), and such assets shall become Purchased Assets.
1.5 Assumption of Liabilities by Purchaser.
(a) On the Closing Date, Purchaser shall only assume and agree to
discharge and perform, as and when due, (i) all liabilities and obligations of
Seller that are reflected on the Closing Date Balance Sheet (as hereinafter
defined) as current liabilities and only to the extent that such liabilities
are reflected and quantified on the Closing Date Balance Sheet and (ii) all
obligations of Seller pursuant to the Contracts which (A) are disclosed on
Schedule 3.8(b), 3.9 or 3.10 (except to the extent described therein as not
being assumed) or (B) were entered into in the ordinary course of business
containing customary terms and provisions and which were not required to be
disclosed in Schedules 3.9 or 3.10 because of the amount thereof, but only to
the extent such obligations relate to periods or goods or services provided to
Purchaser on or after the Closing Date or they are included within the
obligations assumed pursuant to the immediately preceding clause (i), in all
cases excepting intercompany liabilities to Seller's affiliates and any
liabilities of Seller for employment related compensation, payroll and benefits
(collectively the "Assumed Liabilities").
(b) Notwithstanding the foregoing, Purchaser shall not
assume or agree to pay, discharge or perform any liabilities or obligations
arising out of any breach by Seller of any provision of any Contract (except to
the extent that the liability for such breach has been reflected and quantified
on the Closing Date Balance Sheet as a current liability), including
liabilities or obligations arising out of Seller's failure to perform any such
agreement, contract, commitment or lease in accordance with its terms prior to
the Closing and any liability arising out of the assignment to Purchaser of any
such agreement, contract, commitment or lease in violation of the terms
thereof. EXCEPT AS SPECIFICALLY SET FORTH IN THIS SECTION 1.5, PURCHASER SHALL
NOT ASSUME OR BE RESPONSIBLE FOR ANY DEBTS, LIABILITIES OR OBLIGATIONS
(INCLUDING TAX OBLIGATIONS OTHER THAN THOSE TAXES AND FEES WHICH ARE BEING
BORNE EQUALLY BY THE PARTIES PURSUANT TO SUBSECTION 1.5(C) AND SECTION 2.7 AND
BEING PAID BY PURCHASER PURSUANT TO SECTION 5.4 AND SECTION 5.8 HEREOF) OF
SELLER, OR ANY RELATED PARTY.
(c) Notwithstanding the foregoing, (i) Seller, on the one hand,
and Purchaser, on the other, shall share equally the filing fees associated
with making all requisite applications with the FCC for consent to the
transactions contemplated by this Agreement, but not any legal or other fees,
costs and expenses related thereto, it being understood and agreed that each
party shall be responsible for all such other fees, costs and expenses incurred
by or on behalf of it, and (ii) Purchaser shall be responsible for paying for
all fees, costs and expenses associated with Purchaser making and prosecuting
all requisite applications with the Georgia Public
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<PAGE> 9
Service Commission ("GPSC"), if any, for licenses, authorizations and
certificates of public convenience and necessity necessary for Purchaser to
conduct the Business from and after Closing.
1.6 Regarding Consents.
(a) To the extent that Seller's rights under any Contract,
Permit or other Purchased Assets to be assigned to Purchaser hereunder may not
be assigned without the consent of any person (including a governmental or
regulatory body) (the "Required Consents") which has not been obtained, this
Agreement shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof or be unlawful. For a period of
six (6) months following the Closing Date, Seller, at its expense, shall use
commercially reasonable efforts to obtain all Required Consents to transfer
such Contract, Permit or other Purchased Asset, and, upon obtaining such
Required Consents, shall transfer such Contract, Permit or other Purchased
Asset to Purchaser for no additional consideration.
(b) If any consent shall not be obtained or if any
attempted assignment would be ineffective or would impair Purchaser's rights
with respect to the Purchased Asset in question so that Purchaser would not in
effect acquire the benefit of all such rights, Seller, to the maximum extent
permitted by law and the nature of the Purchased Asset, shall for a period of
one year following the Closing Date (i) act after the Closing as Purchaser's
agent in order to preserve and obtain for Purchaser the benefits thereunder and
(ii) cooperate, to the maximum extent permitted by law and the nature of the
Purchased Asset, with Purchaser in any other reasonable arrangement designed to
provide such benefits to Purchaser; provided that nothing contained herein
shall require Seller to incur any additional cost and expense to preserve and
obtain such benefits for Purchaser.
1.7 No Liabilities Not Expressly Assumed. This is a purchase of
assets and Purchaser shall not assume or be bound by or responsible for any
obligations or liabilities of Seller or any Horizon Corporate Controlled
Affiliate of any kind or nature, known, unknown, contingent or otherwise, other
than those obligations or liabilities expressly assumed by Purchaser pursuant
to Section 1.5 hereof.
2. Agreement to Purchase; Indemnification Escrow; Acquisition Price and
Closing.
2.1 Agreement to Purchase. At the Closing hereunder, Purchaser
shall purchase and accept the assignment, transfer and delivery of the
Purchased Assets from Seller, upon and subject to the terms and conditions of
this Agreement and in reliance on the representations, warranties and covenants
of Seller contained herein, in exchange for the delivery of the Acquisition
Price and performance of Purchaser's other obligations contained herein
(hereinafter defined in Section 2.2 hereof). In addition, Purchaser shall
assume at the Closing and agree to pay, discharge or perform, as appropriate,
certain liabilities and obligations of Seller only to the extent and as
provided in Section 1.5 of this Agreement.
2.2 Acquisition Price. The aggregate acquisition price for the
Purchased Assets shall be Fifty-Four Million Dollars ($54,000,000) (the
"Preliminary Acquisition Price"), subject to
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adjustment at and following Closing as provided herein (as so adjusted, the
"Acquisition Price") and payable as provided herein.
2.3 Manner of Payment. Subject to adjustment as provided in this
Agreement, at Closing:
(a) Purchaser shall assume the Assumed Liabilities by written
instrument of assumption in a form reasonably acceptable to the parties (the
"Instrument of Assumption");
(b) as security for the indemnification covenants of Seller
contained in this Agreement, Purchaser shall deliver to CoreStates Bank, N.A.,
Philadelphia, Pennsylvania, as escrow agent (the "Escrow Agent"), the amount of
Three Million Five Hundred Thousand Dollars ($3,500,000) which amount
(including any interest earned thereon, the "Indemnification Escrow Amount")
shall be held by the Escrow Agent pursuant to the terms of a certain escrow
agreement dated as of the Closing Date (the "Escrow Agreement")substantially in
the form of Exhibit 2.3(b). Purchaser shall be entitled to draw upon the
Indemnification Escrow Amount for payment of all indemnification claims made by
Purchaser to the extent, but only to the extent, provided herein and in the
Escrow Agreement. Notwithstanding anything to the contrary contained herein or
in the Escrow Agreement, except as specifically provided in Section 14.11, the
Indemnification Escrow Amount shall constitute Purchaser's sole recourse for
recovery of Seller's indemnification covenants contained in this Agreement;
(c) Purchaser shall pay to Seller (or to any other person as
Seller may direct in writing) by wire transfer of immediately available funds
to such banks and accounts thereat as shall be specified in writing by Seller,
the following:
(i) the amount of Fifty Million Five Hundred Thousand
Dollars ($50,500,000) (the "Closing Cash Payment"), representing the difference
between the Preliminary Acquisition Price and the Indemnification Escrow
Amount;
(ii) the amount obtained (the "Accretion Factor Payment") by
multiplying (A) the Preliminary Acquisition Price times (B) eight percent (8%)
times (C) the number of days in the period from and including August 1, 1996
until the Closing Date (except for any period during which Regulatory Approvals
are delayed primarily as a result of actions or inactions by Seller) divided by
365; and
(iii) the Initial Adjustments Amount (as hereinafter
defined).
2.4 Acquisition Price Adjustment.
(a) The Preliminary Acquisition Price shall be increased or
decreased (the "Acquisition Price Adjustment") on a dollar-for-dollar basis for
the cumulative net adjustment required by the following:
(i) Set forth on Schedule 2.4(a)(i) is a summary of
Seller's budgeted capital expenditures ("Budgeted Capital Expenditures") for
calendar year 1996. The Preliminary
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Acquisition Price shall be increased to the extent that as of the Closing Date
(A) Seller makes any such capital expenditures during 1996 in excess of those
that would have been made had the Budgeted Capital Expenditures been made
pro-rata on a daily basis throughout 1996), or (B) Seller makes any other
capital expenditures that are made with the consent of Purchaser (such consent
not to be unreasonably withheld, conditioned or delayed) and the Preliminary
Acquisition Price shall be decreased to the extent that, as of the Closing
Date, Seller has not made capital expenditures equal to the capital
expenditures that would have been made pro-rata on a daily basis throughout
1996; in each case, however, only to the extent that the capital assets
obtained thereby are included in the Purchased Assets. At Closing, Seller will
deliver to Purchaser a schedule (the "Capital Expenditures Summary") detailing
the amount and type of each of the capital expenditures, if any, for which
Seller or Purchaser is to be paid pursuant to this Section. The determination
of whether an expenditure constitutes a capital expenditure shall be made in
accordance with generally accepted accounting principles consistently applied
("GAAP"), and shall include capital expenditures for which payment has not yet
been made by Seller but for which a liability has been established in Seller's
books and records.
(ii) If at Closing the number of actual ending Subscribers
(as hereinafter defined) on the Closing Date to Seller's cellular services in
the aggregate ("Closing Subscriber Number") is less than the amount determined
in accordance with Schedule 2.4(a)(ii) (the "Target Subscriber Number"), then
there shall be deducted from the Preliminary Acquisition Price an amount equal
to $300 times the difference between the Target Subscriber Number minus the
Closing Subscriber Number. If at Closing the Closing Subscriber Number is
greater than the Target Subscriber Number, then there shall be added to the
Preliminary Acquisition Price an amount equal to $300 times the difference
between the Closing Subscriber Number minus the Target Subscriber Number. For
purposes of this Agreement, "Subscriber" shall mean a person who is a party to
a cellular service agreement with Seller and is reasonably current in paying
its obligations to such Seller, provided that, with respect to persons who
become such a party after the date hereof, (x) the credit worthiness of such
persons shall have been determined on a basis consistent with Seller's past
practices, and (y) the terms and conditions of the agreements entered into by
such persons (including price terms), shall be no more favorable to such
persons than comparable agreements entered into prior to the date hereof,
except where more favorable terms and conditions are required to match the
price offerings of Seller's competition;
(iii) The Preliminary Acquisition Price shall be adjusted
(increased or decreased) by a working capital adjustment (the "Working Capital
Adjustment") based on the amount by which, as of the Closing Date, (x) the
Purchased Assets which are current assets of the Business are less than or
greater than (y) the Assumed Liabilities which are current liabilities of the
Business, determined in accordance with the Closing Date Balance Sheet (as
hereinafter defined); provided, however, that intercompany account balances
with Horizon Cellular Telephone Company of Spalding, L.P., an affiliate of
Seller, shall be disregarded in the calculation of the Working Capital
Adjustment. Attached hereto as Schedule 2.4(a)(iii) is a statement setting
forth the calculation of the net working capital position of Seller as of the
Balance Sheet Date, utilizing those categories of Seller's current assets and
current liabilities accounts and the methods of calculation to be utilized for
purposes of making the determination required by this subsection.
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(b) The initial adjustments to the Preliminary Acquisition
Price will be made at the Closing based upon a good faith estimate by Seller of
the dollar amounts of such adjustments (the "Initial Adjustments Amount")
taking account of all provisions establishing the basis for calculating such
adjustment set forth herein, such estimate to be delivered in reasonable detail
by Seller to Purchaser upon completion of the Inventory physical audit
described in subsection (d) below.
(c) As promptly as practicable after the Closing Date (but in
no event later than ninety (90) days thereafter) Purchaser shall prepare and
deliver to Seller for its review and comment (i) a balance sheet dated as of
the opening of business on the Closing Date (the "Closing Date Balance Sheet")
and (ii) an accompanying closing statement (the "Closing Statement") reasonably
detailing as of the opening of business on the Closing Date Purchaser's
determination of each element of the Acquisition Price Adjustment. The Closing
Date Balance Sheet shall be prepared in accordance with GAAP and consistent
with past practices of Seller and its affiliates and shall reflect all accruals
and adjustments which would be made if the Closing Date Balance Sheet were an
audited year-end balance sheet of Seller, except that with respect to the
accounts which are subject to the Working Capital Adjustment, the accounting
and/or practices contemplated by subsection (d) below shall prevail in the
event of any inconsistency therewith. If Seller objects to any amounts
reflected on the Closing Date Balance Sheet or the Closing Statement, Seller
must, within fifteen (15) business days after Seller's receipt of the Closing
Date Balance Sheet and Closing Statement, give written notice (the "Notice") to
Purchaser specifying in reasonable detail Seller's objections, or Purchaser's
determination of the Acquisition Price Adjustment shall be final, binding and
conclusive on the parties. With respect to any disputed amounts, the parties
shall meet in person and negotiate in good faith during the fifteen (15)
business day period (the "Resolution Period") after the date of Purchaser's
receipt of the Notice to resolve any such disputes. If the parties are unable
to resolve all such disputes within the Resolution Period, then within five (5)
business days after the expiration of the Resolution Period, all disputes shall
be submitted to Arthur Andersen & Co. (the "Independent Accountant") who shall
be engaged to provide a final and conclusive resolution of all unresolved
disputes within forty-five (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 by the party who, in the Independent Accountant's determination,
submitted a disputed amount that differs more significantly from the amount
finally determined by the Independent Accountant. From and after the Closing
Date, Purchaser will provide Seller upon reasonable notice with free and full
access to the books, records and personnel of Purchaser with respect to the
Business reasonably requested by Seller to assist Seller in its review of the
Closing Date Balance Sheet and the Closing Statement prepared by Purchaser.
(d) For purposes of the Working Capital Adjustment (both the
preliminary adjustment contemplated in subsection (b) above and the final
adjustment contemplated in subsection (c) above):
(i) there shall be established reserves for collectability
of accounts receivable based upon the age of such receivables as follows: 2.5%
for receivables which are current to less than or equal to 30 days past due;
15% for receivables between 31 and 60 days past due;
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50% for receivables between 61 and 90 days past due; and 100% for receivables
more than 90 days past due; and
(ii) a physical audit of the Inventory will be taken by
representatives of Seller and Purchaser during the weekend prior to Closing,
the results of which shall be final and binding upon the parties for purposes
of determining the number and type of Inventory items, as it relates to the
calculation of the Working Capital Adjustment.
(e) If the Acquisition Price Adjustment (as finally determined
in accordance with the provisions set forth above) less the Initial Adjustments
Amount is a positive (negative) amount, then, within five (5) business days
after such final determination, Purchaser (Seller) shall pay to Seller
(Purchaser) such amount in immediately available funds, plus interest on such
amount from the Closing Date until such date of payment at the rate of eight
percent (8%) per annum.
(f) The limitations imposed by Section 11.5 shall not apply
with respect to the determination or payment of the Acquisition Price
Adjustment.
2.5 Allocation of Acquisition Price. On the Closing Date,
Purchaser and Seller shall mutually agree in writing (to be delivered and
executed by the parties at Closing) upon the allocation of the Acquisition
Price among the Purchased Assets. Such allocation shall be adjusted as
necessary in connection with the final determination of the Acquisition Price
Adjustment. The parties agree that such allocation shall be made based upon
the relative fair market values of the Purchased Assets as of the Closing Date
conforming with the requirements of Section 1060 of the Internal Revenue Code
of 1986, as amended (the "Code"). To the extent that Purchaser and Seller
cannot mutually agree at Closing as to the allocation of the Acquisition Price,
the Independent Accountant will be engaged to determine the allocation.
Purchaser and Seller shall bear equally the cost for such firm to determine the
allocation. The parties agree to file with their respective federal income tax
returns for the tax year in which the Closing occurs IRS Form 8594 containing
the information agreed upon by the parties pursuant to this Section 2.5.
Seller and Purchaser agree not to assert for income tax purposes (including in
connection with any tax return, tax audit or similar proceeding) any allocation
of the Acquisition Price that differs from that determined pursuant to this
section and contained in IRS Form 8594.
2.6 The Closing. Unless this Agreement shall have been earlier
terminated in accordance with the terms hereof, the transactions contemplated
by this Agreement shall be consummated (the "Closing") at the offices of
Kleinbard, Bell & Brecker, 1900 Market Street, Philadelphia, Pennsylvania
19103, on the tenth (10th) business day after receipt of the Regulatory
Approvals (as hereinafter defined) and such approvals have become Final Orders
in accordance with Section 5.7, or at such other place or on such other date as
Purchaser and Seller may agree in writing. The date on which the Closing shall
occur is referred to in this Agreement as the "Closing Date". The Closing
shall be deemed to have occurred as of 12:01 a.m. on the Closing Date.
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2.7 Closing Costs; Transfer Taxes and Fees. Purchaser and Seller
shall share equally the expense of (i) any documentary and transfer taxes and
any sales, use or other taxes imposed by reason of the transfers of Purchased
Assets provided hereunder and any deficiency, interest or penalty asserted with
respect thereto, (ii) any fees and costs of recording or filing all applicable
conveyancing instruments described in Section 8.1(a) or otherwise.
3. Representations and Warranties of Seller. Seller represents and
warrants to Purchaser that:
3.1 Organizational Status. Seller is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has all requisite partnership power and authority to own,
lease and operate its assets, properties, and its Business, and to carry on its
Business as now being conducted. Seller has heretofore made available to
Purchaser a true, complete and correct copy of its agreement of limited
partnership, amended as to date. Seller does not have any subsidiaries or any
equity interest, directly or indirectly, in any other business.
3.2 Qualification. Seller is duly qualified to do business and is
in good standing as a foreign limited partnership in Georgia, and in all other
jurisdictions where the properties or assets owned, leased or operated by it,
or the conduct of the Business, requires such qualification except for those
jurisdictions where the failure to be so qualified would not reasonably be
expected to have a Material Adverse Effect. All such jurisdictions are listed
on Schedule 3.2.
3.3 Authorization; No Conflict. Seller has the full legal right
and all partnership power and authority required to enter into, execute and
deliver this Agreement and the documents and other agreements required to be
executed and delivered hereunder and to perform fully its obligations hereunder
and thereunder. The execution, delivery and performance of this Agreement by
Seller have been duly authorized by all necessary partnership action on the
part of Seller. This Agreement has been duly executed and delivered and
constitutes, and each of the other agreements and documents to be delivered by
Seller hereunder when executed and delivered by Seller will constitute, the
valid and binding obligation of Seller, enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization, moratorium
or similar laws now or hereafter in effect affecting creditors' rights
generally. Neither the execution, delivery and performance of this Agreement
and the documents and other agreements to be delivered hereunder by Seller nor
the consummation of the transactions contemplated hereby and thereby by Seller
will (i) violate any provision of Seller's certificate of limited partnership
or partnership agreement, (ii) violate, conflict with or result in the breach
of any of the terms of, result in a modification of the effect of, otherwise
give any other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default under, any contract to
which Seller is a party or by or to which it or any of its assets or properties
may be bound or subject, excluding in any case such violations, conflicts,
breaches or defaults that in the aggregate would not reasonably be expected to
have a Material Adverse Effect, (iii) violate any order, judgment, injunction,
award or decree of any court, arbitrator or governmental or regulatory body by
which Seller, or the assets, properties or Business of Seller are bound and,
other than as
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contemplated by this Agreement, no legal action requesting any such relief is
pending or, to the knowledge of Seller, threatened, (iv) violate in any respect
any statute, law or regulation, excluding in any case such violations that
would not reasonably be expected to have a Material Adverse Effect, or (v)
violate or cause any revocation of or limitation on any Permit (A) that is
necessary to the lawful conduct of the Business or (B) the violation,
revocation or limitation of which would reasonably be expected to have a
Material Adverse Effect.
3.4 Books of Account; Financial Statements.
(a) The books of account and related records of Seller fairly
reflect in reasonable detail Seller s assets, liabilities and transactions.
(b) Seller has delivered to Purchaser copies of each of the
audited annual financial statements of Horizon Cellular Telephone Company, L.P.
("Horizon") as of December 31, 1994 and 1993 and for the years then ended
listed on Schedule 3.4(b) (collectively, the "Audited Financial Statements").
The Audited Financial Statements (i) fairly present the financial condition of
Horizon as of such dates and the results of its operations and changes in its
cash flows for the periods covered thereby, (ii) are true, correct and
complete; and (iii) were prepared from the books and records of Horizon
(including the books and records of Seller) in accordance with GAAP. Seller
has also delivered to Purchaser copies of Seller's unaudited financial
statements as of December 31, 1995 and December 31, 1994 and for the periods
then ended listed on Schedule 3.4(b) (the "Unaudited Financial Statements").
The Unaudited Financial Statements (i) fairly present the financial condition
of Seller as of such dates and the results of its operations for the periods
covered thereby and (ii) were prepared in accordance with GAAP (subject to
year-end adjustments and except for the omission of certain footnotes and other
presentation items required by GAAP with respect to audited financial
statements), which adjustments, footnotes, and presentation items, if prepared
as required for audited financial statements, would not reveal any fact or
condition materially adverse to the financial condition or results of
operations of Seller as presented in such Unaudited Financial Statements). As
used in this Agreement, "Current Balance Sheet" means the balance sheet dated
as of December 31, 1995 contained in the Unaudited Financial Statements and
"Balance Sheet Date" means December 31, 1995.
3.5 Compliance with Laws. Seller is in, and has operated in,
compliance in all respects with all applicable federal (including the
Communications Act of 1934, as amended, and the rules, regulations, orders,
policies and procedures of the FCC promulgated thereunder (the "Communications
Act")), state and local laws, regulations and ordinances and any applicable
requirements of any governmental or regulatory body, court or arbitrator
affecting its Business or its assets or the conduct of the Business and has not
failed to obtain or adhere to the requirements of any license, permit or
authorization necessary to the ownership of the System or the conduct of the
Business, except for noncompliances or failures to obtain or adhere that
individually or in the aggregate has not and would not reasonably be expected
to have a Material Adverse Effect upon Seller, the Purchased Assets or the
Business.
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3.6 Permits; FCC Licenses.
(a) Except for those Permits the absence of which individually
or in the aggregate would not reasonably be expected to have a Material Adverse
Effect and which may be readily obtained without a cost which, individually or
in the aggregate, is material, the Permits are the only licenses, permits,
certificates of occupancy, franchises, registrations, certificates of public
convenience and necessity, approvals of operating rights necessary to the
ownership of the Purchased Assets, the operation of the System as now operated,
and the conduct the Business. Such Permits are in full force and effect, and
are unimpaired by any acts or omissions of Seller.
(b) No officer or employee of, or consultant to, Seller or any
affiliate of Seller, or any other person, firm or corporation or, to Seller's
knowledge, any former employee of, or consultant to, Seller or any affiliate of
Seller, owns or has any proprietary, financial or other interest (direct or
indirect) in the Purchased Assets, including the Permits. Seller has not
failed to adhere to the requirements of any Permit, except where the failure to
so adhere would not reasonably be expected to have a Material Adverse Effect on
the Purchased Assets or Business.
(c) Seller applied for and obtained the FCC Licenses in
compliance with the Communications Act, and Seller is, and on the Closing Date
will be, the exclusive holder of the FCC Licenses. The consents of the FCC to
the assignment or transfer of control of the FCC Licenses to Seller have been
granted by Final Order (as hereinafter defined). A list of the FCC Licenses is
set forth on Schedule 3.6(c). The FCC Licenses are in full force and effect.
The SIU map included on Schedule 3.6(c) provides a true, accurate and complete
description of the cellular geographic service area of Seller in the RSA. Also
attached as part of Schedule 3.6(c) is a true and complete copy of an unserved
area application filed by Seller with respect to the RSA. There are no
existing or, to Seller's knowledge, threatened proceedings by or before the FCC
that could reasonably be expected to result in the revocation, cancellation,
suspension, or material adverse modification of the FCC Licenses, except for
proceedings that affect the cellular industry generally. Subject to obtaining
the Regulatory Approvals, Seller will transfer to Purchaser at Closing all of
Seller's right, title and interest in and to the FCC Licenses free and clear of
any lien or other encumbrance other than Permitted Encumbrances.
(d) A "Final Order", as used in this Agreement, means an action
by the FCC (i) that is not reversed, stayed, enjoined, set aside, annulled or
suspended within the deadline, if any, provided by applicable statute or
regulation, (ii) with respect to which no request for stay, motion or petition
for reconsideration or rehearing, application or request for review, or notice
of appeal or other judicial petition for review that is filed within such
period is pending, and (iii) as to which the deadline, if any, for filing any
such request, motion, petition, application, appeal or notice, and for the
entry of orders staying, reconsidering or reviewing on the FCC's own motion
have expired.
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3.7 Litigation.
(a) Except for legal or administrative proceedings affecting
the cellular telephone industry generally, no litigation, including any
arbitration, investigation or other proceeding of or before any court,
arbitrator or governmental or regulatory official, body or authority is pending
or, to the knowledge of Seller, threatened against Seller or any Horizon
Corporate Controlled Affiliate, nor does Seller know of any reasonably likely
basis for any such litigation, arbitration, investigation or proceeding, the
result of which, alone or in the aggregate, could reasonably be expected to
have a Material Adverse Effect on the Purchased Assets, the Business, or the
financial condition of Seller. Seller is not a party to or subject to the
provisions of any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority.
(b) Schedule 3.7(b) lists all civil fines, penalties, and any
orders, writs, judgments, injunctions, decrees, determinations, or other awards
of any courts, governmental agencies or other governmental authorities, which
have been imposed or levied against Seller, or which Seller or any of the
Purchased Assets has become subject to, from the date of formation of Seller,
to the date hereof.
3.8 Title; Real Property.
(a) Except as set forth on Schedule 3.8(a), Seller has good,
valid and marketable title, free and clear of all liens and other
encumbrances other than Permitted Encumbrances, to all of its properties
and assets, real, personal and mixed, which would be included in the Purchased
Assets if the Closing took place on the date hereof, which it purports to own,
including all properties and assets reflected in the Current Balance Sheet and
not sold since the date thereof in the ordinary course of the Business
consistent with past practices. At Closing, Seller will transfer to Purchaser
good and marketable title to the Owned Real Property free and clear of all
liens or other encumbrances other than Permitted Encumbrances.
(b) Schedule 3.8(b) lists all real property and interests in
real property owned, leased or otherwise held by Seller in the conduct of the
Business or upon which the Purchased Assets are located, specifying which are
owned and which are leased and, with respect to the leased property, specifying
the identity of the lessor. There have been made available to Purchaser true
and complete copies of all Real Property Leases. All of the Real Property
Leases are valid, in full force and effect and binding upon Seller, and to
Seller's knowledge, the other parties thereto, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect affecting creditors'
rights generally. Seller is not in default under any of them, nor does any
condition exist that, with notice or lapse of time or both, would constitute
such a default, excluding in any case such defaults that would not reasonably
be expected to have a Material Adverse Effect.
3.9 Personal Property Leases. Set forth on Schedule 3.9 is a list of
(i) all material Personal Property Leases (which leases account for $10,000 or
more annually in business with Seller and which do not extend for a term longer
than five (5) years), and (ii) all Personal
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<PAGE> 18
Property Leases, without regard to materiality, that are not of the type
ordinarily entered into in the conduct of a business similar to that of the
Business, copies of which have been previously made available to Purchaser.
Each Personal Property Lease is valid, binding and enforceable against Seller
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect affecting
creditors' rights generally. Seller is not in default of any Personal Property
Lease nor, to Seller's knowledge, has any event occurred that constitutes, or
with notice or lapse of time or both may constitute, a default under any
Personal Property Lease, excluding in any case such defaults that would not
reasonably be expected to have a Material Adverse Effect.
3.10 Contracts and Other Agreements.
(a) Except as listed on Schedule 3.10, Seller is not a party to
any contract, whether oral or written, which is or involves:
(i) receipt or payment after date hereof by Seller of
more than $25,000 annually;
(ii) receipt or payment after the date hereof by Seller of
more than $10,000 annually (but less than $25,000 annually) that is not
terminable by Seller on ninety (90) or fewer days' notice at any time without
penalty;
(iii) any Contract with any present or former employee or
consultant (or any entity owned or controlled thereby) or for the employment of
any person, including any consultant, who is engaged in the conduct of the
Business;
(iv) any Contract with any labor union or other
representative of employees;
(v) a commission, representative, distributorship or sales
agency agreement, contract or commitment (with any requirement that Seller pay
any residuals under any such arrangement noted on such Schedule);
(vi) a conditional sale or lease under which Seller is
either purchaser or lessee relating to the Purchased Assets or any property at
which the Purchased Assets are located;
(vii) a note, debenture, bond, trust agreement, letter of
credit agreement, loan agreement or other contracts or commitments for the
borrowing or lending of money or agreement or arrangement for a line of credit
or guarantee, pledge or undertaking of the indebtedness of any other person;
(viii) an agreement, contract or commitment for any charitable
or political contribution;
(ix) an agreement, contract or commitment limiting or
restraining Seller, any of its business or any successor thereto from engaging
or competing in any manner or in any business;
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(x) a license, franchise, distributorship or other
agreement which relates in whole or in part to any software, patent, trademark,
trade name, service mark or copyright or to any ideas, technical assistance or
other know-how which is owned or used by Seller in the conduct of the Business
other than Seller's license agreement with CellularOne Group or relating to
commercial word-processing, spreadsheet and similar personal computer software
used by Seller's employees;
(xi) all interconnect agreements and contour extension
agreements relating to the operation of the System or the conduct of the
Business; or
(xii) other agreements, contracts or commitments not made in
the ordinary course of the Business consistent with past practice.
(b) Set forth on Schedule 3.10 is a true and complete copy of
all forms of contract to provide cellular service to customers used by Seller
since August 1994.
(c) There have been made available to Purchaser true and
complete copies of all of the contracts and other agreements set forth on
Schedule 3.10. Except as disclosed on Schedule 3.10, all Contracts (including
those not required to be listed thereon or any other Schedule hereto because of
the value of such Contract) are valid, in full force and effect, binding upon
Seller and, to Seller's knowledge, the other parties thereto and enforceable in
accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect affecting
creditors' rights generally. Neither Seller nor, to Seller's knowledge, any
other party thereto, is in default under any of them, nor, to Seller's
knowledge, does any condition exist that, with notice or lapse of time or both,
would constitute such a default,excluding in any case such defaults that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
(d) Seller has no knowledge of any supplier of the Business or
party to any roaming contract, interconnect agreement, or other agreement
(which supplier or party accounts for $10,000 or more annually in business with
Seller) which intends to cancel or otherwise modify other than in the ordinary
course of business its relationship with Seller or the Business or to decrease
significantly or limit its purchases, services, supplies or materials from or
to Seller or the Business.
3.11 Consents. Except for (i) the Required Consents separately
identified on Schedule 3.11, (ii) a Final Order of the FCC to the assignment of
the FCC Licenses from Seller to Purchaser, and (iii) the expiration of the
waiting period under the HSR Act no consent, approval or authorization of, or
registration or filing with any person is required by Seller in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby. The Required Consents identified on Schedule
3.11 are segregated into two groups: (A) those designated by the parties as
necessary for consummation of the transactions contemplated herein ("Material
Consents") and (B) all other Required Consents.
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3.12 Condition of Tangible Assets; General Lien.
(a) All buildings, structures, facilities, equipment and other
items of tangible property and assets (excluding Inventory) which would be
included in the Purchased Assets if the Closing took place on the date hereof
are in good operating condition and repair, subject to normal wear and
maintenance, are usable in the regular and ordinary course of the Business
consistent with past practice and are fit for their intended purpose, and
conform in all respects to all applicable laws, ordinances, codes, rules,
regulations and Permits relating to their construction, use and operation, the
failure of which would not be reasonably expected to have a Material Adverse
Effect.
(b) Notwithstanding anything to the contrary contained herein or
otherwise, Seller confirms that its assets are generally subject to a security
interest that has been granted by Seller and its affiliates to Citicorp North
America, as collateral agent ("Lender"), which security interest will be
released promptly following Closing upon payment to Lender of certain amounts
owed thereto. Seller will at Closing convey to Purchaser good and marketable
title to all Purchased Assets, in each case free and clear of any lien or other
encumbrance other than Permitted Encumbrances subject to the recording promptly
after Closing of the releases to be delivered by Lender upon payment thereto.
3.13 Taxes.
(a) Except as set forth in Schedule 3.13(a), Seller has duly
and timely filed all tax returns required to be filed by it for all periods
through and including the date hereof in accordance with the provisions of law
pertaining thereto, Seller further certifies that a Georgia composite return
will be filed and that the tax will be paid on behalf of the nonresident
partners pursuant to O.C.G.A. Sec 48-7-128 and Seller has paid all taxes and
assessments (including income, withholding, excise, unemployment, social
security, occupation, transfer, franchise, property, value-added taxes, sales
and use taxes, import duties or charges, and all penalties and interest in
respect thereof) (such taxes, assessments and other amounts collectively
referred to herein as "Taxes") required to have been paid to date and required
to be paid for all periods through and including the date hereof, including any
amount that may become due pursuant to any assessment, deficiency notice,
30-day letter or similar notice. Seller will obtain final tax clearance
certificates from all state taxing authorities as soon as practical after the
Closing Date and will provide a "preliminary" tax clearance certificate in
order to limit sales tax withholding to the unpaid period based on an average
monthly liability pursuant to O.C.G.A. 48-8-46. All such filed Tax returns are
true, complete and correct.
(b) There does not exist and will not exist by virtue of Seller
s conduct of the Business through the Closing, or by virtue of the transactions
contemplated by this Agreement, any liability, transferee or otherwise, for
Taxes which may be asserted by any taxing authority against Purchaser or the
Purchased Assets, and no lien or other obligation for Taxes has attached or
will attach to any of the Purchased Assets. There are not pending or, to
Seller s knowledge, threatened audits, investigations or claims for or relating
to any additional liability in respect of Taxes.
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(c) Seller has not waived any statute of limitation in respect
of Taxes nor agreed to any extension of time with respect to a Tax assessment
or deficiency; with respect to Seller, no claim has ever been made by an
authority in any jurisdiction in which Seller does not file Tax returns that it
is or may be subject to taxation by that jurisdiction; Seller has withheld and
paid over all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
partner or other third party.
3.14 Environmental Matters. (i) No releases (as defined in CERCLA,
which is defined below) of Hazardous Materials have occurred, during Seller's
ownership or occupancy, at or from the Real Property or, to Seller's knowledge,
during the ownership or occupancy of any of Seller's predecessors; (ii) there
are no past, pending, or, to Seller s knowledge, threatened Environmental
Claims against Seller concerning the Real Property; (iii) there are no
underground storage tanks owned by Seller or located at any facility owned or
operated by Seller within the Real Property; (iv) no environmental audits or
assessments have been conducted at any Real Property sites, either by Seller or
any attorney, environmental consultant or engineer engaged by Seller or, to
Seller's knowledge, by any other person, except for such audits or assessments
as are listed on Schedule 3.14, true and complete copies of which have been
previously delivered to Purchaser by Seller; and (v) Seller has not released
any other person from any claim under any Environmental Law or waived any
rights concerning any environmental condition except as provided under the
Acquisition Agreement.
As used herein:
"Environmental Claims" means any and all administrative or judicial
actions, suits, orders, claims, liens, notices, violations or proceedings
related to any applicable Environmental Law or any Environmental Permit
brought, issued or asserted by: (i) a governmental authority for
compliance, damages, penalties, removal, response, remedial or other
action pursuant to any applicable Environmental Law; or (ii) a third party
seeking damages for personal injury or property damage resulting from the
release of a Hazardous Material at, to or from any facility of Seller,
including Seller s employees seeking damages for exposure to Hazardous
Materials;
"Environmental Laws" means all federal, state, and local laws,
statutes, ordinances, codes, rules and regulations related to protection
of the environment and/or the handling, use, generation, treatment,
storage, transportation, or disposal of Hazardous Materials;
"Environmental Permit" means all permits, licenses, approvals,
authorizations, or consents required by any governmental authority under
any applicable Environmental Law and includes any and all orders, consent
orders or binding agreements issued or entered into by a governmental
authority under any applicable Environmental Law; and
"Hazardous Material" means any hazardous or toxic substance, material
or waste which is regulated as of the date hereof by any state or local
governmental authority or the United States, including any material or
substance that is: (i) defined as a "hazardous substance" under
applicable state law; (ii) petroleum; (iii)ambient friable asbestos; (iv)
designated as
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a "hazardous substance" pursuant to Section 311 of the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq. (33
U.S.C. Section 1321); (v) defined as a "hazardous waste" pursuant to
Section 1004 of the federal Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903); (vi)
defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. Section 9601 et seq. ("CERCLA"; 42 U.S.C. Section
9601); (vii) defined as a "regulated substance" pursuant to Section 9001
of the federal Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 6901 et seq. (42 U.S.C. Section 6991); or (viii) otherwise
regulated under the Toxic Substances Control Act, 15 U.S.C. Section 2601,
et seq., the Clean Air Act, as amended, 42 U.S.C. Section 7401, et seq.,
the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section
1801, et seq., or the Federal Insecticide, Fungicide and Rodenticide Act,
as amended, 7 U.S.C. Section 136, et seq.
3.15 Inventory. Except for Inventory which is obsolete or
non-saleable and for which adequate reserves have been provided for in the
Current Balance Sheet or will be provided for in the Closing Date Balance
Sheet, as the case maybe, all of the Inventory, whether held for rental, resale
or for use as spare parts, is, as of the date hereof, and will be, as of the
Closing substantially of a quality, quantity and condition, usable, leasable or
salable in the ordinary course of the Business within the time periods
consistent with the past experience of Seller. Inventories are, and at the
Closing will be valued at the lower of cost or market.
3.16 Receivables. All of the Receivables represent amounts
receivable for services and merchandise actually provided or delivered in bona
fide transactions (or, in the case of non-trade accounts or notes, represent
amounts receivable in respect of other bona-fide business transactions), have
arisen in the ordinary course of business, are to Seller's knowledge, not
subject to any counterclaims or offsets, and have been billed or are billable.
The reserve for bad debt on the Current Balance Sheet has been determined in
accordance with GAAP. Schedule 3.16 sets forth (a) the total amounts of
Receivables of the Seller as of the Balance Sheet Date and (b) the aging of
such Receivables based on the following Schedule: 0-30 days, 31-60 days, 61-90
days and over 90 days, for the due date thereof.
3.17 Existing Condition. Except as disclosed on Schedule 3.17,
since the Balance Sheet Date, Seller, with respect to the operation of the
Business, has not:
(a) incurred any liabilities, other than liabilities incurred
in the ordinary course of business consistent with past practice, or
discharged or satisfied any lien or encumbrance, or paid any liabilities,
other than in the ordinary course of the Business consistent with past
practice, or failed to pay or discharge when due any liabilities of which
the failure to pay or discharge has caused or would reasonably be expected
to cause any material damage or risk of material loss to it or any of its
material assets or properties;
(b) sold, encumbered, assigned or transferred any assets or
properties which would have been included in the Purchased Assets if the
Closing had been held on the Balance Sheet Date or on any date since then,
except in the ordinary course of the Business consistent with past
practice;
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<PAGE> 23
(c) other than in favor of the Lender, created, incurred,
assumed or guaranteed any indebtedness for money borrowed, or mortgaged,
pledged or subjected any of the Purchased Assets to any mortgage, lien,
pledge, security interest, conditional sales contract or other encumbrance
of any nature whatsoever, except for Permitted Encumbrances;
(d) made or suffered any amendment or termination of any
material agreement, contract, commitment, lease under which it is lessee
or plan to which it is a party or by which it is bound, or canceled,
modified or waived any substantial debts or claims held by it or waived
any rights of substantial value, whether or not in the ordinary course of
business, except for any amendment, termination, cancellation,
modification or waiver which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect;
(e) suffered any damage, destruction or loss, whether or not
covered by insurance, (i) materially and adversely affecting its business,
operations, assets, properties or prospects or (ii) of any item or items
carried on its books of account individually or in the aggregate at more
than $25,000, or suffered any repeated, recurring or prolonged shortage,
cessation or interruption of supplies or utility or other services
required to conduct its business and operations;
(f) suffered any Material Adverse Change;
(g) received notice or had actual or threatened labor trouble,
strike or other occurrence, event or condition of any similar character
which has had or would reasonably be expected to have a Material Adverse
Effect on its business, operations, assets, properties or prospects;
(h) increased the salaries or other compensation of, or made
any advance (excluding advances for ordinary and necessary business
expenses) or loaned any money or assets to any of its employees, or made
any increase in, or any addition to, other benefits to which any of its
employees may be entitled other than in the ordinary of Business;
(i) changed any of the accounting principles followed by it
or the methods of applying such principles; or
(j) entered into any transaction not described above other
than in the ordinary course of the Business consistent with past practice.
3.18 Intentionally Omitted.
3.19 Labor Relations. Except as disclosed on Schedule 3.19: (a) to
Seller's knowledge, the relations of Seller with its employees are good; (b) no
employee of Seller is
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<PAGE> 24
represented by any union or other labor organization; (c) there is no unfair
labor practice complaint against Seller pending or, to Seller's knowledge,
threatened before the National Labor Relations Board; (d) there is no labor
strike, dispute, slow down or stoppage actually pending or, to the knowledge of
Seller, threatened against or involving Seller; (e) to Seller's knowledge, no
grievance which might have an adverse affect on Seller or the conduct of the
Business is pending; (f) no private agreement restricts Seller from relocating,
closing or terminating any of its operations or facilities; (g) Seller has not,
since its formation, experienced any work stoppage or other labor difficulty or
committed any unfair labor practice; (h) no organizational effort is being made
or is threatened by or on behalf of any labor union with respect to employees
of Seller and (i) to Seller's knowledge, Seller has made no representations to
its employees that Purchaser will extend offers of employment to any of
Seller's employees.
3.20 Transactions with Related Parties. Except as disclosed on
Schedule 3.20 , no Related Party: (a) has borrowed money from or loaned money
to Seller; (b) has any contractual or other claims, express or implied, of any
kind whatsoever against Seller except for reimbursement for travel and other
out-of-pocket expenses incurred by employees in the ordinary course of
business; (c) has any interest in any property or assets used by Seller in the
Business; or (d) is engaged in any other transaction with Seller (other than
employment relationships disclosed in Schedule 3.21). For purposes of this
Agreement, a "Related Party" means any employee of Seller, any Executive
Officer, or any family member of any such employee or Executive Officer.
3.21 Compensation Arrangements and other Employee Matters. Schedule
3.21 sets forth the following information: the names, job title, and current
annual salary, including bonus, if applicable, of all present employees of
Seller, together with a statement of the full amount of all remuneration paid
by Seller to each such person during 1995.
3.22 Insolvency. Seller is not the subject of any existing, pending
or, to Seller's knowledge, threatened insolvency or bankruptcy proceedings.
The consummation of the transactions contemplated by this Agreement will not
render Seller insolvent.
3.23 Insurance. Seller has previously delivered true and complete
copies of its insurance policies, together with a loss history under such
policies (as well as any other similar policies not now in force) from the date
of formation of Seller to the present. All such policies are in full force and
effect in accordance with their terms, no notice of cancellation has been
received. The coverages provided by such policies are reasonable, both in
scope and amount, in light of the risks attendant to the Business of Seller.
Seller has not been refused any insurance, nor has its coverage been limited,
by any insurance carrier to which it has applied for insurance or with which
it has carried insurance since Seller's formation on the basis of any
condition, physical or otherwise, of any of the Purchased Assets.
3.24 No Third Party Options. Except for this Agreement, there are
no existing agreements, options, commitments or rights with, of or to any
person to acquire any of the Purchased Assets other than the sale of Inventory
or services in the ordinary course of business.
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<PAGE> 25
3.25 Employee Benefit Plans.
(a) Schedule 3.25 contains a complete list of all employee
benefit plans, whether formal or informal, whether or not set forth in writing,
and whether covering one person or more than one person, sponsored, maintained
or contributed to by Seller. For the purposes hereof, the term "employee
benefit plan" includes all plans, funds and programs providing benefits of
economic value to any employee, former employee, or present or former
beneficiary, dependent or assignee of any such employee or former employee
other than regular salary, wages or commissions paid to the employees
substantially concurrently with the performance of the services for which paid.
(b) Except as set forth on Schedule 3.25, Seller does not
sponsor, maintain or have any outstanding liabilities with respect to, and is
not required, either by law or contract, to contribute to any employee welfare
benefit plan within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974 as amended ("ERISA"), nor any employee pensions
benefit plans within the meaning of Section 3(2) of ERISA or any multi-employer
plan within the meaning of Section 3(37) of ERISA. Except as may be required
by applicable law, no employee benefit plan discussed on Schedule 3.25 provides
for the continuation of employer-paid health or life insurance coverage beyond
the termination of an employee's employment with Seller.
(c) All contributions required by law or contract to be made to
fund the employee benefit plans for any plan year, or other period on the basis
of which contributions are required ending before the date hereof, have been
made as of the date hereof or have adequately been provided for in the
Financial Statements.
(d) The employee benefit plans, and any trusts or insurance
contracts maintained in connection therewith, have been administered in
compliance with ERISA and the Code, in all material respects, and Seller has
complied in all material respects with all reporting and disclosure
requirements with respect to such plans.
(e) Seller has furnished to Purchaser a copy of each handbook
or other document summarizing (i) employee benefit plans or (ii) general
internal policies applicable to its employees, which Seller may have furnished
to all or any of its employees. A list of any such handbooks or other
documents so furnished is included in Schedule 3.25.
3.26 Maintenance of Personal Property. Seller has maintained the
Personal Property in accordance with all warranties provided by the vendors or
manufacturers thereof.
3.27 Subscriber Accounts. Schedule 3.27 hereto sets forth a list as
of March 15, 1996 of Seller s subscriber accounts (by telephone number),
indicating whether such accounts are any of the following: active, suspended,
employee, demo, loaners or rentals.
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3.28 Absence of Undisclosed Liabilities. Seller has no liabilities
or obligations with respect to the Purchased Assets or the Business, either
direct or indirect, matured or unmatured, or absolute, contingent or other,
except:
(a) those liabilities or obligations set forth on the Current
Balance Sheet and not heretofore paid or discharged;
(b) liabilities arising in the ordinary course of the Business
consistent with past practice under the Contracts which (i) are disclosed
on Schedule 3.8(b), 3.9 or 3.10 or (ii) were entered into in the ordinary
course of business containing customary terms and provisions and which
were not required to be disclosed in Schedules 3.9 or 3.10 because of the
amount thereof; and
(c) those liabilities or obligations incurred, consistently
with past business practice, in or as a result of the normal and ordinary
course of the Business since the Balance Sheet Date, which in the
aggregate are not material.
For purposes of this Section 3.28, the term "liabilities" shall include
any direct or indirect indebtedness, guaranty, endorsement, claim, loss,
damage, deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, choate or inchoate,
liquidated or unliquidated, secured or unsecured.
3.29 Intellectual Property. Seller lawfully possesses, and the
Purchased Assets will include, all intellectual property rights that are
necessary to the conduct of the Business, the absence of any such rights which
would not reasonably be expected to have a Material Adverse Effect except for
rights with respect to "CellularOne" trademarks and trade names.
4. Representations and Warranties of Purchaser. Purchaser represents and
warrants to Seller as follows:
4.1 Organizational Status. Purchaser is a general partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own, lease and operate
its assets, properties, and its business, and to carry on its business as now
being and as heretofore conducted.
4.2 Qualification. Purchaser is duly qualified to do business and
is in good standing in all jurisdictions where such qualification is required
except for those jurisdictions where the failure to be so qualified would not
reasonably be expected to have a material adverse effect on Purchaser's ability
to perform its obligations hereunder.
4.3 Authorization; No Conflict. Purchaser has the full legal right
and all power and authority required to enter into, execute and deliver this
Agreement and the documents and other agreements required to be executed and
delivered hereunder and to perform fully its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement by
Purchaser have been duly authorized by all necessary action on the part of
Purchaser. This Agreement has been duly executed and delivered and
constitutes, and each of
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the other agreements and documents to be delivered by Purchaser hereunder when
executed and delivered by Purchaser will constitute, the valid and binding
obligation of Purchaser, enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect affecting creditors' rights generally. The
execution, delivery and performance of this Agreement and the documents and
other agreements to be delivered hereunder by Purchaser and the consummation of
the transactions contemplated hereby and thereby by Purchaser will not (i)
violate any provision of Purchaser's Partnership Agreement, (ii) to Purchaser's
knowledge, violate, conflict with or result in the breach of any of the terms
of, result in a modification of the effect of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or
lapse of time or both constitute) a default under, any contract to which
Purchaser is a party or by or to which it or any of its assets or properties
may be bound or subject, excluding in any case such violations, conflicts,
breaches or defaults that would not reasonably be expected to have a material
adverse effect on Purchaser's ability to perform its obligations hereunder,
(iii) violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body by which Purchaser, or the
assets, properties or business of Purchaser are bound, (iv) to Purchaser's
knowledge, violate in any respect any statute, law or regulation, excluding in
any case such violations that would not reasonably be expected to have a
material adverse effect on Purchaser's ability to perform its obligations
hereunder, (v) violate or cause any revocation of or limitation on any permit
(A) that is necessary to the lawful conduct of Purchaser's business and (B) the
violation, revocation or limitation of which could reasonably be expected to
have a material adverse effect on Purchaser's ability to perform its
obligations hereunder.
4.4 Compliance with Laws. To Purchaser's knowledge, Purchaser is
in, and has operated in, compliance in all material respects with all
applicable federal (including the Communications Act), state and local laws,
regulations and ordinances and any applicable requirements of any governmental
or regulatory body, court or arbitrator affecting its business or its assets,
except for noncompliance that has not and would not reasonably be expected to
have a material adverse effect on Purchaser's ability to perform its
obligations hereunder.
4.5 Litigation. There is (i) no suit, action or claim, (ii) no
investigation or inquiry by any administrative agency or governmental body, and
(iii) no legal, administrative or arbitration proceeding pending or, to
Purchaser s knowledge, threatened against Purchaser which seeks to terminate or
modify or which might affect this Agreement or the consummation of the
transactions contemplated herein.
4.6 Consents. Except for (i) the consent of the FCC to the assignment
of the FCC Licenses from Seller to Purchaser, (ii) the expiration of the
waiting period under the HSR Act, and (iii) the consent of such other
governmental or regulatory body or third parties as are separately identified
on Schedule 4.6, no approval, consent or authorization of, or registration or
filing with any person is required by Purchaser in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
4.7 FCC Matters. Purchaser is fully qualified under the
Communications Act to be an FCC licensee and to be approved as the assignee of
the FCC Licenses. Purchaser knows
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<PAGE> 28
of no reason why the FCC will not grant its consent to the assignment of the
FCC Licenses from Seller to Purchaser.
5. Pre-Closing Covenants of Seller and Purchaser. Seller and Purchaser
covenant and agree with the other as follows:
5.1 Continuance of Business. From the date hereof until the
Closing Date (or the earlier termination hereof), Seller agrees that unless
otherwise consented to in writing by Purchaser, which consent will not be
unreasonably withheld, conditioned or delayed:
(a) the Business shall be conducted by Seller in the ordinary
course consistent with past practice and Seller shall continue to operate the
Business in the public interest, convenience and necessity and in compliance
with the Communications Act and the rules and regulations of the FCC and all
other Permits and applicable laws, rules and regulations;
(b) Seller shall not cause or permit to occur any of the events
or occurrences described in Section 3.17 hereof;
(c) Seller shall continue to maintain and service the physical
assets used in the conduct of the Business in the same manner as has been its
consistent past practice;
(d) Seller shall use all reasonable efforts to keep available the
services of the present employees and agents of the Business and to maintain
the relations and goodwill with the suppliers, customers, distributors and any
others having business relations with the Business;
(e) Seller shall keep in full force and effect the insurance
policies maintained by Seller on the Purchased Assets as of the date hereof (or
policies providing substantially the same coverage);
(f) Seller shall take all action necessary to comply with and
maintain all material Permits of Seller used or held in connection with the
conduct of the Business, and otherwise preserve its rights to provide public
cellular telecommunications services throughout the RSA, and shall otherwise
use commercially reasonable efforts to maintain in full force and effect all
material patents, trademarks, patent and trademark applications and copyrights
currently in effect and used in the conduct of the Business;
(g) Seller shall comply with all laws, ordinances, rules,
regulations and orders applicable to the Business, or Seller s operations,
assets or properties in respect thereof, the noncompliance with which would
reasonably be expected to have a Material Adverse Effect;
(h) Seller shall promptly, upon its knowledge thereof, disclose
to Purchaser any information contained in its representations and warranties,
or Schedules hereto, which was not correct or complete on the date hereof or
which, because of an event occurring after the date hereof, is incomplete or is
no longer correct as of all times after the date hereof until the Closing Date,
provided, however, that none of such disclosures shall be deemed to modify,
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amend or supplement the representations and warranties of Seller or the
Schedules hereto, unless Purchaser shall have consented thereto in writing;
(i) Seller shall use commercially reasonable efforts to conduct
the Business in such a manner that on the Closing Date the representations and
warranties of Seller contained in this Agreement shall be true as though such
representations and warranties were made on and as of such date. Furthermore,
Seller shall cooperate with Purchaser and use commercially reasonable efforts
to cause all of the conditions to the obligations of Purchaser under this
Agreement to be satisfied on or prior to the Closing Date;
(j) Seller shall not, directly or indirectly, sell or encumber
all or any part of the Purchased Assets, other than in the ordinary course of
the Business consistent with past practice, or initiate or participate in any
discussions or negotiations or enter into any agreement to do any of the
foregoing. Seller shall not provide any confidential information concerning
the Business or its properties or assets to any third party other than in the
ordinary course of the Business consistent with past practice;
(k) Seller shall cooperate with Purchaser in establishing
network conversion and switching conversion arrangements and implementing other
transitional arrangements as reasonably requested by Purchaser, provided that
(i) such arrangements are technically feasible in Seller's reasonable
determination, (ii) such arrangements do not adversely interfere in any respect
with Seller's conduct of the Business, (iii) such arrangements are permitted by
any applicable real property lease, (iv) Purchaser pays directly any and all
incremental costs, if any, associated with any such arrangements which have
been approved by Purchaser, and (v) Purchaser shall indemnify, defend and hold
harmless Seller and its affiliates from and against all Losses sustained by
Seller or such affiliates as a result of any such installation or maintenance
or the presence of such equipment at the real property.
(l) Seller shall perform in all material respects all of
Seller's obligations under all contracts and other agreements relating to the
Business, including the discharge of all accounts payable of the Business in
accordance with past practices, except when the amount thereof is being
contested in good faith; and
(m) not amend, terminate or waive any rights under any material
Contracts or enter into any material Contracts relating to the Business, except
in the ordinary course of business.
5.2 Access; Due Diligence; Notice of Breach. Seller shall give to
Purchaser's officers, employees, counsel, accountants and other representatives
upon reasonable notice free and full access to and the right to inspect, all of
the premises, properties, assets, records, contracts and other documents of or
relating to Seller and of any Horizon Corporate Controlled Affiliate to the
extent they relate to the Business and shall permit them to consult with the
officers, employees, accountants, counsel and agents of Seller for the purpose
of making such investigations as Purchaser shall desire to make, provided that
such investigations shall not unreasonably interfere with Seller s normal
business operations. Furthermore, Seller shall
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furnish to Purchaser all such documents and copies of documents and records and
information and copies of any working papers relating thereto as Purchaser
shall from time to time reasonably request and shall permit Purchaser and its
agents to make such physical inventories and inspections of its assets as
Purchaser may request from time to time. Due diligence will be coordinated by
Glenn Mayer for Purchaser and Bruce M. Hernandez or Stefan C. Karnavas for
Seller and, without limiting Seller's obligations under the first sentence of
this Section 5.2, all communications between Purchaser and any Seller employee
must have been approved (which approval shall not be unreasonably withheld,
conditioned or delayed) in advance by Bruce M. Hernandez or Stefan C. Karnavas;
provided, however, that if Purchaser reasonably determines that it may require
conversations of an ongoing nature with any employee of Seller, then Purchaser
may, after seeking and obtaining approval (which approval will not be
unreasonably withheld, conditioned or delayed) from either Steven Skinner,
Bruce Hernandez or Stefan Karnavas (who will make themselves reasonably
available for such purpose), participate in communications with any such
employee without having to obtain further approval to speak with such employee
regarding such ongoing matters. Purchaser agrees to provide Seller with prompt
written notice if Purchaser determines that, based upon information provided to
Purchaser or through its own investigation, Seller is in breach of any
representation, warranty or covenant of Seller set forth in this Agreement. If
this Agreement is terminated, Purchaser agrees to return or cause to be
returned all such information provided to Purchaser or its representatives
within five (5) days after the date of such termination.
5.3 Non-solicitation. From the date hereof until this Agreement is
terminated pursuant to Section 12 hereof, neither Seller, nor any other Horizon
Corporate Controlled Affiliate, will directly or indirectly, sell, agree to
sell, solicit inquiries or proposals or furnish any non-public information with
respect to, or participate in any negotiations or discussions concerning any
acquisition or purchase of, all or any of the partnership interests in Seller
or Seller s rights to the Purchased Assets or any business combination with
Seller.
5.4 Certain Filings and Consents.
(a) As soon as practicable after the date of this Agreement,
Seller and Purchaser shall file no later than ten (10) business days after the
date hereof (a) applications with the FCC for consent to the assignment of all
of Seller s rights and interest in the FCC Licenses to Purchaser and such other
applications as may be advisable in the reasonable judgment of the parties
hereto, which applications will comply in all material respects with the
requirements of the Communications Act and (b) applications, if any, for all
consents and approvals of the GPSC and other regulatory consents and approvals
necessary for the consummation of the transactions contemplated hereby. Seller
and Purchaser shall diligently prosecute all such applications and take all
such actions and give all such notice as may be required or requested by the
FCC or any other regulatory agency or as may be appropriate in an effort to
expedite the grant of such consent by the FCC or such regulatory agency.
(b) Upon the execution of this Agreement, the parties shall
cooperate in the filing with the Federal Trade Commission and the Department of
Justice of the notices and information required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and will take
all steps necessary or desirable to obtain the
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expeditious review of Purchaser s acquisition of the Purchased Assets by the
Department of Justice and the Federal Trade Commission. Purchaser shall be
responsible for preparing and making the filing and paying the filing and other
fees associated with making the filing.
(c) Seller shall use commercially reasonable efforts to obtain
all Required Consents (including with respect to the Acquisition Agreement).
5.5 Employees; Employee Compensation. Seller shall terminate the
employment of each of its employees immediately prior to Closing. At least
thirty (30) days prior to the Closing Date, Purchaser shall provide written
notice to Seller identifying any employees of Seller to whom Purchaser intends
to extend offers of employment. Purchaser and Seller shall consult regarding
communications with employees whom Purchaser does not intend to retain after
the Closing so as to minimize any adverse impact on the Business or Purchased
Assets. Upon the reasonable request of Purchaser, Seller shall use
commercially reasonable efforts to minimize such impacts, including without
limitation enforcing Seller's rights under any confidentiality or non-compete
agreement with such employee provided that Purchaser shall promptly reimburse
Seller for all litigation costs (including reasonable attorneys' fees) in
connection therewith incurred by Seller at the direction of Purchaser. Nothing
contained in this Agreement shall confer upon any such employee of Seller any
right with respect to continued employment by Seller or Purchaser. No
provision of this Agreement shall create any third-party rights in any such
employee, or any beneficiary or dependent thereof, with respect to the
compensation, terms and conditions of employment and benefits that may be
provided to such employee by Purchaser if such employee is hired by Purchaser
subsequent to the Closing or under any benefit plan that Purchaser may
maintain.
5.6 Public Disclosure. Except as and only to the extent required by
applicable law in the reasonable opinion of a party's legal counsel, or as
reasonably necessary to perform its obligations hereunder after prior
consultation with the other party, neither Seller nor Purchaser will give
notice to third parties or otherwise make any public statement or releases
concerning this Agreement or the transactions contemplated hereby except for
such written information as shall have been approved in writing as to form and
content by the other party, which approval shall not be unreasonably withheld.
Press releases issued by the parties after being provided to the other party on
the date hereof shall be deemed to have been in compliance with this Section
5.6
5.7 Regulatory Approvals. The parties agree that in order to
consummate the transactions contemplated hereby, the FCC shall have given its
consent to the assignment of the FCC Licenses from Seller to Purchaser and to
the transactions contemplated hereby, and all other governmental bodies and
regulatory agencies, including the GPSC shall have given all necessary consents
and approvals to the transactions contemplated hereby (collectively, the
"Regulatory Approvals"), in all cases free of any special conditions or
obligations adverse to Purchaser (other than any such conditions or obligations
that are imposed due to the status, identity or actions of Purchaser or any of
its affiliates) and the consents of the FCC and such other agencies and bodies
shall have become Final Orders.
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5.8 Environmental Surveys, Remediation.
(a) Within 21 days after signing this Agreement, Purchaser may
conduct a Phase I Environmental Survey, within the meaning of CERCLA, upon
reasonable notice and without interfering with the Business regarding all or
any Real Property owned or leased by Seller, and, if based upon the results of
any of such surveys, Purchaser shall deem it necessary in its reasonable
discretion, Purchaser may, promptly upon receipt of the results of such Phase I
survey, conduct one or more Phase II surveys. The costs for any Phase I, Phase
II or other related surveys shall be borne solely by Purchaser. If the results
of any survey conducted hereunder raise any environmental concerns which in
Purchaser s reasonable opinion require remediation, Purchaser shall so advise
Seller. Seller shall thereupon have the option of undertaking such remediation
itself at its expense or relocating the affected cell site provided that the
same coverage will be afforded in each party's reasonable determination (in
which case the affected asset will be excluded from, and the new site and
related assets shall be included in, the Purchased Assets and the Assumed
Liabilities). If the foregoing remediation or relocation, as applicable, has
not been completed by Closing, a portion of the Closing Cash Payment
(representing the parties' reasonable estimation of the remaining remediation
or relocation costs to be incurred) shall be delivered into escrow, subject to
a mutually satisfactory escrow arrangement, pending completion of such
remediation or relocation after Closing. Such payments shall not affect the
amount of the Indemnification Escrow, nor be subject to Section 11.5.
(b) Notwithstanding the foregoing, if it is estimated that the
remediation costs will exceed $400,000, Seller may, at its option, elect not to
undertake, or credit Purchaser for undertaking such remediation, and may
instead elect to terminate this Agreement without further cost or obligation on
the part of any party hereto.
(c) Notwithstanding any other provision hereof, if any Phase I
or Phase II uncovers an environmental condition of which Seller does not have
knowledge on the date hereof and that due to Seller's then-gained knowledge of
such condition, then comprises a breach of Seller's representations or
warranties herein (which were qualified as to Seller's knowledge), Seller shall
not have breached such a representation or warranty of this Agreement.
5.9 Delivery of Financial Statements.
(a) Seller shall deliver to Purchaser a copy of Horizon's
audited financial statements as of December 31, 1995 (the "1995 Financial
Statements"). The 1995 Financial Statements shall (i) fairly present the
financial condition of Horizon as of such date and the results of its
operations and changes in its cash flows for the period covered thereby, (ii)
be true, complete and correct, and (iii) shall be prepared in accordance with
GAAP.
(b) Between the date hereof and the Closing Date, Seller shall
deliver within 45 days after the end of each calendar month unaudited financial
statements for Seller (consisting of a balance sheet and a statement of income)
for such month and as of the interim period then ended (all such financial
statements, the "Interim Financial Statements"). Such Interim
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Financial Statements shall meet the requirements for Unaudited Financial
Statements as set forth in Section 3.4.
5.10 Restrictions on Certain Actions. From the date hereof until
the earlier to occur of the Closing Date or the termination of this Agreement,
Purchaser will not in any manner, directly or indirectly, solicit, initiate,
encourage or participate in applications, bids, purchases or negotiations with
respect to the acquisition of any interest in an FCC license that, if
consummated, would have the effect under the Communications Act of preventing
or delaying Purchaser from consummating the acquisition of the Purchased Assets
as contemplated by this Agreement.
5.11 Casualty or Condemnation. If, after the date hereof but prior
to the Closing Date, a material portion of the Purchased Assets is damaged,
destroyed or lost by fire or other casualty, or if condemnation or eminent
domain proceeding are proposed, threatened or commenced against a material
portion of the Purchased Assets, Seller will promptly notify Purchaser of such
event.
5.12 Disclaimer of Other Representations and Warranties. Purchaser
acknowledges and agrees that Seller does not make, and has not made, any
representations or warranties relating to Seller, the Business or the Purchased
Assets other than the representations and warranties of Seller expressly set
forth in this Agreement. Without limiting the generality of the disclaimer set
forth in the preceding sentence, Seller does not make, and Seller, its
officers, employees and agents have not made, and shall not be deemed to have
made any representations or warranties in the Confidential Offering Memorandum
dated September 1995, and any supplements or addenda thereto (collectively, the
"Offering Memorandum") except for information contained on Exhibit II under the
"Company Background" section therein concerning the partnership and corporate
structure of Seller and its affiliates (and also including the fact that
Horizon Corporate is the general partner of KCCGP, L.P.), any presentation
relating to Seller, the Business or the Purchased Assets given in connection
with the transactions contemplated by this Agreement, in any filing made by or
on behalf of Seller with any governmental agency or in any other information
provided to or made available to Purchaser, and no statement contained in the
Offering Memorandum, made in any such presentation, made in any such filing or
contained in any such other information shall be deemed to be a representation
or warranty of Seller hereunder or otherwise. No person has been authorized by
Seller to make any representation or warranty in respect of Seller, the
Business or the Purchased Assets in connection with the transactions
contemplated by this Agreement that is inconsistent with or in addition to the
representations and warranties of Seller expressly set forth in this Agreement.
5.13 Permits and FCC Licenses. As promptly as practicable after the
date hereof, Seller shall obtain and deliver to Purchaser (i) a list of all
Permits meeting the requirements of Section 3.6(a), and (ii) true and accurate
copies of the FCC Licenses, which licenses shall be attached as Schedule
3.6(c), which licenses permit the System to be operated and the Business to be
conducted as now operated and conducted, and which shall be free of any
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special conditions adverse to the holder of the license immediately prior to
Closing. Seller shall diligently pursue the "unserved area" application
referred to in Section 3.6.
5.14 Disclosure Schedules.
(a) As of the date of execution of this Agreement, Purchaser
has had insufficient time to review fully the disclosure schedules that Seller
has delivered to Purchaser hereunder ("Seller's Disclosure Schedules").
Accordingly, Purchaser shall have the opportunity until 5:00 p.m. on Monday,
March 25, 1996 (the "Schedule Review Period") to review Seller's Disclosure
Schedules. If, as a result of Purchaser's review, Purchaser determines that
the information contained in Seller's Disclosure Schedules (or the additional
due diligence materials delivered on March 20, 21 or 22, 1996) reveals facts or
conditions that differ materially and adversely from the facts or conditions
contained in the materials delivered prior to March 20, 1996 to Purchaser
during its due diligence review of Seller, the Purchased Assets and the
Business, then Purchaser may, in its reasonable discretion, elect to terminate
this Agreement at any time prior to the expiration of the Schedule Review
Period. If Purchaser does not so terminate this Agreement by the end of the
Schedule Review Period, Purchaser shall have been deemed to have accepted
Seller's Disclosure Schedules. The parties agree that time is of the essence
with respect to the Schedule Review Period.
(b) Seller agrees that prior to the expiration of the Schedule
Review Period Purchaser may determine not to assume certain of the Contracts
that are listed on Seller's Disclosure Schedules. Additionally, during such
period, Purchaser may determine in its opinion that certain Required Consents
are Material Consents and that Exhibit 2.4(a)(iii) is not prepared
appropriately. Seller and Purchaser agree to negotiate in good faith with
respect to the classification of consents as Required Consents or Material
Consents and such Exhibit 2.4(a)(iii).
6. Conditions Precedent to Purchaser's Obligations. The obligation of
Purchaser to consummate the transactions contemplated hereby is subject to the
satisfaction on or prior to the Closing Date of the following conditions, any
of which may be waived in writing by Purchaser (provided that if any condition
shall not have been satisfied due to the violation by Purchaser or any of its
affiliates of a covenant contained herein that is not cured after written
notice from Seller, such condition shall be deemed to have been satisfied or
waived by Purchaser):
6.1 Regulatory Approvals; Required Consents. All Regulatory Approvals
shall have been received in accordance with the provisions of Section 5.7, such
Approvals shall have become Final Orders, and such Approvals shall not be
subject to any terms, limitations, conditions or obligations that would impair
the operation of the Business as it is currently conducted (other than any such
terms, limitations, conditions or obligations that are imposed due to the
status, identity or actions of Purchaser or any of its affiliates). All
Consents shall have been received without the imposition on Purchaser or the
Business of adverse terms, limitations, conditions or obligations.
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6.2 Premerger Notification Compliance. All requirements under the HSR
Act and the rules promulgated thereunder applicable to the transactions
contemplated hereby shall have been met, including all necessary filing and
waiting requirements, and neither the United States Department of Justice nor
the Federal Trade Commission shall have raised an objection to the transactions
contemplated hereby.
6.3 Representations and Warranties on Closing Date. All
representations and warranties of Seller made in this Agreement shall be true
and correct in all material respects on and as of the Closing Date with the
same force and effect as though such representations and warranties were made
on and as of the Closing Date. For purposes of this Section 6.3, the phrase
"true and correct in all material respects" shall mean that the aggregate
amount of Seller's breaches of representations and warranties does not exceed
$750,000; provided that the following shall not constitute breaches by Seller
of any representation or warranty contained herein: (i) inaccuracies resulting
from changes specifically contemplated by this Agreement, (ii) inaccuracies
resulting from changes that occur as a result of the operation of the Business
in the ordinary course subsequent to the date hereof and not adversely
affecting the Purchased Assets or the System prior to the Closing Date, (iii)
representations that were made as of a specific date, and (iv) inaccuracies
that have been waived in writing by Purchaser.
6.4 Terms, Covenants and Conditions. All the terms, covenants and
conditions of this Agreement to be complied with and performed by Seller on or
prior to the Closing Date shall have been complied with and performed in all
material respects unless waived in writing by Purchaser.
6.5 No Material Adverse Change. There shall have been no material
adverse change in the Business taken as a whole; provided, however, that
neither (i) the effects of any events, circumstances or conditions resulting
from changes, developments or circumstances in worldwide or national conditions
(political, economic, regulatory or otherwise) that adversely affect the
markets where the System is operated or affect industries related to the
telecommunications business generally (including proposed legislation or
regulations by any governmental or regulatory body or the introduction of any
technological changes in the telecommunications industry), or adversely affect
a broad group of industries generally, nor (ii) any effects of competition
(including competition resulting from personal communication services or the
introduction of any new technological changes in the telecommunications
industry), shallbe deemed to give rise to sucha material adverse change.
6.6 Absence of Litigation. No suit, action or other proceeding, or
injunction shall have been instituted before any court or governmental or
regulatory body or authority (other than by Purchaser or any of its affiliates)
or instituted or threatened by any governmental or regulatory body to prevent
the transactions contemplated hereby or to obtain damages or other relief in
respect thereof in an action, suit or other proceeding against Purchaser
involving amounts in the aggregate of more than $500,000 which, in the
reasonable judgment of Purchaser, may be legitimate.
6.7 Escrow Agreement. Seller and the Escrow Agent shall have executed
and delivered the Escrow Agreement.
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6.8 Certificate. Purchaser shall have received a certificate executed
by an executive officer of Horizon Corporate, setting forth the Initial
Adjustments Amount, and describing, in reasonable detail the basis for such
adjustment.
6.9 Subscriber Minimum. There shall have been on the last day of the
month prior to the Closing Date a greater number of subscribers for the System
(as determined in accordance with the definition of Subscriber in Section
2.4(a)(ii)) than the targeted catastrophic minimum number of subscribers for
the System as of the month prior to Closing (as reflected on Schedule
2.4(a)(ii)).
6.10 Closing Deliveries. Seller shall have delivered or caused to
be delivered to Purchaser at Closing those items specified in Section 8.1.
7. Conditions Precedent to Seller's Obligations. The obligation of
Seller to consummate the transactions contemplated hereby is subject to the
satisfaction on or prior to the Closing Date of the following conditions, any
of which may be waived in writing by Seller (provided that if any condition
shall not have been satisfied due to the violation by Seller or any of its
affiliates of a covenant contained herein that is not cured after written
notice from Purchaser such condition shall be deemed to have been satisfied or
waived by Seller):
7.1 Regulatory Approvals. All Regulatory Approvals shall have been
received in accordance with the provisions of Section 5.7.
7.2 Premerger Notification Compliance. All requirements under the HSR
Act and the rules promulgated thereunder applicable to the transactions
contemplated hereby shall have been met, including all necessary filing and
waiting requirements, and neither the United States Department of Justice nor
the Federal Trade Commission shall have raised an objection to the transactions
contemplated hereby.
7.3 Representations and Warranties on Closing Date. All
representations and warranties of Purchaser made in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with
the same force and effect as though such representations and warranties were
made on and as of the Closing Date. For purposes of this Section 7.3, the
phrase "true and correct in all material respects" shall mean that the
aggregate amount of Purchaser's breaches of representations and warranties does
not exceed $750,000; provided that the following shall not constitute breaches
by Purchaser of any representation or warranty contained herein: (i)
inaccuracies resulting from changes specifically contemplated by this
Agreement, (ii) inaccuracies resulting from changes that occur as a result of
the operation of Purchaser's business in the ordinary course subsequent to the
date hereof, (iii) representations that were made as of a specific date, and
(iv) inaccuracies that have been waived in writing by Seller.
7.4 Terms, Covenants and Conditions. All the terms, covenants and
conditions of this Agreement to be complied with and performed by Purchaser on
or prior to the Closing Date shall have been complied with and performed in all
material respects unless waived in writing by Seller.
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7.5 Absence of Litigation. No suit, action or other proceeding, or
injunction shall have been instituted before any court or governmental or
regulatory body or authority (other than by Seller or any of its affiliates) or
instituted or threatened by any governmental or regulatory body to prevent the
transactions contemplated hereby or to obtain damages or other relief in
respect thereof in an action, suit or other proceeding against Seller involving
amounts in the aggregate of more than $500,000 which, in the reasonable
judgment of Seller, may be legitimate.
7.6 Escrow Agreement. Purchaser and Escrow Agent shall have executed
and delivered the Escrow Agreement.
7.7 Closing Deliveries. Purchaser shall have delivered or caused to
be delivered to Seller at Closing those items specified in Section 8.2.
8. Deliveries at the Closing. The following deliveries shall be made at
the Closing, each of which shall be conditional on completion of all the others
and all of which shall be deemed to have taken place simultaneously:
8.1 Deliveries. At the Closing, Seller shall deliver or cause to be
delivered to Purchaser all of the following:
(a) all conveyances, deeds, assignments, bills of sale, and
other appropriate conveyancing instruments transferring to Purchaser the
Purchased Assets;
(b) the opinions of Kleinbard, Bell & Brecker, corporate
counsel to Seller, and Latham & Watkins, FCC counsel to Seller, in forms to be
negotiated by the parties within ten (10) business days after the date hereof
and attached hereto as Exhibits 8.1(b)(i) and 8.1(b)(ii), respectively;
(c) the Capital Expenditures Summary;
(d) a certificate executed by an executive officer of Horizon
confirming the matters contained in Sections 6.3 and 6.4;
(e) a certificate of the secretary of Horizon Corporate
attesting to (i) the resolutions adopted by the board of directors of Horizon
Corporate duly authorizing the execution, delivery and performance of this
Agreement by Seller and the execution and delivery by Seller of all instruments
and documents contemplated hereby, and (ii) the signatures of the officers of
Horizon Corporate who have been authorized to execute and deliver this
Agreement and any other agreement executed or to be executed in connection
herewith;
(f) good standing certificates of Seller, KCCGP and Horizon
Corporate from the Secretary of State of Delaware; and
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(g) the Material Consents in form and substance reasonably
satisfactory to Purchaser.
8.2 Purchaser's Deliveries. At the Closing, Purchaser shall deliver
or cause to be delivered to Seller (or to any other person as directed by
Seller in writing) all of the following:
(a) the Instrument of Assumption;
(b) the Closing Cash Payment as adjusted by the Initial
Adjustments Amount, if any;
(c) the Accretion Factor Payment;
(d) the opinion of Morgan, Lewis & Bockius, counsel to
Purchaser, in a form to be negotiated by the parties within ten (10) business
days after the date hereof and attached hereto as Exhibit 8.2(d);
(e) a certificate executed by an executive officer of Purchaser
confirming the matters contained in Sections 7.3 and 7.4;
(f) a certificate of the secretary of Purchaser attesting to
(i) the resolutions adopted by the board of directors of Purchaser duly
authorizing the execution, delivery and performance of this Agreement by
Purchaser and the execution and delivery by Purchaser of all instruments and
documents contemplated hereby, and (ii) the signatures of the officers of
Purchaser who have been authorized to execute and deliver this Agreement and
any other agreement executed or to be executed in connection herewith;
(g) a good standing certificate of Purchaser from the Secretary
of State of Delaware; and
(h) the Indemnification Escrow Amount to the Escrow Agent.
9. Confidentiality. By execution of this Agreement, the parties
hereto join in and agree to be bound by the terms and conditions of the
Confidentiality Agreement dated October 12, 1995 between Horizon and Bell
Atlantic/NYNEX Mobile, Inc.
10. Survival of Representations and Warranties. All representations
and warranties made by the parties in this Agreement or in any certificate,
Schedule, statement, document or instrument furnished hereunder or in
connection with the negotiation, execution and performance of this Agreement
shall survive for a period of one year after Closing. Notwithstanding any
investigation or audit conducted before or after the Closing Date or the
decision of any party to complete the Closing, each party shall be entitled to
rely upon the representations and warranties set forth herein and therein.
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11. Indemnification.
11.1 Obligation to Indemnify by Seller. Subject to the terms of
Section 10, from and after the Closing Date, Seller agrees to indemnify, defend
and hold harmless Purchaser (and its affiliates, and their directors, officers,
stockholders and employees), from and against all losses, Taxes, liabilities,
damages, lawsuits, deficiencies, claims, demands, costs or expenses, including
interest, penalties and reasonable attorneys' fees and disbursements
(collectively, "Losses"), based upon (i) any breach of any representation or
warranty of Seller contained in this Agreement, or (ii) any breach of any
covenant or agreement of Seller contained in this Agreement, or (iii) any
liability of Seller that is not an Assumed Liability.
11.2 Obligation to Indemnify by Purchaser. Subject to the terms of
Section 10, from and after the Closing Date, Purchaser agrees to indemnify,
defend and hold harmless Seller (and its partners, affiliates, and their
directors, officers, stockholders and employees) from and against all Losses
based upon (i) any breach of any representation or warranty of Purchaser
contained in this Agreement, or (ii) any breach of any covenant or agreement of
Purchaser contained in this Agreement or (iii) any Assumed Liability.
11.3 Procedures for Claims Between the Parties. If a claim (a
"Claim") is to be made by the party claiming indemnification (the "Claimant")
against the other party (the "Indemnifying Party"), the Claimant shall give
written notice (a "Claim Notice") to the Indemnifying Party as soon as
practicable after the Claimant becomes aware of the facts, condition or event
that gave rise to Losses for which indemnification is sought under this Section
11, provided that in no event shall such notice be effective if given after the
date that is one year after the Closing Date. Following receipt of the Claim
Notice from the Claimant, the Indemnifying Party shall have thirty (30) days to
make such investigation of the Claim as the Indemnifying Party deems necessary
or desirable. For the purposes of such investigation, the Claimant agrees to
make available to the Indemnifying Party and/or its authorized
representative(s) the information relied upon by the Claimant to substantiate
the Claim. If the Claimant and the Indemnifying Party agree at or prior to the
expiration of said thirty (30) day period to the validity and amount of such
Claim, the Indemnifying Party shall pay to the Claimant the amount of such
Claim. If the Claimant and the Indemnifying Party do not agree within said
period, the Claimant may seek appropriate legal remedy in accordance with the
provisions of Section 14.1.
11.4 Defense of Third-Party Actions. If any lawsuit or enforcement
action (a "Third Party Action") is filed against a Claimant entitled to the
benefit of indemnity hereunder, written notice thereof (the "Third-Party Action
Notice") shall be given by the Claimant to the Indemnifying Party as promptly
as practicable (and in any event within five (5) days after the service of the
citation or summons or other manner of process), provided that in no event
shall such notice be effective if given after the date that is one year after
the Closing Date. After such notice, if the Indemnifying Party shall
acknowledge in writing to the Claimant that the Indemnifying Party shall be
obligated under the terms of its indemnity hereunder in connection with such
Third-Party Action, then the Indemnifying Party shall be entitled, if it so
elects, (i) to take control of the defense and investigation of such
Third-Party Action, (ii) to employ and engage attorneys of its choice to handle
and defend the same, at the Indemnifying Party's cost,
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risk and expense, and (iii) to compromise or settle such Third-Party Action,
which compromise or settlement shall be made only with the written consent of
the Claimant (such consent not to be unreasonably withheld, conditioned or
delayed) unless such compromise or settlement involves only the payment of
money damages in the amount to be indemnified in full hereunder (after
application of Section 11.5) and does not impose an injunction or other
equitable relief upon the Claimant. If the Indemnifying Party fails to assume
the defense of such Third-Party Action within fifteen (15) days after receipt
of the Third-Party Action Notice, the Claimant will (upon delivering notice to
such effect to the Indemnifying Party) have the right to undertake the defense,
compromise or settlement of such Third-Party Action; provided, however, that
such Third-Party Action shall not be compromised or settled without the prior
written consent of the Indemnifying Party, which consent (taking into account
Purchaser's operation of the Business after the Closing Date) shall not be
unreasonably withheld, conditioned or delayed. In the event the Claimant
assumes the defense of the Third-Party Action, the Claimant will keep the
Indemnifying Party timely informed of the progress of any such defense,
compromise or settlement.
11.5 Limitations. The Indemnifying Party's obligations to indemnify
the Claimant pursuant to this Section 11 shall be subject to the following
limitations:
(a) No indemnification shall be required to be made by the
Indemnifying Party until the aggregate amount of the Claimant's Losses exceeds
Two Hundred Twenty-Five Thousand Dollars ($225,000) (the "Deductible") and then
indemnification shall only be required to be made by the Indemnifying Party to
the extent of such Losses that exceed the Deductible.
(b) No indemnification shall be required to be made by the
Indemnifying Party for the amount of the Claimant's Losses that is in excess of
Three Million Five Hundred Thousand Dollars ($3,500,000).
(c) The indemnification obligation of an Indemnifying Party
shall be reduced to the extent of eighty percent (80%) of any insurance
proceeds received or receivable with respect to the indemnified matter
hereunder. Additionally, the Claimant shall refund to the Indemnifying Party
any amount of the Claimant's Losses that are subsequently recovered by the
Claimant pursuant to a settlement or otherwise.
(d) In no event shall the term "Losses" include any
consequential, incidental, indirect or any loss or damage to Claimant, whether
or not based upon events giving rise to indemnification hereunder, including
claims brought by third parties in connection with any public offering or
damages based on a multiple of earnings formula.
(e) From and after the Closing Date, the indemnification rights
contained in this Section 11 shall constitute the sole and exclusive remedies
of the parties hereunder and shall supersede and displace all other rights that
either party may have under statute or common law.
(f) In no event shall any of the limitations contained in this
Section 11.5 apply to (i) intentional or knowing misrepresentations, (ii)
breaches of covenants or agreements, or
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(iii) breaches of warranties to indemnify with respect to liabilities assumed
or not assumed hereunder as described in Sections 11.1(iii) or 11.2(iii) or
(iv) the Acquisition Price Adjustment (collectively, the "Specified
Indemnification Liabilities").
11.6 Bulk Sales. It may not be practicable to comply or attempt to
comply with the procedures of the "Bulk Sales Act," if applicable, or similar
law of any or all of the states in which the Purchased Assets are situated or
of any other state that may be asserted to be applicable to the transactions
contemplated hereby. Accordingly, to induce Purchaser to waive any
requirements for compliance with any or all of such laws, Seller hereby agrees
that the indemnity provisions of this Section 11 hereof shall apply to any
Losses of Purchaser arising out of or resulting from the failure of Seller or
Purchaser to comply with any such laws.
12. Breaches and Defaults; Termination; Remedies.
12.1 Breaches and Defaults; Opportunity to Cure. Prior to the
exercise by a party of any termination rights afforded under this Agreement, if
either party (the "Non-Breaching Party") believes the other (the "Breaching
Party") to be in breach hereunder, the Non-Breaching Party shall provide the
Breaching Party with written notice specifying in reasonable detail the nature
of such breach, whereupon the Breaching Party shall have thirty (30) days from
the receipt of such notice to cure such breach; provided, however, that if such
breach is not capable of being cured within such period and if the Breaching
Party shall have commenced action to cure such breach within such period and is
diligently attempting to cure such breach and such breach is then cured or
reasonably curable, then the Breaching Party shall be afforded an additional
twenty (20) days to cure such breach; provided, further, however, Purchaser
shall have no opportunity to cure the breach of its obligation to deliver any
required portion of the Acquisition Price to be delivered to Seller at Closing.
If the breach is not cured within such time period, then the Breaching Party
shall be in default hereunder and the Non-Breaching Party shall be entitled to
terminate this Agreement (as provided in Section 12.2). This right of
termination shall be in addition to, and not in lieu of, any legal remedies
available to the Non-Breaching Party.
12.2 Termination. This Agreement may be terminated at any time
prior to the Closing as follows:
(a) by mutual written agreement of the parties hereto;
(b) by Purchaser, provided Purchaser is not then in breach of
this Agreement, pursuant to a written notice to Seller, (i) if any one or more
of the conditions to Purchaser's obligation to close has not been fulfilled in
any material respect as of the Closing Date, (ii) subject to Section 12.1, if
(A) Seller has breached in any material respect any covenant or agreement
contained in this Agreement or if (B) the condition specified in Section 6.3
shall be then not satisfied determined as if the date of termination were the
Closing Date, or (iii) if the Closing shall not have taken place by the date
that is twelve (12) months after the date of the execution of this Agreement
(the "Outside Date") (unless any of the foregoing events shall have resulted
primarily from Purchaser breaching any representation, warranty, covenant or
agreement contained in this Agreement); and
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(c) by Seller, provided Seller is not then in breach of this
Agreement, pursuant to a written notice to Purchaser, (i) if any one or more of
the conditions to Seller's obligation to close has not been fulfilled in any
material respect as of the Closing Date, (ii) subject to Section 12.1, if (A)
Purchaser has breached in any material respect any covenant or agreement
contained in this Agreement or if (B) the condition specified in Section 7.3
shall be then not satisfied determined as if the date of termination were the
Closing Date, (iii) if the Closing shall not have taken place by the Outside
Date, or (iv) in accordance with Section 5.8(b) (unless any of the foregoing
events shall have resulted primarily from Seller's breach of any
representation, warranty, covenant or agreement contained in this Agreement).
12.3 Effect of Termination. In the event of any termination of this
Agreement, all obligations of the parties hereto under this Agreement (except
for the obligations contained in Sections 9, 14.1, 14.2 and 14.5) shall
terminate as of such date of termination and this Agreement shall thereafter
become void and be of no further force and effect, and upon such termination no
party hereto shall be liable to the other party, except for damages and
expenses (including attorneys', accounting and other professional fees and
expenses) resulting from breaches of this Agreement prior to such termination.
13. Post-Closing Matters.
13.1 Employee Benefits. Seller and, if applicable, all Horizon
Corporate Controlled Affiliates, shall pay directly to each employee of the
Business that portion of all benefits (including the arrangements, plans and
programs set forth in Schedule 3.25) which has been accrued on behalf of that
employee (or is attributable to expenses properly incurred by that employee) as
of the Closing Date, and Purchaser shall assume no liability therefor. No
portion of the assets of any plan, fund, program or arrangement, written or
unwritten, heretofore sponsored or maintained by Seller or any Horizon
Corporate Controlled Affiliate (and no amount attributable to any such plan,
fund, program or arrangement) shall be transferred to Purchaser, and Purchaser
shall not be required to continue any such plan, fund, program or arrangement
after the Closing Date. All amounts payable directly to employees, or to any
fund, program, arrangement or plan maintained by Seller or any Horizon
Corporate Controlled Affiliate therefor shall be paid by Seller within 30 days
after the Closing Date to the extent that such payment is not inconsistent with
the terms of such fund, program, arrangement or plan. All employees of Seller
who are employed by Purchaser on or after the Closing Date shall be new
employees of Purchaser and any prior employment by Seller or any Horizon
Corporate Controlled Affiliate of such employees shall not affect entitlement
to, or the amount of, salary or other cash compensation, current or deferred,
which Purchaser may make available to its employees.
13.2 Non-Solicitation. For the two (2) year period from and after
the Closing Date, neither Seller nor any of its affiliates (including all
Horizon Corporate Controlled Affiliates) will directly or indirectly solicit
any person engaged in the operation of the Business at the date hereof or
thereafter.
13.3 Discharge of Business Obligations. From and after the Closing
Date, Seller shall pay and discharge, in accordance with past practice but not
less than on a timely basis (except
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if disputed in good faith), all obligations and liabilities incurred prior to
the Closing Date in respect of the Business, its operations or the assets and
properties used therein (except for the Assumed Liabilities) including any
liabilities or obligations to employees, trade creditors and clients of the
Business.
13.4 UCC Matters. From and after the Closing Date, Seller will
promptly refer all inquiries with respect to ownership of the Purchased Assets
or the Business to Purchaser. In addition, Seller will execute such documents
and financing statements as Purchaser may reasonably request from time to time
to evidence transfer of the Purchased Assets to Purchaser.
13.5 Confidentiality Undertaking by Sellers and Horizon. From and
after the consummation of the transactions contemplated hereby, neither Seller
nor any Horizon Corporate Controlled Affiliate shall use or take any action
whatsoever which would result in disclosure to any third party of any
information about the Business or any information provided to Seller pursuant
to Section 14.3, provided that none of such parties shall be required to
maintain confidential any information beyond three (3) years from the date
hereof or such information which: (a) is in the published literature or known
to the public prior to the date hereof or becomes published in the literature
or known to the public after the date hereof through no fault of such parties;
(b) is obtained from a third party which has the right to disclosure such
information; or (c) is required by law to be disclosed.
13.6 Transition Services. In the event that the Closing Date occurs
prior to the closing date relating to the sale of the Georgia RSA# 6 System by
Horizon Cellular Telephone Company of Spalding, L.P., an affiliate of Seller,
Purchaser agrees for a period of up to six (6) months to provide billing
services on behalf of the Georgia RSA# 6 market at a mutually agreed upon
compensation to Purchaser for any such billing services provided; provided that
(i) such arrangements are feasible in Purchaser's reasonable determination,
(ii) such arrangements do not adversely interfere in any respect with
Purchaser's conduct of the Business after Closing, and (iii) Seller shall
indemnify, defend and hold harmless Purchaser and its affiliates from and
against all Losses sustained by Purchaser or such affiliates as a result of
providing any such billing services.
13.7 Terminated Contracts. Seller acknowledges that Purchaser
intends to seek to terminate certain Contracts after the Closing and prior to
the end of their present terms, and agrees to use commercially reasonable
efforts prior to Closing (not to include any payment of money) and to otherwise
cooperate with Purchaser in order to negotiate with counterparties to any such
Contracts any such early termination arrangements.
14. Miscellaneous.
14.1 Expenses. The parties to this Agreement shall, except as
otherwise specifically provided herein, bear their respective expenses incurred
in connection with the preparation, negotiation, execution and performance of
this Agreement and the transactions contemplated hereby, including all fees and
expenses of agents, representatives, consultants, counsel and accountants.
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14.2 Further Assurances.
(a) Each of the parties shall execute such agreements and
documents and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. Each such party shall use its best efforts (which shall not include
the payment of money) to fulfill or obtain the fulfillment of the conditions to
the Closing, including the execution and delivery of any other agreement or
document, the execution and delivery of which are conditions precedent to the
Closing.
(b) At Purchaser's request, Seller from time to time after the
Closing will, at Purchaser's cost and expense, execute, acknowledge and deliver
to Purchaser such other instruments or conveyance and transfer and will take
such other actions and execute and deliver such other documents, certifications
and further assurances as Purchaser may reasonably require in order to vest
more effectively in Purchaser, or to put Purchaser more fully in possession of,
any of the Purchased Assets, or to better enable Purchaser to complete, perform
or discharge any of the Assumed Liabilities.
14.3 Access to Records. From and after the Closing Date, Seller and
Horizon Corporate Controlled Affiliates (with respect to records relating to
the operations of Seller prior to the Closing only) shall allow Purchaser, and
its counsel, accountants and other representatives, such access to records
that after the Closing are in the custody or control of Seller as Purchaser
reasonably requires in order to comply with its obligations under law or under
contracts constituting Assumed Liabilities or for other legitimate purposes and
Seller and Horizon Corporate agree to retain such records for a period of not
less than three (3) years following the Closing. From and after the Closing
Date, Purchaser shall allow Seller, and its counsel, accountants and other
representatives, such access to records that after the Closing are in the
custody or control of Purchaser as Seller reasonably requires in order to
comply with its obligations under law (including with respect to tax matters
and the review of the Closing Date Balance Sheet and the Closing Statement or
for other legitimate purposes.)
14.4 Broker's and Finder's Fees. Purchaser hereby represents and
warrants to Seller that all negotiations relative to this Agreement have been
carried on by it directly without the intervention of any person who may be
entitled to any brokerage or finder's fee or other commission in respect of
this Agreement or the consummation of the transactions contemplated hereby.
Seller hereby represents and warrants to Purchaser that, except for Morgan,
Stanley & Co. Incorporated ("Investment Banker"), all negotiations relative to
this Agreement have been carried on by it directly without the intervention of
any person who may be entitled to any brokerage or finder's fee or other
commission in respect of this Agreement or the consummation of the transactions
contemplated hereby, Seller shall be solely responsible for any compensation of
Investment Banker and Seller agrees to indemnify and hold harmless Purchaser
against any and all claims, losses, liabilities and expenses which may be
asserted against or incurred by it as a result of Seller's dealings,
arrangements or agreements with Investment Banker or any other person or entity
claiming to have been engaged by Seller.
14.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition
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or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
If any court determines that any covenant, or any part of any covenant is
invalid or unenforceable, such covenant shall be enforced to the extent
permitted by such court, and all other covenants shall not thereby be affected
and shall be given full effect, without regard to the invalid portions.
14.6 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when received if delivered personally against receipt; when transmitted
if transmitted by telecopy, electronic or digital transmission method; the next
day if sent for next day delivery by a nationally recognized overnight courier
service; or upon receipt if sent by certified, registered or express mail,
return receipt requested, postage prepaid. In each case notice shall be sent
as follows:
(a) if to Seller, to:
Horizon Cellular Group
101 Lindenwood Drive / Suite 125
Malvern, PA 19355
Telecopy No.: 610-993-2683
Attention: Mr. Bruce M. Hernandez
with a required copy to:
Kleinbard Bell & Brecker
1900 Market Street / Suite 700
Philadelphia, Pennsylvania 19103
Telecopy No.: 215-568-0140
Attention: Howard J. Davis, Esquire
(b) if to Purchaser, to:
Cellco Partnership
180 Washington Valley Road
Bedminster, New Jersey
Attention: Mark Rupp, Vice President -
Planning & Business Development
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with a required copy to:
Jonathan Ratner, Esquire
Regional Counsel
Cellco Partnership
180 Washington Valley Road
Bedminster, New Jersey
and
N. Jeffrey Klauder, Esquire
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
14.7 Entire Agreement. This Agreement (including the Schedules and
Exhibits) and the agreements, certificates and other documents delivered
hereunder contain the entire agreement between the parties with respect to the
transactions described herein, and, except as provided in the next sentence,
supersede all prior agreements, written or oral, with respect thereto. This
Agreement and that certain Confidentiality Agreement dated October 12, 1995
between Purchaser and Horizon shall be construed as integrated and
complementary of each other, and as augmenting and not restricting the rights
and remedies of Seller or Horizon, as applicable, and if after applying the
foregoing an inconsistency still exists, the provisions most favorable to
Seller or Horizon, as applicable, shall control.
14.8 Amendments and Waivers. This Agreement may be modified or
amended, and the terms hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of any party of any such right, power or privilege, nor any single
or partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
14.9 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Pennsylvania without regard
to principles of conflicts of law or any rule of interpretation or construction
as to which party drafted this Agreement, except with respect to matters of law
concerning the internal corporate affairs of any corporate entity that is a
party to or the subject of this Agreement (as to those matters of law, the
jurisdiction under which the respective entity derives its powers shall
govern).
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14.10 Assignment; Binding Effect. Neither this Agreement nor any of
the rights or obligations hereunder may be assigned (including by operation of
law) by any party without the prior written consent of the other party except
that Seller may assign its rights and obligations hereunder to an affiliate of
Seller provided that Seller remains responsible for the performance by such
assignee of its obligations hereunder to Purchaser. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
14.11 NON-RECOURSE. EXCEPT AS PROVIDED IN THIS SECTION 14.11,
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR OTHERWISE, THIS
AGREEMENT AND ALL OF THE AGREEMENTS AND DOCUMENTS EXECUTED IN CONNECTION
HEREWITH SHALL BE NON-RECOURSE TO THE PARTNERS, AFFILIATES AND OFFICERS OF
SELLER AND ITS PARTNERS, AFFILIATES, OFFICERS, DIRECTORS AND STOCKHOLDERS. IF
SELLER OR A HORIZON CORPORATE CONTROLLED AFFILIATE (WITH RESPECT TO THOSE
PROVISIONS THAT ARE THE SUBJECT OF THE JOINDER ATTACHED HERETO) IS IN DEFAULT
HEREOF OR UNDER SUCH OTHER AGREEMENTS OR DOCUMENTS, PURCHASER'S RECOURSE SHALL
BE LIMITED SOLELY TO (A) THE INDEMNIFICATION ESCROW AMOUNT AND (B) SOLELY WITH
RESPECT TO THE SPECIFIED INDEMNIFICATION LIABILITIES, (X) THE PARTY WHOSE
BREACH HAS GIVEN RISE TO SUCH SPECIFIED INDEMNIFICATION LIABILITY AND (Y)
HORIZON CELLULAR TELEPHONE COMPANY, L.P. ("HCTC"), AN AFFILIATE OF SELLER, AND
HCTC'S EQUITY IN ITS ASSETS.
14.12 Beneficiaries of Agreement. The representations, warranties,
covenants and agreements expressed in this Agreement are for the sole benefit
of the other party hereto and are not intended to benefit, and may not be
relied upon or enforced by, any other party as a third-party beneficiary or
otherwise.
14.13 Counterparts; Facsimile Signatures. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. Each counterpart may consist
of a number of copies hereof each signed by less than all, but together signed
by all of the parties hereto. Facsimile signatures on this Agreement and any
of the agreements and documents executed in connection herewith shall be deemed
original signatures.
14.14 Exhibits and Schedules. The Exhibits and Schedules are a part
of this Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
14.15 Computation of Days; Holidays. Whenever this Agreement
provides for a period of time that is expressed in terms of a numbers of days
prior to or within which actions or events are to occur or not occur, such time
period shall be measured in calendar days unless
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otherwise expressly provided. Whenever this Agreement provides for a date, day
or period of time on or prior to which actions or events are to occur or not
occur, and if such date, day or last day of such period of time falls on a
Saturday, Sunday, or legal holiday, then the same shall be deemed to fall on
the immediately following business day.
14.16 Consent to Jurisdiction. In order to enforce the provisions
hereof, each of the parties hereto (i) submits to the jurisdiction of any
Pennsylvania state or federal court with respect to any suit, action or
proceeding relating to this Agreement or any of the transactions contemplated
hereby, (ii) waives any objection that such party may now or hereafter have to
the laying of venue of any such suit, action or proceeding brought in any such
court, and waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum, (iii) waives the
right to object that any such court does not have personal jurisdiction over
such party, and (iv) consents to the service of process in any such suit,
action or proceeding upon receipt through the United States mail of copies of
such process to such party by certified mail to the addresses indicated herein
or at such other addresses of which the other parties shall have received
written notice. Nothing herein shall preclude any party from bringing suit or
taking other legal action in any other jurisdiction or from serving legal
process in any other manner permitted by law or in equity.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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14.17 Headings. The headings in this Agreement are for reference
only, and shall not affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HORIZON CELLULAR TELEPHONE COMPANY OF DAWSON, L.P.
By: KCCGP, L.P., its general partner
By: HORIZON G.P., INC., its general partner
By: /s/ M. E. KALOGRIS
------------------------------------------------
Name: MICHAEL E. KALOGRIS
Title: PRESIDENT
CELLCO PARTNERSHIP
By: BELL ATLANTIC NYNEX MOBILE, INC., its managing
general partner
By: /s/ DENNIS F. STRIGL
------------------------------------------------
Name: DENNIS F. STRIGL
Title: PRESIDENT AND C.E.O.
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<PAGE> 50
JOINDER
The undersigned, intending to be legally bound, and on behalf of itself
and all Horizon Corporate Controlled Affiliates, hereby joins in the execution
of this Agreement solely with respect to the terms and conditions of Sections
5.3, 5.6, 13.1, 13.2, 13.5 and 14.3.
IN WITNESS WHEREOF, the undersigned has executed this Joinder as of the
day and year first above written.
HORIZON G.P., INC.
By: /s/ BRUCE M. HERNANDEZ
-------------------------------------
Name: BRUCE M. HERNANDEZ
Title: VICE PRESIDENT & C.F.O.
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<PAGE> 1
EXHIBIT 10.3
HORIZON CELLULAR TELEPHONE COMPANY, L.P.
HORIZON FINANCE CORPORATION
FIFTH AMENDMENT
TO CREDIT AGREEMENT
This FIFTH AMENDMENT TO CREDIT AGREEMENT (this "FIFTH AMENDMENT") is
dated as of February 26, 1996 and entered into by and among HORIZON CELLULAR
TELEPHONE COMPANY, L.P., a Delaware limited partnership ("COMPANY"), HORIZON
FINANCE CORPORATION, a Delaware corporation and a wholly-owned Subsidiary of
Company ("FINANCE"; and together with Company, "BORROWERS"), the LENDERS LISTED
ON THE SIGNATURE PAGES HEREOF (each individually referred to as a "LENDER" and
collectively as "LENDERS"), BANKERS TRUST COMPANY ("BANKERS"), as an arranging
agent and as administrative agent for Lenders (in its capacity as
administrative agent, "ADMINISTRATIVE AGENT"), CITICORP NORTH AMERICA, INC., as
an arranging agent and as collateral agent for the Lenders (in its capacity as
collateral agent, "COLLATERAL AGENT"; and together with Administrative Agent,
"AGENTS") and the SUBSIDIARIES OF COMPANY IDENTIFIED ON THE SIGNATURE PAGES
HEREOF, and is made with reference to that certain Credit Agreement dated as of
October 1, 1993 by and among Borrowers, Lenders party thereto and Agents (such
agreement as amended by the First Amendment and Consent to Credit Agreement
dated as of November 4, 1993, the Second Amendment to Credit Agreement dated as
of December 22, 1993, the Third Amendment to Credit Agreement dated July 29,
1994 and the Fourth Amendment to Credit Agreement dated as of August 9, 1995,
the "CREDIT AGREEMENT"). Capitalized terms used herein without definition
shall have the same meanings herein as set forth in the Credit Agreement.
R E C I T A L S
WHEREAS, Borrowers have requested that the Credit Agreement be amended
to permit the repurchase by the Borrowers of an additional $10,000,000 of
Subordinated Notes; provided that the aggregate purchase price of all
Subordinated Notes, whether purchased before or after the effective date of
this Fifth Amendment does not exceed $35,000,000, all on certain conditions set
forth herein; and
WHEREAS, Borrowers, Agents and Lenders desire to amend the Credit
Agreement to provide for the foregoing on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
<PAGE> 2
SECTION 1.
AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENT TO SUBSECTION 6.5
A. Subsection 6.5 of the Credit Agreement is hereby amended by
amending and restating clause (vii) thereof in its entirety as follows:
"(vii") Borrowers may repurchase a portion of the Subordinated
Notes; provided that (x) the aggregate purchase price for all
Subordinated Notes repurchased shall not exceed $35,000,000, (y) in the
event any Subordinated Notes are repurchased on or prior to December 31,
1995, Borrowers shall deliver an Officer's Certificate to Administrative
Agent as of the date of such repurchase certifying, to the satisfaction
of Administrative Agent that, after giving effect to such repurchase,
the ratio (a) of Consolidated Senior Debt less Cash and Cash Equivalents
held by Company and its Subsidiaries not in excess of $3,000,000 in the
aggregate, as determined as of the date of such repurchase, to (b)
Consolidated Annualized EBITDA as determined as of the last day of the
fiscal quarter of Company most recently ended (the "SENIOR DEBT LEVERAGE
RATIO") does not exceed 4.75:1.00 and certifying that no Event of
Default or Potential Event of Default has occurred and is continuing and
(z) with respect to any repurchase of Subordinated Notes on any date
after December 31, 1995, Borrowers shall deliver to Administrative Agent
an Officer's Certificate as of the date of such repurchase certifying to
the satisfaction of Administrative Agent that, after giving effect to
such repurchase, the Senior Debt Leverage Ratio covenant as set forth in
subsection 6.6C has been satisfied and certifying that no Event of
Default or Potential Event of Default has occurred and is continuing."
SECTION 2.
BORROWERS' REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Fifth Amendment and to
amend the Credit Agreement in the manner provided herein, the Borrowers
represent and warrant to each Lender that the following statements are true,
correct and complete:
2.1 CORPORATE POWER AND AUTHORITY.
Borrowers have all requisite corporate or partnership power and
authority to enter into this Fifth Amendment and to carry out the transactions
contemplated by, and perform their obligations under, the Credit Agreement as
amended by this Fifth Amendment (the "AMENDED AGREEMENT").
2
<PAGE> 3
2.2 INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT AGREEMENT.
The representations and warranties contained in Section 4 of the Credit
Agreement are and will be true, correct and complete in all material respects
on and as of the effective date of this Fifth Amendment to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
2.3 ABSENCE OF DEFAULT.
No event has occurred and is continuing or will result from the
consummation of the transactions contemplated by this Fifth Amendment that
would constitute an Event of Default or a Potential Event of Default.
SECTION 3.
ACKNOWLEDGEMENT AND CONSENT
Borrowers are parties to the Borrower Pledge and Security Agreement,
pursuant to which Borrowers have created Liens in favor of Collateral Agent on
certain Collateral to secure the obligations. Each of the Subsidiaries is a
party to (i) the Subsidiary Guaranty, pursuant to which such Subsidiary has
guarantied the Obligations and (ii) the Subsidiary Pledge and Security
Agreement pursuant to which such Subsidiary has created Liens in favor of
Collateral Agent on certain collateral to secure the obligations of such
Subsidiary under the Subsidiary Guaranty. Borrowers and the Subsidiaries are
collectively referred to herein as the "CREDIT SUPPORT PARTIES", and the
Subsidiary Guaranty, the Subsidiary Pledge and Security Agreement and the
Borrower Pledge and Security Agreement are collectively referred to herein as
the "CREDIT SUPPORT DOCUMENTS".
Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of this Fifth Amendment and consents to the amendment of
the Credit Agreement effected pursuant to this Fifth Amendment. Each Credit
Support Party hereby confirms that each Credit Support Document to which it is
a party or otherwise bound and all Collateral encumbered thereby will continue
to guaranty or secure, as the case may be, to the fullest extent possible the
payment and performance of all "Guarantied Obligations" or "Secured
Obligations", as the case may be (in each case as such terms are defined in the
applicable Credit Support Document), including without limitation the payment
and performance of all such "Guarantied Obligations" or "Secured Obligations",
as the case may be, in respect of the Obligations of Company now or hereafter
existing under or in respect of the Credit Agreement (as amended by this Fifth
Amendment) and the Notes defined therein.
Borrowers hereby acknowledge and agree that any of the Credit Support
Documents to which it is a party or otherwise bound shall continue in full
force and effect and that all
3
<PAGE> 4
of its obligations thereunder shall be valid and enforceable and shall not be
impaired or limited by the execution or effectiveness of this Fifth Amendment.
Each Credit Support Party (other than Borrowers) acknowledges and
agrees that (i) notwithstanding the conditions to effectiveness set forth in
this Fifth Amendment, such Credit Support Party is not required by the terms of
the Credit Agreement or any other Loan Document to consent to the amendments to
the Credit Agreement effected pursuant to this Fifth Amendment and (ii) nothing
in the Credit Agreement, this Fifth Amendment or any other Loan Document shall
be deemed to require the consent of such Credit Support Party to any future
amendments to the Credit Agreement.
SECTION 4.
MISCELLANEOUS
4.1 REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
A. On and after the date of effectiveness of this Fifth Amendment,
each reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit Agreement,
and each reference in the other Loan Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Amended Agreement.
B. Except as specifically amended by or pursuant to this Fifth
Amendment, the Credit Agreement and the other Loan Documents shall remain in
full force and effect and are hereby ratified and confirmed.
C. The execution, delivery and performance of this Fifth Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agents or
any Lender under, the Credit Agreement or any of the other Loan Documents.
4.2 HEADINGS.
Section and subsection headings in this Fifth Amendment are included
herein for convenience of reference only and shall not constitute a part of
this Fifth Amendment for any other purpose or be given any substantive effect.
4.3 APPLICABLE LAW.
THIS FIFTH AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
4
<PAGE> 5
4.4 COUNTERPARTS; EFFECTIVENESS.
This Fifth Amendment may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Fifth Amendment shall become effective upon receipt by Company
and Administrative Agent of counterpart signature pages hereto executed by
requisite lenders and the Credit Support Parties.
[remainder of page intentionally left blank]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
HORIZON CELLULAR TELEPHONE
COMPANY, L.P.
HORIZON CELLULAR TELEPHONE
COMPANY OF CUMBERLAND, L.P.
HORIZON CELLULAR TELEPHONE
COMPANY OF HAGERSTOWN, L.P.
HORIZON CELLULAR TELEPHONE
COMPANY OF DAWSON, L.P.
HORIZON CELLULAR TELEPHONE
COMPANY OF OTSEGO, L.P.
HORIZON CELLULAR TELEPHONE
COMPANY OF INDIANA, L.P.
HORIZON CELLULAR TELEPHONE
COMPANY OF BEDFORD, L.P.
HORIZON CELLULAR TELEPHONE
COMPANY FREDERICK, L.P.
HORIZON CELLULAR TELEPHONE
COMPANY OF CRAWFORD, L.P.
HORIZON CELLULAR TELEPHONE
COMPANY OF SPALDING, L.P.
HORIZON CELLULAR TELEPHONE
COMPANY OF MONONGALIA, L.P.
HORIZON CELLULAR TELEPHONE
COMPANY OF CENTRAL KENTUCKY, L.P.
HORIZON CELLULAR TELEPHONE
COMPANY OF CHAUTAUQUA, L.P.
By: KCCGP, L.P.,
its general partner
By: HORIZON G.P., INC.
its corporate general partner
By: /s/ BRUCE HERNANDEZ
--------------------------
Bruce Hernandez
Vice President and Chief
Financial Officer
S-1
<PAGE> 7
HORIZON FINANCE CORPORATION
By: /s/ BRUCE HERNANDEZ
--------------------------
Bruce Hernandez
Vice President
S-2
<PAGE> 8
BANKERS TRUST COMPANY,
individually and as Administrative Agent
By: /s/ GINA S. THOMPSON
-----------------------------------
Name: Gina S. Thompson
Title: Vice President
CITICORP NORTH AMERICA, INC.,
individually and as Collateral Agent
By: /s/ MARGARET C. ULLRICH
-----------------------------------
Name: Margaret C. Ullrich
Title: Vice President
Attorney-in-Fact
MELLON BANK, N.A.,
as a Lender
By: /s/ DAVID B. CRAWFORD
-----------------------------------
Name: David B. Crawford
Title: Vice President
ROYAL BANK OF CANADA,
as a Lender
By: /s/ JOHN P. PAGE
-----------------------------------
Name: John P. Page
Title: Senior Manager
S-3
<PAGE> 9
CORESTATES BANK, N.A.,
as a Lender
By: /s/ EDWARD KITTRELL
-----------------------------------
Name: Edward Kittrell
Title: Vice President
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
as a Lender
By: /s/ JIM F. REDMAN
-----------------------------------
Name: Jim F. Redman
Title: Senior Vice President
TORONTO DOMINION (NEW YORK), INC.,
as a Lender
By: /s/ JESSICA LAXMAN
-----------------------------------
Name: Jessica Laxman
Title: Associate-Communications
Finance
MEESPIERSON
as a Lender
By: /s/ JOHN O'CONNOR
-----------------------------------
Name: John O'Connor
Title: Senior Vice President
S-4
<PAGE> 1
EXHIBIT 10.4
HORIZON CELLULAR TELEPHONE COMPANY OF DAWSON, L.P.
101 LINDENWOOD DRIVE, SUITE 125
MALVERN, PA 19355
March 22, 1996
Mr. Mark Rupp
Vice President, Planning
& Business Development
Bell Atlantic NYNEX Mobile, Inc.
180 Washington Valley Road
Bedminster, NJ
Dear Mark:
As an inducement to Horizon Cellular Telephone Company of Dawson, L.P.
("Dawson") entering into and consummating the Asset Acquisition Agreement
("Acquisition Agreement") dated the date hereof between Dawson and Cellco
Partnership, a Delaware general partnership ("BANM"), BANM has agreed to supply
cellular telephones to Dawson and its assignees (collectively, "Horizon"),
subject to the following:
1. All capitalized terms not otherwise defined herein will have the meaning
attributed to them in the Acquisition Agreement.
2. Conditioned upon the Closing under the Acquisition Agreement, on or
after the Closing Date, BANM will sell to Horizon cellular telephones which
will have an agreed value ("Agreed Value"), in the aggregate, of $500,000.
Horizon will purchase on a cash basis the cellular telephones in such
quantities (in the aggregate not to be less than 15,000 units) and at such
times as reasonably agreed by the parties. BANM will sell to Horizon those
makes and models of cellular telephones as set forth on Exhibit "A". At
Horizon's request, such cellular telephones will be branded with the "Cellular
One" logo if reasonably available, otherwise with only the manufacturers' logo.
If such makes and models are not reasonably available, BANM will sell to
Horizon cellular telephones substantially similar in quality to those listed on
Exhibit "A".
3. For purposes of this letter agreement, Agreed Value shall equal the
number of units purchased multiplied by the difference between the price set
forth in Exhibit "A", as in effect at the time of such purchase, and the price
that BANM agrees to sell such cellular telephones to Horizon. Exhibit "A" will
be updated every 120 days by Horizon to reflect the documented cost to Horizon
of such telephones from its usual source of supply.
<PAGE> 2
4. Each delivery of cellular telephones to Horizon by BANM will be
accompanied by a statement listing the cumulative telephones sold pursuant to
this letter agreement and the Agreed Value attributable to such sales.
5. This Agreement will terminate upon written notice thereof at the earlier
of one year after the Closing Date or at such time the Agreed Value for all
cellular telephones sold to Horizon is equal to or greater than $500,000.
6. BANM will, to the extent permitted, assign to Horizon all equipment
manufacturer warranties received by BANM from such manufacturer with respect to
the cellular telephones purchased by Horizon hereunder.
This constitutes the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof. This letter agreement cannot
be amended without the express written consent of the parties hereto.
If this confirms BANM's understanding, please acknowledge its acceptance of
the terms hereof by signing a copy of this letter agreement where designated
below.
Very truly yours,
HORIZON CELLULAR TELEPHONE COMPANY
OF DAWSON, L.P.
By: KCCGP, L.P., its general
partner
By: Horizon G.P., Inc., its general
partner
By: /s/ BRUCE M. HERNANDEZ
-----------------------------
Bruce M. Hernandez, Vice President
and Chief Financial Officer
Agreed to and accepted
on this 22nd
day of March, 1996 by:
CELLCO PARTNERSHIP
By: /s/ MARK RUPP
-------------------------------
Mark Rupp, Vice President-
Planning & Business Development
<PAGE> 3
EXHIBIT "A"
<TABLE>
<CAPTION>
HORIZON MARCH 31, 1996
MODEL INVOICE PRICE*
- ----- ----------------------
<S> <C>
MOTOROLA
- --------
DPC 550 $ 159
Tele Tac 200 $ 139
Tote $ 149
Powerpac $ 169
Attache $ 199
NOKIA
- -----
P100 $ 139
232 $ 249
C-16 $ 99
LXI2 $ 99
</TABLE>
* prices with accessories as indicated on invoice
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000898675
<NAME> HORIZON CELLULAR TELEPHONE COMPANY, L.P.
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT MARCH 31, 1996 (UNAUDITED) AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
[/LEGEND]
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,121,535
<SECURITIES> 0
<RECEIVABLES> 11,713,035
<ALLOWANCES> 703,338
<INVENTORY> 760,700
<CURRENT-ASSETS> 14,924,912
<PP&E> 73,222,884
<DEPRECIATION> 19,943,151
<TOTAL-ASSETS> 312,840,649
<CURRENT-LIABILITIES> 10,753,246
<BONDS> 252,182,769
0
0
<COMMON> 0
<OTHER-SE> 47,564,496
<TOTAL-LIABILITY-AND-EQUITY> 312,840,649
<SALES> 18,028,657
<TOTAL-REVENUES> 18,028,657
<CGS> 3,963,693
<TOTAL-COSTS> 3,963,693
<OTHER-EXPENSES> 12,026,825
<LOSS-PROVISION> 136,152
<INTEREST-EXPENSE> 6,819,220
<INCOME-PRETAX> (4,917,233)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,917,233)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,920,372)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
